CHICAGO Ń The latest turn in the saga of General Growth Properties' (GGP) emergence from bankruptcy surprisingly has nothing to do with Simon Property Group. On Wednesday, GGP agreed in principle with Brookfield Asset Management on a $2.625 billion equity commitment. Under the terms of the agreement, Brookfield would invest $2.5 billion in exchange for new GGP common stock priced at $10 per share. Brookfield would also invest up to $125 million at $5 per share in common stock for General Growth Opportunities, a new company created to hold certain GGP non-core assets, including all of the company's master-planned communities and its landmark developments. In return, Brookfield will own approximately 30 percent of GGP and be able to nominate three of the company's directors. According to a release issued by GGP, the deal is expected to create a floor value for the purpose of raising additional capital for the company. The deal will also provide sufficient liquidity to fund GGP's needs while it emerges from bankruptcy. GGP plans to pursue additional capital-raising alternatives totaling up to $5.8 billion, and Brookfield will assist it in raising the capital. For example, GGP plans to raise $250 million in a stock offering of …
CAMBRIDGE, MASS. Ń In its second big announcement in less than a week, Forest City Enterprises has entered into a $668 million joint venture with Health Care REIT for the ownership of the University Park mixed-use campus in Cambridge. Under the terms of the agreement, Health Care REIT will acquire a 49 percent interest in seven of the campus' 10 life science buildings. Health Care REIT will invest $170 million in cash into the joint venture and will assume $320 million in secured debt for the seven buildings. Six of the seven buildings will be closed on today, with the seventh building closing during the second quarter. Forest City will retain a 51 percent ownership stake in the seven buildings as well as its original ownership stakes in the other three buildings. The transaction's implied value represents a 7.6 cap rate in 2010 net operating income. Earlier this week, it was reported that Forest City would be entering into a joint venture with Bernstein Management in which Bernstein purchased a 50 percent interest in a portfolio of three Washington, D.C.-area multifamily towers. While it is coincidence that the two transactions closed within such close proximity to each other, the deals …
GREENWICH, CONN., AND CHARLOTTE, N.C. Ń Greenwich-based Starwood Property Trust has signed a definitive agreement to acquire a $503 million loan portfolio from Charlotte-based TIAA-CREF. Starwood will pay $510 million for the portfolio, plus accrued interest. The portfolio contains 20 performing commercial real estate loans comprising 18 senior first mortgage A-notes and two junior first mortgage B-notes. The portfolio's weighted averages include a 17.7 percent debt yield, a remaining term of 1.7 years, a coupon of 7.75 percent and a debt-service coverage ratio of 1.8x. In a statement, Starwood CEO Barry Sternlicht said, [T]his investment's high debt yield and relatively short duration should allow us to reinvest capital as the loans mature or provide a built-in pipeline of originations. Almost 20 percent of this portfolio will mature within 1 year, and, as such, these assets are an extremely attractive alternative for cash. They can also be modified, extended or rolled into new term debt and can be levered short term, if necessary. The properties secured by the loans include 4.5 million square feet of retail and office space in 10 states. The transaction is expected to close at the end of February. Ń Coleman Wood
VIRGINIA AND MARYLAND Ń Washington, D.C.-based Bernstein Management has acquired a 50 percent interest in a $250 million portfolio of multifamily properties controlled by Cleveland-based Forest City Enterprises. The portfolio comprises three high-rise multifamily communities located in the greater Washington, D.C., area that were developed by Forest City. The properties include The Grand, a 19-story, 549-unit property located in Bethesda, Md; Lenox Park, a 17-story, 406-unit property located in Silver Springs, Md.; and Lenox Club, a 21-story, 385-unit property located in Arlington, Va. The communities include amenities such as ground-floor retail space, swimming pools and fitness centers. Occupancy for the portfolio averaged 93 percent at the time of closing. Forest City expects to realize approximately $34 million from the creation of the joint venture. The transaction was negotiated by the CB Richard Ellis team of Bill Roohan, Andy Boyer, Mike Mulldowney, Jonathan Greenberg, Michael Rudolph, John Sheridan and Brian Margerum. Ń Coleman Wood
LAS VEGAS Ń Icahn Enterprises has acquired Fontainebleau, a resort and entertainment project currently under construction on the Las Vegas Strip, for approximately $150 million. The project presently consists of an unfinished building located on 25 acres of land. Approximately 70 percent of the 7 million-square-foot building was complete before construction halted last spring. In a statement, Carl Icahn, chairman of Icahn Enterprises, said, The acquisition of the Fontainebleau property was a great opportunity to purchase a distressed asset that I believe has considerable value. According to the original property brochure for Fontainebleau, the $2.9 billion project was originally meant to contain more than 3,800 guest rooms, approximately 100,000 square feet of casino space, 28 restaurants and lounges, and a 40,000-square-foot nightclub. According to published reports in the Las Vegas Sun, construction stalled out when the consortium of lenders for the project Ń led by Bank of America Ń cut off funding for the project. Fontainebleau Las Vegas LLC, the previous owner of the project, filed for bankruptcy protection shortly thereafter. According to a recent story in the Wall Street Journal, Icahn does not plan to restart construction for the project anytime soon. The story goes on to say that …
HOUSTON Ń KBR has expanded its leases at downtown Houston's Cullen Center to a total of approximately 1.2 million square feet. The company renewed its 700,000-square-foot lease at KBR Tower and its 300,000-square-foot lease at 500 Jefferson Street. It will also be expanding its presence in both buildings by a combined 234,000 square feet. Dan Bellow and Mike Boehler of Jones Lang LaSalle represented KBR in lease negotiations. The owner of Cullen Center, Brookfield Properties Corp., was represented in-house by Paul Layne and Paul Frazier. Successfully completing an office transaction of this size Ń involving a significant expansion Ń speaks to the increase in tenant activity we are beginning to see around our major markets, said Dennis Friedrich, president and CEO of Brookfield Properties' U.S. Commercial Operations, in a statement. The Cullen consists of four office towers: KBR Tower, 500 Jefferson Street, and Continental Centers I and II. Each tower contains an attached parking garage. Amenities include a food court, the Crowne Plaza Cullen Center Hotel, conference facilities, full-service banking facilities and other retail amenities. Ń Coleman Wood
DEERFIELD, ILL., AND NEW YORK CITY — Deerfield-based pharmacy chain Walgreens has acquired Duane Reade, one of the largest pharmacy chains in the New York City metropolitan area, in a $1.075 billion, all-cash transaction that will give Walgreens a major stake in one of the nation's largest retail markets. The transaction will include all 257 Duane Reade locations, its two distribution centers and the company's corporate office. The deal is expected to close by the end of August. Duane Reade Holdings, which operates the chain, is controlled by affiliates of Oak Hill Capital Partners. Duane Reade has been operating in the New York City market since 1960. Last year, it posted unaudited net sales of $1.8 billion. The chain has the highest sales per square foot in the retail drugstore industry. In the near term, Walgreens will retain the Duane Reade name, its pharmacy and distribution employees and much of its senior management team. Over time, the two corporate offices will consolidate. Peter J. Solomon Co. served as financial advisor to Walgreens in the transaction, and legal counsel was provided by Wachtell, Lipton, Rosen & Katz. Goldman Sachs & Co. led the financial advisement team for Oak Hill Capital Partners …
MINNEAPOLIS — Minneapolis-based Opus Northwest has been selected to build a new $66 million student center on the campus of the University of St. Thomas, a private Catholic university located in Minneapolis. The Anderson Student Center will be a three-story, 225,000-square-foot facility facing Summit and Cretin avenues. It will serve as a new location for student facilities currently housed within the Murray-Herrick Campus Center. The lower level of the Anderson Student Center will contain retail restaurant space, a clothing and supplies retailer, and a convenience store. Recreation areas on the first floor will include pool tables and darts, a four-lane bowling center and a dance floor, table tennis and foosball tables, and flat-screen televisions. The second floor will contain a resident student dining center. The third floor will include a coffee and smoothie shop, a large multi-purpose room, a Hearth Room and 13 meeting rooms. The second and third floor of the facility will contain offices for the Division of Student Affairs, Campus Ministry, Auxiliary Services and student organizations. “The student center will serve as a wonderful gathering place that will tie together our north and south campuses,” said Father Dennis Dease, president of the University of St. Thomas, in …
INDIANAPOLIS — Indianapolis-based Simon Property Group has made a $10 billion offer to acquire General Growth Properties, promising $9 billion in cash. The deal would net General Growth shareholders more than $9 per sharein cash and ownership interests. Creditors would receive complete cash recovery of all outstanding debts against General Growth, a consideration totaling $7 billion. According to a letter from Simon CEO David Simon to General Growth's Board of Directors, Simon's offer has been on the table for more than a week and has been made public because the company has received no response. “Simon's offer provides the best possible outcome for all General Growth stakeholders,” Simon said in a statement. “Our offer provides much-needed certainty to conclude General Growth's protracted reorganization process.” The transaction would be financed through cash on hand, equity co-investments and Simon's credit facility. Officials are confident the required due diligence can be completed in 30 days. Lazard Ltd., J.P. Morgan and Morgan Stanley are advising Simon in financing matters. Simon's legal advisor is Wachtell, Lipton, Rosen & Katz. The Official Committee of General Growth's Unsecured Creditors approves the deal and has encouraged General Growth to consider the offer. “Full cash payment to all unsecured …
WASHINGTON, D.C. — The U.S. Department of Energy, in coordination with several other federal agencies, has unveiled plans to create a regional research center to promote building efficiency. The center, known as the Energy Innovation Hub, will develop new building efficiency technologies and work with local groups to implement these technologies in area buildings. This regional partnership, which will involve the Hub, local universities, government agencies and private companies, will be known as the Energy Regional Innovation Cluster (ERIC). Under the plan, the ERIC will be based at either a university, a Department of Energy national laboratory, a nonprofit organization or a private firm. It will partner closely with local and state governments and leverage the experience of local architects, builders and manufacturers. The ERIC will work to disseminate new technologies into the regional marketplace and share best practices with the public and private sectors. Additional support will be provided for workforce education and training. The federal government will solicit proposals for the plan and will award up to $129.7 million over a 5-year period to the winning proposal. The Department of Energy is providing up to $22 million during the first year and up to $100 million during the …