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Westside Pavilion, Los Angeles
CaliforniaOfficeRetailTop StoriesWestern

Hudson Pacific, Macerich to Redevelop Westside Pavilion Mall in Los Angeles to Office Space for $450M

by Jeff Shaw

LOS ANGELES — Hudson Pacific Properties (NYSE: HPP) and Macerich (NYSE: MAC) have formed a joint venture to redevelop Westside Pavilion, a 600,000-square-foot shopping mall located in west Los Angeles, into creative office space. The project is expected to cost between $425 and $475 million. At completion, the development will be home to 500,000 square feet of state-of-the-art creative office space, while retaining 100,000 square feet of existing entertainment retail space. The 12-screen Landmark Theatres, Westside Tavern restaurant and other shops primarily located on the ground floor will remain in the reconfigured space, according to reports by the Los Angeles Times. Anchor Macy’s is set to close at the end of this month, and Nordstrom left the property last year to open at Westfield Century City. Project completion is scheduled for summer 2021. Hudson Pacific will hold a 75 percent stake in the property, and will act as managing member, day-to-day operator and developer. Macerich will hold the remaining 25 percent. “Westside Pavilion is a perfect opportunity for us to reposition a marquee asset in a premier location,” says Victor Coleman, chairman and CEO of Hudson Pacific. “The project is poised to capture the strong demand from tenants for creative office …

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Company NewsMultifamilySeniors HousingTop Stories

Seniors Housing Operator HCR ManorCare to File for Bankruptcy Following $385M Rent Delinquency

by Taylor Williams

BETHESDA, MD. — HCR ManorCare, an Ohio-based seniors housing operator, will file for Chapter 11 bankruptcy protection and transfer its management operations to its landlord, Quality Care Properties (NYSE: QCP). HCR ManorCare, which currently manages about 320 seniors housing properties, is the second-largest skilled nursing operator in the country. The company’s management contracts also span the assisted living, hospice and home care sectors. The move follows HCR’s declaration of approximately $385 million in delinquent rent payments. Reuters reports that the company’s total debt is roughly $7.1 billion and that QCP will put its own management teams in place at properties previously managed by HCR. Under the terms of the agreement, HCR’s operating subsidiaries will not file for Chapter 11 bankruptcy protection. The parent company’s name and brand will also remain in place, but as a wholly owned subsidiary of QCP. QCP itself is a spin-off of healthcare REIT HCP (NYSE: HCP), which created the company specifically to remove HCR ManorCare’s 320 properties from its portfolio. QCP and HCR have been in negotiations for months regarding hundreds of millions in unpaid rent. In addition, QCP will give up its REIT designation, as it will now both own and operate its properties. “This …

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CaliforniaOfficeTop StoriesWestern

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

by Kristin Harlow

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

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OfficeSoutheastTop StoriesVirginia

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

by John Nelson

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 …

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IndustrialTexasTop Stories

Dart Container Buys Largest Warehouse in Texas

by Nellie Day

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, …

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HawaiiRetailTop StoriesWestern

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

by Katie Sloan

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 …

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FeaturesLoansTop Stories

2018: Year of Transition for CMBS Industry

by Kristin Harlow

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 …

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IndustrialMidwestMinnesotaOfficeTop Stories

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

by Taylor Williams

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

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CaliforniaFloridaHawaiiHospitalityIllinoisMidwestSoutheastTop StoriesWestern

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

by Kristin Harlow

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 …

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New YorkNortheastOfficeTop Stories

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

by John Nelson

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 …

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