CONTENTS Capital Raising for Non

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CONTENTS Capital Raising for Non
The
WEEKLY
Friday, October 30, 2015
Property News
Accesso to Buy
Office Property
Near Atlanta
Accesso Partners LLC has struck a
deal to acquire North Point Center East,
a 540,137-square-foot office property in
the Atlanta suburb of Alpharetta, Ga.
The Hallandale Beach, Fla., investment manager is acquiring the property
from Cousins Properties Inc. in a deal
arranged by CBRE.
Cousins, an Atlanta REIT, had expected that the property would sell for a
price that would result in a capitalization
rate of 6.5 percent, which would peg
the property’s value at $97.5 million, or
about $181/sf, based on the $6.3 million
of net operating income the complex is
on-track to generate this year. But it’s
not known whether it’s getting what it
sought.
The property would mark Accesso’s
entree into the Alpharetta market. The
company, which owns 25 properties with
a total of 9.2 million sf of office space,
owns two other Atlanta properties, both
in the Galleria area: the Highlands
building, with 150,000 sf at 7100 Highlands Parkway SE, and Platinum Tower,
with 312,228 sf at 400 Interstate North
Parkway.
North Point Center East is comprised
See ALPHARETTA, Page 5
CONTENTS
Oaktree Raises $1.2Bln for Latest
Opportunity Fund...Page 5
E-mail Parser Added to
TreppTrade Platform...Page 7
Hedge-Fund Manager Launches
Another Non-Traded REIT...Page 9
Austin, Texas, Office Sees Offers
Topping $220Mln...Page 10
Vol. 10 Issue 44
REIT News
Capital Raising for Non-Traded REITs
Plummets This Year
Capital raising for non-traded REITs
has plunged this year as AR Capital, the
industry’s heavyweight, has continued
to suffer from the blowback stemming
from accounting irregularities reported
by an affiliated REIT last year.
According to FBR & Co., only $7.6
billion was raised through the end of
September, a 38 percent drop from the
$12.3 billion raised during the same period in 2014. AR Capital, which is still
raising capital for a number of American
Realty Capital-branded REITs, raised
$2 billion of that total - a 63 percent
drop from the $5.4 billion it raised a
year earlier. And its Cole Capital Corp.
affiliate raised only $154 million this
year through September, down from
$1.2 billion a year earlier.
So, 95 percent of the industry’s drop
could be attributed to the American Realty Capital Properties’ accounting issue,
according to FBR.
Other companies, such as NorthStar
Asset Management Group, the investment management affiliate that NorthStar Realty Finance Corp. had spun off
last year, are picking up the slack, raising
$952 million this year, up 44 percent
from a year earlier.
Meanwhile, with the American Realty
Capital accounting issue roughly a year
old, a small rush of new non-traded REITs is hitting the market. They’re timing
coincides with the pullback from the
sector by AR Capital and Cole Capital.
Retail investor demand for non-traded
REITs might be unchanged from last
year, which would present an opportune time for other sponsors to launch
vehicles.
KBS Realty Advisors, for instance, earlier this month launched KBS Growth
& Income REIT Inc., with a $2.3 billion
capital-raising target. The company will
pursue a value-creating core strategy.
See REIT, Page 3
Property News
Boston Apts. Selling for Record $1Mln/Unit
The Rockpoint Group is paying about
$128 million, or a record-setting $1
million/unit, for the 128-unit Arlington
apartment property in Boston’s Back Bay
area.
The Boston investment manager is
buying the luxury property, at 100 Arlington St., from a venture of Congress
Group and Related Cos., which redeveloped what once was the headquarters of
the Boston Consolidated Gas Co. last
year. The sales price results in a capitalization rate of less than 4 percent.
The 13-story property’s units fetch
among the highest monthly rents in the
city, ranging from $3,200 for a one-bedroom unit to $8,500 for a two-bedroom
unit. Those asking rents compare with
a $2,514/unit monthly average for all
class-A properties in the city.
The limestone-clad building was
constructed 88 years ago and designed
by Parker, Thomas and Rice, whose other
works in Boston include Fenway Studios
and the R.H. Stearns Building at 140
Tremont St., both of which are listed on
the U.S. National Register of Historic
Places.
More recently, the building housed the
city’s first charter school, the Boston Renaissance Charter Public School, which
opened in 1995.
When the school moved to the city’s
Hyde Park neighborhood five years ago,
the building was sold to the Congress
Group for $45 million. Two years later,
See ARLINGTON, Page 7
THEINSIDER
Tenants at Americas Tower in
Talks to Renew Leases
Bank Hapoalim and QVT Financial LP are said to be in talks to renew
their leases for a total of 121,871 square
feet at Americas Tower in midtown
Manhattan.
The two companies are on leases that
run for at least another nine months.
Bank Hapoalim occupies 73,911 sf
through April 2017 and pays $72.02/
sf in rent, while QVT leases 47,960 sf
through next July. QVT pays $85.67/
sf in rent, but subleases nearly 24,000
sf of its space to Signature Bank
and Knowledge Group. It’s not clear
whether it’s negotiating to renew its
lease for all its space, or just the space it
occupies. Asking rents in the building
run from $66/sf in its lower floors to
$82/sf in its upper floors, which puts
them in line with what the two tenants
are paying.
Americas Tower, with 1 million sf at
1177 Avenue of the Americas, is 94
occupied, according to servicer data
compiled by Trepp LLC. It is on track
to generate $36.3 million of net cash
flow this year, more than three times
the amount needed to service its $360
million of mortgage debt, which is
securitized through AOA Mortgage
Trust, 2015-1177.
The 47-story property, between 45th
and 46th streets, is owned by a venture
that includes Silverstein Properties
and the California State Teachers’
Retirement System.
Sharga said.
Wilcox, who most recently was
vice president and director of capital
markets on the East Coast for Marcus
& Millichap, is based in New York.
He had joined Marcus & Millichap in
2013 after nearly five years with Savills,
where he was a managing director and
head of capital markets.
Auction.com Hires John Wilcox
to Build Financing Capability
Rubenstein Hires Mike Daugard
to Pursue Opportunities in D.C.
Long-time investment-sales professional John Wilcox has joined auction.
com as senior vice president of commercial real estate finance.
He’s charged with helping develop
the auction company’s capability of
arranging financing for buyers of assets
through its site.
“This will benefit buyers,” explained
Rick Sharga, executive vice president
of auction.com. They’re also likely to
place more aggressive, or greater bids if
they’re more confident they’ll be able to
line up a specific amount of financing.
Sellers, meanwhile, should be confident
they’d have “a larger pool of qualified
buyers vying for their properties,”
Mike Daugard, the former director
of acquisitions and portfolio management at Washington REIT, has joined
Rubenstein Partners as vice president
for its Washington, D.C., office.
In his new post, Daugard is charged
with identifying, evaluating and executing investments in the Washington area
and will work closely with Steve Evans,
regional director. Rubenstein, a Philadelphia investment manager, is in the
process of investing the $515 million
of equity commitments it had raised
in 2012 for its Rubenstein Properties
Fund II, which pursues office properSee INSIDER, Page 3
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October 30, 2015
INSIDER...From Page 2
REIT...From Page 1
ties on the East Coast from Boston to Florida.
While at Washington REIT, Daugard worked on, among
other things, the REIT’s $500.75 million sale last year of
a portfolio of medical-office properties to Harrison Street
Real Estate Capital, and its sale in 2011 of a large industrial
portfolio for $350 million. He also was instrumental in reinvesting proceeds of those transactions into office, retail and
apartment properties. He previously was with JLL, Lowe
Enterprises, the Mills Corp. and Van Metre Cos.
And Griffin Capital has launched Griffin-American Healthcare REIT 4 Inc., with a $3.2 billion equity target. It would
be the latest non-traded REIT sponsored by Griffin Capital,
which last year sold one of its predecessors, Griffin-American
Healthcare REIT II, to NorthStar Realty in a deal valued at
$4 billion. As its name indicates, the latest REIT would pursue
investments in medical-office, seniors-housing, hospitals and
other healthcare-related properties.
Bayonne, N.J., Apartments
Sell for $147.5Mln
Lisa Payne Resigns as CFO of Taubman Centers
Lisa A. Payne is stepping down as chief financial officer
of Taubman Centers Inc., effective next March, to pursue
other opportunities.
Payne had joined the Bloomfield Hills, Mich., REIT in
1997 from Goldman Sachs, where she was a vice president
in its investment-banking division. She previously had been
in Chemical Bank’s real estate department.
She’ll be replaced by Simon J. Leopold, treasurer and executive vice president of capital markets. Leopold had joined
Taubman three years ago and most recently spearheaded the
company’s sale of seven malls with 7.3 million square feet to
Starwood Capital Group for $1.4 billion.
Tanger’s CFO, Frank Marchisello, Retiring
Frank Marchisello is retiring as chief financial officer of
Tanger Factory Outlet Center, effective May.
Marchisello has been with the Greensboro, N.C., REIT
since 1993, when he joined as chief accounting officer. He
previously was with Gilliam, Coble & Moser, an accounting firm, where he was partner of its real estate business,
whose clients included Tanger.
He was named chief financial officer in 1999 and was
instrumental in navigating the company through its initial
public offering of common shares that year.
He’ll be replaced by Jim Williams, the company’s chief
accounting officer, who has been with Tanger for 22 years.
Castle Lanterra Properties has paid $147.5 million, or
$271,140/unit, for Alexan CityView, a 544-unit apartment
property on the Bayonne, N.J., waterfront.
The Suffern, N.Y., company, which was founded six years
ago by Elie Rieder, a long-time apartment-property investor,
bought the five-year-old complex from its developer, a venture
of Trammell Crow Residential and AIG Global Real Estate in
a deal brokered by JLL.
Alexan CityView is 91 percent occupied and includes a
10,000-square-foot clubhouse, fitness center, indoor basketball
court, resort-style swimming pool and seven-story parking garage. But Rieder said Castle Lanterra would upgrade some of
those amenities. For instance, he said the fitness center would
be expanded as would the property’s clubhouse. The property,
which sits on a 7.4-acre parcel, also is being renamed Harbor
Pointe.
It sits on the Peninsula at Bayonne Harbor, offering views of
lower Manhattan. Castle Lanterra is in talks with owners of
neighboring parcels to possibly develop additional units.
The property is near a PATH commuter-subway station that
provides quick access to lower and midtown Manhattan. It is
15 minutes from Jersey City, N.J.
Rieder had founded Castle Lanterra in 2009 and over the
past two years has invested some $500 million on more than
3,000 units. It focuses on the northeast, mid-Atlantic and
southern regions.
350 S. Main St. #312
P.O. Box 1865
Doylestown, PA 18901
267-247-0112
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October 30, 2015
PROPERTYNEWS
ALPHARETTA...From Page 1
of four buildings off North Point Parkway, about 24 miles north of Atlanta.
Rents run about $14.40/sf, which is 12
percent below the submarket’s average of
$16.41/sf, according to Reis Inc., which
projects rents to increase to $17.16/sf by
next year.
While the property is 93 percent occupied, it faces some near-term roll-over
that could benefit Accesso, if it’s able to
increase rents to market levels. Nonetheless, tenants have an average of 6.2 years
remaining on their lease terms.
Among its big tenants is Kids II Inc.,
which makes toys for infants and tod-
dlers. It leases 64,093 sf as its headquarters, but it moved to Atlanta’s Buckhead
area, so it likely won’t renew when its
agreement matures in two months.
The property sits in a market with 15.3
million sf whose occupancy rate is slated
to inch up to 82.7 percent next year
from 81.7 percent in the second quarter,
according to Reis’ projections. It expects
some 259,000 sf to be absorbed through
next year, indicating that demand for
space should remain solid.
Cousins developed the property in the
late 1990s in a venture with Prudential
Real Estate Investors, and 12 years ago
bought out its partner’s stake.
Landmark Apartment REIT Seen Selling
Landmark Apartment Trust Inc., a
non-traded REIT that earlier this year
sought to list its shares, has agreed to
be purchased by a venture of Starwood
Capital Group and Milestone Apartments REIT in a deal valued at nearly
$2 billion.
Landmark, which is headquartered
in Richmond, Va., was launched by
Grubb & Ellis in 2005 as Grubb & Ellis
Apartment REIT. But unlike most other
non-traded REITs, which typically are
capitalized by mom-and-pop investors,
Landmark’s investor base is weighted
with institutions, such as Blackstone
Group, iStar Financial Inc. and Canadian pension OPSEU Pension Trust.
That’s the result of its recapitalization
three years ago in a deal that involved
the purchase by the REIT of 21 properties from an institutional investor group,
each of which received units in Landmark’s operating partnership affiliate in
return. In addition, iStar and Blackstone
had invested $209.8 million in preferred
shares issued by the company to help
fund the purchase of the properties.
Under the agreement with the Starwood/Milestone venture, every Landmark common share and operating partnership unit will receive $8.17 in cash,
or a total of $531 million. The REIT
also has $228 million of preferred equity
outstanding and $1.2 billion of debt, including $983 million of mortgages, and
as of June it had $160 million outstanding under a credit facility provided by
lenders led by Bank of America.
Milestone, a Toronto REIT that
invests solely in apartment properties
October 30, 2015
in the southeastern and southwestern
United States, would buy 15 of Landmark’s properties, with 4,172 units, for
a total of $502 million, and Starwood
would buy the remaining properties,
with 19,615 units, for a total of $1.4
billion. Milestone also will manage the
properties that Starwood buys, earning a
3 percent fee.
Landmark’s predecessor initially had
sold its shares for $10 each, but as of last
year had valued them at $8.15 apiece. It
was able to substantially bolster the size
of its portfolio through its recapitalization and now owns 78 properties with
a total of 23,787 units in the Sunbelt
region that it carried on its balance sheet
at a value of $1.7 billion, as of the end
of June. During the three months that
ended in June, its portfolio generated
$64.6 million of revenue, but operated at
a loss, primarily because of the interest
it pays on its debt and preferred shares.
Net operating income for the quarter
was $34 million, for an annualized
$136.2 million, which would give the
Starwood/Milestone team’s purchase
price a capitalization rate of just more
than 7 percent.
The company’s properties are concentrated in Texas, where it owns 28 with
a total of 8,522 units; Florida, where it
owns 15 with 4,675 units, and North
Carolina, where it owns 13 with 3,620
units. It also owns properties in Alabama, Georgia, Tennessee, Virginia and
South Carolina. Its properties are 95.7
percent occupied and generated an average of $956/unit in monthly revenue.
-5-
Oaktree Capital Raises
$1.2Bln for Latest Fund
Oaktree Capital Group so far has raised
$1.2 billion of a targeted $3.5 billion of
equity commitments for its latest opportunistic investment fund.
The Los Angeles investment manager
late last year had launched the fund,
Oaktree Real Estate Opportunities Fund
VII, just a few months after raising $2.7
billion for its predecessor, Fund VI. That
fund’s capital has been fully invested
and was roughly 90 percent committed
to investments by last June, roughly a
year after being launched and soon after
starting its investment cycle.
According to the Contra Costa County
(Calif.) Employees’ Retirement System, which had committed $80 million
to Fund VI and $50 million to Fund
V, which had raised $1.28 billion of
commitments in 2012, both funds have
performed strongly. Fund V, for instance,
already had returned 51.5 percent of the
capital it had raised and has generated a
19.9 percent gross internal rate of return.
Fund VI, meanwhile, so far has generated
a 24.9 percent IRR. Fund VII is projected to provide its investors with a gross
IRR of more than 15 percent.
It will have a four-year investment
cycle and 10-year term, but it could be
extended.
The latest fund, like its predecessors,
invests in real estate, including corporate-owned properties, debt against
properties, real estate companies and
securities. And while it’s able to invest
overseas, its focus is the United States.
The latest fund is expected to have only
a nominal exposure to structured finance,
specifically CMBS. Previous funds at
times had substantial exposures, which
were largely opportunistic, as market volatility temporarily depressed bond values.
Meanwhile, Fund VII’s exposure to
loan portfolios is expected to shrink
slightly, to 5 percent of all its investments, from 6 percent for Fund VI. Some
previous funds had greater concentrations, but those were driven by Oaktree’s
ability to source opportunities, particularly from the FDIC.
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October 30, 2015
MORTGAGENEWS
E-mail Parser Added to TreppTrade Platform
Trepp LLC has launched a major
enhancement to its TreppTrade product
that allows users, primarily investors in
CMBS, to easily track the trading color
they might receive from various sources
for bonds they’re watching.
Through a collaboration with Solve
Advisors, a Rockville Centre, N.Y., technology company that specializes in the
structured-finance market, TreppTrade
now will display the trading color derived from users’ own e-mails, which is
extremely helpful when they’re looking
to buy or sell bonds.
Investors and traders typically communicate pricing and other information
about CMBS they might be offering for
sale, or looking to buy, via e-mail. An
investor looking to sell a portfolio of
bonds might disseminate what’s called
a bid list to various broker-dealers. And
each of those would, in turn, distribute
the anonymous bid list to their clients
for auction. Once a bond trades, the broker-dealers can distribute trading color,
to include cover, or second-place bids, to
those investors who turned in offers.
The result of only one week of bond
trading could result in a mountain of
e-mails from dozens of participants
about the bonds that might have been
out for bid in that given week. Add
to that the information contained in
dealers’ offer sheets and market e-mails
would make managing that manually at
the very least challenging and often very
confusing.
TreppTrade is trying to address the
challenges by absorbing those e-mails
and integrating the information in them
on users’ screens. So a bond buyer who
has received a dozen e-mails, each of
Greystone Sees $800Mln to $1Bln of
Conduit Lending Volume This Year
Greystone originated some $700 million of commercial mortgages that were
sold through securitization last year,
its first full year in the conduit-lending
business.
And this year, it says it’s on track to
originate $800 million to $1 billion of
loans.
The New York lender, which is best
known for its agency-lending chops,
started writing loans for securitization
in 2013 as part of an effort to broaden
its scope. After all, many of its apartment-owning borrowers also own other
types of properties. Since it already did
business with them, it made sense to
expand its line of offerings to accommodate them.
The company also has the capability of
funding bridge loans against non-multifamily properties that aren’t quite ready
yet for permanent conduit loans.
Greystone originates loans against
apartment properties under Fannie
Mae, Freddie Mac and Federal Housing
Administration programs. It also funds
bridge loans through a balance-sheet
program that serves as a feeder for permanent agency loans. Last year, it funded
roughly $600 million of those loans.
While its expertise is in the multifam-
October 30, 2015
ily and healthcare sectors, the company actively funds loans against other
property types, specifically through its
conduit-lending program. Its overall
origination volume last year was $4.5
billion. That’s projected to increase to
more than $5 billion this year.
Unlike many other lenders that
contribute loans to the CMBS market,
Greystone is absent from most rankings
of loan contributors.
That’s because it typically sells its
originations immediately after funding
them. It funds its loans with proceeds
from warehouse lines it has with two
major banks, which then buy the loans it
writes. As a result, those banks typically
get credit for its originations. But the
company does all its own underwriting
and its loans are written using its own
documentation.
On the conduit side, Greystone is a
decidedly middle-market lender. Last
year, for instance, it completed 26 conduit financings, giving each an average
size of nearly $27 million. But that tally
included one $90 million loan. Exclude
that and its average loan size declines
to nearly $24.5 million. This year, it will
have written between 35 and 40 loans of
roughly $25 million each.
-7-
which includes pricing information on
a specific bond, would have the relevant
information from each of those e-mails
tied to bonds it might be watching on
the TreppTrade platform. And all that
information would be shown side-byside to a host of other details on the
specific bond, including collateral data,
and recent news about individual loans
that a user could use to conduct thorough analysis.
“TreppTrade delivers on the promise
of showing you what you need to know,
when you need to know it,” explained
Michael Gabriella, vice president of
product management and head of credit
analytics at Trepp.
ARLINGTON...From Page 1
Related paid $30 million for a stake in
the property on behalf of its Related Real
Estate Recovery Fund.
The Related/Congress venture retained
many of the landmarked building’s
historic features, such as its bronze mail
chute, two-story arched windows in its
lobby and its Italian marble floors.
Individual units have upscale finishes that include ceilings as high as 12
feet, washed white-oak flooring, walnut
cabinets, KitchenAid appliances that include microwaves and dishwashers with
stainless-steel finishes and Bosch washers
and dryers.
The Arlington, which already is 95
percent occupied, includes a basketball
court that was salvaged from when the
building served as a school, game room
with billiards table and dining room. It’s
staffed by a 24-hour doorman and offers
concierge services, housekeeping and
dry-cleaning services. Its ground-floor
retail space is occupied by the Liquid Art
House, a restaurant with an art gallery
that provides in-home dining to tenants.
The price Rockpoint is paying is some
35 percent more than the $740,741/unit
that Related had paid earlier this year
for the 54-unit 142-170 Charles St. in
the nearby Beacon Hill neighborhood.
A total of eight apartment properties
in Boston have sold this year for prices
north of $500,000/unit. Meanwhile,
the 31 apartment properties that have
changed hands in the city this year sold
for an average of $350,759/unit, for an
average cap rate of 4.9 percent.
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Fitch Ratings has been rating U.S. CMBS transactions for twenty-five years.
Since 1990, we’ve leveraged independent thinking and rigorous
analytics to provide balanced ratings, insightful research, and
precise surveillance tools for the U.S. CMBS market. In that
time we’ve built a legacy of transparency and openness by
maintaining an open dialogue with investors.
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-8-
October 30, 2015
REITNEWS
Highland Capital Launches Non-Traded REIT
Capital Funds Distributor Inc., its parent’s retail-distribution arm. Highland,
which has some $21 billion of assets under management, moved into the retail
sector in 2000, and in 2004 got into the
mutual-fund business.
NexPoint Hospitality is run by James
Dondero, co-founder of Highland; Brian
Mitts, chief financial officer, who is chief
operations officer for Highland Capital
Management, and Matthew McGraner,
chief investment officer, who serves in
the same capacity at Highland.
Like most non-traded REITs, NexPoint Hospitality will sell shares, subject
to a relatively hefty load, to retail
investors. It will sell two classes, which is
now becoming the norm. Class A shares,
which would be sold for $25 each, would
be subject to an upfront 7 percent sales
commission and 3 percent dealer-manager fee. Class T shares, meanwhile,
would be priced at $23.94, and would be
assessed the same up-front dealer-manager fee. But the sales commission
initially would be 3 percent, with the
remainder paid out annually over the
following four years, or until the REIT
executes a liquidity event.
Starwood to Pay $5.4Bln for 72 EQR Properties
million to invest in additional properties
through tax-deferred exchanges.
The properties Starwood is buying
from EQR are in South Florida, with
33 properties that have 10,742 units;
Denver, with 18 properties that have
6,635 units; Washington, D.C., with 10
properties that have 3,020 units; Seattle,
and California’s Inland Empire. They’re
being purchased unencumbered by debt,
giving Starwood plenty of flexibility to
line up fresh financing.
It’s buying the portfolio through its
Starwood Global Opportunity Fund X,
through which it raised $5.6 billion of
equity commitments earlier this year.
The EQR properties are a mix of midrise and garden-style apartments.
Christopher Graham, senior managing
director and head of real estate acquisitions for the Americas at Starwood, said
South Florida and Denver, the two markets with the largest representation in
the portfolio, have had 5.4 percent rent
growth over the past five years, which
he said was greater than the national
average.
NexPoint Credit Strategies Fund, an
affiliate of hedge-fund manager Highland Capital Management, has launched
a non-traded REIT that would pursue
investments in the hotel sector.
The entity would be the third property-owning REIT sponsored by the
Dallas company, which pursues investments primarily in high-yield bonds, but
also has exposure to public equities and
real estate.
It got into the REIT sector less than
three years ago, when it carved out its
real estate holdings - a portfolio of
apartment properties - into a REIT that
operated as a NexPoint Credit Strategies
subsidiary. Then earlier this year, it spun
that business off as NexPoint Residential
Trust Inc., a traded REIT. The company
owns 39 properties with 12,038 units
in the Southeast and Texas that are 93
percent leased.
Meanwhile, last year, it launched an
effort to raise $1.1 billion through
NexPoint Multifamily Realty Trust Inc.
that would pursue core-plus apartments,
meaning properties whose rents could
be increased with modest upgrades or
renovations. It expects upgrades to cost
Starwood Capital Group has agreed to
buy 72 apartment properties with 23,262
units from Equity Residential for $5.4
billion, marking its largest non-hotel
acquisition ever. According to Equity
Residential, the price results in a capitalization rate of 5.5 percent.
For Starwood Capital, a Greenwich,
Conn., investment manager, the announcement comes just after it struck
a deal to buy 63 properties with 19,615
units from Landmark Apartment Trust
Inc., a non-traded REIT, for $1.4 billion.
Those properties are concentrated in
Texas, Florida and North Carolina. The
latest purchase would bring its portfolio
to 88,000 units, making it among the
largest apartment owners in the country.
Including its two latest deals, it would
have purchased 67,800 units over the
last 12 months along.
“The size of this transaction underscores our conviction in multifamily
housing’s continuing ability to offer
superior risk-adjusted returns,” explained
Barry Sternlicht, chairman and chief
October 30, 2015
no more than $4,000/unit.
That would be in contrast with
NexPoint Residential, which pursues
value-add properties that would require
greater capital improvements than those
pursued by its newer sibling company.
Its latest venture, NexPoint Hospitality
Trust Inc., as its name indicates, will
pursue hotels, specifically extended-stay
and select-service properties, and to a
lesser degree, full-service properties. All
of the properties would be flagged under
the most common national brands, from
Marriott International, Hilton Hotels &
Resorts, Hyatt Hotels Corp., Starwood
Hotels & Resorts Worldwide Inc. and
InterContinental Hotels Group. The
company aims to follow a value-add, or
slightly opportunistic strategy, in that it
would buy properties that would benefit
from a re-branding, capital improvements or redevelopment and are in
markets with barriers to entry.
The properties it invests in would be
managed by Pillar Hotels & Resorts, an
Irving, Texas, hotel manager that specializes in limited-service properties.
Shares in NexPoint Hospitality will
be sold for $25 each through Highland
executive of Starwood.
In contrast, EQR, as Equity Residential is commonly referred to, owns 392
properties with 109,347 units, before
its latest deal. But the Chicago REIT is
shrinking its portfolio as it increasingly
focuses on owning properties in urban
markets and that are close to transportation venues.
To that end, it’s planning to sell
another 26 properties with 4,728 units
next year. More than 70 percent of those
units represent the company’s entire
Connecticut portfolio and are in what it
considers non-core submarkets in Massachusetts. The bulk of those properties
were inherited through the REIT’s 2000
purchase of Grove Property Trust.
Those assets, which would be sold as
small portfolios and individual properties, will bring EQR’s total proceeds
from asset sales to roughly $6.1 billion.
It will use about $3.8 billion of that
to pay a special dividend of $9-$11/
share, $2 billion to repay debt, including
possibly all its 2016 maturities, and $300
-9-
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GENERALNEWS
Austin Office Sees Offers Topping $220Mln
Commonwealth Partners, which is
offering for sale the 418,338-squarefoot 301 Congress Ave. office building
in Austin, Texas, is said to have drawn
offers of greater than $220 million, or
$525/sf.
The Los Angeles investment manager owns the property in a venture
with the California Public Employees’
Retirement System, which had acquired
it in 2007 for $119.8 million. At the
time, CalPERS’ national office portfolio was owned through a venture with
Hines. Commonwealth had replaced
Hines in 2011. The 22-story property
was constructed in 1985 and is widely
considered to be among Austin’s most
sought-after office addresses.
It is believed to be very well occupied,
with tenants that include RetailMeNot
Inc., which three years ago signed on for
95,000 sf, and Teza Technologies, which
earlier this year took 12,200 sf on its
top floor. Recently, consultancy Gerson
Lehrman Group nearly doubled its
footprint in the building with a lease for
nearly 42,000 sf.
Meanwhile, the class-A vacancy rate
in Austin is a very manageable 12.8
percent, according to Reis Inc., which
pegs asking rents at $40.44, up considerably from the $33.46/sf rate when the
Record Volume of Apt. Loans Originated in 2014
A record $195.1 billion of loans against
apartment properties with five or more
units each were originated last year,
according to the Mortgage Bankers
Association.
The Washington, D.C., trade group
compiled its data by surveying the
country’s largest lenders and culling
data from smaller financial institutions
through their disclosures as required by
the Home Mortgage Disclosure Act.
Last year’s volume was up 13 percent
from 2013 and was driven by a near-30
percent increase in lending by Fannie
Mae and Freddie Mac, to $61.2 billion.
According to the MBA, the total
volume was comprised of 40,974 loans,
giving each an average size of $4.8 million. The number of loans declined from
2013, when 44,696 were originated, but
their average size increased from $3.9
million.
The year’s volume was originated
by a whopping 2,876 lenders, slightly
less than the 2,898 lenders that wrote
loans in 2013. But the five most-active
lenders, JPMorgan Chase Bank, Wells
Fargo Bank, CBRE Capital Markets
Inc., Walker & Dunlop and PNC Real
Estate, accounted for just more than 30
percent of the total volume.
JPMorgan, for instance, wrote 5,768
loans with a balance of $16.9 billion;
Wells Fargo wrote 2,046 loans with a
balance of $16.5 billion, and CBRE
wrote 453 loans with a balance of $8.7
billion. A total of 19 lenders each originated $2 billion or more in loans. And
not surprisingly, most of those have very
active agency-lending platforms.
While banks and thrifts maintained
the largest share of the market last
year, funding $69 billion of loans, or
35 percent of the year’s total, Fannie
American Realty Fund Raises $566.8Mln
Investment manager American Realty
Advisors has raised $566.8 million of
equity commitments for American
Strategic Value Realty Fund LP, an
open-end vehicle that pursues value-add
investments.
The Glendale, Calif., company, which
has some $7 billion of assets under management, had launched the fund, its flagship, in 2010 and has consistently outperformed its benchmark, the NCREIF
Fund Index-Open End Diversified Core
Equity, or NFI-ODCE, Index.
American Realty has some $7 billion
www.crenews.com
of assets under management through
its flagship fund, other core investment
vehicles and certain separate accounts.
Among the investors in the Value Realty
Fund are the Fort Lauderdale, Fla.,
Police & Fire Retirement System, which
had committed $20 million to it, and the
Stanislaus County, Calif., Employees’
Retirement Association, which committed $30 million.
Value Realty Fund targets an internal
rate of return of 11-13 percent, before
fees, according to a presentation that
Verus Advisory Inc., the former Wurts
-10-
CalPERS venture bought the building
in 2007. But those solid fundamentals
have prompted an increase in new development, which could impact occupancies. Offsetting that risk, however, is the
fact that nearly 40 percent of the space
coming online is already leased.
Reis notes that nearly 2.9 million sf
will be added this year to Austin’s 44.2
million-sf inventory. While it’s not projecting an impact on asking or effective
rents, it expects that the overall vacancy
rate, which would include properties
classified as B as well as A, would
increase this year to 16.4 percent from
15.8 percent.
and Freddie funded 31 percent of the
total. The other major investor groups,
life-insurance companies, Federal Housing Administration and CMBS trusts,
accounted for a combined $36.7 billion
of volume, or 18 percent of the total.
Banks and thrifts tend to focus on relatively small-balance loans, as evidenced
by the 31,488 loans they wrote last year,
giving them an average size of $2.19
million each. USBancorp, for instance,
funded 510 loans, making it among the
most active lenders, in terms of number
of loans. But its average loan size was
only $1.2 million, so its total volume
amounted to only $633.9 million. In
fact, the MBA found that 1,884 lenders
that wrote loans last year had an average
loan size of $1 million or less.
Meanwhile, the 4,092 loans written
by Fannie and Freddie had an average
balance of nearly $15 million each, while
the 706 loans that life insurers wrote had
an average balance of $25.9 million.
& Associates, recently had made for
the Fresno County, Calif., Employees’
Retirement Association.
The fund pursues investments in the
four major property types, with a 49
percent allocation to office, 20 percent
to retail, 17 percent to multifamily and
the remainder to industrial. Properties it
would invest in are typically in or near
major markets and would be in need of
repositioning, or might have a vacancy
issue that was prompted by a lack of
sponsor capital for renovations or tenant
improvements.
October 30, 2015
DATADIGEST
Top 10 Conduit Loans - 1H 2015
Bal
($mln)
Property Name
City
State Prop
Type
LTV
%
Coupon Maturity Date
%
NOI
($mln)
Ticker Name
703.5
Courtyard by Marriott Portfolio
Various
VR
LO
63.00
3.69
Apr. 10, 2020
102.89
COMM 2015-CR23,
COMM 2015-LC21, GSMS 2015-GC30,
260.0
3 Columbus Circle
New York
NY
OF
50.00
3.61
Mar. 10, 2025
30.65
CGCMT 2015-GC29, COMM 2015-CR22,
WFCM 2015-LC20
248.0
Selig Office Portfolio
Seattle
WA
OF
220.0
26 Broadway
New York
NY
OF
63.36
3.91
Apr. 10, 2025
32.08
CGCMT 2015-GC29, GSMS 2015-GC30
59.50
4.38
Jan. 10, 2022
16.19
COMM 2015-DC1, COMM 2015-CR22
175.0
Soho-Tribeca Grand Hotel Portfolio
New York
NY
LO
57.84
4.02
Nov. 15, 2024
23.66
CSAIL 2015-C1, CSAIL 2015-C2
170.0
Discovery Business Center
Irvine
CA
OF
47.49
4.18
Nov. 15, 2024
20.95
MSBAM 2015-C20, MSBAM 2015-C21
155.0
The Club Row Building
New York
NY
OF
62.00
4.38
Jan. 15, 2025
11.89
JPMBB 2015-C27, JPMBB 2015-C28
150.0
Houston Galleria
Houston
TX
RT
48.00
3.29
Mar. 15, 2025
102.33
JPMBB 2015-C28, JPMBB 2015-C28
144.0
One Memorial
Cambridge
MA
OF
54.5
4.02
Oct. 10, 2024
18.87
COMM 2015-LC19
135.0
100 West 57th St.
New York
NY
60.00
2.31
Nov. 10, 2019
4.21
COMM 2015-CR22, COMM 2015-DC1,
WFCM 2015-NXS1
Source: Trepp LLC
Top 10 Defeased Loans - 1H 2015
Balance
($mln)
335.0
Property Name
City
ST
Prop
Type
Coupon %
Maturity Date
Brookdale Office Portfolio
Various
VR
LTV %
NOI
($mln)
OF
4.98
Sept. 11, 2015
63.3
31.0
Ticker
JPMCC 2005-LDP5
% of Deal
16.03
242.0
Selig Office Portfolio
Seattle
WA
OF
5.77
Jan. 1, 2016
71.9
28.3
JPMCC 2005-LDP5
12.49
220.0
353 North Clark Street
Chicago
IL
OF
5.12
Jan. 6, 2016
53.7
26.0
DBUBS 2011-LC1A
10.71
202.0
222 South Riverside Plaza
Chicago
IL
OF
6.19
June 6, 2016
73.1
18.8
GSMS 2006-GG8
7.72
177.0
535 and 545 Fifth Avenue
New York
NY
OF
5.77
May 11, 2016
63.9
11.3
CSMC 2006-C3
13.30
179.5
Michigan Plaza
Chicago
IL
OF
4.94
Nov. 5, 2015
59.9
22.4
MSC 2011-C1
13.27
160.5
Harbor Point Apartments
Boston
MA
MF
6.54
July 6, 2017
77.9
17.1
GSMS 2007-GG10
3.12
160.5
Ashford Hotel Portfolio
Various
VR
LO
5.22
July 1, 2015
76.0
23.1
MLMT 2005-CKI1
21.64
135.0
9200 Sunset Boulevard
Los Angeles
CA
OF
5.80
July 6, 2017
65.8
14.96
GSMS 2007-GG10
2.69
119.9
300 South Riverside Plaza
Chicago
IL
OF
5.43
Jan. 6, 2016
53.3
15.4
DBUBS 2011-LC1A
5.67
Source: Trepp LLC
October 30, 2015
-11-
www.crenews.com
DATADIGEST
Recently Priced CMBS Conduits
Source: Morningstar
Deal Name
Date
Size
($mln)
Underwriter
COMM,
2015-CCRE27
Oct. 20
931.62
DB
S+125 S+525
Rialto
JPMBB,
2015-C32
Oct. 19
1,148.16
JPM, Barc
S+127 S+565
LNR
GS Mortgage,
2015-GC34
Oct. 14
848.38
GS, Citi
S+125 S+510
KKR
MS-BofA-ML,
2015-C25
Oct. 7
1,179.42
MS, BofA
S+125 S+520
Eightfold
Sept. 28 1,090.90
DB
S+125 S+525
Seer
Capital
Wells Fargo,
2015-NXS3
Sept. 25
814.50
WF
S+115 S+460
LNR
Wells Fargo,
2015-LC22
Sept. 15
963.70
WF
S+122 S+460
Rialto
Citigroup,
2015-GC33
Sept. 14
958.49
Citi, GS
S+124 S+460
LNR
BofA-ML,
2015-UBS7
Sept. 14
757.28
UBS, BofA
S+117 S+440
Ellington
Wells Fargo,
2015-SG1
Aug. 18
716.33
WF, SocGen
S+120 S+440
Rialto
JPMBB,
2015-C31
Aug. 13
1,027.32
JPM, Barc
S+120 S+475
KKR
Aug. 13 1,127.41
DB, Cantor
S+116 S+440
Eightfold
COMM,
2015-CCRE26
Source: Morningstar
COMM,
2015-CCRE25
10-yr
AAA
BBB-
B-piece
Buyer
For historical data points, please visit the Commercial Real Estate Direct
Web site, at www.crenews.com.
CMBS Pricing Matrix
New Issue Spreads (bps over swaps)
Bond
Source: Morningstar
Top 10 Liquidated Loans - August 2015
Name
DealID
Bal $mln
Loss $mln
Sever%
10/9
10/2
5-yr AAA
10/23 10/16
77.5
76.5
75
76.5
10-yr AAA
123
123
121.5
122
10-yr AAA Jr.
158.5
159.5
157
155
AA
209.5
212
208.5
214
A
310
309
302.5
309
BBB-
497.5
485
482.5
472.5
Legacy Spreads (bps over swaps)
%ofDeal PropType
Bond
10/23
10/6
10/9
10/2
126.5
126.5
125
126.5
Computer Sciences
LBUB08C1
67.65
55.61
82.2
7.99
OFF
SuperSr AAA
Prudential Plaza-B
JPM06LDP7
37
37
100
1.32
OFF
20%Sub AAA
209.5
208
205
207.5
RET
Junior AAA
603.5
595.5
591.5
582
Mall at Steamtown
LB03C5
37.13
36.66
98.74
80.7
1100 Executive Twr-B
CS08C1
27.5
River Park Plaza
GCC05GG5
29.7
27.5
100
4.51
OFF
23.2
78.09
2
OFF
Fisher/Kahn Bldg
GCC05GG5
23.97
18.84
78.58
1.61
OFF
Reckson Port II
LBUB05C7
27.4
18.71
68.3
5.63
Park 100 Port
LBUB08C1
16.61
16.61
100
Senator Office Bldg
GCC05GG5
34.36
13.36
Trafalgar Plaza
CD06CD2
18.8
11.96
10/9
10/2
OFF
5yr AAA
57
58
53
54
1.96
IND
10yr AAA
76
76
76
74
38.89
2.31
OFF
63.64
1.07
OFF
Source: Trepp LLC
www.crenews.com
Freddie Mac K-Series Spreads (bps over swaps)
-12-
Bond
10/23 10/16
Note: Medians were compiled using spreads provided by several investment banks. Reporting banks
were quoting 5-year swaps at a median spread of
2bps over Treasurys, while 10-year swaps priced at
4bps less than Treasurys.
October 30, 2015
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