U.S. office demand gained momentum in the second quarter of 2015 as net absorption increased 40 percent year-over-year, according to the latest quarterly U.S. office occupancy report from CBRE. This further tightened market conditions for renters and pushed second-quarter 2015 downtown (10.6 percent) and suburban (15.1 percent) vacancy toward its previous lows in 2007 of 9.7 percent and 13.9 percent, respectively. “Market conditions in the U.S. are owner-favorable in most downtown and suburban areas,” reads the report. Downtown office property is particularly hot, with asking rents surpassing their 2008 peak in the first quarter of 2015 and setting a new historical high of $42.70 in the most recent quarter. Suburban rents increased more slowly and remain 3 percent below 2008 levels. The report also states that San Jose, Seattle, Austin, Orlando, Fort Lauderdale and Phoenix are generating the strongest rates of new demand relative to the size of their respective markets, making conditions more competitive. The U.S. gross average asking rent increased by 1.1 percent quarter-over-quarter, and by 3.6 percent year-over-year in the second quarter, surpassing its 2008 peak. Double-digit year-over-year rent increases occurred in downtown San Francisco, downtown Manhattan, Seattle, Houston the Boston suburb of Cambridge. Major leasing activity …
RENO, NEV. — MG Properties Group (MGPG) has purchased two multifamily properties totaling 722 units in Reno for $68.1 million. The transaction includes the 318-unit Vizcaya Hilltop Apartments and the 404-unit Village at Iron Blossom Apartments. The acquisition represents the largest bulk purchase of multifamily units in Reno’s history, according to MGPG. Vizcaya is located at 1350 Grand Summit Drive, while Village at Iron Blossom is located at 690 E Patriot Blvd. The communities are situated near Tesla’s soon-to-be-developed Gigafactory. Both properties include a mix of one- to three-bedroom units. MGPG plans to renovate the communities’ common-area amenities. Unit interiors will also be upgraded, and deferred maintenance will be addressed. “The potential to create value through renovations and upgrades to these properties makes them an excellent fit for our fully integrated investment and management platform,” says Mark Gleiberman, CEO of MGPG. “These assets will bring added value to our existing portfolio.” MGPG has purchased eight multifamily properties in the past year. These acquisitions included 2,600 units for a combined purchase price of $370 million. MGPG is currently targeting properties in the Western U.S. in areas including Arizona, California, Colorado, Nevada, Oregon and Washington. The transaction was executed by Newmark Grubb …
ATLANTIC CITY- N.J. — Caesars Entertainment Corp. has opened its Waterfront Conference Center at Harrah’s Resort Atlantic City. The $125.8 million center has already booked meetings and conventions through 2019. Due to the addition of the conference center, there has been an increase of 90,000 advance room bookings for the upcoming 12 months at Harrah’s. This is an increase from the 7,000 advance room bookings for the previous 12 months. The 100,000-square-foot facility is now the largest conference-hotel complex from Baltimore to Boston according to Caesars. “For Atlantic City, this is an opportunity to attract a new type of customer to the city and significantly increase hotel occupancy, as well as drive revenue for local restaurants, retail outlets and other businesses,” says Mark Frissora, president and CEO of Caesars. Designed by Friedmutter Group and located in Atlantic City’s Marina District, the Harrah’s Waterfront Conference Center can accommodate up to 5,000 attendees. The 100,000 square feet of flexible meetings space can be broken down into 56 separate small meeting rooms with up to 300 different configurations of reception, banquet and pre-function space. “We are excited to introduce Harrah’s Resort Atlantic City Waterfront Conference Center as a major player in not only …
NEW YORK — SL Green Realty Corp. (NYSE: SLG), New York City’s largest commercial property owner, has reached an agreement to sell two Fifth Avenue retail development sites to a single, undisclosed buyer for $125.4 million, or $13,690 per zoning square foot. The transaction is expected to be completed before the end of this year and is subject to customary closing conditions. The sites, located at 570 and 574 Fifth Ave., were acquired by SL Green in November 2013 for a total of $78.7 million. The publicly traded REIT subsequently vacated the tenants in the existing buildings in preparation for a comprehensive retail development. “With this transaction, SL Green will realize returns on its original investment that are consistent with our original underwriting without having incurred any development risk,” says Brett Herschenfeld, managing director of SL Green. “In addition, the sale provides a source of equity capital that can be tax efficiently redeployed into Eleven Madison on an immediately accretive basis.” These sales are part of SL Green’s disposition and reinvestment strategy to help fund its previously announced $2.6 billion acquisition of Eleven Madison Avenue. SL Green Realty Corp. is focused primarily on acquiring and managing commercial properties in Manhattan. …
Single-tenant retail sales volume remains incredibly strong, totaling more than $9.4 billion in transactions through the first half of 2015. At this rate, the sector will have no problem significantly outpacing the $15.24 billion reported last year, according to Stan Johnson’s Net Lease Outlook, which tracks the U.S. single-tenant retail market. According to the report, transaction volume was the highest in the West and Northeast, where sales for the first half of 2015 have already exceeded $2 billion in each region. The Stan Johnson report only tracks significant investment sales (assets priced at $2.5 million or greater). Retail cap rates have been trending downward for several years across the nation, but the greatest compression has occurred in the West. Average cap rates in the West currently are the lowest of all regions at 5.54 percent, representing a 1.24 percentage point drop in the last three-and-a-half years. Overall, single-tenant retail cap rates are fairly consistent across all regions, with the spread being less than one percentage point. Sales prices per square foot vary more widely from region to region. While most areas of the country are at or near the national average of $264 per square foot, the Northeast has seen …
WASHINGTON, D.C. — Global alternative asset manager The Carlyle Group (NASDAQ: CG) has raised $4.2 billion for its seventh U.S. real estate fund, Carlyle Realty Partners VII (CRP VII), reaching the fund’s hard cap. The CRP team of 85 investment professionals focuses on investments across all major real estate sectors and major metropolitan areas in the United States. Nationally, Carlyle has completed more than 500 real estate investments across its seven funds, seeking to identify investments that benefit from strong fundamentals across 11 sectors and 30 markets. Carlyle Realty Partners’ six prior funds have been active in both residential and commercial real estate. In residential, the group has invested in a total of 62,000 housing units, including 42,000 multifamily apartment units and more than 20,000 senior living, student housing and for-sale residential units. CRP has also invested in approximately 41 million square feet of office, industrial, data center and retail, including investments in the San Francisco Bay Area/Silicon Valley, New York City and Washington, D.C. markets. “We believe the robust interest in CRP VII is acknowledgement of our successful focus on opportunistic investments in U.S. real estate, and we look forward to continuing to create value in our portfolio,” says …
LOUISVILLE, Ky. — A joint venture consisting of Griffin-American Healthcare REIT III Inc. and NorthStar Healthcare Income Inc. has agreed to acquire Trilogy Investors LLC, the parent company of Trilogy Health Services LLC, for approximately $1.1 billion. Griffin will own 70 percent of the joint venture while NorthStar will own the remaining 30 percent. Randy Bufford, Trilogy’s founder and CEO, along with other members of Trilogy’s management will maintain an investment of approximately $24 million in the company. Founded in 1997, Louisville-based Trilogy is an owner-operator of 96 seniors housing campuses throughout Indiana, Ohio, Michigan and Kentucky. The portfolio comprises more than 10,000 beds, and most campuses were built or renovated within the past 10 years. Trilogy’s communities offer a range of care, including assisted living, memory care, independent living and skilled nursing services. Griffin and NorthStar are both public, non-traded real estate investment trusts. NorthStar is based in Greenwood Village, Colo., and sponsored by NorthStar Asset Management Group Inc. Griffin is based in Irvine, Calif., and sponsored by American Healthcare Investors and Griffin Capital Corp.
WASHINGTON, D.C. — The August jobs report “gives cover” to the Federal Reserve to finally raise short-term interest rates by a quarter of a percent during its policy meeting on Wednesday and Thursday of this week, says Robert Bach, director of research for the Americas at Newmark Grubb Knight Frank. “Whether they choose to walk through that door, or dawdle for a while on this side, remains to be seen.” The U.S. economy added a modest 173,000 jobs in August, according to the U.S Bureau of Labor Statistics (BLS). What’s more, job gains have averaged 221,000 over the past three months and 247,000 over the past 12 months. “There will never be a perfect time for the Fed to begin the long process of returning monetary policy to its pre-crisis equilibrium, but doing so will give them more leverage to combat the next recession, whenever it occurs,” emphasizes Bach. The Federal Reserve’s target for the fed funds rate — the interest rate at which banks and other depository institutions lend to each other on an overnight basis — has been between 0 and 0.25 percent since December 2008. A quarter-point increase would move that target to between 0.25 percent and 0.50 …
NEW YORK — Fairstead Capital and Blackstone Real Estate Partners VIII have purchased a multifamily portfolio containing nearly 1,000 free-market rental units in Manhattan for $690 million. The acquisition includes 24 mid-rise rental properties situated in the Chelsea and Upper East Side neighborhoods. The new owners plan to upgrade the properties’ common areas. The partners will also add new amenities and carry out a capital improvement plan to renovate the units. The Caiola Family sold the portfolio. It was previously managed by B&L Management Company, which was founded by Benny Caiola in 1980. Family-owned B&L Management owns, acquires, develops and manages residential and retail properties in New York City and Long Island. The portfolio buy comes on the heels of Blackstone’s purchase of a shopping mall and parking garage in Queens for $400 million. That sale closed in late June. New York-based Blackstone currently has about $92 billion in investor capital under management. Fairstead Capital is a real estate investor and asset manager specializing in New York City multifamily properties. The firm owns and manages $2.3 billion of property, which includes more than 4,750 rental units.
MIAMI — Capital One has closed an $88.7 million refinance of ECI Group Inc. and Harbor Group International’s Shorecrest Club Apartments, a 467-unit, 20-story multifamily project located on the west shore of Biscayne Bay in Miami. Loan proceeds will be used to refinance a syndicated construction loan, also from Capital One, used to build the complex. As with the construction loan that preceded it, 50 percent of the current loan has been syndicated with SunTrust Bank. Capital One served as joint lead arranger, joint book runner and administrative agent for the syndicated loan. With the project still under construction, Capital One issued terms for a takeout loan that would close shortly after construction was completed. Located adjacent to the John F. Kennedy Causeway, the Shorecrest Club offers expansive views of Biscayne Bay, North Miami Beach and Bal Harbor from each of its two towers. Amenities at the complex include a waterfront restaurant, lap and resort pools, cabanas and a sundeck overlooking the bay. ECI Group is a privately owned development, construction, brokerage and management real estate company primarily focused on the multifamily sector. Harbor Group International is a diversified real estate investment and financial services company with a portfolio of …