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Seven Ways Commercial Property Owners Can Save on Defeasance Costs

by Christina Cannon April 12, 2016

Commercial real estate owners are increasingly confronting defeasance clauses in conduit or CMBS loans. These clauses require strict prepayment penalties in order to refinance or sell a property prior to maturity. In commercial real estate, defeasance is the process of releasing a commercial property from the lien of a mortgage and replacing it with a portfolio of government securities that are placed in a collateral account and pledged to the lender. This structure allows the borrower to sell or refinance the collateral property prior to loan maturity. Unlike a prepayment on the loan, however, the defeasance structure keeps the loan payment stream in place for the lender. While many of the parameters in a CMBS loan agreement are difficult to negotiate, well-versed property owners can negotiate a few specific clauses to minimize future costs should they decide to defease their loans. What follows are seven ways to save money later with proper planning at the beginning of the loan process. Negotiate the Length of the Open Window — The loan’s open window is the timeframe in which you can prepay your loan without penalty or interest. Generally, CMBS loans allow open windows of two to three months. However, there are …

April 12, 2016

Restaurant Retail Texas

Whiskey Cake Kitchen & Bar to Open in Metro Houston

by Haisten Willis April 6, 2016

KATY, TEXAS — Dallas-based Front Burner Restaurants will break ground on a Whiskey Cake Kitchen & Bar location in Katy at the 120-acre Verde Parc. The 8,500-square-foot restaurant will open this fall and will be situated on a 2.5-acre tract fronting I-10. Whiskey Cake Kitchen & Bar offers entrées like mesquite grilled steak and fish and smoked duck, as well as appetizers like green tomatoes and deviled eggs. The bar is stocked with 24 craft beers, 100 small batch bourbons, whiskeys and scotch and 30 varieties of wine. Whiskey Cake currently operates locations in northwest San Antonio, Plano and northwest Oklahoma City. Parkside NEC Grand Parkway/I-10 Ltd. was the seller. Hugh Ruggles of NewQuest Properties was the deal’s sole broker. Parkside Capital bought the Verde Parc land in January 2014 from Indianapolis-based Simon Property Group.

April 6, 2016

Midwest Office Top Stories Wisconsin

Associated Bank Purchases Milwaukee Center for $60.5M

by Haisten Willis April 6, 2016

MILWAUKEE — Associated Bank (NYSE: ASB) has purchased the Milwaukee Center office building at 111 E. Kilbourn Ave. in downtown Milwaukee. The purchase price was not disclosed, but the Milwaukee Business Journal reported it was $60.5 million. Chicago-based Hub Milwaukee River Center Properties sold the 28-story downtown building to Milwaukee Center Management LLC, a Green Bay, Wis.-based affiliate of Associated. Reinhart Boerner Van Deuren represented Associated Bank in the transaction. Associated will occupy between one-fourth and one-third of the building when the lease on its current regional office expires in 2022. Around 320 Associated employees currently occupy 97,000 square feet of the Plaza East towers at 330 East Kilbourn Ave. “Our purchase of this iconic, city-center building aligns with our efforts to become the city’s hometown bank,” says Philip Flynn, president and CEO of Associated Bank, which is based in Green Bay. The Class A property was built in 1988 and is 426 feet tall, with a total size of 373,000 square feet. It was 81.7 percent leased at the time of sale. Milwaukee Center is attached to a 220-room InterContinental hotel, Milwaukee Rep Theaters and Pabst Theater. Amenities include three on-site dining options and an on-site fitness studio. Associated Bank’s stock …

April 6, 2016

CBRE 2016 Global Real Estate Survey Results

Features Top Stories

U.S. Remains Prime Target for Global Real Estate Investors, CBRE Survey Finds

by Jeff Shaw April 5, 2016

Global real estate investors plan to make $1.16 trillion in gross acquisitions in 2016, according to a newly released survey from CBRE. That’s up 3 percent from last year’s survey conducted by the giant Los Angeles-based real estate services provider. The United States is still the primary target for investors, who collectively plan to spend 48 percent of their dollars in this country. The next most popular target for investors is Western Europe. More specifically, investors plan to spend 28 percent of their capital in Western Europe. Additionally, CBRE reports investor interest in Central and Eastern Europe grew compared with last year’s survey as a result of the faster pace of economic recovery in that region. “The majority of investors (82 percent) indicate that their buying activity will increase or remain the same compared to 2015,” according to the CBRE Global Investor Intentions Survey analysis. “While these results are down slightly from the last two years — 86 percent in 2015 and 93 percent in 2014 — this is not indicative of widespread concern about the short- or medium-term performance of real estate as an asset class. More likely, it reflects some concerns about pricing, the direction of U.S. interest …

April 5, 2016

Maryland Office Southeast Top Stories

Vision Properties Acquires Trophy Office Tower in Baltimore for $187M

by Katie Sloan April 4, 2016

BALTIMORE — Vision Properties has acquired 100 East Pratt, a 662,708-square-foot trophy office tower at 100 E. Pratt St. overlooking Baltimore’s Inner Harbor, for $187 million. Vision acquired the asset from Columbia Property Trust (NYSE: CXP). The building is the long-time headquarters of T. Rowe Price, a global investment firm that leases roughly 65 percent of the building. Other tenants of the tower, which was 98.5 percent leased at the time of sale, include PriceWaterHouseCoopers, Merrill Lynch and Tydings & Rosenberg. The property is located in downtown Baltimore near Harborplace and The Gallery, as well as a multitude of dining and retail options around the Inner Harbor and along Pratt Street. Stephen Conley, Jim Meisel, Dek Potts, Andrew Weir and Matt Nicholson of HFF represented Columbia Property Trust in the transaction, which also included the property’s 932-space parking garage. Vision Properties plans to upgrade the lobby of the 28-story building, according to reports by the Baltimore Business Journal. Columbia Property Trust intends to use the proceeds of the sale to repay a $119 million short-term bridge loan and borrowings on its unsecured credit facility. Vision Properties is a full-service real estate investment and management firm headquartered in New Jersey. The …

April 4, 2016

Industrial Texas

BH Properties Leases 409,180 SF Industrial Space in El Paso

by Haisten Willis April 1, 2016

EL PASO, TEXAS — A business unit of Stockholm, Sweden-based Electrolux Group has leased 409,180 square feet of industrial space in El Paso. BH Properties bought the 655,000-square-foot building from Electrolux in 2009 and leased it back to the company until February of 2014. The property is located at 9600 Pan American Drive. Terms of the five-year lease were not disclosed. Cushman & Wakefield | PIRES International’s Brett Preston and David Hingst were the brokers for the transaction. Champlain Cable Corp. occupies 117,000 square feet in the building, and 128,000 square feet is unoccupied. Electrolux also operates a manufacturing facility across the border from El Paso in Ciudad Juarez.

April 1, 2016

Connecticut Hospitality Northeast Top Stories

Anbang Ends Bidding War by Pulling Out of $14B Proposal to Acquire Starwood Hotels & Resorts

by Christina Cannon April 1, 2016

STAMFORD, CONN. — Anbang Insurance Group and Marriott International Inc. (NASDAQ: MAR) entered a ceasefire yesterday. The bidding war between the two companies to purchase Starwood Hotels & Resorts Worldwide (NYSE: HOT) has ended, as Anbang has rescinded its latest offer. A consortium consisting of Anbang, J.C. Flowers & Co. and Primavera Capital Limited upped its offer to $14 billion on March 26, outbidding Marriott’s previous offer of $13.6 billion, but Anbang is now withdrawing its offer due to “market considerations.” It isn’t clear why Anbang retracted its latest bid or if Marriott had been planning to counteroffer. Both Starwood’s and Marriott’s shares fell over 4 percent in Thursday’s after-hours trading. Starwood’s stock price closed on March 31 at $83.43 per share and opened April 1 at $79.81. Marriott’s stock price closed at $71.18 and opened at $67.48 per share. Starwood’s board of directors continues to unanimously support the existing merger with Marriott, which will create the largest hospitality company in the world. “Throughout this process, we have been focused on maximizing stockholder value now and in the future,” says Bruce Duncan, chairman of Starwood’s board. “We continue to be very excited about the combination of our two companies and …

April 1, 2016

Industrial Market Reports Texas Texas Market Reports

The Tale — and Tail — of El Paso’s Industrial Market is a Happy One

by Haisten Willis April 1, 2016

Mexico is what drives El Paso. Mexico is the dog and El Paso is the tail. When the dog is happy the tail gets to wag, and we’re wagging pretty hard right now. The El Paso industrial market hasn’t been this strong since at least 1990. Juarez, Chihuahua, El Paso’s Mexican counterpart directly across the border, posted a third consecutive year of positive industrial absorption in 2015. Build-to-suit development activity is at a level not seen in five years. As a direct result, El Paso’s industrial vacancy rate dipped below 9 percent in the fourth quarter of 2015, the strongest tenancy performance in nearly a decade, according to Cushman & Wakefield | PIRES International. All the leasing activity we’ve been seeing has been chewing into the city’s vacancy rate. El Paso’s Class A vacancy rate is now below 2 percent. For example, in February, Los Angeles-based BH Properties leased a 409,000-square-foot industrial space located at 9600 Pan American Drive between Interstate 10 and the Rio Grande to a subsidiary of Sweden-based Electrolux Group. Electrolux Group chose the location because it is near the Zaragoza Bridge, El Paso’s far-east port of entry, providing convenient access to the company’s plant across the …

April 1, 2016

California Mixed-Use Top Stories Western

Construction Begins on $6B Redevelopment Project in San Francisco Bay Area

by John Nelson March 31, 2016

SAN FRANCISCO — Construction crews have begun infrastructure work on the redevelopment of Treasure Island and Yerba Buena Island in the San Francisco Bay Area. The total development costs for the 10-year project will be $6 billion, according to the San Francisco Business Times. The development team, known as Treasure Island Community Development LLC, includes Lennar Urban (NYSE: LEN), Kenwood Investments, Stockbridge Capital Group and Wilson Meany. The San Francisco Planning Commission approved the project in 2011, and Skidmore, Owings and Merrill LLP developed the master architectural and engineering plan. The development will feature up to 8,000 residential units, including 7,700 to 7,850 on Treasure Island and 150-300 units on Yerba Buena Island. At least 25 percent of the multifamily units will be offered at below-market rates. The project will also include up to 140,000 square feet of new retail space, 300 acres of parks and public open spaces, up to roughly 500 hotel rooms, a joint police/fire station and 100,000 square feet of office space. The development team will also repurpose Building 1 and Hangars 2 and 3 on Treasure Island and the historic buildings on Yerba Buena Island. According to Kenwood Investments’ website, the development could feature a …

March 31, 2016

Connecticut Hospitality Northeast

Anbang Increases Offer in Bidding War with Marriott for Starwood Hotels & Resorts

by Amy Works March 29, 2016

STAMFORD, CONN. — A consortium consisting of Anbang Insurance Group Co., J.C. Flowers & Co. and Primavera Capital Limited has increased its bid to acquire Starwood Hotels & Resorts Worldwide (NYSE: HOT) to $82.75 in cash per share of Starwood common stock from the previous non-binding proposal of $81 per share bid, which was made on March 26. Starwood’s board of directors has concluded that this revised, non-binding proposal from the consortium is a superior proposal as defined in Starwood’s merger agreement with Marriott International Inc. (NASDAQ: MAR), according to a press release issued Monday by Starwood. The new proposal is valued at $14 billion versus Marriott’s previous offer of $13.6 billion. The Starwood board, in consultation with its legal and financial advisors, will carefully consider the outcome of the discussion with the consortium in order to determine the course of action that is in the best interest of Starwood and its stockholders, the news release stated. Under the terms of the consortium’s current revised proposal, the consortium will acquire all the outstanding shares of common stock of Starwood for $82.75 per share in cash, an increase of $4.75 per share from its initial binding proposal of $78 per share …

March 29, 2016

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