Global Viewpoints

TMW PRAMERICA ACQUIRES LE 31 SHOPPING CENTRE IN FRANCE FOR €160M

Edited: Jennifer Brenner Andrade
Source: Cushman & Wakefield

The investment company TMW Pramerica Property Investment GmbH has acquired LE 31, a shopping centre located in the heart of Lille in France (agglomeration of more than 1 million inhabitants) for two of its special funds: EuRetail and BTI.

The purchase was carried out by way of a joint venture for the two funds at approximately €160M. Foruminvest France, which developed the shopping centre, will continue to manage the property in the long term on behalf of the new owner.

Foruminvest France is a subsidiary of the Dutch group Foruminvest; investor, developer and property manager which specialises in town centre shopping centres.

LE 31 is located on Rue de Béthune, which is the fifth busiest street in France with more than 25 million pedestrians per year. Since its opening in September 2007, the shopping centre has been fully let to retailers Galeries Lafayette, Adidas, Darty, La Grande Récré, Grand Optical, Pull & Bear and Bershka.

Boasting an underground car park run by Q-Park comprising 585 parking spaces, the shopping centre offers shop units of between 395 sq.m and 15,800 sq.m (Galeries Lafayette) and a total lettable area of 22,000 sq.m. The centre also provides 600 jobs.

On the basis of a net yield of 6.05%, the sale has confirmed the Foruminvest Group strategy and will reinforce its development of further high potential schemes throughout Europe. The purchaser was advised by ALLEZ & ASSOCIES and FRESHFIELDS. The vendor was advised by K L & ASSOCIES and LEFEVRE PELLETIER & ASSOCIES.

The sale was structured by Cushman & Wakefield which was instructed by the vendor on an exclusive basis.

Green Expertise Wins Transwestern 1.4M-SF Leasing and Management Assignment

Edited: Jennifer Brenner Andrade
Source: Transwestern

Metropolis Investment Holdings, Inc. (Metropolis) has selected Transwestern to lease and manage Pennzoil Place, a 1.4 million square feet, Class "A" trophy high-rise project located at 711 Louisiana in Houston's Central Business District.

"Metropolis is extremely pleased to be working with Transwestern," said Charles Wagener, senior vice president at Metropolis. "We plan to aggressively pursue LEED® certification at Pennzoil Place and we know Transwestern is a leading provider of sustainability services. We are confident they will steward the project with exemplary expertise."

Pennzoil Place was designed by renowned architect Philip Johnson in 1975. The property, which has achieved numerous architectural awards, brought worldwide recognition to Houston. The building has an onsite heath club and bank and is in close proximity to Houston's Theatre District. Pennzoil Place is positioned above Houston's underground tunnel system where tenants have immediate access to a host of amenities and restaurants. Existing tenants at the property include Shell Oil Company, Bracewell and Giuliani LLP, Baker and McKenzie, and Gensler.

According to Chip Clarke, president of Transwestern's Gulf Coast and Mountain regions, "We are thrilled to expand our relationship with Metropolis and to be associated with an asset of such prestige. Transwestern has been engaged by the ownership to pursue many exciting initiatives and we have assembled an exceptional team to represent this landmark property."

The Transwestern team responsible for the leasing and management of Pennzoil Place includes, Ben Quinton, senior property manager – management services, David Lee, senior vice president – office services, Greg Tilton, vice president – office services, and Lindsay Miller – associate – retail services. Quinton will oversee property management for Pennzoil Place, while Lee, Tilton, and Miller will oversee leasing and marketing efforts.

Newly Formed NYC Value Fund Picks Up Former AIG Office As First Acquisition

Edited: Jennifer Brenner Andrade
Source: KABR Real Estate Investment Partners LLC

KABR Real Estate Investment Partners, LLC, the value fund that buys real estate through the market cycle bottom, has made its first acquisition. The fund has purchased a 235,000-square-foot commercial office building at 85 Challenger Road in Ridgefield Park, NJ from AIG.

Paramus, NJ-based KABR is a newly formed fund, founded by noted investment partners, including its Chairman Kenneth Pasternak, former CEO of Knight Trading, which is dedicated to purchasing commercial and residential properties within 150 miles of the New York area. The deal represents the first post-Lehman, class A, vacant office property to trade in the Tri-State area.

Terms of the Class A building purchase, brokered by Cushman & Wakefield's Metropolitan Area Capital Markets Group, were not disclosed.

"We are delighted to announce the purchase of 85 Challenger, a terrific Class A office building that came onto the market at the right time for the right price," said Pasternak. "This marks the first of what we anticipate will be many advantageous investments. As the real estate market evolves, we anticipate building out our portfolio with a great mix of multi-family residential and commercial properties."

The 85 Challenger building, part of the 60-acre Overpeck Centre which sits at the junction of Route 46, I-80 and the NJ Turnpike, has a historic occupancy rate of more than 90 percent. The previous owner renovated the lobby with stone flooring, wood wall paneling and designer furniture.

"We've already received a number of tenant inquiries because they know we can provide a better space in a better location at a better value," said Laurence Rappaport, KABR managing partner. "That's exactly what shareholders and CEOs are looking for in this environment."

The mixed-use office park serves as home to such notable firms as Bank of America, Samsung and AGFA. It is the only office park in Northern New Jersey to have its own exit off the Turnpike (Exit 68). Abundant area dining and retail, mass transit access and a new Hilton Garden Inn across the street, and a 22-acre county park within walking distance add to its appeal.

"AIG made the right decision to return this building to the developer market following its foreclosure," said Cushman & Wakefield's Andrew Merin, who orchestrated the sale with team members Gary Gabriel, David Bernhaut and Jose Cruz. "We received 17 bids on the offering, which generated a highly competitive process, particularly considering the current investment climate."

American Realty Capital To Spend $31M on Fed-Ex Facility in Houston

Edited: Jennifer Brenner Andrade
Source: American Realty Capital Trust, Inc.

New York-based REIT, American Realty Capital Trust, Inc. is planning to acquire a newly constructed freight facility entirely net leased to FedEx Freight and guaranteed by FedEx Corporation. The deal is anticipated to close on June 15, 2009.

The purchase price, excluding closing costs and fees, is approximately $30.9 million. The primary lease term is fifteen years, having commenced October 16, 2008, and provides for up to two successive five-year extensions. The base annual rent increases by 8% every five years. The acquisition will be financed by a long-term, first mortgage loan from a major European bank, representing approximately 50% of the total purchase price; the remaining capital will be provided by the REIT.

The FedEx Facility is comprised of 152,640 square feet and is located in the Satsuma Station Industrial Park in the northwest corridor of Houston, TX. The property was a build-to-suit and is considered a “less-than-load” facility which allows products to move quickly across the country. American Realty is acquiring the property from PinPoint Commercial, a U.S. developer of commercial and industrial properties.

“We are excited to add this single-tenant, investment-grade, net leased asset to our portfolio. This accretive addition to the REIT will further diversify its portfolio by tenant and geography, decrease its overall leverage, and allow us to continue to cover distributions from funds from operations,” said Nicholas S. Schorsch, CEO of American Realty Capital.

American Realty., which invests in single-tenant, freestanding commercial real estate net leased long term to investment grade tenants, following this acquisition, will own a portfolio of 93 properties with a total purchase price of approximately $180 million, excluding acquisition related costs. American Realty anticipates rental revenues should allow the REIT to continue to cover fully distributions from funds from operations and be accretive to its annualized 6.7% distribution, paid monthly.

Commercial and Multifamily Mortgage Delinquency Rates Continued to Rise in Q1

Edited: Jennifer Brenner Andrade
Source: Mortgage Banker’s Association

The weakening economy and continued credit crunch led to increases in commercial/multifamily mortgage delinquencies during the first quarter of 2009, according to the “Commercial/Multifamily Delinquency Report,” recently released by the Mortgage Bankers Association (MBA).

“Commercial and multifamily mortgage delinquency rates continued to rise in the first quarter,“ said Jamie Woodwell, Vice President of Commercial Real Estate Research at the Mortgage Bankers Association. “Delinquency rates on commercial and multifamily mortgages held by banks and thrifts, by Fannie Mae and in commercial mortgage-backed securities (CMBS) are all now at levels higher than those seen following the 2001 recession. First quarter delinquency rates on commercial mortgages held by life insurance companies remained below the 2001 recession levels.”

Between the fourth quarter of 2008 and first quarter of 2009, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.68 percentage points to 1.85 percent. The 60+ day delinquency rate on loans held in life insurance company portfolios rose 0.05 percentage points to 0.12 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.04 percentage points to 0.34 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac rose 0.08 percentage points to 0.09 percent. (Note that in June 2008, Freddie Mac began reporting multifamily delinquencies as those loans 90+ days delinquent. Prior to that time the reported numbers are for loans 60+ days delinquent). The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.66 percentage points to 2.28 percent.

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the first quarter were as follows:

• CMBS: 1.85 percent (30+ days delinquent or in REO);
  
• Life company portfolios: 0.12 percent (60+days delinquent);
  
• Fannie Mae: 0.34 percent (60 or more days delinquent)
  
• Freddie Mac: 0.09 percent (90 or more days delinquent);
  
• Banks and thrifts: 2.28 percent (90 or more days delinquent or in non-accrual).

To view the report, please visit the following Web link: http://www.mortgagebankers.org/files/Research/CommercialNDR/1Q09CommercialNDR.pdf