211 posts from 2009

S.K. Hart Properties has completed the acquisition of the Bayview Corporate Center in Newport Beach, California from the FDIC, making for the largest single property sale for the FDIC this year as they continue to accumulate loans and properties that it will need to be disposed. Bayview, a premier Class A facility, is the former corporate headquarters of Downey Savings and Loan which was sold in November of 2008 in a transaction facilitated by the Office of Thrift Supervision (OTS) and the FDIC.

The 323,000 square foot property sold for $53 million, a considerable drop from the $70 million that Khosrow B. Semnani, the owner of S.K. Hart, said he offered to pay for the property last year according to a CoStar report. The landmark office campus consists of two, six-story towers connected by a dramatic three-story atrium and a five-level parking structure. Located at the intersection of Jamboree Road, MacArthur Boulevard, and the SR-73 Freeway, S.K. Hart has indicated that they will be creating highly competitive lease packages and are considering CB Richard Ellis in Newport Beach as the leasing agent.

For more news and information visit Blumberg Capital Partners.

The Federal Reserve has released its October 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices looking at the changes in business and household loan supply and demand with a focus on three sets of special questions:  The first asked banks about the reasons for the decline in commercial and industrial (C&I) loans over the first eight months of 2009, the second asked banks about the status of commercial real estate (CRE) loans on their books that were scheduled to mature by September of this year, and the third asked banks about potential changes in credit card lending due to implementation of the Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act.

The results of the survey are based on responses from 57 domestic banks and 23 U.S. branches and agencies of foreign banks; participating banks received the survey on or after October 6, 2009, and their responses were due by October 20, 2009. Domestic banks indicated that they continued to tighten standards and terms over the past three months on all major types of loans to businesses and households. And excerpt:

A small net fraction of branches and agencies of foreign banks eased standards on C&I loans, whereas a significant net fraction continued to tighten standards on CRE loans. Demand for most major categories of loans at domestic banks reportedly continued to weaken, on balance, over the past three months. This weakening was somewhat less widespread than in the July survey for C&I loans, CRE loans, and nontraditional mortgages; approximately the same for consumer loans; and significantly more widespread for home equity lines of credit. However, banks reported stronger demand, on net, for prime residential real estate loans. Demand for C&I and CRE loans at foreign banks continued to weaken, on balance, but the weakening was somewhat less widespread than that in the July survey.

For more news and information visit Blumberg Capital Partners.

Nationwide Health Properties, a REIT specializing in medical office properties and senior living centers based in Newport Beach, CA, announced it struck a deal with Pacific Medical Buildings LLC for between $275 million and $300 million in property. The arrangement would include seven medical office buildings totaling 800,000 square feet. According to GlobeSt.com, "the healthcare properties REIT described its agreement with PMB as a multi-faceted transaction involving, among other things, the acquisition of all or a majority interest in up to seven of the PMB buildings." According to NHP, officials expected the properties would generate an annual net operating income of between $21 million to $23 million however these estimates are likely to change as a final agreement is reached. Under the deal outlined, NHP would assume the existing mortgage debt of up to $170 million with a weighted average interest rate under 6%.

According to the Dow Jones Newswire, Nationwide Health Properties and Pacific Medical Buildings had been working to reach an agreement prior to the credit market freeze.

For more news and information visit Blumberg Capital Partners.

Despite a slow national commercial real estate market, pockets of activity are creating opportunities for property owners and leasers alike. One such area is outside of Philadelphia on the Route 202 Corridor.  Liberty Property Trust is a $6.5 billion real estate investment trust headquartered in the Great Valley Corporate Center, a property in their portfolio, and operates a 77-million-square-foot portfolio with 2,100 tenants at 700 office, distribution and light manufacturing facilities. Tom Sklow, the commercial developer's vice president and city manager, explained the four submarkets (Delaware County, Malvern/Exton/West Chester, King of Prussia/Wayne, and Plymouth Meeting/Blue Bell) never had the big spike in rent prices other regions had, therefore, it did not get slammed with the big drops that Atlanta, Las Vegas and Florida suffered. "Philadelphia is like the bond market, not the stock market," Sklow said.

According to the Pottstown Mercury Liberty has recently signed 6 new tenants and renewed more properties across the Philadelphia suburbs, including SunGard's early renewal for 147,930 square feet of office space at 650 and 680 East Swedesford Road in Tredyffrin; Cadient Group Inc.'s new lease for 31,514 square feet of office space at 2520 Renaissance Boulevard in Upper Merion; Milliman USA's early renewal for 29,860 square feet of office space at 1550 Liberty Ridge Drive in Tredyffrin; Microsoft's renewed a lease of 27,431 square feet of office space at 45 Liberty Boulevard in East Whiteland; and Garnet BioTherapeutics' renewed lease for 10,400 square feet of flexible space at 1 Great Valley Parkway in East Whiteland.

For more news and information visit Blumberg Capital Partners.

GlobeSt.com reported technology firm International Data Group has renewed their lease for the 15th floor and penthouse located at the post-modern One Exeter Plaza in the Back Bay area of Boston. The firm is retaining 15,451 sq. ft. of 211,000 sq. ft. building; other tenants of 699 Boylston St include Morton's Steak House, a Bank of America branch and Disney/ABC. Jones Lang LaSalle represented the owner of the building, Lawrence Ruben Company Inc., but chose not disclose the details of the lease. Average rates are around $50.13/sq. ft. in the neighborhood, according to Massachusetts-based Richard Barry & Joyce.

IDG subsidiary and global market intelligence firm International Data Corp. has also renewed the lease for their office space in Framingham, MA as well as expanded to nearby buildings. IDC now occupies all 87,406 sq. ft. in 5 Speen St, and will be reaching out into nearly 40,000 more sq. ft. at nearby 3 Speen St. RBJ provided representation for IDC and also declined to report lease terms, but noted the average rates are around $22.19 in the surrounding area.

For more news and information visit Blumberg Capital Partners.

The Defense Department's Base Realignment and Closure program has created a flurry of development around the Aberdeen Proving Ground in North-Eastern Maryland. The Department of Defense C4ISR Mission (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance) is relocating from Fort Monmouth, bringing approximately 8,200 jobs. St. John Properties recently broke ground for a 75,000 sq ft office building for defense contractor Raytheon. According to The Gazette, St. John Properties expects to develop 380,000 sq ft inside the base for the Government and Technology Enterprise, a research and development and technology business park for the government sector and private contractors.

Seeking to meet the increased need for contractor space around the Army base, Corporate Office Properties Trust broke ground in November for a second Class A office building at its North Gate Business Park, near Interstate 95. The first building under development totals 80,000 square feet with an anticipated completion date of fourth quarter 2009. The newest project will reach 85,000 square feet with an anticipated completion date of second quarter 2010. Construction is expected to cost more than $64.8 million and will include about 290,000 square feet of office space.  The complex is designed to meet expectations of 3 million square feet of new office space that will be needed for military and private contractors under BRAC.

For more news and information visit Blumberg Capital Partners.

LoopNet conducted a poll of its members -- groups of investors, brokers and owners -- last month and asked where they thought the commercial real estate market was headed in the coming year. Optimism for 2010 may have broken as respondents seem to have grown somewhat pessimistic about the timing of recovery, continued price declines, and access to affordable debt financing. Expectations for the timing of a market recovery continue to drift with nearly half of the respondents expecting improvement in 2011 or later.

Transaction Timing

"Despite the declines in pricing seen over the past quarter, respondents’ expectations for future pricing declines remain almost unchanged from the last survey," LoopNet expounded in their CRE blog. At the beginning of Q3, 52% of respondents expected to see future declines of 11% or more. At the beginning of Q4, that number is 53%. This suggests that future expectations of cash flow and value have continued to deteriorate, preventing pricing from stabilizing even after the declines in Q3.

For more news and information visit Blumberg Capital Partners.

Executives from Sares-Regis Group and Pacifica Commercial Real Estate gathered on Sunday to break ground for a new office and retail development next to Santa Barbara's Municipal Airport. The 14-acre first phase of the 96-acre Cabrillo Business Park will include 175,000 square feet of office, 72,000 square feet of self-storage and 17,500 square feet of retail space. Globest.com reported the full plan calls for development of 956,000 square feet of research-and-development facilities in 12 one- and two-story flex buildings of up to 80,000 square feet, making it the largest commercial development ever proposed on the South Coast. The project is being marketed by Mark Mattingly and Greg Bartholomew of the Santa Barbara office of Pacifica Commercial Realty.

According to the Santa Barbara & Goleta Newzhawk, "Sares-Regis has already renovated three principal buildings on the west end of the park, totaling 170,000 square feet. Fedde (Vice-President of Sares-Regis) said plans include a site build-out of roughly 70,000 square feet a year for 10 years. As part of the development agreement, Sares-Regis will contribute more than $7 million in traffic mitigation fees to Goleta." In 2007 the Santa Barbara Newsroom reported the development is expected to bring $2 billion in revenue to the area, including property taxes of $8 million and sales tax revenues of $48 million. The town of Goleta operates on a budget of roughly $14.7 million.

For more news and information visit Blumberg Capital Partners.

The Federal Deposit Insurance Corp., the Federal Reserve, the Office of Thrift Supervision and the Office of the Comptroller of the Currency released a new policy statement to assist examiners in evaluating institutions' efforts to renew or restructure loans to creditworthy CRE borrowers. The statement supports prudent commercial real estate loan workouts, stressing that performing loans, including those renewed or restructured on reasonable modified terms, will not be subject to adverse classification solely because the value of the underlying collateral declined.

An excerpt from the 33 page statement:

The regulators have found that prudent CRE loan workouts are often in the best interest of the financial institution and the borrower.  Examiners are expected to take a balanced approach in assessing the adequacy of an institution's risk management practices for loan workout activity.  Financial institutions that implement prudent CRE loan workout arrangements after performing a comprehensive review of a borrower's financial condition will not be subject to criticism for engaging in these efforts even if the restructured loans have weaknesses that result in adverse credit classification.  In addition, renewed or restructured loans to borrowers who have the ability to repay their debts according to reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than the loan balance.

For more news and information, visit Blumberg Capital Partners.