Wednesday, April 27, 2016

Equity Commonwealth Sold Locust Street Office for $17.7M

Allan Domb Real Estate acquired the office building at 1525-1529 Locust St. in Philadelphia, PA from Equity Commonwealth for $17.7 million, or about $180 per square foot.

The 19-story, 98,083-square-foot office building was built in 1987 in the Market Street West submarket. At the time of purchase, this building was 97 percent occupied with the law firm Kline & Specter as the anchor tenant.

2.0 University Place Sold for $41.3M

University Place Associates sold the 2.0 University Place office building at 30 N. 41st St. in Philadelphia, PA to commercial insurance and risk management provider Zurich North America for $41.25 million, or about $426 per square foot.

The five-story, 96,916-square-foot office building delivered in 2013 on two-thirds of an acre in the Market Street Corridor, near three major highways. The multi-tenant property was 100 percent leased at the time of sale.

Ocean Desert Sales Signs 107,000-SF Lease

Ocean Desert Sales, an import and export wholesale distributor of general merchandise, signed a lease for 107,346 square feet of industrial space at 1771 Tomlinson Rd. in Philadelphia, PA.

Ocean Desert Sales will be relocating from its current 10,000-square-foot space at 5400 Tulip St. in Philadelphia in June 2016.

Built in 1965, the 207,500-square-foot industrial building is on two acres in the Greater Northeast Industrial submarket, and features over 190 parking spaces, 17 loading docks, 14 drive-ins, 19-foot clear heights and 32x40-foot column spacing.

Lehigh Valley owner inks deal to sell 234 more acres to FedEx developer

By Kurt Bresswein | For
Bigger things may be in store from the developer of a FedEx Ground distribution hub planned on land to be sold by the Lehigh Valley International Airport owner.

Northampton County acres planned for sale by airport authority
The Lehigh-Northampton Airport Authority on April 26, 2016, entered into a sale agreement for about 234 acres in Allen and East Allen Townships to Rock-Lehigh Valley LLC, a subsidiary of The Rockefeller Group. It's adjacent to 260 acres in Allen Township being purchased by the development company for construction of a FedEx Ground distribution hub.

The Lehigh-Northampton Airport Authority Board of Governors on Tuesday unanimously approved an agreement to sell about 234 acres in Northampton County to Rock-Lehigh Valley LLC, a subsidiary of the FedEx developer, The Rockefeller Group.

That's on top of the authority's $9.8 million sale to Rock-Lehigh Valley of 260 acres for the FedEx project. The long-awaited closing on the FedEx land is expected in mid-May, with the sale of the 234 acres anticipated in 2017, airport authority Executive Director Charles Everett said Tuesday.

An appraisal of the 234 acres a few years back put the value of the land at $6.86 million, at a per acre price of $38,000 for 78.7 acres in Allen Township and $25,000 for 155 acres in East Allen Township, Everett said. A new appraisal is needed, Everett said, but he expects the land to be worth at least the prior estimate. The agreement requires Rock-Lehigh Valley to pay the fair market price for the land, or it can cancel the deal, according to Everett.

The land abuts the FedEx Ground site, which is off Willowbrook Road. It has been leased out by the authority for agricultural use.

Representatives of The Rockefeller Group did not immediately respond Tuesday to requests for comment on potential plans for the 234 acres.
The Rockefeller Group subsidiary faced a deadline on Friday to buy the 234 acres, under a master agreement entered into by the authority in 2013, Everett said. Rather than extend the deadline, the two sides entered into the purchase/sale agreement approved Tuesday by the authority.

The authority now has 30 days to apply for a deed of release from the Federal Aviation Administration and Rock-Lehigh Valley has 12 months to obtain approvals needed to develop the land, Everett said.

The airport authority owns and operates three airports: Lehigh Valley International Airport in Hanover Township, Lehigh County; Queen City Airport in Allentown and Braden Airpark in Forks Township. Selling these 234 acres is projected to shore up authority finances in the long term, Everett said.

"We're very excited," he said about the sale. "That has been the long-term priority for the authority, to sell some of the surplus property so that we can satisfy our goal of being financially sustainable into the long-term future."

The authority in January, according to Everett, paid off the balance of a $26 million court judgment entered against it over the 1990s condemnation of property that was to be the Willow Brook Estates housing development.

On the FedEx land, Everett said all parties have signed a settlement agreement resolving claims by the Fuller Family Trust, owner of Willow Brook Farms, that a deed restriction barring industrial development survived the authority's condemnation of the property.

"We are waiting for a fully executed copy," he said Tuesday. "We are pushing for closing in the middle of May."

A representative of the Fuller Family Trust did not immediately return a call for comment Tuesday afternoon.

FedEx had been wooed by Majestic Realty and Bethlehem officials to locate its ground hub in a 981,321-square-foot warehouse and distribution facility approved by city officials along Commerce Center Boulevard, off Route 412, in the city.

The Allen Township site remains the preferred location of FedEx Ground for the $335 million facility, spokesman David Westrick said Tuesday.

"We are continuing to work with everyone we need to," he said. "We want to expedite remaining approvals and hopefully begin breaking ground in the spring."

Workspace Property Trust, Horsham, Announces Strong First Quarter Leasing Activity

Workspace Property Trust ("WPT"), a leading real estate investment firm, today announced the completion of 13 lease transactions in the first quarter of 2016, comprising over 150,000 square feet of space.  These significant lease transactions are indicative of the strong demand for office/flex space in the vibrant Horsham submarket.

"Since acquiring this portfolio in early December, we have worked hard to introduce ourselves to the Horsham community, to engage and partner with the brokerage community and to show ourselves as the new faces and future of suburban office," said Roger Thomas, President and Chief Operating Officer of WPT.  "This portfolio has boasted strong, consistent occupancy over the last decade.  Our ability to continue to focus on driving absorption is proof positive of the resurgence of the suburbs."

Notable lease signings in the first quarter of 2016 for Workspace Property Trust included:

Tyco SimplexGrinnell (36,000 sf), at 261-283 Gibraltar Rd.
Finance of America Mortgage (33,205 sf) at 300 Welsh Rd.
New York Life Insurance Company (25,324 sf) at 100 Witmer Rd.

"WPT consistently provides first class landlord services to our tenants.  As a direct result, we have seen strong demand for companies looking to expand as well as take on a significant footprint in the local market," said Michael Gervasio, Senior Vice President of Workspace Property Trust.

Strategically located directly off the Pennsylvania Turnpike within the prestigious corporate community of Horsham, PA, this portfolio is comprised of 2,374,749 square-feet across 41 buildings.  While the portfolio is diverse across property type and tenant mix, the most heavily concentrated property type within the portfolio is 860,000-square-feet of Class A, multi-story office. Tenants are drawn by the area's proximity to major thoroughfares, which provide convenient access to Philadelphia and New York City.

Workspace Property Trust is a privately held, vertically integrated, full service commercial real estate company specializing in the development, management, and operation of office and flex space. Workspace Property Trust is a partnership between Rizk Ventures, Forum Partners, JMP Group and EverWatch Capital.

Hampshire/MCB Partnership Acquires 18.5-Acre Philadelphia-Area Mixed-Use Retail Center

by Steve Lubetkin
A partnership of The Hampshire Companies and MCB Real Estate has acquired the Drexeline Shopping Center, a 264,417-square-foot, grocery-anchored, mixed-use retail center with office space in the Philadelphia suburb of Drexel Hill, PA.

$21.7 million in acquisition financing was arranged for the partnership, working with the lender, Flushing Bank, to provide permanent financing. Loan proceeds will be used for the acquisition and a secure line of credit for redevelopment and repositioning of the shopping center.

Consisting of five buildings, Drexeline Shopping Center is home to more than 40 retail and office tenants, including grocery-anchor Shop Rite, Ace Hardware, Anthony’s Restaurant, PNC Bank, Drexel Hill Pediatrics Associates and Children’s Dental Health Associates. The mixed-use center is situated on 18.46 acres at 4990-5100 State Road at the signalized intersection of State Road and Route 1. Drexeline Shopping Center is located in Drexel Hill in the western part of Upper Darby Township nine miles west of Center City Philadelphia.

“Drexeline Shopping Center is situated in an infill location with great demographics. The partnership between MCB Real Estate and The Hampshire Companies has an excellent opportunity to refresh, stabilize and reposition the center for the long-term benefit of the local community.”

“Flushing Bank quickly understood the shopping center’s potential and was eager to work with both MCB and The Hampshire Companies to help fulfill their vision for the property."

“Flushing Bank has been a leader in commercial real estate and multi-family lending in the New York Metropolitan area for many years,” says Ron Hartmann, executive vice president for commercial real estate lending at Flushing Bank. “We are excited to expand our lending expertise in support of larger commercial real estate transactions in similar metropolitan markets. Our customers also have the benefit of a robust complement of online banking services, including operating accounts and cash management services.”

Tuesday, April 26, 2016

Daiichi Sankyo Leases 241,000 SF in Basking Ridge, NJ

Daiichi Sankyo, Inc., the U.S. subsidiary of pharmaceutical company Daiichi Sankyo Company Ltd., has leased 241,350 at 211 Mount Airy Rd. in Basking Ridge, NJ.

The company is consolidating several business segments into its new U.S. headquarters beginning in 2017, enabling increased efficiencies and innovation in its existing and emerging therapeutic areas including cardiology, oncology, pain management and other areas. Daiichi Sankyo is comprised of national development functions currently located in Edison and commercial departments located in Parsippany.

"Uniting our New Jersey-based personnel into a single location not only makes us more efficient, but it will also further strengthen collaboration among teams working across the entire life cycle of our medicines," said Glenn Gormley, MD, PhD, chairman of the board and president, Daiichi Sankyo, Inc. "We have enjoyed being a part of the Parsippany and Edison communities and we look forward to what the future holds in our new headquarters."

The firm's new space is located within the three-story, 301,800-square-foot, 4-Star office building that was originally constructed in 1975 and renovated in September 2015. It sits on 52 acres in the Route 78 East submarket of Somerset County, in Bernards Township. The building previously served as the headquarters for Avaya, Inc., which will remain in a portion of the first floor.

Liberty Property Trust unloads 8 parcels

by Jacob Adelman, Inquirer Staff Writer
Liberty Property Trust has sold eight properties in Delaware, Florida and Minnesota for $131.1 million during the first three months of 2016, the company said in a financial report on its website Tuesday.

The six office buildings and two industrial properties account for around 849,000 square feet, the Malvern-based company said.

A joint venture in which Liberty holds a 25 percent interest also sold another seven Virginia office buildings for $146.6 million, it said.

The company plans to sell between $900 million and $1.2 billion worth of suburban properties outside of its core business areas this year, it said.

Wawa Opening A Second Center City Location

by Steve Lubetkin,
Convenience store chain Wawa is opening its largest non-fuel store to date, a 7,000 square-foot location at 1900 Market Street in Center City Philadelphia, and like an earlier location on Broad Street, it will include will include 25 “bar” seats for patron seating, not found in other Wawa locations.

The store is Wawa’s largest non-fuel location to date.

Brandywine Realty Trust owns the building where the new Wawa will be located.

“We are very pleased to be able to work with Wawa’s new store size and format. The activity that these stores generate should be attractive to any landlord in Center City.”

The new location was selected due to the rapid expansion of condos and apartments in the Market Street West corridor.

Wawa hopes to have the new Center City store opened by the end of the year.

Monday, April 25, 2016

Philadelphia REIT Leaders Say They Are ‘Keeping Powder Dry’

by Steve Lubetkin,
Leaders of two of the largest office property REITs in the Philadelphia market say they are “keeping powder dry” and accumulating funds to ensure they have sufficient capital to withstand any downturn in the market over the next 18 to 24 months.

William Hankowsky, president, chairman and CEO of Liberty Property Trust, and Gerald Sweeney, president, CEO, and trustee, Brandywine Realty Trust, participated in a panel, “Where are the capital markets now and where are they going?” at the Urban Land Institute’s Spring Conference, held here last week.

Noting that Liberty had made a decision to change its strategic direction several years ago,  Hankowsky said sales of some $2.5 billion in non-core properties over the last several years, and expected sales between $900 million and $1.2 billion this year were funding its current activities.

“Right now we have about 30 projects under construction, just shy of nine million square feet,” he said. “It’s about $1.6 billion across 24 markets in the United States.” Liberty relies on an $800 line of credit for its financing rather than traditional construction financing, Hankowsky said.

“That line goes up, and we sell some assets, the line comes down, it’s pretty straightforward,” he said. “We never mortgage our assets. To the extent that we have debt on the balance sheet, it’s unsecured corporate debt, which we find to be tremendously flexible.”

Brandywine also has been repositioning out of noncore assets, shedding about $2 billion in properties between 2014 and 2015.

“We actually prefunded a lot of our development pipeline,” said Sweeney. “In the last four quarters, we sold about $1.2 billion of assets and have about $800 million under construction today.” Sweeney says Brandywine has shifted from a concentration in suburban and “near-urban” office properties to one that is now almost exclusively urban, within Philadelphia’s University City, Washington, DC, and Austin, TX.

In its joint venture development projects, Brandywine will use third-party debt, Sweeney says. “Typically we keep the equity funding ratios around 35-45 percent, and then use construction financing with a conversion to a mini-perm, because that tends to fit that model the best,” he says. “That provides us with a higher return on invested equity, and we also look at that in the context of our overall balance sheet.”

Brandywine has a $600 million line of credit with 20 different banks, says Sweeney, adding “and one of our objectives is to never have to draw on that. We haven’t had a balance on that for four or five years, so right now we keep that powder dry to ensure adequate capital capacity.”

The beginning of 2016 was “highly volatile,” says Greta Guggenheim, CEO of TPG Real Estate Finance Trust. “We saw major regulations come in that affected the regulated lenders with the high velocity commercial real estate regulations and Basel III. We saw the mortgage REITs constrained because their prices had dropped and their dividend yields were so high, so those mortgage REITs were out of the market.  Then the conduit lenders pretty much exited the market, they started to withdraw in the fourth quarter of last year. All of this is coinciding with this ‘wall of maturities’ that we’ve been hearing about. So the question is, who’s going to be financing that?”

Guggenheim says currently, she is seeing more requests for construction and land loans from developers who can’t self-fund. “It feels like there’s the beginning of real stress in the system,” she says.

One bank particularly active in construction lending is Bank of the Ozarks, Guggenheim says. “They very much like doing construction loans and they finance nonbank lenders like us. There’s just a few other specialty lenders, but unless you are a major public REIT or institutional owner, it is very difficult to get construction financing.”

Even though Liberty and Brandywine are using little bank financing, they believe banks would be ready and willing to work with them if the need arose.

“One of the things we learned in this business many times over is that memories are short, relationships are long,” says Sweeney. “From our perspective, even if we’re not using a bank today that we’ve used before, we still try to cultivate that relationship. All of our businesses touch a lot of other businesses, so to that extent, we can refer banks to different clients or tenants.”

Brandywine has shrunk balance sheet debt from the high 40 percent range in the 2008 recession to the low 30s today, Sweeney says.

“I think what the financial crisis taught us was leverage precludes opportunities,” he says. “If we had more financial capacity, we could have bought back a lot of our debt at pretty good discounts.”

Hankowsky agrees. “I think the credit markets will be there for real estate in the future for those who have taken care of their balance sheet,” he says.

Connie Moore, most recently president and CEO of BRE Properties, San Francisco, moderated the panel.

Friday, April 22, 2016

Brookfield Raises $9 Billion for Latest Real Estate Fund (Video)

Stitch Fix, Leasing 484K SF Prologis Distribution Center in Bethlehem

San Francisco-based Stitch Fix, an online subscription and personal shopping service, is leasing a 483,990 square foot spec industrial building owned and developed by Prologis in Bethlehem, PA. The property, 4770 Hanoverville Road, occupies 35.25 acres of land. The Garibaldi Group brokered the transaction for Prologis. Terms were not disclosed.

Stitch Fix will use the distribution center to expand its user base along the East Coast.

The single story, single loaded warehouse has 4,250 square feet of office space and 75 dock high doors and 2 grade level positions. Construction was completed in the fourth quarter of 2015.

Thursday, April 21, 2016

PFG Capital Sells Self Storage Portfolio for $35M in Harrisburg

Self Storage Capital Partners has acquired a five-property self storage portfolio in Harrisburg, PA from PFG Capital LP for $35 million. The sales price equates to roughly $13,000 per unit, or about $113 per square foot.

Debt placement team arranged $25.25 million in acquisition funding on behalf of the buyer, placing the loan with a CMBS lender. The financing carries a 10-year, fixed-rate term and a 75 percent LTV.

The Storage Depot-branded portfolio totals 310,257 square feet and encompasses 243 climate-controlled units, 2,271 non climate-controlled units, 87 income-producing surface parking spaces and eight warehouse units totaling 14,054 square feet, in addition to an expansion area totaling 28,880 square feet.

The properties included in the sale are located at: 6325 Allentown Blvd., 32 Milroy Rd., 4401 N. 6th St., 350 S. 7th St., and 115 Cumberland Pky in the Dauphin County submarket of Philadelphia.

"This is the third transaction our team completed in the past 14 months for PFG Capital, totaling $70 million," noted Schontz. "This portfolio is a great fit for Self Storage Capital Partners and is nearly doubling their holdings within the Mid-Atlantic Region.

Wednesday, April 20, 2016

Target's York DC Sold for $60M

Endurance Real Estate Group LLC sold the Target Distribution Center at 325 S. Salem Church Rd. in York, PA to Boston-based private equity firm AEW Capital Management for $60 million, or about $76 per square foot.

The 785,400-square-foot industrial building was constructed in 2007 on 49.7 acres in the York County Industrial submarket of Philadelphia. The unrivaled property features a small office build-out, 64 loading docks with levelators, a 16-foot drive-in, 42-foot clear heights, eight-inch floors, 4,000-amp heavy power with two back-up generators, air lines, 54x43-foot column spacing, 60-foot staging bays, multi-level pick systems, fluorescent lighting, air conditioning, 106 trailer storage positions and 461 car parking spaces, direct highway access and a fenced lot.

The building was renovated and expanded in March 2016. Endurance acquired the building, then totaling just 624,800 square feet, from Schottenstein Property Group in early 2014 for $26 million ($42 psf).

Interview with MGM Growth Prop. CEO (Video)

Tuesday, April 19, 2016

Toll Brothers Forms New Financing JV; Sells Off Some Distressed Holdings

Toll Brothers Inc., a national home builder, through its Gibraltar Capital and Asset Management subsidiary created a venture with an unnamed large institutional investor to provide builders and developers with land banking and joint venture capital. 

The venture will finance builders' and developers' acquisition and development of land and home sites, and will pursue other complementary opportunistic investment strategies. 
The venture, which will be managed by Gibraltar, will have a total of $400 million of funding commitments: 75% from the institutional investor and 25% from Toll Brothers. 
"This exciting new platform will provide much needed acquisition and development capital to third-party residential builders and developers in lot constrained markets across the country,” said Roger A. Brush, Gibraltar's president and managing director. "Many builders require capital beyond the capacity of their balance sheets to fund land acquisition and development.” 
Gibraltar was originally formed in 2010 to acquire distressed real estate loan portfolios from financial institutions. On its own and in partnerships, it has been a successful investor and manager in the acquisition and workout of over $2.2 billion of residential and commercial loan portfolios, a portion of which Gibraltar directly managed. 
In conjunction with this transaction, the institutional investor and Toll Brothers have formed a separate 75/25 joint venture which acquired most of Gibraltar's wholly-owned portfolio of existing assets. 
As of Jan. 31, 2016, Gibraltar had investments in foreclosed real estate and distressed loans of $48.6 million.

Monday, April 18, 2016

Deal Tracker - A Roundup Of Recent Philadelphia Market Transactions

by Steve Lubetkin,

A range of smaller transactions have taken place recently in the Philadelphia and Eastern Pennsylvania markets. Here’s a roundup:

Haines Eastburn Stenton Corp. has sold Ogontz Plaza, at the intersection of 72nd and Ogontz Avenue in Philadelphia, PA, to City View Commercial for $2.9 million. It is 33,000 square foot shopping center located in the West Oak Lane neighborhood.

PHILADELPHIA, PA—CVS Pharmacy in the Holmesburg section of Philadelphia, PA was sold.   The property, originally constructed in 1999, is occupied by CVS under a double net lease.  Before the end of the primary term of the original lease, CVS entered into a lease extension creating a lease term that continues to 2036 with additional options.


PHILADELPHIA, PA—Community Integrated Services, the largest Philadelphia-based employment search agency for people with disabilities, expanded its lease for office space at 441 North 5th Street in Philadelphia, PA.  CIS increased its offices to approximately 8,700 square feet on the first floor of the four-story building.  CIS has been situated in 6,337 square feet of the building since 2006 under an initial lease. Miller Building Partners are the owners of the 80,000 square foot structure, and will extend CIS’ tenancy at 441 North 5th Street to the later years of this decade.  Financial terms were not disclosed.

ERIE, PA—Locally based furniture operator Fred’s Furniture has leased 6,720 square feet at Liberty Center I in Erie, becoming the latest retailer to join the tenant in the 227,000sf shopping center.

SUSQUEHANNA, PA—Maxim Healthcare Services, Inc. leased new office space at 800 Corporate Circle, Susquehanna Twp.

LOWER PAXTON TOWNSHIP, PA—Comprehensive Cleaning Solutions has leased warehouse space at 6130 Jonestown Road, Lower Paxton Twp.

Thursday, April 14, 2016

Two New Leases Signed at One South Broad

Side Car has signed a lease deal for 15,550 square feet in the One South Broad office building at 1 S. Broad St. in Philadelphia, PA. In a separate deal, Zivtech leased 13,430 square feet there.

The 24-story, 463,988-square-foot tower was built in 1932 on half an acre in the Market Street East submarket. The Wired Gold-certified asset was renovated in 1991 to include new exterior facade with 50-foot glass panels, a grand entrance and dramatic lobby on Broad, modernized elevator systems, and the installation of security and life safety systems. Other tenants in the building include Wells Fargo Bank and Tonic Life Communications.

Wednesday, April 13, 2016

Bull case for East coast REITs (Video)

Pennmark Management Acquires Pottstown Mall Property

by Steve Lubetkin,
Pennmark Management Company has acquired Coventry Mall, a 796,869 square-foot property located at 351 W. Schuylkill Road in Pottstown, PA.  Pennmark plans to add dining and entertainment destinations to the property.

“Pennmark’s involvement in the Coventry Mall signals a huge step in the right direction towards helping rejuvenate a mall and community that struggled through the recession. As we have seen in Pennmark’s prior projects, their investment will create jobs and bring a new and exciting energy to North Coventry Township.”

“We appreciate the strong support of our communities and local government agencies,” says Pennmark CFO Robert Sichelstiel. “We believe the robust interest in rural communities is an acknowledgement of our successful focus on opportunistic investments in real estate.”

Focused on the Mid-Atlantic area of the US, Pennmark makes opportunistic investments across retail centers in secondary and tertiary markets.

Coventry Mall consists of an enclosed regional mall, a neighboring strip and three additional outparcel developments. The enclosed mall portion of the property consists of approximately 684,660 square-feet that was originally constructed in 1966 and is anchored by Boscov’s, Kohl’s and Dick’s Sporting Goods. A fourth anchor space was previously occupied by Sears.

“Coventry Mall is the first of several planned investments that are part of its sixth fund, which closed in November 2015 with $60 million."

Pennmark’s five prior funds have been active in most areas of commercial real estate including, retail, office, industrial, flex, the hospitality industry and most recently, conversion of prior uses to first class medical centers in areas such as Beaver Falls, PA, Waynesburg, PA and Sewell, NJ. In commercial real estate, Pennmark has invested in more than three million square feet in areas such as Clearfield, Pennsylvania, Washington Courthouse, Ohio, Lancaster, Pennsylvania, and many more Pennsylvania, New Jersey, New York, and Ohio markets.

“The successful repurposing of a mall location is never easy and requires an owner with vision and a local community willing to work with the property owner,” says Kevin Hennessey, North Coventry Township Manager. “In this case, North Coventry Township and Pennmark are a great fit and we look forward to working with them to rejuvenate the Coventry Mall.”

PREIT Brings Dick's Sporting Goods And Field & Stream To Viewmont Mall In Scranton

by Steve Lubetkin,
DICK’S Sporting Goods and Field & Stream will create a dual store format in PREIT’s Viewmont Mall in Scranton, PA, replacing the existing Sears at the property in 90,000 square feet of space. Sears will close this July, with DICK’s Sporting Goods and Field & Stream scheduled to open for business for the 2017 holiday shopping season.

Over the past several years, Viewmont Mall has been a main focus in PREIT’s strategy to upgrade the quality of its tenant mix within its portfolio. Viewmont’s remerchandising, which include the recent addition of national tenants Ulta, Buffalo Wild Wings, Forever 21 and Yankee Candle, set the stage for the second phase of redevelopment that will include the two stores.

PREIT pointed to the addition of DICK’S Sporting Goods and Field & Stream as evidence of the real estate investment trust’s ability to proactively replace vacant anchors.

“We are pleased to continue the trend of improving our portfolio quality and mitigating our anchor risk,” said PREIT CEO Joseph F. Coradino. “As we strengthen the core of our portfolio, as we’ve done at Viewmont, we can see the path to achieving sales of $500 per square foot is well within our reach.”

Electronic Ink, Inc. Inks Renewal at One South Broad

Electronic Ink, Inc., an enterprise research and design consultancy, has renewed its lease for 15,538 square feet in the One South Broad office building at 1 S. Broad St. in Philadelphia, PA.

The 24-story, 463,988-square-foot tower was built in 1932, with renovations completed in 1991. The tenant's lease includes space on the 19th and 20th floors. Other tenants in the building include Wells Fargo Bank and Tonic Life Communications.

Henkles & McCoy Lease 22,000 SF

Engineering and architectural firm Henkles & McCoy signed a lease for 22,077 square feet at 512 Township Line Rd. in Blue Bell, PA.

The tenant will take occupancy this summer of its new space at the 3 Valley Square office building, which totals 84,906 square feet on 5.5 acres in the Plymouth Meeting / Blue Bell submarket of Montgomery County. The three-story building was constructed in 1985 and renovated in 2008.

Bluejay Mgmt Buys The Crossings At Marshalls Creek for $23.7M

CBL & Associates Properties, Inc. sold The Crossings At Marshalls Creek shopping center at 4541-4551 Milfrod Rd. in East Stroudsburg, PA to Bluejay Management for $23.65 million, or about $222 per square foot.

Built in 2013 in Monroe County, the 106,623-square-foot community center is anchored by regional grocer Price Chopper.

Friday, April 8, 2016

Premier Properties Secures $55M Financing for Multifamily Purchase

Premier Properties has secured $55 million in financing for its $73.84 million purchase of three multifamily properties earlier this year.

Totaling 598,200 square feet and 710 units in Philadelphia, PA, the pet-friendly portfolio offers a mix of one- and two-bedroom apartments. Plans for the financing include a renovation project for interior features, and indoor and outdoor amenities, according to CoStar data.

Elliot Birnbaum of Meridian Capital Partners arranged the financing, which carries a seven-year term and five-year option.

Oregon Avenue Storage Facility Sells For $11 Million

by Steve Lubetkin,
Cleveland-based Amsdell Companies, which owns Compass Self-Storage, has acquired Devon Self Storage, a 104,580-net-rentable-square-foot facility located near downtown Philadelphia, for $11 million, or approximately $105 per rentable square foot.

“This was an interesting transaction in that the buyer and seller had done a trade together on a similar facility in Philadelphia several years ago. In this sale, the buyer gets to enjoy the potential of increased occupancy and the seller got a good price on their conversion.”

Converted to self-storage in 2002, the two-story building consists of 1,142 heated units and 29 recreational vehicle parking spaces. The facility has numerous amenities, including covered drive-through access, 24-hour video surveillance, digital gate access, an institutional- quality leasing office with a retail display, and a two-bedroom apartment for an onsite manager.

The property sits in a densely populated area of Philadelphia with more than 640,000 people within a five-mile radius. It is strategically located on Oregon Avenue with excellent visibility from Interstate 95. The facility also sits adjacent to a number of retail developments anchored by big box tenants such as IKEA and Best Buy.

Centre Square is Up For Sale

Equity Commonwealth has has put Centre Square East and West office towers at 1500 Market St. in Philadelphia, PA up for sale.

The Chicago-based, internally-managed and self-advised real estate investment trust acquired the assets in 2002 for $183.5 million.

Centre Square is one of the largest commercial properties in the Philadelphia CBD, known for its size and glass-domed atrium featuring a "Clothespin" sculpture. The property occupies an entire city block at 15th and Market Streets in the heart of Center City.

The 36-story East Tower and 43-story West Tower includes a galleria, retail shops, restaurants and a commuter concourse. The complex totals roughly 1.85 million square feet in addition to a parking garage that can accommodate 415 cars. The complex was awarded an Energy Star Label and the BOMA 360 Designation in 2015.

Wednesday, April 6, 2016

Philadelphia’s Largest Rental Developments Completed in 2015

by Balazs Szekely
Development dollars have been pouring into Philadelphia, and in late 2014, concerns regarding the market’s ability to absorb new developments were voiced in certain circles. But 2015 results and 2016 predictions for the rental market prove that a growing demand for rental apartments nevertheless exists.

Reporting on the Philadelphia 2016 Outlook conference, Bisnow noted that the last 10 years have seen a 17 percent growth in jobs, primarily in the pharmaceutical and education sectors. In addition, the number of graduates who came to Philly to study, and who remain in the city, has risen from 24 to 67 percent, resulting in growth in the demand for Philadelphia apartments for the young and career-oriented.

The rise in demand for upmarket apartments is confirmed by the latest statistics from Yardi Matrix, with average Philadelphia rentals costing $1,439 per month, while properties completed since 2010 command $2,322 on average. Developments completed in 2015 reflect the latest trends—we focus on the five largest.

  1. 3601 on Market, 363 units

This high-rise development from Southern Land Co. clearly targets young urban professionals, with only 45 of the 363 apartments being two-bedroom units. Apart from the 25 penthouses, the rest of the apartments are studios, one-beds and one-bed alcove apartments. However, the small size of most of the apartments is no indication of low-rent living. On the contrary, hardwood floors, quartz countertops, floor-to-ceiling windows, balconies and amenities such as a pool and fitness center indicate a tenant base that expects a high standard of living. (Image courtesy of the 3601 Market Website)

     2. The Summit, 350 units

The Summit, developed by American Campus Communities, focuses on communal student living, and out of 350 rental units, 228 are two-bedroom units. There are only seven one-bedroom units, with the balance consisting of three- and four-bed apartments for larger student communes. The apartments are fully furnished, and the Academic Success Center with its modern computers and free printing service underlines the focus on student residents. Recreational facilities are aimed at the youth, with a movie theater and outdoor kitchen providing opportunities for in-house relaxation. (Image courtesy of The Summit Website)

     3. 3737 Chestnut, 276 units

A 24-story apartment development from Radnor Property Group, 3737 on Chestnut takes advantage of the need for accommodation suitable for graduates embarking on their careers, as well as those just starting a family, with its one- and two-bedroom apartments. The 276-unit development in downtown Philadelphia offers only 24 parking spaces, reflecting the trend towards no- and low-commute living. Amenities include a fitness center with yoga studio, a game room and rooftop terrace. (Image courtesy of the 3737 Chestnut Facebook Page, Yardi Matrix)

     4. Avenir on Fifteen, 180 units

The retro-style exterior with sandstone-look facade houses 180 rental units with ultra-modern touches, including smart thermostats and stainless steel appliances. Alterra Property Group is also targeting millennials, with studios and one-bedroom apartments representing the majority of units. A variety of amenities, including a fitness center, business center and residents’ lounge, demonstrates a focus on young professionals that is a common thread seen in most new developments in downtown Philly. (Image courtesy of the Avenir on Fifteen Facebook Page)

     5. The Station at Manayunk, 149 units

The trend towards retro-look luxury is emphasized in this complex of five three-story buildings with 149 rental units from J.G. Petrucci Co. The theme is carried through to the interiors with their granite countertops and wood-finish floors. Targeting the same market for one- and two-bedroom apartments as the downtown developments—but with a more suburban location, the pet-friendly community overlooks the Schuylkill River and offers one parking space for each accommodation unit. (Image courtesy of The Station at Manayunk Facebook Page)

This year will see further growth in the Philadelphia rental market, and its resilience is proving attractive to investors and developers.

Time to own real estate stocks? (Video)

Tuesday, April 5, 2016

126K SF Lowe’s Trades For $14M In Hermitage, PA

by Steve Lubetkin,
The sale of a 126,078-square-foot Lowe’s Center in Hermitage, PA was arranged for $14.042 million, or $111 per square foot.

“The property was built-to-suit in 1997 and Lowe’s has extended the lease through 2026. We utilized the networking power of the company’s unique inventory management system to market this asset throughout the United States and Canada. The result was that we were able to connect the Pennsylvania-based seller with an out-of-state real estate investment trust.”

The shopping center is located on nearly 14 acres at 3000 Glimcher Blvd. in Hermitage near a Tractor Supply and a Home Depot. Other national retailers in the area include Giant Eagle, Jo-Ann Fabrics, T.J. Maxx, Kmart, Pet Supplies Plus and Big Lots. Shenango Valley Mall, Shenango Valley Cinemas and Goodwill Industries are also nearby.

Friday, April 1, 2016

Banks vs. real estate (Video)

Commercial Property Sales, Prices Continue Slowdown as Investors Pull Back

Commercial real estate prices and investment volume declined for the second consecutive month in February, despite robust leasing that bolstered net absorption and CRE fundamentals in the first quarter of 2016, according to the new release of CoStar Commercial Repeat-Sale Indices (CCRSI) data.

Both the value-added and equal-weighted U.S. Composite Indices, the broadest measures of aggregate pricing for commercial properties within the CCRSI, declined in February. The value-weighted index, influenced chiefly by larger transactions, declined by 0.6%. The equal-weighted index, comprised of a higher number of smaller deals, declined 0.8%.

Investment sales volume across the commercial property sector also declined from last year's torrid pace. The number of observed repeat-sale trades dropped 12.1% over the last 12 months ending in Feb. 2016, compared with the same period in 2015.

The drop in sales activity was apparent in both the high and low-end sectors as the composite pair count fell 10% in the investment-grade segment of the market and 12.6% in the general commercial segment in the first two months of 2016 compared with the first two months of 2015.

Leasing activity remained strong, with total net absorption of 155.1 million square feet across the office, retail, and industrial markets, contributing to a total of 655.1 million square feet of net absorption for the 12 months ending in March 2016, a 10.7% increase from the same period last year.
Indicating a 'flight to quality' among tenants, investment-grade properties posted the strongest year-over-year absorption growth, increasing 14.8% in the past 12 months compared to last year's period, while the general commercial segment expanded by 1.9%.

The two-month slowdown in CRE price growth suggest that pricing may reach a plateau for the cycle in 2016, according to CoStar's repeat-sale analysis, with trends indicating the two composite indices could level off this year after several years of steady appreciation at a 1% average monthly clip.

Investors have enjoyed a remarkably strong performance in the commercial property markets over the past several years, with limited new construction and the ongoing economic expansion helping to hold vacancies near cyclical lows and spurring rent growth.

The performance is apparent in the CCRSI value-weighted index, which has exceeded its prerecession peak level by nearly 20%, while the equal-weighted index has moved to within 5% of its previous peak.

However, general global economic uncertainty and higher interest rates have begun to put upward pressure on capitalization rates, weighing on price growth this year.