$3B Grand Avenue Project Starts Construction

Tuesday, December 04, 2007 - LOS ANGELES-The Related Cos. of New York City has started construction on the first phase of the $3 billion, 3.6-million-sf mixed use development called "the Grand," designed by architect Frank Gehry. Spanning three city blocks, the Downtown Los Angeles project is one of the largest of its kind in the country.

Phase one of the development will occupy a full city block bordered by Grand Avenue, Olive, First and Second streets. It will total 1.3 million sf and will feature a mix of hotel and residential towers, retail, restaurants, entertainment/nightlife, and public amenities.

The first phase of the development will include demolition of a parking garage at Grand Avenue and First Street beginning in February 2008 following remedial site work. Phase one of the project will also transform the existing County Mall to a new, 16-acre civic park in a portion of the development slated to begin next fall.

The architectural centerpiece of the Grand will be a 48-story tower at Second Street and Grand Avenue, including a 295-key Mandarin Oriental Hotel with 266 for-sale luxury residences. Designed by Gehry, the Mandarin will be similar to the AAA, Five-Diamond hotel in New York City at Related's Time Warner Center.

At First and Olive Streets, a 19-story Gehry-designed residential tower will combine 126 market rate condominiums and 98 units of affordable housing. Other elements will include a 250,000-sf retail pavilion planned for boutiques, restaurants and other tenants.

The new 16-acre civic park will feature terraces, lawns, gardens and plazas that will become the centerpiece of the Grand's landscaped public spaces. The construction schedule calls for it to be completed and opened in late 2010. The Mandarin Oriental Hotel and retail pavilion are slated for opening in early 2001, with the residential towers scheduled for a summer 2011 opening.

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source: cityfeet.com

Centennial Holdings Buys Portfolio for $205M

Tuesday, December 04, 2007 - ATLANTA-Centennial Holdings, based here, is acquiring a six-property multihousing portfolio for $205 million. The seller was a partnership of US Advisors LLC, headquartered in Napa, CA, and Creekstone, based in Houston. The portfolio contained a total of 1,946 apartment units.

The company has already closed on four properties which are located here and the surrounding area. Centennial is expected to close on a property in Charlotte, NC on Dec. 12 and a property in Durham, NC on Feb. 15. The portfolio had a cap rate of “roughly” 5¾%, says Sean Henry, a principal with Atlanta-based Apartment Realty Advisors, which represented the seller in the transaction.

The portfolio consisted of four properties in Atlanta and the surrounding area including Preston Pointe at Windermere in Cumming; Preston Park at Satellite in Duluth; the Heights at Peachtree Creek in Atlanta; and Preston Landing at Streetwater Creek in Lithia Springs. The two North Carolina properties are Parkside, which is located in Charlotte, and Courtney Creek, which is located in Durham.

The average age of the properties is six years with all of the Atlanta properties being constructed since 2001 and the oldest property constructed in 1998, Henry says. Creekstone had been managing the bulk of the properties with the exception of the Heights at Peachtree Creek. The occupancy rate is approximately between 92% and 93% for each of the properties, Henry says. The properties have a mix of one-, two- and three-bedroom units with the average unit size being 1,116 sf. The average rental rates range from $856 for Parkside to $1,268 at the Heights at Peachtree Creek, Henry tells GlobeSt.com.

Centennial Holdings acquired the portfolio because the company wants to increase its Atlanta portfolio and liked that each of the properties was located in different submarkets, Henry says. “Centennial has been expanding their portfolio [and] they liked the high quality of these assets,” he says. “It is just a really high quality large portfolio which is becoming hard to find.”

Centennial plans to hold the portfolio for four to seven years, according to Centennial president and chief executive officer W. Porter Payne Jr. in a released statement on the portfolio acquisition.

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Chicago Buyer Pays

Wednesday, December 05, 2007 - TUSTIN, CA-Waterton Associates of Chicago has acquired the 406-unit Villas at Tustin Apartments from Acacia Capital Corp. of San Mateo in a deal that offers upside potential on several fronts, according to brokers from Hendricks & Partners who negotiated the deal. The property, which was built in 1971, is situated on the west side of North Tustin Avenue, where the daily drive-by traffic count is about 30,000 cars per day, notes Joe Leon of the Newport Beach office of Hendricks & Partners.

Leon, who was the team leader on this assignment, joined with Dave Casper of the Hendricks & Partners West Los Angeles office and Bruce Furniss of the firm's North Orange County office in representing both the buyer and the seller. Leon notes that the Villas at Tustin is "just minutes from the 806-acre Platinum Triangle redevelopment area," which is one of the factors that made the property appealing to prospective buyers. The Platinum Triangle area is entitled for seven million sf of office and retail and is expected to bring 26,000 new jobs to the submarket.

"While the sellers continued the renovation of interiors during their ownership, the buyer envisioned the benefit of further interior renovation and exterior upgrades, given the recent success of other nearby projects like Creekside Village," Leon says. He notes that washer and dryer appliances alone could add as much as $75 per unit per month in new net operating income and that the buyer plans to incorporate washers and dryers into the building upgrades over the next several years.

Casper adds that the Orange County assets of this size rarely come onto the market and that the $183,004 cost per unit "leaves a lot of room for value creation over the next few years." Casper says that the property's proximity to Tustin and its location within the Orange City School District, along with a unit mix heavy on two-bedroom flats and townhomes will continue to make the complex a strong rental option for middle-income residents.

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Inland REIT Sells Four Office Sites for $271M

Wednesday, December 05, 2007 - OAK BROOK, IL-Inland Western Retail Real Estate Trust Inc. has sold four office properties to the German KanAm Grund Kapitalanlagegesellschaft mbH, which made the $271-million purchase on behalf of KanAm Grundivest Fonds. Inland says the facilities are fully leased by American Express, and make up about 1.6 million sf.

Shane Garrison, CIO for the Inland Western REIT, says the properties are in Ontario, Canada; Minneapolis; Phoenix; and Ft. Lauderdale. He wouldn’t divulge the exact location of the facilities. However, Inland records show that the company bought eight office properties from American Express in late 2004 and early 2005, in sale-leaseback transactions for more than $430 million. That purchase included the 541,542-sf 1001 N. Third Ave. South in Minneapolis ($95 million), the 376,348-sf 777 American Expressway in Ft. Lauderdale ($63 million) and the 306,710-sf 101 McNabb St. in Markham, Ontario ($42 million). Two Phoenix properties were included in the 2004 sale-leaseback, but the 337,439-sf 2022 N. 31st Ave. property puts the recent purchase at 1.6 million sf. The Inland REIT still owns the other Phoenix property, and the rest of the American Express-leased facilities in DePere, WI; Greensboro, NC; and Salt Lake City.

Garrison says the REIT wanted to get rid of some of its office properties to concentrate more on multi-tenant retail centers. “We’re pushing for obvious growth vehicles,” he tells GlobeSt.com. “We still have a few office assets. We’ll look at everything opportunistically.” He says the sale was a reverse 1031 exchange, and will go toward funding the purchase made a few months ago for two retail assets. The REIT bought Gerry Centennial Plaza in Oswego, IL in October for $33.8 million from RHS Cos. Inc., and bought a large stake in the completed 388,428-sf portion of the estimated 700,000-sf property the Shops at Legacy, a premier lifestyle center in Plano, Texas from the Karahan Cos. in an off-market transaction.

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Law Firm Inks Five-Year Pacts for 76,679 SF

Wednesday, December 05, 2007 - ADDISON, TX-A leading law firm for mortgage servicing has re-upped and expanded its headquarters space, abandoning an 18-month search for an office building to buy. The dealmaking has bed down 76,679 sf in two neighboring locations in five-year leases with two months' free rent.

Barrett Burke Wilson Castle Daffin & Frappier's double deal could be the largest office lease signed to date this year in the Quorum-Belt Line submarket, says Cameron Tapley, senior vice president of the tenant advisory group in Dallas for Grubb & Ellis Co. The 400-employee firm has occupied the entire 47,140-sf class B building at 15000 Surveyor Blvd. for the past decade. Two years ago, it leased 10,839 sf across the street in the Forum at 4004 Belt Line Rd. and has now added 18,700 sf of the class B space to keep up with its growth, the broker says.

Tapley says the law firm dropped a long-time search for a building to buy about four months ago. "They had a lot of infrastructure invested in the locations. To replicate that on the technology side was pretty expensive," he tells GlobeSt.com. "And timing was such that they were so busy they didn't need to be in the middle of that kind of move."

Tapley says the acquisition hunt most likely will ramp up again in two years. He says the preferred strategy is to get a building large enough for the firm to fill 80,000 sf to 100,000 sf and have some extra room for tenants. "But, for right now, we're sitting pat," he says.

Both locations are owned by Ralston Investment Co. of Santa Monica, CA. Tapley bargained against Dennis Barnes, senior vice president for CB Richard Ellis in Dallas, for the Surveyor Boulevard building and dealt directly with Ralston to work out terms for the Forum space.

Tapley says the law firm is in the process of moving into the expansion space, which was the only part of the five-year deals to win a tenant-improvement package. The firm holds a triple net lease for Surveyor Boulevard building. The average rate for class B office space in the Quorum submarket is $19.03 per sf, according to Grubb & Ellis' third-quarter report.

With the Dallas headquarters space locked down, Tapley's also in the final stage of lease talks for a 3,000-sf office in North Austin and looking for three sites in major metros outside Texas. Barrett Burke Wilson Castle Daffin & Frappier also has offices at 1900 St. James Place in Houston and 1017 Central Pkwy. in San Antonio.

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