Top Stories

Desert Troon Sells 638,717 SF Office Portfolio in Scottsdale for $122M

by John Nelson June 23, 2016

SCOTTSDALE, ARIZ. — Desert Troon Cos., a Scottsdale-based real estate developer, has sold a 638,717-square-foot office portfolio within the 260-acre Perimeter Center business park in Scottsdale. The buyers, Wentworth Property Co. LLC (WPC) and Northwood Investors, purchased the Class A portfolio for $122 million. Desert Troon originally developed the five-building portfolio, which features Perimeter Gateway I, II, III and V, and Terra Verde. WPC plans to start renovations to the portfolio immediately, including upgrades to the lobbies and common areas of Perimeter Gateway I, II and V, as well as adding a cafe, tenant lounge and fitness center to Perimeter Gateway I that will be available to tenants of all four Perimeter Gateway buildings. WPC also plans to convert roughly 162,000 square feet of the portfolio into spec space, with each building having two or three spec office suites. In addition, WPC plans to build two new parking garages, with construction starting in the third quarter for an estimated 2017 completion. Tom Knoell Jr. represented Desert Troon internally in the transaction, and Jeff Wentworth, Chris Walker, Mike Beall and Sean Spellman of Cushman & Wakefield represented the buyers. “As one of the premier office portfolios in the state, it has …

June 23, 2016

Conference Coverage Features Illinois Midwest Multifamily Seniors Housing Top Stories

Non-Core Properties Present Best Buying Opportunities in Seniors Housing Today, Say InterFace Panelists

by Christina Cannon June 23, 2016

CHICAGO — What are the best buying opportunities today for investors in the seniors housing space? The answer begins with an understanding of the deals that are among the least attractive, according to veteran broker Ryan Saul. A property that is 99 percent full that trades at a 6.5 percent cap rate could hardly be called opportunistic because there is no upside, points out Saul, managing director of Chicago-based Senior Living Investment Brokerage. Instead, buying a property that is 75 percent occupied for $100,000 a unit with a broken management team in place presents real opportunity, he believes. “You can go in, turn it around and really add value so that you can sell it stabilized for a much larger premium.” Saul’s insights came during a panel discussion on the state of the investment market at InterFace Seniors Housing Midwest, which took place Tuesday at the Westin Chicago River North Hotel. The conference attracted 265 attendees from a cross-section of the seniors housing industry. Moderated by Ben Firestone, managing director of Blueprint Healthcare Real Estate Advisors, the investment panel discussed who’s buying, who’s selling and what’s driving deal velocity. In addition to Firestone, the panelists included Talya Nevo-Hacohen, chief investment …

June 23, 2016

District of Columbia Loans Mixed-Use Office Retail Southeast Top Stories

KeyBank, Walton Street Originate $196M Refinancing for The Atlantic Building in D.C.

by Haisten Willis June 22, 2016

WASHINGTON, D.C. — A partnership between KeyBank Real Estate Capital and an affiliate of Walton Street Capital LLC have originated a $196 million first mortgage loan for Douglas Development Corp. The loan is secured by The Atlantic Building, a 280,000-square-foot trophy office building with ground-floor retail located in the east end of Washington D.C. The 10-year, fixed-rate loan includes a 65 percent loan-to-value ratio and refinances the existing debt on the property. KeyBank and Walton Street will provide servicing and advisory services for the life of the loan. The Atlantic Building is located at 950 F St. N.W. The property integrates seven historic buildings and facades with a 10-story office building next to Ford’s Theatre, the site where President Abraham Lincoln was assassinated in 1865. Built in 1887, the building was the city’s first privately constructed high-rise with elevator service. The historic exteriors have since been preserved and incorporated into the modern version of the property, which was redeveloped between 2004 and 2006. The Atlantic Building includes 283,512 rentable square feet, of which 29,172 square feet is retail and 35,340 square feet is office. In addition, there are 322 below-grade parking spaces and Metro access from the red, blue and …

June 22, 2016

Features Retail Top Stories

Wave of Store Closures Presents Opportunity to Reimagine Retail Spaces

by Christina Cannon June 22, 2016

The recent move by several national retail chains to close hundreds of their stores across the country creates a tremendous opportunity for shopping center owners, developers, communities and design professionals. This is a nationwide trend that reflects a shift in how we are shopping and living today. Property owners around the country are evaluating what to do with these empty big boxes. In years past, if a large retailer couldn’t be found, the space would be divided into two or three smaller retail spaces. This remains a viable option today in some cases. Expanding retailers with a store footprint of 10,000 to 20,000 square feet are also attracted to these locations. Breaking down the large boxes to mid-size footprints creates an opportunity for expanding retailers to open a new store in an established, mature location. However, with more cities encouraging mixed-use and vertical developments, owners are studying options to break out of the confines of the enclosed mall to create a multi-use environment. Such developments might include residential, hotel, shopping, dining and office uses, much like what is found on the vibrant streets of the world’s greatest cities. This forward thinking is redefining shopping centers and big-box retail spaces across …

June 22, 2016

New York Northeast Office Top Stories

SL Green Taps AECOM’s Tishman Construction to Manage Construction of $1B Office Project in Manhattan

by Jeff Shaw June 21, 2016

NEW YORK CITY — SL Green Realty Corp. has chosen AECOM’s Tishman Construction unit to manage the construction of One Vanderbilt, a 58-story office development located adjacent to Grand Central Terminal in New York City’s East Midtown business district. The total value of construction for the project is approximately $1 billion. The skyscraper will contain 1.6 million square feet of Class A commercial space, a public transit hall and a 14,000-square-foot public plaza. The development will also include $220 million worth of public transit improvements to the Grand Central transit hub. When One Vanderbilt is complete, the building is expected to be the second tallest office tower in New York City, reaching heights of 1,401 square feet, according to Tishman. The tower will be second only to One World Trade Center, which Tishman also built. Kohn Pedersen Fox (KPF) designed the building to pay homage to the Grand Central Terminal and fit into the skyline alongside the Chrysler Building, located one block away from the development site. The developers plan to achieve LEED v4 Gold certification for the project. Primary construction is scheduled to begin in 2016, with completion expected in 2020. — Katie Sloan

June 21, 2016

Features Multifamily Seniors Housing Top Stories

Greystone: 5 Ways to Get More Out of Class B Seniors Housing Properties

by Christina Cannon June 21, 2016

There are a lot of ways to increase and unlock value in lower-quality seniors housing, according to the June 2016 Seniors Housing Market Trend Report from Greystone Real Estate Advisors. According to Senior Care Investor’s annual report, Class A properties reaped $248,500 per unit for assisted living and $243,300 per unit for independent living communities in 2015. Class B properties, comparatively, earned only $138,300 per unit for assisted living and $72,900 per unit for independent living. In 2015, approximately 60 percent of assisted living properties sold were Class B, while 40 percent were Class A. In independent living, approximately one-third of the properties sold were Class A, while two-thirds were Class B. In Greystone’s report, the writers distinguish three different factors — physical location, asset quality and operational performance — that set Class A and Class B properties apart. The report outlines five ways to boost value if a property is lacking in one of those measures. 1. Add amenities — Location is extremely important when it comes to the value of an asset, the report suggests. Since this factor is out of the owner’s control when disposing of a property, owners should focus on increasing the quality of the …

June 21, 2016

California Retail Top Stories Western

Two Southern California Shopping Centers Change Hands for $352M

by Nellie Day June 20, 2016

LOS ANGELES AND SAN DIEGO — Savills Studley has arranged the sale of a pair of shopping centers in Southern California for a combined sales price of $352 million. In the first transaction, ROIC California purchased North Ranch Shopping Center, a 146,625-square-foot neighborhood shopping center in the Los Angeles submarket of Westlake Village, for $122.8 million. Ralphs Fresh Fare, Rite Aid, Trader Joes and Petco anchor North Ranch. It is located at 3815-3963 Thousand Oaks Blvd., one block from the 101 Freeway. In the second transaction, Stockbridge Capital Group purchased Mira Mesa Marketplace, a 487,807-square-foot regional shopping center in San Diego, for $229 million. Smart & Final Extra, CVS, Home Depot, Edwards Theatre, Ross, Old Navy and Barnes & Noble anchor Mira Mesa. It is located off Interstate 15 on Mira Mesa Boulevard. Bill Bauman and Kyle Miller of Savills Studley’s National Retail Services Group represented the unidentified seller of the two properties. ROIC California is an entity of the Retail Opportunity Investment Corp., a publicly traded REIT. Stockbridge Capital Group is a real estate investment firm headquartered in San Francisco. — Nellie Day

June 20, 2016

Illinois Midwest Mixed-Use Retail Top Stories

Intercontinental Real Estate Sells Retail, Entertainment Property in Chicago for $133M

by Christina Cannon June 17, 2016

CHICAGO — Intercontinental Real Estate Corp. has sold the River East Center, a 251,060-square-foot, mixed-use property in the Streeterville area of downtown Chicago. A joint venture between Wheelock Street Capital and Madison Capital purchased the center for $133 million, according to Crain’s Chicago. The buyer has plans to rebrand the property, which is situated on 2.8 acres encompassing an entire city block. Intercontinental Real Estate paid $117.5 million for the property in early 2006, according to Crain’s. The three-story retail and entertainment complex sits on top of a four-story underground parking garage with 1,154 spaces. The property also features an 18-story Embassy Suites hotel and a 58-story, 620-unit luxury condominium tower, neither of which are included in the sale. Tenants at the retail and entertainment center include AMC Theatres, Lucky Strike, LA Fitness, FTW Chicago, Walgreens, Bright Horizons, NIU Sushi, Bellwether restaurant and BMO Harris Bank. Located at 322 E. Illinois St., River East Center is 97.8 percent leased. HFF arranged financing for the transaction. — Christina Cannon

June 17, 2016

Affordable Housing Florida Multifamily Southeast Top Stories

The Wilson Co. Sells Affordable Housing Portfolio in Florida to Starwood for $563.5M

by John Nelson June 16, 2016

TAMPA, FLA. – The Wilson Co., a Tampa-based affordable housing developer and manager, has sold a 31-property portfolio of affordable housing communities in Florida for $563.5 million. Totaling 8,498 units, the portfolio is heavily concentrated in Orlando and Tampa. Starwood Property Trust (NYSE: STWD), an affiliate of Starwood Capital Group, purchased the assets, which were developed between 1995 and 2004 using Low Income Housing Tax Credits (LIHTC). On average, maximum allowable rents across the portfolio are approximately $350 below average rents at nearby market-rate communities. The portfolio was more than 97 percent occupied at the time of sale. “This transaction represents the beginning of a new era for LIHTC investment sales,” says Doug Childers, managing director of HFF’s investment sales team, which represented The Wilson Co. in the transaction. “Traditionally, LIHTC transactions have attracted primarily private, regional capital providers. HFF’s affordable housing experts were able to educate institutional investors regarding the portfolio’s relatively low cash-flow volatility and the regulatory and operational nuances associated with LIHTC communities. As a result, we were able to create a competitive bidding process that included large, institutional investors,” added Childers. Childers led HFF’s investment sales team in the transaction, along with HFF’s senior managing director …

June 16, 2016

cbre-research-change-in-construction-employment-2005-2015

Features Industrial Top Stories

Labor Shortages Are Driving Up Construction Costs, Says CBRE

by Haisten Willis June 16, 2016

A new research report from CBRE says that despite the global collapse of commodity prices — including many key inputs to construction — overall construction costs continue to rise nationwide. This is largely because of worker shortages that have driven up labor costs, offsetting any savings on materials. In January, average total construction costs in the United States registered a year-over-year increase of 1.8 percent, according to the RSMeans Construction Cost Index (CCI). Since January 2011, the national CCI has increased by an annual average of 2.3 percent, resulting in a cumulative 11.8 percent increase during that period. “The price of materials is just one driver of overall construction costs,” says Andrea Cross, head of research for the Americas at CBRE and co-author of the report. “The cost of construction labor tends to be much more variable across geographies and over time, so it typically has a larger impact on overall cost trends.” Cross also notes that the collapse of the housing market and subsequent recession affected supply-side dynamics for new construction throughout the country, as a substantial number of construction workers left the industry during the downturn and never returned. Nationally, the number of workers employed in construction-related occupations …

June 16, 2016

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