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Amazon to Acquire Whole Foods Market for $13.7B

by Kristin Harlow June 16, 2017

SEATTLE — Online retail giant Amazon (NASDAQ: AMZN) has agreed to acquire high-end grocery chain Whole Foods Market Inc. (NASDAQ: WFM) for $13.7 billion. The all-cash transaction amounts to $42 per share and includes the Austin, Texas-based grocer’s net debt. Whole Foods Market will continue to operate stores under the Whole Foods Market brand. John Mackey will remain CEO of Whole Foods Market, and the company’s headquarters will remain in Austin. “This partnership presents an opportunity to maximize value for Whole Foods Market’s shareholders, while at the same time extending our mission and bringing the highest quality, experience, convenience and innovation to our customers,” says Mackey. Completion of the transaction is subject to approval by Whole Foods Market’s shareholders, regulatory approvals and other customary closing conditions. The parties expect to close the transaction during the second half of 2017. “It seems that Amazon, after all, is one of brick and mortar’s biggest believers — and for good reason. The grocery sector has been in major growth for some time now, and Amazon’s entry into the space will be a game changer,” says Rafael Romero, vice president on the retail team at Coral Gables, Florida-based CREC, an independent real estate firm. “It will be interesting to see how other high-end and organic …

June 16, 2017

Multifamily Seniors Housing Southeast Tennessee

Chinese Investor Offers $3B to Acquire Tennessee-Based Brookdale, Reuters Reports

by John Nelson June 14, 2017

BRENTWOOD, TENN. — Zhonghong Zhuoye Group Co. Ltd., a Chinese real estate investor, has reportedly offered approximately $3 billion for the acquisition of Brookdale Senior Living, according to a report by news agency Reuters, which cited people familiar with the matter. If the Brookdale deal were completed as reported, it would be by far the largest Chinese investment in U.S. seniors housing to date. Headquartered in Brentwood, Brookdale is by far the largest owner and operator of seniors housing in the United States. Its operational portfolio includes 1,052 properties and 103,00 units, according to the company’s first-quarter report, which is nearly triple the size of the next largest competitor. The company has struggled since its $2.8 billion acquisition of fellow seniors housing giant Emeritus in 2014. After initially experiencing a lift in the months following the merger, Brookdale’s stock price fell from $38.16 per share on March 2, 2015, to $11.80 per share on Feb. 8, 2016. Rumors of a sale of the company have swirled for months. Following the Reuters report on Tuesday, Brookdale’s stock price saw a brief lift of 6 percent to as high as $15.18 per share, but quickly fell back down to a close of …

June 14, 2017

Hospitality Nevada Top Stories Western

Golden Entertainment to Acquire American Casino & Entertainment Properties for $850M

by Katie Sloan June 13, 2017

LAS VEGAS — Golden Entertainment Inc. (NASDAQ: GDEN) has agreed to acquire American Casino & Entertainment Properties LLC, which owns four gaming and entertainment properties in Nevada, for $850 million. American Casino & Entertainment’s portfolio features 3,879 slot machines, 89 table games and 4,895 hotel rooms in Las Vegas and Laughlin, Nevada. Properties include: The Stratosphere Casino, Hotel & Tower, featuring an 80,000-square-foot casino, 2,427 guestrooms and suites, 13 restaurants, nine bars, two pools, entertainment venues and a 1,149-foot observation tower located on the North Las Vegas Strip. Arizona Charlie’s Hotel & Casino – Decatur, located just off the Las Vegas Strip, which features 1,060 slot machines, seven table games and 259 hotel rooms. Arizona Charlie’s Hotel & Casino – Boulder, located on Boulder Highway in Las Vegas, which features 849 slot machines, seven table games and 303 hotel rooms. The Aquarius Casino Resort, located on the banks of the Colorado River in Laughlin, Nev. The property features a 57,000-square-foot casino, eight restaurants, three bars, 1,906 guestrooms and suites and an entertainment pavilion. The purchase consideration consists of $781 million cash plus approximately four million shares of Golden Entertainment stock issued to American Casino & Entertainment’s current owner, Whitehall Street …

June 13, 2017

Features Retail Top Stories

Avison Young’s Jedd Nero: Today’s Retail Real Estate Market Is a Blank Canvas

by Taylor Williams June 13, 2017

LAS VEGAS — With more than 30 years of experience representing tenants and landlords in retail negotiations, Jedd Nero, principal and executive managing director at Avison Young’s New York office, has worked with household-name retailers such as Hershey’s, Hugo Boss and Verizon Wireless. Nero was one of about 37,000 retail professionals who attended ICSC RECon in Las Vegas in late May. As the crowd jostled through the Las Vegas Convention Center in search of their next networking opportunity, Northeast Real Estate Business found time to chat with Nero. His insights into the rapidly changing landscape of retail real estate are detailed below. Northeast Real Estate Business: Since the beginning of the year, we’ve seen a rash of store closures nationally. In terms of the volume of these closures, what has precipitated that? Is it just online shopping or are there other factors at work? Jedd Nero: I think it’s a combination of several factors. I think we can all agree that the country is over-malled. There are about 1,200 malls in the country. By the time everything is said and done, there will probably be about 900 left. Class C and D malls have been affected the most. Certainly online …

June 13, 2017

Company News Top Stories

Data Center Merger: Digital Realty to Acquire DuPont Fabros in $7.6B Deal

by Taylor Williams June 12, 2017

SAN FRANCISCO AND WASHINGTON, D.C. — Data center REIT Digital Realty Trust Inc., (NYSE: DLR) has entered into an agreement to acquire competitor DuPont Fabros Technology Inc. (NYSE: DFT) in an all-stock merger with an enterprise value of $7.6 billion. The deal’s enterprise value includes $1.6 billion of assumed debt that is expected to be refinanced with a combination of investment-grade corporate bonds, among other securities. The merger is expected to close during the third or fourth quarter. Under the terms of the agreement, DuPont Fabros’ shareholders will receive 0.545 shares of Digital Realty stock for each share of DuPont Fabros stock. The merger is expected to generate as much as $18 million in overhead savings per year. “We are excited to execute two of the strategic objectives embodied in our corporate vision — diversifying our customer base and expanding our geographic presence,” says A. William Stein, CEO of San Francisco-based Digital Realty. “We believe this combination will enhance our ability to create significant long-term value for both sets of shareholders.” According to the company’s annual report, Digital Realty’s portfolio consists of 145 properties totaling roughly 23 million square feet across 33 global metropolitan areas. As of June 1, 2017, …

June 12, 2017

Alabama Market Reports Office Southeast Southeast Market Reports

Consistency, Young Talent Lead to High Expectations for Birmingham Office Market

by John Nelson June 12, 2017

For the first time in quite a while, the Birmingham office market has experienced a rejuvenation and resurgence, catered around growth, a diversification of the tenant base and an effort to attract and retain bright young minds. Like many markets nationally, the city’s focus on urban renewal has made downtown Birmingham an attractive place to live, work and play, and thus will help companies attract talent to the market. Birmingham has entered a new era of industry and residential growth with one of the Southeast’s most dynamic markets after evolving from a historically steel and manufacturing-focused economy. Driven by a new generation of local leaders who have focused on developing biotechnology, life sciences and automotive sectors as catalysts for growth, Birmingham has witnessed a remarkable economic transformation. A preference for dynamic locations to live, work and play is occurring in Birmingham, as a significant amount of development has taken place in downtown Birmingham. While the bulk of this activity is occurring on the multifamily side, the same factors that draw people to live downtown are expected to positively impact the desire of employees to work downtown. In the long run, it is reasonable to expect office development to take off …

June 12, 2017

Features Top Stories

Underwhelming Job Growth in May Raises Question on Fed’s Next Move

by Taylor Williams June 6, 2017

Are the below-average monthly job gains recorded in May due to a labor shortage, or is there weakness emerging in the employment market? That’s the crucial question in the wake of the latest job figures released by the Bureau of Labor Statistics (BLS), which showed employers added 138,000 nonfarm payroll jobs in May, well below the 12-month average of 181,000 positions. Meanwhile, the unemployment rate fell from 4.4 percent in April to 4.3 percent in May. “Most evidence points toward the former, and that should keep the Fed on track to lift rates two additional times in 2017, even if it waits until September,” says Steve Hovland, director of research for Irvine, California-based HomeUnion, an online real estate management firm that specializes in helping investors acquire and manage single-family home rentals. “Job openings remain near record-high levels, indicative of a skills gap rather than hesitant employers. Furthermore, the stock markets regularly flirt with record highs, job growth has been positive for the longest post-war stretch and home prices have soared,” adds Hovland. Members of the Federal Open Market Committee (FOMC) will need to weigh whether the lowest unemployment rate in 16 years is sufficient to justify a rate hike despite …

June 6, 2017

Features Retail Top Stories

Retailers Need ‘Wow’ Factor to Stay Competitive, Says CEO of Lee & Associates

by Kristin Harlow June 6, 2017

LAS VEGAS — Amid a throng of more than 37,000 convention-goers at RECon — the world’s largest retail real estate trade show — Heartland Real Estate Business sat down with veteran Chicago broker Rick Scardino and CEO Jeff Rinkov of Lee & Associates on the show floor of the Las Vegas Convention Center in late May. Scardino, a principal with the Chicago office, spearheads the retail division at Lee & Associates of Illinois. Rinkov serves as CEO and chairman of the board. The two discussed the overall health of the retail market in the Windy City and beyond, the emergence of “grocerants” and the driving factors behind the recent rash of retail bankruptcies and store closures. What follows is an edited version of that conversation. Heartland Real Estate Business: Does the old saying that the grocery sector is recession-proof because everyone needs to eat still hold true? Rick Scardino: I just hate painting anything with a broad brush. I don’t think anything is recession-proof. I grew up with family retail and the restaurant business. Sometimes people move from one category to another, they’ll go from an Aldi when things are tighter to a Jewel. HREB: Who do you think is …

June 6, 2017

Hospitality Top Stories

Summit Hotel Properties to Acquire Five-Hotel Portfolio for $163M

by Taylor Williams June 5, 2017

AUSTIN, TEXAS — Summit Hotel Properties Inc. (NYSE: INN) has agreed to acquire a portfolio of five hotels totaling 812 guestrooms across four markets from Xenia Hotels & Resorts Inc. (NYSE: XHR). The purchase price is approximately $163 million, or $201,000 per room. The purchase, which will be made through an undisclosed Summit affiliate, is expected to close within the next 30 days. The portfolio includes the 203-room Courtyard Fort Worth Downtown/Blackstone; 123-room Courtyard Kansas City Country Club Plaza; 182-room Courtyard Pittsburgh Downtown; 116-room Hampton Inn & Suites Baltimore Inner Harbor; and 188-room Residence Inn Baltimore Downtown/Inner Harbor. As of April 2017, the average evenue per available room (RevPar) across the portfolio was $115.52. The year-to-date RevPar industry average for April 2017 was $78.26, a 3 percent increase from average RevPar of $76.02 in April 2016, according to hospitality research firm STR. “This transaction will represent the continued execution of our strategy of acquiring premium-branded hotels with efficient operating models,” says Daniel Hansen, Summit’s chairman, president and CEO. “All five of these hotels are in prime locations in strong markets and exhibit many of the upside characteristics that are important to our investment criteria.” Coming on the heels of Xenia’s …

June 5, 2017

Florida Multifamily Southeast

Robbins Electra Acquires Multifamily Community in South Florida for $61.2M

by John Nelson June 2, 2017

MIAMI — Robbins Electra has acquired The Broadwater at the Hammock Apartments, a 424-unit multifamily community located at 15000 S.W. 104th St. in Miami. Robbins Electra purchased the asset from HRA Broadwater for $61.2 million. Broadwater’s community amenities include two swimming pools, a fitness center, jogging trail, sand volleyball court and an indoor racquetball court. Larry Stockton, Jeff Resnick, Jaime Rodriguez and Alex Morcate of Colliers International represented both parties in the off-market transaction. Robbins Electra plans to rebrand the property Lago Paradiso and renovate the interiors and community amenities.

June 2, 2017

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