Gregorie Ferry Landing Project Gets $26M FHA Loan

Grandbridge Real Estate Capital closed on a $26,801,800 first mortgage loan funded through FHA’s 221(d)(4) loan product earlier this month. The loan was secured by the Gregorie Ferry Landing Apartments, a proposed 240-unit, Class "A" mid-rise property in Mount Pleasant, South Carolina.

"A great team of professionals all around made this deal possible. The HUD 221(d)(4) loan process requires a combination of hard work, the right timing and the right team to make the deal work," said Grandbridge Senior Vice President Mike Ortlip. "The borrower, Tony Berry, with the Berry Company, along with the Samet Corporation, a general contracting firm represented by Arthur Samet, David Greene and Alton Tew, and Grandbridge’s FHA Underwriting team lead by Senior Vice President Tim Duncan, all worked together, bringing their unique expertise to the process. This was the first 221(d)(4) transaction in South Carolina to be approved by HUD’s new national loan committee."

For more news and information visit Blumberg Capital Partners.

JV Secures $23M Loan for DC Office Condo

In December of last year, Monument Realty and Angelo, Gordon & Co. bought 2055 L Street NW in Washington, DC in an all-cash deal; this month, they've secured a 23.2 million senior loan commitment from PCCP LLC for the acquisition and re-development financing of the property. With this loan in place, the joint venture will now commence a six-month rehabilitation to the owned 102,000 square foot condominium office portion of the 237,000 square foot building.

"The owner plans to renovate the property to position it as a quality Class A asset," said John Randall, senior vice president at PCCP, LLC. "The overall competitive vacancy rate in the CBD is approximately 6.4 percent. Once the renovation is completed, its quality and key location will be desirable to high-profile law firms, lobbyists, and non-profit organizations and associations."

Verizon sold the property, represented by Cushman & Wakefield, to the JV for $12.75 million. The JV plans to move forward in the coming months with a full renovation of 2055 L that will improve the now Class B building’s common areas, facade and building systems and add ground-floor retail space.

For more news and information visit Blumberg Capital Partners.

NYT Takes a Look at Office Sublets

The New York Times published a new article titled "Manhattan Office Sublets Show Benefit as Markets Tighten" examining the current trend in NYC. Data from Newmark Knight Frank shows that, as of April, Downtown reflected a 40% drop in sublease space with Midtown down 35%. An excerpt from the article:

Conventional wisdom holds that subleasing — in which tenants vacate their offices before the end of their lease and rent it to another tenant at a discount — has a negative impact on the market. Landlords must compete against the lower rents, while tenants bristle at the restrictive terms that often are a part of a sublease.

But the industry perspective is now shifting. Tenants are embracing subleases as a means of locking in below-market rents, while landlords, who are facing fewer vacancies, are using it to attract tenants and then converting the leases into direct deals when the subleases expire.

"Landlords don’t usually like the fact that sublease space rents for less, and tenants don’t like that the leases offer little flexibility," said Moshe Sukenik, an executive vice president and principal at Newmark Knight Frank. "But there is a silver lining that can result in a win-win for everyone involved."

For more news and information visit Blumberg Capital Partners.

REIT Acquires Building Leased to Los Angeles Times

Rexford Industrial Fund V REIT has purchased a 48,350 square foot industrial building that's fully leased to The Los Angeles Times for $5.1 million. The Pasadena, CA building at 121-125 North Vinedo Ave. was acquired in an all-cash purchase from an undisclosed source. Cushman & Wakefield represented both the buyer and the seller in the transaction.

"This acquisition aligns with our strategy of acquiring stabilized and value-add industrial properties in strong infill markets," said Howard Schwimmer, co-founder and senior managing partner of Rexford Industrial, in a statement. "The Southern California industrial market continues to demonstrate favorable market fundamentals and the unique opportunity to add value by acquiring assets at substantially below replacement cost."

For more news and information visit Blumberg Capital Partners.

North America's Tallest Building Up for Sale/Investment

The Willis Tower in Chicago, formerly known as the Sears Tower and North America's tallest building, is on the block according to the Wall Street Journal as the owners are reportedly looking to recapitalize or sell the property. The owners of the property, Chicago's American Landmark Properties Ltd, New York Developers Joseph Moinian of the Moinian Group and Joseph Chetrit of the Chetrit Group, originally purchased the building for $900 million, or about $244 a square foot, in 2004. The building carries $780 million of debt on it said sources.

Completed May 3, 1973, Willis Tower stands 1,450 feet tall and is one of the most recognizable landmarks in the Chicago skyline . The building held the record for the world’s tallest building for 25 years until the Petronas Towers in Kuala Lampur, Malaysia were built in 1998. The 3.8 million square foot tower was designed by the architectural firm Skidmore, Owings & Merrill for Sears, Roebuck & Company. The building was renamed to Willis Tower in 2009 when UK insurer Willis Group Holdings leased 140,000 square feet at $14.50 per square foot. Watch an Associated Press video report on the marketing of the tower here.

For more news and information visit Blumberg Capital Partners.

Building and Development in Dubai

The Jumeirah Emirates Towers (along with Burj Khalifa and Burj al Arab - the famous soaring Jumeirah resort hotel in the Gulf) are the symbols of Dubai and along with Emirates Palace, they are the symbols of the UAE and to some extent the emerging states of what is known as the GCC (Gulf Cooperating Council). Almost every GCC country (except Oman) is trying in one way or another to replicate the power these buildings suggest in moving towards a modern future and in overcoming the desert. Oman an ancient country that once stretched from Pakistan to Zanzibar, prizes its desert architecture and low scale, almost whitewashed or sand washed, buildings.

Across from the Jumeirah Emirates Towers on Sheikh Zayed Road, there is a building that is designed to look like a circuit board. The reason for this and much odder designs and shapes for office buildings is that throughout the region and India as well, office buildings are more often developed for speculative investors in a flipping scheme than tenants.

This investment structure means each developer is competing with others to attract buyers for his floors. That's why so often Dubai buildings end up with wholly impractical designs, such as a turning office building, to set themselves apart from others, but without thought to practical value to end users. Further, the floor by floor sales of these buildings means no unified building management or leasing.

The capital used to build most speculative buildings, both office and residential, is 100% debt in the form of deposits. The risk of this to the buyer is that the developer has little at risk and the buyer has all the risk. Further, there has been no clear law defining their rights or the developer's obligations. This mess of a system was very, very fragile and waiting for any market factor to topple it.

That's what happened in 2008-2009 as interest rates increased slightly and loans for the buyers continuing deposit obligations, or the next buyer to flip sell to became scarce. As financing dried slightly the whole market withered and collapsed.

As the real estate economy collapsed, it meant the construction industry, and investment capital flows shut down precipitating a full financial disaster for heavily over extended Dubai, which relied heavily on these sectors (along with ports and tourism trade) for its economic life.

Morgans Sells Two NYC Properties for $140M

Morgans Hotel Group sold off two of its boutique hotels in New York City, the Royalton and Morgans, for $140 million, or approximately $500,000 per room, late last month. Morgans sold the property to Felcor Lodging Trust but will continue to operate the hotels under 15-year management agreements with one 10-year extension option.

Michael Gross, Chief Executive Officer of Morgans said, "We are pleased to complete the sales of these New York hotels and we look forward to a long and beneficial partnership with FelCor as we continue to manage the hotels. With this transaction, we have now completed the sale of three assets which has allowed us to reduce our debt and provided us with financial strength to expand our brands."

Morgans reportedly used part of the proceeds to retire a credit facility. According to a Reuters report, the two hotels, along with the Delano hotel in South Beach that the company sold off in April, were collateral for the credit facility. Delano is currently unencumbered, the company said in a statement.

For more news and information visit Blumberg Capital Partners.