Thursday, February 28, 2013

CommonWealth REIT Prices New Shares (Video)

Catalent Sells Industrial Facility for $17.1M

Frazier Healthcare, a provider of growth equity and venture capital to high growth and emerging health care companies, purchased the industrial facility at 3001 Red Lion Rd. in Philadelphia, PA from Catalent USA Packaging LLC for $17.1 million, or about $37 per square foot. 

The 467,000-square-foot building was constructed in 1950 on 21.5 acres in the Greater Northeast Industrial submarket. It features 8 loading docks and 18-foot clear-heights. 

Chichester Square Sells for $4.1M

RPC Real Estate, LLC sold its 29,025-square-foot retail center to Paragon Real Estate Group for $4.1 million, or roughly $141 per square foot. 

Located at 3601 Chichester Ave. in Boothwyn, PA, the single-story shopping center was constructed in 1983 on 3.7acres in Delaware County.

Juniper Communities Purchases Two Health Care Communities in Lancaster

Juniper Communities LLC, a New Jersey-based company dedicated to senior living facilities, added two new communities to its portfolio of 18 long-term care communities. The Bricker Group sold the two properties for $18.575 million, or about $124 per square foot. 

The two new locations are 607 Hearthstone Ln. in Mount Joy, PA and 1125 Birch Rd. in Lebanon, PA. The communities have been renamed to Juniper Village at Lebanon and Juniper Village at Mount Joy. Combined there are 184 units with 144 being used as assistant living, the other 40 are independent living units. 

Juniper Village at Lebanon is a 104,447-square-foot facility located on 15.9 acres that delivered in 1996 and offering 162 parking spaces. Juniper Village at Mount Joy is a 46,890-square-foot facility located on 1.1 acres delivered in 2000 and offering 47 parking spaces.

Wednesday, February 27, 2013

From Russia With Cash (Video)

CommonWealth REIT could face battle for control

by Mike Armstrong, Inquirer Columnist

One of Philadelphia's largest commercial landlords may be facing a battle over control.
CommonWealth REIT, the Newton, Mass.-based owner of the 54-story BNY Mellon Center and 24-story One Franklin Plaza, had released its 2012 financial results Monday and disclosed plans to raise $450 million by issuing more shares.
On Tuesday, two of the company's largest shareholders blasted that plan in a regulatory filing and urged CommonWealth to change its management structure, buy back stock, and deleverage its balance sheet.

Related Cos., the New York real estate firm begun by billionaire Stephen Ross, and Corvex Management L.P., followed up that filing with a letter to CommonWealth's board of trustees that stated their interest in offering $25 per share for all outstanding shares. That would amount to a $1.89 billion bid.

CommonWealth may not have the profile of Brandywine Realty Trust or Liberty Property Trust, both of which are based in the region and have developed many of the city's signature buildings, including Comcast Center, One Liberty Place, and Cira Centre.
But CommonWealth's Center City holdings include the twin-tower Centre Square complex across from City Hall and 1600 Market St., a black-glass tower nicknamed the "Darth Vader building."

In fact, CommonWealth owns a total of 4.60 million rentable square feet of office space in Center City, placing it just behind Brandywine's 4.85 million. Philadelphia is CommonWealth's largest market, accounting for 11.2 percent of its consolidated net operating income.

However, the 607,000-square-foot One Franklin Plaza will be vacant once GlaxoSmithKline, which provided 1.3 percent of CommonWealth's annualized rental income, completes its relocation to its Navy Yard office building this spring.
During a Monday conference call about its 2012 financial results, CommonWealth president Adam Portnoy said the company was negotiating with a new tenant "to possibly lease the entire building." He also added the caveat that those negotiations may not lead to an agreement and that other options were to lease to multiple tenants or list the property for sale.

A CommonWealth representative declined to discuss the One Franklin negotiations.
But then, it would seem the company now faces a much bigger challenge from two shareholders who make the case that the company has been underperforming its peers, including Brandywine.
Funds from operations (FFO) is the metric that matters most to REITs. CommonWealth, owner of 440 properties, reported FFO of $284.03 million, or $3.39 per share, in 2012. That was largely flat from the $262.28 million, or $3.39 per share, in 2011.
Related and Corvex, who collectively own 9.8 percent of CommonWealth's shares, said they believe the REIT's "intrinsic value" is $40 per share. CommonWealth shares closed Monday at $15.85.
As news of the possible offer spread Tuesday, CommonWealth shares soared 54 percent to close at $24.40, up $8.55.

Tuesday, February 26, 2013

Several Tenants Do Walnut St. Shuffle

Voith MacTavish is expanding from an 8,800-square-foot office the firm had occupied at 1616 Walnut.  The eight-story building the architecture group will now call home is owned by a limited partnership.
At 1845 Walnut,  the Foundation for Breast and Prostate Health in the lease of 1,392 square feet on the 15th floor of the 25-story, 350,000-square-foot building that fronts Rittenhouse Square.  
The foundation raises money for breast and prostate cancer research.  Like Voit MacTavish, the foundation relocated from smaller offices at 1616 Walnut.
At Independence Square, The Forceno Law Firm in leasing 1,376 square feet in Penn Mutual Towers, 510-530 Walnut Street. The Forceno Law Firm is relocating from 2,500 square feet at 1528 Walnut. Management Services is the landlord.

Main Line Health Will Open at Exton Square Mall

Main Line Health will open a 32,000-square-foot ambulatory facility atPennsylvania Real Estate Investment Trust’s Exton Square Mall later this year.
Philadelphia-based PREIT says the company is “moving forward with the selective introduction of ambulatory health care facilities in retail space as a novel way to create greater access for customers to their physicians and other health care services.”
The facility, which is scheduled to open in late 2013, will include a broad range of diagnostic and treatment services, including Main Line Health family medicine physicians, obstetric and gynecology specialists, oncologists, pediatricians and other specialty physician practices, as well as physical therapy, imaging services, an infusion center and blood draw capabilities, the company states in a news release.
“With our patients in mind, we are excited for Main Line Health to offer our high quality health care in a retail setting,” states Jack Lynch, president and CEO of Main Line Health. “The Exton Square Mall’s convenient location and extended hours, coupled with Main Line Health’s nationally recognized physicians, staff and services, will ensure our community has easy access to superior health care with personalized treatment in an innovative environment.”
“We continue to believe in the synergies between health care and retail,” adds Joseph F. Coradino, CEO of PREIT, “We are pleased to offer a convenient and pleasant environment for our shoppers as well as Main Line Heath patients and employees.”
The Exton Square Mall, which totals 1,086,300 square feet, has added Chico’s, White House/Black Market, Cotton On, and Learning Express to the tenant roster in the past year.

Monmouth COO: Remained Strong Through Recession

Monday, February 25, 2013

Market Trend: Philadelphia's Industrial Deliveries and Construction

During the fourth quarter 2012, eight buildings totaling 2,887,868 square feet were completed in the Philadelphia Industrial market area. This compares to four buildings totaling 2,229,000 square feet that were completed in the third quarter 2012. 

There were 3,276,271 square feet of Industrial space under construction at the end of the fourth quarter 2012. 

Some of the notable 2012 deliveries include: Crayola, a 1,534,200-square-foot facility that delivered in fourth quarter 2012 and is now 100% occupied, and 2785 Commerce Center Blvd, a 1,200,000-square-foot building that delivered in third quarter 2012. 

The largest projects underway at the end of fourth quarter 2012 were I-78 Industrial Park At Bethel - Bldg 2, a 1,200,000-square-foot building with 100% of its space pre-leased, and Berks Park 78 - Dollar General, a 906,919-square-foot facility that is 100% pre-leased. 

Total Industrial inventory in the Philadelphia market area amounted to 1,007,903,702 square feet in 19,327 buildings as of the end of the fourth quarter 2012. The Flex sector consisted of 82,152,166 square feet in 3,189 projects. The Warehouse sector consisted of 925,751,536 square feet in 16,138 buildings. Within the Industrial market there were 2,384 owner-occupied buildings accounting for 225,829,430 square feet of Industrial space.

Trends in Office Space: Yahoo Cracks Down on Remote Workers

According to numerous sources, Yahoo CEO Marissa Mayer has instituted a HR plan today to require Yahoo employees who work remotely to relocate to company facilities. The move will apparently impact several hundred employees, who must either comply without exception or presumably quit. It impacts workers such as customer service reps, who perhaps work from home or an office in another city where Yahoo does not have one. Many such staffers who wrote me today are angry, because they felt they were initially hired with the assumption that they could work more flexibly. Not so, as it turns out. A Yahoo spokesperson said the company does not comment on internal matters.
Full story:

Tuesday, February 19, 2013

Philadelphia's 10 biggest commercial taxpayers would get lower bills under new real estate assessment

Philadelphia's 10 biggest commercial taxpayers, including Center City office towers, Franklin Mills Mall, and the shipyard in South Philadelphia, could pay a total of $17.5 million, or 45 percent, less in property tax next year under Mayor Nutter's tax reform.

The reform is designed to base taxes on the properties' actual value rather than on outdated figures used for years by the city.
Commercial properties, particularly in Center City, have long been assessed based on values closer to real market values than most residential properties, which, experts said, meant that commercial-property owners paid more than their fair share of real estate taxes.
"It's been a great week for the office-building owners. They've been getting the shaft for about 20 years, so it's about time," Reaves C. "Trip" Lukens III, a private real estate appraiser in Philadelphia, said Monday.

In the aggregate, commercial and industrial properties could see their property tax bills drop by at least $56 million, or 26 percent, according to an Inquirer analysis, depending on where City Council sets the tax rate and whether it adopts a homestead exemption for residential properties, which would shift some taxes back to commercial parcels.
The estimates here are based on a 1.25 percent rate.

Lukens, of Lukens & Wolf L.L.C., said it appeared to him that some commercial properties remained overvalued.
"Two Penn Center is a good example," Lukens said.

That property was valued at $66 million in a transaction last fall, but the city's Office of Property Assessment valued the building at 1500 John F. Kennedy Blvd. at almost $81 million, 23 percent more.

Even so, under Nutter's tax reform, the property-tax bill there is slated to drop an estimated $241,598, or 19 percent, to about $1 million from $1.25 million.

In its attempt to value commercial properties accurately, the Office of Property Assessment asked property owners for income and expense data, but real estate experts said city officials got very little detail because it was not required.
"I think very few owners gave them that information," said Joseph C. Bright, a tax lawyer at Cozen O'Connor. Any property owners who appeal the new assessments will have to provide the information, he said.

The biggest tax decrease for a single parcel is expected to go to the investors group that owns Franklin Mills Mall. The tax on the property listed at 4301 Byberry Rd. could be $2.25 million next year, down $3.38 million or 60 percent, from this year's estimated bill of $5.63 million. A spokesman for Franklin Mills did not respond to a call seeking comment.
Not all big commercial-property owners would get breaks.

Tenet Healthcare Corp., a for-profit hospital owner based in Texas whose holdings include Hahnemann University Hospital in Center City and St. Christopher's Hospital for Children in North Philadelphia, could see the biggest increase on a single parcel.
Tenet's property at 225-51 N. 15th St., part of the Hahnemann complex, is slated for an estimated $1.7 million increase. That 247 percent increase is partially offset by reductions on other parcels, giving Tenet an overall increase of $1.1 million, or 41 percent.
A spokeswoman for the company declined to comment.

Toll Bros. is scooping up failed projects for conversion to houses

Even with luxury builder Toll Bros.' recent record selling homes in Center City, Manhattan, Brooklyn, and other urban centers, the company continues to buy up suburban properties for eventual conversion into the next generation of McMansions.

Home prices are slowly rebounding from their late-2000s collapse, and failed construction projects remain cheap and ripe for conversion.
Last week, Gibraltar Capital and Asset Management L.L.C., a subsidiary of Horsham-based Toll, said it had spent $33 million buying four packages of loans gone bad, at discount prices, from banks holding property in Pennsylvania, Florida, Arizona, Maryland, Massachusetts, Minnesota and Georgia.
Toll did not list the properties, which it said included "retail shopping centers, residential land, and golf courses."

But Gibraltar president Roger Brush said separately that one of the tracts, "capable of being developed into a residential subdivision, should we end up with title," was in Chester County.
Toll already is managing the Applebrook Meadows project in Malvern, the Preserve at Chadds Ford, Creekside at Byers Station in Chester Springs, and large homes at the former du Pont estate north of Newtown Square in neighboring Delaware County.

Rentals income: Study up

Low mortgage rates have made buying houses more affordable and turned rentals into attractive options for investors.
"In this market, at this point, it's a sweet spot," says Chris Princis, a senior executive at financial advisory firm Brook-Hollow Financial and owner of two rental properties in Chicago. "You're getting the market where it's just starting to rebound, but still at the bottom, with what's looking to be a great recovery."
Here are tips on becoming a landlord or investor in rental property:

Understand what it means. If you elect to buy a property for the long-term investment potential, the goal should be to ensure that the rental income covers the cost of your mortgage and monthly maintenance costs.
If you buy a foreclosed home, you'll have to factor in the cost of repairs to ready the home for renting. And if you have a mortgage, you'll need to be prepared to cover the costs for however long it takes to find a tenant.
"Real estate is a great investment if people are paying their rent," says Princis. "If they're not paying their rent, it's a horrible investment." 

Buy in an area with strong demand. Neighborhoods near universities are a good option. For homes in residential areas, proximity to schools can be a good draw for families.

Condominiums and similar properties in communities with homeowners' associations can be a great option because the association arranges for upkeep on the property. But check the fine print on your mortgage and homeowners' association rules to make sure renting isn't forbidden.
If you're going to buy a foreclosure, be prepared to compete with other investors, many of them paying cash. And because many require upgrades and repairs, expect that it will take longer to generate rental income.
Foreclosure tracker RealtyTrac Inc. recently ranked U.S. metro areas with a population of 500,000 or more according to the supply of available foreclosures for sale and their discount versus other homes, among other criteria. Among the top 20 cities deemed the best places to buy: Philadelphia; Miami; Chicago; El Paso, Texas; and Poughkeepsie, N.Y.
Claire Thomas, a retiree in Phoenix who owns 10 rental condos in Las Vegas, says that landlords looking to keep their properties income-generating for many years should look into areas that are not too expensive.
"I would rather have a middle-of-the-road rental that stays rented than a higher-end" property, she says.

Consider using a management firm. Determine whether you want to select the tenant and handle property issues or hire a company to do it. If you take on the responsibility, you are obliged to fix leaky faucets, broken furnaces, etc., or find professionals to do it.
"Are you prepared to do all of this on your weekends or evenings or get calls while you're at work because a pipe burst and it's flooding?" asks Jim Warren, chief marketing officer for property management company FirstService Residential Realty. "What's that threshold worth to you?"
Property-management firms can charge a percentage of the rent, sometimes 10 percent or more.

Do the math. Although prevailing rental prices will go a long way toward determining what you can charge, start with making sure you're going to get enough rent to cover expenses and costs.
Princis' formula is charging 15 percent above monthly mortgage and maintenance costs. So if those costs add up to $1,000, he'll look to charge $1,150.
Of course, flexibility might be called for if you're unable to get a tenant in for months and months. Experts recommend starting with popular rental listings in newspapers or on websites such as, Trulia, and Zillow to see what comparable apartments or rooms are going for.

Get familiar with landlord laws. Two good resources are the U.S. Department of Housing and Urban Development's website ( and the Landlord Protection Agency (, which includes state-specific rental guidelines and standardized forms for rental agreements. A lawyer or the Landlord Protection Agency also can help you craft a well-written lease. It will help you evict a tenant or hold the tenant accountable for damage, if necessary.

Saturday, February 16, 2013

Whole Foods will add a Cherry Hill store next year

Whole Foods Market, the national organic supermarket chain, is coming to Cherry Hill next year.
The company, which will replace the former Genuardi's supermarket at the Ellisburg Circle Shopping Center, plans to open in spring 2014, according to John Hendrickson, Northeast regional chief operating officer for Federal Realty Investment Trust, which manages the center.

"I think they view it as a perfect market for them," Hendrickson said of the Texas-based grocer.
Whole Foods has a location in Marlton, and "they see this as a complement, really, to that," Hendrickson said.
Federal Realty has been searching for a tenant for the 47,000-square-foot space since summer, when Genaurdi's left the shopping center at Route 70 and Kings Highway.

"A handful of other operators" had expressed interest in the property, Hendrickson said. He did not name those companies but said Whole Foods "was certainly top on our list and a great fit for the property."
Township officials said the grocer's expansion into Cherry Hill signaled confidence in the community and would breathe new life into the center.

Before Whole Foods opens, Hendrickson said, renovations will be made to the facade of the center, where roof- and ground-mounted solar panels were installed last year.
"It'll look like a brand-new center," Hendrickson said.
The township, preparing to auction off a new liquor license, is considering eliminating a rule that bars supermarkets from selling liquor.
In a statement through a Federal Realty representative, Whole Foods said it believed state laws would prevent it from bidding on a license.

"The state liquor laws only allow a company to operate two licenses in New Jersey, which we currently have active in Middletown and Paramus," said Scott Allshouse, the company's mid-Atlantic region president. "While we'd love to offer that convenience to our shoppers, it's unlikely unless that law were to change."

Next up for the Navy Yard: Nightlife

FOR THE LAST DECADE, construction cranes have been busy at the Navy Yard churning up dirt and converting the former shipyard into an office mecca for companies of all sizes.
After celebrating the 10,000-employee milestone last week - the same number that was there before the shipyard closed in 1995 - developers said they're ready to turn their attention to a new phase: nightlife.
Planning officials said they soon hope to secure the first restaurant that would be open for dinner and that would cater largely to the after-work crowd. The Courtyard by Marriott - the center's first hotel - is set to open this fall, which will also generate evening traffic.

"That begins to start the first amenity down at the Navy Yard," John Gattuso, regional director and senior vice president of Liberty Property Trust, which oversees development of the corporate center at the y ard, said of the hotel. "It's just one gesture, I will be open to admitting, but it's an initial gesture that starts to create other hours down there. We really believe that will become more of its character [as] you go further into the future."

Officials plan to add a convenience store and other amenities that high-profile employers look for. The amenities also are being added with an eye toward the future, with plans for the first residential units about two or three years away.

The updated master plan unveiled last week calls for as many as 1,000 rental units, as opposed to the mix of rentals and single-family homes outlined in the 2004 plan.

"We do not believe the Navy Yard needs that much of a residential-only community, which is part of what had been proposed," said Will Agate, senior vice president of Philadelphia Industrial Development Corp., which spearheads planning for the 1,200-acre center. "In the original plan we still had envisioned residential in the historic core that was 850 units max, but we've added more density in the historic core."
But make no mistake, the center is sticking with its bread and butter. Officials have tripled the amount of dedicated commercial space, which they believe will help generate another 10,000 employees in the next decade.

And to those who argue that hubs such as the Navy Yard just cannabalize business, Agate said that 65 percent of the businesses there are new to the city. Only 27 percent of businesses are using tax exemptions, he said.

The ongoing development and new amenities has created significant buzz among tenants like GlaxoSmithKline, whose 1,300 employees in one of the Navy Yard's 11 new buildings tipped the workforce past 10,000.

"It's an incredible spot. It's changing literally by the month down here," said Ray Milora, project executive for the pharmaceutical giant. "A lot of the other things that were planned are picking up speed. It's an amazing spot to be part of."

Friday, February 15, 2013

Conshohocken Commercial Real Estate (Video)

REITs on Fire (Video)

Crestbury Apts Sell for $16.1M

The Michaels Organization sold a 394-unit multifamily complex to Tyrko Partners for $16.1 million, or about $41,000 per unit. 

The Crestbury Apartments were built in 1950 and feature one- and two-bedroom units overlooking a neighborhood park. It is situated a few miles from several bridges heading into the City of Philadelphia.

Philadelphia's Industrial Vacancy Increases to 9.1%

The Philadelphia Industrial market ended the fourth quarter 2012 with a vacancy rate of 9.1%. 

The vacancy rate was up over the previous quarter, with net absorption totaling positive 1,388,935 square feet in the fourth quarter. That compares to positive 549,201 square feet in the third quarter 2012. Vacant sublease space increased in the quarter, ending the quarter at 2,714,612 square feet. 

Tenants moving into large blocks of space in 2012 include: Cardone Industries Incorporated moving into 1,455,000 square feet at 5400 Langdon St, Westport Axle moving into 516,800 square feet at 650 Boulder Dr, and Ulta Inc moving into 361,900 square feet at I-81 Distribution Center. 

Rental rates ended the fourth quarter at $4.48, an increase over the previous quarter. 

This trend is compared to the U.S. National Industrial vacancy rate, which decreased to 8.8% from the previous quarter, with net absorption positive 70.41 million square feet in the fourth quarter. Average rental rates increased to $5.18.

Wednesday, February 13, 2013

Keystone Signs Flurry of Office Leases

Keystone Property Group has recently leased a total of nearly 19,000 square feet at its Parkview Tower office building.
The transactions include:
  • Inc. taking a 66-month lease for 7,076 square feet. 
  •  Bankers Life Insurance signing a five-year lease extension for 8,179 square feet.
  • Contemporary Staffing Solutions’ signing for 1,844 square feet.
  • PP Pediatric Management renewing for 1,900 square feet.

Located at 1150 First Avenue, the 220,513-square-foot nine-story building is connected to a Radisson Hotel and the Valley Forge Casino, offering tenants access to large conference facilities, a food court, spa and several full-service restaurants.
Parkview Tower also includes on-site amenities, including a deli, telecommunications with fiber optics, a back-up generator, ample parking and 24-hour security.
Keystone makes continuous upgrades to the common areas, bathrooms and lobbies.
Tenants include Arcadia University, Huntington Bank, SAIC, TekniPlex and Fort Dearborn Life Insurance.

Rosemont Realty of Santa Fe, N.M., poised to buy 2000 Market St.

by Natalie Kostelni

Rosemont Realty of Santa Fe, N.M., is poised to buy 2000 Market St., a 29-story office tower in Center City, for about $110 million, according to people familiar with the transaction.
The acquisition is part of what many believe is a growing trend in Center City: Investors from outside the region are taking a serious look at putting money into Philadelphia real estate.
The last time 2000 Market St. traded was on New Year’s Eve 2009, while the economy was struggling and lenders continued to be tightfisted. Just a month earlier that November, RREEF, which had owned the 665,000-square-foot office building, voluntarily gave the building back to its lender, Prudential Life Insurance, in a deed in lieu of foreclosure.
CB Richard Ellis Investors, the pension advisory arm of CBRE Inc., stepped in. It bought the building for about $50 million, or $80 a square foot, a steep discount to the $77 million RREEF had paid in 2003. It had a $49 million mortgage with Prudential.
Between the time RREEF bought the property — when the commercial real estate market was climbing to a peak — and the time it relinquished ownership, 2000 Market had lost nearly $30 million in value.
Since buying the building, CB Richard Ellis Investors put $25 million into it, redoing the lobby, creating a large conference center in what had been a cafeteria and renovating common spaces. It also bought occupancy up to about 96 percent from 80 percent.

Sam Zell's Real Estate Roundup (Video)

Monday, February 11, 2013

Apple is buying up Pennsylvania tax credits

I mention KIZ tax credits to my clients all the time. Most of Montgomery County is a KIZ but you have to file if you qualify.

There are many things to call Apple Inc.
Maker of the iPhone, iPad, and other must-have products. The world's most innovative company, and the world's most valuable company (at times).

Allow me to add to the list: "Major buyer of Pennsylvania tax credits."
The Cupertino, Calif.-based technology Goliath may have more cash than investor David Einhorn believes is prudent, but Apple isn't foolish when comes to taxes. Apple apparently is trying to reduce its tax liability in Pennsylvania by buying up tax credits from other companies here.

The Pennsylvania Department of Community and Economic Development's (DCED) annual report on the Keystone Innovation Zone (KIZ) tax credit program lists Apple as having acquired 32 approved tax credits worth $2.33 million in 2012.
The Rendell administration created the KIZ program in 2004 to support early-stage companies with ties to Pennsylvania colleges. Firms in operation for less than eight years and situated in one of the 29 zones statewide can apply for a tax credit of up to $100,000.
Last year, the DCED approved a total of $13.73 million in tax credits to 179 companies across the state. Of those totals, 43 Philadelphia-area companies were awarded a total of $3.33 million in credits.

Young companies often apply for these credits not to offset their own tax liabilities, but to raise money. The KIZ program allows companies to sell or assign their tax credits for cash.

Which is where Apple and other buyers, such as Susquehanna Bank ($2.53 million), First Commonwealth Bank ($2.20 million) and Kohl's Department Stores Inc. ($182,806), come in.

Small companies got between 88 cents and 92.8 cents on the dollar when they sold their credits through a broker recently.
Since 2006, the sale of KIZ tax credits has generated $48.9 million in capital that companies in those zones have used to expand their operations, hire workers, and fund prototypes, according to the annual report.

KIZ Map:

KIZ Guidelines:

Saturday, February 9, 2013

Jeremy Siegel on International REITs (Video)

Starwood Hotels & Resorts CEO Talks Earnings (Video)

Chambers Street Closes on Malvern Acquisition

Chambers Street Properties has acquired the Endo Pharmaceuticals twin office towers located at 1400 Atwater Dr. in the Philadelphia suburb of Malvern, PA.

The two five-story, 150,000-square-foot, class A office buildings are connected via a second-story walkway and two-story glass lobby. The buildings feature a full-service cafeteria, fitness center and conference room on a 15-acre parcel that overlooks the 60-acre Atwater Lake within the 388-acre Atwater Corporate Center, located off the Pennsylvania Turnpike at Hwy 29. 

The properties were developed by Chambers Street in a joint venture with Trammell Crow Company. The newly-delivered asset is fully leased to Endo Health Solutions, a specialty healthcare company focused on branded and generic pharmaceuticals, devices and services. 

"We are delighted to deliver 1400 Atwater Drive for occupancy by our tenant and complete the process of adding this Class A property to our expanding portfolio," said Philip L. Kianka, executive vice president and COO of Chambers Street Properties. "Our entire development team did an outstanding job collaborating with Endo to deliver the project on time and budget, and with great pride." 

This project marks the developer's entry into the suburban Philadelphia market. The company has amassed a diverse portfolio of 129 properties in 40 markets across three continents, and currently has more than $3 billion in assets under management.

Philadelphia's Retail Vacancy Rises to 6.4%

The Philadelphia retail market did not experience much change in market conditions in the fourth quarter 2012. 

The vacancy rate went from 6.3% in the previous quarter to 6.4% in the current quarter. Net absorption was negative 121,857 square feet, and vacant sublease space decreased by 40,143 square feet. In third quarter 2012, net absorption was negative 835,612 square feet. 

Tenants moving into large blocks of space in 2012 include: Wegmans moving into 140,000 square feet at The Village at Valley Forge - Phase I; Speed Raceway moving into 106,000 square feet at Village Mall; and Speed Raceway moving into 78,000 square feet at Cinnaminson Shopping Center. 

Quoted rental rates decreased from third quarter 2012 levels, ending at $13.86 per square foot per year. 

A total of 10 retail buildings with 86,485 square feet of retail space were delivered to the market in the quarter, with 857,574 square feet still under construction at the end of the quarter. 

This trend is compared to the U.S. National Retail vacancy rate, which decreased to 6.8% from the previous quarter, with net absorption positive 26.998 million square feet in the fourth quarter. Average rental rates decreased to $14.43, and 804 retail buildings delivered in the quarter.

Thursday, February 7, 2013

Global Logistic Properties' Optimistic Outlook

Albert's Organics Expands in LogistiCenter at Logan

Albert’s Organics, a leading distributor of organically grown produce and perishable items, has finalized a long-term lease deal on a build-to-suit facility located in the LogistiCenter at Logan. 

Located at 1155 Commerce Boulevard in Logan, NJ, the distribution facility will be 70,000 square feet. The project is scheduled to be completed in April 2013.

Brandywine picks Ga. firm to build $158M student high-rise at Penn

Brandywine Realty Trust, Radnor, put out a statement last night confirming it has joined Georgia-based Campus Crest Communities to build a high-rise student tower at 2930 Chestnut St. on ground leased from the University of Pennsylvania.

The joint venture - 40% owned by investor Harrison Street Real Estate, the rest split by Brandywine and Campus Crest - will rise 33 stories (the site is permitted for 36), sleep 850 students (not counting guests), and cost $158.5 million (with $97.8 million lent by banks led by administrator PNC and syndicator Capital One).

Brandywine expects Drexel students as well as Penn students will live in the tower, dubbed The Grove at Cira Center South (Cira North is the office building by 30th St. Station). The building would draw students toward the campus neighborhood and away from the West Philly and Center City housing where they've been proliferating for decades. 

Wednesday, February 6, 2013

Commercial Developer Linda Alvarado on CNBC (Video)

Brandywine Agrees to $121M Sale of Princeton Pike

Brandywine Realty Trust  has entered into an agreement to sell its Princeton Pike Corporate Center, an eight-building, 800,546-square-foot office park in Lawrenceville, NJ. 

The sale is expected to close in 30 days for a reported $121 million, or about $151 per square foot. As part of the sale agreement, the buyer was given a 7.5-year option to acquire Brandywine's three remaining development parcels in the park. 

The company's report identified net proceeds from the sale will be used to retire existing debt, including balances under an unsecured revolving credit facility. 

"The sale of Princeton Pike reduces New Jersey's contribution to just 5.5% of overall Company revenues and amplifies our shift to a more urban and transit-oriented portfolio with better growth characteristics," stated Gerard H. Sweeney, President and CEO of Brandywine Realty Trust. "Within our consolidated portfolio, we ended 2012 as a $97.7 million net seller, in line with our capital recycling and disposition goals.

Saturday, February 2, 2013

Liberty to Develop 200,000 SF for Vanguard

Liberty Property Trust has announced plans to develop a brand new 200,000-square-foot, six-story office building for The Vanguard Group. The property will be located in the Great Valley Corporate Center in Malvern, PA 

Construction is expected to begin in March, with an anticipated completion date in mid-2014. Total cost for the project is estimated to come in around $55 million. 

D2CA Architects lent its expertise to the project, designed to achieve LEED certification. Studio Bryan Hanes came on as landscape architect, and the project engineer is Bala Consulting Engineers. 

Liberty began development of GVCC in 1972. Companies in and around the park today employ nearly 25,000 people. 

"Now in its 41st year, Great Valley Corporate Center is one of nation’s leading business parks and a major employment center for Greater Philadelphia," said Tom Sklow, vice president and city manager for Liberty. "The park continues to evolve and grow, and just last month became even more accessible with new connections to the Pennsylvania Turnpike." 

Vanguard has signed a long-term lease at the park for the entire 200,000-square-foot property, commencing upon completion of the new building.

Miller's Ale House Expanding in Northeast

Miller's Ale House is continuing its expansion in the Northeastern U.S. following the completion of two lease transactions in Willow Grove, PA and Paramus, NJ. 

In the first deal, the 60-store restaurant chain headquartered in Jupiter, FL signed a ground lease for 1.5 acres of development land located off the Pennsylvania Turnpike in Willow Grove, PA. 

In the second transaction, the restaurant known for great food at affordable prices leased a 9,200-square-foot location in Bergen Town Center, a 1 million-square-foot power center located in Paramus, NJ.

Brandywine Realty Trust plans to redevelop 1900 Market St.

Brandywine Realty Trust says it will redevelop 1900 Market St., which houses Nasdaq's Philadelphia Stock Exchange operations and investment and law offices, "as a Class A office building." Work will start next year and be done by 2015, the company said.

Separately, Brandywine, of Radnor, has asked Campus Crest Communities, a Georgia company known mostly for building student housing at suburban and small-town colleges in the South and West, to put up student housing on a site approved for a 36-story high-rise at 2930 Chestnut St. in University City, according to two real estate industry sources familiar with the deal.

The property adjoins the University of Pennsylvania campus. Brandywine had earlier hoped to lure office tenants to the block with help from state and city tax breaks. Brandywine spokeswoman Marge Boccuti declined to comment on the project.

Brandywine paid $34.8 million to buy the 457,000-square-foot 1900 Market building in 2011. Last summer, its lead tenant, law firm Cozen O'Connor, announced plans to vacate 200,000 square feet. But given the sale price of $76 per square foot, "the building's existing tenant base, current below-market leases, and purchase price will provide an attractive yield," Brandywine said in a statement.

Philadelphia's office real estate market, as measured by square footage, rents, and employment, has been flat for 20 years, as the impact of expanding tenants such as Comcast has been erased by cutbacks such as GlaxoSmithKline's move next week from its complex near 16th and Vine Streets to a smaller space at the Navy Yard.

Cozen's plan to move to One Liberty Place fed speculation that 1900 Market, with an open atrium at its center, could be turned into high-end apartments and expanded, echoing developer Ron Caplan's plans for the vacant AAA Mid-Atlantic building nearby or the Brandywine-Independence Blue Cross plan for apartments and retail in the vacant lot at 1919 Market.

But Brandywine and other landlords also have said that the city's most modern office towers, including the Mellon and the former Verizon towers nearby, are successfully attracting high-end tenants, and that there may be more demand for high-end offices as companies like FMC Corp., the Philadelphia chemical conglomerate, seek to consolidate into newer space.

Friday, February 1, 2013

Philadelphia's Office Vacancy Rises to 11.6%

The Philadelphia Office market ended the fourth quarter 2012 with a vacancy rate of 11.6%. 

The vacancy rate was up over the previous quarter, with net absorption totaling negative 120,250 square feet in the fourth quarter. That compares to negative 1,040,010 square feet in the third quarter 2012. Vacant sublease space increased in the quarter, ending the quarter at 1,219,839 square feet. 

Tenants moving into large blocks of space in 2012 include: Young Conaway Stargatt & Taylor, LLP. moving into 218,335 square feet at The Courthouse; Marshall, Dennehey, Warner, Coleman & Goggin moving into 131,325 square feet at 2000 Market St; and Philadelphia Media Network Inc moving into 125,000 square feet at 801 Market St. 

Rental rates ended the fourth quarter at $20.92, a decrease over the previous quarter. 

A total of eight buildings delivered to the market in the quarter totaling 490,854 square feet, with 802,262 square feet still under construction at the end of the quarter. 

This trend is compared to the U.S. National Office vacancy rate, which decreased to 11.9% from the previous quarter, with net absorption positive 27.16 million square feet in the fourth quarter. Average rental rates increased to $21.63, and 234 office buildings delivered in the quarter.

Steven Ross Interview on CNBC (Video)

Beneficial is close to HQ decision

by Joseph N. DiStefano

Beneficial Bank, the biggest lender still based in Philadelphia, has narrowed it down to three possible new headquarters buildings, all in different parts of Center City, for its central staff of around 250, says chief executive Gerry Cuddy.

The bank's current office in the Penn Mutual tower near 4th and Walnut has cool views of the city's brick colonial neighborhoods backed by the Delaware and the Market Street high-rises -- but the space is broken up and Cuddy wants a single "bloc" of up to 120,000 sq ft, because, hey, space in Philly is as cheap now as it was 20 years ago, mostly.

"Our lease expires March 1 of 2014," so he wants to make a decision this February, to give a year's moving time, he told me.

"We looked at leaving the city. We eliminated that. So we looked at moving jobs out of Philadelphia" but keeping the headquarters in the town where Beneficial was founded 160 years ago. "But I like it here."
Are tax breaks or public aid part of the sweetener? "We're talking to the city and the state. But we're not there" right now.
The new space won't include room to grow: "Our commercial lenders are out now more than they're sitting at a desk."

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