Wednesday, April 1, 2020

PREIT to Cut Dividend, Capital Projects and Takes Other Measures to Improve Liquidity

by John Jordan Globest.com
Locally-based PREIT reports that it is taking a number of steps to increase liquidity, including drastically reducing dividends, cutting capital projects, increasing borrowing limits and selling assets in response to the Coronavirus pandemic.

The Philadelphia-based retail REIT estimates the measures will create nearly $300 million in incremental liquidity.
“As we continue to navigate an uncharted operating environment, we are focused on safeguarding the safety and well-being of our associates and communities while enhancing near-term liquidity,” said Joseph F. Coradino, chairman and CEO of PREIT. “PREIT was among the first companies in our sector to embark on a proactive effort to improve our portfolio through anchor repositioning and redevelopment, completing the program ahead of industry peers and in advance of the COVID-19 pandemic. We are now laser-focused on improving our balance sheet to position PREIT for long-term success.”

Among the company’s steps to improve its liquidity include beginning with the second quarter dividend, proposing reducing the dividend by 90% to a quarterly cash dividend of $0.02 per common share. The reduction will enhance company liquidity by approximately $15 million per quarter, or $60 million in additional liquidity on a full-year basis.

PREIT has increased its borrowing capacity by more than $83 million by executing amendments to its senior credit facilities. PREIT is reviewing its capital spending projections and expects to reduce its planned 2020 spending by 11% or $11 million. Based on current forecasts, the company also expects to realize savings of approximately $2 million per month while its mall operations are suspended.

Other mitigation efforts include working with officials to reduce its municipal tax liabilities, which, if successful, could potentially generate savings of more than $10 million.

In addition, its previously announced property dispositions are expected to generate gross proceeds of $312.6 million. These deals include an agreement for the sale-leaseback of five properties, the sale of land parcels for multifamily development at seven properties, operating outparcel sales and the sale of land for hotel development at two properties.
PREIT states t, it expects to net approximately $200 million in additional liquidity at the close of these transactions.
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Tuesday, March 31, 2020

Buyers Pull Out of Two New Jersey Shopping Center Sales Valued at $52 Million

A real estate investment trust's pending sales of two shopping centers in Bergen County, New Jersey, for $52.5 million have been scrapped because the prospective buyers pulled out of the deals.

First Real Estate Investment Trust of New Jersey, based in Hackensack, said the sales of both Franklin Crossing in Franklin Lakes, for $26.5 million, and Westwood Plaza in Westwood, for $26 million, have been terminated.

The REIT disclosed the end of the two separate deals in filings with the Securities and Exchange Commission. First Real Estate Investment didn't identify the prospective buyer in either of the transactions.

The REIT earlier this month saw another one of its pending sales fall through, for a multifamily property that was part of a portfolio New York City-based Kushner Cos. had been slated to acquire from it for $266.5 million. First Real Estate Investment reported that its mortgage lender for Pierre Towers, a 266-unit apartment complex at 185 Prospect Ave. in Hackensack, wouldn't agree to assign that loan to Kushner Cos. So the purchase agreement for that particular property, valued at $80.5 million, was canceled, bringing the portfolio's price tag down to $186 million.

Regarding Franklin Crossing, the REIT reported the would-be buyer prior to the end of a 21-day due diligence period "determined not to proceed with the purchase." That prospective purchaser's $500,000 deposit was returned.

In the Westwood Plaza sale, prior to the end of a 30-day due diligence period in that transaction, its suitor chose not to proceed with the purchase and got its $1 million deposit return.

The filings didn't say why the buyers declined to close on the sales, and First Real Estate Investment on Monday declined to comment beyond what was contained in the SEC documents.

Jared Kushner, the husband of President Trump's daughter Ivanka, once led Kushner Cos., which was founded by his father, Charles Kushner. But the younger Kushner stepped down from his role at the family company after he became a key adviser to the president. He is no longer involved in its daily operations.

In January, when First Real Estate Investment announced the pending portfolio sale to Kushner Cos., the REIT said it planned to wind down and proceed with a voluntary liquidation after that transaction closed.
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Monday, March 30, 2020

Boston Firm Adds Northeast Philadelphia Industrial Buildings to Growing Portfolio

Full service investment firm NorthBridge Partners has purchased a 281,000-square-foot, four-building portfolio in the Northeast Philadelphia industrial submarket from local development shop Anvil Construction for $25.5 million, or about $91 per square foot.

The properties in the Byberry East and West Section of the Philadelphia Industrial Park are located at 2722 Commerce Way, 2801-17 Southampton Road, 2825-45 Southampton Road and 2191 Hornig Road.

At the time of sale, the portfolio was 94% leased to 12 different tenants including United Natural Foods, Goodman Distribution, the City of Philadelphia, EIS and Riley Sales.

The team at Roddy Inc. will represent NorthBridge in the leasing of the Philadelphia industrial portfolio moving forward. There is currently 24,000 square feet of space available and tenant needs from 6,000 to 24,000 square feet can be accommodated.

Headquartered in Boston, NorthBridge Partners has invested more than $450 million of capital across over 30 separate investments totaling over 4 million square feet since its launch in 2014, according to its website.
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New Jersey Unveils 90-Day Mortgage Grace Period in Wake of Pandemic

By Linda Moss CoStar News

Working with financial lenders, New Jersey has arranged for a 90-day grace period for mortgage payments throughout the state in response to the coronavirus pandemic, as confirmed cases of the illness rose to 11,124, No. 2 in the nation.

New Jersey Gov. Phil Murphy unveiled the mortgage-relief initiative for home owners financially hurt by the outbreak Saturday at a press briefing in the state capital in Trenton. The governor's announcement only pertains to residential mortgages, not those on commercial properties, according to a spokesman for his office. New Jersey now also has a 60-day ban on evictions.

Murphy, in an initiative that "closely mirrors" one underway in California, said the Garden State secured support from Citigroup, JPMorgan Chase, U.S. Bank, Wells Fargo and Bank of America in addition to over 40 other federal and state-chartered banks, credit unions, and servicers to offer financial protection to New Jersey home owners. More financial institutions are preparing to sign on in the coming days, according to a statement from the governor's office.

California Gov. Gavin Newsom announced a similar mortgage forbearance arrangement with Citigroup, JPMorgan Chase, U.S. Bank, and Wells Fargo last week. And on Friday Newsom ordered a statewide eviction moratorium, which bars residential landlords from evicting tenants unable to make their rent as a result of lost work, illness or being left to care for a family member because of the virus.
A number of states, not only California but New York and others, have ordered moratoriums on mortgage payments and evictions as residents financially struggle because of the health crisis, which has resulted in thousands of layoffs as businesses are forced to close. The Empire State has the most confirmed coronavirus cases nationally, with Gov. Andrew Cuomo reporting 52,318 as of Saturday.

April 1 looms

New Jersey's action comes in time to help those worried "as that April 1 payment date loomed especially large and foreboding," Murphy said, and builds on an earlier ban on evictions.

"Put together a 90-day grace period and a moratorium on foreclosures and evictions means many New Jersey families can breathe easier, keep their heads above water and have a place they can continue to to call home," the governor said.

Under New Jersey's plan, residents who are struggling financially as a result of COVID-19 may be eligible for relief but must reach out to their financial institutions.

Participaing lenders would offer, consistent with applicable guidelines:


  • Mortgage-payment forbearance of up to 90 days to borrowers economically impacted by the pandemic;
  • Provide borrowers a streamlined process to request a forbearance for COVID-19-related reasons, supported with available documentation;
  • Confirm approval of and terms of forbearance program;
  • Provide borrowers the opportunity to request additional relief, as practicable, upon continued showing of hardship due to COVID-19.

The New Jersey Bankers Association, CrossState Credit Union Association and the Mortgage Bankers Association of New Jersey have endorsed the mortgage-payment moratorium and are encouraging their members to adopt these policies, according to a statement from the governor's office.

No harm to credit rating

Home owners who take advantage of the mortgage forbearance won't see their credit ratings negatively impacted as a result, according to Murphy.

During his press conference, Murphy said for at least 90 days, financial institutions will waive or refund mortgage-related late fees and other fees, including early CD withdrawals, subject to applicable federal regulations, for customers who have sought assistance.

Last week, Murphy signed an executive order that imposed a moratorium on removing individuals from their homes pursuant to an eviction or foreclosure proceeding while the order is in effect. Tenants cannot be asked to leave their homes for nonpayment of rent during this time. Building on that order, mortgage lenders have committed to not initiating foreclosure sale or evictions for at least 60 days, the governor said.

The state Department of Community Affairs has received an additional $13 million in federal funds as part of its annual renewal for the Section 8 voucher Program, according to the governor. These funds, based on New Jersey increased use of the prgoram last year, "are critical to helping current voucher tenants maintain their housing stability during the coming year," the governor's office said in a statement.
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Coronavirus (COVID-19) and Commercial Real Estate: Government Finance Interventions (Video)

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Wednesday, March 25, 2020

Real estate investor Tom Barrack: Commercial mortgages could be on brink of collapse (Video)

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Rubenstein Partners Announces New Leases, Launch of Capital Improvements at Makefield Crossing

by John Jordan Globest.com
Rubenstein Partners reports that it has secured more than 100,000 square feet in new lease deals at the Makefield Crossing office campus here in the last 12 months.

The Philadelphia-based real estate investment advisory firm, also notes that it has begun capital improvements involving both interior and exterior upgrades at the nearly 467,000-square-foot property. The capital improvements mark the first step in a larger plan to reposition and improve the Class A office park in Bucks County, PA.

Within the past 12 months, Rubenstein has signed four large leases exceeding 20,000 square feet each, including a new lease for 21,082 square feet with Biohaven Pharmaceuticals, a 21,690-square-foot renewal and expansion of Cello Health, and a 22,409-square-foot renewal and expansion of Jubilant Pharma, among other deals.

“New and existing tenants have embraced our previously announced capital improvement plan for Makefield Crossing, which we are now executing after securing unanimous approvals from the Township,” says Louis Merlini, VP of asset management at Rubenstein. “We believe that Makefield Crossing will become even more attractive to users as we proceed with our plans and the end result comes into focus.”

Rubenstein plans to completely overhaul both the North and South campuses of Makefield Crossing with market-leading amenities and best-in-class common area upgrades. Makefield Crossing North consists of five office buildings totaling 190,183 square feet, plus a Hampton Inn hotel that was not included in the acquisition.

Rubenstein’s planned upgrades to Makefield Crossing North include replacing the interior parking lot with a large, collaborative green space, adding new amenities including a fitness center, conference center, and café/tenant lounge, renovating building common areas including main lobbies, restrooms, and corridors and replacing signage.

Makefield Crossing South consists of four office buildings, of which Rubenstein acquired three buildings totaling 276,533 square feet. Rubenstein plans to improve Makefield Crossing South by adding and upgrading amenities including a fitness center, conference center, and full-service café and tenant lounge, replacing a portion of the interior parking lot with a collaborative green space connecting the new amenities to a series of waterfront decks, renovation of building common areas including main lobbies, restrooms, corridors and new signage.
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Tuesday, March 24, 2020

Barry Sternlicht, Starwood CEO on coronavirus outbreak's impact on business and investments (Video)

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Philadelphia Is Among the Top Metropolitan Areas in the US for Industries to Most Likely Survive and Eventually Thrive Following This Crisis

By Adrian Ponsen CoStar Analytics
The coronavirus spread has reintroduced factors absent from Philadelphia's economy for almost a decade: widespread fear and uncertainty. As we are early in the onset and short on government data points collected after the virus' spread, any market analyst worth his or her salt will admit there will be a deluge of question marks hanging over the economic outlook during the next month or two.

However, it's still constructive to take stock of what we do know, in order to build up as clear a picture of the road ahead as possible.

First off, a painful near-term decline in Philly's economic figures is all but certain for this spring. To curb the virus' spread and prevent hospitals from being overwhelmed with patients, Pennsylvania and New Jersey governors both ordered all nonessential businesses to close on March 16.

How long are these monumental measures likely to stay in place? China’s aggressive lockdown measures lasted about two months. The CDC recently recommended cancelling or postponing any gatherings of 50 scheduled through mid-May. Johns Hopkins University School of Medicine’s infectious disease expert Morgan Katz expects meaningful improvements by early May. Meanwhile, Treasury Secretary Steven Mnuchin is at the center of the White House’s economic response to this crisis and says Republican senators’ proposed coronavirus relief bill, now under debate in the congress, aims to cushion businesses for 10-12 weeks of serious disruption. That would take us through early to mid-June.

Regardless of how long these shutdowns last, the leisure/hospitality sector and retail trade sectors will likely be some of the worst-affected major industries. They represent 10% and 8% of Philadelphia total employment, respectively.

Hit by department store closures and the shift to automated or online checkout, Philadelphia's retail employment was already on the decline before the onset of the virus. Considering how many national retailers’ balance sheets had already been eroding prior to the onset of this crisis, the retail market’s road ahead looks like a painful one.

Leisure and hospitality employment, supported mostly by restaurants, bars and hotels, had been one of the metropolitan area's fastest-growing employment sectors. Center City's blossoming nightlife has been a key ingredient to Philadelphia economic revival over the past 15 to 20 years. The fact that the industry is now at such high risk is probably the biggest existential threat posed by the coronavirus to Philadelphia’s ongoing revival.

But overall, the coronavirus and its accompanying economic shock do not pose major threats to the fundamental drivers of Philadelphia's economic renaissance over the past 15 to 20 years.

Philadelphia's industry mix positions it better than the vast majority of major U.S. cities to weather the negative economic impact of the coronavirus. Very few major U.S. markets have higher concentrations of the sector including healthcare, professional and business services which will likely remain most resilient in the months ahead.

Meanwhile, Philadelphia has relatively lower concentrations of the sectors now most at risk such as leisure and hospitality, retail and oil and gas extraction.

The city's status as a powerhouse of healthcare innovation only gains renewed importance as a result of the current tragedy and will be a key economic benefit as the number of U.S. residents aged 70 and older grows by 40% over the course of this new decade.

Meanwhile, the cost of living differential between Philadelphia and its nearby competitors, New York, Boston and Washington, D.C., remains massive. Philadelphia will continue to attract large net inflows of college-educated young adults moving from these places in search of more spacious housing and higher savings/disposable income.

In other words, for firms able to remain on offense during what will undoubtedly be challenging months ahead, Philadelphia remains an attractive destination for real estate investment capital seeking stable long-term growth, especially when stacked against other major metropolitan areas in the U.S.
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Wednesday, March 18, 2020

Paypal Signs New Lease Deal at Plymouth Meeting Property

An office lease in Plymouth Meeting, Pennsylvania, will have Paypal moving to 4000 Chemical Rd.

The tenant will take occupancy of 60,593 square feet in the five-story, 120,877-square-foot office property in the third quarter of 2020.
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Arden Group Acquires Industrial Portfolio in $163M Deal

by John Jordan Globest.com
Locally-based Arden Group has secured a $163-million floating-rate loan with BlackRock and CIT Group for the purchase and recapitalization of a 12-asset industrial portfolio in six major markets throughout the United States.

Arden Group is acquiring a portfolio of assets from Avistone of Laguna Niguel, CA. The portfolio is spread across San Antonio and Dallas, TX; Atlanta, GA and Columbus, OH.
No financial terms of the portfolio purchase were disclosed.

Avistone assembled these assets through a series of transactions dating back to June 2014. The properties will be combined with two Philadelphia and Charlotte properties already acquired by Arden in the second half of 2018. The new financing will retire the securitized debt on the acquisition targets, while paying down the bridge loan on the Philadelphia and Charlotte assets.

“The recapitalized properties are optimally spread across six industrial markets throughout the country and leased to a diverse array of more than 300 tenants across various industries."

Nearly 90% occupied portfolio has staggered lease term rollover providing Arden Group downside protection.
Arden Group, which has regional offices in New York City and Miami has acquired and/or developed more than $4 billion of properties through joint ventures and discretionary investment funds since its founding in 1989.
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Tuesday, March 17, 2020

The New Yorkers Are Coming! Migration Into Philadelphia From Nearby Cities Continues to Rise

CoStar released its market update video outlining the top five trends in Philadelphia’s apartment market heading into 2020 a few weeks ago. One of the key trends the video highlighted was the continued migration of college-educated renters into Philadelphia’s urban core.

Without these inflows, Philadelphia’s apartment occupancy rate wouldn’t be able to remain in healthy standing, given the record totals of new construction the market is now seeing. This means it’s important for investors to understand where Philly’s new residents are coming from and what’s driving them to the city in the first place.

While its reporting data is lagged by a few years, the Census Bureau’s County-to-County migration flows dataset is the best source for answering these questions. It shows that just in the past 10 years, there’s been a sea change in terms of migration patterns in and out of Philadelphia in a way that many nationally focused investors still don’t fully understand or appreciate.

During the early years coming out of the last recession, more Philadelphia residents left the city for New York City than vice versa. They left in search of better jobs, higher wages, more lively bars and restaurants, and they were whiling to tolerate New York’s higher cost of living as part of the trade-off.

But as the cost of living in New York has skyrocketed, and Philadelphia’s nightlife has begun to flourish, these migration flows have completely switched. The number of residents moving from New York City to Philadelphia is rising, and has begun to far surpass the number of residents moving in the opposite direction, which has been on the decline in recent years.

A similar trend holds for residents moving between the costly Washington, D.C., suburbs in Northern Virginia and Philadelphia.

Migration from the most expensive pockets of New England including cities such as Boston and Cambridge to Philadelphia are also on the rise, while fewer Philadelphians are moving in the opposite direction.


While cost of living differentials are driving these trends, there appears to be plenty of additional runway for Philadelphia’s migration inflows to continue. Average two-bedroom apartment rents in Boston and New York City range from $3,300 to $3,900 per month, twice Philly’s average rate of $1,700. Meanwhile, the gap in home prices between Philly and its regional competitors is even wider.

From an investor’s perspective, Philadelphia’s growing inflows provide much needed support for apartment leasing. Local millennials are increasingly buying homes, which has kept the metropolitan area’s homeownership rate rising slowly since 2018. But new migrants into the city are more likely to rent. According the most recent U.S. census, 72% of residents who moved into Philadelphia from outside the state during 2018 moved into renter-occupied households during their first year.
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Monday, March 16, 2020

Office Performance from CoStar (Video)

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Stockton University, Atlantic City Development Corp. to Build New Student Housing

by John Jordan Globest.com
Stockton University and the Atlantic City Development Corp. have announced a public-private partnership to build a new student residence hall at Stockton University Atlantic City.

Phase two of the partnership, which was announced on Friday, will involve the construction of a 140,000-square-foot building that will feature apartment-style living with a total of 416 beds. There will also be a lounge, meeting room and laundry facilities. Residents will have access to parking in the existing parking garage.
Published reports have put the cost of the new project at more than $60 million.

In consideration of precautions taken to stem the spread of the coronavirus, a planned March 27 groundbreaking for the new Residence Hall was postponed, according to an update provided by Stockton University on Saturday.
The construction will continue the public/private partnership with AC Devco, which developed the first Gateway initiative that includes the Stockton Atlantic City campus, South Jersey Gas headquarters and AtlantiCare Urgent Care.

“Stockton University and its partners set the stage for a new economic development strategy with the Gateway initiative,” said AC Devco President Christopher Paladino. “Today thousands of students, staff, visitors, and employees of Stockton, South Jersey Gas and AtlantiCare have changed the tempo of the streets of Chelsea. This Phase II investment will further add to the vibrancy of the neighborhood.”

Stockton Atlantic City opened in fall 2018 with an academic building, 543-bed residential complex and parking garage. This spring, almost 1,500 students are taking at least one class in the John F. Scarpa Academic Center.
Stockton President Harvey Kesselman said, “We are excited to be able to expand our presence in Atlantic City and contribute to creating a more diversified economy. The new residence hall will allow even more students to live, learn and earn in Atlantic City through academic, internship and employment opportunities.”

Demolition of the Eldredge Building is anticipated for the summer of 2020 with construction of the new Residence Hall to begin in the fall. The target completion date for students to move in is in the fall of 2022.
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Thursday, March 12, 2020

How Investors Value Commercial Real Estate (Value)

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$64M New Health Facility Opens in King of Prussia

by John Jordan Globest.com
Main Line Health reports that it has opened its $64-million, 94,000-square-foot Maine Line Health King of Prussia facility here.

The new health center is home to Main Line Health’s first Women’s Specialty Center in collaboration with Axia Women’s Health. The new facility which opened on Monday is located in the Village at Valley Forge.
Jack Lynch, FACHE, president and CEO, Main Line Health, said of the new health center’s opening, “As we developed plans for Main Line Health King of Prussia, we really dove deep into researching what services and amenities are important to our community—specifically women. With our partners at Axia Women’s Health, we are essentially delivering a one-stop-shop for women to see their primary care physician and specialists in a seamless, coordinated manner and offering boutique-like amenities to complement that care.”

Some of the specialized services offered for women include: primary care, imaging and lab services, X-rays, Ultrasound, Dexascans, 3D mammograms, specialty care, autoimmune health, breast health, digestive care, emotional wellness, endocrinology, genetic risk, gynecological care, headache care, heart care, maternity care, occupational therapy, pelvic floor health, physical therapy, reproductive medicine, speech therapy, surgical consultation, vein care and weight and wellness.
Main Line Health King of Prussia will also house a second office for the Women’s Emotional Wellness Center, expanding the specialized outpatient behavioral health services provided to women and their families. Services include individual and group counseling, post-partum depression care, and mindfulness therapies, including yoga.

While the Women’s Specialty Center seeks to meet the health care needs of women, Main Line Health King of Prussia offers care for all members of the community.

Main Line Health King of Prussia also features Aneu Kitchen & Juicery, a teaching kitchen, interactive wellness classes, The Wellness Porch–a boutique, wellness-focused retail store and complimentary parking. A 6,500-square-foot rooftop farm will also be built and will have its own professional farmer. The produce grown on the farm will be donated to a local university, to the community of Norristown and used in the center’s cooking classes and other events.
The construction manager for Main Line Health King of Prussia was IMC Construction; the architect/interior designer was NELSON Worldwide; the women’s specialty consultant was Susan Black, Perkins Eastman Black; and the development manager was Anchor Health Properties.
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Wednesday, March 11, 2020

Free Standing REITs (Video)

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What is a Cap Rate? | How Do You Analyze Commercial Real Estate Properties? (Video)

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Center City Philadelphia Office Landlords Not Afraid to Ask for More

By Adrian Ponsen CoStar Analytics
Given the city’s notorious wage tax and slow-but-steady pace of office leasing, Center City Philadelphia office owners aren’t used to seeing their market listed at the top of the charts in national rankings. This is particularly the case given that the list of office tenants moving into Center City, while growing, is still somewhat limited.

However, Center City Philadelphia’s office market does stand out nationally for its low average vacancy, minimal new construction and a surge in college-educated residents moving into the Philadelphia area’s urban core. These trends are providing local office landlords and brokers the pricing power they need to raise asking rents at some of the fastest rates of any major central business district in the U.S.

The chart above draws on more than 5,400 office space listings with asking rents that have been posted on CoStar since the beginning of 2019. In order to provide a clearer picture of where office landlords are more bullish versus more bearish, this analysis focused on office listings that either increased or decreased their asking rent. Other changes in term or service types, for example from gross rent to triple net, were excluded.

The key takeaway: Office landlords and brokers have raised asking rents by 5% or more on a third of the office space listings in Philadelphia's Market Street West and Market Street East submarkets since the beginning of last year, while almost no landlords lowered listed rents. The strong average increases in asking rents outshine central business districts in many of the country’s largest cities including New York, Washington, D.C. and San Francisco.

This is one of the factors that appealed to investors who made large Center City Philadelphia office acquisitions over the past two years.

Manhattan-based Silverstein Properties and locally based Arden Group were responsible for last year’s largest Center City office acquisition, with their joint-venture purchase of the trophy-class BNY Mellon Center for $451.6 million, or $351 per square foot.

“When we acquired 1735 Market we knew that we were getting the premier multi-tenant office building in the city in the best location at 18th & Market St. directly across the street from the Comcast world headquarters,” Arden Group CEO Craig Spencer said in a statement provided to CoStar. “Combining the iconic trophy quality of the property with Philadelphia’s dynamic job growth, millennial population growth and residential migration into Center City has created an exciting environment where we have been able to grow rents much faster than we initially anticipated.”

“We and our partners at Arden Group and Migdal love Philadelphia for a lot of reasons,” he said. “The city has a fantastic lifestyle that is attracting young, creative people to live and work here. It has some of the country’s top colleges and universities and is strategically located between Washington, D.C. and New York City. The bottom line is that Philadelphia is a global destination that continues to attract leading businesses and their employees. Growth in office rents is a natural byproduct of the city’s continued growth and success.”

Meanwhile, Philadelphia’s notoriously high construction labor costs have helped to keep the amount of new office space coming to market to a minimum. This restrained growth in new office supply is likely another key contributor to rising asking rents.

However, high construction costs also mean increased tenant improvement allowances, which have partially offset the market’s recent rent gains.

“Five years ago, the average 10-year Class A office deal was getting around $50 per square foot in tenant improvement allowances. Now, that figure is looking more like $65 to $80 because of rising construction costs and sophistication of desired tenant build-outs. While we’ve seen great rent gains across the city’s office inventory, effective rates – what landlords are taking in after TI and concessions have been factored out – have seen more muted growth.”
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Single Tenant Net Lease Performance Today (Video)

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Tuesday, March 10, 2020

Billionaire real estate investor Sam Zell on market volatility amid coronavirus fears (Video)

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SANT Properties Buys Former Macy’s at Neshaminy Mall

by John Jordan Globest.com
Kin Properties of Boca Raton, FL has sold the former Macy’s department store at the Neshaminy Mall here to SANT Properties of Huntington Valley, PA.

The deal for the 211,000-square-foot dark anchor at the Neshaminy Mall was reported by Colliers Retail team of Todd Sussman and Jon Kieserman, which has been appointed exclusive leasing agent for the property by the new ownership.
No financial terms of the transaction were disclosed.

Macy’s opened at Neshaminy Mall in 1968 (then Strawbridge’s) and closed amidst 100 store closings nationwide for the retailer that began in 2017 as it readjusted its business to growing online competition.

The new owner has reconceived the vacant box as a mix of large floor plate opportunities, new exterior facing small retail and/or restaurant tenants along with several new outparcels offering the potential to court statement restaurant operators to the mall complex.

In addition, flexible zoning allows for multiple uses that would encourage, fitness, entertainment, office and more.

“We are excited to be an integral part of the redevelopment of this parcel. The 16 acres and the former Macy’s box will certainly be the key to transforming one of the most strategically placed malls in the Tri-state area."
Brookfield purchased the entirety of the Neshaminy Mall, independent of Macy’s, in 2018. There are some reports that Brookfield is planning to undertake redevelopment and implement substantial improvements for the property.

Current Neshaminy Mall retailers Boscov’s and AMC anchor a mix of specialty shops that include Barnes & Noble, Hollister Co., H&M, Aéropostale, The Children’s Place, Express and Victoria’s Secret.
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Monday, March 9, 2020

Cherry Hill Office Complex Changes Hands

by John Jordan Globest.com
The two-building office complex at 5 and 6 Executive Campus here has been sold for an undisclosed sum.

The seller was an institutional owner of the 166,979-square-foot complex.
The portfolio is located off State Route 70 one mile from State Route 38 and approximately 5.4 miles from Philadelphia. The buildings are also proximate to retail and restaurant amenities along with being within walking distance to the Cherry Hill Transit station, which offers service to Philadelphia within 30 minutes, and across the street from the NJ Transit bus stop.

No financial terms of the transaction were disclosed.
The 66,703-square-foot 5 Executive is a two-story office building that was completed in 1970, and 6 Executive is a four-story, 100,276-square-foot building that first opened in 1982. The value-add buildings are home to a roster of all credit-rated government agencies.

“We were very pleased to work with the seller on the disposition of these properties. They were able to take advantage of the market’s strong demand for office properties that offer stable cash flow and leasing upside.”
The office portfolio acquisition provides the buyer with a “unique opportunity to acquire in-place cash flow secured by government agency tenancy in one of Southern New Jersey’s premier office markets.”
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Sunday, March 8, 2020

26-Store Dollar General Portfolio in Pennsylvania Trades for $36M

by John Jordan Globest.com
A portfolio of 26 single-tenant retail properties in Pennsylvania occupied by discount retailer Dollar General has changed hands in a deal valued at $36 million.

Brentwood, TN-based GBT Realty Corporation, which developed the properties over the past two years, sold the portfolio to a Virginia-based, private investment group that was completing a sizable 1031 exchange.

Averaging a consideration of $1.4 million per location, each free-standing store features approximately 9,000 square feet of retail space and is absolute, triple-net leased to Dollar General Corporation which has provided its corporate guarantee on each lease. The leases all have between 12 and 13 years remaining with rent increases in each option period. The properties are all located in key suburban markets throughout the State of Pennsylvania.

“Discount retail continues to thrive as Dollar General, and its peers, open more stores each year. For the net lease investor, these assets provide an attractive combination of credit, lease term, and passive ownership, making dollar stores some of the most actively traded net lease properties on the market.”
Fallon notes that he is heading the marketing for additional Dollar Store inventory, including seven new Dollar General stores located in Pennsylvania,  Ohio, Maine and Connecticut.

Dollar General currently operates more than 15,000 stores in 44 states and counting.
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Friday, March 6, 2020

CCIM’s K.C. Conway on the Impact of Coronavirus on Economy and Commercial Real Estate (Video)

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Institutional Investor Sells Government Office Portfolio Near Philadelphia

An institutional investor has sold a value-add office portfolio totaling 166,969 square feet in Philadelphia’s Cherry Hill, New Jersey, suburb to a private investor.

The buildings at 5 and 6 Executive Campus are located off State Route 70, approximately 5 miles from downtown Philadelphia. The buildings are leased to a roster of all credit-rated government agencies.

The two-story office building at 5 Executive was built in 1970 and totals 66,703 square feet, and the four-story facility at 6 Executive, which opened its doors in 1982, totals 100,276 square feet. The buildings are within walking distance to the Cherry Hill Transit station.

“We were very pleased to work with the seller on the disposition of these properties. They were able to take advantage of the market’s strong demand for office properties that offer stable cash flow and leasing upside.”
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Thursday, March 5, 2020

4 Types of Commercial Real Estate Lenders (Video)

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Cannabis Company Buys New Jersey Warehouse

Columbia Care, which holds one of six licenses in New Jersey to cultivate cannabis, has purchased its first location in the Garden State.

The company, a global medical cannabis operation with licenses in 18 jurisdictions in the United States and Europe, bought a vacant industrial building in the southern part of the state at 1560 N. West Blvd. in Vineland for $2.6 million, according to CoStar data.

LS Capital, which was represented by NAI Mertz in the transaction, sold the 50,274-square-foot building to Columbia Care, which provides cannabis-based health and wellness options for patients.

The company has more than 25 locations throughout the United States and Puerto Rico, with one now in New Jersey. The state issued Columbia Care its cultivation license in 2018.

"New Jersey is moving to provide alternative healthcare for qualifying patients, and Columbia Care is a trusted and respected company in its industry. This property provides quality warehouse and office space, and a smart location, to support its business operations."

The building that Columbia Care purchased has 47,525 square feet of warehouse space with two drive-in doors, four platform loading docks and clear ceiling heights of 15 to 27 feet. Its 2,749-square-foot, two-story office space includes seven offices and four restrooms. The property is in close proximity to major highways including Routes 47 and 55, and is about 35 minutes from the Atlantic City Expressway.
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Philadelphia Tops the Country on Monthly Small Business Hiring Index

by Ricahrd Lawson Costar News
Philadelphia bumped Phoenix out of the top spot on a monthly index that measures small business job growth.

A year ago, the City of Brotherly Love’s metropolitan area sat next to last on the index from payroll company Paychex and analytics company IHS Markit. Since then, the area has surged on the index by 2.76%, pushing Phoenix to third behind Tampa.

Though growth is strong, Philadelphia finished just shy of a 100 rating, which means small business job growth for all metropolitan areas is at a slower pace than the benchmark year in 2004.

Tennessee retained the top spot among the 20 most populous states, driven largely by growth in the Nashville area, which isn’t populous enough yet to put it in the top 20 for cities. Tennessee is followed by Florida, Virginia, Pennsylvania and Texas in the top 5 on the March index.

Paychex culls data from the payrolls of 350,000 of its clients that employ 50 or fewer people. Real estate investors look at job and wage data when deciding on the best places to put their money.

Overall, the index showed a slight uptick in hiring across the country as a whole for the third consecutive month. Martin Mucci, Paychex’s president and chief executive officer, said in a statement that the “results have yet to reflect any impact from cases" of the coronavirus, known as COVID-19, "which is expected to increase in the coming months.”

Small business hiring in the Philadelphia metropolitan area, which includes parts of New Jersey, has finally caught up to an area economy that has been doing well over the past few years, Jim Diffey, chief economist for Boston-based IHS, told CoStar News.

“For a while, I was shocked at how low they were performing,” Diffey said. “The readings a few years ago were too pessimistic.”

He said there are a lot of cranes in the Philadelphia area like a lot of cities around the country. Construction is a big with small business hiring.

Determining the breadth of businesses is more challenging. But the latest figures from the U.S. Bureau of Labor Statistics show that financial activities and professional and business services are the two sectors that have been growing the most between July and December of last year.

“Many outside investors aren’t aware that among the largest 15 metro areas in the U.S., Philly is near the very top of the list in terms of growth in college educated residents moving into its urban core,” said Adrian Ponsen, CoStar’s director of market analytics, based in Philadelphia.

He said that is “supporting a booming restaurant and entertainment scene in and around Center City Philadelphia, which has been one of the key contributors to small business growth.”

Plus, Philadelphia has a relatively low cost of living, he said. That is “increasingly attracting new residents, including entrepreneurs seeking relief from more cost prohibitive cities nearby such as New York and Washington, D.C., while fewer and fewer Philly residents are moving in the opposite direction every year.”
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Tuesday, March 3, 2020

How will the real estate market will fare in 2020? (Video)

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Opportunity Zone Update 2020 (Video)

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Industrial Investments Acquires 21-Building South NJ Industrial Portfolio

by John Jordan Globest.com
An affiliate of Blue Bell, PA-based Industrial Investments, Inc. has purchased a 21-building industrial portfolio here for $16.05 million and plans further mixed-use development on available lots adjacent to its newly acquired properties.

The acquisition includes Bloomfield Business Park, which consists of 16 multi-tenant warehouse/flex buildings and five multi-tenant buildings along Commerce Lane in the Commerce Lane Business Park.
The portfolio was 98% occupied at the time of sale to 55 tenants. Michael T. Bown, Sr., partner, Industrial Investments, represented the buyer in the transaction.

Bloomfield Business Park was originally developed as a joint venture between The Bloom Organization and Tom Merryfield in the late 1980s/early 1990s in several phases. Each building is 10,500 square feet. The early stage buildings consisted of five units of 2,100 sf each with five front entrances, five electric services and five loading doors. The early stage buildings have drive-in loading only. In the later stages of construction, the buildings were built on larger lots that allowed for five tailgate loading doors in the back and drive-in doors on the end units.

Tenants in the portfolio include United Refrigeration, Cooper Electric, Bath Fitter, Terminix, ProSource and Ewing Irrigation.

Industrial Investments states in connection with its latest purchase: “We are delighted to expand our footprint in the South Jersey industrial market with the acquisition of the West Berlin portfolio of master-planned, well-manicured, multi-tenant industrial buildings with excellent accessibility to consumers, retail locations and major roadways.”

The firm added that it plans to further develop the property, utilizing available lots on Route 73 for build-to-suit opportunities for retail, office or industrial buildings up to 25,000 square feet each.
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Monday, March 2, 2020

Maximizing Renewals | Commercial Real Estate Tips (Video)

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Five Teams Make Short-List for Philadelphia Navy Yard Project

by John Jordan Globest.com
The PIDC announced on Friday that it had whittled down the more than 35 responses to an RFP issued last fall for a development partner on 109 acres at the Philadelphia Navy Yard to five development teams.

The five respondents now competing for the development solicitation are:
● Ensemble Real Estate Investments and Mosaic Partners;

● Gilbane Development Company and Jair Lynch Real Estate Partners;
● Hines;

● Hoffman and Associates, Gattuso Development Partners, and Synterra Partners and

● Trammell Crow Co.
The five teams on the shortlist have been invited to submit detailed proposals in a request for proposal stage, with final selection of a development partner scheduled to be made later this year.

“We are heartened by the many enthusiastic responses for the development opportunities at the Navy Yard,” says Kate McNamara, PIDC’s senior vice president, Navy Yard. “We believe that we have a strong pool of potential partners that will contribute to this next chapter of innovation and development at the Navy Yard and look forward to announcing a new development partner later this year.”

In September 2019, PIDC initiated a request for qualifications process that put a call out for prospective partners—real estate developers and end-users—capable of planning, delivering, and managing office, R&D, and mixed-use residential buildings on approximately 109 acres at the Navy Yard. The PIDC is Philadelphia’s public-private economic development corporation founded in 1958 by the City of Philadelphia and the Greater Philadelphia Chamber of Commerce,

More than 35 responses to the RFQ were received in December 2019. The development opportunity marks the only time since 2004 that PIDC has offered exclusive development rights and the first time that mixed-use multifamily development will be allowed at the Navy Yard.

The Philadelphia Navy Yard currently hosts approximately 15,000 employees and 170 employers who occupy 7.5 million square feet across a mix of property types, including office, retail, industrial, R&D and institution space. Since acquiring the 1,200-acre site from the federal government in 2000, PIDC has been the master developer and site operator of the Navy Yard on behalf of the Philadelphia Authority for Industrial Development.
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Thursday, February 27, 2020

What Rent Control Means For Commercial Real Estate Investors (Video)

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Walmart-Anchored Center Acquired by First National Realty

by John Jordan Globest.com
The Court at Hamilton, a 194,106-square-foot retail property anchored by a Walmart Supercenter, has been sold to Red Bank, NJ-based First National Realty Partners for $19.2 million.

The property, which was developed in 2016, is anchored by a 150,000-square-foot Walmart Supercenter. The property was sold by Abrams Realty & Development of Elkins Park, PA.


“With little to no competition within three miles, Walmart performs extremely well here, with more than $100 million in sales. The area’s high population density and the opportunity to co-tenant with Walmart make the center immensely appealing to retailers.”

The Court at Hamilton was 99% occupied at the time of sale. In addition to Walmart, which has a long-term lease at the property, the center’s other tenants include Rainbow, Snipes, Burger King, and an upcoming Capital Health General Medicine practice slated to open in March.

“The attractive nature of a newly developed shopping center anchored by a Walmart Supercenter on a long-term lease at a time when large format retail development has been dormant was a huge demand driver for investors. We are still finding that the bulk of national investor demand lies in grocery-anchored shopping centers, especially with the ability to borrow at very attractive interest rates in today’s debt markets.”
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Wednesday, February 26, 2020

Amazon to Build Advanced Fulfillment Center on Site of Former GM Plant in DE

E-commerce giant Amazon is seeking public funding from the state of Delaware to build one of its most technologically advanced fulfillment centers as it ramps up construction around the country.

The Delaware Council on Development Finance approved a $4.5 million grant this week for a 3.7 million-square-foot fulfillment center that Seattle-based Amazon is planning in Newport, a small town southwest of Wilmington, a spokesman for the Delaware Division of Small Business told CoStar News.

The five-and-a-half-story proposed fulfillment center at 801 Boxwood Road is at the site of a former General Motors plant that closed in 2009 and was later demolished, the spokesman said. Dermody Properties owns the site, and a construction timeline has not been finalized. Dermody Properties is expected to spend $200 million developing the property, while Amazon is expected to spend $50 million outfitting the property with equipment and robotics technology, the spokesman said.

The facility is expected to be one of Amazon’s most advanced fulfillment centers as the company seeks to tap increased demand for online shopping, a process that requires warehouse space for organizing orders for doorstep delivery. Plans call for more robotics than Amazon's other facilities, as well as a structure that takes up less land by being built vertically. Amazon is planning vertical warehouse in other U.S. cities such as the Austin, Texas, area and Memphis and Nashville in Tennessee.

A spokeswoman for Amazon declined to comment on the company's plans in Delaware. She added in an email that "Amazon is a dynamic business and we are constantly exploring new locations and weighing a variety of factors when deciding where to develop sites to best serve customers, however, we have a policy of not commenting on our future roadmap and are not yet commenting on any specific operations plans in Wilmington."

The fulfillment center is expected to create 1,000 full-time jobs. Amazon is required to maintain the jobs created while it receives grant funds, according to the contract, which has not been finalized.

Over a period of roughly seven years, the project’s statewide economic impact is estimated to be about $445 million, according to the spokesman with Delaware Division of Small Business.

Some Delaware politicians expressed frustration at the public incentives Amazon is seeking for the project. Amazon, which reported fourth quarter revenue of $87.4 billion last year, consistently receives public incentives for its fulfillment centers and other commercial real estate investments in small and large cities alike.

“Amazon, the multi-billion dollar conglomerate owned by the one of the richest individuals on the planet, Jeff Bezos, is asking for $4.5 million in Delaware taxpayer money,” State Rep. John Kowalko said in a statement on his website. “This is another ‘prime’ example of wealthy corporations seeking corporate welfare from ordinary working families who struggle each day to afford basic essentials.”

Amazon and other retailers are beefing up their industrial footprints across the country as they add more automation to cut transportation time and costs in the era of same-day and next-day delivery.

Amazon plans to open a fulfillment center near Richmond, Virginia, in an empty 798,000-square-foot facility that used to function as an Ace Hardware distribution center. And, Amazon is planning to occupy a $75 million fulfillment center about 60 miles northwest of New York City in Orange County, New York.
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Real Estate Executives Outlook for 2020 (Video)

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Tuesday, February 25, 2020

Economy and the Market in 2020 (Video)

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How Debt Affects Commercial Real Estate Returns (Video)

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New Jersey Shopping Center Trades for $60 Million

Expanding its U.S. retail portfolio, Time Equities has acquired Hamilton Commons, a 403,050-square-foot shopping center in New Jersey, for $60 million.

The transaction is the largest purchase of the year for Time Equities, which is based in New York City. It bought the center at 190 Hamilton Commons Drive in Mays Landing from Retail Value, a real estate investment trust headquartered in Beachwood, Ohio.

In a statement, Time Equities said it "remains bullish on retail, specifically open-air strip and power centers," and that its portfolio has grown to include 121 retail properties.

"We know retail, and over the course of the past five years, increased our portfolio by 35 retail assets," Ami Ziff, director of national retail for Time Equities, said in a statement. "We continue to expand nationally as we build up our retail platform in various secondary and tertiary markets ... and plan to sustain this robust level of growth for the next several years."

Hamilton Commons, built in 2001, is in a high-traffic area of Atlantic County near the Atlantic City Expressway, the main highway linking Philadelphia and Atlantic City, and the Black Horse Pike. The shopping center is 93% leased to 34 tenants, and is anchored by Regal Cinemas, Hobby Lobby, Marshalls, Ross Dress for Less and Big Lots.

In its statement on the deal, Retail Value said net proceeds equal to 105% of the property’s allocated loan amount were used to repay mortgage debt associated with the REIT, with the remaining proceeds retained as cash.

Following the transaction, Retail Value owns interests in 15 properties located in the continental United States and 12 properties in Puerto Rico.
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Thursday, February 20, 2020

Inside the Cannabis Industry's Fight for Commercial Real Estate (Video)

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Co-Working Provider Mindspace to Open Third US Facility in Philadelphia

by John Jordan Globest.com
Co-working office space provider Mindspace has signed a management agreement with an affiliate of Rubenstein Partners, L.P. to open its first location in the City of Philadelphia.

The Tel-Aviv, Israel-based firm’s agreement with Rubenstein Partners calls for a new location totaling 42,000 square feet at the 1.4-million-square-foot Wanamaker Building in Center City.
Under the management agreement, Mindspace will develop and operate premium flexible workspaces for companies of various sizes on behalf of Rubenstein and under the Mindspace brand. Mindspace will provide additional management services through its “Mindspace for Landlords” offering that includes managing building amenities such as meeting rooms and event spaces, communal areas, guest and check-in services, community programming, and food and beverage offerings, as well as other concierge-type services.

Mindspace CEO Dan Zakai says of the deal, “This new relationship is a direct response to changes in the commercial real estate market. Landlords recognize that the traditional leasing model has been disrupted, and that flex spaces and coworking can help broaden their offerings to tenants. Our goal is to pioneer the next level of the business model in the industry through innovative partnerships with landlords. We are excited about our Wanamaker Building plans and the partnership with Rubenstein.”
Read Mortimer, SVP at Rubenstein Partners, adds, “We were very selective with our choice of partner and are pleased to move forward with Mindspace. We believe that Mindspace’s approach is consistent with our strategy of delivering a differentiated office experience through providing enhanced amenities and hospitality-style service in the office sector.”

The building ownership of Rubenstein and Amerimar Enterprises Inc., has completed its multi-phased improvement plan for the Wanamaker Building, including a lobby modernization with central guest check-in, new tenant amenity space on the eighth and ninth floors, and significant updates to common areas and building systems.

Mindspace recently signed four similar management agreements with landlords in Europe and Israel totaling approximately 180,000 square feet. The Wanamaker Building will be the company’s third U.S. location, following San Francisco and Washington DC. Mindspace has 31 locations in 16 cities across the globe.
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Wednesday, February 19, 2020

Monthly Economic Outlook – February 2020 (Video)

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A Sponsor's View on Crowdfunding (Video) Part 1 & 2

Part 1
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Integra's Viewpoint 2020 Report - Office, Retail, and Industrial (Video)

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Delaware County Industrial Building Changes Hands

by John Jordan Globest.com
A fully-occupied more than 172,000-square-foot industrial office building here has been sold.

The property a 1515 Garnet Mine Road here was sold by Evergreen Private Finance of Washington, DC to New York-based BHN Associates.
1515 Garnet Mine Road is currently 100% occupied by two industrial tenants; The Mine Studios, LLC, which leases 119,031 square feet and Club W, Inc., which occupies 53,040 square feet at the property.

“Investor demand for older, functioning industrial product along the I-95 corridor has never been stronger."

He adds that both leases are below market at the property that is located three miles from I-95 and 12 miles from Philadelphia International Airport, which makes the deal a tremendous opportunity for BHN Associates going forward.

Built in 1974 and renovated in 2002, the 4.36-acre site was originally designed as a single-tenant manufacturing facility that was subsequently bifurcated to house multiple tenants. Today, 1515 Garnet Mine Road, which is located 25 miles southwest of Center City Philadelphia, contains 48,000 square feet of office space and 124,071 square feet of production and warehouse space with ceiling heights ranging from 16 to 24 feet. The property features 10 existing raised loading docks and the site has the ability to add additional docks if required.
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Tuesday, February 18, 2020

Michaels Organization Kicks Off Final Phase of Camden Redevelopment

The Michaels Organization has begun construction of 58 affordable apartments for seniors in Camden, New Jersey, marking the final stage of the redevelopment of a former public housing site in that city's Centerville neighborhood.

Michaels, which is itself based in Camden, has partnered with the city's housing authority on the nearly $16 million project. The senior housing marks phase four of The Branches at Centerville, which will complete the revitalization of the site of the former Clement T. Branch Village.

Michaels spearheaded the Branch Village redevelopment with financing or tax credit awards from the New Jersey Housing and Mortgage Finance Agency. The first phase opened in December 2017 with 50 affordable one- to two-bedroom rental apartments in a mid-rise building. The second phase created 72 affordable townhouses for families with incomes up to 60% of the area median income and includes five apartments for homeless individuals. Last October, Michaels held a groundbreaking for the third phase, 75 additional townhouses for families, with an expected completion date of this October.

The agency awarded the $15.9 million development 9% low-income housing tax credits, which are expected to generate $12.9 million in private equity. The low-income housing tax program is considered the single largest source of funding for affordable housing in the United States for families, seniors and residents with special needs, according to NJHMFA, which is New Jersey's sole administrator of the program.

Branch Village was built in 1941 and named for Dr. Clement T. Branch, who was a prominent doctor and the first African American to serve on the Camden school board. The development featured blocks of brick apartment buildings that over time became dilapidated and obsolete public housing.

The final phase of the redevelopment will include 58 one-bedroom apartments in a three-story building for residents age 55 and older, earning up to 60% percent of the area median income. Five apartments will be set aside for homeless individuals. Rents for the senior apartments will be about $825 for a one-bedroom apartment.

Clement T. Branch Village is the last public housing community to be redeveloped in the Mount Ephraim Avenue corridor. Eight two-story brick buildings were demolished, and three new public roads will be introduced to better integrate the community with the rest of the residential neighborhood.

Michaels has partnered with NJHMFA on a number of projects in Camden. In the past five years alone, the private developer has completed or plans to complete six developments financed in part by the agency, which have provided or will provide nearly 600 affordable housing units.
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Should You Model Income Taxes in a Real Estate Financial Model? (Video)

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Monday, February 17, 2020

Weingarten Realty Investors Takes Focused Approach toward Acquisitions (Video)

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Seven Lease Deals Totaling 90,000 SF Signed at Equus Capital Properties in PA

by John Jordan Globest.com
Equus Capital Partners of Newtown Square, PA has secured seven new lease deals at its 440 and 460 East Swedesford Road office buildings here that totaled 90,137 square feet of space

There were four new lease deals and three renewals. The largest transactions were renewals by Genex totaling 50,037 square feet at 440 East Swedesford Road and Tekni-Lex’s 17,219-square-foot renewal at 460 Swedesford Place. The Provident Bank also signed a lease renewal for its 3,350-square-foot operations at 460 Swedesford Road.

Western & Southern Life Insurance Company (4,545, square feet), Kelley Jasons McGowan Spinelli Hanna & Reber, LLP (4,172 square feet), FRS Capital Management (3,947 square feet) and Transparent Health Marketplace (6,867 square feet) all signed new office deals at 460 East Swedesford Road.
Equus Capital Partners, which acquired the two, Class A office buildings in early 2018 from Liberty Property Trust, repositioned the assets and invested significant capital on renovations to both interior and exterior features, as well as the enhancement of amenity spaces and building systems.

“Credit to Equus for taking two outdated buildings in a premier location and turning them into two of the top office properties in the East Swedesford Road corridor. A new grand, three-story glass entrance with exposed stairs and glass railings was constructed at both properties and all new finishes in the lobbies, restrooms and corridors were added, plus a Fooda concept for on-site dining. With these improvements, existing and new tenants saw the value at 440 and 460 East Swedesford Road.”

The two buildings, totaling 149,450 sq. ft. of office space, are located in Tredyffrin Township with no earned income or business privilege taxes. Additionally, the properties are in proximity to the King of Prussia Town Center and the King of Prussia Mall and offer access to Routes 202, 252, 422, Interstate 76 and the Pennsylvania Turnpike.
Earlier this month,  an affiliate of Equus Capital Partners, Ltd. acquired The Reserve at Bridford, a 232-unit garden-style multi-family community located in Greensboro, NC. The acquisition was made on behalf of Equus Investment Partnership XI, L.P. (“Fund XI”), a fully discretionary $382-million value-add equity fund managed by Equus. Madison Apartment Group, L.P., the multi-family operating arm of Equus, will manage the community.
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Thursday, February 13, 2020

PREIT Inks 150,000 SF of Leases at Redeveloped Properties

by John Jordan Globest.com
Locally-based PREIT reports it has signed more than 150,000 square feet of new leases at four of its redeveloped shopping centers.

A total of more than a dozen tenants will open in the next six months at its Woodland Mall, Willow Grove Park, Plymouth Meeting and Valley Mall properties.
“In an ever-evolving retail environment, our redevelopments continue to attract a unique tenant mix geared toward current consumer preferences that both refresh our properties and improve our portfolio,” says Joseph F. Coradino, CEO of PREIT. “PREIT has been at the forefront of shaping the consumer experience, recently completing several high-impact redevelopments that are expected to fuel growth and create value within the portfolio demonstrated by the continuous addition of high-quality, diverse tenants.”

This year, Sephora, White House|Black Market, Windsor Fashion, Champs Sports and Aeropostale will open at the Woodland Mall in Grand Rapids, MI. Specialty grab-and-go options, Auntie Anne’s and Jamba will also open this spring. The new tenants will bring 20,000 square feet of new retail and dining at the mall.

Woodland Mall opened its expansion wing in October 2019, which resulted in double-digit traffic growth over the recent holiday season.

At the Willow Grove Park Mall located north of Philadelphia, the newly-added Yard House will be joined by new dining and snack options including &Pizza, Häagen-Dazs, and Dunkin’, as well as Studio Movie Grille, which will open this spring. LUSH will also join the tenant roster, further strengthening the property’s retail line-up that includes one of two Bloomingdale’s and Primark locations in the Philadelphia metro.

In first half of 2020 at the Plymouth Meeting Mall in Plymouth Meeting, PA, Sola Salon Studios, Ideal Image and Restore Hyper Wellness and Cryotherapy will complete the open-air plaza connecting the newly-added anchors, DICK’s Sporting Goods and Burlington to the lifestyle wing anchored by Whole Foods.
In Hagerstown, MD, the Valley Mall will welcome Dick’s Sporting Goods this spring, replacing the former Sears space and completing PREIT’s anchor repositioning initiative at the property. Dick’s Sporting Goods will occupy 59,000 square feet and complement the property’s other new and diverse anchor tenants: Onelife Fitness, Belk and Tilt. Regal Cinema will complete its full-scale renovation this year as well, PREIT reports.
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Wednesday, February 12, 2020

REIT News (Video)

2020 Nareit Chair Describes the REIT Industry as “Healthy” REIT Market Minute - February 2020 Physicians Realty Trust Looking to Medical Office Buildings to Fuel Future Growth www.omegare.com

American College of Radiology Inks Deal at Two Liberty Place

by John Jordan Globest.com
The American College of Radiology has signed a lease for more than 10,000 square feet of space at the Two Liberty Place office tower here.

The American College of Radiology is scheduled to relocate operations this month from its offices at 1818 Market St. to the 28th floor of the 57-story Center City property.

“ACR has roughly 150 employees in the Philadelphia region, many of whom work remotely. This relocation provides the client with the opportunity to shed excess space and enhance the way the office operates. The group will leverage the consolidated, open-concept floorplate and move to a flexible hoteling solution with reservation-based unassigned seating. The efficient footprint allows ACR to significantly reduce annual overhead costs over the course of the lease.”
The relocation and shift in office format will allow ACR to reduce its Philadelphia real estate by a third, Savills states.

The space will be built out and designed to suit the organization’s specific needs. Utilizing a more efficient layout, the new hoteling concept will accommodate approximately 50 employees.

Charles Apgar, executive vice president, ACR, says, “After being in the last location for 15 years, we now have a workplace strategy that aligns with the ACR’s culture and positioning, as well as an engaging environment for our employees and guests.”
ACR, which is headquartered in Reston, VA, is a membership organization of approximately 40,000 radiologists, radiation oncologists and medical physicists dedicated to serving patients and society by empowering radiology professionals to advance the practice, science and professions of radiological care.
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Friday, February 7, 2020

Kuwaiti group buys Axalta building in South Philly’s Navy Yard for $61.2 million

by Jacob Adelman Philadelphia Inquirer
A Kuwaiti investment firm has acquired Axalta Coating System LLC’s office and research building at the Navy Yard for $61.2 million.

Dimah Capital Investment Co. bought the 175,000-square-foot property through its U.S.-based Apex Capital Investments Corp. subsidiary. The seller was Liberty Property Trust.

The 1050 Constitution Ave. property was built for Center City-based Axalta in 2017. Axalta’s lease at the property runs until fall 2037.

Liberty built the project as the main developer of the Navy Yard’s central business campus before shifting its focus to industrial projects in 2018.

It sold the Axalta property shortly before its acquisition by San Francisco-based warehouse giant Prologis Inc. closed this week. It was announced in October.

The building is the latest in the region to be acquired by a Kuwait-based fund following the Centre Square office complex’s sale to a group involving Wafra Inc., and Soor Capital’s purchase of four Malvern buildings leased to Vanguard Group.

Apex is managed by Philadelphia-based John Gaghan, a former vice president with real estate firm Lowe Enterprises.

Full story: https://tinyurl.com/ruhpfcg
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Thursday, February 6, 2020

Rent is a Function of Sales | Commercial Real Estate Tips (Video)

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Cross Roads Plaza Shopping Center Trades for $25M

by John Jordan Globest.com
Cyprus-based Medipower Public Co. Ltd. has acquired the 99,650-square-foot Cross Roads Plaza shopping center here in a deal valued at $25 million.

The seller was a partnership between Madison International Realty and SITE Centers Corp.
Ron Stern, CEO of Medipower Public Co., said, “We believe that Crossroads Plaza, anchored by the region’s leading grocer, which is further supported by traffic-driving outparcels Wells Fargo and Wawa, is the ideal combination of location, strong demographics and attractive fit to our business model.”

Cross Roads Plaza is anchored by a 70,818-square-foot ShopRite, which makes-up 71% of the property’s gross leasing area and 58% of the gross income. The grocer’s lease term runs through 2024.

ShopRite expanded by more than 10,000 square feet in 2013 into its current footprint. ShopRite combines with outparcels occupied by Wawa and a bank to compromise 81% of the GLA and 74% of the property’s gross income, creating a stable and secure cash flow. The property is further supported by a premier shadow anchor in Lowe’s Home Improvement.

Approximately 20 miles from Philadelphia, the property maintains highly visibility along Route 38, counting more than 40,000 vehicles per day. Situated in Lumberton, Cross Roads Plaza is near Virtua Memorial Hospital, one of Burlington County’s largest employers, and adjacent to a dense aggregation of industrial employers.

“We have had tremendous success with stable, high-performing grocery-anchored product like Cross Roads Plaza within the Philadelphia MSA. With growing capital formation and continued cap rate compression within the vertical, the market is sure to remain strong.”

The deal for Cross Roads Plaza follows up Medipower’s $40-million purchase last month of Centre Square Commons, an 88,598-square-foot grocery anchored shopping center located in Blue Bell, PA, an affluent suburb of Philadelphia.

The center is anchored by Aldi in its latest prototype of 22,450 square feet. In addition to Aldi, the property is occupied by a strong mix of regional and national tenants including Pennsylvania Fine Wine & Spirits, Starbucks, Zoe’s and Anthony’s Coal Fire Pizza.

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Wednesday, February 5, 2020

Penwood-Metrix JV Lands Nearly $17M for Speculative Industrial Project in NJ

by John Jordan Globest.com
The development team of Penwood Real Estate Investment Management, LLC and Metrix Real Estate Services LLC has secured $16.76 million in construction financing for its 340,000-square-foot speculative warehouse-distribution project here.

Penwood Real Estate, which is headquartered in West Hartford, CT, and Princeton, NJ-based Metrix Real Estate secured a three-year construction loan with two one-year extension options through Wells Fargo Bank for the project at 10 Princess Road. The transaction was arranged by JLL Capital Markets, which worked on behalf of the borrowers in the deal.
The Class A industrial building is under construction on a 31-acre land site at 10 Princess Road in Lawrence Township within a business park situated to the northeast of Trenton and to the southwest of Princeton.

The cross-dock industrial building will feature 40-foot clear heights, 2,000 square feet of office space, 103 dock-high loading positions, 69 trailer parking stalls and four drive-in doors. The expected completion date for the project is June 2020.

The property is immediately off the four-way interchange of I-295 and Princeton Pike and offers prominent frontage on I-295. The location is proximate to and equidistant between both the ports of New York and New Jersey and the Port of Philadelphia, each located approximately 50 miles away.

Last September, Penwood Real Estate Investment Management, LLC, through its fifth value-added investment vehicle, Penwood Select Industrial Partners V, L.P., along with its development partner Metrix Real Estate Services, LLC, acquired an approximate 20.5-acre site in Hamilton, NJ.

The partnership plans to raze the existing inline shopping center and build a 171,250-square foot warehouse/distribution building at the site.
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Tuesday, February 4, 2020

Philly Poised for Office Boom Not Seen Since Early ’90s

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What a Good IRR Looks Like in Real Estate Investing (Video)

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Ghost Kitchens Coming to a Mall Near You

by Linda Moss Costar News
Retail developer Simon Property Group, international hotelier Accor and hospitality firm SBE Entertainment Group are joining together to open so-called ghost kitchens at 200 locations, including vacant space at shopping malls, by the end of 2021.

The three companies have launched Creating Culinary Communities, or C3, which SBE described Monday as a new "way to approach food halls, ghost kitchens and mobile delivery." A ghost kitchen is a broad term that can encompass professional kitchen space for businesses that don’t have brick-and-mortar restaurant locations and only deliver or operate food trucks, as well as commissary space that national chains take to help fill their delivery orders or to prepare orders for their smaller eateries.

C3 will be bringing consumers food "from phone-to-table in under 30 minutes and for under $30 dollars," Sam Nazarian, SBE's founder and CEO, said in a statement.

"I view C3 as the Netflix-equivalent of food and beverage as we focus on constantly creating culinary content that can be delivered to consumers via non-traditional distribution channels," he said. "C3 will be the first entity to bring single operator, multi-branded solutions to food halls, ghost kitchens and mobile delivery."

C3 has started construction of its first major restaurant, Citizens, which is scheduled to have a ghost kitchen and open at Manhattan West, the 7 million-square-foot project that Brookfield Properties is developing in the Hudson Yards district on New York City’s West Side, according to SBE. The 40,000-square-foot restaurant, by award-winning interior designer David Rockwell, will have two full-service restaurants, multiple bars and a fast-casual market hall.

Citizens will also have a 5,000-square-foot ghost kitchen, one of the largest in New York, which will serve customers both at the food hall as well as through delivery, according to SBE. The Miami-based firm said "through the growing network of ghost kitchens, C3 will take a major step in reimagining the concept of food delivery."

In part, ghost kitchens provide a new use for vacant space at sites such as malls, which have seen vacancies because of the demise and bankruptcy filings of a number of national retail chains. The commissary kitchens also provide businesses a way to offer food for delivery, an increasingly popular choice for consumers, without the expense of opening a brick-and-mortar restaurant or over-burdening such locations.

There are other players in the ghost kitchen arena, including CloudKitchen, a company led by former Uber Technologies CEO Travis Kalanick, and Kitchen United, which is backed by RXR Realty and GV, formerly Google Ventures. C3 has signed four leases with CloudKitchen for ghost kitchens, according to The Wall Street Journal.

Officials at SBE and Simon declined to comment. Accor and CloudKitchen did not return requests for more information.

But in his statement, Nazarian called C3 and Indianapolis-based Simon a perfect match because of the mall owner’s "global real estate platform" and "continued commitment to rethinking consumer experiences." And Accor’s part in the ghost kitchens "will allow C3 to rethink the use of hotel real estate to play a significant role in the world of delivery, revolutionizing the in-room dining experience and, in turn, growing the delivery footprint of our C3 brands," according to Nazarian.

C3 has ghost kitchens slated for the King of Prussia Mall in Pennsylvania, Lenox Square in Atlanta and the Sanderson London hotel, according to the Journal.

"Our unrivaled portfolio of iconic retail, dining and entertainment destinations generates billions of visits each year and provide an ideal platform to re-imagine dining and culinary experiences that meet the evolving tastes of our customers," Simon CEO David Simon said in a statement. "C3 is another example of Simon partnering with dynamic, best-in-class brands to build the next generation of experiential destinations."

C3 has four chefs on its roster, namely Dani Garcia, Masaharu Morimoto, Dario Cecchini and SBE Chief Culinary Officer Martin Heierling. Garcia, as a three-star Michelin chef, will launch his Mediterranean tapas-style concept across the C3 ghost kitchen platform.
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Monday, February 3, 2020

CNBC’s “Squawk on the Street” on Commercial Real Estate (Video)

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Co-Living Brand Quarters to Open Second Location in Philly

by John Jordan Globest.com
New York City-based co-living provider reports it will build a new 113,000-square-foot ground-up development at 1201 Callowhill St. that will feature 239 bedrooms across shared apartments.

The six-story,113,700-square-foot development will include 4,000 square feet of retail, a 42-space parking garage, a 5,000-square-foot outdoor roof deck and a 2,900-square foot ground-floor lobby, which will offer co-working and lounge areas.
The owner and developer of the Philadelphia site, Richard Zeghibe—founder of Patriot Parking—is expecting to break ground on the building in the second quarter of 2020 and plans to complete construction in the fourth quarter of 2021.

“We made our foray into Philadelphia in May 2019 at 1150 North American St., which will open in the second quarter of 2020” says Gunther Schmidt, founder and CEO of Quarters. “We’re thrilled to bring an additional 239 bedrooms to the market, to meet the growing demand for flexibility.”

The announcement of the second location in Philadelphia follows the company’s $300-million raise for its U.S. expansion in January 2019 and its $1.1-billion raise for its European expansion in December 2018.

In addition to planned expansion in New York City, Philadelphia, Chicago, Austin and Washington, DC, the $300-million investment program includes target cities such as San Francisco, Boston, Denver, Seattle and Miami, with several sites due to be announced throughout 2020.

Last week, Quarters announced plans for two new locations in Brooklyn, NY. The new properties will add more than 200 beds to the Quarters’ Brooklyn portfolio and boosts its presence in New York City to five locations, according to multiple press reports.
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UPS Expanding Operations in 4 PA Locations

Governor Tom Wolf announced that United Parcel Service (UPS), the world’s largest package delivery company and a provider of supply chain management solutions, will expand its operations in the commonwealth, supporting the creation of 1,721 new, full-time jobs and the retention of 6,458 full-time jobs.

“With a foundation of longevity and rich history, UPS is a company that is still growing at a rapid rate, serving the needs of people in all corners of the commonwealth on a daily basis,” said Gov. Wolf. “Our investment in this global company will not only ensure that customers across Pennsylvania will continue to receive the service they expect, but also local communities will benefit from the combined creation and retention of thousands of good-paying, full-time jobs.”

The company will expand its operations to four locations in Pennsylvania—Cumberland, Dauphin, Northampton, and Philadelphia counties—and will invest in building renovations, equipment, and infrastructure improvements at each of the locations. The company has committed to investing at least $1.4 billion in the project.

“UPS is grateful for the strong relationship we continue to build with the Commonwealth of Pennsylvania. We are excited to bring new jobs to Pennsylvania and we are committed to engaging in the communities where we are expanding our operations.” said Juan Perez, UPS Chief Information and Engineering Officer. “From small business owners growing their customer base to manufacturers moving parts and products, and e-tailers looking for efficient and fast order fulfillment, companies of all sizes throughout the Northeast will benefit from UPS’s latest global network transformation initiative.”

UPS received a funding proposal from the Department of Community and Economic Development for $2.7 million in Job Creation Tax Credits to be distributed following the creation of the new jobs, $5.6 million in Infrastructure and Facilities Improvement Program funding, and $659,400 in grants for workforce training and development. The project was coordinated by the Governor’s Action Team, an experienced group of economic development professionals who report directly to the governor and work with businesses that are considering locating or expanding in Pennsylvania.

Founded in 1907 as a messenger company in the United States, UPS has grown into a multi-billion-dollar corporation by clearly focusing on the goal of enabling commerce around the globe. Today, UPS is a global company with one of the most recognized and admired brands in the world. The world’s largest package delivery company and a leading global provider of specialized transportation and logistics services, UPS manages the flow of goods, funds, and information in more than 200 countries and territories worldwide.
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Thursday, January 30, 2020

New Jersey's Industrial Demand Hits Uncharted Territory

New Jersey's soaring industrial market is in uncharted demand territory, making it difficult to predict when the leasing will cool, local executives say. And they point out that it comes as the state deals with a negative real estate issue, criticism of its programs to award tax breaks to get companies to do business in New Jersey.

The commentary on two of the hottest topics in the Garden State's commercial real estate industry came during a discussion at the annual meeting of the New Jersey chapter of NAIOP in Short Hills. The trade group hosted a panel on the real estate outlook for the coming year, with the logistics sector in the Garden State and its lapsed corporate tax credits on the agenda.

New Jersey, because of its proximity to New York City and area ports, as well as being centrally located in a densely populated region, has been a big beneficiary of the explosion of demand for warehouse and distribution space. That demand has been driven by the growing popularity of online shopping, spurred by e-commerce giant Amazon, as well as other companies and traditional brick-and-mortar retailers looking to offer quick delivery to demanding consumers.

The phenomenon has resulted in record low vacancy rates and rising rents for industrial properties in New Jersey. But panelist Andrew Merin, a vice chairman at Cushman & Wakefield's office in East Rutherford, New Jersey, questioned how long the sector's hot streak can go on.

During his career Merin said he witnessed a run-up in the state's office market, "with phenomenal growth," and that he saw apartment properties "go off the charts" five years ago.

“However, in my 40-plus years I have never seen anything that rivals the velocity and the change that we’ve seen in the industrial market,” he said. “So we’re seeing things that are unprecedented ... I don’t know how long this is going to last because at some point all things peter out.”

Industrial Predictions

Industrial tenants could be leasing space "out in front of demand," which happened to the Jersey City, New Jersey, office market when it was at its height years ago, according to Merin. Large banks were inking 20-year leases for entire buildings on the waterfront, and ended up subleasing some of that space, he said.

“Now we’re seeing e-commerce people taking huge warehouses depending on the future, so it is unbelievable,” Merin said.

One of his fellow panelists raised the same question but predicted logistics will remain strong this year, with rents continuing to increase.

"The big question is is this the beginning of a trend that’s going to have a long runway to it, or does the market appear to be overheated?" said Ed Russo, president of Russo Development, based in Carlstadt, New Jersey.

The family-owned firm specializes in warehouse and distribution facilities, particularly in Northern New Jersey's Meadowlands area. Russo Development and Forsgate Industrial Partners of Teterboro, New Jersey, are developing Kinsgland Meadowlands, more than 3 million square feet of industrial buildings, on speculation, with no signed tenants yet.

Russo remains bullish on the industrial sector, predicting that rents for distribution sites could hit an "unprecedented" $20 a square foot.

Tax Break Fallout

New Jersey's commercial real estate industry has vocally supported the passage of new tax incentive programs for the state as quickly as possible, joining other business groups in saying the tax breaks are critical to attract and retain companies.

The former programs were administered by the New Jersey Economic Development Authority, which has come under fire and investigation for allegedly awarding incentives to companies that didn't deserve them. The old programs expired June 30 last year, and New Jersey Gov. Phil Murphy refused to extend them. He wants to overhaul the tax breaks, but hasn't been able to reach a consensus with state legislators on changes. The criticism over the incentives has made front-page headlines.

Panelist Christopher Paladino, president of New Brunswick Development Corp., said he expects the state will have new tax incentive programs by the spring. But New Jersey will have its work cut out for it in terms of rehabilitating its reputation in corporate America, in places like New York or Philadelphia or Chicago with companies that may be weighing relocating to or expanding in the Garden State, according to Paladino.

“There’s been so much damage done to New Jersey’s reputation," he said.

Nonetheless, while incentives are important to businesses, he said he'd "never had a CFO or a COO or a head of human resources say to me at the first meeting, ‘What are the incentives?’ ”

Catering to Workforce

Employers are more concerned about having access to an educated workforce, or forging relationships with institutions of higher learning like Rutgers University and Princeton University, according to Paladino.

Higher rents are part of the price that companies are willing to pay to draw employees, according to Merin. He cited the recent announcement that Big Four accounting firm Deloitte was relocating one of its offices in suburban Parsippany, New Jersey, to the more urban Morristown, New Jersey. Morristown boasts a train station and a lively downtown scene with many restaurants, bars and stores.

Deloitte could have stayed in Parsippany and continued to pay about $30 a square foot in rent, but instead it is opting to pay $55 a square foot to move to Morristown, according to Merin.

"That huge differential in the rent meant nothing" because Deloitte is striving to attract and retain quality employees, he said.
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