Lincoln Partnership Re-Acquires 915 Wilshire

Lincoln Property Company has partnered with affiliates of Rockwood Capital, LLC for the purchase of a 22-story office tower in downtown Los Angeles that it previously sold to Brickman Associates in 2007. Lincoln originally purchased the property in 2003 for $49.2 million, or $128 a square foot, from TIAA-CREF, selling it to Brickman for $117 million, or just under $300 a square foot. The price Lincoln Property paid this time was not released, but sources tell GlobeSt the building probably sold for $130 million. Kevin Shannon, currently with Newmark Grubb Knight Frank, brokered the deal; terms were not disclosed.

"Lincoln has a lot of history with this property, and we're thrilled to bring it back into our portfolio once again," said David Binswanger, Executive Vice President of Lincoln Property Company. "We really believe in downtown LA, and with this particular building, we were attracted to its potential for renovation. We look forward to executing our vision to create a more modern, inviting space for current and future tenants of 915 Wilshire."

Originally built in 1979, 915 Wilshire is a 390,312 square foot steel frame Class A office building complete with a storage penthouse, emergency equipped helipad, exterior terraces at the 7th and 8th floor northern exposure, and a parking garage. The Skidmore, Owings and Merrill design was constructed by Turner Construction and developed by Cabot, Cabot & Forbes. After selling the property to Brickman in 2007, Lincoln has stayed on as a property manager and leasing agent. The Lincoln partnership said in a press release that it has plans to renovate the property for the first time in over a decade, to include upgrades to the lobby and valet area, redesigning the outdoor patio, and replacing the elevators. The building was 88% leased at the time of sale, and is across the street from the Wilshire Grand Center, a $1 billion mixed-use project being built by Hanjin Group that's expected to be completed in July 2017.

"We are very excited to be partnering with Lincoln on the renovation of 915 Wilshire," said Tyson Skillings, Managing Partner at Rockwood Capital, LLC. "This property, already in high demand by tenants, is located in the heart of the most vibrant area for redevelopment in downtown LA. It will become even more attractive with the nearby addition of a new, world-class hotel tower, restaurants, nightlife and retail. This is a prime example of Rockwood's investment approach."

For more news and information visit Blumberg Partners.

Von Karman Office Building Sold

CBRE announced this week that it had arranged the sale of 17885 Von Karman in Irvine, CA on behalf of funds managed by Oaktree Capital Management, L.P. & Hines. According to a report from the OC Register, the property is part of the Irvine office complex known to many as the Washington Mutual campus. Terms of the deal were not disclosed. Designed by Callison Architecture, Inc., the building was constructed in 2007 and includes striking features such as a modern exterior, first-class interior finishes and virtually column-free floor plates.

"Orange County continues to be an attractive basis market compared to West Los Angeles, Seattle and the San Francisco Bay Area. This sale is still below peak pricing and replacement cost for Orange County unlike core deals in those other coastal gateway markets," said CBRE vice chairman Kevin Shannon, who represented the sellers in the transaction. "The leasing momentum in Orange County Airport submarket has continued to the point where new speculative office space is warranted similar to those other coastal markets as well. Southern California in general has experienced a slower market recovery but is definitely starting to catch up in this cycle to the San Francisco Bay Area and Seattle."

For more news and information visit Blumberg Partners.

Esplanade III in Phoenix Sold for $74M

Dallas-based investment firm Crow Holdings has purchased one of the Esplanade buildings in the Biltmore area of Phoenix for $74.3 million, or $336 a square foot, in a cash deal. AEW Capital Management of New York sold the tower, which it paid $77 million for in 2006. Jim Fijan and Will Mast with CBRE's Phoenix office negotiated the sale, along with Kevin Shannon of CBRE's South Bay, CA office.

"This is the highest price per square foot for a multi-tenant, class A asset since the downturn," said Jim Filjan of CBRE. "Office fundamentals are improving and pricing is approaching pre-recession levels. Investors are taking notice and have shifted their attention to Phoenix, especially as pricing in coastal markets skyrockets.

Esplanade III is a ten-story office complex totaling 218,266 rentable square feet and is conveniently located just minutes from downtown Phoenix, Scottsdale and Phoenix Sky Harbor International Airport. Major tenants include CBRE, Alliance Residential, Regus, Helios and Major League Baseball's western headquarters.

For more news and information visit Blumberg Capital Partners.

Amazon's Global HQ for Sale

Microsoft co-founder Paul Allen's Vulcan Real Estate announced last Thursday that it would be putting Amazon.com Inc.'s 11-building Seattle headquarters on the market with plans to use the proceeds for other real estate projects in the area. "We have been deeply involved in the redevelopment and revitalization of South Lake Union for over a decade, and the sale of the Amazon campus will allow us to continue to invest in the neighborhood and the community," Ada M. Healey, vice president of Vulcan's real estate unit, said in the statement.

"Vulcan's portfolio is heavily weighted in office and we need to rebalance that distribution," Lori Mason Curran, Investment Strategy Director of Real Estate at Vulcan said in a statement. "With the current low interest rate environment and high values for core assets this feels like a good time to capitalize on market conditions."

Built in the former warehouse district north of downtown, the 1.8 million square foot campus is being listed for sale through CBRE Group Inc. While no asking price was listed, industry experts expect the property to sell for more than $1 billion. According to a Reuters report, Amazon, which only recently moved into its new headquarters, declined comment on whether it would be a bidder to buy the 11 buildings on 1.8 million square feet of land which make up its headquarters. Amazon already has plans to build new offices nearby to house its growing staff.

"If they're going to take the cash and use it to do more development in South Lake Union, I see it only as a good thing," commented Jerry Dinndorf, president of the South Lake Union Community Council.

"The Amazon corporate headquarters buildings represent exactly what core capital wants today: new product featuring durable, credit income streams in great CBD locations. Markets like South Lake Union in Seattle, South of Market in San Francisco and Silicon Beach in Santa Monica, command premium rents because of huge tenant demand," said Kevin Shannon of CBRE in a CoStar Group report. "Technology and corporate tenants love state of the art campuses in amenity rich, transit oriented environments like Amazon's because these locations allow them to attract and retain the best talent in the workforce."

For more news and information visit Blumberg Capital Partners.

Russell Investments Center Sold for $480M

Northwestern Mutual announced Friday that it has sold the Russell Investments Center at 1301 Second Ave. in Seattle to CommonWealth Partners, a privately held real estate investment, development and management firm based in Los Angeles, for $480 million. According to the Northwestern Mutual press release, it is believed to be the largest single asset office sale in the Western United States since 2006. CBRE served as broker for the transaction through a team led by Vice Chairman Kevin Shannon.

"This transaction is an example of how we actively manage our $5.8 billion real estate equity portfolio to generate strong returns on behalf of our policyowners," said Paul Hanson, managing director - real estate, Northwestern Mutual. "The company's real estate strategy typically focuses on long-term holds; however, the Seattle market rebounded quickly, creating an excellent opportunity for the company to realize a gain for our policyowners."

"It speaks volumes about real-estate market cycles," said Ann Chamberlin, managing director with brokerage Jones Lang LaSalle, in a Seattle Times article. "That building was purchased [by Northwestern Mutual] at the absolute bottom of the market. Now we're bouncing back and they're getting a nice return."

Northwestern Mutual originally purchased the 42-story, 872,000 square foot office building in the fall of 2009. The sale is not expected to cause disruption for tenants with long-term leases, including Russell Investments, Boeing, Nordstrom, Dendreon, JP Morgan Chase and Zillow.

For more news and information visit Blumberg Capital Partners.

1515 Wynkoop Sold in Denver

1515 Wynkoop, an eight-story LEED Gold-Certified Class AA premier office building in Denver, sold this month for an estimated $120 million, or $391 per square foot, according to a Denver Business Journal article. Hines sold the property to Glendale, CA-based American Realty Advisors.

"Capital loves best-in-class assets like Hines’ 1515 Wynkoop project, in one of LoDo’s best locations," said Kevin Shannon, vice chairman and managing director of CBRE’s institutional group-west, which represented the seller in the transaction. "This is the second, significant core office sale in the Denver CBD market this year. Both debt and equity is attracted to Denver’s strong growth prospects, fueled in part by its healthy energy and technology industries. We expect to see stronger sales activity in Denver as the market continues to benefit from improving fundamentals."

The 306,791 square foot mixed-use core property was built in 2009 and includes 279,578 square feet of office space. The building is reportedly 90% leased to a number of tenants, including credit tenant Black Hills Corp., law firm Polsinelli Shughart and insurance company Van Gilder. Designed by Hartman-Cox Architects, the exterior of 1515 Wynkoop is clad in brick and glass, in keeping with the historical tradition of its neighboring structures.

For more news and information visit Blumberg Capital Partners.

CA Selects Buyer for State Buildings at $2.3B

According to an Associated Press article the Department of General Services in California has selected California First LLC, a partnership led by Hines and Antarctica Capital Real Estate, as the buyer for 11 state office properties that went up for bid earlier this year with a winning offer of $2.33 billion. The sale will result in more than $1.2 billion for California's state general fund and $1.09 billion to pay off bonds on the properties. Over the next 20 years, the state will reportedly lease the offices back from the new owner at predetermined rates, and will no longer maintain, operate, or repair the buildings. All the leases with California First allow the state to buy back any or all of the buildings at anytime during the 20-year term. The offices included in the portfolio are:
  • Attorney General Building, Sacramento
  • California Emergency Management Agency Building, Sacramento
  • Capitol Area East End Complex, Sacramento
  • Elihu M. Harris Building, Oakland
  • Franchise Tax Board Complex, Sacramento
  • San Francisco Civic Center, San Francisco
  • Junipero Serra State Building, Los Angeles
  • Department of Justice Building, Sacramento
  • Public Utilities Commission Building, San Francisco
  • Judge Joseph A. Rattigan Building, Santa Rosa
  • Ronald Reagan State Building, Los Angeles

"Far from a fire sale, this was a stiff, multiple-offer competition that generated favorable pricing for the state," Kevin Shannon, vice chairman of CB Richard Ellis, which brokered the sale, said in a written statement. Rich Mayo, one of the chief investors, said California, despite its financial problems, is a reliable investment. The state is not a tenant prone to "run out on leases or anything," he said in a Sacramento Bee article.

For more news and information visit Blumberg Capital Partners.