Top Stories

NKF Arranges $196M Sale of Trophy Office Building in Downtown Los Angeles

by Kristin Harlow March 2, 2018

LOS ANGELES — NKF Capital Markets has arranged the sale of Wedbush Center at 1000 Wilshire Blvd. in downtown Los Angeles for $196 million. Lincoln Property Co. sold the building to Cerberus Capital Management LP. The 476,491-square-foot office building is 86 percent leased. Financial services firm Wedbush Securities anchors the property. Located along Wilshire Boulevard, the Class A office tower is near entertainment destinations such as Staples Center and LA Live. The 21-story building recently underwent a $4 million renovation focused on repositioning the building’s ground-floor lobby, including the addition of a full-service bar and café. Designed by Kohn Pederson Fox Associates, 1000 Wilshire opened in 1987, according to The Skyscraper Center. Kevin Shannon, Rob Hannan, Laura Stumm, Michael Moll and Ken White of NKF represented the seller, while David Milestone and Brett Green of NKF procured financing on behalf of the buyer. Dallas-based Lincoln is a commercial real estate developer and property manager. Cerberus, headquartered in New York City, is a private investment firm. — Kristin Hiller

March 2, 2018

Office Southeast Top Stories Virginia

Harbor Group Buys Amazon-Anchored Office Tower in Northern Virginia from FCP for $226M

by John Nelson March 1, 2018

HERNDON, VA. — Harbor Group International LLC (HGI) has purchased One Dulles Tower, a 13-story office building located in Herndon, a northern Virginia suburb roughly 24 miles west of Washington, D.C. Federal Capital Partners (FCP) sold the 403,622-square-foot asset to HGI for $226 million. Following the departure of its anchor tenant, FCP landed another company in early 2017, Amazon Web Services (AWS). The cloud-computing services provider is the sole occupant of One Dulles Tower, according to FCP. “This is a Class A property with a top-tier tenant in an irreplaceable location in the Dulles Technology Corridor,” says Richard Litton Jr., president of HGI. Last summer, former Virginia Gov. Terry McAuliffe announced that the Amazon.com (NASDAQ: AMZN) subsidiary chose the office tower for its East Coast corporate hub, a move that could ultimately bring up to 1,500 jobs to the Fairfax County area. One Dulles Tower is located within the Woodland Park master-planned development, giving AWS staffers convenient access to more than 140,000 square feet of retail and restaurants. Other walkable attractions include a hotel and five-acre park. The property is also situated within a half-mile of both the future Herndon and Innovation Center Silver Line Metro stations, as well as …

March 1, 2018

Industrial Texas Top Stories

Dart Container Buys Largest Warehouse in Texas

by Nellie Day February 28, 2018

CORSICANA, TEXAS — Dart Container has purchased a 1.4 million-square-foot industrial building in Corsicana for an undisclosed sum. The building formerly housed Home Depot’s distribution center. It is situated on 139 acres just south of Dallas. The building consists of 13,248 square feet of modern, air-conditioned office space with paved and lighted parking for 560 cars and 1,130 trailers. The asset’s rail access is served by Union Pacific on the northwest boundary. The facility is situated on Business Highway 45 South, near I-45 and State Highway 31, and provides direct access to the Dallas/Fort Worth International Airport. The seller, Eliken Property Management, is a private, self-administered and self-managed real estate firm that owns and manages high-quality industrial properties. Eliken’s current portfolio includes more than 3.5 million square feet across the Midwest and Southeast. The firm is looking to expand its presence in Texas and Arkansas, as well as other target markets. Holmes Davis of Binswanger represented Eliken in the transaction. Mason, Mich.-based Dart Container produces a variety of plastic and foam cups and food containers, including Solo party cups. The company plans to invest $38 million in its new Texas space. Dart operates more than 40 locations in six countries, …

February 28, 2018

Hawaii Retail Top Stories Western

Alexander & Baldwin Acquires Three Shopping Centers in Hawaii for $254M

by Katie Sloan February 27, 2018

HONOLULU — Honolulu-based Alexander & Baldwin (NYSE: ALEX) has acquired three shopping centers located in Hawaii. Terramar Retail Centers LLC sold the properties for $254 million. The buyer also assumed $62 million in mortgage debt in the transaction. Acquisitions include Laulani Village, Hokulei Village and Pu`unene Shopping Center. Laulani Village is a 175,000-square-foot, community retail center located in Ewa Beach on the island of Oahu. Safeway, Ross Dress for Less, Petco and City Mill anchor the 95 percent leased property. The center is also home to Buffalo Wild Wings, Teddy’s Bigger Burgers, Starbucks Coffee and Panda Express. Hokulei Village is a 103,000-square-foot center located in Lihue on the island of Kaua`i. The center was 97 percent leased at the time of sale to tenants including Safeway, Petco, American Savings Bank, Chevron, Jack in the Box, Domino’s Pizza and Panda Express. Pu`unene Shopping Center is a 113,000-square-foot retail center located in Kahului on the island of Maui. The property was completed in 2017, and is home to tenants including Ulta Beauty, Starbucks Coffee, Petco, Maui Tacos, Massage Envy, Planet Fitness and Verizon. Alexander & Baldwin Inc. owns, operates and manages a portfolio of approximately 87,000 acres in Hawaii, making it the state’s fourth largest …

February 27, 2018

Features Loans Top Stories

2018: Year of Transition for CMBS Industry

by Kristin Harlow February 27, 2018

As a result of new Dodd-Frank risk retention regulations that went into effect in December 2016, last year was widely considered to be a pivotal period for the CMBS industry. Formulated to hold banks more accountable for their own investment decisions and place a greater emphasis on collateral quality, the regulatory provision imposed higher capital charges on sponsors by requiring them to retain a 5 percent interest in an asset-backed securitization. The mandate fueled concerns that CMBS would become less competitive compared with other commercial real estate lending sources, leading to speculation of a potential slowdown in interest among investors, a reduction in market liquidity and higher borrowing costs. In short, the rules require issuers to retain a portion of the credit risk in their own transactions. This is accomplished by setting aside additional capital that amounts to 5 percent of the value of newly issued bonds on their balance sheets. There are three different methods of fulfilling the retained risk requirement, which take shape in the form of one of three structural options: a horizontal slice equal to 5 percent of the lowest bonds in the deal waterfall, a vertical slice that amounts to 5 percent of each tranche …

February 27, 2018

Industrial Midwest Minnesota Office Top Stories

Industrial Realty Group Acquires IBM’s 3.1 MSF Campus in Rochester, Minnesota

by Taylor Williams February 26, 2018

ROCHESTER, MINN. — Industrial Realty Group LLC (IRG) has acquired IBM’s technology campus in Rochester, about 90 miles southeast of Minneapolis. The price was not disclosed. The campus opened in 1957 and currently spans 490 acres. Its 34 buildings comprise a total of 3.1 million square feet of office, manufacturing, warehouse, data center and lab space. IRG plans to lease back eight of the buildings to IBM and create a multi-tenant, mixed-use campus for the rest of the property. “We have already engaged potential tenants who are interested in locating their operations to this high-tech campus,” says John Mase, CEO of IRG. “We plan to create an environment that encompasses a variety of uses and creates as many jobs as possible.” Rochester’s daily newspaper, The Post Bulletin, reports that the campus housed about 3,200 employees in 2012, when the data was last made available, and that Olmsted County recently valued the property at just under $33 million. The paper also reports that 1 million square feet of space is currently available for lease. IRG is a Los Angeles-based developer and operator of more than 150 commercial developments across eight states. — Taylor Williams

February 26, 2018

California Florida Hawaii Hospitality Illinois Midwest Southeast Top Stories Western

Hyatt to Sell Three-Property Hotel Portfolio for $1B

by Kristin Harlow February 23, 2018

CHICAGO — Hyatt Hotels Corp. (NYSE: H) has agreed to sell a three-property hotel portfolio to Host Hotels & Resorts Inc. (NYSE: HST) for approximately $1 billion. The transaction includes the Andaz Maui at Wailea Resort in Wailea, Hawaii, the Grand Hyatt San Francisco and the Hyatt Regency Coconut Point Resort and Spa in Bonita Springs, Fla. Hyatt will continue to manage the three hotels under long-term management agreements. The transaction is expected to close at the end of March. The 301-room Andaz Maui features a 15-acre beachfront setting, four infinity pools, 15,000 square feet of event space, five dining options, a spa and a fitness center. Featuring 668 rooms, the Grand Hyatt San Francisco includes a 24-hour fitness center, as well as restaurant, lounge and event space on the 36th floor. Located in southwest Florida, the 454-room Hyatt Regency Coconut Point features several pools, waterslides, a golf course, rock climbing wall, five restaurants and over 82,500 square feet of flexible space. The sale reflects a recently announced initiative from Hyatt to reduce real estate ownership, according to Mark Hoplamazian, president and CEO of Hyatt. Andaz Maui and Grand Hyatt San Francisco reflect a combined attributed sale value of approximately …

February 23, 2018

New York Northeast Office Top Stories

JPMorgan Chase to Build 2.5 MSF Skyscraper in Midtown Manhattan for New Headquarters

by John Nelson February 22, 2018

NEW YORK CITY — JPMorgan Chase (NYSE: JPM) plans to build a new 2.5 million-square-foot skyscraper that will replace its existing 50-story office building at 270 Park Ave. in Midtown Manhattan. The company plans to consolidate its global headquarters from various locations at the new tower, which some media outlets are reporting would rise 70 stories. “We are recommitting ourselves to New York City while also ensuring that we operate in a highly efficient and world-class environment for the 21st century,” says Jaime Dimon, chairman and CEO of JPMorgan Chase. The new headquarters building would house about 15,000 employees, replacing the existing facility that was designed in the late 1950s for about 3,500 employees. JPMorgan Chase plans to pursue LEED certification for the new facility, which would come on line in 2024 at the earliest. Most employees currently located at 270 Park Ave. would be relocated nearby during the development period. Dimon and New York City Mayor Bill de Blasio jointly announced JPMorgan Chase’s new headquarters, which would be the first major project under New York City’s Midtown East Rezoning plan that was passed last year by the New York City Council. “This is our plan for East Midtown in …

February 22, 2018

Features Top Stories

Restrictive Bank Regulations Open Door for Alternative Lenders

by Jeff Shaw February 22, 2018

Upon the introduction in 2015 of new banking regulations related to holding extra reserves for short-term or riskier commercial real estate loans, banks reined in lending. While the pullback affected property investors across the board, developers felt it most. Typical loan-to-cost ratios for construction financing dropped 20 percentage points to 55 percent, interest rates ballooned by some 150 basis points to around 350 basis points over 30-day LIBOR (London Interbank Offered Rate), and the number of banks that would consider development financing plunged, say mortgage bankers. In 2017, the number of banks willing to look at potential deals grew and interest rates dropped some, but leverage generally remained capped at 65 percent of costs. Consequently, borrowers more than ever are tapping non-bank lenders, particularly private debt funds. “The most notable change in 2017 was the growth in debt fund activity,” says Kathy Farrell, head of commercial real estate for Atlanta-based SunTrust Banks. “They certainly stepped in to fill the gap in construction and acquisition financing created by the pullback of the banks.” According to alternative asset research firm Preqin, 47 global real estate debt funds raised a record $28 billion in 2017, up from 32 funds that raised $19 billion …

February 22, 2018

Idaho Retail Top Stories Western

Albertsons to Buy Drugstore Chain Rite Aid

by Nellie Day February 21, 2018

BOISE, IDAHO — Boise-based grocery chain Albertsons Cos. has agreed to acquire Rite Aid Corp. (NYSE: RAD), one of the nation’s largest drugstore chains, for an undisclosed sum. The integrated company will operate about 4,900 locations, 4,350 pharmacy counters, and 320 clinics across 38 states and Washington, D.C., serving 40 more than million customers per week. The majority of Albertsons’ pharmacies will be rebranded as Rite Aid. The company will continue to operate Rite Aid standalone pharmacies. The Rite Aid merger will allow Albertsons to go public. Under the terms of the agreement, in exchange for every 10 shares of Rite Aid common stock, Rite Aid shareholders can receive either one share of Albertsons common stock plus about $1.83 in cash, or 1.079 shares of Albertsons stock. Depending upon the results of cash elections, upon closing of the merger, shareholders of Rite Aid will own a 28 percent to 29.6 percent stake in the combined company, while current Albertsons shareholders will own a 70.4 percent to 72.0 percent stake in the combined company on a fully diluted basis. The combined company plans to seek expanded opportunities in Albertsons’ many brands, including O Organics and Lucerne, along with its manufacturing and …

February 21, 2018

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