Sunday, March 24, 2019

AmeriBest Home Care Inks Deal in Philadelphia

Health services company AmeriBest Home Care signed a 17,330-square-foot lease at Arts & Crafts Holdings’ Class B office building in Philadelphia.

The 160,000-square-foot, seven-story structure at 990 Spring Garden St. was built in 1920 and renovated in 1998. Spanning an acre, the building is less than five blocks from the Spring Garden subway station.

Amazon Leases Distribution Building in Harleysville, Pennsylvania

Online retailer Amazon leased Patriarch Management’s Class A distribution building in Harleysville, Pennsylvania.

The 98,000-square-foot, single-story structure at 2001 Gehman Road comprises 10 loading docks, one drive-in bay, 40- by 40-foot column spacing and a 28-foot clear ceiling height. Built in 1989, the facility spans 8.3 acres just off of the Northeast Extension of the Pennsylvania Turnpike.

The facility is slated to open in summer 2019.

Saturday, March 23, 2019

PREIT Redeveloping Woodland Mall with New Retailers

by Steve Lubetkin,

PREIT has continued the repositioning of Woodland Mall, further establishing its presence as the premiere retail, dining and entertainment destination in Grand Rapids, the second largest city in Michigan. The makeover includes a 90,000-square-foot retail lease in the former Sears store, and the second location for The Cheesecake Factory restaurant in Michigan.
“With the addition of a fashion department store, the region’s only Apple store and The Cheesecake Factory, this property will take its place as a trophy mall and a top-performer in our portfolio,” says Joseph F. Coradino, CEO of PREIT. “The high-impact redevelopment of Woodland Mall is delivering a diverse and robust tenant mix that aligns with our portfolio quality improvement efforts.”

First-to-portfolio retailer Von Maur, which will occupy 90,000 square feet in the former Sears space, is set to open in the fall. This location will be the high-end department store’s first in the region. Von Maur will be joined by Urban Outfitters and a series of other new-to-portfolio and new-to-market retailers at the mall. REI will open in a 20,000 square-foot outparcel in the second quarter 2019 – bringing the in-demand outdoor clothing, gear and footwear brand to the region.

The project will feature other high-impact tenants, strengthening this market-dominant asset.  As the second largest redevelopment underway in PREIT’s portfolio, Woodland Mall is expected to deliver nearly 20% NOI growth in 2020.
To elevate the dining experience and expand the mall’s trade area, PREIT has signed up The Cheesecake Factory for its second location in Michigan and its only location in more than 50 miles.  The 8,500 square foot restaurant is expected to open late October 2019. The Cheesecake Factory is known around the globe for its extensive menu, generous portions and legendary desserts.

“Since opening our first restaurant in Beverly Hills more than 40 years ago, The Cheesecake Factory has become known for creating delicious, memorable experiences for millions of guests around the country, and we’re so pleased to be opening our first restaurant in Grand Rapids,” says David Overton, founder, chairman and chief executive officer of The Cheesecake Factory. “We look forward to opening in Woodland Mall this fall.”

The Cheesecake Factory will join Black Rock Bar & Grill, an award-winning steakhouse and first-to-market experiential dining offering, with an anticipated opening this summer.

Complementing these high-quality and diverse retailers, this Fall, Woodland Mall will also welcome Tricho Salon, a salon featuring the top hair styles, designs and products as well as makeup and waxing services.  An innovator in the salon business since 2003, Tricho Salons boasts 12 locations across the US.

PREIT has continued to evolve the retail mix at the mall, with new and upgraded store prototypes from key retailers including Altar’d State, Apple and LUSH.  These stores will also be joined by newly renovated prototypes from Williams-Sonoma and Bath & Body Works, which will relocate their stores to the newly-created Von Maur wing.

During the 2018 holiday shopping season, Woodland Mall experienced strong growth in foot traffic, which is expected to be enhanced with these new additions.

Thursday, March 21, 2019

National Retail Properties Maintains Lengthy Dividend Increase Streak (Video)

US Leasing May Reach Highest Point in a Decade

U.S. office leasing is surging, and it may keep rising for at least the next year.

Expansions by technology giants such as Amazon, Google and Facebook and financial firms such as Deutsche Financial Services pushed the national office vacancy rate to single digits last year for the first time since the early 2000s, falling to 9.8 percent in the final quarter of 2018 from 10.1 percent for the same time a year earlier, according to a CoStar analysis.

Total U.S. leasing volume for 2018 will probably top 400 million square feet for the fifth straight year when analysts finalize the tally, probably setting a new high for leasing in the past decade, exceeding 450 million square feet, CoStar analysts said. New York led all markets with 42 million square feet of leasing last year, followed by Los Angeles, Washington, Dallas, and Chicago.

“Given this level of leasing activity, we’re pretty confident that demand will remain pretty strong over the next year or so,” said CoStar Managing Director and Senior Economist Robert Calhoun. “Our forecast calls for vacancies to continue to fall into 2019, despite some pretty significant supply on the way.”

Keeping the market in balance is the relatively light amount of overall office construction relative to the past 15 years, helped by something of a paradox.

"Markets like New York, San Francisco, and Boston are seeing record levels of new construction, perennially oversupplied markets like Atlanta, Dallas, Houston, and Phoenix have seen relatively little new supply," said CoStar Managing Consultant Paul Leonard.

Construction of mega projects like the $25 billion Hudson Yards in New York City, 61-story Salesforce Tower in San Francisco and the redevelopment of Boston’s Seaport District have added millions of square feet and challenged the traditional notion that these gateway markets are “supply constrained.”

Strong leasing and low vacancies haven’t translated into impressive rent growth for the past several years, however. Rents grew just under 2 percent in 2018, the smallest amount since 2011 and well below the decade’s peak rate of 6 percent in 2015. CoStar expects rent growth to slow further, especially in the largest cities, with rents leveling out in 2021 as the economy sheds jobs.

At Home Décor Store Leases 95K SF at Former Kmart in Willow Grove, PA

by Steve Lubetkin,
At Home, a home décor superstore, has signed a long-term lease for the former Kmart at 2620 W. Moreland Road, in Willow Grove, PA. TLM Realty brokered the lease for the property owner.
The 94,500 square foot property is situated at the foot of Willow Grove Mall, a three-story, 1.2 million square foot enclosed mall. Michael Oestreich, senior vice president, TLM, spearheaded lease negotiations on behalf of ownership.

 At Home recently commenced construction of its store and plans a summer 2019 opening.
There is currently another outparcel piece being marketing with W. Moreland Road frontage for ground lease that can support up to 8,000 square feet of retail or restaurant space.

Wednesday, March 20, 2019

How soon before my lease expires should I start looking for office space? (Video)

How can a seller do a complete 1031 exchange and still pull out some cash? (Video)

New Retail Leases Signed in the Lehigh and Blue Bell Area

by Steve Lubetkin,
Three lease signings we arranged at Trexlertown Plaza, 7150 Hamilton Boulevard, and the Trexler Mall, 6900 Hamilton Boulevard, Trexlertown, PA, and two leases at Centre Square Commons, 936 Dekalb Pike, Blue Bell, PA.

The landlord is Cedar Realty Trust.

The Trexlertown leases were:

  • Mavis Tire Supply will occupy an 8,546-square-foot space and is expected to open this year. Aside from tire services, Mavis Tire Supply offers brakes, alignments, suspension, shocks, struts, oil changes, battery replacement, and exhaust work.
  • Active Learning Centers will take a 7,800-square-foot space and open this year. Trexlertown Plaza is Active Learning Centers’ fifth location in the region. From infant child care to certified kindergarten, Active Learning Centers offers multiple programs and camps to help children succeed.
  • Steel City Gyro signed a lease for 2,400 square feet and is currently open to the public. The family-owned restaurant brings Mediterranean food to the shopping center and the greater Trexlertown area with a full lunch and dinner menu.

Trexlertown Plaza and the Trexler Mall are adjacent centers located right off of Hamilton Boulevard and Trexlertown Road, a major thoroughfare connecting Routes 222 and 100. The shopping centers are adjacent to Air Products’ campus, the Lehigh Valley’s largest employer. Other retailers include Hobby Lobby, Giant, Marshalls, HomeGoods, and Burlington.

  • Chipotle, which opened a 2,296-square-foot-space at Centre Square Commons.
  • Tough Mudder Bootcampwill occupy a 3,800-square-foot-space for high-intensity team training (HITT) classes designed to challenge and train all fitness levels.

Centre Square Commons also is home to Aldi, Anthony’s Coal Fired Pizza, Starbucks, and Zoës Kitchen. It serves a daytime population of approximately 179,453 people.

Tuesday, March 19, 2019

Amboy Bank Lends $51 Million to Ex-NFL Player for New Jersey Project

Kevin Johnson, a former NFL player who is now a New Jersey real estate developer, closed on roughly $51 million in construction loans from Amboy Bank to build retail and medical offices in Burlington County.

The bank, based in Old Bridge, New Jersey, supplied loans to K Johnson Enterprises, the firm founded and led by Johnson, who plans more than 400,000 square feet of space. He is one of several former professional athletes who are involved in commercial real estate development in the Garden State.

Retired basketball great Shaquille O’Neal, a native of Newark, in partnership with Boraie Development has apartment projects in his hometown: a 33-story, 370-unit complex at 777 McCarter Highway and a 22-story, 169-unit apartment building at 1 Rector St. And ex-MLB All-Star Maurice "Mo" Vaughn, through his company Omni America, has purchased and is renovating two low-income housing complexes in Newark.

Amboy Bank's latest loan is the third in a sequence that the bank has provided K Johnson. It previously provided $10 million to finance the company's 120,000-square-foot fitness center in Bordentown, a facility called Team 85 Fitness and Wellness. It is located at 8500 K. Johnson Blvd.

The real estate firm received an additional loan from Amboy Bank totaling more than $40 million to develop medical buildings at the Team 85 campus in Bordentown, according to the bank.

“Throughout our 130-year history as an independent bank, we have never lost sight of the fact that partnering with inventive individuals based in our own local communities boosts our success and creates a positive impact across New Jersey,” Amboy Bank Chief Executive Gregory Scharpf said in a statement, “Having worked with Kevin since 2014, he has clearly demonstrated his commitment to his clients and his community, and we are pleased to provide support in this next venture.”

Friday, March 15, 2019

First Industrial Realty Trust’s 2018 Year-End Occupancy Hit Record High of 98.5% (Video)

Cambridge Landmark Snaps Up Former Sheraton Downtown Philadelphia

Newington, Connecticut-based Cambridge Landmark purchased the former 757-room Sheraton Downtown Philadelphia hotel from The Blackstone Group for an undisclosed price.

With 58,000 square feet of event space, the hotel at 201 N. 17th St. currently operates as the Philadelphia 201 Hotel under the Marriott flagship. The 30-story tower spans north of an acre in Philadelphia’s Center City district.

Cambridge Landmark’s Managing Partner Pedro Miranda said in a statement that the "acquisition demonstrates Cambridge Landmark's focus on ownership-driven hotel investment with assets in the largest U.S. domestic markets."

The hotel will regain the Sheraton brand upon completion of a $28 million renovation, which includes upgrading the rooms, creating new suites, enhancing the lobby and meeting space and adding a new Sheraton Club Lounge, according to Cambridge Landmark.

The seller, headquartered in New York, originally purchased the hotel as part of a portfolio in December 2010, CoStar data shows.

Global Co-living Brand Selects Northern Liberties for First Philadelphia Location

Global co-living brand Quarters confirmed plans to open its first Philadelphia location in Northern Liberties. The former industrial area fronting the Delaware River between Girard Avenue and Callowhill Street has become a popular neighborhood known to locals as 'NoLibs.'

Plans for the six-story co-living apartment building at 1150 N. American St. call for 186 units across 74 shared two- and four-bedroom flats, and 60,000 square feet of retail space.

Quarters’ parent company, Medici Living Group, recently raised $300 million for its U.S. expansion and approximately $1.1 billion for its European expansion. According to the firm’s press release, the two raises are set to bring 1,800 new units to the U.S. market over the next three years, and 6,000 additional units to the European market by 2024.

Medici Living Group’s Founder and Chief Executive Gunther Schmidt said in a statement that Philadelphia was among the first cities the firm looked at when planning its U.S. expansion.

Spain Property Group and Vaughan Buckley Construction broke ground on the building in Dec. 2018, and the project is slated to deliver in the fourth quarter of 2019.

Quarters also confirmed plans to open a new location in Brooklyn, which is set to come online in 2020.

AREP Rebrands Conshohocken Office Tower as 161 Washington Street, Plans Revitalization

by Steve Lubetkin
Washington, DC-based American Real Estate Partners, which last year re-entered the Philadelphia market with the acquisition of 1600 Market Street in Center City, is launching a comprehensive revitalization and rebranding of 161 Washington Street, formerly known as Eight Tower Bridge, Conshohocken, PA, about 15 miles west of the city. AREP acquired the property in October 2018 from Oliver Tyrone Pulver Corp., a private commercial real estate development firm, for $108 million, according to Real Capital Analytics, a proprietary database service that tracks commercial real estate transactions.
161 Washington Street is a 16-story, 347,000 square-foot class-A boutique office building designed by world-renowned architect Skidmore, Owings & Merrill. The trophy tower is the tallest office building in Suburban Philadelphia, boasting superior views overlooking the Schuylkill River and ideally situated for easy access to the Main Line suburbs and Center City Philadelphia.

“161 Washington is already the premier office destination on the Main Line and this year we are taking it to the next level with a curated set of services and amenities that respond directly to the top priorities of tenants in the premier suburban Philadelphia sub-market,” says Paul Schulman, principal and chief operating officer at AREP. “For AREP, these investments in 161 Washington—and the recent acquisition of 1600 Market—reflect our ambition for growth in the Philadelphia market and across the mid-Atlantic region, with much more to come.”
AREP plans a series of major internal improvements to transform the overall building experience, including: a fully redesigned lobby complete with green wall; a new, 3rd floor amenity center with food service, conference rooms, casual work space and social lounge; and an overhaul of the 2nd floor gym. The work is expected to be complete in 2019.

The revitalization of 161 Washington Street is the latest step in AREP’s re-entry into the Philadelphia market, coming on the heels of its acquisition of 1600 Market Street in Center City in 2018. The company previously owned Two Liberty Place in Center City and intends to continue expanding its footprint in the Philadelphia area to provide unrivaled customer service and tenant experiences across more outstanding properties.

The property enhancements will position the building as a best-in-class asset in the thriving Conshohocken submarket, which already offers an abundance of features to employers seeking quality and convenience. 161 Washington’s location is directly adjacent to the SEPTA Regional Rail line – with station renovations planned this year – as well as the key intersection of Interstates 76 and 476, offering swift connections to Center City Philadelphia, Philadelphia International Airport, and the affluent Main Line suburbs. Additionally, the property is set in the heart of one of suburban Philadelphia’s most sought-after neighborhoods, offering an abundance of retail amenities easily within walking distance, as well as a variety of premier residential communities and hotels.
The renovation is being designed by Meyer, a national architecture and interior design firm based in Ardmore, PA.
AREP and Partners Group acquired 161 Washington Street as equal partners in October 2018.

Holman Automotive Opens 145K SF Audi Fort Washington Dealership

by Steve Lubetkin
Holman Automotive, one of the largest privately-owned dealership groups in the United States, has opened Audi Fort Washington, a state-of-the-art 145,000 square-foot dealership at 428 Pennsylvania Avenue in Fort Washington, PA.
The facility features the all-new Audi Terminal Concept, a sophisticated contemporary showroom design that delivers a lifestyle-focused experience representative of the Holman values and the premier luxury of the Audi brand to consumers throughout the region.

“Our new Audi dealership in Fort Washington is absolutely stunning and we look forward to continuing to provide an exceptional sales and service experience for Audi customers throughout the area at this world-class facility,” says Brian Bates, president and CEO, Holman Consumer Services. “Customers can expect the same personalized attention and knowledgeable expertise that have long been hallmarks of the Holman Automotive family of dealerships in an innovative, visually welcoming environment that embodies Audi’s legendary styling.”
The new dealership features four levels of new and pre-owned vehicles, a first-class customer lounge with complimentary Wi-Fi, indoor and outdoor parking, and two Quattro Cafés serving premium beverages onsite. The service facility includes 30 service bays with three heated, indoor service lanes and private workstations with charging docks. The dealership is also a designated Audi Sport dealer, featuring certified product specialists and a unique showroom experience that highlights iconic models such as the Audi R8 and Audi RS 5 Coupe.

Holman Automotive is transitioning its Audi dealership operations from its Willow Grove location to the new Audi Fort Washington facility.

Lantern Portfolio Makes Record With Its $891M Trade

by Erika Morphy by
Recently Lonestar sold its Lantern Portfolio to the locally-based Morgan Properties for $890.5 million. The portfolio has 10 assets and 4,130 units that span Philadelphia and Northern Virginia, making it the largest multifamily transaction in Philadelphia to date, according to Morgan Properties.
The transaction also makes Morgan Properties the largest multifamily owner in Pennsylvania, according to Jonathan Morgan, president of the company, bringing its Pennsylvania portfolio to 9,300 units and its total unit count to 50,000 units. "The Lantern Portfolio transaction solidifies the geographic concentration in two of our core markets of suburban Philly and Northern Virginia,” he says in a prepared statement.

Morgan Properties plans to invest an additional $20 million into renovations and amenity upgrades. It financed the acquisition using internal sources of equity, and by securing long-term, fixed-rate financing, according to principal Jason Morgan.
The company has reached the size that it has through multiple large portfolio acquisitions including the Mark Center Portfolio, a $509 million acquisition in Alexandria, Va., and Chesterfield Apartments and Curren Terrace Apartments, a combined $71 million portfolio acquisition in suburban Philadelphia. Since 2012, Morgan Properties has made over $5 billion in acquisitions for a total of more than 30,000 units, according to Morgan.

The Lantern Portfolio’s Philadelphia assets consist of seven apartment communities totaling 2,346 units. Stonegate at Devon and Villas at Bryn Mawr, both situated in the Main Line neighborhoods of Devon and Bryn Mawr, total 947 units. The remaining five assets, totaling 1,399 units, are located in Conshohocken, West Chester, Downingtown, Jeffersonville, and Bensalem in suburban Philadelphia.

The Northern Virginia sub-portfolio consists of three assets totaling 1,784 units. Mount Vernon Square in Alexandria represents the largest apartment community in the Lantern portfolio, with 1,387 units. East Meadows and Village of Potomac Falls round out the Northern Virginia sub-portfolio. The properties, located in Fairfax and Sterling, total a combined 397 units.

Wednesday, March 13, 2019

Lulus Signs Large Industrial Lease in Palmer Township, PA

Online retailer Lulus Fashion Lounge leased The Carson Companies’ 258,232-square-foot industrial building in Palmer Township, Pennsylvania.

The single-story structure at 2505 Hollo Road comprises 41 loading docks, two drive-in bays and a 36-foot clear ceiling height. Developed by the owner in 2019, the Class A facility is less than 12 miles from Lehigh Valley International Airport.

Headquartered in Newport Beach, California, The Carson Companies’ current portfolio of properties owned exceeds 14 million square feet, according to its website.

First Commonwealth Federal Credit Union Reveals Plans for New HQ in Allentown

First Commonwealth Federal Credit Union plans to break ground this spring on its new corporate headquarters at Trexler Business Center in Allentown, Pennsylvania.

The credit union revealed plans to build a new 81,000-square-foot, mixed-use building and an adjacent 5,000-square-foot office facility at 6126 Hamilton Boulevard.

Boyle Construction will serve as the construction manager on the project, and the facilities are slated to be completed by spring 2020.

"FCFCU wanted all the benefits it typically seeks for a prime retail location for its branches in this office requirement. As soon as FCFCU gave it the greenlight this project became an incredible example of how the client, township and seller came together to make this happen very quickly," Zerfass said in a statement.

FCFCU has more than 61,000 members and assets of roughly $721.5 million, according to the National Credit Union Administration.

NJ Offers $500,000 in Grants to Towns For Best Opportunity Zone 'Game Plans'

New Jersey, looking to jump start municipalities into actively encouraging development in their federal Opportunity Zones, will be offering $500,000 in grants to towns that come up with the best strategies, Gov. Phil Murphy said Monday.

Murphy unveiled the grant plan at an Opportunity Zone Summit that was held by Choose New Jersey, a privately funded economic development group, in New Brunswick, New Jersey. State economic officials have held several such gatherings in order to educate local officials about Opportunity Zones and help them "put their best foot forward as they compete for investment dollars on a national scale,” according to the governor.

"God knows there's lots of communities that want to develop these tracts," Murphy said. "And God knows there's a lot of capital. But getting that right ... is really going to be important."

The Opportunity Zone program was established as part of the Tax Cuts and Jobs Act of 2017. The goal is to drive long-term private capital investment in designated low-income urban and rural communities by providing investors -- including real estate developers -- tax breaks on capital gains. The Garden State has 169 opportunity zones in 75 municipalities.

“The opportunity to defer capital gains or ultimately expunge them completely if you hold them long enough is a big deal," Murphy said at the summit. "I am sure that the investors who are here today, they are here are because of that. This is a huge opportunity.”

The governor then announced the state is starting "a competitive grant process" that would award $100,000 each to the five communities, for a total of $500,000, that "come up with the best game plan for how they would tackle their opportunity zones." New Jersey is a home rule state, with each of its more than 500 municipalities in charge of approving development plans within their borders -- something that sparks complaints from some real estate firms, who say they are hampered by the delays caused by the red tape and dealing with local officials. The potential of getting a $100,000 grant is meant to encourage the 75 towns and cities with opportunity zones to focus on laying out possible projects, and outlining their priorities, for development in them, according to Murphy.

"I think it will have the added benefit of the communities thinking earlier than they might otherwise would have on, 'How do you see this? Is this an affordable housing opportunity? Is it commercial retail? Is it businesses that we want to attract?'" Murphy said. "Or is it some sophisticated plan to stack incentives, the federal piece with the various state pieces that we’re generating for the next generation?"

Later Monday, the state Economic Development Authority issued a press release referencing the plan Murphy had mentioned, which it called the New Jersey Opportunity Zone Challenge. The EDA said it will issue a request-for-proposals this spring.

The summit attracted more than 300 business leaders, state officials, real estate developers, investors and the mayors of several cities, including Perth Amboy Mayor Wilda Diaz. Opportunity Zones make up 51 percent of her city, according to Diaz, who said she plans to compete for one of the $100,000 grants.

Plainfield Mayor Adrian Mapp was a speaker at one of the summit's panels, and he said municipalities "can make a difference by streamlining the process" and expediting approvals for opportunity zone projects.

"We must be willing and able to work with investors," Mapp said.

At the summit Murphy mentioned that earlier in the day he had been in South Amboy, New Jersey, to talk about his proposed brownfields-redevelopment tax credit program, which is one prong of his overall plan for incentive reform. The state's current brownfields program is co-administered by the state EDA, the Department of Environmental Protection and the Division of Taxation, with $14.8 million appropriated for a brownfield-site reimbursement fund for fiscal 2019.

"Under Murphy’s proposed legislation, appropriated funds would be phased out and replaced by competitive grant opportunities administered by the EDA and DEP," according to a statement from the governor's office.

CanAm Capital Partners Closes Opportunity Zone Investment in #Philadelphia

by Steve Lubetkin
CanAm Capital Partners, an affiliate of CanAm Enterprises, has closed its third private equity investment deal, a $4 million investment in the development of The Civic, a mixed-use property in Philadelphia with a project budget of approximately $26.8 million.
“Many of CanAm’s investors have been looking for new investment opportunities after their EB-5 investments are repaid,” says John Reid, director of project development at CanAm Capital Partners. “We are excited to build on our 30 years of experience and offer unique investment opportunities that produce highly attractive risk-adjusted returns to our investors beyond the EB-5 program.”

CACP’s investors may be eligible for preferential tax treatment as The Civic is in an Opportunity Zone within central Philadelphia. Developed, owned and managed by Philadelphia real estate development veteran MMPartners, The Civic will embrace the original fabric of both the building and neighborhood while providing extraordinary amenities, convenient access to transportation and stylish design that all caters to the needs of millennials.
The Civic investment is offered together with CanAm’s long-time partner, the Philadelphia Industrial Development Corporation, Philadelphia’s city-wide economic development corporation, which has 60 years of experience. CanAm has partnered with PIDC in the EB-5 program for 16 years.

With more has more than 30 years of experience, CanAm Enterprises has raised and invested more than $2.8 billion since inception.

According to CanAm’s website, the EB-5 Visa is an employment-based immigrant visa category that provides permanent resident status in the United States. Foreign nationals who make an investment of $500,000 or $1 million in a new commercial enterprise in a designated Targeted Employment Area that creates at least ten new jobs for US workers can obtain residency in the US. Once the job creation requirement is met, the conditions are removed and investors obtain unconditional permanent residency.
In response to demand from investors seeking new investment opportunities with attractive risk-adjusted returns, CanAm established CanAm Capital Partners to provide select private investment opportunities focused on geographies and assets where CanAm has informational, operational and other competitive advantages.

CACP makes project-level capital investments with an average 3-5 year holding period and generally target a +10% annual internal rate of return combined with cash distribution upon stabilization.

Cambridge Landmark Acquires Former Sheraton Philadelphia

by Steve Lubetkin,
Cambridge Landmark, a hotel-focused private equity company, acquired the former Sheraton Downtown Philadelphia, a 757-room full service hotel located in Center City and two blocks from the Pennsylvania Convention Center from The Blackstone Group. Financial terms were not disclosed, but according to Real Capital Analytics, a proprietary research database that tracks commercial real estate  transactions, Blackstone has owned the property since 2011.

The hotel currently operates as the Philadelphia 201 Hotel under the Marriott reservation system. With the closing of this transaction, a new franchise agreement has been signed with Marriott International for the property to regain the Sheraton brand upon completion of a $28-million renovation focused on upgrading the rooms, creating new suites, enhancing the lobby and meeting space, and adding a new Sheraton Club Lounge.

“This acquisition demonstrates Cambridge Landmark’s focus on ownership-driven hotel investment with assets in the largest US domestic markets,” says Pedro Miranda, managing partner. “This property holds great potential, with its premier location in one of the most vibrant cities in the United States. With the forthcoming renovations and refurbishments, we expect this hotel to drive long-term value, and be an integral part of the expanding Cambridge Landmark portfolio.”
Located in the Center City district, the Philadelphia 201 Hotel is the second largest hotel in Philadelphia. It is situated just two blocks from the Pennsylvania Convention Center, and walking distance from Love Park, the Franklin Institute and the iconic Philadelphia Museum of Art. The property features 58,000 square feet of event space, an indoor swimming pool, fitness center, and a restaurant and lounge.

Friday, March 8, 2019

Multifamily and Housing from NAR/Deloitte/Situs RERC's Expectations and Market Realities Outlook (Video)

Should I deal directly with the Landlord or Use Tenant Representative (Video)

27-Unit Multi Family Trade in Secane, PA

by Steve Lubetkin,
 Ashland Terrace was sold. It is a 27-unit apartment property comprised of 6 one-bedroom units and 21 two-bedroom units, at 711 Ashland Avenue, Secane, PA, an unincorporated community in Ridley Township and Upper Darby Township, Delaware County. The well-maintained property sold for $1.85 million.

The long-term owner had made several significant upgrades including substantial roof work, replacing boilers, and updated kitchens over the years. The buyer, a regional company, was secured and represented by the Philadelphia-based investment sales team as well.
“The property was only on the market for 30 days and generated 15 tours. The response we received from the market is reflective of the continued demand for multifamily properties, especially properties with upside in rents, such as Ashland Terrace.”

REIT Market Minute: March 2019 (Video)

Retail Forecast & Review with Hines (Video)

Office, Industrial, & Retail from NAR/Deloitte/Situs RERC's Expectations and Market Realities (Video)

Thursday, March 7, 2019

#Philadelphia Among Top US Markets for Life Sciences Sector

by Steve Lubetkin,
The US life sciences industry and the real estate that it occupies have ridden a wave of momentum into this year that has positioned various industry hubs—including Philadelphia—for continued growth.
Numerous indicators point to robust expansion for the life sciences industry, including the 86 percent increase in venture-capital funding for US life sciences companies to $15.8 billion for the year ended in September from the previous year. Additionally, life sciences lab space under construction in the industry’s five largest US markets expanded by 101 percent last year to six million square feet.

That momentum has several markets rising in the ranking of the top established and emerging life sciences hubs.
In Philadelphia, for example, funding surged in 2018 to its highest level since 2007, which will have a significant impact on local life sciences employment. Much of that momentum exists in Downtown Philadelphia, including the recently completed 3675 Market Street, which is anchored by the region’s first location of the Cambridge Innovation Center. Other success stories were expansions by Spark Therapeutics at Brandywine’s Schuylkill Yards development and WuXi AppTec at the Navy Yard.

“Philadelphia is undoubtedly one of the nation’s key clusters fueling the life sciences revolution,” says Ian Anderson. At the same time, the region has been lagging some of the exponential growth witnessed in hubs like Cambridge. Nonetheless, 2018 was a year of huge progress that should translate into accelerating future growth.”

The report focuses on the human life-sciences industry, which encompasses manufacturing, testing and research-and-development work in the fields of biotechnology, pharmaceuticals and medical devices.

It was analyzed and ranked the top established life sciences hubs by weighing four main criteria for each market: number of scientists in key industry categories, industry funding for local life sciences companies, size and long-term growth of their life sciences workforce, and their inventory of industry lab space.

Wednesday, March 6, 2019

Capital Funding Group Sells Philadelphia Metropolitan Area Apartment Complexes

Baltimore-based Capital Funding Group sold two apartment complexes totaling 262 units in the Philadelphia metropolitan area to ReNew REIT for an undisclosed price.

Keystone Villa at Fleetwood at 501 Hoch Road in Blandon spans 5.1 acres. Built in 2011, the 4-Star property comprises a mix of studio, one- and two-bedroom units ranging from 430 to 786 square feet in a three-story building.

The Keystone Villa at Ephrata complex at 100 N. State St. in Ephrata comprises one-bedroom units averaging 733 square feet in two, four-story buildings. The garden-style community was developed in 2014 on 4.5 acres.

Ocwen (formerly DiTech) closing Fort Washington facility

Lost another one to Ditech!

By Jeff Blumenthal  – Reporter, Philadelphia Business Journal
As part of a cost-cutting plan to help the company return to profitability after five consecutive annual losses, Ocwen Corp. said it will close its Fort Washington office, with the 125 employees working there subject to either layoffs or transferring to a South Jersey facility.

While a spokesman did not offer a specific number, he said some of the employees working at 1100 Virginia Drive will be laid off and others will transfer to the Mount Laurel, N.J. office the mortgage company added last year via the $360 million acquisition of competitor PHH Corp.

Spokesman Dico Akseraylian said the Fort Washington site will close in September and all impacted employees will be notified by March 15. Ocwen employees were told of the pending changes last week. Impacted employees will receive 60 days notice, a severance package and career transition assistance. Akseraylian said exit dates will vary through the course of the year.

Akseraylian said Owcen leases over 77,000 square feet there but declined to disclose future plans for the site.
Full story:

Highlights from Expectations and Market Realities Outlook Report 2019 (Video)

Black Bear Sports Group Buys Warminster Hockey Rink

by Steve Lubetkin,
Black Bear Sports Group has acquired the Revolution Ice Gardens, 1621 Mearns Rd., Warminster, PA. The arena houses two NHL-size ice sheets and is home to the Philadelphia Revolution Hockey Club, the Lady Patriots Hockey Club and various local high schools. BBSG was founded by Murry Gunty in 2015.
“The Revolution Ice Gardens is the hockey hub of North Philadelphia and Bucks County,” says Gunty. “Under the direction of Chris Kanaly, this rink has produced world-class hockey players like NHL draft pick Cayden Primeau. We are excited to help Chris grow the programs and in particular, to now be able to offer local youth players at the Revolution Ice Gardens a path to college hockey through our network of USHL, NAHL and EHL junior hockey teams.”

“The arena is the 11th ice rink (20 sheets of ice) purchased by BBSG along with its three junior hockey teams,” says Ryan Scott, vice president of BBSG. “Revolution is a great complement to our existing rinks in Pennsylvania and New Jersey and we look forward to expanding our operations into Eastern PA.”
“Black Bear Sports Group owns junior hockey teams in the nation’s top leagues scouted by the NCAA and NHL,” says Chris Kanaly, general manager of the Revolution Elite Youth Hockey Club. “The new affiliation between Revolution Youth Elite Hockey and Black Bear Sports Group creates a unique opportunity for our players to climb the ladder of development through junior hockey into college and pro that no other club in the city can offer.”

Tuesday, March 5, 2019

Net Lease Tenant Preference in Philly Swings to Convenience Stores, Gas Stations #STNL - Podcast

Pennsylvania's I-78/I-81 Corridor Gets 11 of Largest Industrial Deals in 2018

by Steve Lubetkin,
E-commerce and logistics companies claimed a larger share of the 100 largest industrial-and-logistics leases signed in 2018, and the latest report on industrial leasing activity says Pennsylvania’s I-78/I-81 corridor had 11 of the largest deals, totaling more than 11.8 million square feet.

“The Pennsylvania I-78/I-81 corridor has been a beneficiary of the surging demand for e-commerce and logistics space. In 2018, our region was one of the leaders in the US in large format leases signed by e-commerce companies. To accommodate the demand, several parcel hubs and last mile delivery facilities came online along the corridor. We expect this trend to continue as consumers shift to e-commerce and demand immediate delivery”.

Last year’s industrial-leasing activity in the US found that 61 of the largest 100 leases were signed by e-commerce companies and logistics firms for a total of 61.5 million square feet vs. 52 leases last year for 43.2 million square feet.

The two are related in that many logistics companies, specifically third-party logistics providers, handle e-commerce distribution for their clients.
Regardless of industry, the largest industrial leases got even larger last year. The largest 100 from last year – spanning uses such as e-commerce, logistics, manufacturing, food and beverage, technology and retailing – totaled 19 percent more space than the largest of 2017.

Last year’s largest industrial leases were spread across 32 markets, with many clustering in leading logistics hubs.

Friday, March 1, 2019

Winning Busines 2019 - Time Kills Deals (Video)

Current Trends Impacting Office Property Values via Morningstar Credit Ratings (Video)

Jefferson Group Delivers Mount Laurel, NJ, Luxury MF Near Philadelphia

by Steve Lubetkin,
McLean, VA-based Jefferson Apartment Group, a multifamily developer and operator specializing in premier apartment communities throughout the East Coast, says the first phase of Jefferson Mount Laurel is completed, with residents moving into the new community in Mount Laurel, NJ, about 15 miles from Philadelphia, PA.
The 490-unit apartment community is a joint venture with Northwestern Mutual, and JAG is providing the property management services. The project is the second in a series of recent deliveries from JAG in Greater Philadelphia.

“We are thrilled to announce the opening of another development project in the Philadelphia market as we continue to grow our presence here,” says Drew Chapman, senior vice president and development partner at Jefferson Apartment Group. “We see enormous potential in the Philadelphia market having successfully opened Maybrook in late 2017, and now Jefferson Mount Laurel, with another project in Exton, PA, delivering within a year that will bring our Greater Philadelphia managed portfolio to over 1,600 units by year-end. So to say it will be an exciting year for us in the Philly market would be an understatement.”
The Mount Laurel apartments range from one-bedroom up to two-bedroom plus den layouts. The garden style buildings offer controlled access entry with an elevator in most buildings. Residences feature nine-foot ceilings, chef-style kitchens with stainless steel appliances and quartz countertops, plank flooring, full-size washer and dryer, and private balconies and patios. Additional, optional offerings include private entrances and garages with remote control access.

Set on a tree-lined 50-acre parcel, Jefferson Mount Laurel offers scenic wooded views and more than 7,000 square feet of best in class amenity space typical of JAG-quality, class A apartment living. The community boasts a fitness center, resort-style swimming pool, sports court, a putting green, playground, dog park, pet spa, gardening plots, and over a mile of walking trails on-site.

Other features include an outdoor living area with fire pit, grilling stations and movie screen, a courtyard with fountain and lawn games, a resident lounge featuring a stunning double-sided fireplace, billiards, foosball, and shuffleboard, and charging stations for electric vehicles.

What are (STNL) Single Tenant Net Lease Building? (Video)

Phase One of The Hamilton, 10-Story, 279 Unit Mixed Use Tower, Opens in Logan Square

by Steve Lubetkin
The Harman Group, which specializes in structural engineering and parking planning and design, says phase one of The Hamilton, a 10-story, 279-unit mixed-use residential tower on the Community College of Philadelphia’s campus in Logan Square, has opened.
The Harman Group provided structural engineering and parking planning and design services for the tower, which was developed by Radnor Property Group in partnership with CCP and designed by MY Architecture.

The Hamilton was built on top of the site’s original foundation as well as a portion of its existing garage structure with cold-formed load-bearing construction and hollow core plank. The project also utilized existing assets to create an underground parking garage. Geared towards graduate students attending nearby Philadelphia schools and young professionals, units range from about 300-950 square feet. The development features ample resident amenities, ground floor retail, and a community courtyard.
“The Harman Group’s extensive experience with overbuilds allowed for a more practical use of this site,” says Al Meyer, senior project engineer for The Harman Group. “By threading a new lateral system through the existing garage, we were able to minimize Radnor Property Group’s costs, which translated to lower rents for the property.”

“The Hamilton is a modern, mixed-use property that meets the needs of the college and the surrounding neighborhood,” says Dave Yeager, president of Radnor Property Group. “Radnor Property Group is proud to serve the community at large by sustainably transforming this formerly vacant building into a vibrant, amenity-driven hub.”

Construction on phase two, a 16-story, 210-unit mixed-use residential tower, is expected to start later this year.

Thursday, February 28, 2019

Site Selection to Grow Your Brand (Video) Pt2

Comcast IP Services Renews Lease at East Gate Business Center NJ

Cable and internet provider Comcast IP Services renewed its 83,500-square-foot lease at Veritas Real Estate Services’ Class A office building at East Gate Business Park in Mount Laurel, New Jersey.

The 113,000-square-foot building at 112 W. Park Drive was built in 1967 and renovated in 2007. The 4-Star property spans 16.8 acres less than 13 miles from downtown Philadelphia.

Cranberry Plaza in Pennsville, NJ, Changing Hands

by Steve Lubetkin,
Cranberry Plaza, a 106,165-square-foot shopping center located in Pennsville, NJ, was sold for $3.525 million.
The seller was a private New Jersey-based investor who had owned the property for ten years and made numerous capital improvements. The buyer, a well-qualified New Jersey-based private investor.

“Cranberry Plaza offered investors solid double-digit cash-on-cash returns with upside potential in a stable market with very minimal downside risk. We were able to generate numerous qualified offers in a short period of time, and ultimately closed with the buyer that my client was most confident would execute.”
Cranberry Plaza is located on 18 acres of land at 233 S. Broadway in Pennsville, NJ. The center has 12 tenants, including Save A Lot, Metro PCS, and local tenants PV Pets and Tap & Bottle.

Office Site Selection (Video)

Wednesday, February 27, 2019

What is REITs? Real Estate Investment Trust (Video)

3 Reasons Public REITs Outperform the S&P 500 (Video)

uCity Square's 3675 Market Nears Full Occupancy

by Steve Lubetkin,
Global biotechnology company Amicus Therapeutics will occupy space in uCity Square’s newest building, 3675 Market Street, for its newly-announced Global Research and Gene Therapy Center of Excellence.
With the Amicus announcement, 3675 Market is now 90% leased just 90 days after opening in November. Amicus’s commitment in the building totals 75,000 square feet of office and lab space over three floors and is expected to be open in the second half of 2019.

The space will eventually hold up to 200 employees. A group of Amicus researchers is already occupying space in the building as a client of BioLabs@CIC Philadelphia, a state-of-the art co-working wet lab and office facility.
“Like all of our facilities, the BioLabs@CIC Philadelphia site is designed to stimulate exciting science and creative collaboration,” says Dr. Laura Holberger, vice president of strategic partnerships, BioLabs. “Amicus brings valuable real-life experience and world-class science to our Philadelphia community and our national network.”

Developed by Wexford Science & Technology in partnership with the University City Science Center and real estate investment trust Ventas, 3675 Market Street is a 14-story, 345,000-square-foot building that combines several unique but complementary innovation assets including CIC Philadelphia, BioLabs@CIC Philadelphia, Science Center commercialization programs, Quorum, Venture Café Philadelphia, and FirstHand.

“We’re thrilled to welcome Amicus Therapeutics to 3675 Market,” says Science Center president and CEO Steve Zarrilli. “The establishment of the Global Research and Gene Therapy Center of Excellence is a testament to the vitality of the vibrant community here at uCity Square and Philadelphia as a leader in biotechnology and gene therapy research.”
3675 Market is the latest addition to uCity Square, a 6.5 million square-foot mixed-use knowledge community consisting of office, laboratory, clinical, residential, and retail space to enable university and corporate research, entrepreneurial activity, and community engagement.

“Attracting biotechnology industry leaders like Amicus to uCity Square validates the power of the knowledge community business model in developing a platform that encourages innovation through collaboration with leading research universities,” says Joe Reagan, senior vice president at Wexford Science & Technology. “The decision to come to 3675 is a testament to the diverse combination of partners and offerings within our ecosystem that provide flexibility and scalability for organizations like Amicus.”

Amicus Therapeutics chairman and CEO John F. Crowley acknowledged the proximity to collaborators at the University of Pennsylvania and other major academic centers and hospitals in the area as a tremendous opportunity to advance their commitment to gene therapies and novel high-quality medicines for people living with rare metabolic diseases as part of their announcement.

Former Guardian Life Building Making Way for Flex Industrial Complex

by Steve Lubetkin,
J.G. Petrucci has begun demolition of Guardian Life Insurance’s former Lehigh Valley office building at 3900 Burgess Place, Hanover Township, PA.  Petrucci will demolish the 196,823 square-foot, three-building complex, to make way for a three-building, 470,000 square-foot flex industrial center to be called the Lehigh Valley Flex Center.
Lehigh Valley Flex Center will provide flexible lease options for requirements that range from 50,000 to 160,000 square feet. Petrucci expects to deliver the new facility in the fourth quarter of 2019.

“An important and often overlooked element of economic development is the redevelopment of brownfields and the rehabilitation of vacant buildings into new, vibrant uses for the region,” says Don Cunningham, president and CEO of Lehigh Valley Economic Development Corporation. “We’re grateful that J.G. Petrucci has once again breathed new life into another Lehigh Valley property, particularly one that serves the growing need for smaller industrial flex space in the region to meet manufacturing demand.”

Constructed in 1983 and situated on 31 acres, the former Guardian office building featured a dated design comprised of private office spaces, conference rooms, cubicles, limited day light, and restricted views of the outdoors. As one of the largest employers in the Lehigh Valley, the company chose to construct a new building to attract new talent from the local community and raise the bar on what employees should expect from the work place. The new building enabled all of Guardian’s regional employees to be consolidated under one roof and promotes a more collaborative work environment with features such as open space, walk-up technology support centers, walking trails, fitness center, and pantries on every floor.
“This building really became obsolete over the years and we look forward to replacing it with a highly functional complex that will serve users’ demands for manufacturing and warehouse spaces available for lease in the 50,000 to 160,000 square foot range,” says Jim Petrucci, founder and president of J.G. Petrucci Co.


Tuesday, February 26, 2019

Achillion Pharma moves HQ to suburban Philly from New England for Talent

by Joseph DiStefano
Publicly traded Achillion Pharmaceuticals Inc. has moved its headquarters from New Haven, Conn., to suburban Philadelphia. “We didn’t get any state aid to do this,” boasts CEO Joe Truitt. “We aren’t Amazon.”

The move to 1777 Sentry Parkway West, Blue Bell, brings to the region the head office for a $350 million (market cap) company — now between products and without revenues, but with $270 million in cash to spend building new products. The move also brings an initial 30 jobs, a modest number, but high-paying management and science posts, the boss added.

“We moved here because I needed to recruit a lot of people," Truitt told me. "We came here because of the favorability of this region, based on the most important thing — talent. Biotech development and commercialization talent.”

Achillion is developing therapies for “orphan diseases,” serious conditions that affect a few thousand Americans. Its current focus is on “alternative pathways" for factor D, an immune system enzyme whose maladjustment is associated with lethal kidney and blood diseases. The company’s therapies are going through later-stage trials in hopes of taking them to market.
Fully story:

Amicus Therapeutics to join University City’s surging biotech sector

by Sam Wood
Amicus Therapeutics, a growing biopharmaceutical company that focuses on rare and orphan diseases, is committing to Philadelphia in a big way.

Citing the city as a burgeoning hub for medical breakthroughs, Amicus will launch a new Global Research and Gene Therapy Center at uCitySquare.

About a dozen Amicus research employees already have moved into a temporary space in West Philadelphia. They will be joined by 200 new hires — biologists and chemists — when the company’s 75,000 square foot center opens in late 2019. The new facility will house the headquarters for the global Amicus science organization and the gene therapy leadership team. Amicus will retain its corporate headquarters in Cranbury, N.J.

“It’s a big deal for us, and I hope for Philadelphia as well,” said CEO John F. Crowley. Amicus will collaborate with top gene therapy researchers at the University of Pennsylvania and Penn Medicine, and seek additional partnerships with Drexel University and other regional institutions, he said. “For us Philadelphia is a terrific fit to make medicines for people who have rare developmental disorders.”

Full story:

Monday, February 25, 2019

Admiral Capital Acquires 160K SF KOP Office Property

by Steve Lubetkin,
Admiral Capital Group says its core-plus investment platform acquired Valley Forge Park Place, an office complex encompassing 160,043 square feet of space in two three-story buildings in King of Prussia, PA. The seller was Keystone Property of Conshohocken, PA, which has owned the office complex since 2006, according to Real Capital Analytics, a proprietary research database that tracks commercial real estate transactions,. Financial details were not disclosed.

VFPP is located less than three miles away from both King of Prussia Town Center and King of Prussia Mall, providing exceptional retail and entertainment amenities to its tenants. VFPP was constructed in 1978, underwent a significant renovation in 2007 and is 96 percent leased.

The acquisition adds to Admiral’s core-plus office portfolio which already includes assets in Phoenix, AZ; San Diego, CA; and Frisco and Plano, TX (Dallas MSA).
This investment expands Admiral’s presence in the region, which includes a significant investment as a co-founder of the Fitler Club, opening in Philadelphia in April 2019. The Fitler Club is a high-end social, dining and fitness club located at 2400 Market Street in the new Aramark headquarters building.

Admiral’s core-plus strategy, called A2R, was formed in early 2018 with the mandate of acquiring and managing core-plus properties that provide stable cash yields in growth markets across the US. A2R is led by Andy Stone, who has acquired and managed more than $1 billion of commercial real estate assets in his career.

Friday, February 22, 2019

Office Design Trends and Tenant Strategies (Video)

Christiana Care Health System, Chemical Firm Solenis Commit Major Office Moves to Former AstraZeneca Campus in North Wilmington

Two major Delaware employers have signed long-term leases to move their respective headquarters to Avenue North, the redevelopment of the former AstraZeneca corporate campus in suburban Wilmington.

The two companies, Christiana Care Health System, Delaware's largest hospital operator, and specialty chemical producer Solenis Inc., which recently completed a merger with BASF to combine their paper and water chemicals businesses, agreed to lease two large blocks of office space in the $350 million redevelopment located along U.S. 202 .

Delaware-based Delle Donne & Associates purchased the 80-acre property in 2017 from drugmaker AstraZeneca and is in the process of redeveloping it into a high-end, mixed-use complex. The developer plans to add more than 300 residences, approximately 200,000 square feet of retail space and a 200-room hotel-conference center in addition to new and existing office space.

AstraZeneca agreed to leaseback approximately 400,000 square feet encompassing two buildings for its U.S. headquarters when it sold the property.

Christiana Care will lease the entire 386,460-square-foot Center Building, while Solenis will occupy the Pavilion Building , which measures 104,488 square feet. These two leases fill the largest remaining blocks of existing office space in northern New Castle County, according to JLL Senior Vice President Jamie Vari, who helped procure the two tenants on behalf of Delle Donne.

Vari said the early leasing success of the Avenue North project bringing thousands of jobs to the site reflects the scale and expected quality of the proposed mixed-use project.

"Within 18 months of acquiring the site, Delle Donne & Associates, Inc. and their extended team executed on a marketing approach which secured three major Delaware users," Vari said in a press release announcing the two latest lease commitments. "The goal of the plan is to create the new benchmark of high-end development along the Route 202 corridor."

For Solenis, which had considered relocating out of state, the new lease confirms the headquarters of the $3 billion specialty chemical company employing over 5,200 people worldwide will remain in Delaware. CBRE assisted the chemical firm in its site selection.

The company expects to relocate to its new location in the first quarter of 2020. Last November, Delaware approved a $3.9-million taxpayer-funded grant as an incentive for the company to keep its headquarters in the state.

Christiana Care said it plans to relocate much of its administrative and support services to the Avenue North location, freeing up more space at its hospitals in Wilmington and Stanton.

"Avenue North creates an opportunity for Christiana Care to consolidate many of these offices together, reducing costs and increasing efficiency," said Sharon Kurfuerst, the chief operating officer of the health system in a statement.

Thursday, February 21, 2019

PNL Companies Sells Suburban Philadelphia Office Building for $15.5M

PNL Companies, a full service investment firm headquartered in Dallas, sold a 91,190-square-foot office building in Malvern to a private investor. Malvern Executive Center sold for $15.5 million, or about $170 per square foot.

The three-story structure at 100 Deerfield Lane was built in 2003 and renovated in 2015. The 4-Star property spans nearly an acre less than 25 miles from Philadelphia International Airport.

The Class A building is 73 percent leased to ten tenants including Fox & Roach and USA Technologies.

The property provides both a current, stable cash flow and substantial value-add opportunity through the lease-up of existing vacancy,

Office Sector Update from RC Analytics (Video)

Ballinger Renews Lease in Downtown Philadelphia

Local architecture firm Ballinger renewed its 78,951-square-foot lease at HCP’s Class A office building in Philadelphia.

The 708,361-square-foot building at 833 Chestnut St. was built in 1926 and renovated in 2006. The 14-story, 4-Star property spans 1.6 acres across from the 8th and Market Street train station.

HCP originally purchased the building, which is managed by Lincoln Harris CSG, in April 2015, CoStar data shows.

Self-Storage Stands on Its Own Square Feet As the US Population Grows

From New York City to Chicago to Los Angeles, some newly renovated multistory buildings with city views aren't housing people. They're holding their stuff.

America's obsession with possessions is fueling unprecedented interest by investors and developers willing to pay increasing prices for buildings and land on which to create self-storage units.

Long considered an unglamorous subset of industrial real estate, self-storage is coming into its own in the United States. The nationwide growth of residential real estate prices has pushed more of the population to living in smaller places where they don’t necessarily have the space for off-season clothing, gear and supplies for their hobbies.

Storage and warehouse leasing has grown 2.5 percent since 2014 to become a $37 billion industry this year, according to market research company IBISWorld. The number of storage businesses has grown 2.4 percent and their workforce has climbed 2 percent in that time.

“Storage is a beneficiary as long as there’s population growth,” said Charles Byerly, president and chief executive of Irvine, California-based U.S. Storage Centers, which owns and operates self-storage facilities across the country. “As long as the economy is not stagnant, storage will do well.”

The U.S. population has grown 3.3 percent from 2013 to 2018, and the economy is in the midst of what could be the longest economic expansion in U.S. history come July. It follows, then, that spending on self-storage construction grew about $1 billion to more than $4.5 billion in October last year from the year earlier, according to data compiled in December by website SpareFoot, which tracks the self-storage industry.

The abundance of self storage now is inspiring not just reality shows in which people bid for the contents of abandoned storage units, but also a Netflix series called "Tidying Up With Marie Kondo" that goes the opposite way by teaching people how to pare their possessions.

The industry is even drawing attention from high-profile investors beyond real estate. Japanese conglomerate and investor SoftBank, a backer of ride-sharing app Uber and coworking firm WeWork, said Wednesday its Vision Fund made a $200 million infusion in Clutter, the Los Angeles-based startup that allows users to summon a crew to their homes to pick up items and haul them to a storage facility. Fast-growing Clutter in December agreed to lease 462,000 square feet of industrial space for storage.

Added Demand

Major commercial real estate companies have taken note of the increased demand for self-storage and are directing their dollars accordingly too, while companies that have existed in the space for years look for ways to protect their territory.

Companies such as Nuveen Real Estate, the investment management arm of financial services giant TIAA, have taken notice. Nuveen last month acquired a 90 percent interest in a 21-property portfolio totaling 1.3 million square feet in nine cities through a partnership with Morningstar Storage, a Matthews, North Carolina-based self-storage company.

Houston developer Hines in 2018 launched an effort of its own to invest in high-end storage facilities in the southwest and began construction on a self-storage facility in Phoenix. The company said it plans to build as many as three to five more projects a year in areas with growing populations and high incomes.

In addition to being in high demand, self-storage is also seen as a relatively safe investment, as it fared comparatively well during the recession, said Walter Brower, vice president of capital markets specializing in self-storage properties at Los Angeles commercial real estate firm CBRE Group Inc.

Like all real estate types, self-storage properties suffered during the recession, but they still made money. They paid dividends at a time when few other property types did, thanks to a diverse tenant base and short lease terms, Brower said.

After the recession ended, Brower said, private equity started flowing into the industry.

The combination of capital and demand inevitably leads to development, which is happening in major markets across the country at varying levels, with bigger, denser cities getting more attention from developers.

Self-storage units today are built vertically, a departure from the short, broad structures from previous decades. In particularly dense, expensive areas like Brooklyn, New York, self-storage projects can reach 12 and 13 stories tall, with units starting at $300 for each month.

But in spite of the common perception that self-storage is an inexpensive property type, building in these areas is neither cheap nor easy, Brower said.

Pricey Bet

“In Los Angeles, $6 million per acre pricing for prime, infill self-storage locations is not unheard of,” said Brower. By comparison, the average acre of U.S. farmland was about $3,080 in 2017, according to the United States Department of Agriculture.

Land costs are just one of the many challenges that the industry’s growth presents for long-time self-storage operators, U.S. Storage’s Byerly said.

The influx of capital has made it difficult to do deals, added Byerly, because the presence of motivated and deep-pocketed investors in the industry has caused valuations to go up and overall make the industry a more expensive place.

U.S. Storage, which earlier this month purchased a 1,269-unit self-storage facility in Las Vegas, has properties in 16 states and in most of the major coastal cities.

The market nationwide is at a heightened level of supply, Byerly said, because so many companies started building self-storage so quickly after the recession. But slow entitlement processes, larger and more complicated facilities that include components like climate-controlled storage, and construction labor shortages have slowed down the construction process and pushed back the time frame for most new development.

Another challenge is increased overheard and operations costs, Byerly said. Property taxes and insurance costs are up, and minimum-wage laws enacted in many states mean that employees have to be paid more. Marketing self-storage is also more difficult because of increased competition in the space.

In spite of these challenges, growth in the industry is expected to continue, at least as long as the American population keeps growing.

“During even the downturn, one thing continued,” Brower said. “U.S. population growth.”

Wednesday, February 20, 2019

New Jersey Awards Pennsylvania Company $39.6 Million to Open Camden Site

A Pennsylvania company was awarded nearly $40 million in tax incentives from New Jersey to build an administrative-office outpost on Camden's waterfront, bringing 200 jobs to a city that's been mounting a comeback.

The state Economic Development Authority approved the $39.6 million tax package, which spans 10 years, for Elwyn, a nonprofit. The company, founded in 1852 and based in Middletown Township, Pennsylvania, provides services to children and adults with intellectual, developmental, physical, medical, emotional and behavioral health challenges.

At the meeting, the EDA's managing director of business development, Paul Ceppi, told the agency's board that Elwyn was looking to take new office space for its administrative functions by either building a 53,425-square-foot facility at 2 Penn St. , which is part of a huge $1 billion redevelopment on the Camden waterfront, or else lease an existing 57,000-square-foot building in Wilmington, Delaware.

Elwyn will be bringing 167 new jobs to New Jersey, and Camden, as well as transferring 33 jobs that are now at its location at 1667 East Landis Ave., Vineland, New Jersey, to the city on the Delaware River, for a total of 200 jobs.

"These positions are all headquarter-related, dealing with payroll processing, insurance processing and the like," Ceppi said, adding that Elwyn plans to make a $39.6 million capital investment in Camden.

An EDA memorandum said that Elwyn's proposed project on Penn Street "represents a significant step forward for Camden's redevelopment efforts" and would have a net benefit to the state of $88,310 over a 35-year period. Elwyn will complete its capital investment by Feb. 1, 2021, according to the memo.

Camden has struggled, and made some strides, to overcome its economic woes, according to officials like former Gov. James Florio. Econsult Solutions Inc. released a report in January on the city's status and progress. It credited state tax incentives as being crucial in helping the city to rebound.

"Camden faced more than 50 years of economic decline, a decline that had a dramatic impact on the quality of life, health and well-being of its residents," the report said. "By the early 2000s, it was facing crises of fiscal health, public safety, and K-12 education. Through collaboration and commitment, Camden’s state and local government entities, business leaders, and community stakeholders have driven improvements across social determinants of health citywide. Crime is at a historic low, with murders down by 60 percent over five years, and violent crime down by 40 percent. New, state of the art of schools are open across the city, and test scores are rising. And most importantly, economic development is helping create jobs for Camden residents."

But the report cautioned that the city's economic recovery still needs assistance.

"Camden has made tremendous progress in a short period of time, but these changes are not yet secure, and continued investments by the private and public sectors, including the state of New Jersey, are necessary to ensure that Camden’s emerging platform for growth is not compromised," the report said. "The social determinants of health -- and the city's future -- require it."

Jeremy Sunkett, Elwyn's vice president of strategic real estate, attended the EDA session.

"It's been a long process and we're really happy with the results," he told the agency.

After the meeting, Sunkett said that redeveloper Liberty Property Trust owns the vacant site where Elwyn's office building is planned, nestled behind a new American Water headquarters.

"It's an expensive place to develop in general, Camden," Sunkett said. "And obviously it's distressed. It's a difficult set of circumstances. And you're also talking about riverfront construction for it, which puts a premium on the cost to build it."

With the move to Camden, Elwyn can move out of three different buildings at two locations, consolidating and going from about 130,000 square feet to 54,000 square feet, according to Sunkett.

At its meeting the EDA also approved a memorandum of understanding for a data-sharing agreement between it and the state Deportment of Labor and Workforce Development. The purpose of the agreement is "to promote additional compliance with the rules and regulations of the job-based incentive programs" within the EDA, according to the agency.

EDA Chief Executive Tim Sullivan talked about the agreement with state labor officials last week when he testified before a joint legislative hearing on New Jersey's tax incentive programs. An audit by the State Comptroller found that the EDA had “improperly awarded, miscalculated, overstated and overpaid” $11 billion in granted corporate tax breaks, in part finding there wasn't proper verification of jobs that were supposed to be created by some award recipients.

With its memorandum of understanding in place, the EDA said it will be able "to cross-reference the employment information provided by our applicants with data submitted" to the state labor department. The EDA will reimburse the department no more than $5,000 a year for the data-sharing.

Hospitality and Hotel Industry Performance (Video) Pt 2

Linlo Acquires Mechanicsburg, PA, Office Assets in Sale-Leaseback Deal for $10.3

by Steve Lubetkin
Linlo Properties acquired two office buildings totaling 76,972 square feet in the Rossmoyne Business Park, in Mechanicsburg, PA. Members 1st Federal Credit Union has leased back a portion of both buildings as it begins due diligence phases for a new corporate headquarters.
The two office buildings are located at 4999 Louise Drive and 5053 Ritter Road and are 56,494 square feet and 20,478 square feet, respectively.

“Here at Linlo we could not ask for a better acquisition pairing to start 2019,” says Sarah Gates, Linlo portfolio manager. “We continue to see the strength of the Rossmoyne Business Park and feel that these assets complement our existing offering well. We thank Members 1st for the opportunity and for their professionalism throughout the entire deal process.”
Members 1st is exploring the option to consolidate operations into one facility at a new corporate headquarters in Hampden Township, although details have not been finalized.

“We are approaching nearly 70 years of proudly serving members, associates and the community,” says Mike Wilson, chief marketing officer at Members 1st Federal Credit Union. “In addition to significantly expanding our offerings of extremely competitive products and services in the marketplace, we have also grown as an employer of choice. Maintaining the costs associated with multiple buildings is neither efficient, nor conducive to a collaborative organization with nearly 500 associates who serve 400,000 members from our headquarters each day. It has been great to partner with Linlo Properties as we begin the due diligence phases of consolidating into one cohesive, collaborative facility in a fiscally responsible manner.”

Tuesday, February 19, 2019

Once Again, Cheap Apartments Show Big Appeal

In another sign that investors see big value in cheaper apartments, Morgan Properties has struck a deal to buy 15 older rental complexes in the suburbs around Philadelphia, Baltimore and Washington, for $1.4 billion.

Morgan, of suburban Philadelphia, has been one of the most aggressive buyers of “workforce housing” in the Mid-Atlantic in recent years. Now, they’ve struck a $1.4 billion deal for 6,696 apartments, mostly of 1960’s and 1970’s vintage.

That’s Morgan Properties’ specialty – “workforce housing” that caters to mid-income renters and has the potential for higher rent growth than the newer, higher-rent rentals in those markets. With cheaper rents than the fancy new developments popping up in those markets’ downtowns, the older communities have a natural pool of potential tenants among lower-income renters.

And by making modest improvements to the apartment interiors and the community amenities, Morgan could raise rents to boost their own returns on the investments. The strategy is becoming increasingly popular, as very little of the tsunami of new apartment development is aimed at middle-income renters.

The deal is the biggest single pick-up ever for Morgan, an apartment management and investment firm founded in 1985. But the company has shown an appetite for big deals, especially those involving Class-B properties with upside potential.

Since 2013, the company has picked up about $3 billion in apartments before the Lone Star deal. The vast majority of Morgan's rentals are in the Mid-Atlantic, but the company has acquired rentals in Tennessee and as far west as Nebraska, and as far south as South Carolina. The firm now owns more than 30,000 apartments.

Just two weeks ago, Harbor Group International made a similar big investment in workforce housing. The Norfolk, Virginia-based shop paid $380 million for a six-property, 1722-apartment portfolio in suburban Massachusetts. They too appeal to the renter priced out of the gleaming towers now littering downtown Boston and its close-in suburbs. And they too offer their new owners the potential for larger rent increases through property upgrades.

The deal with Lone Star has yet to close and details could change, last minute. But market players familiar with the deal say Morgan is under contract for the portfolio and will pay slightly more than $210,000 per unit.

Morgan’s new portfolio will include the 1,387-unit Mount Vernon Square Apartments, at 7429 Vernon Square Drive in Alexandria, Virginia. It was developed in 1965, and is the largest in the portfolio acquired from Lone Star. The Home Properties of Bryn Mawr, at 105 Charles Drive, in Bryn Mawr, Pennsylvania, is the oldest property. That 316-unit property was built in 1940.

Bob Sulentic discussed the commercial real estate outlook on CNBC (Video)

McLaren Engineering Group Triples Office Space in Lehigh Valley Expansion

by Steve Lubetkin,
McLaren Engineering Group is expanding its Lehigh Valley location. The full-service engineering firm will now occupy 2,700 square feet at 5100 West Tilghman Street in Allentown—tripling the amount of space of its previous location, which opened in 2016. The move allows the McLaren team to grow from six to 16 employees.

“Due to the region’s business growth, proximity to talent and affordable costs, our Lehigh Valley office is well-positioned to continue its growth trajectory,” says Malcolm McLaren, CEO of McLaren Engineering Group.

McLaren’s Lehigh Valley office provides services to the steel industry and specializes in aluminum paneling design work for office towers, mixed-use complexes and university buildings across Pennsylvania, New Jersey, and New York.

“Since we opened three years ago, we’ve continued to expand due to the Lehigh Valley’s exceptional business climate and access to talent,” says Matthew B. Kawczenski, P.E., S.E., F.SEI, Pennsylvania regional director who leads the Lehigh Valley office. “One of our largest clients, BAMCO Inc., trusted us in designing significant projects that include American Water’s new headquarters in Camden, NJ, The View II tower in Philadelphia, and One Willoughby Square, a 34-story project in Brooklyn.”

Additionally, McLaren’s Lehigh Valley office engineered the steel egress stairs, railings and interior glass guardrail systems for Lafayette College’s Rockwell Integrated Science Center, opening this year in Easton, PA. The office has also provided a range of engineering services for projects in Philadelphia and the surrounding region.

The Lehigh Valley office has strategic relationships with Lehigh University, Lafayette College, and Bucknell University’s engineering schools, which provide a steady pipeline of engineering talent. Kawczenski and his team are also regular speakers within Lehigh and Bucknell’s engineering programs.
“It’s important for engineering students to take engineering principles learned in school and apply them to real-world projects,” says Kawczenski. “We provide a pathway for graduates in our region to become experts in our increasingly complex field—which continues to evolve based on changing architectural requirements.”

Kawczenski notes that comprehensive knowledge of design standards and codes is crucial within the space, as there have been measurable shifts in design work over the past decade. The regional director notes that straight, flat aluminum panels have given way to more complex designs—and these architectural requirements are accommodated by the Lehigh Valley staff.

Freedom Credit Union Leasing in Morrell Plaza in Philadelphia

by Steve Lubetkin,
Freedom Credit Union has leased 2,000 square feet at Morrell Plaza in Philadelphia, becoming the latest business to join the tenant mix at this 103,250-square foot shopping destination. Located directly on Frankford Avenue/Route 13, Morrell Plaza is exclusively leased and managed by North Plainfield, NJ-based Levin Management Corporation.

 Freedom Credit Union is a community-based, full-service financial institution that offers a banking alternative to consumers. Anyone who lives, works, worships, performs volunteer service or attends school in Bucks, Chester, Delaware, Montgomery or Philadelphia counties is eligible for membership.

“The presence of a high-volume grocer, exceptional demographics and a visible location—in the retail heart of a busy Northeast Philadelphia neighborhood—makes Morrell Plaza an attractive place to conduct business. Freedom Credit Union will bring a new retail category for the center, and its presence undoubtedly will enhance Morrell Plaza’s co-tenancy as we continue to expand the property’s retail offerings. We are confident this organization’s professional financial services will be a valuable resource for its members.”

Morrell Plaza is anchored by a 63,000-square-foot, newly renovated ShopRite supermarket and a 12,700-square-foot Rite Aid drugstore. The tenant roster includes a mix of national, regional and local retailers and service providers including T-Mobile, Supercuts, Dunkin’, and Yamato Sushi & Hibachi, among others. The property serves a five-mile residential population of more than 399,800 and its daily traffic count exceeds 36,000 vehicles.

Hospitality and Hotel Industry Performance (Video)

Commercial Real Estate Loan Growth Plateaus

Investors and lenders dove into apartment and industrial mortgages in the final three months of last year while retail and office property lending slowed, setting a pattern industry executives expect to extend into 2019.

Total commercial and apartment mortgage origination for 2018 rose 3 percent, after a 14 percent surge in the fourth quarter, according to preliminary estimates from the Mortgage Bankers Association.

Origination for apartment properties increased 22 percent for the year, with loans from government-sponsored enterprises leading the surge. Loans made for industrial properties rose 12 percent for the 12 months, while those for hotel properties climbed 5 percent.

Last year "ended on a strong note for commercial mortgage borrowing and lending, with fourth-quarter origination 14 percent higher than a year earlier, despite the broader market volatility," said Jamie Woodwell, Mortgage Bankers' vice president for commercial real estate research.

However, Woodwell added that "the market as a whole ended the year roughly flat compared to 2017, continuing a plateau we've seen in mortgage borrowing and lending since 2015" as a result of moderation in both property value growth and building net operating income. The trend is expected to continue this year.

Typical of the apartment surge were results recently released by Freddie Mac, which set a record with $77.5 billion in loan purchase and guarantee volume for 2018, and $500 million in low-income housing tax credit investments. The $78 billion in total production bested the company's prior record of $73.2 billion set in 2017.

Life insurance companies boosted their loan origination by 10 percent in 2018 over 2017. Typical of that was PGIM Real Estate Finance, which originated its own record $18.1 billion in financing in 2018, up from $14.8 billion in 2017. Record production in multifamily and core-plus lending led the boost. PGIM Real Estate Finance is the commercial mortgage finance business of PGIM Inc., the $1 trillion global investment management business of Prudential Financial Inc.

PGIM Real Estate Finance has as much as $18 billion available for financing in 2019 and said it will again look to target growth in apartment and industrial loans.

However, the stepped up lending from government-sponsored enterprises and life insurance companies was offset by decreased loans from banks and conduit lenders feeding the mortgage securities markets. Loans for commercial bank portfolios decreased 10 percent and loans for CMBS fell 26 percent.

By property type, office property origination was down 7 percent, retail properties declined 13 percent and healthcare properties decreased 16 percent.

Commercial and multifamily mortgage origination is expected to remain roughly on par with the volume in the past two years, according to the Mortgage Bankers. The association projects commercial and multifamily mortgage origination to total $530 billion in 2019, essentially flat from last year's $526 billion, and the record $530 billion in 2017.

Mortgage banker origination of just multifamily mortgages are forecast to rise 1 percent this year to $264 billion, with total multifamily lending at $315 billion. The association expects the origination total to extend into 2020.

"Slowing global and domestic growth may have an impact on overall demand, but readily available equity and debt for commercial real estate should support transaction volumes," Woodwell said.

Monday, February 18, 2019

CAI Signs Office Lease in Newark, Delaware

CAI, a privately-held global IT corporation, signed a 32,521-square-foot lease at BPG Real Estate Services’ Class A office building at Iron Hill Corporate Center in Newark, Delaware.

The 105,475-square-foot, three-story structure at 700 Prides Crossing was built in 1992. The building spans nearly two acres less than two miles from the Fairplay train station.

Friday, February 15, 2019

Duke Acquires LV Market's Wind Gap Logistics Center from Petrucci and Davis

by Steve Lubetkin,

Duke Realty Corporation has acquired Wind Gap Logistics Center—a 349,012 square-foot class A warehouse/distribution facility located at 1380 Jacobsburg Road in Wind Gap, PA, from JG Petrucci Company and The Davis Companies for $41.3 million, or $118 per square foot, according to Real Capital Analytics, a proprietary research database that tracks commercial real estate transactions,.

Wind Gap Logistics Center, a joint venture between Petrucci and Davis, was completed in 2018. Designed and built by Petrucci, the precast construction features: 36-foot clear height with 54-foot-x-54-foot columns; 60-foot deep loading bay; ESFR sprinkler system; and 9,400 square feet per door loading ratio. Wind Gap Logistics Center was designed by Cerminara Architect and constructed by Petrucci’s in-house construction firm, Iron Hill Construction Management Company.
With the increased focus on the supply chain and need to efficiently move goods into major northeast metro areas, the joint venture believed the project provided a unique opportunity. The location has a significant competitive advantage within the established Lehigh Valley distribution market, because it is close to PA Route 33 and has equidistant access to both I-78 and I-80, the two main highways to the ports of New York/New Jersey and the MSAs of New York and Philadelphia. This strategic location allows tenants to avoid reliance exclusively on I-78.

“Wind Gap Logistics Center represents the idyllic formula for success throughout the critical logistics corridor in Eastern Pennsylvania. Premium specifications, flexible design, institutional development management and immediate highway interchange access combined to fully capitalize on the Lehigh Valley-foots evolving symbiotic relationship with the New York Metropolitan region and its ports.”

Shortly after construction of the property finished, Teva Pharmaceuticals signed a long-term lease for 54% of the building, demonstrating the strong demand for this state-of-the-art, well located class A distribution facility.

Value-Add MF, Workforce Housing Attractive, Says Dealmaking Panel

by Steve Lubetkin,
Value-add multifamily and workforce housing are attractive sectors for lenders in the current market, but Opportunity Zones may not live up to their promise for real estate, according to participants in the “Deep Dive in Deal Making” panel at ALM’s Philadelphia Conference this week at the Crystal Tea Room.

“We really like value add multifamily,” says Christophe Terlizzi, senior vice president & market leader for commercial real estate lending, KeyBank. “We see that as being one of the safest bets for balance sheet lending, and it also drives permanent loan business through our off-balance-sheet channels.”

Terlizzi described a recent deal involving a workforce housing project of 210 units where the sponsor wanted to buy out his equity partners and needed to recapitalize the transaction, but the property’s rents were about $250 a month below the market because other more modern properties attracted a higher rent.
“We structured a loan that provided him with 98% of the capital to buy out his equity,  and we structured a deal with 100% of the renovation costs, to be advanced over basically a four-year period,” says Terlizzi. The financing included two one-year extension options and a principal guarantee. Despite complex tax issues because of foreign investor participation, Terlizzi says Key was able to close the deal in 45 days.

“I’m seeing a lot of clients leaving New York, and taking that money and bringing it over to Philadelphia and New Jersey,” says Amanuel Mekonen, director, Greystone & Co. “We are in love with affordable housing and workforce housing. I really think you can’t go wrong. Anytime we see developers looking into affordable housing or workforce housing, we’re going to be excited about it.”

Mekonen’s firm provides bridge financing to developers working on zoning approvals and converts that to FHA construction loans after land is acquired and approved, he says.
“Last year, I didn’t see a lot of that,” he says. “This year, I’m getting a lot of requests and spending a good amount of time on that. And we closed around $1.8 billion last year, so I can see that really gearing up.”

Opportunity zones could provide an extra incentive for developers to look at affordable housing developments in a city like Philadelphia, Mekonen says.

“I think that only adds to the flavor, because if you can underwrite it right and the deal works, it’s only going to get better,” he says.

But Terlizzi and panelist Leo Addimando, co-founder and managing partner, Alterra Property Group, were not as sanguine about Opportunity Zones.

“I’m a big believer in the notion that you have to have a market,” Terlizzi says. “You can subsidize whatever you want, but if there’s no market, there’s really no value to be created. There are some opportunity zones that, if one scrutinized the locations, really didn’t need to be opportunity zones. So if you’re in one of those and you’re a developer, you’re going to get a bonus because there is a market, and the tax-advantaged equity that you can attract is going to be financially attractive to you.”

“If the real estate deal makes sense, the opportunity zone is just an extra sweetener, but I’m very skeptical about making real estate deals that only work because of the opportunity zone program,” Addimando says. “I don’t think it’s the big windfall that that people are predicting it’s going to be.”

In a discussion of complex structures, panelist Jacqueline Buhn, principal and CEO, AthenianRazak, described her firm’s master lease on most of the retail space in Philadelphia’s Suburban Station commuter rail hub, owned by the Southeast Pennsylvania Transportation Authority, known as SEPTA.

“SEPTA likes to master-lease retail for good reasons,” Buhn says. “It’s not their core business, and they’re also constrained in a number of ways by what kind of deals they can do, so they put an intermediary in, and we can do anything the market can do.”

Suburban Station has long suffered from a perception among commuters of a dingy, unpleasant concourse with limited retail options, but Buhn’s firm has been attacking that perception with a rebranding effort, she says.

“We determined early on we had to do something fairly dramatic to begin to recognize the value in the station,” she says. Hesitation by SEPTA to permit bank financing of a retail redevelopment has limited the focus to what Buhn calls “the Gold Coast,” retail locations facing commuters as they descend stairs into the rail station.

Describing an adaptive reuse deal involving a former department store chain’s warehouse property for a combination of retail space for a Target store and office space upstairs, Terlizzi says the client wanted to take advantage of credit tenant lease financing that “would provide an advance rate that would not be available under a typical financing.”

The bank arranged a 20-year credit tenant lease loan, the proceeds of which were pre-funded by the permanent lender into a deposit account at the bank, Terlizzi says.

“If that had been done by two separate lenders, there would have been an issue with respect to resolving inter-creditor issues and so forth,” he says. “Instead, we were in a position to do both executions, because we have the investor placement program that accesses the credit tenant lease proceeds, as well as the balance-sheet funding."