Top Stories

Seniors Housing Draws Customers to Mixed-Use Centers

by Jeff Shaw May 11, 2017

Generally, when one thinks about the massive, new mixed-use projects under development, a few images come to mind. Apartments, offices, hotels and retail mixed together, with some green walking trails and open spaces. Seniors housing, however, is probably not among those first impressions. This idea is changing, though, as mixed-use developers and seniors housing owners and operators begin to see the mutual benefits that senior living can bring to a project. The demographic wave of Baby Boomers hitting retirement age will nearly double the 65-plus population in the United States by 2050, from 43.1 million to 83.7 million, according to projections by the U.S. Census Bureau. The tactic of integrating seniors living into mixed-use developments is becoming more common throughout the country. Usually in high-end developments, the target market is seniors with disposable income. While the projects are a one-off concept for most seniors housing developers, some are making it a cornerstone of their development philosophies. For example, Georgia-based Formation Development Group, a subsidiary of private equity group Formation Capital, has opened four communities in mixed-use developments in Texas and Illinois since 2009. The company has a fifth currently under construction in Pennsylvania. “That’s an intentional strategy on our part,” …

May 11, 2017

New York Northeast Retail Top Stories

Coach Looks to Become Multi-Brand Operation with $2.4B Acquisition of Kate Spade

by Kristin Harlow May 10, 2017

NEW YORK CITY — Coach Inc. (NYSE: COH) has agreed to acquire Kate Spade & Co. (NYSE: KATE) for $18.50 per share in cash for a total transaction value of $2.4 billion. The acquisition is an important step in Coach’s evolution, according to Victor Luis, CEO of Coach. “Kate Spade has a truly unique and differentiated brand positioning with a broad lifestyle assortment and strong awareness among consumers, especially millennials,” says Luis. “Through this acquisition, we will create the first New York-based house of modern luxury lifestyle brands, defined by authentic, distinctive products and fashion innovation.” Coach expects the combined company to realize $50 million in savings through improved efficiencies, scale, inventory management and supply chain optimization, according to Kevin Wills, CFO of Coach. So far, the deal looks promising for Coach as shares of its stock closed at $45.20 per share on Tuesday, May 9, the highest mark since 2014. Shares of Kate Spade stock also jumped post-announcement, closing at $18.40 on Tuesday, up from $16.97 on Friday, May 5. Yesterday, Goldman Sachs raised Coach’s rating to buy from neutral. BofA Merrill Lynch is providing bridge financing to Coach for the acquisition. Coach plans to pay the $2.4 billion …

May 10, 2017

California Multifamily Top Stories Western

American Assets Trust Buys 533-Unit Apartment Property in San Diego for $232M

by Jeff Shaw May 9, 2017

SAN DIEGO — American Assets Trust Inc., a San Diego-based REIT, has acquired Pacific Ridge, a 533-unit apartment complex near the San Diego coastline, for $232 million. The sale is one of the largest multifamily transactions in San Diego history, according to Berkadia, which brokered the transaction. Pacific Ridge is a Class A luxury community located on 15 acres with unobstructed ocean views. Carmel Partners developed the 577,147-square-foot property, which opened in 2010. Outdoor amenities include Moroccan-styled common areas, lounges, two saltwater pools and spas, an outdoor grill and dining pavilion, yoga deck, bocce court, fire pits, jogging trail and dog walk. Indoor amenities include a wine bar, coffee bar, demonstration kitchen, fitness center, tanning studio, board sport and bicycle storage, saltwater aquarium and concierge. The property is located near San Diego International Airport, SeaWorld San Diego and Petco Park, home of Major League Baseball’s San Diego Padres. Berkadia cited a declining unemployment rate — falling 60 basis points year-over-year to 4 percent at the end of February — as a reason for San Diego’s attractiveness as a market. Ed Rosen, John Chu, Kyle Pinkalla and Erin Dammen of Berkadia represented the seller, identified only as “a San Francisco-based entity,” …

May 9, 2017

Features Multifamily Top Stories

Multifamily Rents Climb in 81 Percent of U.S. Markets in April, RENTCafé Report Shows

by Jeff Shaw May 9, 2017

Average U.S. apartment rents saw a modest increase of 0.2 percent from March to April 2017, but rents increased in 81 percent of markets nationwide, according to a report from RENTCafé. The report uses data from the apartment listing service’s parent company, software provider Yardi. The RENTCafé research team analyzed data across the 250 largest cities in the United States for buildings containing 50 or more units. Based on the data, the average U.S. apartment saw a $2 increase in rent between March and April 2017. Rents increased in April in 203 of the 250 cities tracked by Yardi, while they decreased in 13 cities and stayed flat in 34. Year-over-year, rents went up 2 percent nationwide, which is “a significant reduction in regard to historical performance at this time of the year and is the lowest annual growth rate we’ve seen in more than three years,” according to the report’s author, Ama Otet. By comparison, average rents increased at triple that rate — 6 percent — from April 2015 to April 2016. California cities make up the bulk of the April rent-growth list, with 11 of the top 20 growth cities located in the state. Stockton, Calif., took the …

May 9, 2017

Healthcare Top Stories

Sabra Health Care, Care Capital Properties Agree to Merge, Create $7.4B Healthcare REIT

by Taylor Williams May 8, 2017

IRVINE, CALIF. AND CHICAGO — Sabra Health Care REIT (NASDAQ: SBRA) and Care Capital Properties Inc. (NYSE: CCP) are joining forces to create a healthcare REIT with a pro forma total market capitalization of roughly $7.4 billion and an equity market capitalization of roughly $4.3 billion. The all-stock transaction is expected to close during the third quarter of 2017. The new REIT will be headquartered in Irvine and include a healthcare portfolio comprised of 564 investments across 43 states and Canada. Sabra’s current executive team will manage the company, which will continue to trade under the SBRA ticker symbol. During a conference call on Monday morning, Sabra CEO and Chairman Rick Matros stated that the merger enables Sabra to achieve its goal of upgrading its credit rating. “With this structure to the stock deal, the transaction is credit-enhancing for both parties,” Matros said during the call. “Our leverage will be modest, we’ll have greater scale and diversification and greater opportunities for shareholder-friendly growth than either company had on a standalone basis.” Matros also noted during the call that the merger allows Sabra to meet one of its diversification goals: adding more skilled nursing facilities. However, that focus won’t change the …

May 8, 2017

Healthcare Northeast Pennsylvania Top Stories

PennFIRST Designs $1.5B Hospital Pavilion for University of Pennsylvania

by Kristin Harlow May 5, 2017

PHILADELPHIA — PennFIRST is completing the planning and design process for the University of Pennsylvania’s new $1.5 billion hospital. The “Pavilion” will be situated on Penn Medicine’s West Philadelphia campus where it will create a new public square and a focal point for all surrounding buildings to anchor the health system. An official groundbreaking took place on Wednesday, May 3. The Pavilion will house inpatient care for the Abramson Cancer Center, heart and vascular medicine and surgery, neurology and neurosurgery, and a new emergency department. The project is slated for completion in 2021. Located on the former site of Penn Tower, the Pavilion will be home to about 500 new private patient rooms and 47 operating/interventional rooms in a 1.5 million-square-foot, 16-story facility. The Pavilion will be linked to the Hospital of the University of Pennsylvania and the adjacent Perelman Center for Advanced Medicine as well as the train station via a network of public bridges and walkways. Long-term flexibility was incorporated into the design so that patient rooms can be adapted and changed over time with minimal impact to the building fabric. The patient rooms will be equipped with in-room technologies to strengthen communication between patients, families and care …

May 5, 2017

Multifamily Seniors Housing Top Stories

Kayne Anderson to Acquire Sentio Healthcare Properties for $825M

by John Nelson May 4, 2017

BOCA RATON AND ORLANDO, FLA. — Kayne Anderson Real Estate Advisors (KAREA) has entered into a definitive merger agreement under which affiliates of KAREA will acquire Sentio Healthcare Properties Inc. KAREA will acquire all of the outstanding shares of Sentio in an all-cash transaction valued at $825 million. Sentio is a public, non-listed real estate investment trust (REIT), externally advised by Sentio Investments. The firm’s portfolio includes 34 seniors housing communities and medical office buildings located in 16 states across the United States. The Orlando-based company is financially backed by KKR (NYSE: KKR), a global private equity firm based in New York City. The merger would end KKR’s partnership with Sentio. Sentio’s board of directors has unanimously approved the merger, which is expected to close in the third quarter of this year. KAREA plans to increase the value of the Sentio portfolio through property renovations, facility expansions and other operational enhancements. KAREA is part of Kayne Anderson Capital Advisors LP, a $26 billion, Los Angeles-based alternative investment management firm with more than 30 years of experience in the energy, infrastructure, growth capital, real estate, middle market credit and distressed municipal sectors. KAREA, which operates out of Boca Raton, focuses on …

May 4, 2017

Features Retail Top Stories

M&M: Positive Economic Forces Buoy Net-Leased Retail Sector, Despite Rising Interest Rates

by Kristin Harlow May 4, 2017

Steady growth of the U.S. economy will likely continue through 2017, benefitting a wide range of single-tenant, net-lease retail concepts that will dominate the development pipeline over the coming year, according to Marcus & Millichap’s latest Net-Leased Retail Research Report. The report details three aspects of the U.S. economy that are proving to be positive forces for the net-leased retail sector: job growth, consumer sentiment and core retail sales. Job growth gains averaged 195,000 positions per month over the last year, and the unemployment rate has fallen to 4.7 percent, the lowest level since 2007. The report also references an annual increase in average hourly earnings of 2.8 percent. Consumer sentiment posted its highest level since 2000, with expectations also elevated. The U.S. consumer confidence index is 11.9 percent above the average reading since the survey began in 1967. Core retail sales, defined as aggregate sales excluding automobile and gasoline sales, vaulted 5.7 percent year-over-year in February. Lead growth categories within the retail sector include e-commerce, food and drink establishments and health and personal care stores. As For Rising Interest Rates The postelection surge of the 10-year Treasury yield, as well as the Federal Reserve’s decision to increase the federal funds …

May 4, 2017

Features Multifamily Top Stories

MBA: First-Quarter Mortgage Originations Up 9 Percent Year Over Year

by Taylor Williams May 4, 2017

WASHINGTON, D.C. — Commercial and multifamily mortgage originations increased by 9 percent during the first quarter of 2017 on a year-over-year basis, according to the Mortgage Bankers Association (MBA). The results are based on the MBA’s Commercial/Multifamily Mortgage Bankers Originations index, which has tracked quarterly activity since 2002. The first quarter saw the dollar volume of loans for industrial properties increase by 40 percent compared with the first quarter of 2016. The volume of loans for healthcare and multifamily properties rose by 22 percent and 14 percent, respectively, during the same time frame. Loan production for all property classes was down 27 percent relative to the fourth quarter of 2016, but that was to be expected, says Jamie Woodwell, MBA’s vice president of commercial real estate research. “Commercial real estate borrowing and lending started 2017 on much the same footing it ended 2016,” says Woodwell. “Multifamily properties remain the key force behind overall origination trends. Matching, broader investment themes, financing for industrial properties also picked up while retail declined.” The dollar volume of loans originated by Fannie Mae and Freddie Mac during the first quarter represented a 33 percent increase from the same period a year ago. On the flip …

May 4, 2017

New York Northeast Retail Top Stories

Kimco Signs First Retail Leases for $180M Boulevard Redevelopment in New York’s Staten Island

by Nellie Day May 3, 2017

NEW YORK CITY — Kimco Realty (NYSE: KIM) has signed its first round of retail leases at The Boulevard, a $180 million lifestyle center in the Staten Island borough of New York City. The project is a redevelopment of Hylan Plaza, which has been shuttering its existing retailers over the past several months. Situated on Ebbitts Street and Hylan Boulevard, The Boulevard will feature 50 stores in a 460,000-square-foot, multi-level format. The first retailers to sign onto the project include ShopRite (68,000 square feet), Alamo Drafthouse (41,000 square feet), Party City (13,000 square feet), PetSmart (23,500 square feet) and Chase Bank (5,100 square feet). Modell’s sporting goods store and Mandee will be relocating within the center, absorbing 16,000 square feet and 11,000 square feet, respectively. Construction at the redevelopment is scheduled to commence in early summer or late fall, with a grand opening scheduled for summer 2019. Existing Hylan Plaza tenants that have shuttered in anticipation of this redevelopment include United Artist movie theater, Toys “R” Us/Babies “R” Us, the Salvation Army, Kids Place and Subway. Rainbow Shops and Telco are scheduled to close by the end of this month. S9 Architecture is designing the redevelopment to feature ground-floor retail …

May 3, 2017

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