| GlobeSt.WEEK |
Volume 6 - Number 23 | June 2, 2008
 |
||||
|
|
|
||
|
||||
|
|
NEW YORK CITY-Boston Properties has entered an agreement to acquire the General Motors Building and three other Manhattan assets for almost $3.95 billion, as was speculated last week. The REIT is spending just under $1.47 billion in cash, $10 million in stock and will assume about $2.5 billion on debt.
"The idea of a REIT like Boston Properties or any other REIT for that matter stepping up to the plate and doing a deal here is that they bring a lot to the table," Anthony Paolone, an analyst at JP Morgan, tells GlobeSt.com. "They are liquid, they are good operators, they know the market, they know the assets and they have the ability to underwrite and close quickly on the transaction." he says.
On the two-million-sf GM Building, located between 58th and 59th streets at Fifth Avenue and Central Park South, the firm is assuming $1.9 billion of secured and mezzanine loans. That part of the deal is set to close next month.
Boston Properties is also buying the 292,000-sf 540 Madison Ave. building at Madison and 55th Street, a 591,000-sf office building at 125 W. 55th St., and the 664,000-sf Two Grand Central Tower at 44th Street between Lexington and Third avenues. Those deals are being financed with a combination of secured and mezzanine loans and are expected to close after the GM Building.
An unidentified industry source tells GlobeSt.com that they believe this sale "comes close to solving Macklowe's debt issues." Macklowe Properties faced a $7 billion debt on a portfolio of office buildings it acquired last February from Equity Office Properties Trust. That acquisition was paid for by a $5.8 billion short-term loan from Deutsche Bank AG, $50 million in equity from Macklowe, and a $1.2 billion loan from Fortress Investment Group LLC. The unidentified source tells GlobeSt.com that "the big issue is the $1.4 billion bridge loan to Fortress, which is due very soon," they explain, noting that they believe it is due sometime in June.
Goldman Sachs and Morgan Stanley are Boston Properties’ financial advisors, as well as Lehman Brothers and Deutsche Bank. Proskauer Rose LLP and Goodwin Procter LLP are giving the Boston-based REIT legal assistance. Goodwin Procter partners Mark Kirshenbaum, Edward Glazer and Ettore Santucci are advising on the tax and structuring issues related to the transaction.
The closing of the acquisitions is expected to occur in multiple steps, with the acquisition of the GM Building expected to close in June 2008 and the acquisition of the remaining assets occurring thereafter, according to a prepared statement. Boston Properties has posted a deposit in the form of a letter of credit in the amount of $165 million. The firm currently owns 139 buildings in Boston, Washington, DC, New York City, San Francisco and Princeton, NJ. It’s portfolio is currently 94.9% leased.
Additional reporting done by Natalie Dolce, Northeast bureau chief.
|
||||
|
|
|
||
|
||||
|
 View Slide Show |
The collapse occurred two months after a tower crane collapsed on 51st Street between Second and First avenues, killing seven people. The New York Fire Department said that it has pulled people from the wreckage, but their conditions were not immediately known.
According to published reports, the building under construction at the site is the Azure, a 245,000-sf building being constructed at 333 East 91st St. between First and Second avenues by the DeMatteis Organizations and the Mattone Group.
A resident at 1760 2nd Ave., an apartment building which overlooks the construction site, saw the collapse a "few minutes after eight o'clock." The resident says the "top piece" fell off, referring to the pivoting boom arm which sits atop the crane. The arm crashed into the street below at the corner of 91st Street and 1st Avenue, caving in part of the northeast corner of the Electra, an apartment building at 354 E. 91st St.
The boom of the crane is man-operated from a cabin at the joint of the arm. The resident believes the operator was still in the crane, operating the turret, when it fell "because the guys start at 7:30." There was no comment to Globest.com inquiries about the condition of the operator.
A resident at the 23-story Electra tells GlobeSt.com that the crane collapse mostly damaged the top floor, where the administration office is. He explained that there was some flooding on the 4th floor, and the crane tore off a 19th floor balcony. "Last week, Thursday I believe, there was a 40-foot extension added to the crane. They wouldn't let us leave the building," he explains. "As of now, we are told we are not allowed back in the building."
The cause of today's crane collapse has yet to be determined, but clearly, construction safety is still a concern. In April, the city’s buildings commissioner, Patricia Lancaster, was forced out of her job and an extensive review of the city’s cranes was conducted in the aftermath of that March accident.
This article had additional reporting by GlobeSt.com managing editor Ryan Clark.
|
||||
|
|
|
||
|
||||
|
|
BOSTON-It was a pessimist’s paradise yesterday during the fourth annual RealShare Boston, as the ebullient atmosphere enjoyed during 2007’s program was largely supplanted by concerns over a torpid economy, skyrocketing energy prices and the daunting credit crisis that some speakers warned could shift the commercial real estate landscape dramatically in the coming months.
"I think its going to be a tough couple of years," Taurus Investment Holdings President Peter Merrigan told more than 300 attendees during the half-day conference’s opening program at the Hyatt Regency. Merrigan and three other respected industry veterans assessed local conditions and handicapped various sectors going forward, with most indicating the near-term outlook is bleak.
"We certainly are nervous," fellow speaker William McCall Jr. relayed. The president of McCall & Almy indicated demand for office and flex space has slowed considerably, a notion shared by Paradigm Holdings President Kevin McCall (no relation), who voiced fears that the US economy could face "stagflation" such as that experienced in the 1970s. "It’s eerily similar," he says of the present situation to those dire days, adding he believes unemployment could soar to 8 or 9 percent as it did in the 1970s, if problems persist for such areas as hospitality, housing and retail.
The most upbeat of the four at the inaugural panel seemed to be National Development President Thomas Alperin, predicting demand will recover sooner than many anticipate. "I feel very good about our regional economy," Alperin says, albeit citing the threat of inflation as a wild card that could disrupt a recovery. On the sales side, Alperin says the cost of debt and tighter underwriting should result in pricing adjustments of 5% to 20%, a view shared by others who agreed the feeding frenzy that led to record investment sales in 2007 is long gone, and could mean difficult times ahead for property owners needing to harvest assets.
But while those who bought at the top of the market might face challenging times, Kevin McCall and Merrigan said it creates opportunities for companies such as Taurus and Paradigm that have had trouble competing in the highly leveraged atmosphere. "We hated the environment of the past couple of years," says Kevin McCall. "It was nutty." Although owners have largely resisted adjusting their pricing to date, Kevin McCall says many will be forced to do so because of financial engineering gone amok, including shaky bridge financing about to mature. "Thank goodness that is over, because now I can compete on some of these deals," said Merrigan of the leveraged atmosphere.
Entitled, "Is the Glass Half Full or Half Empty in Today’s Boston Market," the opening program segued to a special focus on "credit, capital and inappropriate leverage" moderated by Eastdil Secured Managing Director Frank Petz, as he and five other experts from the debt and equity fields debated how long the CMBS drought will linger, and other issues, including where cap rates and interest rates are headed, plus the state of customized products such as construction financing and mezzanine debt. BayNorth Capital Managing Director Chip Douglas says equity funding is finally starting to free up and will continue to do so as returns become more in line with returns. On the debt side, Anglo Irish Bank lending chief Eddie Byrne says his institution has doled out $2.5 billion in loans thus far in 2008, concentrating on such markets as Boston, Chicago and New York.
Byrne joined others in citing the dearth of supply in the pipeline and tight vacancy rates as reasons for being comfortable about Boston, a belief underscored by the bank’s just-completed $120 million loan to the developers of Westwood Station, a major mixed-use complex underway in the Route 128 submarket. Other panelists included AEW Capital principal Robert Plumb, mortgage broker David Douvadjian of Colliers Meredith & Grew and Joseph Iadarola of Babson Capital. "We are still active in the market today doing loans, albeit more conservatively," said Iadarola, with Babson having closed on $1.2 billion year-to-date versus $1.9 billion thus far a year ago. Iadarola did, however, express concerns that life companies will run out of money later in the year, while panelists expressed doubts about the availability of construction financing. "Speculative development for the foreseeable future is going to be choked," Byrne said.
The focus event was followed by two series of discussion panels, each with three programs that delved into specific areas such as the suburban and Downtown leasing markets, another program on the capital markets and one reviewing who is looking to buy real estate and how they can accomplish their aims in a market lacking product. That program featured Barrington Capital Partners principal Jeffrey Miller; investor Michael Price of Legacy Real Estate Ventures and Grubb & Ellis investment broker Anthony Biette along with Brian Kavoogian of Charles River Realty and Passco Cos. VP Peter Nicoletti. Attorney Samuel Richardson of Goodwin Procter LLP was moderator for the discussion.
Another special program, moderated by John Hirschfeld of Class Green Capital Partners LLC, took a hard look at the sustainability design movement in terms of its support among tenants and the cost of building green. Panelists included developers such as Tod Brainard of Griffith Properties, William Kane of Davis Marcus Partners and James Trudeau of Cummings Properties, whose firms are all employing that method throughout Greater Boston. Architect Bill Holland of Margulies & Associates joined the group, which discussed the costs of maintaining such elements as motorized dimming switches or under-floor HVAC, which speakers said can be more efficient but also disruptive to the construction process. Energy credits have become one popular tool used by developers to offset costs, said Brainard, whose firm is using those credits at its redevelopment project in Quincy, HarborSouth.
The conference also featured a one-on-one interview between RealShare executive director Richard Kelley and developer John B. Hynes III. Now CEO of Gale International, Hynes has already made his imprint on Boston’s skyline in the 1.1 million-sf One Lincoln St. office tower near South Station, and he is presently redeveloping a $700 million mixed-use complex in the city’s Downtown Crossing District. The program, "Inside the Real Estate Mind," detailed the developer’s ascent from a Harvard University graduate in 1980 to a major real estate force whose imprint spans two hemispheres thanks to a 1,500-acre master planned city Gale is building in South Korea. Hynes cited program attendee Lawrence Bianchi as a key mentor, after the Codman Co. principal hired Hynes for his first position, a relationship Hynes said aided him when he joined Lincoln Property Co. in 1983 to build his first project, 101 Arch St., in Boston.
Hynes went on to reveal his subsequent ups and downs in the business, including riding out the 1990 recession that quashed office development in Boston for nearly a decade. While still building out the South Korean site, Hynes also told of his desire to move ahead on a 6.5-million-sf mixed-use project in Boston’s Seaport District, telling the crowd that Gale hopes to have permitting in place by year’s end, and that he wants to develop the ambitious venture in one phase.
Hynes also said he will not let a down cycle deter him from moving forward. "You want to build into the downward draft of the cycle," he opined. At the prodding of Kelley, Hynes closed out the interview with three predictions for the coming year, one that John McCain will win the presidential election after naming New York City Mayor Michael Bloomberg his running mate. Hynes also said he expects the Red Sox will win the World Series, and that freedom will come to North Koreans in 2008.
|
||||
|
|
|
||
|
||||
|
|
DALLAS-With 300 acres of entitled land now ready for development, Incap Fund is pulling the cloak of secrecy off its plan after two years of market speculation and limited details. The $2-billion build-out is a vision to reshape the landscape of Oak Cliff.
"We had a blank canvas for master planning," says Alan McDonald, managing director of Dallas-based Incap. "Now we're starting to take offers on this." Incap has divided the assemblage into four districts, investing $240 million into the land acquisitions, scraping roughly 2,000 apartments and prepping the dirt for resale, he tells GlobeSt.com.
Incap has nearly 100 acres of the ready-to-go mixed-use land under contract or under negotiation, with closings set to start in July. The dirt is bringing $30 per sf to $35 per sf, McDonald says.
 |
In October, McDonald says Gus Woehr of Dallas will buy four acres for an 80-unit residential project. Woehr's site once held the Kings Highway Apartments in the city's oldest conservation district.
Closing in November will be 4.3 acres that once held the Chateau Crete Apartments along Stevens Forest Drive. McDonald says the development partnership is Beck/Holley, with Dallas-based Beck Group at the forefront of the deal.
Another 10.15 acres near Methodist Hospital will be sold in November to a national homebuilder. The hospital controls another 5.44 acres, also earmarked for development. McDonald says he can't release the homebuilder's name due to a confidentiality clause, but the build-out plan calls for 200 multifamily units, 200 senior housing apartments, 150,000 sf of medical office and 150,000 sf of retail.
A 4.9-acre site at 1836 W. Davis St., once Cliffwood Apartments, is being marketed to retail developers for $32 per sf. McDonald says the vision is to create another eclectic shopping district like Knox-Travis. Another 5.34-acre tract along Cedar Hill Drive also is being marketed.
The lion's share of Incap's land assemblage is earmarked for a sustainable mixed-use urban campus spanning 100 acres. Marketing begins next month. The Westmoreland urban campus tentatively calls for 200 single-family lots, 400 townhouses, 1,800 condos in mid-rise towers, 4,800 apartments, 450,000 sf of retail and possibly 30,000 sf of office space atop some street retail.
The urban campus is "the largest undeveloped tract in the inner city," McDonald says. And, he quickly points out that it's just 3.5 miles from Downtown and Uptown.
McDonald says Incap's tracts aren't contiguous like other massive redevelopments that he's undertaken in Dallas. "But, the unique part of these tracts is they are in the most fabulous neighborhoods in the city and the oldest ones in the city," he says. Many surrounding homes were built in the 1920s and 1930s. "They are little jewel boxes," he says. In the past five years, he says the various neighborhoods have transitioned from an aging population to the Gen Y age crowd, spawning eclectic emerging pockets like the Bishop Arts District.
Incap's land bank is situated within the 589-acre Davis Garden District Tax Increment Financing District. McDonald labels it a "new generation TIF" because it is so broad-based and focused on residential redevelopment, including affordable and seniors housing, unlike TIFs of Downtown and Uptown. Interstate 30 is Incap's northern boundary; Davis Street, southern; Methodist Hospital, eastern; and Pinnacle Park, western.
But for the veteran McDonald, the assemblage is another opportunity for him to reshape a Dallas neighborhood like he did with projects in Uptown and Knox-Travis.
 |
He says the second-story view from all the assembled tracts will be the city skyline, the Trinity River and the to-be-built Calatrava bridge trio. "That's the view corridor from every single site on the second floor," McDonald stresses, "and it's unobstructed because of the Trinity River's flow. The river is coming back with the Calatrava bridges and town lake plan and it connects to the original neighborhood that was the birth of Dallas."
|
||||
|
|
|
||
|
||||
|
|
DALLAS-Duke Realty Corp., with a new equity partner at its side, has shifted its build-to-suit strategy with a 10-year plan to keep clients close to its on-the-ground teams. The Indianapolis-based developer has pledged to roll all build-to-suits into a joint venture with CB Richard Ellis Realty Trust until it depletes the $800-million fund.
"CB Realty Trust will exclusively look at all the build-to-suits that Duke will be building in the next two to three years," Josh McArtor, first vice president in Dallas for CB Richard Ellis, tells GlobeSt.com. The JV, disclosed May 6, was seeded by 5.2 million sf of bulk industrial space, valued at $250 million, built in the past 18 months. The fully leased five buildings are single-tenant, net-leased properties with an average of 12 years on the term, he says. A sixth property is due to roll into the portfolio any day now.
McArtor, who helped to mastermind the JV marriage, says the expectation is the fund will be spent in three years, but Los Angeles-based CBRE Realty Trust and its partner plan to hold onto the portfolio for 10 years. Another 10 million to 12 million sf in the Top 20 MSAs will easily flow into the pool. Duke holds a 20% interest and gets to control leasing and management.
 |
"These are good single-tenant buildings with famous-name tenants in metro markets," says Jack Fraker, CBRE's vice chairman, whose capital markets team was the deal's equity placement agent. Duke's underlying strategy is to stay close to the build-to-suit tenants once construction ends. He says 75% of the tenants have expansion options in their leases, with early signs that they will execute those plans.
"Duke wants to be there for that type of situation as well," Fraker says. "Duke wants to maintain the tenant relationship with these customers." In the past, it wasn't uncommon for Duke to build and then sell the development rather than hold it on its books long term.
London-based Unilever US Inc.'s 822,550-sf distribution center in southern Dallas County and its 722,210-sf building in Jacksonville, FL helped to seed the portfolio. In the first planting, Duke also delivered the 630,570-sf Anson Building 1 in Indianapolis, occupied by Amazon.com; a 1.2-million-sf building leased to Prime Distribution in Plainfield, IN; and a 1.1-million-sf building occupied by Kellogg's in West Jefferson, OH. Soon to be added is the 604,678-sf Buckeye Logistics Center in Phoenix, also occupied by Amazon.com.
|
||||
|
|
|
||
|
||||
|
|
SAN DIEGO-Economists and commercial real estate leaders expect continued job growth here, but they are chalking up 2008 as a tough year and don't expect to see a turnaround in the regional economy until 2009. Those were some of the themes sounded as 175 industry professionals and others in related fields gathered on Thursday at the fifth annual RealShare San Diego conference and networking event at the Hyatt Regency LaJolla.
Keynote speaker Kelly Cunningham, economist and senior fellow at the San Diego Institute, kicked off RealShare San Diego. Kelly acknowledged the commercial real estate markets in the city and county of San Diego are facing the same challenging conditions as the rest of the country. But he noted that San Diego also benefits from its coastal location, a strong biomedical industry and a growing tourism base.
“I see San Diego continuing to grow,” he said. “We will continue to add jobs.” Cunningham’s keynote address was followed by a town hall meeting that weighed in on the question, "How Will San Diego Fare in 2008?" His remarks and the town hall meeting were part of a combination of individual and panel discussions, keynote remarks and networking opportunities designed for commercial real estate professionals at Thursday's event.
Panelists agreed that the San Diego area, like the rest of the country, is in uncertain territory, and all said they see a turnaround starting sometime in 2009. “It’s amazing, when you get out of this forest that you’re in you see the trees,” said Jay Alexander, senior vice president with Colliers International. “In 2010 you’ll have a landlord market again.”
Ken Calegari, senior vice president and division president of Champion Development, said 2008 is poised to be a bad year when all is said and done. “Over the next year, with consumer spending declining, we’re going to have some difficult times,” Calegari said, adding, “I’m bullish long term.”
During a session titled "Pardon the Interruption" Scott Brusseau, president of Newport National Corp. and Dennis Hearst, senior director with Cushman & Wakefield challenged each other's views in a fast-paced exchange regarding the San Diego area’s hottest real estate and economic issues. The two discussed everything from local politics to the impact of rising fuel prices.
A session titled "Million Dollar Question" featured Jon Walz, senior director of Cushman & Wakefield; Einar Roden, commercial lending officer for Imperial Capital Bank; Jeff Schindler, chief investment officer for Equastone and John Wickenhiser, senior vice president and manager of Wells Fargo Real Estate Group.
The RealShare San Diego conference wrapped up with two concurrent sessions. One addressed "Prime Opportunities in the San Diego Investment Sales Market," while the other presented a leasing market forecast.
“There will be a period of opportunity out there,” panelist Chris Rosenstock, managing director of Pacifica Equity Partners, said of opportunities in investment sales in San Diego. “How far off it is, is anybody’s guess. But we don’t see it there right now.”
Talking about leasing, panelist Missy Moore, vice president with The Staubach Co., said fuel costs are playing bigger roles in the decision making process of users. “That’s really been the driver,” she said. Fellow panelist Adam Molnar, senior vice president of Coldwell Banker Commercial/Almar Real Estate Group, said an increasing number of prospective tenants are commissioning commute studies to get a handle on the impact that longer drives will have on employees before they make a move. “I think we’re going to be seeing more and more of that,” he said.
The RealShare San Diego conference and other RealShare events are produced by Real Estate Media, the publisher of GlobeSt.com, Real Estate Forum magazine, Real Estate Southern California magazine and other publications devoted to commercial real estate.
|
||||
|
|
|
||
|
||||
|
|
WOOD-RIDGE, NJ-AvalonBay Communities has signed on as a JV partner in Somerset Development’s Wesmont Station mixed-use project here. Site work is under way for the 70-acre transit-oriented development, which has also been selected as a pilot project in the US Green Building Council’s LEED Neighborhood Development Initiative.
Specifically, AvalonBay will develop 400 high-end rental apartments in four buildings as part of phase one of the project, or more than half of its 788-unit residential component. For-sale residential development will come in later phases.
Carrying a reported price tag of $500 million, Wesmont Station will also include 130,000 sf of retail and office space, a public square, community center, a new middle school, athletic fields and other recreational facilities, and a new commuter train station on NJ Transit’s Bergen Line. The Lakewood, NJ-based Somerset had picked up final site plan approval in the summer of 2006.
"With Wesmont Station, we’re looking to create an entirely new neighborhood based on smart growth principles and sustainability," Ralph Zucker, Somerset’s president, tells GlobeSt.com. "The sheer scale of it requires a team of experienced companies to achieve the goals we’ve set. AvalonBay is one of the industry’s most accomplished and well-regarded companies."
AvalonBay VP Ron Ladell, says in a statement that "AvalonBay believes strongly in the driving principles behind Wesmont Station and actively pursues transit-oriented, mixed-use development opportunities of this caliber because we know that this type of design will ensure the long-term value of the residences we build, regardless of market cycles." The Alexandria, VA-based company has its New Jersey offices in Woodbridge.
Actual construction for phase one is slated to start in early 2009, with occupancy a year later. The train station is scheduled to be under construction in early 2009 as well. The 70-acre site is part of a former Curtiss-Wright industrial complex once used to make and test jet engines, but more recently utilized as multi-tenant W/D space. The Wesmont Station site itself had been in use as a parking lot for the two-million-sf complex.
|
||||
|
|
|
||
|
||||
|
|
SCOTTSDALE, AZ-International Capital Partners Inc. is in the permitting process for the first phase of the $500-million District on Camelback. As soon as approvals are in hand, the local developer plans to immediately begin converting 278 empty apartments into a 260-condo project, dubbed Orchid on Camelback.
ICP's 20-acre project will include the retooling of the Orchid Tree Apartments at 6801 E. Camelback Rd. and a massive redevelopment at 68th Street and Camelback Road. The District on Camelback is mapped out as a financial and business center with more than two million sf of office, retail and residential space.
James Petersen, ICP's marketing director, says the commercial space will include a boutique hotel and an arts component. "There are several components to this," he says. In addition, he points out that some buildings are vacant and some have tenants along the 20-acre commercial swath.
ICP is in the process of negotiating a 10-year-lease with a New York City restaurateur for 6828 E. Camelback Rd. That same company signed a letter of intent to convert a residential penthouse at the top of 6909 Camelback Rd. into a first-class restaurant. "That penthouse is zoned residential and the highest building in Scottsdale so this will be the highest restaurant in Scottsdale," Petersen says.
ICP also is in discussion with several development partners and institutional investors to lend a hand with the project. "We're coming close to announcing deals with some partners," Petersen tells GlobeSt.com. "There are a number of developers interested in this $500-million master plan."
|
||||
|
|
|
||
|
||||
|
|
NEWARK, NJ-The RealShare Industrial East conference will have its fourth annual renewal here on June 5th, and the issues facing commercial real estate in general are certainly more difficult now than in any of the three previous years. The day-long networking event, which is expected to attract approximately 250 attendees, will be held at the Sheraton Newark Airport Hotel. It is produced by Real Estate Media, publishers of Real Estate Forum, GlobeSt.com, Real Estate New Jersey and Industrial Property Journal.
Those issues include the current economic slowdown and the ongoing turbulence in the capital markets, and a slate of industrial experts will try to provide some answers as to where the national, regional and local industrial markets are right now and where they’re going. The larger theme of the program will be how companies and industry professionals can best position themselves to best take advantage of the opportunities that continue to exist in the marketplace, while at the same time weathering the market conditions that cloud those opportunities.
"RealShare Industrial East will gather the leading owners, investors, developers, financiers and brokers, as well as supply chain and logistics executives, for networking and to address the economic slowdown, inflation, tight credit and turbulence in the capital markets and how it will impact industrial real estate in the eastern US," says Jason Young, conference producer at Real Estate Media.
Highlights of the program include a keynote presentation by Curtis Spencer, president of IMS Worldwide Inc., and Howard Covert, president of H.A. Covert Enterprises Inc. The duo will present their thoughts on a variety of industry topics, ranging from global logistical trends to the impact of industrial real estate on economic development in the US and around the world.
And the popular Town Hall Meeting panel will address the overall state of industrial real estate. "The real estate industry is facing tough times, but industrial may be able to muscle its way through while taking less of a beating than other property sectors," says panel moderator Tom Tucci, senior managing director with CB Richard Ellis. Other panelists include Craig Guers, SVP and general manager of Opus East, and Jojo Yap CIO of First Industrial Realty Trust.
Other general and concurrent sessions will cover everything from innovations in streamlining the distribution and supply chain to opportunities in urban infill and brownfield development. Topics on the program also include investment sales trends, the outlook for leasing, getting deals done in the current market, getting the most out of new and redeveloped space, smart growth and the greening of industrial real estate.
|
||||
|
|
|
||
|
||||
|
|
ATLANTIC CITY, NJ-Rumors have been circulating about the possible sale of Trump Entertainment's three casino/hotel properties here, and one of them, Trump Marina, is indeed being sold. Coastal Marina LLC, an affiliate of the New York City-based Coastal Development, is under contract to buy the 728-key property for $316 million, subject to regulatory approvals. The buyer and seller have also agreed to drop prior, unrelated litigation, details of which were not released.
And the new ownership plans to refurbish and rebrand the property as the Margaritaville Marina Resort & Casino. Besides the room count, the 14-acre, 27-story property includes 79,000 sf of gaming space, 58,000 sf of ballroom and meeting space, a 540-seat theater, a rooftop helipad and a nine-story parking garage with a capacity of 3,000 cars. Also part of the package is the lease for the adjacent Sen. Frank S Farley State Marina.
"Together with Jimmy Buffett's team at Margaritaville, our plans are to create an exciting new property that we believe will tap its full potential and make it one of the most successful destination gaming resorts in Atlantic City," says Coastal Marina chairman Richard Fields, in a statement. "In the weeks and months ahead, there will be additional announcements and more details about the transition of ownership and our new resort concept."
Donald Trump says in a prepared statement that "they are buying a wonderful building in a great location. It has been an important part of our company with a loyal customer base and a dedicated team."
Trump CEO Mark Juliano, also says in a statement that "the execution of this transaction will provide us with additional financial flexibility to effectively master plan the future path of our company in the midst of an overall transformation which has already been marked by many successes. As we look forward to the opening of the new 782-room hotel tower and Il Mulino restaurant at the Taj Mahal later this year, we are encouraged by the success of the projects we have already introduced…at the Taj Mahal and [Trump] Plaza.
"Now we are closely evaluating the variety of options before us to create value for our shareholders, including additional development in Atlantic City, reducing the company's debt, and potential projects to diversify our interests outside of Atlantic City," Juliano says.
Latham & Watkins, led by partner Raymond Lin, and Bear Stearns, led by senior managing director Kenneth Shea, provided legal and financial advice respectively to Fields and Coastal Marina. Weil, Gotshal & Manges partners J. Philip Rosen and Malcolm Landau advised Trump Entertainment on the legal end, while the financial advice was provided by Merrill Lynch, led by managing partner Ragavan Bala.
|
||||
|
|
|
||
|
||||
|
|
YONKERS-While some redevelopment work is under way at the property, the ownership of the Cross County Shopping Center has made some revisions to its $250-million improvement plan. The original redevelopment initiative was approved by the city last November. However, after discussions with the property’s existing retailers and re-thinking the plan’s components, a revised plan was filed last month and presented to the Yonkers Planning Board earlier this month.
Robert Ryan, general manager of the Cross County Shopping Center, says the property owner Brooks Shopping Centers LLC, has decided to go away from new big-box oriented space and add new multi-tenant buildings geared to smaller tenants. In addition, one of the property’s chief anchor’s Macy’s is looking to expand its more than 250,000-sf store by another 75,000 sf. In the original plan, Macy’s was to expand its store by 50,000 sf. Construction has commenced on the façade improvements on some of the existing retail stores at the center.
The redevelopment project will add a total of 245,375 sf to the more than one-million-sf shopping center, which now consists of 960,773 sf of retail space ad 60,200 sf of office space. The center, which was built in 1954, is anchored by Macy’s, Sears, Super Stop & Shop, National Amusement Multiplex Theater and Old Navy.
"The vast majority of our retailers wanted more square footage," Ryan says, and that fact drove the need to revise the original plan. In addition to Macy’s, Aeropostale, New York & Co., Wet Seal, Bath & Body Works are all expanding their stores at the property. He also reports that Guess has signed a lease for a 3,000-sf store and Body Shop inked a deal for 1,200 sf. Macerich will be looking to add restaurants to the property.
Ryan, who is an executive with The Macerich Co., of Santa Monica, CA, was the keynote speaker at the May 22 meeting of the Westchester County Board of Realtors Commercial Investment division held at the WCBR offices in White Plains. Macerich manages the property for Brooks Shopping Centers. Macerich is hoping to begin development on the expansion of the retail at the property in late 2008 or early 2009.
Ryan says another key component of the multi-phased revised plan is the proposed demolition of an existing eight-story 60,000-sf office building. In its place will be built a new 150-room hotel with ground floor retail. The revised plan also reconfigures some of the planned new parking facilities that allow more visibility from adjacent roadways. Currently there are approximately 4,000 parking spaces at the property. If approved, the new plan would bring that total to 5,500 spaces.
When asked the cost of the project will be, Ryan says that the final numbers are still being calculated, but notes the redevelopment will wind up "well in excess of $250 million," including approximately $10 million worth of infrastructure improvements that will enhance the center’s access to the Cross County Parkway, New York State Thruway and adjacent local access roads.
|
||||
|
|
|
||
|
||||
|
|
NEW YORK CITY-BCN Development CEO Craig Nassi tells GlobeSt.com that his firm is currently in the works to build a 400,000-sf hotel near the World Trade Center site. Although details are scarce at this point, with the specific site and financing information not disclosed, Nassi says it will be a five-star hotel with 200-plus condos, and groundbreaking is expected to be in early 2009.
Nassi says the hotel is expected to be complete within 36 months. He notes that "debt is at a maximum of 55% to 60% today, which makes the capital stack difficult to fill while still fulfilling your proforma." He adds that construction costs throughout Manhattan are at a "$500-plus-per-sf to build cost, only this has to be built union which is very costly." He expects to close within 90 days. Factoring in that $500-plus per sf, a 400,000-sf property would be approximately over $200 million, according to GlobeSt.com's calculations, although one source put the construction cost closer to $1000. Another unidentified industry source tells GlobeSt.com that $1,000-per-buildable-sf is too high, but $500-per-sf is low. After following up with Nassi again regarding the construction costs, he again says that "hard costs are only $500-per-buildable-sf."
Nassi says that anything near the World Trade Center is desirable because "it's going to be the largest tourist attraction in New York City and the USA for decades to come." He says that Costas Kondylis & Partners LLP Architects has been hired. A rendering on BCN's website shows a proposed tower by Costas Kondylis at 111 Washington St., which is more than likely the tower's location, although Nassi would not further confirm. Calls to Costas Kondylis were not returned by deadline.
Sumner Baye, president and partner of International Hotel Network LLC, tells GlobeSt.com that a lot of the success of hotel properties downtown depends on the WTC's plans and how quickly it will get done, which is difficult, he explains. He adds that the location is very competitive--with Silverstein's Four Seasons and the Ritz Carlton in the area, for example. "You have to be careful. The cost of construction is very high, so to build a hotel today from the ground-floor up is a very costly business depending on what type of hotel you are going to build," he says.
Baye says that in order to compete with the Four Seasons hotel and the Ritz Carlton hotel, rates will have to be $500 to $1000 per night to be competitive based on constructions costs, which he notes are "probably closer to $1000 per-buildable-sf to get it done." Baye also explains to GlobeSt.com the importance of branding in order to compete with these other hotels in the area. "The question is, who are they going to bring in to compete with these other brands in the area?"
As GlobeSt.com previously reported, hotel experts have a lot of confidence in Downtown at the moment. Swig Equities LLC recently revealed plans to construct a 62-story, luxury, mixed-use development Downtown. Also, Daniel Lesser, senior managing director of CB Richard Ellis Valuation & Advisory Services and Hospitality and Gaming Group, told GlobeSt.com last week that "hotels are experiencing strong occupancy levels and increases in room rates that exceed underlying inflation rates." He further explained that similar to all of Manhattan, "Downtown is currently 'under-hoteled' with a variety of new lodging projects in various stages of development. Given the increased corporate and leisure/transient demand expected during the foreseeable future, occupancy levels should remain strong coupled with continued growth in room rates above inflationary levels."
BCN last year purchased 315 Park Ave. South as GlobeSt.com exclusively reported. BCN was started in 1993 by Nassi and focuses mainly on creating high-end, mixed-use properties.
|
||||
|
|
|
||
|
||||
|
|
NEW YORK CITY-Hudson River Park Trust chair Diana Taylor and president Connie Fishman today revealed that there is currently $170 million of construction activity now happening at Pier 25, 26, 62, 63, 64, and 86 here, and it will soon undergo a surge in construction--with the goal of completing 80% of the park by 2010. An additional $110 million in activity is expected to start in the coming months. The major sections of construction activities currently are in Tribeca and Chelsea.
 |
In addition, a new request for proposals for the development of Pier 57 is to be released within the next couple of months. The 300,000-sf pier at West 15th Street, a city bus garage until 2003, will be offered for redevelopment with uses that are allowed under the Hudson River Park Act.
Since construction of the park began in 1999, roughly $350 million in capital funds from the state and New York City and the federal government have been used to build 10 new piers and about 2.5 miles of upland park area, according to Taylor. It is the largest recreational amenity and open space to be built in Manhattan since the opening of Central Park more than 150 years ago, she told attendees at a media briefing Thursday morning. Hudson River Park Trust is a partnership between New York State and City charged with the design, construction, operation and maintenance of the five-mile Hudson River Park.
 |
Early this summer, the newest section of the park, running from Laight Street in Tribeca up to Houston Street will open to the public, and another new public pier in Chelsea is expected to open by the end of the year. The Tribeca section of the park was built with $70 million in funds obtained from the federal government through the Lower Manhattan Development Corp. to assist in New York City’s recovery from the 9/11 attacks, as GlobeSt.com previously reported. The Tribeca section will include a playground, practice recreation field, mini-golf and snack bar, beach volleyball courts, historic ships, mooring field , skate park, basketball, comfort station, boathouse and waterside café, an estuary research center, dog run, tennis and public art. A mile-long waterfront esplanade will offer native grasses, trees and gardens, landscaped seating areas, and a seaside boardwalk. The northern half of this section will open this summer, according to Taylor.
 |
"Commercial activities such as parking at Pier 40 and Chelsea Piers Sports and Entertainment Complex generate most of the funds needed to maintain and operate the park on an annual basis; in the future however we know that those funds will not meet our entire fiscal need," Taylor said, which is the reason for issuing a new RFP for the development of Pier 57. "We are also hoping to conclude our review of proposed uses for a development at Pier 40 in the next several months to create a mix of recreational playing fields, parking and new commercial or educational uses on that 15 acre site. These two developments will help produce the money needed to maintain and operate a great park well into the future."
 |
As the park continues to take shape, the level of funding needed to maintain it and offer high quality programming increases, added Fishman. "Therefore, it is essential that we move forward with the development of the revenue-generating commercial nodes in a way that supports the park and guarantees its future."
|
||||
|
|
|
||
|
||||
|
|
BOSTON-Taurus Investment Holdings has been as active as anyone in buying Boston real estate during the past year, most notably on Newbury Street, but the locally based firm’s global footprint is also rapidly expanding, as evidenced by a series of acquisitions just completed in Turkey. The investments are being made in a partnership with Apollo Real Estate Advisors for their Taurus of Galata Gayrimenkul Yatirim AS fund.
Focused on residential, the vehicle has now acquired seven multifamily properties totaling more than one million sf of space, including ground floor retail in certain assets. Taurus and Apollo aim to buy and develop residential buildings throughout Istanbul’s city center, pursuing both restoration and new construction, according to company officials. The program plans to spend between $125 million and $155 million via private equity and debt finance, with an exit strategy to sell to owner occupiers or investors seeking rental income.
Taurus secured more than 75 residential and commercial units in securing the seven latest deals. The Bereketzade Apartments in Galata Kuledibi has six floors and approximately 20,000 sf, with the 15 residential units offering views of the Bosphorus, the Golden Horn and the Marmara Sea. The fund also secured the Nuri Ziya Apartments just off the main street of Beyoglu, another six-story building, featuring one retail shop and 18 apartments. The fund’s Hoca Ali Apartments are off the principal street of Istanbul’s Galata district, plus Taurus acquired the nearby Haci Mimi complex, a 30-unit complex centered around a common garden.
Also purchased during the shopping spree, is the seven-story, 14,000-sf Vakif Building, an historically protected structure that has retained its original Art Nouveau detailing, and the Eysan Hotel on the waterfront in Kadikoy. That six-story, 40,000-sf property offers a panoramic view of the Galata Tower and Sultanahmet peninsula.
According to Taurus, Istanbul is an up-and-coming market that fits its global profile for emerging markets promising the potential for increased returns, with the group active throughout Europe and North and South America. The firm also has seven international offices in addition to 14 in the United States, and has purchased and sold more than 20 million sf since being founded in 1976. In between his trips globally to eye new deals, Taurus President Peter Merrigan was a guest this week at RealShare Boston, as reported by GlobeSt.com.
|
||||
|
|
|
||
|
||||
|
|
WASHINGTON, DC-Patriot Transportation Holding expects to begin developing phase 1 of a 5.8-acre site that stretches along the Anacostia River within the next two years. The Jacksonville, FL-based firm got the word recently from DC’s Zoning Commission that its planned unit development application received final approval, allowing the company to begin thinking about taking the next steps to bring the project to fruition.
Patriot Transportation will either develop the site--located next to the Washington Nationals Baseball Park--on its own or with a partner, CEO John Baker III tells GlobeSt.com. Davis Buckley Architects and Planners is the architect for the 1.1 million-sf development. According to Baker, the first building to deliver will most likely be an office. At full build-out, the site will have four buildings, with approximately 545,800 sf devoted to office and retail and 569,000-sf to residential and hotel, which will be LEED certified, according to the architect’s website. The development would include publicly accessible open spaces and a waterfront esplanade along the Anacostia River waterfront. The site currently is occupied by a subsidiary of Vulcan Materials Co. under a short-term lease. Baker could not provide development costs for the project.
This project represents new inroads for Patriot Transportation, which has a strong footprint in the warehouse and industrial space, including assets in the Baltimore-Washington Corridor. The Anacostia development, Baker says, will be the firm’s first project in the District itself--and its first office and retail mixed-use project.
Once this project gets underway, undeveloped acreage fronting the Anacostia in DC will become even more scarce. Earlier this month, the District issued a Request for Expressions of Interest for a master developer to redevelop the Hill East neighborhood on the Anacostia--the last major piece of the District’s Anacostia Waterfront Initiative calling for redevelopment, which hasn't yet been identified for redevelopment.
|
||||
|
|
|
||
|
||||
|
|
BOSTON-Public officials and community activists in the city’s Brighton district are scrambling to address plans by Boston College to acquire a 16-story apartment building near its main campus after the school’s secretive campaign was unveiled last week by GlobeSt.com. BC has finally acknowledged intentions to buy 2000 Commonwealth Ave. from Archstone-Smith, maintaining in a prepared statement that the venture is being pursued to appease mounting local concerns over institutional expansion.
"Boston College’s interest in 2000 Commonwealth Ave. reflects the university’s desire to improve the quality of life for our neighbors and our students, by housing as many undergraduates as possible in university controlled residence halls," spokesman Jack Dunn explains in an e-mail response to GlobeSt.com. Noting that BC students have been renting units in the tower on their own, he says the school wants to keep those apartments available to its constituency. "While no deal has been finalized, we are exploring this option in light of our overall housing goals," Dunn concludes.
Concerns already being raised regarding fears that students will be disruptive to residents living in and around the hulking property, which dominates surrounding structures and was considered so out of scale, that efforts to erect the 190-unit building were fought vigorously in the early 1980s. Developer Jerome Rappaport ultimately prevailed, opening 2000 Commonwealth Ave. in 1985. His partnership sold the building to a predecessor of Archstone-Smith in 1997 for $27.5 million. In between was an attempt during the early 1990s by Boston College to acquire the asset, but that effort was quashed by local opposition.
Town/gown tensions have increased since BC bought a 43-acre swath of land from the Boston Archdiocese, two years ago, that has brought the school’s reach even closer to Brighton residents. Others are complaining about the rapid absorption of real estate by tax-exempt institutions, most acutely in the Allston-Brighton district. BC has been acquiring individual homes on top of the larger purchases, while Harvard University and Boston University are also rapidly expanding throughout the neighborhood.
One source tells GlobeSt.com that a local civic group has already penciled in 2000 Commonwealth Ave. as a topic of discussion for its monthly meeting next week, and says activists are lobbying for the matter to be vetted at an ongoing task force addressing BC’s overall expansion plans. "They’ve told us nothing," complained the source, a Brighton resident who questions whether Mayor Thomas Menino’s office has been informed of BC’s intentions. The mayor’s office did not return a call by press deadline, and BC officials also did not respond to inquiries about Menino’s awareness of the negotiations, which are being handled by Cushman & Wakefield’s Capital Markets Group in Boston.
|
||||
|
|
|
||
|
||||
|
|
WHITE PLAINS-Core Plus Properties of Stamford, CT is set to break ground in early fall on its $25-million the Venue on Bloomingdale Road retail project. The development will total 42,000 sf of boutique retail space and specialty shops as well as a 6,000-sf restaurant and an outdoor café,
The Venue will be constructed on a 6.6-acre site that includes the former NYNEX office building at 120 Bloomingdale Rd. that was originally constructed as the headquarters for Nestle USA. The 145,000-sf building, owned by Core Plus, is now a multi-tenant office building with the New York State Department of Labor as its largest tenant. The Venue will be built on what is a surface parking lot for the office building, Core Plus officials stated. The project received final approval from the White Plains Common Council earlier this month.
A two-level parking garage will be built as part of the complex. There will be a total of 501 parking spaces on-site including the new garage and existing outdoor parking adjacent to the front and rear of the office building and at the upper level parking lot along Hale Avenue, company officials say.
"The Venue will be a perfect fit within this very strong, up-scale retail area," says Frank Gallo, managing director of Core Plus. "We have approached the site with special care to assure that we create a project that will not only complement the existing retail environment but that will enhance the entire surrounding area."
The center is located in the Bloomingdale Road retail corridor and will be adjacent to such retailers as: Bloomingdale’s, The Container Store, Fortunoff, Whole Foods, Morton’s, Cheesecake Factory, P.F Changs, Crate & Barrel, Brooks Brothers, Tiffany’s, Sony Style, The Apple Store, Abercrombie and Fitch, Tommy Hilfiger, Louis Vuitton, Club Monaco and Hugo Boss.
Although Gallo reports no lease signings to date, he adds, "the interest we have already received from retailers and restaurant operators has been tremendous. With the plan now approved, we expect the level of tenant interest will increase. There are very few locations that offer what Bloomingdale Road in White Plains does, and prospective tenants are acutely aware of that."
The building has been designed by architectural firm, Arrowstreet Inc. of Sommerville, MA and is being planned with "green" technologies and efficient heating and cooling systems to minimize its carbon footprint.
|
||||
|
|
|
||
|
||||
|
|
HAZLETON, PA-Amazon.com has chosen the Humboldt Industrial Park here as the site of its newest distribution center. According to the governor’s office, the company plans to invest more than $20 million in the property and received almost $2 million in state grants.
The 600,000-sf distribution center, which is scheduled to open in July 2008, is expected to create 1,100 jobs over the next three years. In addition, more than 800 seasonal employees will work at the center. This is the fifth facility Amazon will operate in the state. The others are in Carlisle, Lewisberry, Chambersburg and Allentown.
 |
Pennsylvania provided Amazon with two grants to encourage the company to move into Hazleton. Amazon received $500,000 to put toward job training programs and a nearly $1.3 million opportunity grant, which can be used to purchase machinery, make improvements to the land or buildings and provide additional job training programs. A spokesperson with the state Department of Community and Economic Development cited the large number of jobs the company would bring to the area as a reason why Amazon received assistance from the state.
"Not only will this project result in more than a thousand new jobs for Pennsylvanians, but those jobs, along with the large amount of private investment, will provide ancillary benefits for the entire region," says Pennsylvania Gov. Edward Rendell in an official release. "This is the type of project that could have happened anywhere in the US and Amazon’s renewed commitment to Pennsylvania attests to our strong pro-business climate."
The state previously worked with Amazon in 2005. Amazon received $400,000 to open two warehouses in Carlisle, Cumberland County and Lewisberry in York County.
"We’ve had a good working relationship with the government in Pennsylvania and the facilities we currently have have worked out well for us," a spokesperson for Amazon tells GlobeSt.com. "We look at a number of factors when we relocate in a given area, one being the availability of talent so we can hire and staff the site appropriately, the proximity to customers and the availability of real estate and whether that’s going to suit our needs. Hazleton had all those things going for it."
With its new property, Amazon will receive an additional boost from the state for choosing a building in a designated Keystone Opportunity Zone. KOZ businesses can receive exemptions, deductions, abatements and credits for many state and local taxes, including corporate net income taxes, personal income tax and sales tax.
Humboldt Industrial Park is a 3,000-acre project on a former brownfield site. Developer Greater Hazleton Community Area New Development Organization received nearly $4.3 million from DCED’s Business on Our Sites program and more than $3 million in loans from the Pennsylvania Industrial Development Authority to prepare and develop infrastructure at the site. The tenant roster includes OfficeMax, the Hershey Co. and Quebecor World. Calls to Amazon seeking additional information and comment were not returned as of press time.
|
||||
|
|
|
||
|
||||
|
|
NEW YORK CITY-Alpha Equity Management LLC and the Praedium Group LLC are joint venturing to manage and develop investment products focused on publicly-traded real estate securities. The joint venture draws on Hartford and New York City-based Alpha Equity’s securities investment experience and performance record and Manhattan-based Praedium’s experience as a seasoned real estate investor and fiduciary, according to a prepared statement.
Alpha Equity’s investment process has been refined by their investment team for more than eight years and incorporates real estate fundamentals and stock characteristics to capitalize on inefficiencies in a variety of market conditions. "Alpha Equity has an exceptional team of experienced professionals with a distinctive investment process," says Russell Appel, president of Praedium in a prepared statement. Both Alpha Equity and Praedium sources were unavailable for further comment by deadline.
Appel continues that "while Praedium’s core strategy continues to be identifying opportunistic, value-added real estate deals, we are very excited to team with Alpha Equity and look forward to working closely with them on various real estate securities products."
Kevin Means, Alpha Equity’s founder, managing partner, and real estate portfolio manager, says in a prepared statement that "we believe that their [Praedium's] private market expertise complements our public market experience, and that their well-established reputation in the real estate community complements our growing presence in the hedge fund community."
|
||||
|
|
|
||
|
||||
|
|
MILWAUKEE-Lauth has dramatically increased its plans for a mixed-use property going up next to the Bradley Center, home of the city’s basketball and hockey teams. In December, the developer announced plans for a $70 million, 200,000-sf retail project, but recently the company has released a concept drawing that can accommodate more than 500,000 sf of retail on 12 acres, as well as two towers that could be added for condos and/or offices. The projected cost is now more than $100 million, says a spokesman.
The new concept includes space for major anchor tenants, junior anchors and small shops, as well as a parking garage as well as space for dining and entertainment venues. Larry Evinger, FVP of retail, says they would like two anchors, “standard kind of retail,” which could include a movie theater if anyone is interested. “We have no deals with any tenants, the sketch is relatively new. We’ve marketed this concept, there a lot of companies who want to take a look at it,” Evinger tells GlobeSt.com.
The sketch also includes two towers with an unidentified amount of space, that are not part of the 500,000 sf, Evinger says. These will be tall towers, where the project could incorporate another block north of the Bradley Center, put in to meet potential demand, he says. “When we first looked at the space, we looked at it as a small project, but then we started seeing what’s happening around there. There have been a lot of new restaurants that have come into this area of downtown, and a lot of proposals for offices and hotels. There’s been some slowdown of condo sales, but we are still excited when we saw that there’s 5,000 new condo units that are on board, built and sold in the downtown,” Evinger says.
He says the company is meeting with city staff and aldermen over the next two-three months, and will present a more detailed plan after that. “We want to make sure we have input, and get retailer attention,” Evinger says.
|
||||
|
|
|
||
|
||||
|
|
ROCKTON, IL-Chemtool Inc., headquartered in Crystal Lake, IL, is consolidating a couple of its locations and moving its headquarters to a 178-acre site at 1165 Prairie Rd., here. The maker of industrial lubricants has acquired the property from Mallory Properties, based in Milwaukee.
The property currently has a 330,000-sf industrial building on the site, says Sue Mroz, the economic development director for Winnebago County. Chemtool plans to renovate the 330,000-sf building and construct a 75,000-sf office addition which will house the company’s global headquarters, says Mroz, who helped facilitate the deal. “Some of (the facility) had problems. There was a hole in the roof (and) there were some electrical issues,” she says.
The estimated cost to acquire the land, renovate the building and construct the addition is reportedly $40 million. Chemtool is expected to move into the facility this year, Mroz says. Reload had been leasing the 330,000-sf building and will continue to occupy some of the building until August when a new Reload facility is completed in Rockton, Mroz says. Beloit Corp. had owned and occupied the property until it closed its plant in the late 1990’s. Beloit’s parent company went bankrupt and Mallory Properties acquired the site, which is part of a TIF district, she says.
Chemtool’s headquarters is currently at 8200 Ridgeland Rd., Crystal Lake, IL. The privately-held company was founded in 1963. Chemtool’s clients include Boeing, John Deere and Caterpillar, Mroz says. The company will be consolidating the Crystal Lake facility, which houses the global headquarters and manufacturing, and a facility in Elkhorn, WI where they have 60,000 sf that is used for service and distribution, Mroz says. The facility is expected to create between 200 and 250 jobs and employ a total of 500 to 600 people, she says.
Chemtool had initially been in negotiations to acquire the site in 2005 but, “in the 11th hour, it all kind of unraveled,” Mroz says. Chemtool’s CEO Jim Athans had also considered moving the company to Garden Prairie, IL but decided he preferred the Rockton site, she says. “It is strategically perfect,” Mroz says of the Rockton site. “It is already zoned heavy industrial (and) it has a tremendous amount of land with it.” Athans also liked that there was an existing building on the site and that it had rail access, she says.
|
||||
|
|
|
||
|
||||
|
|
TECUMSEH, MI-The city has moved one step further in approving the sale of land for a 158-acre industrial and flex office park on former farmland here. City officials heard a proposed master plan for the Tecumseh Business and Technology Campus, and approved more than $1 million to help put in infrastructure to the site, to prepare the property for interested developers.
Paula Holtz, economic development planner for this small city, says it’s believed that companies will want to locate corporate headquarters, smaller automotive plants, business incubators and research and development facilities at the park. The city already has Tecumseh Industrial Park, which is 95% occupied, she tells GlobeSt.com.
“When we bought the property for $2 million a few years ago, we put it out, and we thought we would get manufacturing interest. However, we started getting different potential tenants, and we used a matching state grant to hire Albert Kahn and Associates to draw us up a master plan. They talked about us focusing on high-tech businesses. It makes sense, we’re about 25 miles from the new ($150-million) Toyota research and development facility in York Township, near Ann Arbor, and close to the Global Engine Plant in nearby Dundee, MI.” Tecumseh is about 45 miles southwest of Detroit.
The park would be located along the main highway through the city, at 5000 E. M-50, about 15 miles west of US 23. The city Planning Commission will hear a final plan by Albert Kahn in June, and then it will go before the City Council. If approved, the city would market and sell the property to developers. “We’re prepared to sell the lots,” Holtz says. A minimum of 5 acres would be available, with no regulated wetlands, nor rail, on the site. A plan of the site, now zoned industrial, shows a cluster of five developmental areas.
|
||||
|
|
|
||
|
||||
|
|
MARYLAND HEIGHTS, MO-Elsevier, a science, technical and medical publisher, has asked Duke Realty Corp. to build it a 146,000-sf office building here in the Riverport Business Park development. The property, to be owned by Duke and leased back to Elsevier, will go on 11 acres at 13610 Riverport Dr.
The tenant, a subsidiary of Reed Elsevier Group PLC with its world headquarters in Amsterdam, Netherlands, is consolidating a few nearby offices into this new building for a regional HQ. Toby Martin, SVP with Duke, says the three-story building will have 48,000-sf floor plates and more than 825 parking spaces. “We weren’t the only ones trying to get this business,” he tells GlobeSt.com. He says he estimates that the project will cost about $200 per sf to build, or at least more than $25 million. The building should be completed next summer, Martin says.
He says the office market is strong everywhere in the St. Louis area right now. “It’s a bit of an anomaly compared to the national office market, particularly in the suburban, value areas. There’s very few good choices, and the good sites left are in play for the big office projects. It’s really competitive in this market. But this is an excellent credit tenant, with each of the company’s products doing about $4 billion to $5 billion in business.”
The suburb competes well with downtown and the popular office location of Clayton, MO, Martin says. “There’s challenges right now with the CBD, which is a little behind in its recovery. Clayton is almost a mini-CBD, with 10 million sf of high-rise. Maryland Heights is just well out there, with most of the buildings not needing structured parking, just open, free parking. It’s just a low-cost environment for corporations, and that’s right in Duke’s wheelhouse.”
Martin says he can’t quote the planned rate for the 10-year lease, which will fully occupy the building. Rates in this area are averaging about $24.70 per sf, according to a Grubb & Ellis first-quarter market report.
Whitaker Varley, VP of leasing, represented Duke in the deal. Scott Panzer, principal with Newmark Knight Frank and head of its Strategic Occupancy Solutions practice, was joined by Lisa Campofranco in negotiating on behalf of the tenant.
|
||||
|
|
|
||
|
||||
|
|
ANN ARBOR, MI-The day after launching its independent e-commerce site, Borders Group also said it would continue to open its new concept stores, executives said at the company’s first quarter conference call.
The company will open a total of 14 new “concept stores,” which include a number of technological improvements and a smaller reliance on music retailing. The first opened in Ann Arbor in February, with “substantially” all to open in the first half.
“The concept store is one of the key planks in our strategic plan,” said George L. Jones, president and CEO. “We’re really thrilled by how customers are responding to this.”
A day earlier, Borders launched its new e-commerce site, now independent after a seven-year partnership with Amazon.com, which also showed numbers, said Edward W. Wilhelm, executive VP and CFO.
“Sales and profits will all go to Borders,” Wilhelm said.
Total consolidated sales were $784.7 million, down 1% over a year ago. At domestic superstores, comparable-store sales for the period decreased 4.1%. Without the impact of music (a staggering 25.8% decline), same-store sales at Borders domestic superstores decreased by 1.7% for the quarter. Waldenbooks comp sales decreased by 0.8% over the same period a year ago. Same-store sales in the international segment rose 3.1%. The first quarter loss from continuing operations was $31.7 million, compared to $29.1 million a year ago.
Borders Group, Inc. operates more than 1,100 stores worldwide.
|
||||
|
|
|
||
|
||||
|
|
DENVER-Arthur Hill & Co. of Chicago has made the first acquisition for its third private equity fund. The company’s director of asset management Rob Gilbert tells GlobeSt.com the fund paid $9.3 million for Cherry Creek Place, a 107,000-sf building at 3151 Vaughn Way in Aurora, CO., near the regional light rail line.
The acquisition was financed by Private Bank Corp., which put up 75% of the cost of the acquisition. The loan floats over LIBOR and is currently just under 5.35%, Gilbert says.
The seller was Cherry Creek Place Associates III Ltd., whose general partner is Angelo Mariani, according to public documents. The limited partner is listed as Cherry Creek Equities, which includes Bill L Walters.
The seller also owns an adjacent 200,000-sf building but is restricted from taking any tenants from Arthur Hill’s building for five years, Gilbert says. The other adjacent property is a hotel, which has been useful for the building’s tenant. The US Office of Personnel Management leases 38,000 sf for a training facility, flying people in from all over the country and housing them in the adjacent Radisson hotel. The hotel was put under contract by Red Lion Hotels Corp. earlier this month.
The office building is currently 95% leased and a lease is in negotiation that would take it to 98%. Gilbert tells GlobeSt.com that approximately 11,500 sf will come available next year when Ironwood Communications vacates following a merger. He characterizes the event as an opportunity because the tenant’s existing rent is below current market rents.
“We see rents rising more than last year,” he says. The current market rent for comparable space is $16.50 full service gross, he says.
The second largest tenant in the building is the University of Phoenix, which has been in the building since 1983 and has signage on the building. UofP leases 17,000 sf on the building’s first floor. The third largest tenant is another government tenant, the US Passport Office.
Arthur Hill’s third fund has $30 million of equity provided by high-net-worth individuals. With leverage, the fund expects to acquire $125 million of real estate. The five-to-seven year fund’s focus is office, retail and multifamily properties in Portland, Texas, Florida and the Carolinas.
When asked about the funds’ performance, Gilbert declined to be specific but did share an anecdote: “We liquidated about $35 million of assets about the same time we were raising money for the third fund; [the investors] rolled the money into the third fund.”
Red Lion Hotels Corp. said earlier this month it has agreed to acquire the 478-key hotel property for $25.3 million. The 53-hotel chain headquartered in Spokane, WA, will close on the Radisson Hotel Denver Southeast later this quarter.
Like the office building, the hotel is adjacent the region’s light rail system along Interstate 225, 20 minutes from downtown Denver and 25 minutes from Denver International Airport. Amenities include 25,000 sf of meeting space, a two-story parking garage, swimming pool, business center, and full food and beverage service, including a 120-seat restaurant and 50-seat lounge.
Immediately upon taking ownership, Red Lion plans to put its company name on the asset and begin n $8-milliom improvement program. Most of the money will be spent upgrading rooms and common a
