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Kayne Anderson Real Estate announces strategic, minority investment by Goldman

by Released | Jan 17, 2020

Kayne Anderson Real Estate announced that Goldman Sachs Asset Management’s AIMS Petershill program has made a passive minority investment to support the continued success of KA Real Estate. The firm will continue to be a part of Kayne Anderson Capital Advisors and operate under the direction of Al Rabil, co-founder, managing partner and CEO, and David Selznick, CIO, with no changes to the management, funds or control of the business. Kayne Anderson Real Estate is a leading real estate investor that manages nearly $8 billion on behalf of institutional, foundation, endowment and high-net-worth investors globally. The firm invests in opportunistic, core and debt strategies in the alternative real estate sectors of medical office, senior housing, student housing and self-storage. The platform was launched in 2007 as a partnership between Kayne Anderson Capital Advisors and Rabil. KA Real Estate will remain a part of KACALP, which oversees $31 billion with more than 30 years of successful alternative investment management experience in the infrastructure, energy, real estate, credit and growth capital sectors. This transaction will facilitate the continued strategic development of KA Real Estate by providing capital that will be reinvested in the business and utilizing Petershill's global platform to provide strategic support for new platform initiatives and expanding an already first-class base of global limited partners. The AIMS Petershill program launched over a decade ago to partner with leading alternative asset managers and help to accelerate their strategic development. AIMS Petershill's minority investments seek to support the creation of long-term value by providing strategic capital to enhance employee retention, facilitate business development, buy out legacy equity holders and generate strategic options, while preserving the autonomy and entrepreneurial spirit of these organizations. AIMS Petershill is part of Goldman Sachs Asset Management's Alternative Investments & Manager Selection Group, which manages more than $250 billion in assets across leading real estate, private equity, hedge fund and traditional long-only managers.
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DivcoWest completes sale of Santa Monica’s historic telephone building to an affiliate of Rockwood Capital

by Andrea Zander | Jan 17, 2020

DivcoWest has sold its interest in the Telephone Building, a historic, six-story building in downtown Santa Monica, Calif., to an affiliate of Rockwood Capital.  Terms of the transaction were not disclosed. DivcoWest purchased the 58,000-square-foot creative office and retail interests in the property in 2017. Over its ownership, DivcoWest completed lease-up, made capital improvements and achieved historical landmark status for the building from the City of Santa Monica under the Mills Act, a move which will ensure preservation of the Art Deco structure. “Santa Monica’s growth has continued to excel in recent years and the Telephone Building’s location and unique appeal to tenants as a jewel-box asset, with landmark status, will preserve its long-term value. We’re proud of the opportunity to have owned it and are confident it will flourish in its next chapter under Rockwood’s stewardship,” said Mike Provost, managing director at DivcoWest. DivcoWest currently owns several major commercial assets in Southern California, including 331 N. Maple, 1600 Vine and UTA Plaza in Los Angeles; Glendale Plaza in Glendale; and 1420 Kettner and DiamondView East Village in San Diego. The company focuses on acquiring and improving commercial assets in strong innovation markets. It also has major holdings in the San Francisco Bay Area, Austin, Boston, New York City, Seattle, and Washington, D.C.
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Hines Global sells two assets for $991m

by Andrea Zander | Jan 17, 2020

In separate deals, Hines Global REIT has sold two offices for a total of $991 million. Alexandria Real Estate Equities has acquired a 509,702-square-foot office complex in Newton, Mass., for $235 million. Hines Global REIT sold the property, which is nearly fully leased, reported The Business Journal. Hines also sold its Summit III office complex in the Seattle suburb of Bellevue, Wash., for $756 million. The new buyer was not reported. Recently, Hines sign Amazon to lease the building, 300,000 square feet of the 17-story building. Three properties — Summit I, Summit II and Summit III — are on the Summit Campus that was acquired in 2015. As of June 30, 2019, Hines Global REIT had a portfolio of 12 real estate properties, consisting of office, retail and industrial assets, with an estimated aggregate value of approximately $2.4 billion. The 6.2 million square feet of leasable space was reported as 90 percent leased as of that date. On April 23, 2018, in connection with its review of potential strategic alternatives available to the REIT, the board of directors determined that it is in the best interests of the company and its stockholders to sell all or substantially all of its properties and assets and for the company to liquidate and dissolve pursuant to its plan of liquidation and dissolution. The principal purpose of the liquidation is to provide liquidity to stockholders by selling the company’s assets, making payments on property and corporate level debt, and distributing the net proceeds from liquidation to stockholders. The plan of liquidation was approved by the affirmative vote of stockholders at the company’s annual meeting held on July 17, 2018.
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Student debt woes feed multifamily markets

by Andrea Zander | Jan 17, 2020

College student debt is delaying home buying and keeping young adults in multifamily housing longer than previous generations, reported CBRE. Student debt delayed saving for a down payment for 60 percent of younger home buyers in 2018. And in 2018, at graduation, 65 percent of college students held student debt. The amount of student loans for each student with student debt has been rising, too. In 2019, the average level of federal student debt per loan recipient was $35,200, up from $20,500 a decade ago. The financial challenges of buying a home, including holding student debt, has also contributed to younger adults' delaying other major life decisions that often trigger home buying (e.g., getting married or starting a family). The bottom line for multifamily housing, however, is clearly positive. High levels of student debt have contributed to creating and sustaining high levels of multifamily demand over the past decade.
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Sacramento office market hits 1.2m sf of growth in 2019, exceeding 2017 and 2018 combined

by Andrea Zander | Jan 17, 2020

Sacramento’s office sector maintains high levels of demand and solid fundamentals, reported Cushman & Wakefield in its Sacramento Office Fourth Quarter 2019 Report. Achieving well over 1 million square feet of net occupancy growth in 2019, overall office vacancy finished the year at 8.3 percent, down 110 basis points from 2018 and shedding another 10 basis points from the previous quarter. The story is similar in the region’s CBD, where vacancy fell by 170 basis points year-over-year and 30 basis points quarter-over-quarter. Will Austin, Cushman & Wakefield senior research analyst in Sacramento, said, “Sacramento’s office market closed 2019 very strong with 368,000 square feet of positive net absorption during the fourth quarter, or nearly one-third of our annual absorption, which totaled 1.2 million square feet. The elevated office growth in 2019 exceeded 2017 and 2018 combined.” Austin added, “The CBD remains a popular destination for tenants, as net absorption reached 167,000 square feet for the year, similar to the 2018 totals.” Additional growth standouts for the year included Roseville/Rocklin, which achieved nearly 400,000 square feet of positive net absorption in 2019, North Natomas with 155,000 square feet, and South Sacramento with 123,000 square feet. Cushman & Wakefield’s Ron Thomas, executive director and managing principal of the Sacramento region, said, “We maintain a positive outlook heading into 2020, with continued job growth and as real estate demand remains strong throughout Sacramento, still with 2.1 million square feet of tenants currently seeking space, exceeding our historical average of 1.9 million square feet. However, while interest in the market is robust, net absorption could be hindered in the coming year by a lack of supply, particularly large blocks which are increasingly sparse throughout the region. That said, a lack of speculative construction also helps protect the market from exposure to oversupply.” Driven by demand and supply, office lease rates continue to tick up as the market average reached $1.92 per square foot per month on a full services gross basis, up $0.01 quarter-over-quarter and hovering the all-time market record of $1.93 full services gross set during the second quarter of 2019. Downtown continues to record ever higher rents, with an all-time high of $2.65 full services gross, while class A rents reached $3.27 full services gross. All product classes recorded increases in lease rates during the period. Thomas noted, “Interestingly, Downtown’s class B average asking rate of $2.63 full services gross has surpassed the class A asking rate from the first quarter of 2015, which was then $2.61 full services gross.” Office sales played a major role in market activity during the fourth quarter, as 400 Capitol Mall sold for $199 million to Manulife, the second highest price ever paid for an office building in Sacramento. Austin said, “The impact of the Golden 1 Center is also becoming ever clearer, especially when reviewing office property values. Sacramento has had only eight building sales of $100 million or more in its history, four of which have transpired since the Golden 1 Center opened in September 2016, a point also considered to really have started the urbanization of Sacramento. Also benefiting values, of course, is the fact current market conditions are unprecedently strong in the CBD.” Thomas concluded, “Sacramento’s ongoing economic growth can be seen throughout the office market fundamentals. The increasing willingness to invest large sums in the city’s urban core, record low vacancy rates, record high lease rates and the largest urban infill project in the nation, The Railyards, combine to create a vibrant and dynamic office landscap
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FCP, Westbridge Partners sells mixed-use project to Clarion Partners

by Released | Jan 17, 2020

FCP and developer Westbridge Partners have sold Stockyards Atlanta, the joint-venture adaptive renovation of three historic warehouses in Atlanta’s West Midtown submarket, to Clarion Partners for $69.7 million. “We are incredibly proud of Stockyards Atlanta, a project that preserved the last of the historic buildings that made up the Miller Union Stockyards,” said Chris Faussemagne, who co-founded Westbridge Partners, which has since merged with Third & Urban. “Clarion Partners is the ideal owner, as they have experience with adaptive re-use projects and the West Midtown submarket as owners of the Westside Provisions District.” Stockyards Atlanta is on three acres on the corner of 10th Street and Brady Avenue in the Upper Westside of Midtown Atlanta. Initially built in the early 1900s as a stockyard and meatpacking plant to serve Atlanta’s growing population, the project is steeped in more than 120 years of history. In 2017, the joint-venture partnership of Westbridge Partners and FCP transformed it into one of Atlanta’s premier creative communities. “We are pleased with the strong success of our business plan at Stockyards. This project is truly unique and has been a lot of fun to execute,” said Erik Weinberg, senior vice president, FCP. “FCP remains committed to the West Midtown neighborhood and the Atlanta market, as evidenced by the recent adaptive re-use acquisition at 950 W. Marietta, a portion of the former WestRock facility.” The Urban Land Institute (ULI) honored Stockyards Atlanta in 2018 for Excellence in Office/Commercial Mixed-Use Development. Designed by architectural firm ai3 and built by Gay Construction Co., the 142,478-square-foot creative office and entertainment space landed tenants including Red Bull, Fitzgerald and Co., Painted Duck and Italian restaurant Donetto. It achieved full occupancy within a year of delivery. Faussemagne, now a partner with Third & Urban, has extensive experience in historic preservation, renovation and re-use. His team acquired the White Provision building in 2005 and served as the development partner for the project, which transformed the Howell Mill Road corridor. Third & Urban and FCP recently announced the acquisition of a 275,000-square-foot warehouse on West Marietta Street, which will become large-format creative office space on the Atlanta Beltline. Stockyards Atlanta was FCP’s first commercial project in Atlanta. The company’s Atlanta area portfolio also includes eight multifamily properties with 1,924 units.
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Canyon Partners, Fore Property invest in southwest Orlando opportunity zone multifamily project

by Released | Jan 17, 2020

Joint venture partners Canyon Partners Real Estate and Fore Property have plans to develop 19 South, a 384-unit apartment community in Orlando. Canyon Partners invested $29.8 million of equity into this project, which is located within a qualified opportunity zone. Construction is slated to begin in March 2020 and achieve completion by May 2022. 19 South is centrally located between downtown Kissimmee, the Lake Nona Medical District, Walt Disney World Resort and Orlando International Airport, and near several transportation options. The project is in proximity to the Osceola Parkway and Sun Rail light rail station, which provide convenient access to major employment centers within the Orlando metropolitan area. The project will consist of four, four-story residential buildings and feature keyless Bluetooth entry throughout the property, 10-foot ceilings within several units, co-working space, and a lakeside fitness track. “Rapid employment and population growth in the Orlando area are driving significant demand for accessible housing near transit and other convenient amenities,” said James Sullivan, managing partner at Fore. “We look forward to breaking ground on 19 South and providing a well-located, high-quality option to the area as it continues to undergo strong economic development.” The Orlando market has experienced notable growth in recent years due to its low cost of doing business, high quality of life and warm climate, which also attracts new business to the area and encourages expansion of existing companies. The southwest Orlando submarket has attracted a roster of corporate tenants, including several prominent technology and healthcare companies. Specifically, as Orlando has grown, southwest Orlando has benefited from the growth of healthcare providers, including the expansion of Orlando Health, Osceola Regional Medical Facility and Adventhealth. This investment marks Canyon’s third joint venture equity investment into opportunity zones, and second investment in partnership with Fore. Over the past five years, Canyon has invested more than $900 million in debt and equity in multifamily investments nationwide, supporting the financing of more than $2.8 billion of project capitalization.
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Progress Realty Partners buys shopping center in North Carolina for $36m

by Released | Jan 16, 2020

Progress Realty Partners (PRP) has acquired a 219,000-square-foot, class A shopping center from Westport Capital, a national REIT with offices in Connecticut and California. The sales price was $36 million. Marketfair Shopping Center, located at 1916 Skibo Road in Fayetteville, N.C., represents PRP’s first acquisition in North Carolina. “What attracted us to Marketfair Shopping Center is its extraordinary tenant mix and positioning in the Fayetteville sub-market,” said Adam Dickert, who oversees the firm’s acquisitions. “Marketfair represents exactly what today’s consumer is looking for when you talk about things like convenience, experience and value.” The property recently underwent a complete redevelopment and retenanting, highlighted by the mid-December grand opening of Lidl, a German-based grocery store. Lidl joins other national tenants, such as Planet Fitness, Gander Outdoors and AMC Theaters. Progress Realty Partners specializes in the acquisition and management of commercial real estate properties nationwide. PRP provides accredited investors, family offices and funds superior commercial real estate investment options in institutional-quality properties. PRP and its affiliates have closed over $40 billion in commercial real estate acquisition, debt and equity transactions, serving a wide array of real estate professionals.
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Hamilton Zanze acquires two apartment communities in Columbia, Md.

by Released | Jan 16, 2020

Hamilton Zanze (HZ) has acquired two apartment communities in Columbia, Md., including the Timbers at Long Reach apartments and the Chimneys of Cradlerock. The seller was Aimco. Built in 1979, Timbers at Long Reach features 178 residential units and was 98 percent occupied at the time of purchase. The Chimneys at Cradlerock, also opened in 1979, offers 198 units and was 95 percent occupied as of the date of purchase. Both properties are garden-style communities with onsite Luxor One package lockers, dog parks and onsite walking paths. Spacious units feature washers and dryers, walk-in closets, and private patios and balconies. HZ’s capital improvements plans for the properties include exterior maintenance and improvements, landscaping and interior unit renovations. At the Chimneys of Cradlerock, the property will receive additional upgrades to its community amenities and security systems, as well. With the acquisition, HZ owns and operates six residential apartment communities in the D.C. metro.    
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UBS: Online retail distribution coming under pressure

by Released | Jan 16, 2020

There is a familiar pattern within the retail sector: stagnant in-store sales combined with ever-higher levels of online sales. But there are clear signs that the distribution side of the equation is coming under pressure. The cost of delivery, returns and logistics has now soared to 75 percent of costs of the average distributor, raising the question as to whether “e-Christmas” will prove viable in the long run, reported UBS. The firm identified five factors that are placing increasing strain on the e-commerce supply chain: volume, fulfillment, land, labor and ESG. To read the report, click here.
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