Top Stories

RLJ Lodging, FelCor Merge to Create $7B REIT

by Taylor Williams April 24, 2017

BETHESDA, MD. — RLJ Lodging Trust (NYSE: RLJ) has entered into an agreement to acquire Texas-based FelCor Lodging Trust Inc. (NYSE: FCH), creating a REIT with a pro forma equity market capitalization of $4.2 billion and an enterprise value of about $7 billion. The all-stock transaction, which will make RLJ the third largest pure-play lodging REIT, is expected to close by the end of 2017. The newly combined entity will own 160 Marriott, Hilton, Hyatt and Wyndham hotels totaling 31,467 rooms across 26 states and Washington, D.C. At 41 percent and 36 percent, respectively, Marriott- and Hilton-branded hotels comprise the majority of the rooms in the portfolio. Under the terms of the transaction, the newly formed entity will continue to trade under the “RLJ” stock symbol. The Bethesda-based firm will also assume FelCor’s debt and preferred stock upon closing, with its shareholders expected to own approximately 71 percent of the FelCor’s diluted equity. Felcor’s current shareholders are expected to retain ownership of the remaining 29 percent. In addition, each share of FelCor common stock will be converted into 0.36 shares of RLJ common stock. The acquired company’s operating units will be exchanged for limited partnership units in RLJ’s operating partnership …

April 24, 2017

CMC Group Receives $236M Financing to Develop Luxury Condominium Tower in Miami

by Kristin Harlow April 21, 2017

MIAMI — CMC Group has received $236 million in financing for the development of Brickell Flatiron, a 549-unit luxury condominium tower in Miami’s Brickell financial district. The 64-story building will be located at 1001 S. Miami Ave., across from The Shops at Mary Brickell Village and near the Brickell City Centre mixed-use development. Upon completion in mid-2019, the project will be the tallest residential tower south of New York City, according to CMC. Amenities will include a rooftop deck with spa, fitness center and pool, private movie theater, meeting rooms, wine cellar and concierge service. Revuelta Architecture designed the property. Jim Dockerty of HFF arranged the loan on behalf of CMC Group. HFF secured a $138.3 million senior loan and a $98 million mezzanine loan, which will be used to complete the project and market the remaining units. Bank of the Ozarks provided the senior loan, while RFR provided the mezzanine loan. Sales to date at Brickell Flatiron are in excess of $300 million. Miami-based CMC Group is a real estate development company focused on luxury residential, commercial and retail properties. — Kristin Hiller

April 21, 2017

Retail Texas Top Stories

Whitestone REIT to Purchase Two Retail Assets in Houston, Dallas for $204.6M

by John Nelson April 20, 2017

HOUSTON AND DALLAS — Whitestone REIT (NYSE: WSR) has entered into separate purchase agreements to acquire BLVD Place in Houston and Eldorado Plaza in Dallas for a combined $204.6 million. The sellers were undisclosed. The Houston-based REIT expects to close the acquisitions in May, subject to customary closing conditions. Upon closing, BLVD Place will be Whitestone’s 28th property in the Houston region and Eldorado Plaza will be the company’s seventh property in the Dallas area. Situated at 1800 Post Oak Blvd. in Uptown Houston, the 216,944-square-foot BLVD Place was 99 percent leased at the time of sale to tenants such as Whole Foods Market, Elaine Turner, North, Peska, Pinkberry, True Food Kitchen, New Balance and Verizon Wireless. The brewpub within Whole Foods was the first brewery located inside a grocery store in the United States. BLVD Place also features office space, including the regional headquarters for Frost Bank. Houston-based Wulfe & Co. developed the first two phases of BLVD Place. The acquisition of BLVD Place includes 1.4 acres of land that Whitestone REIT will use to develop a $45 million, six-story mixed-use building. The future project will feature 46,000 square feet of retail space on the first two floors and …

April 20, 2017

Features Hospitality Top Stories

M&M: Job Growth Fuels Bright Outlook for Hotels in 2017

by Taylor Williams April 20, 2017

Hoteliers are poised to see higher revenues in 2017, thanks in large part to the shrinking national unemployment rate, according to a new report from Marcus & Millichap titled “U.S. Hospitality Investment Forecast.” The unemployment rate, which the Bureau of Labor Statistics (BLS) reports fell 20 basis points to 4.5 percent in March, is powering hospitality forecasts in several ways. Most fundamentally, as the economy expands and more jobs are created, wages begin to increase, leaving consumers with more disposable income for leisure and travel. Economic expansion also breeds more interstate commerce between businesses, driving up levels of work-related travel. In March 2017, the country added 56,000 jobs in the professional and business services sector, according to the BLS. Furthermore, since 2011, the U.S. has added between two and three million jobs per year. This growth has enabled workers to hold jobs for longer periods of time, giving them more accrued vacation days. Finally, as the workforce grows, younger employees gradually phase out older ones, leading to a growing segment of retirement-age consumers. These job-growth trends all point to increased consumer traveling and spending in 2017. As such, the hospitality sector is projecting a 1.4 percent growth in room demand …

April 20, 2017

Multifamily Top Stories

Blackstone Buys Six-Property TA Realty Multifamily Portfolio for $430M

by Nellie Day April 19, 2017

BOSTON — Blackstone Real Estate Income Trust has purchased a six-property multifamily portfolio that spans four states for $430 million. The assets contain a total of 2,514 units. TA Realty LLC sold the portfolio on behalf of its Realty Associates Fund IX. The assets are situated in high-barrier-to-entry markets such as Dallas, Chicago and Orlando, supported by favorable demographic trends and positive economic indicators, according to TA Realty. Although the specific properties were not disclosed, CoStar notes that TA recently sold a 461-unit complex in Orlando for $105 million. Other properties CoStar believes to be included in the acquisition are the 483-unit Preserve at Osprey in Gurnee, Ill.; the 479-unit San Merano at Mirasol in Palm Beach Gardens, Fla.; the 312-unit Mason Park in Katy, Texas; and the 309-unit West End at City Center in Lenexa, Kan. “We believe the outcome of this transaction represents compelling value for Fund IX investors,” says Tom Landry, managing partner at TA Realty. “The price we were able to command for this well-located portfolio of apartment communities reflects the significant value created through strategic operational and capital improvements over the ownership period.” This is TA Realty’s second major disposition this month. On April 4, …

April 19, 2017

Northeast Pennsylvania Retail Top Stories

Teen Retailer rue21 to Close 400 Stores, Focus on Online Sales

by Katie Sloan April 18, 2017

WARRENDALE, PA. — Teen clothing retailer rue21 is set to close about one-third of its stores nationwide as it shifts its focus to e-commerce. The privately held company will shutter 400 stores, according to reports by The Associated Press, leaving more than 700 rue21 locations in 48 states. The retailer confirmed upcoming closures in a Facebook post, stating that “it was a difficult but necessary decision.” A spokeswoman for rue21 recently alluded to the retailer’s unfavorable financial state, according to reports by Women’s Wear Daily. The decision to shrink the company’s store footprint comes about two weeks after entering into forbearance agreements with lenders in order to stave off a default. In 2002, the company filed for bankruptcy under its former name — Pennsylvania Fashions Inc. It emerged under the name rue21 the following year. The company, based in the Pittsburgh suburb of Warrendale, didn’t say how soon the stores would close. Rue21 took to Facebook, once again, to explain to customers that they could search for stores near them on the company’s “Store Locator” page. Those set to close will show a “Closing Store” label above the address. Rue21 is the latest retailer to struggle amid the expansion of …

April 18, 2017

Features Office Top Stories

Growth of U.S. Office Market Continues to ‘Disappoint,’ Says Reis

by Taylor Williams April 18, 2017

One measurement of the health of the U.S. office sector stood out in the first quarter of this year. Net absorption totaled 4.9 million square feet, down from an average of 9.4 million square feet per quarter in 2016 and the lowest since 2014. In short, growth in the office sector “continued to disappoint,” according to Reis. The New York City-based real estate research firm, which tracks 82 markets nationally, recently released its analysis of the property sector’s vital signs in the first quarter. The positive news is that the office vacancy rate held steady at 15.8 percent from the prior quarter, and was down 20 basis points from the first quarter of 2016. The overall asking rent rose 1.8 percent on an annual basis. Construction was also relatively low at 7.9 million square feet in the first quarter of 2017, down from an average of 8.8 million square feet in 2016. Much like retail real estate’s war with e-commerce, office markets are competing with the pressures of using space more efficiently and hiring employees who work from remote locations, says Reis senior economist Barbara Byrne Denham. “Firms have persistently leased less space for their growing workforce,” she says. The …

April 18, 2017

Retail Texas Top Stories

TriGate Capital Acquires 410,121 SF Retail Center in Metro Houston

by Taylor Williams April 17, 2017

SUGAR LAND, TEXAS — TriGate Capital, a Dallas-based real estate private equity firm, has purchased First Colony Commons, a 410,121-square-foot retail center in the Houston suburb of Sugar Land. Covington Realty Partners, a Chicago-based investment firm that specializes in Class A assets in primary markets, sold the property. HFF arranged the $38.2 million in acquisition financing for the property and represented both parties in the sales transaction. Nexbank SSB provided the floating-rate, non-recourse loan for the property, which features a 12-year term and a five-year extension option. Situated on 37.8 acres at 15201-15555 Southwest Freeway near Interstate 69 on Houston’s southwestern outskirts, the center was 99 percent leased at the time of sale. Tenants include The Home Depot, Tuesday Morning, Babies “R” Us and Office Depot. More than 85,000 residents earning an average annual household income of $134,000 or more live within three miles of First Colony Commons. Rusty Tamlyn and Ryan West of HFF headed the investment sales effort. Jim Curtin of HFF led the debt placement transaction. “This power center had a lot of moving parts, which presented challenges for buyers and lenders,” says Tamlyn. “TriGate was able to navigate through the issues and will have potential value-add opportunities …

April 17, 2017

Connecticut Multifamily Northeast Top Stories

Starwood Capital Group to Acquire Forestar Group for $605M

by Kristin Harlow April 14, 2017

GREENWICH, CONN. — Starwood Capital Group has agreed to acquire Forestar Group Inc., a residential and mixed-use real estate development company, for $605 million. Starwood will acquire all of the outstanding shares of Forestar’s common stock for $14.25 per share in cash. The Forestar Board of Directors has unanimously approved the merger agreement and has recommended approval of the merger by Forestar’s stockholders. The transaction is expected to close in the third quarter of 2017. “Over the past 18 months Forestar has significantly reduced costs and outstanding debt, exited non-core assets and focused on its core community development business. While executing these key initiatives, the board and management have been evaluating longer term strategic alternatives,” says James Rubright, chairman of the Forestar board. “After conducting a thorough review assisted by highly experienced financial and legal advisors, the board believes that engaging in the transaction with Starwood is the best option to maximize stockholder value.” JMP Securities LLC is serving as financial advisor to Forestar, while Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor. Kirkland & Ellis LLP is serving as legal advisor to Starwood. Austin, Texas-based Forestar Group maintains a portfolio of 50 residential and mixed-use …

April 14, 2017

Massachusetts Mixed-Use Northeast Top Stories

Shorenstein Properties Sells 741,200 SF Center Plaza in Boston for $365M

by John Nelson April 13, 2017

BOSTON — After more than three years of ownership, Shorenstein Properties has sold Center Plaza, a 741,200-square-foot mixed-use asset in downtown Boston. Synergy Investments, a Boston-based real estate owner and investor, and GreenOak, an international real estate investment and lending firm, have jointly purchased Center Plaza for $365 million. Developed by Beacon Capital in phases in the late 1960s and early 1970s, Center Plaza consists of three interconnected, nine-story buildings comprising more than 600,000 square feet of office space, 77,000 square feet of street-level retail and a below-grade parking garage with 575 spaces. Situated at 1-3 Center Plaza, the retail and office development features nearly 875 feet of frontage along Cambridge Street. Center Plaza, which is currently 60 percent leased to 31 tenants, sits at the entrance to Boston’s Beacon Hill neighborhood. The project is situated across the street from Boston’s City Hall. Shorenstein Properties purchased Center Plaza in January 2014 for $307 million, according to the Boston Business Journal. The media outlet also reported that Shorenstein’s planned $25 million overhaul of Center Plaza never took shape. The NGKF Capital Markets Boston team led by Robert Griffin, Edward Maher, Matthew Pullen and James Tribble represented Shorenstein Properties, which sold the …

April 13, 2017

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