Top Stories

Tri-Venture Gets Approval to Develop $1.2B Mixed-Use Skyscraper in Los Angeles

by Kristin Harlow December 22, 2017

LOS ANGELES — The City of Los Angeles has selected Angels Landing Partners LLC, a partnership between the Peebles Corp., MacFarlane Partners and Claridge Properties, to manage development of the Angels Landing site, a $1.2 billion mixed-use project. The group will build the tallest building in the western United States as part of the development, according to a news . All three firms are 100 percent minority owned. Construction of the 2.2-acre site at 4th and Hill streets in Los Angeles is slated to last 41 months with a completion date scheduled for late 2024. “Our team is inspired by the opportunity to transform the Los Angeles skyline with our iconic building, enhance residential life and change how large buildings are constructed by ensuring all residents and businesses receive equal access to career and business opportunities,” says Don Peebles, chairman and CEO of the Peebles Corp. Handel Architects is designing the two-tower project. The development will include a 192-room SLS hotel and a 289-room Mondrian hotel, both to be operated by SBE Entertainment Group. Other project plans call for 425 apartments (including affordable housing), 250 condominiums, 45,000 square feet of retail and restaurant space, an elementary charter school and a …

December 22, 2017

California Office Top Stories Western

Douglas Emmett Acquires 146,300 SF Office Property in Beverly Hills for $143.6M

by Katie Sloan December 21, 2017

BEVERLY HILLS, CALIF. — Douglas Emmett Inc. (NYSE: DEI) has acquired the Beverly Hills Financial Center, a 146,300-square-foot, Class A office property located at 9401 Wilshire Blvd. in Beverly Hills. Located at the corner of Wilshire and Canon Drive in Beverly Hills’ Golden Triangle, the property was initially constructed in 1972 and renovated in 1999. The building is home to tenants including Ervin Cohen & Jessup LLP, Citibank, Bank of the West, Momentum Talent Agency and Mozaic LLC. As part of the transaction, Douglas Emmett received an acquisition loan with a principal balance of approximately $32.3 million and a 4.55 percent interest rate, which matures on June 1, 2038. The provider was undisclosed. To fund the remainder of the purchase price, Douglas Emmett used cash and issued approximately 2.6 million units in its operating partnership to the undisclosed seller at an equivalent price of $40.60 per common share. Paul Hastings LLP represented the seller, a partnership between Cando Partners and Wilshire-Canon Properties LLC, in the transaction. The company’s portfolio now consists of 71 office properties totaling approximately 18.4 million square feet, along with 10 apartment communities. The company is also developing residential buildings in Los Angeles and Honolulu. Douglas Emmett’s stock price closed on Wednesday, …

December 21, 2017

Features Retail Top Stories

Report: Compressing Cap Rates Don’t Slow Investor Appetite for 7-Eleven, Circle K Stores

by Taylor Williams December 21, 2017

CHICAGO — In an era wherein investors are generally bearish on the performance of retail properties, single-tenant, small-footprint assets leased to convenience stores may be an exception to the rule, according to a recent report from Chicago-based Quantum Real Estate Advisors Inc. The average capitalization rates for convenience stores flying under two brands — 7-Eleven and Alimentation Couche-Tard, which owns Circle K and Kangaroo Express — decreased from 2016 to 2017, according to the report. Despite the cap rate compression, though, investor interest in single-tenant retail properties leased to either of these firms is on the rise. The report found that the average cap rate for 7-Eleven stores decreased by six basis points between 2016 and 2017, while Couche-Tard stores experienced an average cap rate compression of 74 basis points during that stretch. Average cap rates for these 7-Eleven and Couche-Tard stores, which typically operate on 10- to 20-year leases, now stand at 5.1 and 6.1 percent, respectively. And while cap rates for both chains appear to be trending downward, they also reflect stability in the sense that they are bucking the larger trend in retail real estate — a key appeal to investors. As such, investor demand for these …

December 21, 2017

Office Top Stories Washington Western

Takenaka Corp. Buys 290,573 SF Office Building in Seattle for $268.5M

by Nellie Day December 20, 2017

SEATTLE — Takenaka Corp. has purchased Tilt49, a 290,573-square-foot office building in Seattle, for $268.5 million. The Class A building is located at 1812 Boren Ave. in the Denny Triangle area of the city. Tilt49 is triple-net leased to Amazon through 2033. The newly constructed project includes 1,646 square feet of retail leased to Mighty-O Donuts. NKF represented the seller, a joint venture between Principal Real Estate Investors and Touchstone. The firm’s Kevin Shannon, Ken White, Rob Hannan, Tim O’Keefe and Michael Moll executed the transaction. The 11-story creative office property is nearby more than 100 restaurants, 3,000 hotel rooms, 28,000 urban residential units and public transit. The Denny Triangle submarket has experienced a 51 percent increase in average asking lease rates over the past three years, according to NKF. Tilt49 sold for $924 per square foot. This is approximately about $40 per square foot more than the recently sold Midtown 21 office property, which is situated adjacent to Tilt49 and also leased to Amazon. “The buyer [was sourced] via an ad hoc Asia/Pacific roadshow to four countries,” Shannon says. “As a result, we identified a strong buyer and achieved record-setting pricing for a Seattle office property. Takenaka is a …

December 20, 2017

Hospitality Northeast Pennsylvania Retail Top Stories

Gaming Giant Penn National to Acquire Pinnacle Entertainment in $2.8B Deal

by John Nelson December 19, 2017

LAS VEGAS — Penn National Gaming Inc. (NASDAQ: PENN) has agreed to purchase fellow gaming property owner Pinnacle Entertainment Inc. (NASDAQ: PNK) in a cash and stock transaction valued at $2.8 billion. The deal has been approved by the boards of directors of both companies and is expected to close in the second half of 2018 following an approvals process involving the two companies’ shareholders and applicable gaming authorities. Pinnacle employs roughly 16,000 team members and owns and operates 16 gaming and entertainment facilities located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio and Pennsylvania. The Las Vegas-based company is also a manager and majority owner of Retama Park Racetrack near San Antonio. As part of the transaction, Wyomissing, Pa.-based Penn National will sell four of the newly acquired assets to Las Vegas-based Boyd Gaming Corp. (NYSE: BYD) for $575 million. The properties include Ameristar St. Charles and Ameristar Kansas City in Missouri; Belterra Casino Resort in Florence, Ind.; and Belterra Park in Cincinnati. Penn National has also negotiated with Gaming and Leisure Properties (NASDAQ: GLPI), the landlord for Penn National and Pinnacle’s master lease agreements, to sell and lease back the real estate associated with Belterra Park and …

December 19, 2017

Features Multifamily Seniors Housing Top Stories

Skilled Nursing Occupancy Hits Five-Year Low, According to NIC Data

by Taylor Williams December 19, 2017

ANNAPOLIS, Md. — Occupancy for skilled nursing facilities throughout the United States hit a five year low in the third quarter of 2017, falling to 81.6 percent, according to data released today by the National Investment Center for Seniors Housing & Care (NIC). NIC is a nonprofit data analytics organization exclusively serving the seniors housing sector. NIC collects the data using a sample population collected each month from more than 1,400 skilled nursing properties throughout the country. The occupancy numbers mark a 29 basis point decrease from the previous quarter and 167 basis point decrease from the same time last year. “Historically, there has been some variability in the occupancy trend in the third quarter in any given year, so it is difficult to gauge the impact of seasonality,” says Bill Kauffman, senior principal at NIC. “Occupancy did set a new low within this time series in the third quarter as pressure continues on the Medicare mix. However, it did decline at a slower pace from the prior quarter.” Medicare patient day mix declined 58 basis points from the second quarter and 84 basis points from year-earlier levels, coming in at a new low of 12.2 percent in the third …

December 19, 2017

Hospitality Massachusetts Northeast Top Stories

RLJ Lodging Sells 383-Room Hotel in Boston for $170M

by Taylor Williams December 18, 2017

BOSTON — RLJ Lodging Trust (NYSE: RLJ) has sold Fairmont Copley Plaza, a 383-room hotel located in the Back Bay area of Boston, for $170 million, or approximately $444,000 per room. Maryland-based RLJ, which merged with Texas-based FelCor Lodging Trust Inc. in September, intends to use the proceeds from the sale to cover general corporate expenses, with an emphasis on paying down debt. The sales price represents a capitalization rate of roughly 4.6 percent on the hotel’s projected net operating income (NOI) for 2017. The buyer of Fairmont Copley Plaza was not disclosed. The hotel, which is situated within walking distance of Boston Common as well as a variety of shopping and dining destinations on nearby Newbury Street, opened in 1912. Amenities for guests include laundry services, safety deposit boxes, a 3,000-square-foot rooftop health club and on-site restaurant OAK Long Bar + Kitchen. The property also features 23,000 square feet of meeting and conference space. “The disposition of this asset is consistent with our objectives of selling non-core assets and unlocking shareholder value,” says Ross Bierkan, president and CEO of RLJ. Following the sale of Fairmont Copley Plaza, RLJ’s hospitality portfolio consists of 157 hotels totaling 30,800 rooms across 26 states …

December 18, 2017

Midwest Ohio Retail Top Stories

DDR to Spin Off 50 Assets With Gross Book Value of $3B into Separate REIT

by Kristin Harlow December 15, 2017

BEACHWOOD, OHIO — As part of what DDR Corp. (NYSE: DDR) calls a “strategic transformation,” the shopping center REIT has approved a plan to spin off a portfolio of 50 assets — including 38 continental U.S. assets and all 12 of its properties in Puerto Rico — into a separate publicly traded REIT to be named Retail Value Trust (RVT). The gross book value of the assets in the RVT portfolio is approximately $3 billion. “We believe that these two distinct companies with two distinct business plans will appeal to a much broader pool of investors than the combined DDR today,” said David Lukes, president and CEO of Beachwood-based DDR, during an investor conference call late Thursday afternoon. “This strategy adds value for all of our stakeholders and maximizes both our growth and optionality well into the future.” Specifically, the RVT portfolio consists of 38 high-quality, lower-growth assets in the continental U.S. and all 12 assets in the Puerto Rico portfolio. The properties within the RVT portfolio in the continental U.S. are mostly located in suburbs outside metro areas. Common tenants include Bed Bath & Beyond, Michaels, Kohl’s and T.J. Maxx. The remaining company, known as the “New DDR,” will …

December 15, 2017

Company News Retail Texas Top Stories

Charming Charlie Files for Chapter 11 Bankruptcy, Plans to Close 97 Stores

by John Nelson December 14, 2017

HOUSTON — Citing struggles stemming from the rise of e-commerce, fashion retailer Charming Charlie has filed for Chapter 11 bankruptcy protection. During the Chapter 11 process, which was filed late Monday, the Houston-based fashion retailer plans to restructure its debt while maintaining and operating a majority of its stores, as well as its online platform. The company also plans to go through with its previously announced decision to shutter 97 of its underperforming stores. Charming Charlie specializes in selling jewelry, handbags, apparel and beauty products. The company, which was launched in 2004, currently operates more than 375 stores in the United States and Canada. Charming Charlie has secured commitments from its lenders for $20 million in new-money debtor-in-possession (DIP) financing. The company also entered into a $35 million DIP asset-backed loan with its lenders. Both financing arrangements are subject to court approval and are intended to help operation costs during the Chapter 11 process. The Wall Street Journal reports the court on Wednesday approved the early use of the financing, and Charming Charlie is scheduled to return to court in January to request approval to use the balance of the loans. The Chapter 11 bankruptcy filing is part of Charming …

December 14, 2017

Features Top Stories

Marcus & Millichap: Proposed Tax Legislation Holds Modest Change for Investment Real Estate

by Katie Sloan December 14, 2017

WASHINGTON, D.C. — As the much anticipated tax reform legislation makes it way through Congress, commercial real estate investors may be wondering what reverberations they will feel if the proposed changes are signed into law by President Trump. According to a special report by Marcus & Millichap, the two final versions of the law from the U.S. House of Representatives and Senate appear relatively benign for real estate investors. Both versions of the legislation, which have yet to be reconciled, offer modest changes to key provisions including 1031 tax-deferred exchange, mortgage interest deductibility and asset depreciation. The tax plans offer generous cuts for corporations and pass-through entities such as limited liability companies, which may lend an opportunity for investors to reconfigure their portfolios. “There are many nuances in both the House and Senate versions,” says John Chang, first vice president of research services at Marcus & Millichap. “The House version could reduce tax rates on this income from personal rates as high as 39.6 percent to as low as 25 percent depending on whether the earnings are active or passive. The Senate version grants a 23 percent deduction on qualified pass-through income with some restrictions.” The maximum tax rate for …

December 14, 2017

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