SF Financial District Building Gets $126M Loan via Starwood

Starwood Property Trust announced today that it had originated a $126 million first mortgage loan and mezzanine loan for 100 Montgomery in San Francisco on behalf of Blackstone Real Estate Partners VII. Blackstone Group agreed to buy a 25-story building in downtown San Francisco for $165 million last month from a joint venture of Houston-based Hines and Sterling American Property Inc., which previously purchased the tower in January 2006 for $67.5 million from Equities Office Properties Trust. Starwood has said that it will sell the first mortgage "in the near term" to increase its investment returns. The total financing will have an initial funding of $115.5 million with $10.5 million of future funding for tenant improvements and leasing commissions.

"We are excited to complete another complex financing transaction with Blackstone," said Boyd Fellows, President and Director of Starwood Property Trust. "Similar to the $61 million Glendale transaction we announced earlier this quarter, we funded the entire capital stack with a flexible structure which meets Blackstone's exact financing needs. Our ability to act as a 'one stop financing solution' for borrowers looking to finance large transitional assets is a significant strategic advantage."

As of last month, the office building was 84% occupied, with the U.S. General Services Administration as its largest tenant, according to the people. Situated on the corner of Sutter and Montgomery Streets in the Financial District, the building offers more than 420,000 square feet of space including retail storefronts. 100 Montgomery, also known as the Equitable Life Building, has undergone $54 million in capital improvements redesigned by Robert A.M. Stern Architects, including a comprehensive renovation in 2009 that added a new glass facade and lobby.

For more news and information visit Blumberg Capital Partners.

Parkway Properties Buying NASCAR Headquarters for $100M

Parkway Properties, Inc. announced this week that it had entered into a purchase agreement for NASCAR Plaza in Charlotte, NC for a purchase price of approximately $100 million. A joint venture between Trinity Capital Advisors and Rubenstein Partners is selling the 390,000 20-story office tower located in the central business district, according to an Orlando Business Journal article. Parkway will own 100% of the asset and plans to assume the first mortgage secured by the property, which has a current outstanding balance of approximately $42.3 million with a current interest rate of 4.7% and a maturity date of March 30, 2016; Parkway intends to amend and restate the loan upon assumption to current market terms. Closing is expected to occur by the end of the fourth quarter 2012 and is subject to customary closing conditions.

James R. Heistand, Parkway's President and Chief Executive Officer, stated, "The purchase of NASCAR Plaza represents another off-market transaction that enables us to expand in one of our key, target submarkets with a high-quality asset. NASCAR Plaza has a strong tenant base and is the headquarters for several well-known companies, and we expect to create additional value through leasing and rent growth in a submarket that we believe will outperform during a recovery."

Walker Collier, Partner at Trinity Capital, notes that while it's bittersweet to sell the building after less than two years of ownership, he is proud of Trinity Capital's work that created such value for the asset. "Rubenstein Partners and Trinity Capital‘s partnership worked tirelessly with our leasing and property management stakeholders to shift NASCAR Plaza from the tremendous distress it was under before it was purchased, creating the stabilized asset it is today," Collier said. "NASCAR Plaza will serve as a good case study for Trinity Capital and the value creation that we work towards for our investors and partners." Anne Vulcano and Jessica Brown of CBRE handled the building's leasing duties and Trinity Partners managed the property for the ownership group.

NASCAR Plaza, created by renowned Pei Cobb Freed & Partners and built in 2009, sits adjacent to the NASCAR Hall of Fame and serves as the headquarters of NASCAR. The building is currently 88% leased, with 139,000 square feet leased to NASCAR through May 2021.

For more news and information visit Blumberg Capital Partners.

Major CRE Firms Report 3Q Deal Slowdown

A new report from CoStar Group examines the slowed activity in commercial real estate during the third quarter this year, and the causes. With third quarter earnings calls being hosted this week, the largest publicly traded CRE firms have indicated that the lull in leasing and sales activity in the United States reflects cautious businesses waiting for results from the Presidential election, national tax and debt issues, and concerns regarding the ongoing debt crisis in Europe coupled with the slowdown in Asian economic growth.

Comments from industry leaders quoted in the CoStar article include:

"The market environment turned more cautious in the third quarter," noted Brett White, CEO of Los Angeles-based CBRE Group Inc. "Many investors and occupiers deferred making decisions and commitments. The current recovery, unlike previous ones, remains frustratingly slow and inconsistent. Nevertheless, we continue to believe that the recovery is ongoing and as we've been saying for some time, remain subject to quick swings in market sentiment."

"We believe we see that business is coming our way because of general uncertainty and hesitancy, and that traditionally favors the strong brands in any markets, and ours is no exception," said JLL CEO Colin Dyer, participating in the company's conference call Tuesday morning via mobile phone due to dislocation by the hurricane. "For next year, we anticipate markets that are not going to get worse, but at the same time, not improving as quickly as businesses might hope," he said. "There are encouraging signs. The U.K. emerging from recession and China perhaps, turning around its declining growth rates. But there are also global-scale issues that concern business confidence, the post-election fiscal cliff in the U.S. and the ongoing issues with sovereign debt in Europe being the two principal examples."

For more news and information visit Blumberg Capital Partners.

Astani Plans $100M Mixed-Use Project in Hollywood

Developer Sonny Astani's company, Astani Enterprises, has plans to develop a $100 mixed-use complex called High Line West along a formerly neglected stretch of Hollywood Boulevard. The longtime apartment developer bought a 1.9-acre site on Hollywood near Western Avenue for about $11 million from Capmark Financial Group Inc. according to a Los Angeles Times article. Astani's complex will include a 5,000-square-foot elevated park above street-level shops that is meant to evoke New York's popular High Line park. Work on the $100 million project could begin in about year and would take 18 months to build.

Among the structures on the property is a building that was part of Falcon Studios, a performing arts school founded in 1929 run by former Olympic fencer Ralph Faulkner. Faulkner, who died in 1987, crossed swords with some of Hollywood's biggest action stars, with students including Errol Flynn, Ronald Colman, Basil Rathbone and Douglas Fairbanks Jr. Astani plans to incorporate a Falcon Studios building facade in his 280-unit apartment complex and build around a city landmark structure at 5540 Hollywood Boulevard.

"I've long wanted to build in this neighborhood," Astani said. "It's home to a rich cultural mix of single people and families, and is situated between the upscale retail developments of Hollywood to the west and Los Feliz to the east."

For more news and information visit Blumberg Capital Partners.

Covington City Hall to Convert to $25M Luxury Boutique

Aparium Hotel Group and The Salyers Group announced this week that it would partner with the City of Covington, KY to develop The Hotel Covington inside what is currently city hall. According to a WCPO report, plans call on keeping the historic shell of the building, which originally housed a fancy department store that catered to the well-to-do of the time. The City of Covington, under the leadership of Mayor Chuck Scheper, will invest the 102-year-old former Coppin's Department Store building, now home to City Hall and state offices, to the project. The $25 million project is expected to create approximately 125 jobs and foster economic development along Madison Avenue, a wedding district already established in downtown Covington.

"We're very excited about this project," said Covington City Manager Larry Klein. "We think the impact is going to be huge. It's going to be great for the small businesses already in the area. It's going to attract more small businesses as we bring in out of town people and people who live here."

"This property ideally suits our commitment to delivering Translocal Hospitality in urban markets," said Mario Tricoci, CEO of Aparium Hotel Group. "The Hotel Covington will draw inspiration from the local culture and cultivate a following through a sense of civic pride and exciting food & beverage."

Located at 638 Madison Avenue, the seven-story Hotel Covington will have 107 rooms and a signature restaurant and bar. Covington's City Hall will move to another location, which has not been determined, according to the report.

For more news and information visit Blumberg Capital Partners.

New Class AA Building at Hall Office Park

Craig Hall, chairman and founder of Hall Financial Group, announced this week that construction will soon be underway on the 16th building at Hall Office Park in Frisco, Texas. According to a Dallas Business Journal article, development on the speculative new office building at 3001 Dallas Parkway will begin in early 2013. The new Class AA building at 3001 Dallas Parkway will be eight-stories with 200,000 square feet.

"With existing demand for new multi-tenant office space in the area outpacing availability, we believe the timing is right to start this next building," said Hall. "Our decision to move forward was facilitated by the support and development incentives provided by the City of Frisco and the Frisco Economic Development Corporation. Their encouragement and assistance will help make this speculative project economically workable."

Hall Office Park is Hall Financial Group's 162-acre development in Frisco, Texas, master planned for 3 million square feet of Class A space. The new addition is s being built on one of the two remaining and highly visible development sites in the park overlooking the Dallas North Tollway. Hall Financial Group has maintained a steady development pace at Hall Office Park since opening its first speculative building in early 1998. Today, 15 buildings with 2 million square feet of space are complete and 98% leased to a roster of 170 tenant companies with an employee population of 6,500.

For more news and information visit Blumberg Capital Partners.

ACC Acquires $862.8M in 19 Properties

American Campus Communities, Inc. (ACC), the largest owner, manager and developer of high-quality student housing properties in the U.S., announced this week that it had acquired 19 select student housing properties for $862.8 million from affiliates of Kayne Anderson Capital Advisors, L.P. According to a Businessweek article, ACC will pay $466.6 million in cash under the deal and assume roughly $396.2 million of outstanding mortgage debt. The acquisition is expected to close in the fourth quarter of 2012, with the exception of a property that is under development. That portion of the deal will close during the third quarter of 2013.

"We believe these 19 select assets offer high-quality products and locations in Tier 1 markets," said Bill Bayless, ACC CEO. "Furthermore, approximately 75 percent of the select portfolio is an average of 0.3 miles from campus in submarkets with barriers to entry. We are excited about this opportunity to create substantial value by overlaying our operating platform on this portfolio."

For more news and information visit Blumberg Capital Partners.