FEBRUARY 11, 2015 Rental Sales Hit Record; CBRE Keeps Trophy Sales of large apartment properties soared to a record-shattering $66.4 billion in 8 TOP INDUSTRIAL BROKERS 2014, and experts don’t expect a slowdown this year. The annual volume was up 34% from the previous year, according to Real Estate 12 TOP MULTI-FAMILY BROKERS Alert’s Deal Database, which tracks sales of $25 million and up. And it was 28% 2 Rockefeller Shops Pricey DC Offices greater than the previous record of $52 billion, set in 2005 when the economy was booming and the condominium-conversion craze was feeding demand. 2 Beachfront Florida Resort for Sale Last year’s activity was broad-based, with continued deal flow in most of the biggest markets, large gains in secondary cities and a steady push by investors into 2 Legacy Pitches Revived SF Tower suburban and value-added plays. 3 HEI Drops Fund, Eyes Joint Ventures CBRE remained the sector’s top brokerage, increasing its market share to 33% with a whopping $19.7 billion of sales. That was more than double the tally of its 3 Ex-Kimpton Pros Set Up Fund Shop closest competitor, HFF, which closed $8.7 billion of deals for a 14.6% share of bro- kered sales. Apartment Realty Advisors finished third again with $7.4 billion of 4 Waterfront Boston Up for Grabs See RENTAL on Page 13 6 New Arizona Apartments Available 6 Bay Area Offices With Upside Listed Brookfield Eyes $7 Billion High-Yield Fund Brookfield Asset Management 6 Office Portfolio on the Block is seeking to raise $7 billion of equity for what would be one of the largest commercial real estate funds to date. 9 Industrial Sales Soar; CBRE on Top The vehicle, Brookfield Strategic Real Estate Partners 2, would follow up a $4.4 billion fund that had its final close in the summer of 2013 and is nearly fully invested 10 High-End Bora Bora Hotel for Sale or committed. 13 Cushman, Newmark Eye Rental Sector The Toronto manager would target a return in the high teens by investing globally in properties and real estate operating companies. 15 New Charlotte Apartments Listed Only four closed-end real estate funds have ever exceeded Brookfield’s equity target. Blackstone sponsored three of them, including the largest — Blackstone Real Estate 15 High Price Seen for DC-Area Land Partners 7, which completed raising $13.3 billion in 2012. And Blackstone is well on 16 Backers Sought for Industrial Fund the way to adding another to the list, because its Partners 8 vehicle is set to close on $10 billion of initial equity this month. That fund has a $13 billion overall target. 16 Sponsor Seeks Home-Building Capital The only other manager to raise more than $7 billion for a real estate fund is See BROOKFIELD on Page 4 16 NJ Power Center Up for Grabs 19 MARKET SPOTLIGHT Office Sales Market Heats Up in South Florida A West Palm Beach office complex could fetch one of the highest per-foot valua- THE GRAPEVINE tions ever in South Florida, presaging what many local pros expect to be a big year for sales in the rebounding market. Garrison Investment co-founder Steven Colonnade Properties could attract bids of about $245 million for the Stuart is leaving the opportunistic 460,000-square-foot Phillips Point, which is 88% occupied. At that $533/sf valua- fund shop. Investors in Garrison’s three tion, the buyer’s initial annual yield would be just under 6%. New York-based Col- vehicles were notified in the past month onnade has given the brokerage assignment to HFF. that Stuart will give up involvement in The listing comes as improving fundamentals have attracted buyers to South day-to-day operations at the New York Florida, driving down capitalization rates. After the region failed to place among firm and that his “overall economic the top 20 in large office sales in 2013, activity surged 138% last year, lifting the interest in [the firm] and its affiliates will market to eighth place, according to Real Estate Alert’s annual ranking. gradually shift over time” to co-founder Local pros expect an even bigger year ahead. Three current listings, including Joe Tansey and others. The buzz is Phillips Point, could command at least $500/sf. By comparison, only two large See GRAPEVINE on Back Page See FLORIDA on Page 10 February 11, 2015 Real Estate 2 ALERT Rockefeller Shops Pricey DC Offices vated in 2002, would benefit from updatess to the guest rooms. It encompasses 79 beachfront rooms and another 110 units in Rockefeller Group is marketing a well-leased office building two towers. in Washington that could fetch about $275 million. There are several restaurants and bars, 8,000 square feet of The 294,000-square-foot building, at 1101 K Street NW in meeting space, three outdoor pools and a 21-slip marina. The the East End, is 96% leased. At the estimated value, the buyer’s LaPlaya Beach and Golf Club has an exclusive agreement to use initial annual yield would be just under 5%. New York-based a separately owned golf course four miles away.  Rockefeller, which is owned by Japanese developer Mitsubishi Estate, has given the listing to Eastdil Secured. Legacy Pitches Revived SF Tower Rockefeller acquired the Class-A property for $199 million in March 2011, when the occupancy rate hovered around 80%. Legacy Partners, which hung on to a San Francisco office It then signed leases on more than 30,000 sf. building as its value sagged during the recession, is poised to The tenants include FTI Consulting (96,000 sf), District of capitalize on that decision. Columbia Bar (52,000 sf), American Forest & Paper Association The offering of the 289,000-square-foot building, at 160 (29,000 sf) and Bloomberg (29,000 sf), according to CoStar. Spear Street in the South Financial District, could attract bids Asking rents for vacant space range from $44/sf to $52/sf. of about $650/sf, or $188 million. That would be more than Office space in the East End is 89% occupied, with an average double the price that Legacy paid in 2006. The Forest City, asking rate of $53.82/sf. Calif., fund shop has given the listing to Eastdil Secured. The 10-story building, completed in 2006, earned a LEED The building’s occupancy rate is 92%. Tenants include gold designation in 2012. It has a two-story lobby, a fitness cen- Conversant, Databricks, the Social Security Administration and ter, a rooftop deck and 300 underground parking spaces. There the University of California. The weighted average remaining is some ground-floor retail space, including a restaurant, Bras- lease term is six years. serie Beck, that faces K Street. The 19-story building, which has a refurbished lobby, is The site is near numerous shops, restaurants and , and between Mission and Howard Streets. It’s a block from the $4.5 is a few blocks from a stop on the Metro, McPherson Square billion Transbay Transit Center, a 1 million-sf public trans- Station.  portation hub scheduled to open in 2017. Some 3 million sf of office space and thousands of housing units are being con- Beachfront Florida Resort for Sale structed in the area in conjunction with the project. The South Financial District and the adjacent South of Mar- A joint venture is shopping a beachfront resort in Naples, ket neighborhood have become home to many technology Fla., that is unencumbered by brand or management contracts. giants, including Google, Spotify and Twitter. The 189-room LaPlaya Beach & Golf Resort is expected to The Spear Street building was developed in 1984. Legacy, trade for about $180 million. The whopping $952,000/room acting via its $457 million Legacy Partners Realty Fund 2, valuation is bolstered by revenues from the property’s beach acquired it from a Ellis Partners joint venture in 2006 for $86.5 and golf club, which has some 800 members. million, or $300/sf. The listing is being pitched to REITs, institutional investors All told, the fund snapped up $1.9 billion of properties and and operators of luxury hotel brands. HFF is advising the seller, development sites, mainly in Northern and Southern Califor- a joint venture between Noble House Hotels & Resorts of Kirk- nia, Seattle and Denver, as the market was peaking. Property land, Wash., and Halstatt Real Estate Partners of Naples. values, rents and occupancy rates subsequently plunged, and The 6.5-acre resort is one of two hotels in Naples with direct by 2009, Legacy had written down the value of the fund’s assets beach access. A buyer could either brand LaPlaya or continue by 70%. to operate it as an independent property. But Legacy was able to refinance and restructure loans for Zoning regulations and a lack of available space make many of the properties in the portfolio. In early 2009, when additional hotel construction in the area unfeasible. That has Credit Suisse sold a $75 million loan on 160 Spear Street to prompted a round of renovations and rebranding of existing Winthrop Realty of Boston, the company negotiated a $25 hotels. For example the Marco Island Marriott Beach Resort is million reduction in the balance. In 2012, it refinanced that closing and will be renovated and reflagged as a JW Marriott. debt with a $69.6 million loan from GE Capital. If the pricing The LaPlaya’s performance has kept pace with other luxury expectations for 160 Spear Street are met, it would be a coup properties in the area. Luxury hotels in Naples were 65.2% for the fund.  occupied last year, with an average daily room rate of $274.41. That generated $178.91 of revenue per room, according toSTR. Hotels in the area have benefited from an influx of travelers Need to see the largest property sales that were completed looking for more affordable options to Miami, as well as from recently? Go to The Marketplace section of REAlert.com and click an upswing in corporate group reservations. on “Sales Activity.” It’s free. The LaPlaya, which was completed in 1968 and last reno- February 11, 2015 Real Estate 3 ALERT HEI Drops Fund, Eyes Joint Ventures chief financial officer and worked on capital raising. Joining them are former Kimpton general counsel Judy HEI Hotels & Resorts has shelved plans to set up its fourth Miles and 15 other Kimpton alumni. hospitality fund and instead will seek to invest via joint ven- The management team formed three funds while at San tures. Francisco-based Kimpton, which was acquired last month by The Norwalk, Conn., operator last year started soliciting Intercontinental Hotels of London for $430 million. KHP will $450 million of equity for the planned HEI Hospitality Fund continue to manage those funds, which have fully invested 4. But it never closed on any commitments, and investors their $562 million of total equity. recently were told that the shop had changed its investment KHP is dubbing its new vehicle KHP Fund 4. With leverage, strategy. it will have up to $750 million of investment power if the equity HEI’s third fund held a final close in 2008 with $515.4 mil- goal is reached.  lion of total equity. It bought and developed full-service, upper- upscale and luxury hotels in the U.S., Canada and the Caribbean. The firm’s first two funds raised a combined $699.3 million. All three vehicles are fully invested. 1801 K Street The firm has also operated joint :DVKLQJWRQ'& ventures with Prudential Real 2I¿FHVDOHDQG¿QDQFLQJ Estate Investors. 570,000 s.f. Gary Mendell is HEI’s chair- )LQDQFLQJ man. His brother, Steve Mendell, 6DOH SLFWXUHG is president and head of invest- ments and development. Anthony Rutledge is chief executive. The Sierra Commerce Park brothers formed HEI Hotels & Reno, NV Resorts in 2002. They previously Industrial portfolio sale had formed a company called 1,524,449 s.f. HEI Hotels in 1985 and sold it in $49,000,000 1997 to a predecessor of Starwood Hotels & Resorts Worldwide of Stamford, Conn. 

1635 Market Street Philadelphia, PA Ex-Kimpton Pros 2I¿FHDQGUHWDLO Set Up Fund Shop VDOHDQG¿QDQFLQJ 276,455 s.f. The former management team )LQDQFLQJ of just-sold Kimpton Hotels & 6DOH7HUPVFRQ¿GHQWLDO Restaurants has formed its own fund shop. The San Francisco company, called KHP Capital, plans to solicit $300 million of equity for its first fund, which would shoot for an We drive value %DFNHGE\WKHPRVWFXUUHQWJOREDOPDUNHWLQWHOOLJHQFHZHRIIHUFOLHQWVUHDOWLPH 18% return by purchasing, devel- RSSRUWXQLWLHVDQGIRUZDUGWKLQNLQJSHUVSHFWLYHV2XUSURIHVVLRQDOVRSHUDWHWKURXJK oping and redeveloping boutique DQLQWHJUDWHGQHWZRUNLQFRXQWULHVDQGXQGHUVWDQGWKHJOREDOQDWXUHRIFDSLWDO DQGKRZLW¶VLQYHVWHG1RPDWWHUZKHUH\RXDUHLQWKHLQYHVWPHQWF\FOH\RX and independent hotels in major FDQFRXQWRQXVWROHYHUDJHRXULQGXVWU\NQRZOHGJHWUXVWHGUHODWLRQVKLSVDQG metropolitan areas and resort H[WHQVLYHQHWZRUNWRPD[LPL]HUHWXUQVRQ\RXULQYHVWPHQW destinations across the U.S.

KHP is led by three managing Mike Depatie, 1HZV!,QVLJKWV!2SSRUWXQLWLHV partners: Kimp- ZZZMOOFRPLQYHVWRU ton’s former chief executive; Joe Long, who was chief investment  lZZZXVMOOFRPFDSLWDOPDUNHWV ‹-RQHV/DQJ/D6DOOH,3,QF$OOULJKWVUHVHUYHG officer; andBen Rowe, who was February 11, 2015 Real Estate 4 ALERT Waterfront Boston Hotel Up for Grabs ground lease runs for another 86 years. The estimated value is in line with the amount that a Loeb Fillmore Capital is looking to cash out of a Boston hotel that Partners Realty group spent developing the property, which it assumed four years ago from a defaulted borrower. opened in 2008 during the market downturn. The joint venture The leasehold interest in the 471-room Renaissance Bos- lined up $140 million of debt financing — a $90 million senior ton Waterfront could attract bids of about $165 million, or mortgage from German lenders DekaBank and Landesbank $350,000/room. San Francisco-based Fillmore has given the Baden-Wurttemberg, and a $50 million subordinate loan from listing to Eastdil Secured. San Francisco-based Fillmore. The 21-story hotel, at 606 Congress Street in the Seaport The Loeb partnership defaulted in 2011 amid declining District, is being offered subject to a long-term management occupancy and revenue. Fillmore paid off the senior debt contract with Marriott International of Bethesda, Md. The and took control of the property. That maneuver has paid off, because Boston’s hotel market has rebounded sharply. Since 2009, the Renaissance has posted a 56% increase in revenue per room, outperform- ing its competitive set, accord- ing to marketing materials. Marriott projects another 5.7% increase this year. PKF Hospitality Research predicts that per-room TRANSACTIONS revenue will grow 8.4% citywide this year and 5.9% next year. The property has 21,000 square SPEAK LOUDER feet of meeting space, a restaurant, a health club and an indoor pool. THAN WORDS It is at D Street, along the Boston Harbor and within a few blocks of the Boston Convention and Exhi- Over $25 Billion Sold bition Center.  SEARCH LISTINGS AND SET ALERTS: WWW.AUCTION.COM/REA-BUY Brookfield... From Page 1

INTERESTED IN SELLING? . It finished lining WWW.AUCTION.COM/REA-SELL up $8 billion for Morgan Stanley Real Estate Fund 6 in 2007, just View licensing at www.auction.com/licensing before the financial crisis. - based Lone Star Funds is solicit- FEATURED CLOSINGS • FEBRUARY 2015 ing $5 billion of equity for Lone Star Real Estate Fund 4, accord- ing to Preqin. The predecessor

SOLD SOLD Fund 3 raised $6.6 billion. Brookfield doesn’t use a place- ment agent. Investors in its first fund include AXA, Boston City Retirement, Houston Police Offi- cers Pension, New York City Board of Education, New York City Three-Building, Class A Office Portfolio Double-Anchored Community Retail Center Employees, New York City Fire Colorado Springs, CO • 320,712 SF Suwanee, GA • 68,409 SF Department, Pennsylvania Public Occupancy: 65% • CAs Signed: 83 Occupancy: 95% • CAs Signed: 144 School Employees, San Francisco Employees, San Jose Police and Fire, Texas Employees, Travelers WHERE REAL ESTATE IS MOVING™ Cos. and the University of Mis- souri’s endowment, according to Preqin.  EAT. SLEEP. CLOSE. REPEAT.

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REA_ESCR_$30B$120M_21115.indd 1 2/6/15 1:55 PM February 11, 2015 Real Estate 6 ALERT New Arizona Apartments Available Texas Office Portfolio on the Block USAA Real Estate is shopping a just-completed apartment Five Texas office buildings with value-added potential are complex in Arizona. out for bid. The 325-unit SkySong Apartments, in Scottsdale, could The package, encompassing 703,000 square feet of Class- attract bids of about $80 million, or almost $250,000/unit. B space in Houston, San Antonio and the suburbs of Dallas, CBRE has the listing. has an estimated value of $70 million. The owner, Klabzuba The complex was developed by San Antonio-based USAA Realty of Fort Worth, Texas, will take bids on the properties within SkySong, an Arizona State University master devel- individually or as a portfolio. HFF is handling the offering. opment featuring office space for high-tech companies and The buildings are 78% leased. The pitch is that a buyer start-ups. All told, 1.2 million square feet of office, retail, and could boost its return by filling vacant space and raising apartment space will be built on the 42-acre site roughly 10 below-market rents as existing leases mature. Klabzuba made miles from downtown Phoenix. $4.7 million of improvements in the past five years. SkySong Apartments, at 1301 North Scottsdale Road, was Three Dallas-area properties make up the bulk of the offer- completed last year. It is still in its initial leasing phase, with ing: the 221,000-sf Promenade Tower, the 141,000-sf Belve- an occupancy rate of 80%. The complex will be exempt from dere and the 100,000-sf Meridian. municipal property taxes for 74 years. The 15-story Promenade Tower, completed in 1977 and The units range in size from studios to three bedrooms and renovated in 2011, is at 300 North Coit Road in Richardson. It have washer/dryers, stainless steel appliances and patios or has 133,000 sf of office space that is 81% occupied and 89,000 balconies. The amenities include a swimming pool with a spa, sf of retail space that is 60% leased. The average occupancy a large fitness center and a clubhouse with a lounge and a full- level in the surrounding Richardson/Plano office submarket service kitchen. is 89%, up 9 percentage points from yearend 2011. Rents The Phoenix area’s apartment market has rebounded steadily increased 11% during the same timeframe, to $20/sf . following the recession. The average occupancy rate is 93.8%, up The nine-story Belvedere, constructed in 1984, is at 14881 a percentage point from 2013. Rents rose 4% last year. But an Quorum Drive in Addison. It is 80% occupied, compared to increase in supply is likely to depress the occupancy rate a bit and the 87.6% average for the surrounding Far North Dallas sub- slow rent growth. Some 7,950 apartments — equal to 2.4% of the market. The marketing campaign highlights expectations of total inventory — will be completed this year, on top of almost growth in the area, driven in part by the planned addition of 5,000 units in 2014, according to Marcus & Millichap.  Toyota’s U.S. headquarters to a local tenant list that already includes Coca-Cola, FedEx and PepsiCo. Bay Area Offices With Upside Listed The six-story Meridian, built in 1981, is at 1425 Greenway Drive in Irving. It is 90% occupied, exceeding the 84% aver- Fund shop Walton Street Capital is marketing a suburban age for the Las Colinas area’s Office Center submarket. Klab- San Francisco office building with significant vacant space that zuba is pointing to a growing population in the area, where should be easy to fill. 1,500 single-family homes and 2,500 multi-family units are The 143,000-square-foot property, in San Mateo, Calif., is planned or under construction. 81% leased. It’s expected to attract bids of about $60 million, or The San Antonio property is the 166,000-sf One Alamo $420/sf. CBRE has the listing. Center, at 106 South St. Mary’s Street. The eight-story build- The seven-story San Mateo Plaza, at 1850 Gateway Drive, ing, completed in 1981, was 74% occupied at yearend. It is was developed in 1990. The entire top floor is vacant, account- expected to benefit from growth in the surrounding down- ing for all of the unleased space. That could attract a large ten- town district, where 3,000 multi-family units are planned or ant or one seeking the rights to place high-visibility signage on under construction and $1 billion of public improvements are the top floors. under way. The nine occupants includeCafepress.com, Serena Software Rounding out the offering is the 75,000-sf Featherwood, at and corporate dining-services firmGuckenheimer Enterprises. 12600 Featherwood Drive in Houston. The four-story build- Chicago-based Walton Street acquired the property from ing, completed in 1987, is 84% occupied, just below the 86% Legacy Partners of Forest City, Calif., in late 2013 for $47.2 mil- average for comparable space in the Gulf Freeway/Pasadena lion, or $330/sf. Legacy had acquired it in 2007 from Matteson submarket — where Class-B space dominates. Class-B rents Cos. of San Mateo for $48.5 million, or $351/sf. in the area grew 9% last year to $22.80/sf. San Mateo is one of the San Francisco peninsula’s stron- Klabzuba is part of a family-owned operation started ger office markets, benefitting from an influx of technology by Robert Klabzuba, initially with a focus on oil-and-gas companies that have been priced out of nearby Silicon Valley . The real estate arm’s portfolio encompasses and San Francisco. 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RANKINGS Top Brokers of Industrial Properties in 2014 Brokers representing sellers in deals of at least $25 million 2014 Market 2013 Market Amount No. of Share Amount No. of Share ’13-’14 ($Mil.) Properties (%) ($Mil.) Properties (%) % Chg. 1 CBRE $5,837.9 447 45.8 $3,580.1 126 38.8 63.1 2 Eastdil Secured 2,538.6 487 19.9 2,490.1 174 27.0 1.9 3 Cushman & Wakefield 1,132.4 32 8.9 925.6 35 10.0 22.3 4 JLL 966.3 101 7.6 663.1 19 7.2 45.7 5 Colliers International 659.3 28 5.2 353.0 10 3.8 86.8 6 HFF 436.4 16 3.4 565.3 43 6.1 -22.8 7 Cassidy Turley 292.9 7 2.3 318.4 19 3.5 -8.0 8 Newmark Grubb 205.8 9 1.6 165.7 5 1.8 24.2 9 Cohen & Co. 110.0 6 0.9 29.3 1 0.3 275.9 10 Avison Young 108.1 2 0.8 0.0 0 0.0 11 Massey Knakal 106.7 3 0.8 0.0 0 0.0 12 Voit Real Estate Services 91.8 3 0.7 35.2 1 0.4 160.8 13 Transwestern 77.2 3 0.6 35.5 1 0.4 117.5 14 RKF 60.0 1 0.5 0.0 0 0.0 15 Eastern Consolidated 48.3 2 0.4 0.0 0 0.0 16 CRESA Partners 31.9 1 0.3 0.0 0 0.0 17 Pinnacle Realty 30.0 1 0.2 0.0 0 0.0 18 Binswanger 26.0 1 0.2 0.0 0 0.0 OTHERS 0.0 0 0.0 57.6 2 0.6 Brokered Total 12,759.5 848 100.0 9,218.7 433 100.0 38.4 No Broker 1,264.7 55 1,082.1 21 16.9 TOTAL 14,024.2 903 10,300.8 454 36.1 Large Industrial-Property Transactions in 2014 Price Property Units Buyer Seller Broker ($Mil.) 1 Cobalt Capital Portfolio 29,500 Colony Capital Cobalt Capital Eastdil, CBRE $1,600.0 2 GE Capital Portfolio 9,612 Blackstone GE Capital Eastdil Secured 555.0 3 Brennan Investment National Portfolio 6,298 NorthStar Realty Brennan Investment (None) 404.0 4 RREEF National Portfolio 7,838 Greenfield Partners RREEF CBRE 390.0 5 Prologis Warehouse Portfolio 7,458 TPG Prologis Eastdil Secured 375.0 6 Hillwood Properties National Portfolio 5,933 Clarion Partners Hillwood Properties CBRE 334.3 7 Mesa Warehouse Portfolio, Mesa, Ariz. 2,500 American Realty Capital Mesa Real Estate JLL 257.1 8 Cardinal Industrial Goodyear Tire Portfolio 4,701 American Realty Capital Cardinal Industrial HFF, Cohen & Co. 219.9 9 Scannell Properties Portfolio 2,394 Pure Industrial Real Estate Scannell Properties JLL 198.8 10 80 West End Avenue, New York 235 Frank Ring Extell Development, Kushner (None) 195.0 11 Mirvac Illinois/Wisconsin Portfolio 4,981 (Unidentified) Mirvac CBRE 180.0 12 Dividend Capital Portfolio 3,402 J.P. Morgan Asset Mgmt. Dividend Capital CBRE 175.2 13 Adidas Campus, Spartanburg, S.C. 1,962 Adidas Real Estate Capital Cushman, JLL 133.0 14 LNR Property Portfolio 4,404 Exeter Property LNR Property Colliers International 132.0 15 North Atlanta Distribution Portfolio, Ga. 2,500 Hartz Mountain Clarion Partners CBRE 129.0 16 Broadway Trade Center, Los Angeles 1,080 Waterbridge Capital (Unidentified) CBRE 122.3 17 Moffett Business Park, Sunnyvale, Calif. 264 CBRE Global Investors Prologis (None) 116.6 18 Research Tri-Center South 2, Durham, N.C. 1,500 Clarion Partners Northwood Investors Cassidy Turley 115.0 19 Prologis Cabot Park Portfolio, Mass. 1,782 Prudential, Spaulding Sly Prologis Eastdil Secured 113.0 20 DCT Industrial Ohio Portfolio, Ohio 3,528 Exeter Property DCT Industrial CBRE 112.1 February 11, 2015 Real Estate 9 ALERT

RANKINGS Industrial Sales Jump 36%; CBRE Dominates Sector, Sets Volume Record Sales of large industrial properties surged 2.3%, the most since the recession, according 36.1% last year, while CBRE set a volume Industrial Sales to REIS, a New York research firm. record and won the sector’s brokerage crown Amount No. of REIS said the strongest leasing demand is for the fourth time in a row. ($Bil.) Prop. for large, high-quality distribution centers, The year’s $14 billion of trades was second 2005 $9.0 537 as companies such as Amazon.com, Target only to the 2007 peak of $17 billion, accord- 2006 9.0 290 and Wal-Mart gobble up huge blocks of space. ing to Real Estate Alert’s Deal Database, which 2007 17.0 694 “Increased consumer spending bodes well for tracks sales of at least $25 million. 2008 6.4 220 warehouse and distribution centers,” REIS “It was a great, great year,” said Jack Fraker, 2009 2.1 137 researcher Bradley Doremus wrote in a Janu- a CBRE vice chairman who leads the firm’s 2010 6.8 443 ary report. national industrial-sales team. “Institutional 2011 8.4 350 Construction is increasing — including investors want to be in this asset class because 2012 11.4 560 speculative projects — but REIS projects the fundamentals are so strong.” 2013 10.3 454 another 40-bp increase this year in the occu- Market pros foresee an even bigger year 2014 14.0 903 pancy rate for all warehouses, along with rent ahead as demand remains intense. Indeed, growth of more than 3%. one portfolio marketed last year is already In the brokerage sweepstakes, CBRE under contract and expected to close in the increased its dominance by closing $5.8 bil- first quarter for $725 million, and three more with a combined lion of deals last year, the highest annual total by any firm since valued of nearly $5 billion are on the block. Real Estate Alert began tracking sales in 2001. That perfor- As in other asset classes, the improving U.S. economy and mance bested by 21% the previous record of $4.8 billion, set by cheap debt are drawing in capital. Meanwhile, increasing occu- Eastdil Secured at the market peak in 2007. pancy and rising rents continue to encourage investors to move CBRE’s sales total and its 45.8% market share were both out on the risk spectrum. more than double those of Eastdil, which remained in second Momentum from last year’s brisk activity will carry over this place. Eastdil’s volume was virtually flat at $2.5 billion, giving year, said Lew Friedland, managing director at Colony Financial it a 19.9% share of brokered trades. Cushman & Wakefield, JLL and head of its new light-industrial platform. “More transac- and Colliers International each saw significant sales gains to tions lead to even more trades because there is a more-estab- take the third through fifth slots. lished market in terms of pricing,” he said. In the past, Eastdil had a virtual lock on the largest deals. In Friedland added that 2014 “was really a strong year and this 2013, it closed six of the seven industrial trades of $250 million year should be even better. Strong demand, attractive pricing or more. But its grip on those big-ticket assignments loosened and low interest rates — all very positive indictors for a vibrant last year. Eastdil and CBRE each brokered two deals of that size industrial sector in 2015.” in 2014, they split credit on a third, and JLL picked up one. Moreover, the buyer pool continues to grow. Foreign inves- CBRE has more large deals on tap. It’s representing USAA tors, for example, expanded their activity with some block- Real Estate of San Antonio in its pending $725 million sale buster moves last year and are expected to stay hungry. of a 14 million-square-foot portfolio to Abu Dhabi Investment Singapore’s sovereign-wealth fund, for one, is jumping into Authority. CBRE also has mega-portfolio listings from Center- the market in a major way via an entity-level acquisition. The Point Properties of Oak Brook, Ill. ($1 billion), and a Calpers vehicle, GIC, is under contract to pay Blackstone $8.1 billion to vehicle called CalEast Global Logistics ($800 million). acquire its industrial firm, Chicago-based IndCor, in one of the Eastdil and CBRE are splitting a $3 billion assignment from sector’s largest transactions in history. Exeter Property of Plymouth Meeting, Pa., with Eastdil taking The industrial sector registered the sharpest drop in the lead. And Eastdil is the brokerage that, along with several capitalization rates of any asset class last year, according to Real investment banks, is advising Blackstone on its $8.1 billion sale Capital Analytics. The research firm said yields shrank by 40 bp of IndCor. While that assignment won’t count in the broker to a national average of 7%. They dipped near 4% in Southern rankings next year because it’s a corporate acquisition rather California and were 5-6% in markets such as Chicago, Dallas, than a property trade, it dwarfs any other industrial deal and Miami and Northern New Jersey. shows Eastdil remains a major force in the sector. CBRE’s Fraker said buyers are willing to accept low initial The 2014 trade on which Eastdil and CBRE worked together yields because, in many cases, leases signed during the down- was the biggest of the year and the largest since the downturn. turn can be rolled over at much higher rents amid the sector’s In that December sale, Santa Monica, Calif.-based Colony improving fundamentals. The nationwide occupancy rate paid $1.6 billion for a 30 million-sf portfolio owned by funds climbed 40 bp last year, to 88.8%, and asking rents grew by See INDUSTRIAL on Page 10 February 11, 2015 Real Estate 10 ALERT High-End Bora Bora Hotel for Sale of wealth, according to marketing materials. For example, Wexford Capital moved the bulk of its operations there last year A luxury resort on the French Polynesian island of Bora from Greenwich, Conn. Bora is being pitched to U.S. investors, who are expected to bid The average occupancy rate in South Florida climbed to as much as $185 million. 85.7% at yearend, up 2.6 percentage points from a year ear- The offering encompasses the 107-room Four Seasons Bora lier and 4.8 points from the market bottom in 2012. Local pros Bora and a 15-acre development parcel. At the estimated value said the region’s slow recovery has created pent-up demand for of $1.7 million/room, the buyer’s initial annual yield would sales. be 6%. JLL is representing the owner, a joint venture led by A per-foot price record was set for West Palm Beach in Lancaster Group of Kazakhstan. August, when the 296,000-sf CityPlace Tower traded for The offering is subject to a long-term management contract $507/sf, or $150 million. That was also the second-highest with Toronto-based Four Seasons Hotels and Resorts. The exist- valuation for a South Florida office property worth at least ing property consists of 100 overwater bungalows and seven $100 million, after the $606/sf price fetched in 2008 by the beach villas on 54 acres, along with a spa, restaurants and bars. 188,000-sf Banco Santander Office Tower in Miami. The additional land could accommodate up to 70 more hotel Other South Florida deals are in the offing. The buzz is that a rooms or 15 Four Seasons-branded residences. foreign investor has agreed to buy the 289,000-sf office building The hotel’s average daily room rates are among the highest at 777 Brickell Avenue in Miami for roughly $500/sf, or $145 mil- for the Four Seasons chain, according to marketing materials. lion, which would translate to an initial annual yield under 5%. The property, completed in 2008, is on Bora Bora’s north- CBRE is advising the seller, Orange County Employees. eastern coast. The island — one of 118 in the South Pacific that Meanwhile, a Guggenheim Partners joint venture plans to make up the French Polynesia chain — has evolved into a high- shop another Miami office building that could trade at a sub- end outpost for international travelers. It is positioned to ben- 5% cap rate. That 209,000-sf property, at 800 Brickell Avenue, is efit from an increase in direct flights from China. also worth about $500/sf, or $105 million. CBRE has the listing. The average occupancy level among hotels in French Poly- In another significant South Florida offering, the 252,000- nesia was 66.8% in 2014, roughly matching the 2013 figure. sf Aventura Corporate Center in Aventura, Fla., is expected to Room rates averaged $426.56, up 6.3%. That pushed up per- fetch $120 million, or $477/sf. The cap rate at that price would room revenues to $284.83, an increase of almost 6%, according be just under 6%. A buyer could boost its return by increas- to STR Global.  ing the 84% occupancy rate and raising below-market rents as leases roll over.  Florida ... From Page 1 Industrial ... From Page 9 South Florida office trades have reached that threshold since 2001, when Real Estate Alert’s Deal Database began tracking operated by Cobalt Capital of Irving, Texas. As part of the deal, the market. Friedland, who co-founded Cobalt with USAA in 2002, moved If Phillips Point sells at the estimated value, it would rank over to Colony to run the light-industrial platform. as South Florida’s fourth-largest office trade in terms of total That sale was an example of investors’ growing willingness dollars. The complex’s two buildings, which were completed in to make big bets with some risk. While demand has been most 1985 and 1988, boast views of the Intracoastal Waterway and acute for large distribution centers occupied by single tenants, the Atlantic Ocean. That has helped it draw high-quality ten- Colony acquired 256 light-industrial buildings spread across 18 ants and command the highest rents in the city. markets, most with 250,000 sf or less. They are 85% leased by The marketing campaign emphasizes the Class-A property’s 650 tenants. location at the entrance of the Royal Palm Bridge, which con- The ranking of industrial brokers was based on transactions nects West Palm Beach to affluent Palm Beach island, where of at least $25 million that closed in 2014. When multiple bro- homes run up to $50 million. kers shared a listing, the dollar credit was equally split, but each The rent roll includes law firmsGunster (51,000 sf), Akerman broker received credit for one property. Only brokers for sellers (44,000 sf) and Greenberg Taurig (39,000 sf). Among the were counted. Portfolio transactions were included if the price other tenants are AMG (38,000 sf), Morgan Stanley (26,000 sf) exceeded $200 million or if at least one property in the portfo- and Credit Suisse (10,000 sf). There is also a 57,000-sf retail lio was worth at least $25 million.  promenade with a Morton’s restaurant. Tenants have triple-net leases, most with annual rent bumps. The seller is emphasizing the property’s stability. The weighted Unless your company holds a multi-user license, it is a violation of average remaining lease term is 8.1 years, and leases on less U.S. copyright law to photocopy or reproduce any part of this than 14% of the space mature within four years. Many tenants publication, or forward it electronically, without first obtaining have been in place for more than two decades. permission from Real Estate Alert. For details about licenses, West Palm Beach is a lure for investment firms because contact JoAnn Tassie at 201-234-3980 or [email protected]. of its low state taxes, balmy weather and high concentration Newmark Grubb Knight Frank is proud to announce that Apartment Realty Advisors (ARA), the gold standard for multihousing sales DQGĞQDQFLQJ will now be operating as

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RANKINGS Top Brokers of Multi-Family Properties in 2014 Brokers representing sellers in deals of at least $25 million 2014 Market 2013 Market Amount No. of Share Amount No. of Share ’13-’14 ($Mil.) Properties (%) ($Mil.) Properties (%) % Chg. 1 CBRE $19,726.2 424 33.0 $11,077.5 250 25.5 78.1 2 HFF 8,734.2 166 14.6 8,565.1 190 19.7 2.0 3 Apartment Realty Advisors 7,364.0 170 12.3 6,253.9 150 14.4 17.8 4 JLL 3,432.6 64 5.7 2,931.9 57 6.8 17.1 5 Moran & Co. 3,408.7 50 5.7 1,944.8 30 4.5 75.3 6 Cushman & Wakefield 3,290.9 61 5.5 2,328.6 55 5.4 41.3 7 Marcus & Millichap 2,999.7 69 5.0 3,258.5 68 7.5 -7.9 8 Eastdil Secured 2,364.1 11 3.9 2,242.1 31 5.2 5.4 9 Engler Financial 1,276.3 25 2.1 609.4 18 1.4 109.4 10 Savills Studley 1,160.4 7 1.9 0.0 0 0.0 11 Newmark Grubb 893.3 50 1.5 295.1 10 0.7 202.8 12 Massey Knakal 769.8 68 1.3 228.6 6 0.5 236.7 13 BlueGate Partners 651.3 5 1.1 304.2 3 0.7 114.1 14 Colliers International 451.1 16 0.8 467.3 9 1.1 -3.5 15 Rosewood Realty 416.6 8 0.7 762.9 61 1.8 -45.4 16 Hendricks-Berkadia 385.8 11 0.6 438.3 13 1.0 -12.0 17 Transwestern 357.8 11 0.6 490.6 8 1.1 -27.1 18 Eastern Consolidated 309.2 6 0.5 84.0 3 0.2 268.1 19 Cassidy Turley 301.6 6 0.5 397.2 3 0.9 -24.1 20 Westwood Realty 250.4 4 0.4 0.0 0 0.0 21 Multi Housing Advisors 170.9 5 0.3 92.0 3 0.2 85.8 22 Kislak Co. 136.0 1 0.2 26.0 1 0.1 423.1 23 Walchle Lear Multifamily Advisors 84.0 2 0.1 0.0 0 0.0 24 JBM Institutional Multifamily 81.8 2 0.1 0.0 0 0.0 25 GFI Realty 81.3 3 0.1 0.0 0 0.0 26 First Capital Realty 80.5 1 0.1 159.0 3 0.4 -49.4 27 Stratus Capital 68.0 1 0.1 0.0 0 0.0 28 Kidder Mathews 61.0 2 0.1 29.4 1 0.1 107.5 29 Gebroe-Hammer Associates 52.0 2 0.1 58.5 2 0.1 -11.1 30 HFO 51.3 1 0.1 0.0 0 0.0 31 Ackman-Ziff Real Estate 45.0 1 0.1 0.0 0 0.0 32 Charles Dunn 43.3 1 0.1 0.0 0 0.0 33 Abi Multifamily 35.4 1 0.1 0.0 0 0.0 34 Radius Commercial Real Estate 33.0 1 0.1 0.0 0 0.0 35 SSH Real Estate 31.5 1 0.1 0.0 0 0.0 36 Commercial Property Advisors 31.5 1 0.1 0.0 0 0.0 37 Arroyo & Coates 29.8 1 0.0 0.0 0 0.0 38 Westlake Associates 29.1 1 0.0 0.0 0 0.0 39 Chozick Realty 27.3 1 0.0 0.0 0 0.0 40 CRESA Partners 26.5 1 0.0 0.0 0 0.0 OTHERS 109.8 5 0.2 378.1 16 0.9 -71.0 Brokered Total 59,852.7 1,256 100.0 43,422.9 973 100.0 37.8 No Broker 6,544.3 236 6,311.5 301 3.7 TOTAL 66,397.0 1,492 49,734.4 1,274 33.5 February 11, 2015 Real Estate 13 ALERT

RANKINGS

Rental ... From Page 1 Cushman, Newmark Beef Up for 2015 sales, while JLL jumped up a spot to fourth place with $3.43 billion. Moran & Co. leaped from eighth Mergers are reshaping the apartment brokerage race. place in 2013 to fifth last year with a 75% increase Cushman & Wakefield’s yearend purchase of Massey Knakal and in sales, to $3.41 billion. The Chicago-based “super- the acquisition of Apartment Realty Advisors by the parent company boutique” specializes in high-end deals and has of Newmark Grubb create combos that are likely to be among the top offices in just eight markets. competitors going forward. The huge increase in overall volume exceeded The four firms’ sales figures were counted separately Realin Estate the expectations of multi-family experts — yet Alert’s 2014 rankings. But viewed together, third-place Apartment most don’t think the market has hit its peak for Realty Advisors and No. 11 Newmark closed $8.3 billion of deals in this cycle. 2014, within hailing distance of the $8.7 billion posted by second- “If you had asked me a year ago, I would have place HFF. And the $4.1 billion of combined sales for sixth-place said we’re approaching the seventh inning,” said Cushman and 12th-ranked Massey would have been enough to grab Brian McAuliffe, head of CBRE’s U.S. investment the No. 4 slot, ahead of JLL. sales platform and co-head of the multi-family What’s more, both mergers involve brokerages that have been rap- practice. “Now, if we’re in the seventh inning, then idly expanding their apartment-sales activity. this is a 15-inning game. The trends continue to be Massey, long known as a high-volume New York brokerage spe- extremely impressive, and we expect these num- cializing in smaller and mid-market apartment and office trades, was bers to continue to climb.” already making a push to capture more institutional business and was McAuliffe and others point to several long- moving up in the rankings. In 2012, the firm chalked up just $186 term factors likely to keep the apartment market million of large multi-family trades. That jumped to $212 million surging. Chief among them is the belief that U.S. in 2013 and then soared to $769.8 million last year — more than homeownership won’t return to the historically quadrupling in two years. Its acquirer, Cushman, handled 41% more high rate seen before the downturn and that more deals last year than 2013. Americans will prefer renting for longer periods Meanwhile, Newmark and its parent company, BGC Partners, con- of time. Meanwhile, the relatively slow pace of the tinue to aggressively expand the brokerage, which gained a national economic recovery to date suggests there’s still presence with the acquisition of Grubb & Ellis in 2012. Newmark’s substantial room for growth in employment and sales of big apartment properties tripled last year to $893.3 million household formation. All of that bodes well for from $295.1 million, while the recently absorbed Apartment Realty apartment fundamentals. Advisors showed an 18% gain. At the beginning of 2014, market pros were concerned that overbuilding would drag down occupancy rates and rent growth in many markets, at least temporarily. Instead, rental demand out- Investor demand appears as strong as ever. Matthew Lawton, stripped the wave of new supply: The nationwide occupancy an executive managing director at HFF and head of its national rate ticked up to 95.3% last year, from 95% in 2013, according multi-family platform, said conversations at the recent National to Marcus & Millichap. It’s that surprising absorption that has Multi Housing Conference confirmed for him that buyers are prompted forecasters to brighten their outlook. still clamoring for product, especially Class-A properties in Experts also had predicted that the flow of listings favored urban centers. by institutional buyers — high-quality, downtown properties “For the most part we’ve powered through this wave of in the biggest markets — was bound to fall off after several new supply,” he said. His firm expects to see a steady flow of years of high turnover. But every one of the dozen most-active offerings from developers looking to sell before their prop- markets of 2013 saw sales increase in 2014 — some just slightly erties are stabilized. Demand will be driven, he said, by the (1% in Washington, 6% in both Houston and Los Angeles), oth- large number of institutional investors willing to take on leas- ers by large amounts. The nation’s biggest market, New York, ing risk, for a nominal price discount if any. “Many of these saw volume increase 60% to $9.4 billion. Large trades in the units coming on line this year are being delivered by mer- Atlanta area jumped 85% to $4.7 billion, and Denver-area sales chant builders and are core, Class-A, urban-infill product,” nearly doubled to $3.4 billion. Lawton added. Several smaller markets saw gigantic increases. Volume One trend that picked up steam in 2014 and is expected to nearly tripled in Baltimore and more than doubled in Phila- continue is value-added plays in the suburbs of major markets. delphia and Northern New Jersey, reaching well over $1 billion With new, luxury properties pushing downtown rents higher, apiece. San Francisco sales quadrupled to $1.4 billion. See RENTAL on Page 14 February 11, 2015 Real Estate 14 ALERT

RANKINGS

bank Sandler, O’Neill & Partners, said firms Rental ... From Page 13 Multi-Family Sales like AvalonBay Communities, Camden investors are snapping up older Class-B Amount No. of Properties and Equity Residential Properties properties in surrounding submarkets ($Bil.) Prop. will find it harder to meet their yield targets with an eye toward upgrading the units 2005 $52.0 1,061 via development. and amenities. The aim is to boost rents 2006 50.7 984 “We’re closer to the end of that cycle and juice returns, while still undercutting 2007 41.1 955 than the beginning,” Goldfarb said. In the new properties on price. McAuliffe 2008 20.1 508 2010, when apartment development noted that several big national developers 2009 6.6 169 resumed in earnest, projected income far are forming “value-added teams” that will 2010 19.6 388 outpaced development costs. As the major focus on such plays. 2011 32.9 694 markets mature, slower rent growth will Meanwhile, the pace of construction is 2012 42.7 914 make return goals harder to achieve. Some expected to slow. Marcus & Millichap fore- 2013 49.7 1,274 big REITs are likely to become net sellers, casts that 210,000 units will be completed 2014 66.4 1,489 Goldfarb said, harvesting their investments this year nationwide, down from 238,000 in Class-A properties in the major markets. last year. It projects tenant demand for The broker rankings are based on trans- units to rise by 186,000, so occupancy and actions of at least $25 million that closed in rent growth should tick down, if only slightly, before turning 2014. When multiple brokers shared a listing, the dollar credit back up as development slackens. was divided evenly, but each broker was credited with one The trends toward value-added strategies and secondary property. Only brokers for sellers were given credit. Portfolio markets are likely to sideline some investors, such as big REITs transactions were included if the overall price was at least $200 that have been focused on construction. million or if at least one property in the portfolio had a value of Alexander Goldfarb, a REIT analyst at New York investment $25 million or more. 

Large Multi-Family Transactions in 2014 Price Property Units Buyer Seller Broker ($Mil.) 1 DRA Advisors/Bell Partners Portfolio 20,439 Lone Star Funds DRA Advisors, Bell Partners CBRE $1,832.6 2 Villas Parkmerced, San Francisco 3,221 Maximum partnership Fortress partnership Eastdil Secured 1,500.0 3 Urban American Manhattan Portfolio 3,962 Brookfield Property Urban American Savills Studley 1,040.0 4 Crow Holdings Apartment Portfolio 3,773 Berkshire Group Crow Holdings ARA, HFF 612.0 5 Holiday Acquisition Ind. Living Portfolio 2,850 Sabra Health Care Holiday Acquisition HFF 550.0 6 50 Murray Street, New York 504 Clipper Equity Sapir Organization CBRE 518.0 8 Brightview Senior Living Portfolio A 1,637 Harrison Street Real Estate Prudential Real Estate Inv. CBRE 498.0 9 Lexington/Yorkshire Towers, New York 861 Stellar, Chetrit Schneider, Helmsley CBRE 485.0 10 Avalon Chrystie Place, New York 361 Ashkenazy Acquisition AvalonBay, N.Y. Common HFF 365.0 11 Brightview Senior Living Portfolio B 1,117 Prudential Real Estate Inv. Brightview Senior Living CBRE 363.5 12 Manhattan Park, New York (99% stake) 1,100 Starret, Cohen Roosevelt Verizon Capital Cushman & Wakefield 361.4 13 Management Solutions Portfolio 5,464 Cortland Partners Management Solutions (None) 338.5 14 Berkshire Property Portfolio 3,233 Starwood Capital Berkshire Property CBRE 309.9 14 Berkshire Property Mid-Atlantic Portfolio 2,633 Morgan Properties, Olayan Berkshire Property CBRE 309.0 16 AREA Queens Portfolio, Queens, NY 2,124 (Unidentified) AREA Property (None) 300.0 16 Pivotal Group Texas Portfolio 3,128 Related Cos. Pivotal Group (None) 300.0 16 West Loop Senior Housing Portfolio 1,209 Griffin-American GE, KMF, Senior Lifestyle Cushman & Wakefield 300.0 19 Flats 130 at Constitution Sq., Washington 643 TIAA-CREF StonebridgeCarras, Walton St. HFF 295.0 20 Vermont, Los Angeles 464 Capri Capital, TruAmerica J.H. Snyder, Washington Cap. JLL 283.0 21 Post Toscana/Post Luminaria, New York 337 Magnum Real Estate Post Properties Eastdil Secured 270.0 22 SW Management Bronx Portfolio 2,000 Related Cos. SW Management Newmark Grubb 260.0 23 Legacy Town Center, Plano, Texas 1,675 Invesco Real Estate Columbus Realty JLL 257.7 24 Pillar Texas Portfolio, Texas 2,400 Atlas, Intl. Inv. Bank Bahrain Pillar Income Asset Mgmt. (None) 250.0 24 Southern Portfolio 4,178 Wharton Equity, partner (Unidentified) (None) 250.0 February 11, 2015 Real Estate 15 ALERT New Charlotte Apartments Listed came on line last year, and another 4,600 are scheduled to be completed this year.  A development team is marketing a nearly completed Charlotte apartment complex that’s already two-thirds occu- High Price Seen for DC-Area Land pied. The 280-unit Gateway West Apartments, at 902 West 4th Radio-broadcasting company Cumulus Media is shopping a Street in the Uptown submarket, is scheduled to be finished tract of land in Bethesda, Md., with a lofty $1 million per-acre this year. Bids should come in at around $250,000/unit, or $70 valuation. million. HFF is advising the owner, a joint venture between local The 75-acre site, at 7115 Greentree Road, could attract bids of developers FCA Partners and Faison & Associates. $75 million — reflecting its status as the largest parcel of develop- The units range from studios to two-bedroom apartments able land in the affluent Washington suburb.CBRE has the listing. and have stainless-steel appliances, faux-wood flooring and The land is zoned for residential development, with the washer/dryers. The amenities include a saltwater pool, an potential for some 300 single-family units. Cumulus could outdoor grilling area, a fitness center and a private movie the- either hand off the property immediately or after a buyer ater. obtains preliminary approvals for development plans. The tract Charlotte is experiencing healthy job growth, with compa- is bound by Interstates 495 and 270, abutting other residential nies like Daimler and AvidXchange looking to add hundreds of developments. jobs this year. The city is attracting relatively young residents Bethesda, an urban outpost about 10 miles northwest of who are eager to live in urban centers and prefer new proper- Washington, has an abundance of shops, restaurants, hotels ties with lavish amenities. and offices — as well as extensive public transportation. Hous- Rents have grown 4-6% annually for the last four years, ing has been in demand as a result, with home prices rising according to Marcus & Millichap, even though a wave of new 14% in the past five years. Within a three-mile radius of the units has depressed the overall occupancy rate, which now site, home values average $731,000. The average household stands at 95%, down 40 bp from a year ago. About 7,800 units income in that area is $182,000. 

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Start your free trial at HFAlert.com Call: 1-212-901-0542 or call 201-659-1700 www.imn.org/landeast2015 | Email: [email protected] February 11, 2015 Real Estate 16 ALERT Backers Sought for Industrial Fund NJ Power Center Up for Grabs Industrial-property investor Adler Kawa Real Estate is A partnership is marketing a power center in an affluent marketing a value-added fund. Northern New Jersey suburb that could attract bids of about The Aventura, Fla., firm has set a $100 million equity tar- $50 million. get and a $150 million limit for the vehicle, Adler Kawa Real The 140,000-square-foot Livingston Shopping Center, in Estate Fund 3. It would aim to produce a 14% return, mostly Livingston, is fully leased. At the estimated value, the buyer’s though purchases of industrial assets, with office and flex initial annual yield would be 5.75%. HFF is representing the properties on the menu as well. owners, KABR Group of Ridgefield Park, N.J. and New York- Adler Kawa looks for value-added and opportunistic deals based G&S Investors. in cities from Philadelphia to Miami, along with major mar- The property has a stable profile. The weighted average kets in Texas. With leverage, the fund would have some $425 remaining lease term is just under 10 years. And three-quarters million of buying power. of the space is leased by investment-grade firms, according to Adler Kawa isn’t using a placement agent. the marketing materials. The tenants include Buy Buy Baby, The predecessor Fund 2 held its final close last year and Cost Plus World Market, DSW, Nordstrom Rack, TJ Maxx and has almost fully invested its $56 million of equity. The first Ulta. fund in the series was a small vehicle launched by part owner The shopping center, which has a 584-space parking lot, Adler Group, which has also run several separate accounts was completed in 1997 and renovated last year. It’s at 530 West and joint ventures with partners including Apollo Real Estate Mount Pleasant Avenue (Route 10 West), in a busy retail cor- and MetLife. ridor whose other retailers include Costco, Golfsmith, Home Miami-based Adler Group was formed in 1950 by Samuel Depot, Pier 1 Imports and Target. Adler. The real estate investment and property-management Livingston has 30,000 residents with an average household operation set up Adler Kawa in 2012 in a move to expand its income of $172,000. It’s surrounded by other wealthy, densely fund business, working in partnership with Kawa Capital of populated communities, including Chatham, Essex Fells and Aventura and Ganot Capital of Hollywood, Fla. Short Hills.  Adler Kawa is led by chief executive Matthew Adler, Samuel Adler’s grandson. Managing director Nick Rahman heads the shop’s investment team. Jason Almuli oversees investor rela- NEW DEALS tions.  Southern California Resort Sponsor Seeks Home-Building Capital The $360 million paid by Strategic Hotels & Resorts for Hearthstone Advisors is seeking to raise $200 million of the 248-room Montage Laguna Beach in Southern California equity to invest in the development of single-family homes. would yield a skimpy 4% initial annual return, based on 2014 The investment vehicle, Hearthstone Housing Partners income. The deal two weeks ago set a record per-room price for 16, could be structured as a commingled fund or a separate California, at $1.5 million. Strategic, a Chicago REIT, is bank- account. The predecessor Partners 15 is a separate account ing on increases in average daily room rates to lift the yield to that has almost fully invested its roughly $200 million of 5% this year. The luxury hotel, on a bluff overlooking the Pacific equity. Ocean in Laguna Beach, carries a five-star rating from Forbes. The San Rafael, Calif., shop shoots for opportunistic JLL represented the seller, Ohana Real Estate Investors of San returns by teaming up with local developers to build housing Diego. communities. Investments range from $10 million to $30 mil- lion, with Hearthstone contributing nearly all of the equity. Oregon Office Building The investment manager targets select markets with strong employment growth in the West and Southeast, with an Menlo Equities acquired a 240,000-square-foot office tower emphasis on Seattle, Silicon Valley, Dallas, Atlanta, Orlando in Portland, Ore., last week. The Palo Alto, Calif., fund shop and Phoenix. It avoids areas with large inventories of dis- paid $48.5 million, or $202/sf, for One Pacific Square, in the tressed housing, which have been a favorite of fund managers Old Town neighborhood. The property is 95% leased, with that buy foreclosed homes and rent them out. anchor tenant NW Natural Gas occupying 71% of the space. According to Preqin, past investors in the firm’s vehicles The 13-story building, developed in 1981, underwent a major include Boston City Retirement, California State Teachers, renovation in 2011 to appeal to the technology firms that are Calpers, Dallas Police & Fire, Dartmouth, MIT, North Dakota increasingly calling Portland home. Menlo specializes in invest- State Investment and San Diego County Employees. ing in tech-heavy office markets. HFF marketed the property for The shop, which doesn’t use a placement agent, is led by a partnership between GE Asset Management and Ashforth Co. president Mark Porath, who founded the company in 1992.  of Stamford, Conn.  February 11, 2015 Real Estate 17 ALERT ON THE MARKET ON THE MARKET

Retail

Estimated Property Size Value Owner Broker Color Tempe Square, 114,000 sf $30 million Unidentified DTZ Occupancy rate: 84%. Anchored by Trader Joe’s and 6430 S. McClintock Drive, 5.5% yield partnership Walgreens. Other tenants include Mac’s Broiler & Tap. Tempe, Ariz. Pitched as core-plus play with stable income and upside potential in the vacant space. Lincoln View Plaza, 64,500 sf $30 million Unidentified DTZ Neighborhood center in the Camelback Corridor 3113 East Lincoln Drive, 5.5% yield partnership submarket. Fully occupied under triple-net leases. Phoenix Tenants include Spine Surgery Center of Paradise Valley, Coldwell Banker and Starbucks.

Office

Estimated Property Size Value Owner Broker Color Five Resource Square, 152,000 sf $26 million DRA Advisors, HFF Five-story, Class-A building, 92% leased to a mix of 10715 David Taylor Drive, $167/sf New York technology, government and tenants. In the Charlotte University submarket, second only to Downtown in employment. Built in 2000. Zanker Business Center, 120,000 sf $25 million Deutsche Asset DTZ Four single-story office buildings developed in 1984. 1920-1982 Zanker Road, $200/sf & Wealth Occupancy rate: 96%. In-place rents are about 20% San Jose Management below current asking rates and 45% of the space rolls over within five years, providing potential to boost rents.

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MARKET SPOTLIGHT Florida Hotels  Seeking higher yields, buyers are pushing beyond Miami into secondary markets, including Fort Lauderdale and Naples.  Investor confidence is being bolstered by continued revenue growth. Occupancy and room rates have climbed steadily during the recovery.  Two pending sales will exceed the state’s per-room record. The Setai Miami Beach is selling for $1.14 million/room. And two Waldorf-Astoria hotels in Key West are being valued at $1.09 million/room. Those properties — the Casa Marina and the Reach — are part of a portfolio that Hilton Worldwide is buying. On the Market Hit No. of Estimated Value Property Seller Market Rooms ($Mil.) (Per Rm.) Broker Grande Lakes Resort, Orlando Blackstone, Paulson, Winthrop January 1,580 $750 $475,000 Eastdil Secured James Royal Palm, Miami Beach KSL Capital December 393 295 751,000 JLL La Playa Beach & Golf Resort, Naples Halstatt, Noble House Hotels January 189 180 952,000 HFF Aloft & Element hotels, Doral Eurocon January 284 70 246,000 CBRE Westin Tampa Harbour Island Blackstone January 200 65 325,000 HFF Recent Deals No. of Sales Price Property Buyer Closed Rooms ($Mil.) (Per Rm.) Broker Waldorf-Astoria Casa Marina/Reach, Key West Hilton Worldwide (Pending) 461 $500 $1,085,000 JLL Westin Beach Resort, Fort Lauderdale DiamondRock Hospitality December 432 149 345,000 JLL Hilton Clearwater Beach Resort Columbia Sussex January 416 134 322,000 HFF Sheraton Yankee Clipper, Fort Lauderdale Carlyle Group, Insite December 487 100 205,000 JLL Setai Miami Beach Nakash Holdings (Pending) 79 90 1,139,000 Eastdil Secured Days Inn & Suites Miami, Miami Beach Claro Development December 93 29 315,000 (None)

CALENDAR CALENDAR

Main Events Dates Event Location Sponsor Information March 26-27 PREA Spring Conference Washington PREA www.prea.org June 15-16 U.S. Real Estate Opportunity & Private Fund Inv. Forum New York IMN www.imn.org Nov. 17-19 REIT World Las Vegas NAREIT www.reit.com Mar. 22-23, 2016 PREA Spring Conference Boston PREA www.prea.org Nov. 15-17 REIT World Phoenix NAREIT www.reit.com

Events in US Dates Event Location Sponsor Information Feb. 24 Net Lease West Los Angeles InterFace Conf. Grp. interfaceconferencegroup.com Feb. 25 Womens’ Forum New York Real Estate Weekly rewomensforum.com Feb. 25 Healthcare Real Estate West Los Angeles InterFace Conf. Grp. interfaceconferencegroup.com Feb. 25 Networking Event New York YREPNY www.yrepny.org Feb. 25-26 Seniors Housing West Los Angeles InterFace Conf. Grp. interfaceconferencegroup.com March 3-4 Real Estate Summit New York iGlobal Forum www.iglobalforum.com March 9-10 Forum for Real Estate New York IMN www.imn.org March 18 Asset & Property Management Symposium New York IREM remams.com March 19-20 Private Markets Summit Sea Island, Ga. BHA brightonhouseassociates.com To view the complete conference calendar, visit The Marketplace section of REAlert.com

February 11, 2015 Real Estate 20 ALERT

THE GRAPEVINE this month as a senior vice president. had its final close last year. Branum Selig builds and develops office, retail, came from another Dallas firm,Hudson ... From Page 1 industrial and flex properties. Rendle Advisors, the asset-management affili- spent more than eight years at Atlanta- ate of Lone Star Funds. She previously that the split is amicable and Stuart’s based Jamestown, leaving last fall as worked in investment sales at JLL. departure will happen over the next few a managing director. Before that, he months. His plans are unknown. He had stints at Wells Real Estate Funds of Newmark Grubb has added another and Tansey were senior executives at Norcross, Ga., and SunTrust. broker to its retail investment-sales Fortress Investment of New York before staff.Katharine French started this they set up Garrison in 2007 with Simon Honeybone joined Cypress Equities month as a director in New York. She Fortress’ backing. Stuart had joined of Dallas about two weeks ago as a direc- reports to Thomas Dobrowski, who Fortress in 2002 and was one of the tor of investments. He came from another joined Newmark last month as a senior founding partners of its flagship hedge Dallas firm,Sarofim Realty,where he managing director in the capital mar- fund, Drawbridge Special Opportunities spent more than a decade, ending up kets group. French previously worked Fund. as a vice president working on acquisi- for Dobrowski at Rockwood Real Estate tions and asset management. As part of Advisors, where she spent the past four Beacon Capital senior vice president Stu- the real estate investment management years. Dobrowski logged 12 years at art Milstein has left the Boston fund shop group at Cypress, Honeybone will scout Rockwood. At Newmark, they work on to start his own firm. The acquisitions out retail properties in the Northeastern retail sales nationally, with an emphasis pro told colleagues last week that he’s and Western U.S. He reports to managing on regional malls. heading up Drake Street Partners, a New partner and chief investment officerTodd York shop that will focus on value-added Minnis. Cypress, launched in 1995, buys, Tishman Speyer wants to hire an associ- deals in and around the city. Milstein develops and manages retail and mixed- ate to monitor properties that the New spent five years at Beacon’s Manhattan use properties. York developer and investment man- office, and before that was atVornado ager owns in Brazil. The recruit would Realty of New York for eight years. Meanwhile, Cypress Equities also hired be based in Manhattan and be involved Kelly Branum as investor relations with a portfolio of roughly 15 projects, Jamestown’s former head of asset manager. She’ll work with limited part- with a gross value of more than $2 management, Matt Rendle, has joined ners of the firm’s $400 million Cypress billion. Occasional travel to Brazil is Selig Enterprises of Atlanta. He started Acquisition Partners Retail Fund, which required.

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