Top Stories

Canada Pension Plan Investment Board to Acquire Parkway for $1.2B

by Kristin Harlow June 30, 2017

TORONTO AND HOUSTON — Canada Pension Plan Investment Board (CPPIB) and Parkway Inc. (NYSE: PKY) have entered into a definitive agreement under which CPPIB will acquire Parkway, a Houston-based real estate investment trust, for $1.2 billion. The transaction, expected to close in the fourth quarter of this year, equates to $23.05 per share. Parkway owns the largest office portfolio in Houston, according to CPPIB. Located in the Westchase, Greenway and Galleria submarkets, the 19 properties span approximately 8.7 million square feet and were 87 percent leased as of March. Financial services, technology and commodities tenants anchor the buildings. TPG Capital and its affiliates, which collectively own approximately 10 percent of the outstanding common stock of Parkway, have agreed to vote in favor of the transaction. Parkway will pay its previously announced second quarter dividend today, but will suspend all future quarterly dividend payments through the expected close of the transaction. “We believe there are still some near-term headwinds in the office sector for Houston, but the implied asset valuation of this transaction shows CPPIB’s appreciation for the high-quality portfolio we have assembled and the near-term stability it provides during the current downturn in the market,” says James R. Heistand, president and CEO of Parkway. …

June 30, 2017

Mixed-Use Top Stories Utah Western

SALT Development Breaks Ground on $275M Multifamily, Office Project in Salt Lake City

by John Nelson June 29, 2017

SALT LAKE CITY — SALT Development, a privately held commercial real estate developer, has broken ground on Hardware Village, a $275 million, four-building mixed-use development situated on 400 West between North Temple Street and 200 North in Salt Lake City. Situated one block from the Vivint Smart Home Arena, home of the Utah Jazz NBA franchise, the project will include two seven-story multifamily buildings known as Hardware West and Hardware East, a 10-story office building known as Hardware Station and a four-story office building known as Hardware Crossings. “From the beginning we have envisioned creating a experience where residents are excited to work and live,” says Thomas Vegh, managing partner of Salt Lake City-based SALT Development. “Hardware District is the perfect complement to 4th West Apartments and the Salt Lake Hardware Building as it provides a sense of community with first-class living and working amenities.” The 265-unit Hardware West will feature 48 studios, 134 one-bedroom units and 83 two-bedroom units ranging from 450 to 1,800 square feet. The ground floor will feature 37 two-story brownstone townhomes averaging 1,400 square feet. Completion of the Hardware West building is scheduled for February 2018. The 144-unit Hardware East building will feature 32 one-bedroom …

June 29, 2017

Features Retail Top Stories

Repurposing Malls Among Retail’s Biggest Challenges, Says Coldwell Banker Commercial’s Schmidt

by Taylor Williams June 29, 2017

Given his background in business development, Fred Schmidt, president and chief operating officer of Coldwell Banker Commercial Affiliates, is accustomed to analyzing real estate trends over his 36 years in the industry. Schmidt, who joined Madison, N.J.-based Coldwell Banker Commercial in 2003 as vice president of business development, is not nearly as surprised by the spate of retail store closures as some of his colleagues seem to be. REBusinessOnline.com sat down with Schmidt at the International Council of Shopping Center’s RECon event in Las Vegas in late May. In addition to discussing his firm’s push into retail markets in major cities, Schmidt shared his insights on how to repurpose malls. REBusinessOnline.com: Why are we seeing so many store closures and retail bankruptcies at this time? Fred Schmidt: It’s not a new discussion. It’s common knowledge that Class A malls are doing very well and that the discounters — the top end and bottom end — have been doing well over the years. But there was a prediction four or five years ago that the Class B and C malls were going to suffer because they didn’t have the right merchandising. These changes are now manifesting themselves in terms of the …

June 29, 2017

District of Columbia Maryland Office Southeast 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

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