CBRE: CAP RATES REMAIN STABLE
February 28, 2019| By Michael Tucker | Original Content of MBA Newslink
Strong economic growth, abundant capital and a favorable supply and demand environment led to broadly stable capitalization rates for U.S. commercial real estate assets in second-half 2018, said CBRE, Los Angeles.
Cap rates remained generally unchanged across property sectors in H2 2018, the CBRE North America Cap Rate Survey reported. Industrial cap rates tightened marginally across all segments, while office, multifamily and hotel cap rates remained generally stable.
CBRE said it expects continued cap rate stability throughout the first half of 2019, with the multifamily and retail sectors experiencing the most mixed sentiment. "Investment activity remains robust, driven by a strong economy, significant amounts of capital and a sense that supply and demand in real estate markets is very well balanced," said CBRE Global Chief Economist Richard Barkham.
Office cap rates increased by a greater amount for downtown properties than for suburban assets in late 2018, CBRE Capital Markets Global President Chris Ludeman said. Suburban office cap rates remained relatively flat across all classes and investment strategies. CONTINUE READING
PNL COMPANIES SELLS SUBURBAN PHILADELPHIA OFFICE BUILDING FOR $15.5M
February 21, 2019| By Taylor Damm | Original Content of CoStar News
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, according to a press release issued by Newmark Knight Frank.
Mike Margolis, Dave Dolan, Dave Garonzik and Jim Dugan with NKF represented the seller, which originally purchased the property in December 2014, CoStar data shows.
Please refer to CoStar COMP #4682284 for additional information regarding this transaction.CONTINUE READING
NEW JERSEY AWRDS PENNSYLVANIA COMPANY $39.6 MILLION TO OPEN CAMDEN SITE
February 19, 2019| By Linda Moss | Original Content of CoStar News
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.
LISS PROPERTY GROUP SELLS KEYSTONE LOFTS IN PHILADELPHIA
February 15, 2019| By Clayton Daneker | Original Content of CoStar News
Liss Property Group, a local investment firm, sold an apartment building in Philadelphia to a private international investor. Keystone Lofts sold for $7.9 million, or about $141,000 per unit.
Built as a warehouse in 1923 and later converted to apartments, the Class B property contains 55 multifamily units and one commercial unit. The two-story building at 7165 Keystone St. comprises one- and two-bedroom floorplans ranging from 1,000 to 1,400 square feet. Spanning nearly three acres, the building is less than a mile from the Tacony train station.
Kenneth Wellar, Corey Lonberger and Mark Duszak with Rittenhouse Realty Advisors represented the seller in the transaction.
“We are seeing more foreign capital purchase assets in the Philadelphia region, which is driving up pricing. We successfully closed this transaction at a record price per unit for the neighborhood on behalf of the sellers,” Wellar said in a statement.
Please refer to CoStar COMP #4674658 for additional information regarding this transaction.
CAESARS ENTERTAINMENT BETS ON NON-GAMING, BUILDING ITS FIRST GAMBLING-FREE RESORT
January 31, 2019| By Randyl Drummer | Original Content of CoStar News
Gaming giant Caesars Entertainment Corp. is betting that developing hotels and other non-gaming revenue will help boost profits as Americans spend more time shopping and staying in hotels than gambling, joining other casino companies in diversifying.
Caesars plans to build a 266-room hotel in Scottsdale, Arizona, that would be its first hotel not connected with a casino. HCW Development, based in Branson, Missouri, is scheduled to start construction later this year on the hotel, branded as Caesars Republic Scottsdale, on Goldwater Boulevard at Highland Avenue next to upscale Scottsdale Fashion Square shopping center. Caesars agreed to license its brand and consult on designing the 11-story glass-and-steel building with a rooftop pool and bar.
The hotel, to be completed by 2021 and managed by Plano, Texas-based Aimbridge Hospitality, is part of a strategy announced last year by Paradise, Nevada-based Caesars Entertainment to expand its non-gaming business. Caesars late last year opened two beachfront luxury resorts on the southeast coast of the Persian Gulf of Dubai, and the company announced development of a Caesars Palace resort without a casino at Puerto Los Cabos, Mexico.
Caesars and other casino operators, encouraged by strong increases in lodging, shopping, concerts and other non-gambling revenue, are looking to expand their customer base beyond casinos amid heightened competition for entertainment dollars. Non-gaming revenue outpaced gambling income at U.S. Indian casinos, rising 8.2 percent to a record $4.2 billion in 2016 from about $3.9 billion in 2015, according to the latest edition of Casino City’s Indian Gaming Industry Report, an industry survey compiled by tribal consultant Alan Meister.
"While we saw slightly slower growth year over year for Indian gaming on a nationwide basis, it outpaced other casino gaming segments as well as the economy," Meister said in the report. "Both are good signs... CONTINUE READING
FHFA WILL NOT DEFEND ITS CONSTITUTIONALITY IN COURT
January 21, 2019| By Kelsey Ramirez | Original Content of HousingWire News
The Federal Housing Finance Agency revealed it will no longer defend its own structure, calling itself unconstitutional.
Back in July, the Court of Appeals for the Fifth Circuit ruled that the federal government’s regulator of Fannie Mae and Freddie Mac is not constitutionally structured. The FHFA ruling deals with the agency’s leadership structure and whether a single director that wields as much authority as the FHFA director is a violation of the Constitution’s separation of powers.
Then in August, the FHFA appealed this ruling under former FHFA Director Mel Watt, petitioning for a rehearing en banc, meaning it wanted the entire court to hear the case.
But Watt’s term recently expired, and a new director is stepping up to the helm. Going forward, the FHFA will be led by Comptroller of the Currency Joseph Otting, who was picked by President Donald Trump to serve as acting director of the FHFA while Mark Calabria is awaiting Senate confirmation to replace Watt on a permanent basis.
And now, Otting is moving a different direction, telling the court that the FHFA is under new leadership, and will no longer defend its structure. In a filing to the fifth circuit, Otting urged the court to dismiss the case and leave the previous judgment intact.
From the filing:
Under prior leadership, FHFA petitioned for rehearing en banc seeking consideration by the full Court of the Panel’s holding that FHFA’s structure, in particular its leadership by a single director removable only for cause, unconstitutionally limits the President’s ability to supervise FHFA. As of January 7, 2019, FHFA is led by a new Acting Director, who has reconsidered the issues presented in this case. For the reasons discussed herein, it remains FHFA’s position that it is unnecessary for this Court to reach the constitutionality of the Housing and Economic Recovery Act’s (“HERA”) for-cause removal provision in order to resolve this case and affirm the dismissal of Plaintiffs’ claims. To the extent the Court concludes it is necessary to reach the constitutional issue, FHFA will not defend the constitutionality of HERA’s for-cause removal provision and agrees with the analysis in Section II.A of Treasury’s Supplemental Brief that the provision infringes on the President’s control of executive authority.
The case originally comes as the result of a lawsuit brought by Fannie and Freddie shareholders who challenged both the structure of the FHFA and the so-called “Third Amendment sweep.”CONTINUE READING
ENDURANCE REAL ESTATE GROUP BUYS DISTRIBUTION BUILDING NEAR PHILADELPHIA
January 24, 2019| By Costar Staff | Original Content of Costar News
Endurance Real Estate Group, a local full service investment and development firm, purchased a 430,373-square-foot distribution building at Expressway 95 Bus Center in Bensalem, Pennsylvania, from Ivy Realty for $23.7 million, or about $55 per square foot.
The single-story structure at 450 Winks Lane comprises 38 loading docks, six drive-in bays, 40- by 45-foot column spacing and a 40-foot clear ceiling height. Built in 1973 and renovated in 2018, the Class B building is 97 percent leased to National Refrigeration, Rolled Metal Products and Brenner Aerostructures.
The facility is located along I-95 less than 25 miles from Philadelphia International Airport.
Founded in 2002, Endurance’s portfolio consists of 4.3 million square feet of commercial space, according to its website. The firm is currently speculatively developing the Interstate Distribution Center in Pittston.
Gerry Blinebury, Gary Gabriel, Kyle Schmidt and Jonas Skovdal of Cushman & Wakefield represented the seller, which originally purchased the property in May 2017, CoStar data shows. CONTINUE READING
DELAWARE RIVER WATERFRONT CORP. SELECTS DURST TO DEVELOP VINE ST. PARKING LOT
January 24, 2019| By Costar Staff | Original Content of Costar News
The Delaware River Waterfront Corp. announced this week that it selected The Durst Organization, one of the largest developers and property owners in New York City, to redevelop a large parking lot north of the Benjamin Franklin Bridge into a mixed-use project that will include residences, commercial and open space.
The 1.6-acre parcel, located between Vine and Callowhill streets on the west side of Columbus Blvd., is considered a key part of DRWC’s plans for its ongoing revitalization of the Delaware River waterfront. The lot is also directly across from several waterfront piers Durst acquired in 2017.
The Durst Organization and DRWC said they plan to build a "vibrant new mixed-use development" at the site, expanding on the recent public-sector investments that began with the Race Street Pier and now includes Cherry Street Pier, Spruce Street Harbor Park, Washington Avenue Pier and Pier 68.
DRWC selected Durst following an extensive evaluation process after issuing a request for proposals seeking qualified developers last June.
Under the terms of the letter of intent signed by Durst and the DRWC, the developer committed to setting aside a portion of the parcel for public green space, in keeping with the Central Delaware master plan. Durst also said it will work with a team of archaeologists from Los Angeles-based engineering firm AECOM currently researching the site.
According to the DRWC, the surface of the parking lot covers a former shipyard that include some of the most complete remains documenting shipbuilding and waterfront activities in Philadelphia dating back to the late 17th century.
In addition, the new project will also be expected to create a connection to another historic element, the Wood Street Steps located directly west of the development site. Ordered by William Penn to ensure public access to the waterfront, the steps are among the oldest surviving structures from Philadelphia's colonial past. CONTINUE READING
CELGENE'S $74 BILLION SALE RAISES QUESTIONS ON FUTURE OF ITS NEW JERSEY HEADQUARTERS
January 4, 2019| By Linda Moss | Original Content of Costar News
Bristol-Myers Squibb's $74 billion acquisition of rival drugmaker Celgene Corp., and its goal to cut $2.5 billion in costs from the joint entity, is raising questions about how the consolidation will affect Celgene's headquarters as well as its large research and development campus in Summit, New Jersey.
The plan by New York-based Bristol-Myers to buy Celgene, another leading maker of cancer drugs, in a cash-and-stock merger in the third quarter is designed to link two oncology treatment specialists. That field is expected to gain demand with Americans living longer because some diseases are more likely in later stages of life.
The flurry of health care and pharmaceutical consolidations in the past decade has taken a toll on the state and rocked area real estate. Biopharmaceutical companies left or shrank their footprints in New Jersey, closing facilities because of layoffs and other cost-cutting as they took advantage of synergies. In addition, past corporate acquisitions involving all types of New Jersey businesses have resulted in the local headquarters of the purchased firms being closed or reduced as part of the subsequent merging of operations.
Both Bristol-Myers and Celgene have significant real estate holdings in the Garden State beyond Summit that could be affected by their merger. In light of the latest deal, one industry expert suggests New Jersey leaders urge the firms to create a new, build-to-suit, state-of-the-art headquarters for the merged entity so it doesn't leave the state.
Most recently, the Parsippany, New Jersey-headquarters of Pinnacle Foods Inc. was shut by its new owner, Conagra Brands Inc. of Chicago. After Express Scripts bought Medco Health Solutions, which was based in Franklin Lakes, New Jersey,CONTINUE READING
REPORTS SAY LAMPERT'S BID FOR SEARS AND KMART STORES FALL SHORT
January 7, 2019| By Jennifer Waters | Original Content of Costar News
Sears Holding Chairman Eddie Lampert apparently has until Tuesday to tie up the loose ends of his $4.4 billion bid to keep the doors open at 425 Sears and Kmart stores – and preserve 50,000 jobs – or liquidation could possibly begin for the 125-year-old retailer, once an icon of American consumerism.
Friday’s deadline for Sears Holdings and its independent board to basically choose between Lampert’s bid and those from a handful of liquidators passed without word from the bankruptcy court, Sears Holdings and its independent committee. Nor did ESL Investments, Lampert’s hedge fund, or any number of the other players involved in retail giant’s Chapter 11 proceedings offer insight into the standing of the bids.
What did appear in bankruptcy court filings was a notice that a status conference has been scheduled for 10 a.m. Tuesday in White Plains, New York, court where Lampert filed for Chapter 11 on Oct. 15.
Over the weekend, a number of published reports, citing unnamed sources, said Lampert’s bid fell short of expectations and costs, and that negotiations went well past the 4 p.m. ET deadline.
As Lampert, who made the bid through Transform Holdco LLC, a newly formed subsidiary of ESL Investments, tweaked his bid, Sears Holdings was preparing for the end, lining up liquidators to sell what was left in merchandise, tools, appliances, store fixtures and the like, according to published reports.
Reuters reported that Sears Holdings had chosen Abascus Advisory Group as the lead liquidator. Closter, New Jersey-based Abacus has a long history with Sears Holdings, having liquidated some 800 Sears and Kmart stores in recent years, according to court filings. CONTINUE READING
AMAZON GO CONCEPT MAY TAKE FLIGHT AT AIRPORTS AS US RETAILERS JETTISON
December 11, 2018| By Lou Hirsh| Original Content of Costar News
E-commerce giant Amazon Inc. is reportedly looking to put its checkout-free Amazon Go stores into major U.S. airports as those busy transport hubs join retail chains in expanding the use of cashier-less technologies to reduce labor costs and lure time-strapped customers.
Citing public records and sources familiar with the strategy, the Reuters news agency reported that the world’s largest online retailer is evaluating top U.S. airports, including those in Los Angeles and California's Silicon Valley, for new locations of Amazon Go.
Amazon Go stores are equipped with technology allowing Amazon customers to quickly scan their smartphones at the store entrance, then take products off shelves as their selections are monitored by cameras and sensors. They can leave without going through a checkout line, with their purchases automatically billed to the debit or credit card already on file with Amazon.
The bid by Amazon, the world's largest online retailer, to expand its cashier-free Go stores comes as major competitors are boosting their use of technologies that allow customers to forgo checkout lines. Walmart’s Sam’s Club warehouse division, for instance, is currently testing smartphone-enabled technology similar to Amazon Go at one of its Dallas stores, which could eventually be deployed at other locations. Putting such technology in airport concessions could help introduce the concepts to a wider audience, easing the entry into new markets.
A report from research and consulting firm RBR this year noted that global shipments of retail self-checkout units rose 14 percent during the prior year, with the industry reaching a record 63,000 units delivered worldwide in 2017.CONTINUE READING
FHFA ANNOUNCES MAXIMUM CONFORMING LOAN LIMITS FOR 2019
November 27, 2018| By FHFA Staff | Original Content of Federal Housing Finance Agency
The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019. In most of the U.S., the 2019 maximum conforming loan limit for one-unit properties will be $484,350, an increase from $453,100 in 2018.
The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. Earlier today, FHFA published its third quarter 2018 House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters. According to FHFA's seasonally adjusted, expanded-data HPI, house prices increased 6.9 percent, on average, between the third quarters of 2017 and 2018. Therefore, the baseline maximum conforming loan limit in 2019 will increase by the same percentage.
For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling" on that limit of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2018, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525 — or 150 percent of $484,350.
Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $726,525 for one-unit properties.
As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county...CONTINUE READING
FORMER URBAN BIG-BOXES, CLASS-B OFFICE BUILDINGS ARE BEING CONVERTED TO LAST MILE INDUSTRIAL SPACE
November 28, 2018 | By Patricia Kirk | Original Content of National Real Estate Investor News
The limited supply of urban industrial inventory available for “last mile” e-commerce distribution space is causing investors and end-users to get creative by repositioning other types of real estate with failed uses or shrinking demand, according to a JLL report, Urban infill: the route to delivery solutions.” The report notes that annual total e-commerce deliveries have more than tripled over the past five years, but development of new urban industrial infill assets has remained relatively flat.
Despite dwindling opportunities in urban locations, investors remain interested in the 18 percent sales price premium last mile industrial assets command over “first mile” locations, and the higher rents users are willing to pay in order to be near their customer base.
Older office buildings, underused parking structures, abandoned strip centers—even former churches—are now among properties being repositioned as last mile fulfillment centers. E-commerce fulfillment centers are actually “terminal facilities,” as trucks deliver merchandise there to be broken down for home delivery trucks and other types of vehicles, according to Mark Glagola, D.C.-based senior managing director for industrial services with Transwestern. He notes that these distribution facilities are especially critical for time-sensitive merchandise like food products.
Adaptive reuse of class-B office buildings as industrial space is a growing phenomenon that Pete Quinn, Indianapolis-based national director of industrial services, USA, with Colliers International, says investors would have considered a ridiculous proposition 10 years ago. But landlords dealing with falling office occupancy rates are increasingly undertaking such conversions. The JLL report suggests that this makes perfect sense in New Jersey, for example, as the average office vacancy rate has hovered near 25 percent in recent years, while average industrial vacancy has dipped to 5 percent. CONTINUE READING
COMMERCIAL, MULTI-FAMILY ORIGINATIONS PULL BACK AMID HIGHER RATE
November 20, 2018 | By Francis Monfort | Original Content of Mortgage Professional America News
Commercial and multifamily originations slowed during the third quarter on year-over-year and quarter-over-quarter bases amid a pullback in lending activity across most property types, according to the Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations released by the Mortgage Bankers Association (MBA).
"Borrowing and lending backed by commercial and multifamily properties decreased 3% during the third quarter, and was 7% lower than a year ago," said Jamie Woodwell, MBA's vice president of commercial real estate research. "Rising interest rates took some wind out of the market's sails, with the 10-year Treasury yield starting the quarter at 2.87% and finishing at 3.05%, and the 2-year Treasury starting at 2.57% and ending at 2.81%. The CMBS and bank-lending markets were the hardest hit. Meanwhile, lending backed by multifamily properties and for the government-sponsored enterprises (GSEs) continued to grow."
The annual decline in originations was primarily driven by a decline in third-quarter originations for health care and retail properties. By property type, there was a 55% decrease in the dollar volume of loans for health care properties; a 28% decrease for retail properties; a 19% decrease for hotel properties; and a 17% decrease for office properties. Meanwhile, originations for loans backed by multifamily and industrial properties each increased by 19%.
Among investor types, the dollar volume of loans originated during the third quarter for CMBS loans and commercial bank portfolio loans decreased from a year earlier, by 53% and 22%, respectively. Loan originations increased for life insurance companies by 4% and the GSEs by 3%.
Compared to the second quarter, third quarter originations for hotel properties decreased 30%, originations for retail properties declined 22%, and originations for office properties fell 18%. Originations of loans backed by health care properties increased by 18%, as did multifamily properties by 13%. Industrial property loans were essentially unchanged.
Among investor types, the dollar volume of loans for CMBS decreased 47%, loans for commercial bank portfolios decreased 10%, originations for life insurance companies decreased 6%. Meanwhile, GSE loans increased by 14%. CONTINUE READING