Top Stories

Government Properties Income Trust to Acquire First Potomac Realty Trust for $1.4B

by Nellie Day June 28, 2017

BETHESDA, MD. — Government Properties Income Trust (NASDAQ: GOV) has agreed to purchase all of the outstanding shares of First Potomac Realty Trust (NYSE: FPO) in a deal that is valued at $1.4 billion. The all-cash transaction, which includes the assumption of debt, is expected to close before the end of 2017. First Potomac shareholders will receive $11.15 in cash per share, or about $683 million in aggregate, at the close of the transaction. This represents a premium of about 9.3 percent to First Potomac’s 30-trading day volume weighted average price, based on a period ending April 24, 2017. The remaining transaction value includes the expected repayment of about $418 million of FPO debt and an assumption of about $232 million of FPO mortgage debt, as well as the payment of transaction fees and expenses. FPO has agreed it will not pay any distributions to its shareholders before the transaction closes. GOV’s distributions to its shareholders will not be impacted by the transaction. First Potomac maintains an office and industrial portfolio of properties that are located primarily in the metropolitan Washington, D.C., area. FPO’s portfolio includes 39 properties (74 buildings) with about 6.5 million square feet that was 92.2 percent …

June 28, 2017

Office Texas Top Stories

TIER REIT Acquires Office Tower in Metro Dallas for $123.3M, Exits Louisville Market with $71.5M Portfolio Sale

by Jeff Shaw June 27, 2017

PLANO, TEXAS — TIER REIT Inc. (NYSE: TIER) has acquired 5851 Legacy Circle, a 12-story office tower in the Legacy Town Center area of Plano, for $123.3 million. The sale includes the assumption of a $66 million mortgage loan. The seller was not disclosed. The property, also known as Tower One, is master leased to Encana Corp., which has subleased 88 percent of the property to tenants such as LegacyTexas Bank, U.S. Renal Care and Aimbridge Hospitality. The Class A, 319,000-square-foot property was built in 2012. Tower One is contiguous to two other land parcels totaling four acres that TIER bought in 2015. The company is building office towers on each of those properties, which will add an additional 570,000 square feet. TIER will rebrand the entire combined development as Legacy District. “This acquisition complements our existing development parcels and enhances our vision for Legacy District, given its strategic location in the heart of the vibrant live-work-play Legacy submarket,” says Scott Fordham, president and CEO of TIER REIT. “Further, it plants our flag prominently near the exciting new corporate campuses of Toyota, JP Morgan, Liberty Mutual and FedEx Office, which combined should bring over 15,000 new office workers to the …

June 27, 2017

Features Office Top Stories

Rethinking Physical Workspace Helps Improve the ‘Human Experience’ for Employees, Says JLL

by John Nelson June 27, 2017

CHICAGO — In its most recent study on the workplace, JLL has found that helping people feel good on the job is more than a ‘box-ticking” exercise in trying to achieve work-life balance. A place of work is far more than a property. It is a living environment that helps individuals and businesses craft and experience a better fusion of life and work. One of the key findings from the report, entitled “Workplace Powered by Human Experience,” is that workplaces must provide a broader range of innovative spaces to meet employee expectations and attract and retain talent. The design and configuration of workplaces will evolve to put human experience at the heart of modern workspaces, and understanding the ecosystem in which employees operate and thrive is critical to business success as aesthetic solutions alone are no longer enough. The report finds that an ideal work environment is a mixture of collaborative space and support services, including coffee and tea shops, lounges, terraces, war rooms, service desks, creative spaces and “incubators” that feature dedicated space for employees and external talent to develop personal projects. The space provided by a company can directly impact employee experience levels. New types of spaces can …

June 27, 2017

Hospitality Massachusetts Northeast Top Stories

Pebblebrook Hotel Trust Sells Parking Garage at Boston Hotel for $95M

by Taylor Williams June 26, 2017

BOSTON — Pebblebrook Hotel Trust (NYSE: PEB), a hospitality REIT, has sold an 826-space parking garage at Revere Hotel Boston Common, located at 200 Stuart St. in downtown Boston, for $95 million. The buyer was not disclosed. The sale, which closed on June 23, also includes 10,500 square feet of vacant space on the ground floor. Pebblebrook will utilize the proceeds from the sale for general business purposes, such as paying off outstanding debt or repurchasing some of its shares of common stock. The company expects the acquisition to generate approximately $11.7 million in additional net income across the second, third and fourth quarters, and to reduce funds from operations (FFO) by $1.3 million during that period. Since initiating a strategic disposition plan in 2016, the REIT has sold five hotels and two non-hotel assets that have generated $676.8 million in gross proceeds. “This sale generates significant value for our shareholders at a very favorable price and overall capitalization rate,” says Jon Bortz, CEO and president of Pebblebrook, based in Bethesda, Md. “These property sales continue to allow us to take advantage of the value differential between the higher private market prices and values and the lower public market valuation …

June 26, 2017

Georgia Mixed-Use Southeast Top Stories

NAP Breaks Ground on $80M Mixed-Use Project on Atlanta BeltLine

by Kristin Harlow June 23, 2017

ATLANTA — North American Properties (NAP) has broken ground on Edge, an $80 million mixed-use project on the Atlanta BeltLine’s Eastside Trail. NAP is partnering with Atlanta BeltLine Inc. (ABI) and The Conservation Fund Partner to transform the environmentally contaminated site. Edge will line both sides of the BeltLine’s Eastside Trail with 29,000 square feet of retail, dining and loft office space, connected by a pedestrian bridge. Of 350 residential units, 30 percent will be dedicated to affordable workforce housing for the portion of the property purchased from ABI. Completion of the retail and residential components is slated for spring 2019. “This initiative is the first redevelopment project on the Atlanta BeltLine where activation is occurring on three corridors: the Atlanta BeltLine, DeKalb Avenue and Edgewood Avenue, and it represents the vision of building an Atlanta BeltLine that everyone can call home,” says Paul Morris, president and CEO of ABI. The Atlanta BeltLine currently consists of four open trails, two trails under construction and seven parks. The 22-mile loop of pedestrian-friendly transit is slated for full completion in 2030. Founded in 1954, NAP is a privately held, multi-regional real estate operating and development company that has acquired, developed and managed …

June 23, 2017

Florida Multifamily Southeast Student Housing Top Stories

Joint Venture Breaks Ground on $54M Student Housing Community Near University of Florida

by John Nelson June 22, 2017

GAINESVILLE, FLA. — A joint venture between Batson-Cook Development Co. (BCDC), 908 Group and Kayne Anderson Real Estate Advisors has broken ground on The Nine @ Gainesville, a $54 million student housing community situated less than a quarter-mile from the University of Florida’s campus in Gainesville. Located at 1115 13th St., The Nine will feature 627 beds within one-, two-, three-, four- and five-bedroom units. All fully furnished residences will feature private bathrooms, in-unit washer and dryer units, stainless steel appliances and private balconies. Community amenities will include a resort-style swimming pool, fitness center, interactive study rooms, community café and a structured parking deck with 420 spaces. “We are thrilled to be underway on The Nine @ Gainesville and to launch this project with 908 Group,” says Litt Glover, CEO and president of Atlanta-based BCDC. “This location is unmatched in its proximity to the university, and with our team’s experience in student housing, we will be delivering a highly amenitized, desirable project that will appeal to UF students.” Kayne Anderson Real Estate Advisors, BCDC and 908 Group are providing equity and PNC Bank is providing construction financing. TSB Capital Advisors acted as consultant to 908 Group and BCDC on the …

June 22, 2017

Features Loans Multifamily Seniors Housing Top Stories

FHA’s Latest Revisions to Lean 232 Address Owner Issues

by Taylor Williams June 22, 2017

Recent changes to the Federal Housing Administration’s (FHA) Lean 232 program provide owners with more options, all of which a lender offering a full suite of financing options can act upon. Owners who anticipate future cash-out needs are in a good position to benefit. The program was made easier for owners to work with through several additional changes. For owners of residential healthcare facilities that offer services like skilled living or memory care, FHA Lean 232 loans are of exceptionally high value. Because the FHA is committed to ensuring an adequate supply of affordable beds for seniors, nursing home borrowers can secure terms that are unheard of in other CRE markets. Early this year, the FHA made changes in its official Section 232 Handbook that make these loans even more attractive, especially for owners who wish to take cash out of their properties. In order to understand the significance of these changes, it helps to see them in the context of baseline Lean 232 loans. These FHA-insured loans are non-recourse and assumable, offer maturity schedules of up to 35 years and loan parameters of up to 80 percent loan-to-value (LTV), as well as 1.45 debt service ratio coverage. Best of …

June 22, 2017

Hospitality New York Northeast Top Stories

Pebblebrook Hotel Trust Sells Dumont NYC for $118M

by Nellie Day June 21, 2017

NEW YORK — Pebblebrook Hotel Trust (NYSE: PEB) has sold the 252-room Dumont NYC in New York for $118 million. The transaction marks Pebblebrook’s exit from the New York market. The upper upscale hotel is located at 150 E. 34th St. at Lexington Avenue in Manhattan. It was built in 1986. The buyer was LeFrak Organization, which plans to convert the hotel into apartments, according to The Real Deal. Dumont NYC was previously part of a six-hotel portfolio Pebblebrook held with joint venture partner Denihan Hospitality Group. Denihan Investments completed a redemption agreement with Pebblebrook that transferred ownership of the jointly owned hotels in October. Denihan became the sole owner of four of the assets. This included The Benjamin, Fifty NYC, Gardens NYC and Shelburne NYC for a total of 917 rooms. Pebblebrook assumed full ownership of Dumont NYC and Manhattan NYC, totaling 870 rooms. Manhattan NYC was then sold to a joint venture between Sioni Group, Patriarch Equities and Highgate for $217.5 million. It was rebranded as the Stewart Hotel. Proceeds from the Dumont NYC sale will be used for general business purposes, which may include reducing Pebblebrook’s outstanding debt or repurchasing some of the company’s common shares. “With …

June 21, 2017

Office Southeast Top Stories Virginia

Lerner Enterprises Secures $200M Financing for 17-Story Office Tower in Virginia

by Katie Sloan June 20, 2017

TYSONS, VA. — Lerner Enterprises has received $200 million in permanent financing for 1775 Tysons Boulevard, a 17-story office tower located in Tysons, Virginia. The developer, Lerner, delivered the property in late 2016. The 476,000-square-foot office tower is LEED Platinum certified, and features a state-of-the-art fitness center, conference center, café, indoor and outdoor social areas, and an onsite Fogo de Chão restaurant. Tenants at the property include EY, DXC Technology and WeWork. JLL is handling leasing at the tower. KPF designed the project. Towers Golde was landscape architect, Dewberry handled engineering and Paladino was LEED consultant. The office complex is the newest building in the Tysons II master plan, which features office, retail, dining, hotel and residential space. The 117-acre development is home to Tysons Galleria, an 800,000-square-foot luxury retail center, and a Ritz-Carlton. TH Real Estate — the real estate investment management arm of TIAA — provided the capital for the financing, which John Sieber Jr. of Phillips Realty Capital structured. Rockville, Md.-based Lerner Enterprises is one of the largest development and management companies in metro Washington, D.C. The company’s portfolio includes Dulles Town Center, a 1.4 million-square-foot regional mall in Loudoun County, Va., and Washington Square, a 1 …

June 20, 2017

Features Retail Top Stories

Lease Restructuring Increasingly Common in Today’s Retail Market, Says Gordon Brothers’ Mark Dufton

by Taylor Williams June 20, 2017

LAS VEGAS — As a specialist in lease mitigation and restructuring for retailers who are closing or relocating their stores, Gordon Brothers’ CEO of Real Estate Mark Dufton has represented dozens of retailers in the market for new or smaller spaces. In his 25-plus years in the business, Dufton has mitigated or restructured more than 1,500 leases, saving his clients more than $100 million. Northeast Real Estate Business sat down with Dufton of Boston-based Gordon Brothers during the International Council of Shopping Centers’ RECon event in late May in Las Vegas to pick his brain on how brick-and-mortar retailers facing heavy store closures can minimize financial losses. Northeast Real Estate Business: How do you measure success at a conference like this? Mark Dufton: We had a great day yesterday. The retail world is in a fair amount of turmoil, and that’s our space. We do lease valuation, disposition and restructuring work. So it’s been pretty heady times for us in this environment. NREB: DJM Real Estate changed its name about a year ago to Gordon Brothers. Can you walk me through what led to the transition of the company name? Dufton: DJM Real Estate was a stand-alone real estate company. It got bought by …

June 20, 2017

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