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SL Green Sells Stake in SoCal Office Portfolio as Los Angeles Office Market Shifts Away from Downtown

10 Mar 2014, 3:54 pm

By Alex Girda, Associate Editor

The ownership structure of a major office portfolio recently suffered some changes after New York City-based SL Green Realty Corp. announced that it had sold its stake in a Southern California portfolio to an affiliate of its joint venture partner. SL received $100 million from an entity linked to Blackstone Real Estate Partners VII for its 43.74 percent interest. The properties that comprise the portfolio are located across Southern California in major markets including Los Angeles, Orange County and San Diego.

The 28-asset portfolio offers the new owner 3.7 million square feet of office space. Originally, the portfolio included 31 properties and a total area of 4.5 million square feet which SL Green Realty Corp. acquired through foreclosure. The company then began restructuring the portfolio’s $750 million of in place financing. During the time of the restructuring, SL began its partnership with Blackstone, then acquired the minority interest in three of the properties. The seller went on to move those three properties in deals worth a total of $223 million, a recent press statement indicated. The portfolio then went through another extensive improvement and lease-up phase, handled by an affiliate of Blackstone, namely Equity Office Properties.

The greater Los Angeles’ office market has seen vacancy rates plateau at around 16.5 percent over past quarters, as data from Marcus & Millichap Real Estate Services indicates. The research shows that in 2013, around 510,000 square feet of office space was added to the available stock. Increased leasing at the end of the year meant that absorption in 2013 maintained the average vacancy rate for downtown Los Angeles at the same levels seen during 2012. Major improvement in terms of vacancy has been seen over the past few years in the San Fernando Valley where current values outpace L.A.’s downtown. The Westside Cities submarket has also seen rates drop, with vacancy now lower than the core of Los Angeles.   

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com 



Los Angeles Apartment Communities Trade Hands as M West Expands Portfolio

17 Feb 2014, 5:52 pm

By Alex Girda, Associate Editor

The local multifamily market has had a good start to 2014, with a number of deals taking place since the beginning of the year. Recently, real estate investment services firm Marcus & Millichap announced that it had arranged the sale of a three-multifamily property portfolio in the Santa Monica submarket of Los Angeles. M West Holdings recently announced the acquisition of a number of residential properties, expanding its multifamily portfolio in the Los Angeles market.

The Marcus & Millichap-arranged deals were completed for a total fee of $28.5 million, according to a recently issued press statement. The three apartment assets located at 1033 3rd Street, 811 6th Street and 1137 11th Street total 66 residential units, acquired at a per-unit rate of $432,000. The three properties were built between 1963 and 1972. The deal was handled by Marcus & Millichap associates in the company’s L.A. office, Michael Hanassab and Elliot Hassan, on behalf of a private investor.

M West Holdings added almost 300 residential units to its Los Angeles multifamily property portfolio since the beginning of February alone. The company recently announced the acquisition of the Milano Apartments, a 248-unit luxury apartment complex located in Torrance. Originally built in 1964, the residential community was renovated between 2007 and 2009, and it offers a resident amenity package that includes fitness facilities, two tennis and basketball courts, secured covered parking spaces for residents, a lavish clubhouse, internet café, a business center, barbecue area, outdoor pools, a sundeck and a spa.

Also acquired by M West recently was Grafton Lofts, a 44-unit residential asset located in one of the best-known neighborhoods of L.A., Echo Park. The apartment community offers studio, one- and two-bedroom units located in the proximity of local staples such as the Baxter Stairway, Elyasian Park, Angelino Heights and Dodger Stadium. The property will be rebranded by its new owner, according to a press statement issued by M West.  



Inland Empire Power Center Trades Hand in $49 Million Deal Arranged by HFF

8 Feb 2014, 9:18 pm

By Alex Girda, Associate Editor

An Inland Empire retail property traded hands recently, with Holiday Fenoglio Fowler announcing that it had closed a deal for an asset located in Jurupa Valley. The leading provider of commercial real estate and capital markets services completed the acquisition of the Vernola Marketplace by a joint venture consisting of Rockwood Capital, Equity One, Inc. and Vestar. The JV paid a fee of $49 million for the shopping venue.

Vernola Marketplace is a retail power center at 6205 Pats Ranch Road in Jurupa Valley that offers the new owners a total of 210,963 square feet of space. The asset occupies a 22.2-acre site in an area boasting exposure to around 314,000 cars per day. According to a press statement, the shopping center is located 45 miles away from downtown Los Angeles, 20 miles away from Orange County, and just eight miles away from the LA/Ontario International Airport.

The property’s tenant roster includes names such as Ross Dress for Less, Bed Bath and Beyond, Michael’s, Petco, BevMol, Denny’s, Five Guys Burgers and Fries, and Jamba Juice. The power center currently has a vacancy rate of around 16 percent, a figure that the new owner will look to improve upon. Vernola is anchored by a 172,000-square-foot Lowe’s store that was not part of the transaction.

HFF has now completed approximately $374 million worth of transactions in the retail sector, in the Inland Empire alone. The team of HFF representatives responsible for the acquisition consisted of Managing Director Bryan Ley, Director John Crump and Senior Managing Director Michael Ross.  



Kennedy Wilson is New Owner of Victory Plaza and Multifamily Site in North Hollywood After Purchasing $30 Million of Debt

25 Jan 2014, 8:40 pm

By Alex Girda, Associate Editor

Kennedy Wilson, an international real estate investment and services firm, recently expanded its retail portfolio with a Los Angeles grocery-anchored property. The company is the new owner of Victory Plaza, a North Hollywood retail center, as well as a development site earmarked for multifamily development. Kennedy Wilson had purchased the debt on the two assets in December of last year from an Ireland-based financing firm, for a total of $30 million.

The new owner invested $12 million of equity, as well as $18 million sourced through a financing deal with Pacific Western Bank. According to a press statement, KW became the new owner of the properties through foreclosure.

Victory Plaza is a 132,995-square-foot shopping center located at 13007-13947 Victory Boulevard. Constructed in the late seventies, it is currently anchored by a Vallarta grocery store. According to listings on real estate site loopnet.com, the power center is currently struggling, with a total of 23,604 square feet of space still available for lease, at a rate of $2-2.5/square foot/month. The adjacent 2.4-acre site offers the owner development possibilities, as it is zoned for multifamily use.

Kennedy Wilson now owns 10 properties and 1.3 million square feet on the West Coast, and the retail property is the investment company’s second addition to its portfolio this cycle. From the beginning of 2010, the 1977-founded real estate company has acquired real estate assets and debt worth a total of approximately $11.2 billion.   



Partnership Between Centennial and Lincoln Completes its Fifth Acquisition with $20 Million Santa Monica Buy

24 Jan 2014, 5:46 pm

By Alex Girda, Associate Editor

One of the most high-profile shopping locations in Santa Monica is about to get a boost as a deal was recently completed for one of its anchor properties. A joint venture between Lincoln Property Company and Centennial Real Estate has acquired a retail property for $20.5 million. The partnership will reportedly take the newly acquired property through an extensive renovation process that will add value to the asset.

The property was originally built as the dining anchor for the Third Street Promenade. The five-story building totals 27,000 square feet of space, some of which is currently occupied by major quick-serve fast food chains such as McDonald’s and Subway, a press statement shows. Fifty percent of the available dining space in the building was under contract at the time of the transaction.

Beginning with Q2 of 2014, the joint venture between Lincoln and Centennial will kick off a renovation process that would upgrade the dining space and bring a change in aesthetic, drawing inspiration from the marketplace motif. The process will also focus on transforming the top vacant levels into creative office space featuring open layouts and high ceilings. The move will cater to tech companies—since Santa Monica is a tech hotbed—with creative space being the most sought after by prospective tenants.

The acquisition is the fifth transaction to be carried out by the joint venture between Lincoln Property Company and Centennial Real Estate since it was created, three years ago. The partnership owns three other properties in the Santa Monica submarket, as well as an asset in Pacific Palisades.  

Image courtesy of www.downtownsm.com



La Kretz Innovation Campus in Cleantech Corridor Secures Final Part of Financing, Set to Open in 2015

10 Jan 2014, 7:33 pm

By Alex Girda, Associate Editor

An initiative that promises to reignite the tech sector in L.A. recently received the go-ahead as financing for the project is finally in place. Thanks to U.S. Bank, the La Kretz Innovation Campus is now closer to reality as the last piece of the financial puzzle has been locked in. The banking giant has secured $14 million in New Markets Tax Credit for the La Kretz development project, which when completed will consist of a total investment of around $46 million. The project has received wide support from local officials, especially Los Angeles Mayor, Eric Garcetti.

The cleantech industry hub will take shape in L.A.’s established Cleantech Corridor, namely at 5th and Hewitt Streets. The facility aims at attracting young professionals in the field with a look at aiding the community as it becomes a hub for green industries in the city. The project is being financed in partnership with the Los Angeles Department of Water and Power, Clearinghouse CDFI, Consortium America, Los Angeles Development Fund, and Urban Research Park CDE, as well as a sizable donation from Mort La Kretz, after whom the project was named.

When completed, in early 2015, the cleantech incubator will hold up to 40 clean tech companies, and it will create around 600 new jobs in one of the fastest growing sectors. The campus will include a 30,000 square foot facility, as well as demonstration centers, R&D labs, conference facilities, work force training facilities and additional space for companies that will be part of the cleantech hub.

The local support of the innovation campus comes as a result of its central role in the city’s current strategy for economic growth, the development of the Cleantech Corridor being one of the priorities of the local administration. Projects such as the La Kretz campus will attract new, high-paying jobs to an L.A. submarket where the focus is shifting to solving environmental problems and contributing to research going on around the globe.

Rendering courtesy of  laincubator.org 



Record-Breaking Land Deal Completed in Central L.A., Set to Become the Site of New LEED-Certified Industrial Complex

3 Jan 2014, 3:05 pm

By Alex Girda, Associate Editor

The Los Angeles real estate market recorded a milestone recently as the largest land deal in over a decade in the central area of the city was completed when Pacific Industrial, LLC acquired a large plot of land from the City of Bell. The purchase was announced by the local office of commercial real estate services provider, CBRE.

The buyer paid the City of Bell a purchase fee of $44 million for the 39 acres that are currently entitled for 840,390 square feet of mixed-use space. The site formerly served as the home of the World War II Cheli Air Force Base GSA site, and is at the moment vacant and undeveloped. Pacific Industrial was represented by aforementioned brokerage CBRE in the completion of the deal.

According to a recently issued press statement, the new owner will develop a Class A industrial campus on 25 acres of the newly acquired plot, as the first phase of its massive development project. This initial phase will include three buildings totaling 550,000 square feet of space. The second phase of the development will add another structure totaling 300,000 square feet of space located in the immediate proximity of the 710 freeway, with rail service a future option for the site. The company has set an October 2014 deadline for the first phase of development at the site.

Specifics on the end product according to the developer will include state-of-the-art commerce facilities, two-story office space, above-standard skylight counts to maximize the amount of daylight, and 100 percent concrete yard areas. The construction will be developed according to the U.S. Green Building Council’s LEED standards. A number of green features will be used in the development process to ensure its eco-friendly status such as: electric vehicle charging stations, solar-ready roofs and others meant to make the structure one of the most environmentally advanced industrial development projects in the state of California.



Los Angeles Hotels Trade Hands to Chinese Investors

20 Dec 2013, 7:50 pm

By Alex Girda, Associate Editor

Southern California seems to be the perfect hospitality market for Chinese investors as two recent hotel deals were made by different companies entering the city’s real estate market. Chinese real estate developer Hazens Investment completed the acquisition of the Sheraton Gateway Los Angeles Hotel for a fee of $96 million, while earlier this month the Torrance Marriott South Bay was acquired by the Sichuan Xinglida Group Enterprises Co. for $74 million.

Image courtesy of sheratonlax.com

The Sheraton Gateway Los Angeles Hotel is a 15-story facility that is located in the immediate vicinity of Los Angeles International Airport. According to the Los Angeles Times, the property was sold by an affiliate of Long Wharf Real Estate Partners, with representation from Maxim Hotel Brokerage Inc.

The 802-key Sheraton Gateway is the first property acquired by Hazens in the U.S. The new owner will keep Pyramid Hotel Group on as the hotel manager, but will carry out a number of improvements to the hotel. The lobby, common areas and guest rooms will be upgraded by Hazens, in an effort to maintain the facility’s appeal as a site for a number of business meetings.

Image courtesy of marriott.com

The Torrance Marriott South Bay is a 17-story property located near the Del Amo Fashion Center, an 8.4-acre mall, one of the largest properties of its kind in the entire U.S. The property was acquired by XLD Group, a subsidiary of Chinese real estate company Sichuan Xinglida Group Enterprises Co., an entity responsible for a number of mixed-use developments in China. The deal was brokered by Jones Lang LaSalle on behalf of seller DiamondRock Hospitality Co. The 487-key hotel was built in 1987 and underwent its most recent renovation in 2007.The new owner will give the property a makeover and raise its profile as a more upscale location, while Marriott will stay on as the operator.



Hines REIT Agrees to Purchase the Howard Hughes Center from Blackstone Group

19 Dec 2013, 12:02 pm

By Alex Girda, Associate Editor

With 2013 all but over, the Los Angeles real estate market looks set to end the year with a huge headliner as one of the largest office asset acquisitions that the city has seen this year is set to take place. The media has been buzzing over the past week with news that Hines Real Estate Investment Trust Inc. has agreed to purchase the Howard Hughes Center from current owner Blackstone Group LP for a fee of $506 million.

The Howard Hughes Center offers tenants 1.318,682 square feet of office space divided into five Class A office buildings located at 6080, 6060, 6701, 6100 and 6601 Center Drive. Located near the Howard Hughes Promenade, one of the most high-profile shopping spots in the area, the office complex was developed over 15 years between 1987 and 2002. The campus has a vacancy rate of 12 percent, with a tenant roster totaling 93 companies.

Houston-based Hines REIT Inc. has filed paperwork for the completion of this blockbuster deal with the Securities and Exchange Commission, which, according to Bloomberg.com, revealed that the deal will be closed by the 15th of January. The Howard Hughes Center last traded hands when current seller Blackstone acquired it back in 2006, part of a joint acquisition of Trizec Properties Inc., along with Brookfield Office Properties Inc.

The Los Angeles office market is finally showing signs of stabilization after a number of years during which vacancy rates have ballooned to a value of almost 17 percent. Data provided by Marcus and Millichap Real Estate Investment Services shows that, based on their forecast for the final quarter of 2013, the end of the year will mark a plateau for greater downtown’s vacancy rate.

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com



Hines REIT Agrees to Purchase the Howard Hughes Center from Blackstone Group

13 Dec 2013, 5:30 pm

By Alex Girda, Associate Editor

With 2013 all but over, the Los Angeles real estate market looks set to end the year with a huge headliner as one of the largest office asset acquisitions that the city has seen this year is set to take place. The media has been buzzing over the past week with news that Hines Real Estate Investment Trust Inc. has agreed to purchase the Howard Hughes Center from current owner Blackstone Group LP for a fee of $506 million.

The Howard Hughes Center offers tenants 1.318,682 square feet of office space divided into five Class A office buildings located at 6080, 6060, 6701, 6100 and 6601 Center Drive. Located near the Howard Hughes Promenade, one of the most high-profile shopping spots in the area, the office complex was developed over 15 years between 1987 and 2002. The campus has a vacancy rate of 12 percent, with a tenant roster totaling 93 companies.

Houston-based Hines REIT Inc. has filed paperwork for the completion of this blockbuster deal with the Securities and Exchange Commission, which, according to Bloomberg.com, revealed that the deal will be closed by the 15th of January. The Howard Hughes Center last traded hands when current seller Blackstone acquired it back in 2006, part of a joint acquisition of Trizec Properties Inc., along with Brookfield Office Properties Inc.

The Los Angeles office market is finally showing signs of stabilization after a number of years during which vacancy rates have ballooned to a value of almost 17 percent. Data provided by Marcus and Millichap Real Estate Investment Services shows that, based on their forecast for the final quarter of 2013, the end of the year will mark a plateau for greater downtown’s vacancy rate.

Chart courtesy of Marcus & Millichap Real Estate Investment Services at marcusmillichap.com







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