DECEMBER 20, 2017 TIAA Unit Weighs Offering of DC Office Trophy TH Real Estate is mulling whether to list a Washington office property that could 2 Penwood Fund Lines Up $325 Million command a record price. The TIAA unit is talking with multiple brokerages about valuations and options 2 Goldman Strikes Nashville Office Deal for 1001 Pennsylvania Avenue NW, including a potential sale of the approximately 2 MetLife Lists Novartis Campus in Ga. 800,000-square-foot, trophy-quality building. While a current valuation couldn’t be learned, TH pegged it at $810 million in a third-quarter public filing. 2 Shop’s Debut Fund Holds First Close A sale at or near that price would shatter the $734 million record for a single office property in Washington. That mark was set in 2012, whenMetLife Real 4 CBRE Global Buying Atlanta Offices Estate and Clarion Partners paid $734 million for the 1.4 million-sf Constitution 4 Price Record Broken Again in DC Center. The 14-story building at 1001 Pennsylvania Avenue has about 763,000 sf of 4 Blackstone Unit Snags Vegas Rentals offices and 41,000 sf of retail space. It was 81% occupied at the end of the third quar- ter, below the 86% average for offices in the surrounding East End submarket. Fund 6 Shop Set to Pitch 6th Apartment Fund giant Carlyle Group is headquartered in the building. Other office tenants include 6 Viking Marketing 4th Retail Vehicle See TROPHY on Page 7 6 Georgia Retail Center Heads to Market Western Apartment Shop Targets East Coast 6 Land Leased to Power Plant for Sale After establishing a few beachheads on the East Coast,TruAmerica Multifamily is 7 Virginia Office Portfolio Up for Grabs gearing up to expand its presence in the region. The Los Angeles shop aims to buy as much as $800 million of value-added apart- 7 RCG Marketing Opportunity Fund ment properties in the Eastern U.S. over the next two years — amounting to 40-50% 11 MARKET SPOTLIGHT of its planned purchases nationally. The four-year-old firm — a partnership between Guardian Life and former Ken- nedy Wilson multi-family head Robert Hart — has built up a $7 billion portfolio, concentrated in seven Western states where it owns complexes with more than THE GRAPEVINE 30,000 units. It made its first East Coast purchase in May 2016 and now owns some 4,700 units in Maryland and Florida — mostly in suburbs of Baltimore, Washington Industry veteran Jeff Erenberg has joined and Orlando — that are worth about $750 million. State Street Global Advisors to work on TruAmerica is selectively targeting East Coast markets with high job and wage acquisitions and asset management. He’s See APARTMENT on Page 9 based in Stamford, Conn., for the Boston investment manager. Erenberg spent the Grocery-Anchored Portfolio Split Up for Sale past six-plus years at Building and Land Technology, leaving that Stamford invest- Terramar Retail Centers has lined up buyers ment shop as a managing director. He for $275 million of grocery-anchored shop- The next issue of Real Estate previously worked for five years at Dubai ping centers in suburban Seattle, as it breaks Alert will be published Jan. 10. Investment Group, where he was a senior up a massive portfolio it put on the block a few Happy Holidays! vice president, and eight years at GE Real months ago. Estate. State Street last year bought GE Donahue Schriber is under contract to pay about $200 million for four centers Asset Management, including its real totaling 589,000 square feet. Separately, a joint venture between First Washington estate team. Realty and Calpers has inked a deal to pay roughly $75 million for a 215,000-sf property in Renton, Wash. Both purchases would generate initial annual yields just It turns out that Stockbridge Capital under 5%, although the marketing campaign touted the potential to boost returns negotiated the roughly $265 million by leasing up the small amount of vacant space and raising below-market rents purchase agreement for Three Alliance upon rollover. Center in Atlanta on behalf of Florida Eastdil Secured marketed the high-quality centers for Terramar, which is owned See GRAPEVINE on Back Page See PORTFOLIO on Page 8 December 20, 2017 Real Estate 2 ALERT Penwood Fund Lines Up $325 Million Avenue, includes an adjacent 834-space garage. Nashville’s growing Central Business District has emerged Penwood Real Estate Investment has raised $325 million of as a “live-work-play” neighborhood. Some 2,800 multi-family equity for its fifth and largest industrial fund. units and 1,900 hotel rooms are under construction in the sub- The Hartford shop held the final close last week, exceeding market. its $300 million target. Only three Nashville-area office properties have ever com- The vehicle, Penwood Select Industrial Partners 5, is shoot- manded more than $120 million. The city has been attracting ing for an 11-13% return by acquiring and building industrial increased attention from institutional investors, thanks to a properties, mostly warehouses. The sponsor typically forms growing population and strong local economy anchored in the joint ventures with local operators that manage the proper- healthcare and education sectors. ties. Some 70% of the capital is expected to be deployed for buy- MetLife Lists Novartis Campus in Ga. ing, leasing and renovating properties, with the rest going for development. With leverage, the fund will have some $650 mil- MetLife Real Estate Investors is gearing up to shop a subur- lion of buying power. The geographic focus is Southern Califor- ban Atlanta corporate campus that’s fully occupied by a unit of nia, Northern New Jersey and Central Pennsylvania. pharmaceutical giant Novartis under a long-term lease. Among the firm’s investments this year was the $27 mil- The 800,000-square-foot property, in Duluth, Ga., is worth an lion purchase of a 277,000-square-foot industrial property at estimated $110 million, or $138/sf. It encompasses five buildings 12752-12822 Monarch Street in Garden Grove, Calif. Penwood with office, research-and-development, distribution and manu- teamed up with Western Realco of Newport Beach, Calif., to facturing space. Cushman & Wakefield, which has the listing, is buy the Orange County property from Colony NorthStar of Los expected to begin the marketing campaign in January. Angeles. The price was equivalent to $97/sf. The tenant, Alcon, is a Swiss manufacturer of contact lenses Penwood’s first four funds raised a combined $727 million. and other eye-care products that posted $6 billion of revenue last Fund 4 held a final close in 2015 and has nearly fully invested year. It has 1,000 employees at the campus. The lease runs for its $250 million of equity. Limited partners in Penwood’s fund another 14 years and is guaranteed by Novartis, which is rated series have included New York State Teachers, North Carolina Aa3/AA- by Moody’s and S&P. Public Employees and Virginia Retirement System, according to The 77-acre campus is adjacent to Johns Creek, one of Preqin. The firm doesn’t use a placement agent. Atlanta’s most affluent suburbs. The manufacturing facility is Penwood was formed in 2003 by principals Richard Chase, at 11440 Johns Creek Parkway and the other four buildings are John Hurley and Karen Nista, all of whom previously worked at 11460 Johns Creek Parkway. The site is about 25 miles north- together at Cigna. east of downtown Atlanta. Goldman Strikes Nashville Office Deal Shop’s Debut Fund Holds First Close In one of Nashville’s biggest office deals ever,Goldman Sachs Blackbird Investment has held an initial equity close on its has agreed to buy a Class-A downtown tower from an Illinois first fund. Teachers partnership for about $120 million. The Chicago firm, formed three years ago by Greg Adler and The price tag for the 490,000-square-foot Fifth Third Center, Todd Vender after they leftBlue Vista Capital, last month locked which works out to $245/sf, will provide Goldman with an ini- in $14.4 million of equity commitments for Blackbird Sponsor tial annual yield of about 5.5%. Eastdil Secured is advising the Equity Partners, according to an SEC filing. The sponsor started Illinois pension fund and its partner, Lincoln Property of Dallas. soliciting capital in the summer of 2016, aiming to raise $50 The marketing campaign touted the potential to boost the million. investment return by increasing the 85% occupancy rate and Blackbird, which has separately completed some one-off raising below-market rents as leases roll over. The weighted acquisitions, plans to team up with partners on value-added average remaining lease term is six years, so income should be and opportunistic plays across asset classes, serving as either stable while new tenants are recruited. a general or limited partner. The firm is expected to focus on No occupant leases more than 12% of the space. The rent mid-size properties, but could target bigger investments if it roll includes Fifth Third Bank (52,000 sf), Sony (51,000 sf), law joins forces with large operators. firm Adams & Reese (46,000 sf) and Lowes Hotels (40,000 sf). The investment manager, which isn’t using a placement The 31-story building, at 424 Church Street in the Arts Dis- agent, solicits capital from family offices, wealthy individuals trict, was completed in 1986. Illinois Teachers and Lincoln and select institutions. acquired it from Amstar Group of Denver for $89 million, or Adler was head of acquisitions at Blue Vista when he left after $182/sf, in 2014. At the time, the occupancy rate was only a 12-year stint.