Thursday, December 1, 2011
PCCP LLC Provides $69.2 Million Senior Loan to Recapitalize and Renovate Valley Fair Mall in Salt Lake City, UT
SAN FRANCISCO, CA, Dec. 1, 2011 - PCCP, LLC announced today it has provided a $69.2 million senior loan to recapitalize and provide renovation financing for Valley Fair Mall (top left photo), an 877,153 square foot regional mall in Salt Lake City, Utah that is 93 percent occupied.
The ownership is a joint venture between Coventry Real Estate Advisors and Satterfield Helm.
Built in 1970, Valley Fair Mall consists of 150 tenants and is still anchored by original tenants JC Penney and Macy’s. A significant portion of the new loan will finance the construction of a new 15-screen Megaplex movie theater totaling 110,000 square feet that will replace a former Mervyns space, and is slated to open in the fourth quarter of 2012. Costco is the fourth anchor, with a free-standing 150,000 square foot building adjacent to the mall on a long-term ground lease.
The retail center has experienced significant repositioning already, with over 100,000 square feet of new junior anchor, restaurant and shop space built in the past three years.
The majority of this new space was built outside of the existing mall in a town center that increases the overall traffic of the mall. Costco, and other significant credit tenants including Ross and Petco, have been brought into the center over the past three years. The ownership intends to continue the momentum and repositioning progress over the next three years.
“The PCCP loan will refinance the current loan as well as provide funding for significant new construction including the Megaplex, approximately 50,000 square feet of new junior anchor space and significant renovation of the mall interior,” said Jim Galovan, vice president with PCCP, LLC. “Overall, this opportunity fit well with PCCP’s debt strategy as the retail center is a well-performing asset in a strong location with both durable in-place cash flow and immediate value-add opportunities.”
Learn more about PCCP at http://www.pccpllc.com/.
Contact: Darcie Giacchetto, 949.278.6224, Spaulding Thompson & Associates
CHICAGO, IL, Dec. 1, 2011 - The Real Estate Capital Scoreboard issued by the Real Estate Capital Institute reports the jittery stock market keeps real state capital on the forefront of activities, as investors flee towards attractive debt and equity yields offered by brick-and-mortar versus low yielding corporate bonds and other less profitable investments.
Even as markets fluctuate, interest rates remain steady with mortgage spreads continuing an overall downward draft with more CMBS and bridge lenders returning to the market.
Market highlights for the month are as follows:
· Project cash flow is the be-all-end-all any type of successful financing, although more new construction projects in select markets are now progressing.
- As interest rates decline, more lenders have been relaxing theirreliance on debt coverage ratios as an underwriting standard. They are underwriting to more traditional benchmark levels including 75% leverage and debt yield has now become one of the most important underwriting metrics, particularly with the CMBS industry, hovering in the low double-digit range for non-multifamily properties.
While fixed-rate debt is attractive, watch for rising international bank rates as European banks unravel their banking problems. Still extremely low, LIBOR has increased 20 basis points since summer, potentially creating more concerns about floating-rate debt.
- Non-Agency funding sources continue exploring alternative property types, over-and-above multifamily assets, as yields are driven to minimum levels within this asset class. Retail and industrial properties are the largest beneficiaries, yet office and lodging are gaining popularity.
Key benchmark treasury rates the five and 10-year notes, tightened to a range of about 100 basis points of each other, while overall spreads for mortgages are within 20 basis-point premium for the shorter-term maturities. That said, commercial mortgage rates are still at historical lows and mortgage spreads over treasuries remain flat.
- In the next few months expect mortgage spreads to tighten even further, as much as 50 to 75 basis points, as lenders remain awash with funds and continue to elect lower pricing, rather than compromising on asset quality. Within the past month, for example, CMBS pricing over swaps dropped 20 to 50 basis points.
According to Jeanne Peck (top right photo), the Real Estate Capital Institute's Director, "The commercial property sector is bifurcated into haves and have-nots, with a substantial difference existing between credit and noncredit financing options. The real estate markets are no different than the overall credit markets as far as trying to pinpoint successful businesses."
The Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
Jeanne Peck, Research Director
PHOENIX, AZ, Dec..1, 2011 – Vestar, one of the leading privately held real estate companies in the western United States, announced today that it has launched a retail investment fund, Vestar Strategic Retail Partners. Vestar is looking to raise $250 million of equity capital by mid-year 2012.
Vestar Strategic Retail Partners will acquire value-add retail properties ranging from $20 million to $100 million in the West and Southwest regions of the United States. The fund will consider individual properties and portfolios. Once raised, the fund will be Vestar’s exclusive vehicle for acquiring properties. Dallas-based Stephen Inc. is marketing the fund to investors.
“We believe this is a great time to invest in value-add retail properties,” said Bob Cavanaugh (top right photo), Chief Investment Officer of Vestar. “With our firm’s track record of acquiring and stabilizing struggling assets, we are confident that our in-house capabilities will create meaningful value for the fund’s investors.”
In the last two years Vestar has acquired more than $400 million in shopping center assets in conjunction with institutional partners. Currently, it manages more than 21 million square feet of retail properties with an average occupancy of 97 percent. Vestar’s strategy is to acquire and reposition properties with a three to seven year hold period. The firm targets leveraged returns in the mid to high teens.
For more information, please visit http://www.vestar.com/
Grubb & Ellis Healthcare REIT II Enters Agreements to Acquire Eight Medical Office Buildings for $112 Million
As of Nov. 4, 2011, Grubb & Ellis Healthcare REIT II has sold approximately 42,651,049 shares of its common stock, excluding the shares issued under its distribution reinvestment plan, for approximately $425,605,000 through its initial public offering.
To date, the REIT has made 24 geographically diverse acquisitions comprised of 55 buildings valued at approximately $430.8 million, based on purchase price in the aggregate. The company’s property portfolio achieved an aggregate average occupancy of 97 percent, held leverage of 25.6 percent and had an average remaining lease term of 10.0 years as of Sept. 30, 2011.
ATLANTA, GA (Dec. 1, 2011) – Lincoln Property Company Southeast has hired Shane Froman (top right photo) as Vice President of Management Services – a move that preceded its award of an assignment to manage more than 3 million square feet of office space in Atlanta’s suburbs.
With more than 10 years of experience in the commercial real estate industry, Froman has a background in property management, marketing, leasing, and business development. As a property manager with Cousins Properties, Froman managed two of the largest and finest Class A office towers in the Southeast while leading teams through the evolution of building, safety and management practices.
“Froman is a creative and proactive manager who will bring innovation and new energy to our management services teams,” said Tony Bartlett (middle left photo), Senior Vice President at Lincoln. “We are impressed with his ability to create strong relationships and listen to clients and tenants. He is an outstanding addition to our team.”
Prior to joining Lincoln, Froman was the director of business development for Angus Systems. In this position, he partnered with some of the world’s largest property management companies, assisting them in setting up procedures and best practices for operational reporting and efficiency.
Lincoln recently added millions of square feet to its Atlanta portfolio when Equity Office selected it as one of several top real estate firms to lease and manage the 10 million square feet of office Duke Realty Inc. is selling in markets across the country.
In addition to winning contracts to manage 3.3 million square feet, Lincoln will also lease 1.9 million square feet of the portfolio. The management assignment covers buildings in Atlanta’s North Fulton and Northeast submarkets, and the leasing assignment is for buildings in North Fulton.
For more information on the Southeast Region of Lincoln Property Company, please visit http://www.lpc.com/ or http://www.lpcsoutheast.com/.
BELLFLOWER, CA – Colliers International, the third largest global real estate services organization, has completed a 60,000-square-feet shopping center named Rosewood Center (top left photo) located at the SWC of Rosecrans and Woodruff. The transaction is valued at $6,500,000.
Christopher E. Maling (middle right photo) and David Maling (lower left photo), both Senior Vice Presidents based in Colliers International’s Downtown Los Angeles office, represented the Seller, AG/BP Rosewood, LLC.
Located on the Southwest corner of Rosecrans and Woodruff in the City of Bellflower, the center boasts national and regional tenants such as Carl’s Jr., Papa John’s Pizza and Healthcare Partners.
The center was 30% vacant at the time of sale and created a value add opportunity through leasing and management for the new buyer.
“Rosewood Center was the fifth retail property we closed for this client and the last in the portfolio,” said Chris Maling. “Over 28 offers were generated leveraging the Colliers Retail platform.”
Angela S. Hwang
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