Real Estate Alert
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NOVEMBER 12, 2014 Cushman Asking Parent for Capital to Expand Signaling a shift in direction,Cushman & Wakefield’s new chief executive is 3 Big DC-Area Grocery Center for Sale pressing the company’s parent to pump in some $580 million of capital to help the brokerage compete against increasingly aggressive rivals. 3 Net-Leased Listing in Silicon Valley Former Goldman Sachs executive Edward Forst, who took Cushman’s helm in 3 Fund Ready to Develop Apartments January, is arguing the infusion is necessary for the company to defend its crum- bling position as the third-largest global commercial real estate brokerage, accord- 4 Rockpoint Snares NY Apartments ing to Cushman insiders. The capital could be used to acquire other brokerages and recruit talent across service lines internationally, with a priority on investment 6 Ace Hotel Available in Downtown LA sales, especially in the U.S. 8 Canadian Vehicle Holds First Close It’s unclear how Forst’s plan will be received by Cushman’s parent, Exor, a con- glomerate controlled by the Agnelli family of Italy. Exor’s previous reluctance to 10 Value-Added Rental Play Near Atlanta back growth at Cushman was seen as the reason behind the abrupt resignation of See CUSHMAN on Page 12 10 JP Morgan Markets Bay Area Offices 10 Puerto Rican Bank Shops Shaky Loans Heitman to Buy Chicago Trophy From Tishman 10 Buyer Sought for Ore. Business Park Heitman has emerged as the winning bidder for the office tower at 353 North 11 Carr Shops ‘Spy Tech’ Offices in Va. Clark Street in Chicago, beating out a mix of foreign and domestic investors. The investment manager’s offer for the 1.2 million-square-foot building topped 14 Angelo Gordon Buys Industrial Bundle $700 million, or $583/sf. The capitalization rate is believed to be in the vicinity of 5%, in line with other recent trophy trades in Chicago. It’s unclear if Chicago-based 14 Big NH Shopping Center Hits Market Heitman is acting on behalf of its core fund or an institution it advises. 13 ON THE MARKET The deal is a coup for the seller, Tishman Speyer, which is being advised by JLL. Tishman acquired the building in 2010 from Mesirow Financial for $385 million. 15 MARKET SPOTLIGHT Mesirow, which developed the property in 2009, had struggled to lease up space and pay off construction loans amid the market downturn. But since then, Chicago’s downtown office market has been boosted by rising demand for space from technology firms and companies relocating from the sub- urbs. New York-based Tishman lifted the occupancy rate to 96% from 80%, bringing See HEITMAN on Page 6 THE GRAPEVINE Blackstone Team Offers San Francisco Hotel The buzz is that an unidentified inves- tor has made a pre-emptive bid for the A large San Francisco hotel that hit the market last week could attract bids of 1.2-million-square foot office build- around $525 million — more than twice its value when it was recapitalized two- ing at 1095 Avenue of the Americas in and-a-half years ago. Midtown Manhattan. The property, also The 1,024-room Parc 55 Wyndham, the city’s fourth-largest hotel, is being known as Three Bryant Park, was put offered unencumbered by brand and management contracts. JLL is handling the on the block in September by New York offering for a partnership led by Blackstone, which bought its majority stake in the fund titan Blackstone. Broker Eastdil 2012 recap of the then-overleveraged property. Secured started a sales campaign, but The estimated value of $513,000/room reflects San Francisco’s position as one of that’s been put on hold following the the nation’s top hotel markets, where growth in occupancy levels and room rates has offer of around $2.25 billion, or outpaced the national average over the past few years. That’s due in part to an influx $1,875/sf. Talks are ongoing. A trade of of technology companies to downtown offices. What’s more, an abundance of for- the 42-story tower at that price would eign and domestic investors eager to own hotels in top markets, plus the continued be the largest single-property sale in low cost of financing, have fueled buyer interest. the U.S. since 2008, when another The 32-story Parc 55, at 55 Cyril Magnin Street, carries a four-diamond rating See GRAPEVINE on Back Page See BLACKSTONE on Page 15 ® Deal Tracking and Powerful Analytics for Your Portfolio In use and tested since 2010 Proposal Tracking Reporting Approvals Budgeting Track and compare Over 30 highly customizable Process and track Create leasing budgets proposals, including all templates with 1,000+ custom deal approvals and track performance key metrics report configurations against them Forecasting Remeasurement Mark-to-Market Rental Uplift Create market forecasts to Automatic calculation of all Track in-place versus Automatically calculate track deal terms against metrics on both an actual, market rents rental uplift market terms and as-leased basis Leasing Commissions Stacking Plans Document Management Rapid Deployment Automatically calculate Interactive stacking plan even the most complex with the ability to drill-down commission structures to deal level details For More Information, Contact: Eric Johnston Institutional Services 312-810-0788 [email protected] © 2010-2014 LeaseLinks, LLC. November 12, 2014 Real Estate 3 ALERT Big DC-Area Grocery Center for Sale Calif., are expected to hit $90 million, or $180/sf. At that price, a buyer’s initial annual yield would be about 5.75%. San A BlackRock partnership is marketing a large grocery- Diego-based Westcore has listed the property with Cassidy anchored retail center in Northern Virginia that could fetch Turley. about $250 million. The complex, consisting of nine low-rise buildings, is net A trade at that price would be one of the biggest retails deals leased to Flextronics, an electronics manufacturer with its head- ever in the Washington area. quarters in nearby San Jose. The lease runs until 2024. About The 482,000-square-foot Stonebridge at Potomac Town Cen- 40% of the space is used for offices and the rest for research and ter, in Woodbridge, is 84.8% leased. It’s anchored by a 139,000- development and for light manufacturing. sf Wegman’s and boasts an Apple store. Similar high-quality Flextronics has invested about $50 million in improvements retail properties in such strong markets have been trading at to the property over the last seven years. While the company capitalization rates of 5% and even lower. has a long-term lease and considers the complex vital, the prop- Eastdil Secured is representing BlackRock and its partner, erty’s layout provides options if the tenant eventually were to Washington-based Roadside Development. The duo acquired vacate or downsize. Individual buildings could be repositioned the site in 2007 and developed the property in phases between and sold separately. Also, the campus is adjacent to a planned 2010 and 2012. retail and residential development, and could be redeveloped The center is about 25 miles south of downtown Washing- for similar uses. ton, in an area that’s growing rapidly and becoming more afflu- The buildings are along Gibraltar Court, between Interstates ent. Roadside estimates that the surrounding trade area, which 680 and 880 about 10 miles north of downtown San Jose. extends beyond a five-mile radius, has 352,000 residents with an average household income of $110,000. Fund Ready to Develop Apartments In addition to Wegman’s, one of the nation’s top-performing grocers, and Apple, tenants include DSW, Old Navy, REI and Ulta. Opportunity-fund shop Encore Capital has met its $500 mil- Restaurants include Not Your Average Joe’s, P.F. Chang’s and Uncle lion equity goal for a vehicle that will develop apartment prop- Julio’s. The weighted average remaining lease term is 10.2 years. erties. The property, at 14900 Potomac Town Place, has what The San Francisco firm will wait until yearend to hold the marketing materials describe as a pedestrian-friendly, “Main final close, as scheduled, but the equity has already been com- Street” design, along with nearly 2,700 parking spaces. It’s adja- mitted and the manager isn’t seeking any more. cent to Interstate 95, where 330,000 vehicles pass each day. The vehicle, ResCore Property Trust, will seek a 20% return The offering includes 23.4 acres of additional land that by building multi-family properties in urban centers that have investors have been told is suitable for mixed-use future devel- large populations, high job-growth rates and relatively low opment. A proposal has been floated to build a minor-league supply. Among its targets are Austin, Dallas, Los Angeles, San baseball stadium, via a $70 million public-private partnership, Francisco, Scottsdale, Ariz., and the Florida markets of Fort as a new home for the Potomac Nationals. BlackRock was unin- Lauderdale, Miami, Orlando and Tampa. terested in the project, but a buyer could pursue it. Encore has already invested about 20% of the fund’s equity A sale at the estimated value would be the third-largest in total to buy land for two projects in San Francisco and one in Los dollars for a retail property in Washington or its suburbs in at least Angeles. With leverage, the vehicle would have some $1.5 bil- a decade. One of the top deals was recent and the other is pending. lion of investment power. The manager is focusing on ground- In August, Atlanta-based Jamestown Properties paid $272.5 up development, but would also consider redevelopment million for the 278,000-sf Shops at Georgetown Park in Wash- projects.