NEW YORK CITY — A joint venture between Cerberus Series Four Holdings and Chatham Lodging Trust (NYSC: CLDT) has reached an agreement with Innkeepers USA Trust and its affiliates to acquire 64 Innkeepers hotels for $1.02 billion. This is the second agreement the companies have reached. The first agreement was reached in May, and then terminated in August due to “the occurrence of a condition, change or development that could reasonably be expected to have a material adverse effect on Innkeepers’ business, assets, liabilities (actual or contingent), operations, condition (financial or otherwise) or prospects,” according to a press release sent from Chatham on August 19. The $1.02 billion sale price offers a $75 million increase in value to creditors compared to the baseline bid that was set for the May 2011 auction. The new agreement will still allow the company to exit from Chapter 11 as planned. “Chatham and Cerberus are excited about owning this valuable portfolio and look forward to creating significant value for their shareholders and investors,” said Jeff Fisher, CEO of Chatham, in a statement. Chatham’s share price closed at $10.90, down from $18.85 a year ago. — Savannah Duncan
JERSEY CITY, N.J. — MEPT, in conjunction with Bentall Kennedy, has purchased the 1.1 million-square-foot Newport Tower, a high-rise office tower located at 525 Washington Blvd. in Jersey City, from Brookfield Office Properties for $377.5 million. The 36-story, Class A building sits on the Hudson waterfront. It is LEED Gold certified and currently 89 percent leased to a variety of financial service firms and related services companies. “The Newark Metro market is one of our major target markets for the fund,” said Martin Standiford, senior vice president of acquisitions for the Northeast for Bentall Kennedy. “We were underweighted in that market relative to our holdings in the other strategic markets. We do have some properties there but relative to the size of that market, we were really underrepresented.” The Hudson waterfront submarket has strong supply and demand fundamentals, with a vacancy rate around 6 percent, Standiford said. MEPT purchased the building through a limited partnership subsidiary. CBRE represented the seller in the transaction and has been retained to provide property management and leasing services. “Newport Tower is a significant acquisition for MEPT since it provides the fund with an investment in a high-quality, stabilized asset in the New York-New Jersey …
NASHVILLE — O’Charley’s Inc. has completed the 20-year sale-leaseback of 50 O’Charley’s restaurant properties with Scottsdale, Ariz.-based STORE Capital for $105 million. Nashville-based O’Charley’s will use $103.8 million of the sale proceeds and $11.4 million of available cash to redeem at par its entire $115.2 million principal amount of 9 percent senior subordinated notes due November 2013. The transaction will leave the company with virtually no long-term debt. “As a result of this 20-year sale-leaseback, we believe we have significantly strengthened our financial position,” said David Head, president and CEO of O’Charley’s, in a statement. “In addition, by monetizing approximately half of our real estate portfolio and locking in more favorable long-term financing, the transaction increases our flexibility in a difficult operating environment.” In addition, O’Charley’s reduced its revolving credit facility to $30 million from the previous $45 million and extended the term from 2013 to 2016. This will allow the company to spend up to $5 million on renovations and expansions, with up to 35 percent EBITDA for 2012 and beyond. There are currently 227 O’Charley’s restaurants in 18 states in the Southeast and Midwest, 221 of which are company-owned. — Savannah Duncan
NEW YORK CITY — Africa Israel USA has signed an agreement with an undisclosed buyer to sell the 267,000-square-foot Clock Tower Building, a 41-story tower located at 5 Madison Ave. in New York City, for $165 million. Metropolitan Life Insurance originally constructed the tower, which has been vacant since 2005, and Africa Israel purchased the property in 2007. “We are delighted to have reached an agreement with a very credit-worthy buyer to secure the future of this remarkable building and support the burgeoning vitality of the Madison Square Park neighborhood,” said Tamir Kazaz, CEO of AFI USA in a statement. According to Laurie Golub, general counsel and managing director of business affairs for AFI USA, the buyer has already made a $5 million deposit, $2 million of which is non-refundable. The transaction is expected to close no later than January 16, 2012. — Savannah Duncan
CHICAGO — Chicago-based General Growth Properties (GGP) has refinanced four shopping centers, representing $966 million of new mortgages. The loans include: – a $450 million loan at a 4.6 percent interest rate, due in 2019, for Natick Mall in Natick, Mass. – a $200 million loan at a 5.05 percent interest rate, due in 2023, for Galleria at Tyler in Riverside, Calif. – a $185 million loan at a 4.5 percent interest rate, due in 2019, for First Colony Mall in Sugar Land, Texas. – a $131 million loan at a 4.25 percent interest rate, due in 2021, for Northbrook Court in Northbrook, Ill. After adjusting for GGP’s ownership interest, the company’s pro-rata share of the new four non-recourse mortgages totals $483 million. “At the start of 2011, one of GGP’s stated goals was to strength the company’s balance sheet and liquidity while also reducing interest rates and extending the average debt maturity profile,” said Sandeep Mathrani, CEO of GGP in a statement. “We have accomplished our 2011 goals and are now focused on 2012 financing opportunities. Year-to-date, GGP has completed nearly $3.9 billion of new property level non-recourse financings.
CHICAGO — Grubb & Ellis Senior Vice President and Chief Economist Bob Bach released a report this week analyzing the national office market, and how it's stood up relatively well in the face of recent challenges in the economy. “Defying the economic headwinds, the office market turned in a reasonably strong performance in the Q3,” Bach wrote. To wit, the national office vacancy rate ended the quarter at 17.0 percent, down 30 basis points from Q2. The decline of 70 bps in the last two quarters, however, remains on the low side of a “normal” recovery cycle. Vacancy remains 90 bps below the peak, still well above the 12 to 14 percent range that represents a balanced market. “Although vacancy has been consistently lower in CBD markets, both CBD and suburban markets are recovering at a comparable pace,” Bach added. Notably, CBD vacancy fell from 14.7 percent in Q2 to 14.4 percent in Q3 while suburban vacancy declined from 18.7 percent to 18.4 percent during this period (see chart below for historical vacancy data). Source: Grubb & Ellis In all, Q3 saw 11.8 million square feet absorbed, falling just short of the 12.0 million square feet absorbed in Q3. “Class …
WASHINGTON, D.C. — Six U.S. banks failed in September, raising the total to 74 for the year and putting the banking sector on a pace for nearly 100 failures for all of 2011, according to the Federal Deposit Insurance Corp. and New York-based Trepp LLC. The failed banks include First International Bank in Texas, Citizens Bank of Northern California, Bank of the Commonwealth in Virginia, First National Bank of Florida, CreekSide Bank in Georgia, and Patriot Bank of Georgia (see below). Georgia has the highest count of bank failures, with 19 year-to-date in 2011 and 71 since the current cycle began in late 2007. Florida ranks second for bank failures, with 11 year-to-date in 2011 and 56 in the current cycle. The closure in Texas was the first since early 2010. For a state with a large number of banks, Texas has had relatively few failures — nine in the current cycle. Commercial real estate exposure was the main driver behind problem loans for the banks that failed in September. Commercial real estate loans accounted for $365 million, or 82 percent, of the total $445 million in nonperforming loans at the failed banks. Commercial mortgages made up $199 million (45 …
CHATHAM, N.J. — Woodmont Industrial Partners (WI Partners), has formed as a new venture focused on acquiring industrial properties in select, high-barrier-to-entry and globally oriented seaport and inland port markets in the Eastern United States. The venture is an affiliate of real estate development and management firm Woodmont Properties, led by Managing Principal Eugene Preston, and Principals Eric Witmondt and Marc Lebovitz. Collectively, the principals of WI Partners have acquired or developed more than 14 million square feet, including properties in such states as New Jersey, Pennsylvania, Florida, California and Texas. Preston, who is responsible for sourcing opportunities and managing the WI Partners’ portfolio, previously held the position of senior vice president at ProLogis, where he directed development and acquisition activities for the company’s Northeastern region. Witmondt is currently chief executive officer for Woodmont Properties, and David Trager, chief investment officer for Woodmont Properties, holds the same position with WI Partners. Lebovitz is focused on delivering strategic and operational expertise for WI Partners and is president of Romark Logistics, which specializes in regional, national and international supply chain management solutions. “The principals of Woodmont Industrial Partners are uniquely qualified among their peers because they bring together highly complimentary skill sets …
WASHINGTON, D.C. — Job growth is the straw that stirs the drink for the commercial real estate industry, but the addition of 103,000 payroll jobs to the U.S. economy in September is hardly cause for celebration, say real estate economists. What’s more, employers are leasing office space at a cautious pace, observes Victor Calanog, director of research for New York-based Reis. Net absorption of office space nationally slowed from 3.2 million square feet in July to 2.1 million square feet in August and 1 million square feet in September, “a somewhat worrying downward trend,” points out Calanog. In its release of the September jobs report last Friday, the Bureau of Labor Statistics revised the payroll figures upward for July (+42,000) and August (+57,000) by a total of 99,000, bolstering the argument that the economy is slowly improving and not headed back into recession (see chart below). The U.S. economy has now added nearly 1.1 million new jobs year-to-date through September, up from 940,000 for all of 2010, according to Reis. “While the September report is good news compared with last month’s preliminary report that zero jobs were created in August, the labor market is still not growing fast enough to …
NEW YORK CITY AND CHATTANOOGA, TENN. — TIAA-CREF and CBL & Associates Properties, Inc. (NYSE: CBL), have closed their $1.09 billion real estate joint venture to invest in market dominant shopping malls, originally announced in May 2011. As part of the joint venture, TIAA-CREF has completed its investment in four of CBL’s market dominant shopping malls: Oak Park Mall in Kansas City, Kan.; West County Center in St. Louis; CoolSprings Galleria in Nashville, Tenn.; and Pearland Town Center in Pearland, Texas. Eastdil Secured acted as CBL’s exclusive financial advisor in arranging this joint venture. “With the ongoing disconnect in public versus private market valuations, we believe this transaction provides us with the most advantageous source of monetizing the equity value in our portfolio,” said Stephen Lebovitz, CBL’s president & chief executive officer, in a statement. “TIAA-CREF’s investment strengthens our balance sheet and partners us with a well-capitalized institution to pursue new opportunities.” Specifically, CBL reduced outstanding debt balances by approximately $486 million through TIAA-CREF’s assumption of approximately $267 million of property-specific debt and cash proceeds of approximately $219 million. TIAA-CREF received a 50 percent pari passu interest in the three enclosed malls, including Oak Park Mall, West County Center and …