CoStar to Acquire LoopNet in $860M Deal

CoStar announced yesterday that it has entered into an agreement to acquire LoopNet in a transaction valued at approximately $860 million. The boards of directors of both companies have unanimously approved the deal which is expected to close by the end of 2011. CoStar has received a commitment letter from J.P. Morgan for a fully committed term loan of $415 million and a $50 million revolving credit facility. J.P. Morgan acted as CoStar’s financial advisor, and Simpson Thacher & Bartlett LLP acted as legal counsel to CoStar. Evercore Partners, L.L.C. acted as LoopNet’s financial advisor, and Davis Polk & Wardwell LLP acted as legal counsel to LoopNet.

"We are combining two very innovative companies that have transformed the commercial real estate industry," Andrew C. Florance, CoStar Group's Founder and CEO, said in a conference call announcing the agreement. "CoStar revolutionized how the industry researches commercial real estate and LoopNet revolutionized the way the industry markets commercial real estate. We believe that the combination of our two outstanding and complementary companies will lead to even more innovation and greater efficiencies by creating the premier Internet solution for the commercial real estate industry. We expect the benefits to our customers and ultimately our shareholders to be very significant."

"CoStar and LoopNet have been at the cutting edge of innovation in their respective businesses, and we believe the two companies will be even stronger together," said Richard Boyle, Chairman and CEO of LoopNet. "This transaction combines the capabilities and best practices of two successful and very complementary companies. We are excited about the possibilities that can be created together."

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Panasonic Moving to New $190M Newark HQ

Panasonic Corporation of North America announced that it has entered into a lease agreement in Newark, NJ that will serve as headquarters to some 1,000 employees and contractors beginning in 2013. Steven Pozycki's SJP Properties will develop a new, state-of-the-art, sustainable high-rise office building worth $190 million under a joint venture with Matrix Development Group. SJP is scheduled to break ground on the 12-story tower no later than this fall and is scheduled to complete the 325,000 square foot building by 2013.

"This is a very exciting time in the life of Panasonic," said Joseph M. Taylor, Chairman and CEO of Panasonic Corporation of North America. "This is the culmination of a very exhaustive process for us in which we examined all of the options available to us that would meet our needs and goals for our future as a green business technology leader. We are most grateful to the State of New Jersey and City of Newark for their support and efforts to make it possible for Panasonic and its employees to remain right here in New Jersey."

"Today is a historic, game-changing moment for the city of Newark," said Mayor Cory Booker, speaking at a press conference at One Riverfront Center, which will be adjacent to the new property. Bringing Panasonic to Newark "is the single greatest economic development accomplishment of my administration."

For more news and information visit Blumberg Capital Partners.

Pittsburgh's Tallest Office Tower Sold for $250M

The U.S. Steel Tower, a Pittsburgh landmark and tallest building, traded hands this week for $250 million as Area Property Partners sold the property to a New York-based investment group according to a Daily Mail article. Area Property Partners originally acquired the property in 1999 when they bought part of a $265 million mortgage held by GE Capital. Peter Braverman, a shareholder in the buildings' managers Winthrop Management, said that the current building management will stay in place after the transition. "Every new owner tries to improve a building and provide better services, but there are no dramatic plans at this point," Braverman said.

The 64-story building at 600 Grant Street, completed in 1970 and built by U.S. Steel, is 92% occupied with major tenants including the University of Pittsburgh Medical Center, U.S. Steel Corp., and PNC Bank. "We could get to 100 percent (occupation), based on the expansion of UPMC," said Mark Karasick, a principal in the new ownership group. UPMC's renovation of executive and administrative offices at the tower won LEED-Silver certification for energy conservation and environmental design.

For more news and information visit Blumberg Capital Partners.

Morgans Sells Mondrian for $137M

Pebblebrook Hotel Trust has entered into a definitive agreement this week to purchase the Mondrian Los Angeles hotel from Morgans Hotel Group for $137 million according to a Wall Street Journal article. Under the terms of the deal, Morgans will continue to manage the hotel under a 20-year management agreement with one 10-year extension option. Morgans has received a $5 million security deposit, which is non-refundable except in the event of a default by Morgans. Pebblebrook expects to fund the purchase price with available cash and to close the acquisition during the second quarter.

The Mondrian Los Angeles is located on Sunset Boulevard and was originally built in 1959 as an apartment building. Reopened in 1996 after extensive renovation, the hotel is famous for its Asia de Cuba restaurant and Skybar bar and lounge.

Michael Gross, Chief Executive Officer of Morgans said, "This transaction further demonstrates the value of our real estate assets and our success in transitioning to an 'asset light' strategy. We are looking forward to a long and beneficial partnership with Pebblebrook as we continue to manage the hotel under the Mondrian brand with a long-term management agreement. The transaction proceeds will allow us to reduce our debt and fund the continued growth of our higher margin management business." Morgans has also recently agreed to sell the Royalton and Morgans hotels in New York. Reuters reported that Morgans has also been shopping the Delano in Miami.

For more news and information visit Blumberg Capital Partners.

Excel Trust Invests $68M in Gilroy Crossing

Excel Trust, Inc., a San Diego-based real estate investment trust, has acquired the 473,640 square foot Gilroy Crossing in Gilroy, CA for $68.5 million according to a GlobeSt.com article. The purchase price was below the roughly $80 million asking price announced by the center's former owner, Lakha Properties-Gilroy, in 2008. Excel Trust funded the purchase price for Gilroy Crossing with a $48.4 million mortgage and borrowings under its unsecured line of credit according to an SEC filing.

"We continue to pursue our strategy of sourcing well located, attractively priced real estate through off market transactions," Gary Sabin, Excel Trust chairman and CEO, said in a statement about the purchase.

Gilroy Crossing, which sits at the intersection of Camino Arroyo and Pacheo Pass Highway, originally opened in 2004 and is currently 99% leased with major tenants including Kohl's, Target, Sports Authority, Ross Dress for Less, Michaels, PetSmart and Bed, Bath & Beyond. The current annual net operating income is approximately $5.3 million.

For more news and information visit Blumberg Capital Partners.

MTA Seeks to Sell Madison Avenue Headquarters for $150M

The Metropolitan Transportation Authority (MTA) announced this week that it is seeking to sell three of its headquarter buildings in midtown Manhattan in an effort to consolidate office space. MTA said that it expects to yield at least $150 million from the sale and would use those funds to support MTA capital projects. MTA plans to relocate employees from the 341, 345 and 347 Madison Avenue buildings would be relocated near Grand Central and Metro-North’s other facilities, including an office facility in North White Plains.

"We are reviewing our real estate portfolio from top to bottom, looking for opportunities to reduce costs and increase revenue," said Jeffrey B. Rosen, MTA Director of Real Estate. "In our real estate, as in all of our operations, the MTA is making every dollar count."

Peter S. Kalikow, who was chairman of the authority from 2001 to 2007, said he had decided not to sell the buildings when he was in charge because they housed the Metro-North administration, which he believed should remain close to Grand Central according to a New York Times article. "Moving New York City Transit to 2 Broadway is best thing we ever did," he said in an interview this week. "But there are no Metro-North trains down there."

For more news and information visit Blumberg Capital Partners.

Former William Morris Building Sold for $42M

The 74,000 square foot office building at 150 South Rodeo Drive in Beverly Hills traded hands this month for $42 million according to a Los Angeles Times article. Real estate investment trust Douglas Emmett, Inc. bought the property from New York City-based Brickman for $568 per square foot. Built in 1991, the office building was 75% leased at the time of purchase.

The $42 million price "is reflective of the location and the interest that a place like Beverly Hills commands today," said Marc D. Renard of Cushman & Wakefield, which arranged the sale. "There are only two institutional quality office buildings in the world that have a Rodeo Drive address, and this is one of them." Bruce Brickman, president of privately held Brickman, also cited the quality and location of the building, saying "We are very pleased with the results that Marc and his team achieved."

For more news and information visit Blumberg Capital Partners.