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Investment sales team led by Meisel, Potts, Weir, Conley, Nicholson & Diorio HFF closes $109m sale of downtown Washington, DC office building W ASHINGTON, DC – HFF closed the $109 million sale of
ISSUE HIGHLIGHTS Volume 27 Issue 7 April 10 - 23, 2015
tels. The building is proximate to four metro stations: Farragut North and West, Dupont Circle and Foggy Bottom. The build- ing features 173,229 s/f of office, 16,886 s/f of retail and 5,509 s/f of storage space in addition to a 4,500 s/f roof terrace and three levels of below-grade parking containing 242 spaces. Tenants of the 100% leased building in- clude Kaplan, Radio Free Asia, and Smith Bucklin. The HFF investment sales team was led by senior manag- ing directors James Meisel, Dek Potts and AndrewWeir , executive managing director Stephen Conley, associate director Matthew Nicholson and senior real estate analyst Jessica Diorio. n
ALLENTOWN, PA — Mis- sion Capital Advisors ar- ranged $41 million in ac- quisition and repositioning financing for 1110 American Parkway NE, a 563,000 s/f , class A office building in the heart of Pennsylvania’s fast growing Lehigh Valley. The Mission Capital team of Jonathan More, Alex Dra- ganiuk and Axel DeAngelis represented Patriot Equities on an exclusive basis in secur- ing the financing. “Our team was tasked with the challenge of arranging full leverage financing on a 2025 M St. NW, a 195,624 s/f office building in downtown Washington, DC’s Golden Tri- angle area. HFF marketed the prop- erty on behalf of the seller, a partnership between The Oli- ver Carr Company and Clark Enterprises, Inc. Mikeone EK purchased the asset. The eight-story 2025 M St. NW is situated between 20th and 21st Streets NW within downtown Washington, DC’s Golden Triangle, an area that encompasses 43 blocks and houses 3,000 businesses, more than 500 retail shops and res- taurants and seven luxury ho-
11-19A
EquityRetail Brokers represents the Cato Corporation in lease
2025 M Street NW
Mission Capital Advisors arranges $41 million in financing for class ALehigh Valley office property
5B
Rittenhouse Realty Advisors celebrates 2 Year Anniversary
10C
1110 American Parkway NE the seller. Patriot Equities’ institutional-quality sponsor- ship, along with aggressive and exemplary leasing prow- ess during the contract period, helped our team craft the right story needed to nearly full- leverage financing.” The 2002-built, class A of- fice property was developed by a subsidiary of Lucent, an AT&T joint venture, which spared no expense in creat- ing this best-in-class asset with top-tier infrastructure and amenities. Upon acquisi- tion, Patriot Equities is set to
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short-fuse acquisition with 40 days to close. We were also presented with a host of mov- ing parts and unknowns, such as substantive property lease- up during the contract period, including post-lender term sheet execution prior to loan closing, which required addi- tional negotiation and capital source flexibility,” said More. “The Property itself is the top suburban office asset in Penn- sylvania. The Sponsor suc- ceeded in tying it up directly off-market at a very attractive basis after 10 years of courting
invest approximately $7 mil- lion in capital improvements, including renovations to the lobby and common areas. The sponsor will also initiate tenant improvements for the 475,000 s/f of leases negoti- ated and executed during the contract period. “With Patriot Equities’ reputation as a premier real estate investor and the excel- lent condition of this class A property, we received sig- nificant interest from wide array of capital sources,” said Draganiuk. n
DelMarVa.................................................................5-6A Financial Digest......................................................7-20A New Jersey....................................................... Section B Southern New Jersey. ............................................5-11B Pennsylvania.................................................... Section C Eastern PA.............................................................. 3-14C
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26th Annual NJAA Conference & Expo a nc
The 2015 NJAA Conference & Expo is the ultimate industry showcase for New Jersey’s multi-family housing professionals to network and build connections. Together more than 1,500 attendees are anticipated to participate, along with aptproximately 200 exhibit booths as they display the latest in products and services on the tradeshow floor. Our three day conference will also feature many important education sessions, and exciting networking events! The 2015 NJAA Conference & Expo is the ultimat industry showcase for New Jersey’s multi-family housing professionals to network and build connections. Together more than 1,500 attendees are anticipated to participate, alo g ith aptproximately 200 exhibit bo ths as they display the latest in products and services on the tradeshow floor. Our three day conference will also feature many important education sessions, and exciting networking events! ATLANTIC CITY CONVENTION CENTER & THE WATER CLUB AT THE BORGATA HOTEL ATLANTIC CITY, NJ May 19th May 21st ATL NTIC CITY CONVENTION CE TER & THE WATER CLUB AT THE BORGATA HOTEL ATLANTIC CITY, NJ May 19th May 21st ATLANTIC CITY CONVENTIONCENTER & THE WATER CLUB AT THE BORGATA HOTEL ATLANTIC CITY, NJ MAY 19TH - MAY 21ST
Here are just some of the reasons why YOU should attend: • Network with over 1,500 industry leaders; • Receive Continuing Education Credits by attending many of our Education Sessions; • Gain valuable insight from leading national owner members during our Opening General Session; Here are just some reasons w y YOU should attend: Network with over 1,500 industry leaders; Receive Continuing Education Credits by attending many of our Education Sessions; Gain valuable insight from leading nation owner members during ur Opening General Session; Hear from our Keynote Speaker: Vernice "Fly Girl" Armour during her presentation of "Zero to Breakthrough"; Receive the latest information from approximately 200 Exhibitors on products and services offered in the multi-housing industry; A chance to be the lucky winner of our $5,000 GRAND PRIZE during our Expo Floor Cocktail Reception; Atten the ever popular President's Reception & the After Hours Party....AND MORE! • Hear from our Keynote Speaker: Vernice “Fly Girl” Armour during her presentation of “Zero to Breakthrough”; • Receive the latest information from approximately 200 Exhibitors on products and services offered in the multi-housing industry; • Don’t miss your chance to be the lucky winner of our $5,000 GRAND PRIZE during our Expo Floor Cocktail Reception! • Attend the Exclusive Diamond Reception (open to Owner members), Popular President’s Reception, & After Hours Dance Party! ` …And more! Here are just some of the reasons why YOU should attend: • Network with over 1,500 industry leaders; • Receive Continuing Education Credits by attending many of our Education Sessions; • Gain valuable insight from leading national owner members during our Opening General Session; • Hear from our Keynote Speaker: Vernice “Fly Girl” Armour during her presentation of “Zero to Breakth • Receive the latest information from approximately 200 Exhibitors on products and services offered in multi-housing industry; • Don’t miss your chance to be the lucky winner of our $5,000 GRAND PRIZE during our Expo Floor Cocktail Reception! • Attend the Exclusive Diamond Reception (open to Owner members), Popular President’s Reception, & After Hours Dance Party! ` …And mor DON'T MISS OUR OWNERS' ROUNDTABLE REDEFINING THE IMAGE OF AN INDUSTRY THAT PROVIDES, MAINTAINS, AND BUILDS A MILLION HOMES Date: Tuesday, May 19th Time: 10:30 am - 12:00 pm Location: Atlan ic City Convention Center Hear from leaders in the multifamily housing industry on key issues such as: community revitalization; job growth and economic development; rental market fundamentals; and changing industry trends. Our panel of experts will give you key insights into New Jersey’s rental housing market and their expectations for the future. Our Panelists Include: Michael Barry, President/CEO, Ironstate Development and Applied Property Mgmt. Christiana Foglio, Founder/CEO, Community Investment Strategies, Inc. Richard Kurtz, Founder/CEO, The Kamson Corporation Mitch Morgan, Founder/CEO, Morgan Properties Marc Ross, Chairman-Elect, National Apartment Association & President, Bob Ross Realty Panel Moderated by: Joshua Burd, Managing Editor, NJ BIZ
2015 Online Exhibit Booth Reservations & Sponsorship Opportunities Now Available!
Visit the NJAA website at www.njaa.com or by contacting membership services at membership@njaa.com or (732) 992-0600 for more information. To register for the conference, reserve a booth or for sponsorship opportunities visit the NJAA website at www.njaa.com or contact NJAA headquaters at (732) 992-0600.
2015 Online Exhibit Booth Reservations & Sponsorship Opportunities Now Available!
Visit the NJAA website at www.njaa.com or by contacting membership services at membership@njaa.com or (732) 992-0600 for more information.
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Agenda 7:55 AM – 12:00 PM 7:15AM Registration & Continental Breakfast
7:55 AMWelcome & Introduction 8:00 AMMarket Update: An Evaluation of the Office Market & What Tenants require today • Vacancy Rates: Newark and Suburban office market update • Leasing trends: what projects are leasing up and why • What are the factors driving demand • How has the needs of tenants affected what brokers need to know • What do tenants demand today and what do terms look like today • Predictions on where the office market will be in the next two years 9:00 AM Critical Capital Markets & Investment Strategies • Where are the markets today and what finance vehicles are available • Where are rates at and where are they heading • Who is Buying What & Why • Where is trading and what are the CAP rates • How are appraiser valuations effecting sales • Office investment predictions for the next two years • Where is the CMBS market today 10:00 AM Break
10:10AMThe Value of Tenant Improvements in securing a new lease and retaining tenants • The importance of working with a credible contractor • The importance of design and pre-planning – how that correlates to leasing and developing a more profitable project • How to meet the requirements of the Tenant and the Landlord • How quality Tenant Improvements can help spur leasing activity • Current pressures on the design/construction market • Project Schedules: How the improving construction market is impacting project timelines • Future Trends in Tenant Improvements 11:05 AMThe Future of Office Development: Developer Titans Panel • Dealing with today’s challenges and is activity picking up • How do we overcome these challenges and what is needed to do to spur growth • What types of development projects will we see first • What is in store for downtown development • When will the next spec building be built • Construction trends and changes that will affect our industry • What are your predictions for the next 1 year 12:00 p.m. Networking
For speaking and sponsorship information please contact Linda Christman at Lchristman@marejournal.com or 781-871-3456 Early Bird Rates Apply
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Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Section Publisher .................................................................... Steve Kelley Associate Publisher .............................................................Alissa Aronson Associate Publisher ..........................................................Barbara Holyoke Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant ....................................................................Julie King Office Manager .................................................................... Joanne Gavaza Contributing Columnists ........................................................... Yasir Billoo Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockland, MA 02370 USPS #22-358 | Vol. 27 Issue 7 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com
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Renter Beware: Top Considerations for Commercial Leases Yasir Billoo
J.D. Parker Manhattan
Brian Hosey New Jersey (201) 582-1000 Bryn Merrey Washington, D.C. (202) 536-3700
B
usiness leases (also known as commercial leases) are increasing
(212) 430-5100 Brenton Baskin Philadelphia (215) 531-7000
in complexity and length, with the potential for many pitfalls if the reviewer is not careful. Whether your business is en- tering into a lease for simple office space or a large retail operation, it is worth the effort (and relatively minimal cost) to have an attorney review the commercial lease and, if necessary, negotiate the legal terms of the lease with the landlord. Here are some of the most important considerations for potential tenants of all com- mercial leases: Personal Guaranty Landlords often require one or more personal guaranty of the lease. Your first goal should be to try to negotiate the guaranty language out of the lease altogether, by offering the landlord added security, such as a larger security deposit. If that does not work, and you believe the
The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
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lease will be profitable enough to risk personal liability, you should try to include as many limitations into the guaranty as possible. Landlords will negotiate with you on such limitations, but you need an attorney to guide you on the appropriate language to best protect you. Breach & Default Provi- sions You should require written notice followed by a grace period before the landlord may exercise default rights; the grace period allows a cure period for the tenant to make a late rent or comply with another requirement of the lease. Otherwise, in Florida, the landlord must only give
continued on page 22A Finally, and most impor- tantly, most commercial leas- es have consequences once a default is uncured and many such provisions give landlords the right to re-enter the prem- ises and lock you out, without a court order to do so. While self-help for commercial leases is not permitted in Florida, you 3 days to pay or vacate the premises. Additionally, you should try to negotiate a maximum amount of damages in the event of tenant default, such as three months of base rent, similar to the negotiations referenced in the section re- garding personal guaranties, above.
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DelStar Construction to execute renovations Evergreen Apartment Group arranges$25msaleof384-units
Fritz represents buyer of 27,305 s/f NAI KLNB inks $2.95m sale of former bank
N
ewark, DE — E vergreen Apart- ment Group Inc.
of New Castle, Del. recently arranged the sale of Village of Windhover Apartments, a 384-unit community located in Newark, for $25 million. Fannie Mae provided fi- nancing for the property, owned by Village of Wind- hover LLC. Key Bank ser- viced the loan and AMA Financial was the mortgage broker. The community will be re- branded as Evergreen Apart- ments at Christiana Reserve. The property features 32 complete concrete building structures and is built on 21 acres with 395,000 s/f of rentable space. The prop- erty consists of a mix of one-, two-, and three-bedroom apartments, with rents for one-bedroom units starting at $799 and for two-bedroom units starting at $949. The community has a current oc- cupancy of 90%. The community is located off Rte. 1, half way between Philadelphia and Baltimore. McLEAn, VA — ci de- sign, inc. , an international planning, architecture and interior design services firm, served as design lead for the renovation of the recently constructed elevator enclo- sure at the Tysons Galleria in McLean, Virginia. Located in the mall’s cen- ter court, the internally lit elevator enclosure includes an integrated LED display for advertising. The feature was designed to complement the three-level shopping center’s upscale tenants and premier luxury shops. “The property owner, Gen- eral Growth Properties (GGP) , approached us with the challenge of creating a contemporary statement in the center court, anchored by the Ritz Carlton and Lord & Taylor, that would not obstruct tenant views. With
1614 Churchville Rd.
BEL AIR, MD — NAI KLNB has brokered the sale of the former Slavie Federal Savings Bank building, lo- cated at 1614 Churchville Rd. in Bel Air, Maryland to 1614 Churchville Road, LLC for $2.95 million. David Fritz of NAI KLNB represented the buyer and Beetle Smith and Tom Motley of MacKenzie Commercial Real Estate Services represented the seller, the Federal Deposit Insurance Corporation in this transaction. The independent agency of the United States Govern- ment assumed ownership and control of the three-story, 27,305 s/f building, located near the intersection of MD Rtes. 22 and 543 in Bel Air, upon the closing of Slavie Fed- eral Savings Bank last spring. The new owner, affiliated with Bramhall-Hitchen Insur- ance in Newark, Delaware, has acquired Bel Air-based WSMT Insurance and plans to utilize this building for the new offices of the insurance agency that offers products serving individuals as well as the dental, medical, hospital- ity, manufacturing, not-for- profit, property management, construction and wholesale in- dustries. The offices are being relocated fromEast Broadway in Bel Air. In addition, three separately-owned businesses will continue to operate within this building. “This classically-designed office building is recognized as among the most aesthet- ically-pleasing commercial real estate products in the
Harford County region, and the investor/user interest in this property was extremely high,” said David Fritz of NAI KLNB. “The new owner is able to take occupancy of this building with minimal tenant improvements, based on the pristine condition of the space. In addition, the owner assumes the leases and income of three stable and high-quality tenants with the ability to increase the cash flow with available class ‘A’ office space for rent.” COLUMBIA, MD — Sig- nal Outdoor has signed a lease with Kenwood Man- agement , on behalf of its affiliate Hampton Centre East, for 5,469 s/f of space at 9225 Hampton Overlook in the Capitol Heights section of Prince George’s County, Maryland. Alan Coppola , Josh Halbedel , and Mike Miller of NAI KLNB repre- sented the landlord and Greg Ferraro of JLL represented the tenant in this transaction. Hampton Overlook is a two- building portfolio contained within the Hampton Center East industrial park. “We are thrilled to be a new member of the Capitol Heights business community,” said Mary Niemeyer, general manager DC Division. “The owner recently re- placed the roof on two build- ings in the portfolio, and up- graded the entire landscaping package, which significantly improved our leasing efforts,” said Alan Coppola of NAI KLNB. n
Village of Windhover Apartments
Christiana Reserve is built over an infill area near nu- merous retail and office des- tinations. Evergreen Apar tment Group plans to initiate an extensive renovation project that will include a lifestyle and fitness center, commu- nity clubhouse, and a variety
of exterior building and site improvements. The renova- tions will also include interior unit remodeling including replacements of kitchens and bathrooms. Del-Star Con- struction , a subsidiary of Evergreen Apartment Group, will execute a majority of renovations. n
Construction completed on Tysons Galleria Center Court renovations in McLean, VA
Tysons Galleria elevator enclosure
our partners, were able to integrate an LED display into the enclosure, instead of sim- ply hanging it,” said ci design
principal, Chris Bauer . ci partnered with Daktron- ics and AdVice to complete the project fabrication. n
4A — April 10 - 23, 2015 — M id A tlantic
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D el M ar V a 1 Milestone Center Court receives $3 million in renovations DRS moves 250 employees into Matan Companies’ newly renovated 133,140 s/f building
ermantown, MD — DRS Technolo- gies has moved 250 employees into 1 Milestone Center Court in German- town, after completing over 3 million dollars in renova- tions to the 133,140 s/f build- ing. DRS signed a long-term lease with Matan Compa- nies in February of 2014 as part of an area consolidation that included relocation from their aging manufacturing and engineering facilities at 700 Quince Orchard Rd. in Gaithersburg. DRS began the extensive renovations in June after JDSU relocated G
to 20250 Century Blvd. in Germantown. DRS’ new Germantown facility will house DRS Sig- nal Solutions, together with personnel from other DRS divisions. “DRS is a great addition to the Milestone campus,” said JP Matan , director of leasing for Matan Companies. “Their long-term commitment to Germantown and anticipated expansion is a boost to the I-270 Corridor.” Matan recently announced its plans to add 485 apart- ment units, 28,000 s/f of street level retail, and im- proved access to Milestone
Business Park, transforming this traditional office park into a true live, work, play environment destination. n Divaris completes four leases for over 25,000 s/f of office space RICHMOND, VA — Ger- ald S. Divaris , chairman and CEO of Divaris Real Estate, Inc. (DRE) , an- nounced the signing of four leases totaling over 25,000 s/f of office or flex space in Richmond. All leases were handled out of DRE’s Rich- mond office. SignScapes, Inc., leased 12,000 s/f of office/warehouse space at 7519 Ranco Rd. With this lease, the company moves into larger office and production space within the same complex. DRE’s Brett McNamee represented the tenant in the negotiations with the landlord, Bertozzi Family Limited Partnership. Richmond Radiant Health leased 6,494 s/f of office space in Huguenot Trade Center, located at 1105 Alverser Dr. This lease represents a relocation and expansion for Richmond Radiant Health. McNamee represented the tenant in the negotiations with the landlord, CH&B Associates, LLP. Boxwood Capital Partners, LLC leased 4,550 s/f of office space in Shockoe Centre at 11 South 12th St. Boxwood Cap- ital Partners is a Richmond, Virginia-based private equity firm focused on investing in and acquiring profitable lower-middle-market compa- nies with attractive growth prospects in a variety of in- dustries, such as e-commerce, manufacturing, franchising, business services, distribu- tion, and consumer products and services. McNamee han- dled the lease negotiations on behalf of the landlord, James K. Coyne, LLC. Wilmer Hernandez leased 2,355 s/f of industrial space in the Divaris-leased and -man- aged South Belt Flex complex at 133 East Belt Blvd. The space will be used for online retail sales of cars. John Madures of the Richmond office of Divaris Real Estate represented the landlord, South Belt Flex, LLC in the lease negotiations. n
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Commercial-Industrial Realty Council Join CIRC Now and Get Great Value! Great CRE Events ...Cont. Education...Speakers...Networking www.circdelaware.org
Annual Economic Forecast
Gubinatorial Address
Schedule of Upcoming Events MEMBERSHIP LUNCH EVENTS March. 11, 2015 (Wed.) Clarion Belle Speaker: Michael Hare, Buccini/Pollin Group April 8, 2015 (Wed.) Clarion Belle May 14, 2015 (Wed.) Clarion Belle Speaker: Paula Swain, Incyte Corporation ANNUAL GOLF OUTING June 29, 2015 (Mon.) Hartefeld National R.E. CONTINUING EDUCATION * Mod. 7 / Contemporary Issues Mod. 3 / Real Estate Documents Clarion Hotel-The Belle * Visit us on the web: CircDelaware.org for more information on our course provider and credits for DE*MD*PA*NJ: circdelaware.org/education/schedule.cfm Good Times / Great Reasons to Join CIRC! www.CircDelaware.org October 14, 2015 (Wed) * Mod. 4 / Office Management Mod. 5 / Legislative Issues: Agency Clarion Hotel-The Belle January 13, 2016 (Wed) *
2014 Board of Directors President John Birmingham Cushman & Wakefield Vice President Bert Root Harvey Hanna & Associates Treasurer Katherine L. Silicato, CPA Gunnip & Company, LLP Secretary Bayard J. Snyder, Esq. Bayard & Associates Directors /Committee Education Chair: Dan Lesher Patterson Woods Associates Legislative Chair: J. Gregory Ellis Patterson-Woods Associates Program Chair: Donald Robitzer The Commonwealth Group Membership Chair: James Manna MidCoast Community Bank Benjamin J. Berger, Esq. Berger Harris, LLC Jim O’Hara, Jr. NAI Emory Hill-Retail Div. Rachael Justice ATAPCO Christiana Marvin Sachs Bellevue Realty Co. BrightFields, Inc. Jeremy Abelson C. S. Kidner & Associates Economic Dev. Liaisons New Castle County Chamber Bob Chadwick NCC Ec. Dev. Council State of Delaware David Archer DEDO NCCo. Rep. City of Wilmington Jeff Flynn Office of Economic Dev. Contact Us www.circdelaware.org (302) 633-1705 janet@circdelaware.org Ex-Officio Members Business Manager Janet S. Pippert CIRC / Landmark Science & Engineering Legislative Lobbyist C. Scott Kidner
February Keynote: Augustine (Gus) Faucher, The PNC Financial Services Group John Birmingham ( CIRC Pres.) Cushman Wakefield (right)
January Keynote: Jack A. Markell, Governor State of Delaware Bert Root (CIRC VP), Harvey Hanna & Associates left) John Birmingham ( CIRC Pres.) Cushman Wakefield (right)
Thank you Joe Allen, Sonitrol (right) for your photography sponsorship.
Thank you Bruce Jones, PNC (center), for arranging for our Economic Forecast speaker.
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Real Estate Journal — April 10 - 23, 2015 — 7A
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HFF obtains $54.65m financing for Pittsburgh office campus
ASHINGTON, DC — DTZ has secured $45 million in fi- For 176,297 s/f class A office building in Northwest DC DTZ’s Mudd & Geiger secures $45 million in financing W
nancing for 1133 Connecti- cut Ave., a 12-story, 176,297 s/f class A office building in Northwest DC. Connecticut DeSales, LLC is a partner- ship consisting of the Lenkin Family, Lerner Enterprises and others. Executive managing direc- tor Philip Mudd and vice president Bradley Geiger of DTZ arranged the long-term fixed-rate financing on behalf of Lenkin Company. A pension fund provided the mortgage. 1133 Connecticut Ave. is located at the center of Wash- ington, DC’s Central Business District in the Golden Triangle and features many premier tenants including Wells Fargo and H&M. The building is less than one block from the Farragut North To facilitate this transac- tion, Eastern Union’s Jeff Seidenfeld negotiated a $19.5 million five year loan. Financing was arranged with Investors Bank. Eastern Union Funding ar- ranged a $20 million loan for ground up construction on 99 Morningside Ave. on behalf of Azimuth Development Group LLC. Seidenfeld brokered the loan, which covers 100% of construction costs and 90% of the client’s out of pocket costs—a loan with a storyline in its own right for what will be a game-changing piece of real estate in West Harlem. Provided by Madison Real- ty Capital , the loan features two years interest-only with an interest rate of 11.5%. “Normally, paying double digit rates is very high, and most of our construction loans are sub-five percent,” Seiden- feld said. “In this case, the fi- nal product was cheap equity.
Allegheny Center Office Complex
PITTSBURGH, PA – HFF has arranged $54.65 million in financing for the Allegh- eny Center Office Complex, a three-building campus totaling 1.22 million s/f on Pittsburgh’s North Shore. Working on behalf of Faros Properties, LLC, HFF placed the three-year, floating-rate loan with Wells Fargo Bank. Loan proceeds were used to purchase the property and make capital improvements. Allegheny Center Office Complex consists of One and Two Allegheny Square and the Concourse in addition to a parking garage with 2,550 spaces. The eight-story One Allegheny Square has 156,914 s/f, and the 13-story Two Al- legheny Square has 265,953 s/f. Tenants include PNC, Bank of America and numer- ous data center companies. Located along Pittsburgh’s
financial services profes- sional with nearly 30 years of experience in commercial real estate financing. In his new role, Doherty will be securing debt and equity on behalf of clients while work- ing closely with the invest- ment sales professionals in that office. He will report to Mike Riccio , senior manag- ing director and co-head of production, CBRE Capital Markets. “Bringing Steve on board begins an exciting new ven- ture here in CBRE’s Phila- delphia region,” said Bob Walters , executive manag- ing director, CBRE. n “Faros has done a tremen- dous job with the apartments at Allegheny Center, and their plans for the office portion of the complex are very excit- ing,” Sansosti said. “They have brought a fresh approach to the Pittsburgh commercial real estate market, and their long-term approach is positive for the assets that they have acquired.” n North Shore in the Greater Downtown Pittsburgh market, the property has a Walk Score of 91 and is blocks from the Pittsburgh Light Rail Tran- sit, known as the “T.” Faros is planning significant capital improvements to the complex. The HFF debt placement team representing the borrow- er was led by executive manag- ing director Gerard Sansosti , senior managing director Nick Matt and senior real estate analyst Tom Rieck .
1133 Connecticut Ave.
Metro station and two blocks from the Farragut West sta- tion, as well as within walking distance to the White House, the global headquarters of the International Monetary Fund, and theWorld Bank. Addition-
ally, it is directly across the street from the historic May- flower Hotel The property recently re- ceived LEED certification from the U.S. Green Building Council at the “Gold” level. n
Eastern Union Funding arranges $44.1 million BROOKLYN, NY — East- ern Union Funding ar- ranged a $19.5 million acqui- sition loan on behalf of a buyer operating as 270 Meserole Street LLC.
CBRE launches Debt & Structured Finance Practice in Philadelphia
270 Meserole Street Interior
Philadelphia, PA — CBRE Group, Inc. an- nounced that CBRE Capital
This leverage would have been impossible had we gone with a conventional bank, the cli- ent would have had to put up substantially more equity and possibly taken out a partner- ship.” WASHINGTON, D.C. — Eastern Union’s David Mer- kin , based in the firm’s Mid- Atlantic office, originated and arranged a non-recourse seven-year $4.6 million loan carrying a competitive inter- est rate. It closed with Inves- tors Bank , which is based in New Jersey, lends to a broad range of markets and consis- tently expands its banking
footprint. Merkin worked with Inves- tors to refinance this property – despite its location to the south of the Short Hills-based lender’s typical market. In do- ing so, the bank tapped into one the most thriving real estate corridors in Washing- ton DC. “This was the easiest refi- nancing I’ve ever done,” said managing member Ronald Bergman . “Today, they make you jump through a lot of hoops, but thanks to David and the team at Investors, we avoided all that – we had our ducks in a row.” n
Markets has e x p a n d e d its Debt & Structured F i n a n c e p r a c t i c e with the for- mation of a d e d i c a t e d team in the
Steve Doherty
greater Philadelphia region. Steven Doherty has been appointed senior vice president to lead the team and is based in CBRE’s Wayne, Pennsylvania, office. Doherty is a high-performing
8A — April 10 - 23, 2015 — M id A tlantic
Real Estate Journal
www.marejournal.com
F inancial D igest By Mark Scott, Commercial Mortgage Capital Locking in today’s low rates
T here is has been a rap- id rise in rates over the past three weeks. While many people are say-
rates decline, you can jump in and lock at these low levels. If rates continue to rise, you can be prepared to lock the rate when you feel ready. Once rates start rising, lenders will be swamped with deals and pipelines and delays will grow. Rate locks will be delayed as mortgage bankers scurry to underwrite loans Then, most importantly --secure the at- tention of the lender to focus on, and issue a quote and an application in order to lock a rate. All this takes time. Be ready. Indeed, Federal Reserve Chair Janet Yellen seems to
be setting the stage for rate hikes this year. She noted in her Semiannual Monetary Policy Report to the Congress that if economic conditions continue to improve, as the Committee anticipates, the Committee will at some point begin considering an increase in the target range for the fed- eral funds rate on a meeting- by-meeting basis. Before then, the Committee will change its forward guidance. However, Ms. Yellen said, “it is important to emphasize that a modification of the forward guidance should not be read as indicating that the Commit-
tee will necessarily increase the target range in a couple of meetings. Instead the modifi- cation should be understood as reflecting the Committee's judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting. Provided that labor market conditions continue to improve and further improve- ment is expected, the Commit- tee anticipates that it will be appropriate to raise the target range for the federal funds rate when, on the basis of in- coming data, the Committee
is reasonably confident that inflation will move back over the medium term toward our two percent objective.” Though we can expect to see more transactions in 2015, there is still a level of uncer- tainty in the market, com- bined with continued confu- sion about the fate of interest rates. As a result, now is the time for borrower’s to lock in today’s low rates with a sea- soned mortgage professional. Call us. Mark Scott is principal of Commercial Mortgage Capital, based in Livings- ton, NJ. n CHCcloses $8.5 million loan Chatham, NJ — David Turley, Janet Proscia and Jeffrey Pacailler recently secured an $8.5 million CMBS loan for a Hampton Inn & Suites in a secondary Tennes- see market. The loan amount represents the client’s entire cost basis in the property. CHC successfully obtained a loan at 65% LTV on a 10/25. The interest rate was locked in the low 4%’s at a spread of 195bps over the 10-year Swap rate. CHC was also able to negotiate a full wavier of cash management for DSCR, a very attractive feature for the client. David Turley said, “This was a challenging assignment even at 65% LTV given the cash out and the property’s limited operating history. However, CHC was able to successfully communicate the strengths of the Property which were backed up by impressive per- formance metrics - occupancy, ADR and RevPAR - within its comp set.” “We ran a thorough mar- keting process,” added Janet Proscia, “and asked lenders to bid on both the economic and legal terms of the transaction. The client was very pleased to secure not just an attractive rate but also flexible terms that will make the loan easy to live with over the next 10 years.” n Hampton Inn & Suites
i n g t h a t rates will de- cline again, a number of Federal Re- serve presi- d e n t s a r e saying that t h e y m a y raise rates
Mark Scott
as soon as this coming July, or September. As a result, now is the time to prepare to refinance any loans on the next 18 month horizon. If
Real Estate Journal — April 10 - 23, 2015 — 9A
www.marejournal.com
M id A tlantic
F inancial D igest Regional Capital Group Alternative Project Funding with EB-5 and Build to Suit Capital
uild to Suit Today’s lending en- vironment requires a higher level o f c ap i t a l investment from inves- t o r s a n d developers l ook ing t o develop, ac- qui re , sel l and/or joint venture projects across a B Paul Braungart G.S. Wilcox & Co. arranges $60.625m with Thrivent Financial Morristown, NJ — G.S. Wilcox & Co. arranged financ- ing in the amount of $60.625 million, arranged by Gretchen Wilcox , president, and Al Raymond , principal of G.S. Wilcox & Co. Five loans have been made with Thrivent Financial for Lutherans. One loan for $9.95 million was secured by a 230,000 s/f warehouse building located at Exit 8A. The property has a single tenant on a short-term lease; the lender allowed a mas- ter lease until a replacement tenant is found. The loan was fixed for 15 years, and had a 25 year amortization. Four additional loans include two South Brunswick, NJ prop- erties totaling 916,012 s/f of industrial warehouse space for $29.925 million, a third loan for $11.375 million for a 169,627 s/f industrial warehouse build- ing located in Moonachie and a fourth loan for $9.375 million for warehouse space located in Lyndhurst. n Elkton, MD — David Turley and Janet Proscia of CronheimMortgage secured a $16.16 million securitized loan for the mixed-use prop- erty located on East Pulaski Hwy. in Elkton. The fund- ing retired existing debt and enabled the owner to recover substantial trapped equity. The 70% LTV, 85% loan-to- cost financing was locked for a 10-year loan term on a 30-year amortization schedule. The Project includes a 78,800 s/f medical office build- ing converted from a former Wal-Mart. n CronheimMortgage secures $16.16m for office & retail prop.
has the ability to provide up to 100% of the capital for these properties allowing clients to preserve capital for future projects. There is a wide range of asset classes eligible for this funding op- tion including Corporate offices; data centers; call centers; warehouse/distribu- tion facilities; governmental or state-run facilities; truck terminals; manufacturing; all retail including big box; drug stores; restaurants; auto service centers/dealerships; national furniture stores; convenience stores; medical
office and acute care; univer- sity buildings including hous- ing; prisons or correctional facilities; bank sites includ- ing branches and operation centers. EB-5 EB-5 is an alternative fi- nancing option for qualified, job-creating projects focused on construction and invest- ments in commercial real es- tate, healthcare, hospitality, recreation, and manufactur- ing sectors. EB-5 provides a very flexible and low cost of capital for real estate projects that create construction jobs.
It is a source of funding not provided by typical capital sources and can be structured to supplement traditional institutional debt. EB-5 can be in the form of senior debt, subordinate debt, mezzanine, or preferred equity to com- plete the capital stack. Paul Braungart the president of Regional Capital states “having managed multiple opportunity funds and raised capital all of the world, EB-5 is the lowest cost and most flexible form of capital I have come across in my 30 + years of experience”. n
broad spectrum of real es- tate asset classes. RCG of- fers a principal built-to-suit platform, which is typically geared towards construction of a building for a single ten- ant asset or a property where one tenant is at least 50% of the building. This structure provides another avenue for developers, tenants, and investors of real estate as- sets obtain full funding for a project which will conserve capital for future projects. RCG also structures a sale- leaseback program designed for these types of assets. RCG
FANNIE MAE LOAN $27,075,000 Acquisition of 196-unit garden apartments Yardley, PA
FREDDIE MAC LOAN $10,137,000 Acquisition of 120-unit garden apartments Dover, DE
FHA 221(D)(4) LOAN $23,025,300 Newconstruction financing 160-unit garden apartments Frederick, MD
CONDUIT LOAN $20,000,000 Acquisition of 182,583 sf retail center Phillipsburg, NJ
Building relationships is important.
Understanding what’s important. At M&T, we know that growing and maintaining strong relationships with our customers truly matters. This is how our experienced origination, underwriting and asset management teams provide financing solutions that meet each borrower’s unique needs. And our customers like the way we do business. We’re proud that 75% of our new business comes from repeat borrowers. Find out how you can become one of them.
Contact us at 1-800-737-2344. mandtrealtycapital.com
Basedon internalcustomerdata.All loansandall terms referencedhereinaresubject to receiptofacompleteapplication,creditapprovalandotherconditions. ©2015 M&T Realty Capital Corporation.
10A — April 10 - 23, 2015 — M id A tlantic
Real Estate Journal
www.marejournal.com
F inancial D igest By H. Jack Miller, Gelt Financial Corporation How do investors receive liquidity for their minority interest positions in real estate partnerships? O ne common invest- ment strategy in commercial real es- ship through the secondary market, or any outside real estate investor.
cash-flow problems arise and quick liquidity is required, we provide a reliable exit strategy. H. Jack Miller, Gelt Fi- ancial Corporation. n
turns. In example, ten real estate investors want to buy a commercial building for $1,000,000. If they each invest $100,000 they can pur- chase that property and each investor would receive a 10% minority interest position in the partnership. While pooling funds to purchase larger and more de- sirable properties has many benefits, it also has many downfalls. One of the major problems that minority inter- est owners face is illiquidity. Since the authority to sell the investment property is usually left to the majority
members or managing mem- bers, the minority interest investors face limited routes when financial problems arise and they need access to quick capital. The managing members are legally bound to do what is best for the partnership’s investment as a whole, which is often to not sell the investment property. This prevents minority in- terest investors from selling their shares at fair market value. Minority interest owners do however have the ability to sell their minority position in the real estate partner-
t a t e i s t o bring mul- tiple real es- tate inves- tors together to pool their cap i t a l i n o r d e r t o p u r c h a s e a property
We are direct buyers of minority interest in real estate partnerships. When
Eastern Consolidated arranges $236m sale of Kings Portfolio
Group LLC and DavidMalek of Malek Management LLC acquiring the 15-property rental portfolio from Urban American. Eastern Consolidated chairman and CEO Peter Hauspurg , principal and ex- ecutive managing director David Schechtman , princi- pal and senior director Peter Carillo , and director Marion Jones represented the seller in the transaction. Eastern Consolidated senior managing director and principal Lipa Lieberman represented the buyer. Senior director of fi- nancial services Gary Meese , served as the analyst in the transaction. The 1.5 million s/f portfolio includes a total of 1,434 apart- ments, 99% are occupied and 96% are rent stabilized among 15 multi-family rental prop- erties. All properties are in excellent physical condition, with Urban American having invested more than $13 million in major capital improvements across the portfolio since Au- gust 2007. Of the geographically concen- trated residential assets, seven are located in the East Flat- bush/Remsen Village neighbor- hoods of North Central Brook- lyn, seven are located in the Midwood/Flatlands neighbor- hoods of South Central Brook- lyn, and one garden apartment complex is located in the Oak- wood neighborhood in Staten Island. The two largest buildings in the portfolio are a 178-unit property at 2425 Nostrand Av- enue in Midwood in Brooklyn, and a 176-unit complex at 2838- 2868 Hylan Blvd. in Staten Is- land’s Oakwood neighborhood. “It is rare that a portfolio of this quality and size ever comes to market in NewYork City and especially rare during a time when abundant debt and equity financing exists,” Schechtman said. “This is an incredibly large, stable portfolio with high occupancy and strong in-place income with units across a broad cross-section of the most ascendant NYC borough.” nwe
NEW YORK, NY —In a landmark transaction, Eastern Consolidated has arranged the sale of “The Kings Portfolio”, spanning Central Brooklyn and Staten Island for $236 million with principals Peter Re- benwurzel of Coney Realty
H. Jack Miller
that individually they could not afford. This provides in- vestors with limited capital greater leverage by using their funds to invest in larger properties with higher re-
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