Wednesday, June 30, 2010

JGPCO and Bennett Toyota/Scion Break Ground on LEED-Certified Dealership

"JG Petrucci Co. (JGPCO) has begun construction on a new auto dealership in Allentown, PA, for Bennett Toyota/Scion, located at the end of the "Lehigh Street Auto Mile."

The new 46,130-square-foot facility will consist of a showroom, service center, parts department, body shop and associated retail uses. The state-of-the-art, LEED-certified facility will be the first of its kind in the Mid-Atlantic region for Toyota.

The dealership is being built on the site of a former Exide Battery plant. The brownfield property, which JGPCO purchased in 2005, was then taken through the Act 2 voluntary clean-up process with Pennsylvania DEP.

Greg Rogerson, a principal at JGPCO, said, "This is an exciting project and one that will eventually create more than 150 jobs."

Tuesday, June 29, 2010

Wegmans opening in Uptown Worthington

"Wegmans will hold a grand opening for its newest store, in Malvern, Pa., July 18, giving the mixed-use project called Uptown Worthington a boost of shopping activity as well as jobs. The Wegmans supermarket needs about 550 people to staff the new store. The Rochester, N.Y., company will occupy 140,000 square feet at the mixed-used project at Routes 202 and 29. Except for the Wegmans, development at Uptown Worthington came to a halt last fall when Citizens Bank secured a $61 million judgment against its developer, O’Neill Properties Group of King of Prussia, Pa., alleging it was in default of a loan used to develop the property."

Friday, June 25, 2010

MacDade Terrace Trades for $7.5M

"The MacDade Terrace Apartments in Woodlyn, PA, sold for $7.5 million, or $46,875 per unit, in a sale between private parties.

The 160-unit multifamily complex at 1400 MacDade Blvd. was constructed in 1964 on 7.5 acres. The complex features 15 efficiencies, 78 one-bedroom units and 67 two-bedroom units. The property was 80% occupied at the time of sale. It is located in the Delaware County submarket."

Philadelphia Industrial Nets $5.9M

"Highland Development acquired 9400 Bluegrass Road in Philadelphia for $5.85 million, or about $75 per square foot, from B. Barks Refrigerated.

The 77,010-square-foot warehouse was built in 1970 in the Greater Northeast submarket. The buyers plan to demolish the existing building and build a new commercial property in the near future."

Wednesday, June 23, 2010

Right Time for Real Estate?

Great video from CNBC from Monday 6/21/2010

Keystone Industrial buys Oxford site

"Keystone Industrial Properties Inc. bought the former Oxford Bookbinding Co.’s facility off Red Lion Road in the Philadelphia Industrial Park for about $1.1 million. The 58,780-square-foot building at 3101 Red Lion Road in Philadelphia had been on the auction block since October. That’s when Oxford, having filed for Chapter 7 bankruptcy, was liquidating assets, including the building and equipment inside.

While the auction for the equipment was successful, the sale of the 42-year-old building was not.

A buyer was lined up for the vacant building after the auction but that deal fell through.

Once the original sale didn’t close, Keystone was approached and a deal was struck, Olender said. Keystone Industrial bought the property for investment purposes."

Tuesday, June 22, 2010

Lawyers for Brian O'Neill, Citizens Bank square off in court

"In a courtroom showdown of two local business titans, accusations of fraud, secret agendas, and other misdeeds flew for three hours Monday between lawyers for developer J. Brian O'Neill and Citizens Bank of Pennsylvania, the lender he contends has "destroyed" one of his most ambitious projects.

When it was all over, nothing was settled.

The two sides disagreed over just about everything - including what financial obligations Citizens Bank had to O'Neill and whether the King of Prussia developer should qualify for damages, or even a trial.

In a desperate bid to find consensus, Philadelphia Common Pleas Court Senior Judge Albert W. Sheppard Jr. polled two lawyers for the bank and two for O'Neill to determine whether they even agreed that yesterday was Monday.

He pushed several times for the sides to reconcile, making a particularly bold proposal to the lead attorney for Citizens Bank.

"Why doesn't your bank become a partner with him [O'Neill] and let's do it?" Sheppard asked attorney Robert C. Heim of Dechert L.L.P.

By "it," the judge meant complete the largely unfinished $700 million Uptown Worthington retail/office/residential development in Malvern, which is at the center of the litigation.

Sheppard did not get the answer he had hoped for.

"I think we're past that now," Heim said.

The judge made no ruling on Citizens Bank's motion to have O'Neill's $297 million lawsuit thrown out - nor did he say when he would.

Filed in January, the lawsuit originally sought $8 billion in damages and contended that the bank had ruined Uptown Worthington by deciding in 2008 not to provide funding toward its $300 million-to-$400 million "vertical phase," when the buildings were to be constructed.

The proposed 1.6 million square feet of housing, shops, entertainment venues, a hotel, and high-value office space is currently just two stores totaling 300,000 square feet - a Wegmans and a Target, both scheduled to open in July.

Citizens has contended that O'Neill's lawsuit is retaliation for the bank's having secured a $61 million judgment against the developer in Montgomery County Court in November for default on an office-construction loan for Uptown Worthington.

The bank followed that with two more judgments totaling $3 million against O'Neill and his O'Neill Properties Group L.P. in connection with the unfinished Horizon Corporate Center, a 101-acre mixed-use development in Bensalem.

On Monday, O'Neill sat in the front row of a cramped courtroom on the fifth floor of City Hall, but he was not called to testify. Afterward, he said there would be no comment from him or his legal team, headed by Steven M. Coren of Kaufman, Coren & Ress P.C.

In arguing for the lawsuit's dismissal, Heim told the judge: "This is a very, very important case to the commercial-lending world, because if you can get around your written agreements by coming in [to court] and saying these things don't count . . . it [becomes] a whole new world out there for commercial lending."

"We ask you to put a stop to it right now," Heim said.

Coren countered that O'Neill should be given the opportunity to present his case at trial.

"All we want here is the opportunity to connect the dots," Coren said.

Those dots, he said, include depositions of bank employees and internal documents that show that, in spring 2008, bank officials - responding to a directive by parent company Royal Bank of Scotland to "reduce existing exposures" and "curtail new business originations" - decided that they would not provide financing for the vertical phase of Uptown Worthington.

Yet, Coren argued in court Monday, the bank deliberately encouraged O'Neill to enter into contracts with prospective tenants for Uptown Worthington, knowing he would not be able to meet conditions of those contracts - such as move-in dates - without vertical-phase financing.

He said the bank encouraged O'Neill to spend $40 million to continue developing the massive former Worthington Steel site along Routes 202 and 29 so Citizens would have more leverage when it foreclosed on the property.

Coren also has alleged that the bank - which over the years had provided O'Neill with more than $180 million for various projects - had plans to "steal" the Uptown Worthington development from O'Neill and establish a partnership agreement with a Rhode Island developer, also a substantial Citizens Bank customer, to finish it.

"They were dishonest and deceitful, not only to Mr. O'Neill, but other participants in the project," including other banks O'Neill was trying to line up to participate in the vertical-phase financing, Coren said.

Heim said that Citizens Bank had no written agreements with O'Neill for vertical-phase financing for Uptown Worthington, and that O'Neill's inability to provide any evidence to the contrary "undercuts every one" of his claims against the bank.

After the hearing, Heim said he was not able to comment on whether Citizens would be interested in partnering with O'Neill on completing Worthington, as the judge suggested.

"I'm always hopeful that business people can work things out," Heim said. "But I don't think it helps to work things out by accusing people of fraud."

Friday, June 18, 2010

Atriums at Greentree Trades for $4.5 Million

"Private investors acquired 10000-11000 Lincoln Drive W, in Marlton, NJ, from CD Realty Advisors for $4.5 million or about $95 per square foot.

The 46,660-square-foot office building is located Burlington County and is known as the Atriums of Greentree.

At the time of sale, the property had a high vacancy rate, which affected the price."

Creekside Apts. loan to special servicer

"The loan on Creekside Apartments in Bensalem, Pa., has been sent to a special servicer, according to Trepp LLC. The property at 2500 Knights Road has a $68 million loan that is part of a pool of 184 loans secured by secured by 242 multifamily, mobile home parks and commercial properties, according to The loan is the fifth largest loan in the J.P. Morgan Chase tranche referred to as JPMCC 2005-LDP4 and represents 3.1 percent of the deal.

The Creekside loan was sent to the special servicer this month. Though it’s current, according to Trepp, the loan is expected to be switch from being interest only in August. The garden-style apartments was constructed in 1971 and appraised for $85 million five years ago, Trepp data indicate."

St. Luke's Hospital Purchases Wind Gap Retail for $4.2M

"St. Luke's Hospital acquired the Laneco Plaza at 487 E. Moorestown Road in Wind Gap, PA, from Country Junction for $4.2 million, or $37 per square foot.

The 114,238-square-foot shopping center was built in 1975 on 22.69 acres. At the time of the sale, the center was mostly vacant, with only Ashley Furniture and Sal's Pizza as tenants.

St. Luke's Hospital will be converting part of the property into an emergency care center. The renovations have started and are slated to be finished by September."

Dollar Deals Sells for $1.5M in Philly

"A California investor purchased the Dollar Deals at 6428-32 Castor Ave. in Philadelphia, for $1.53 million, or about $170 per square foot, from BEL Investments.

This 9010-square-foot retail building was recently renovated and features additional basement storage space Dollar Deals executed a long-term, triple-net lease and has invested more than $560,000 in the property."

Saturday, June 12, 2010

Investors Pay $2.6M for Pottstown Apt. Complex

"Private investors acquired the 60-unit Wexford Apartments in Pottstown, PA, from Hoy Storage Inc. for $2.55 million, or about $42,500 per unit.

The apartment complex at 456 Elm St. delivered in 1972 and totals 39,490 square feet. At the time of sale the property was 90% occupied."

Allegheny Plywood Renews in Allentown

"Allegheny Plywood Co. signed a 17,600-square-foot, three-year renewal at 969 Postal Road in Allentown, PA.

969 Postal Road is a, 64,800-square-foot flex facility located on six acres. It is part of the Iron Run Business Campus, a industrial park located in the western portion of the Lehigh Valley Industrial Market."

First Federal Purchases 10,600-SF Condo in Yardley

"First Federal of Bucks County purchased office suite 1800 at 107 Floral Vale Blvd. in Yardley, PA, for $2.75 million, or about $260 per square foot.

The 10,600-square-foot condo unit is part of the Floral Vale Office Condominiums and is a single tenant, owner-operated office. First Federal will use the space as administrative offices. The unit delivered in 2001."

Office Depot Sells Two Retail Stores for $6M

"Office Depot sold two retail stores in Deptford, NJ, and Langhorne, PA, to Sixth Avenue Electronics for a total of $6 million.

The New Jersey building, located at 1409 Almonesson Road, totals 25,068 square feet and sold for $3.3 million, or $132 per square foot. The property, which is situated across from the Deptford Mall, has been vacant for a year.

The retail building in Pennsylvania, located at 2365 E. Lincoln Highway, is 25,000 square feet and sold for $2.7 million, or $107 per square foot. It is located across from the Oxford Valley Mall.

Sixth Avenue Electronics is steadily adding locations through out Pennsylvania and New Jersey."

Rotwitt-led Sun Center Studios breaking ground

"A groundbreaking will be held Thursday June 10th for Sun Center Studios, an $85 million film and production studio that will be constructed in Chester. The project is spearheaded by Jeffrey Rotwitt, a partner in Sun Center Studios and former lawyer with Obermayer Rebmann Maxwell & Hippel.

Rotwitt is at the center of a controversy that emerged in recent weeks over the construction of a family court building in Philadelphia. The construction of the court building has prompted an FBI investigation, Rotwitt’s law firm to fire him and the state to take over the project.

Sun Center Studios will be built on 33 acres of the former Tri-State Sports Complex at 63 Concord Road. It will total 370,000 square feet and have five studios, seven soundstages, a 4-D movie theater and high-tech museum. Dozens of state and local officials are scheduled to attend the groundbreaking including Sharon Pinkenson, executive director of the Greater Philadelphia Film Office; J. Mickey Rowley, deputy secretary for tourism, film and marketing at the state’s Department of Community and Economic Development; and state Rep. Thaddeus Kirkland, D-Delaware. Some state funds and local and state tax credits have been earmarked for the project. For example, it received a $459,000 loan for a geothermal heat pump that will be installed at the studios.

The studios could create more than 1,000 new jobs in the five-county region over the next three years and is being touted as a tourist attraction, according to a statement about the project."

Monday, June 7, 2010

Wolf Furniture Inks 10-Year Deal in Mechanicsburg

"Wolf Furniture signed a 10-year lease for 45,567 square feet at the Gateway Square Shopping Center in Mechanicsburg, PA.

The 220,629-square-foot retail center at 105-125 Gateway Square was built in 1988 and sits on 22 acres of land. It is in the Harrisburg Area West submarket."

Exeter Property Group Purchases Northeast Distribution Center

"A joint venture of Higgins Development Partners and Pritzker Realty Group LP sold the Northeast Distribution Center at 68 Green Mountain Road in Hazelton, PA, to Exeter Property Group for $13 million, or $32 per square foot.

The 400,260-square-foot facility was built in 2006 on about 25 acres, in the Humboldt Industrial Park. Graham Packaging currently occupies more than 168,000 square feet, while the remaining space is vacant."

Thursday, June 3, 2010

Real Estate Groups Warn That Carried Interest Tax Could Harm Recovery

"Opponents Say Commercial Real Estate Investors Will Unfairly Get Lumped In With Hedge Fund Managers Under Tax Changes Awaiting Senate Consideration."

"Legislation changing the tax treatment of so-called carried-interest income by investment partnerships will result in tax hikes that could discourage commercial real estate ventures from making investments -- and possibly put the brakes to a fledgling recovery in real estate, CRE trade groups warned this week.

Invoking the law of unintended consequences, industry leaders said real estate limited-liability corporations (LLCs) and limited partnerships (LPs) would see significant tax increases under the legislation -- even though Congress is mostly targeting hedge funds and private equity funds in trying to cope with a skyrocketing budget deficit and ongoing public chagrin over Wall Street's perceived influence over lawmakers.

In passing the "American Jobs and Closing Tax Loopholes Act" (HR 4213) by a vote of 215-204 on May 28, the House of Representatives adopted the changes on carried interest, the portion of a fund’s investment gains taken as compensation by the fund's managers. The Senate is expected to take up the measure when it returns to session next week.

The bill would change the treatment of carried-interest income, which is currently taxed at the capital gains rate of 15%. Under the new law, carried interest would be treated as a mixture of ordinary income, which can be taxed at a rate of up to 35%, and capital gains.

For three years beginning in 2011, 50% of carried interest would be taxed as capital gain and 50% as ordinary income. After 2013, the percentage of carried interest taxed as capital gains would fall to 25%, with 75% treated as ordinary income.

Opponents did succeed in delaying the date the legislation would take effect until Jan. 1, 2011. And Congress has been down this road before. This is the third time in three years the House has voted to raise the tax, and previous efforts have stalled in the Senate.

The legislation is an attempt to end what proponents in Congress have characterize as a tax break for wealthy executives of hedge funds, private equity funds and venture-capital investment funds, who have allegedly used IRS loopholes to lower their tax liability on tens of billions in investment profits annually.

However, that's not the view of more than a dozen CRE trade groups representing the spectrum of commercial property types. Those groups, which have vigorously lobbied Congress in a coordinated effort to oppose the legislation, include such organizations as NAIOP, The Commercial Real Estate Development Association; the American Hotel & Lodging Association, the American Seniors Housing Association, Building Owners and Managers Association International (BOMA), the CRE Finance Council, the International Council of Shopping Centers (ICSC), the National Multi Housing Council and Real Estate Roundtable.

Opponents argue that the real estate industry, and by extension, the overall economy, will suffer collateral damage in what is essentially a political battle between Congress and Wall Street.

While NAIOP supports Congress in going after fund managers who haven't paid their fair share, changes in tax policy typically apply broadly to legal entities structured as LLCs and LPs, not selectively targeted types of investors, James V. Camp, chairman of legislative affairs for the Southern California chapter of NAIOP, tells the Advisor.

"We wanted them to go after the hedge funds, to go after the bad Wall Street guys, but not to take the real estate industry down with the ship," Camp said. "For whatever reason, [Congress] couldn’t or didn’t want to come up with a really creative way to go after who they were trying to go after."

"We’re just a casualty of war in this zest and zeal to penalize the evil Wall Street guys," Camp said.

While much of the public believes the carried interest tax proposal is aimed at leveling the playing field on tax inequities between average workers on Main Street and wealthy hedge fund managers on Wall Street, the proposal "will actually hurt the commercial real estate industry, job creation and economic development in communities across the U.S.," BOMA International said in a statement.

"Real estate is a long-term, risk-based investment which is regularly structured as a partnership, and therefore often involves a carried interest," noted BOMA International Chair James A. Peck, who is also senior director of asset services for CB Richard Ellis. "The passage of the bill by the Senate would result in fewer jobs, fewer economic development projects, fewer small investors lifting our economy into recovery and less tax income at the local level."

The carried-interest measure is problematic because almost every piece of real estate is owned in an LLC or an LP, Camp said. While successful investments typically pay a premium to the investment manager as a reward for taking the calculated financial risk, "this law basically eliminates the capital gains treatment on investment income and treats it as ordinary income," Camp said.

Real estate investors and developers would pay more taxes and see narrower margins, reducing their ability and incentive to make risk-based investments, Camp said. Higher taxes will also continue to hold down property pricing, as profit-pinched investors won't be able to afford to pay as much for office, industrial, multifamily and other properties, Camp said.

"With the commercial real estate market and our economy in the condition it’s in, the last thing we need now is a major tax increase on our industry. Prices have already gone down around 45% and there’s $2 trillion in commercial real estate mortgages expiring before 2013," Camp said.

NAIOP National President Thomas J. Bisacquino said in a statement that the House passed the bill "without the full consideration of the resulting harmful impact to one of the largest contributors to the nation's GDP."

Mounting an especially vigorous and organized lobbying effort is the International Council of Shopping Centers, which represents 60,000 mostly retail members. The ICSC said lobbying the Senate before next week is the last chance to stop the tax increase, the ICSC said in a policy document on its Web site.

"Because of the tremendous lobbying efforts you have generated, numerous senators from both parties have expressed concern with the tax increase and its effect on real estate," ICSC said.

The ICSC said about 48% of all partnership entities are real estate partnerships. Although no precise financial impact on real estate is available, the ICSC claimed in its materials that some real estate partnerships could see a 150% increase in their taxes. An ICSC issues brief from last year estimated economic loss due to the "crowding out of economically viable projects" at between $15 billion and $20 billion annually."

Big Lots Coming to Whiteland Towne Center, Exton

"Big Lots has leased 26,954 square feet at the Whiteland Towne Center in Exton, PA. The national closeout retailer signed a long-term deal, slated to commence later this year.

Located on Route 30 and Route 100, the Whiteland Towne Center has over 355,095 square feet of retail space. The shopping center is across from Exton Square Mall and features such tenants as Acme Market, T.J Maxx, Dress Barn, Petco, Kohl's and Party City."

Wednesday, June 2, 2010

1642 Woodhaven Drive In Woodhaven Industrial Park Bensalem, sells for $800,000

"French Palm, LLC sold the modern one story building of 15,150 SF located on 1.22 acres at 1642 Woodhaven Drive, Woodhaven Industrial Park, Bensalem, Bucks County, PA to Hagen Properties, LLC for $800,000.

The 15,150 square foot building is heated and sprinklered throughout, offers ceiling heights ranging from 15'8" to 16', two tailgate docks and one drive-in door and 2,665 SF of offices. The property is conveniently located between the Woodhaven Interchange and the Street Road Interchange of I-95 and is adjacent to the Cornwell Heights Train Station.

The Buyer is one of the largest carpentry/drywall subcontractors in the Delaware Valley. Since its beginning in 1987, the Company has successfully completed a variety of unique projects. Their success stems from their commitment to quality work, which is always demanded by the company s founder, Alfred D. Hagen, Jr."

Recent Lease Transactions

"Tozour-Trane leased 12,670 SF of industrial space at 440-480 Drew Court in King of Prussia from Ajax Investment Partners, LLC.

Fraser Advanced Information Systems subleased 5,982 SF of office space at 3 Bala Plaza in Bala Cynwyd from Oracle America, Inc.

Iron Workers District Council, Benefit & Pension Plans leased 7,050 SF of office space at 1 International Plaza in Tinicum from International Plaza Owner, LP."