IRVINE, CALIF. — Commercial real estate markets are starting to show signs of stabilization following years of run-up and appreciation, according to Auction.com’s second-quarter 2015 commercial real estate market monitor report. While CRE deal volume increased in the first quarter, volume declined 14.6 percent in the second quarter to $112.4 billion, but remains 24 percent higher than a year ago. The second quarter dip marked the first time since 2008 that total deal volume dropped on a quarter-over-quarter basis. “It’s unclear whether the second-quarter drop in sales volume is the beginning of a slowdown in the CRE market, or simply an adjustment from an unusually strong first quarter,” says Rick Sharga, Auction.com’s executive vice president. “What’s clear is that all of the major CRE sectors continue to perform far better than they did a year ago, and may be strong enough to withstand a potential decline in international investment activity due to the economic issues in China and Europe.” Europe continues to struggle with high unemployment and low growth, leading the European Central Bank to start its own quantitative easing program to spur lending and growth. This has depressed European interest rates when compared to U.S. rates, which have risen …
NEW YORK — Madison Realty Capital (MRC), an institutionally backed real estate investment firm, has provided first and second mortgage financing totaling $124 million for the acquisition and future renovation of a 15-building, 175,000-square-foot portfolio of residential and mixed-use properties in New York’s East Village. “This portfolio of properties in such prime locations in the East Village would be nearly impossible to replicate in today’s market,” says Josh Zegen, co-founder and managing principal of MRC. “We’re excited to offer a customized loan package to help the borrower enhance the value of the portfolio.” The portfolio has a mix of studio and one-bedroom units. The buildings are located in a neighborhood that is increasingly popular with young professionals and students due to its retail, restaurants, nightlife and proximity to New York University and the city’s employment centers. The acquisition was an off-market deal with long-term family owners. The borrower plans to update common areas of the buildings, renovate residential units to maximize square footage and lease up vacancies. Including this transaction, MRC has closed 24 debt investments totaling $590 million so far in 2015, consisting of special situation loan origination opportunities and loan acquisition deals. MRC is a New York-based real estate …
NEW YORK — HFF (NYSE: HFF) has secured a $110 million first mortgage financing for 180 Madison Avenue, an historic, 23-story, 280,953-square-foot office tower in Manhattan. 180 Madison Avenue is located at the southwest corner of Madison Avenue and East 34th Street in Manhattan’s Midtown South office submarket. The building, formerly known as The Lingerie Building, was historically the premier building for lingerie manufacturers and wholesalers in New York. Originally built in 1926, the property is in the final stages of a comprehensive renovation that has repositioned the asset as a best-in-class office building. Improvements include a lobby renovation, elevator modernization and window replacements, as well as various electrical upgrades. Recent rollover at the building, which is currently 72 percent leased, has enabled ownership to demolish and pre-build space as tenants’ leases expire. The property has become a desirable location for firms in the technology, advertising, media and information (TAMI) sectors that are concentrated in the Midtown South market, according to HFF. Two of the top five largest tenants located in the building, The Rubicon Project and Unified Social, are indicative of growing TAMI firms relocating to Midtown South. Both tenants signed leases at the property in the last few …
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.