Hines nabs Los Angeles trophy from Mitsui Fudosan Houston-based Hines has acquired Sanwa Bank Plaza in downtown Los Angeles from Los Angeles-based Mitsui Fudosan (U.S.A.). Hines purchased the 52-story, 1 million sq. ft. office tower for approximately $200 million. Los Angeles-based Allen, Matkins, Leck, Gamble & Mallory LLP represented Mitsui Fudosan in the transaction.
Blackstone goes suburban with Detroit acquisition New York-based Blackstone Real Estate Advisors, an affiliate of the Blackstone Group, has acquired Southfield Town Center, a 2 million sq. ft. suburban office complex in Southfield, Mich., from the Government of Singapore Investment Corp. Blackstone reportedly paid between $255 million and $265 million for the suburban property with GE Capital providing a three-year, $190 million mortgage.
The five-building, Class-A complex includes a roster of high-tech tenants such as Microsoft, Cisco Systems and Sun Microsystems.
Equity Office buys complex from the boss Chicago-based Equity Office Properties Trust (EOP) has acquired Palo Alto Square, a 320,500 sq. ft. Class-A Silicon Valley complex, from Palo Alto Square LP, a private investment partnership controlled by EOP chairman Sam Zell. The development is in the Stanford Research Park in Palo Alto, Calif.
EOP paid approximately $85 million, using about $30 million in EOP operating units valued at $29.50 per unit, approximately $1.5 million in cash and the balance in existing mortgage financing. Terms of the acquisition were approved by a special subcommittee of EOP's Board of Trustees formed to review related-party conflicts between trustees and their affiliates.
In other EOP news, the company has signed Marsh Inc., a unit of New York-based Marsh & McLennan Cos., to a 111,000 sq. ft. lease at Prominence, a recently completed Class-A office building in Atlanta's Buckhead submarket. The 18-story, 426,000 sq. ft. building is now 47% leased.
If you can't make money in Boston In a deal brokered by Boston-based Fallon Hines & O'Connor, an affiliate of Dallas-based Trammell Crow Co., White Plains, N.Y.-based SSR Realty Advisors (SSR) has acquired 300 Baker Avenue in Concord, Mass. SSR acquired the property on behalf of Tower Fund, an open-ended, co-mingled account managed by SSR. The 422,200 sq. ft. office/R&D property was purchased from 300 Baker Avenue Associates LP, a Boston-based private investment group, for $47.75 million.
Built in phases between 1958 and 1980, 300 Baker Avenue was renovated in 1998 with new telecommunications capabilities, HVAC systems, passenger elevators and other finishes. The multi-tenant property is 96% leased, primarily to high-tech tenants.
Beat copy: On the floor at NAIOP At the National Association of Industrial and Office Properties (NAIOP) national convention in Seattle, the Office Market Outlook forum yielded a number of nuggets of wisdom. The public/private debate was one of many hot topics.
Dwight Taylor, president of Columbia, Md.-based Corporate Development Services, a subsidiary of recently REITed Corporate Office Properties Trust, said the every-three-month earnings horizon can make life extremely difficult. "Every three months we have to start over again," Taylor said. "That's the downside. It's not impossible, but we are challenged."
Public/private joint ventures have also been a hot topic of late, and Doug Norberg, president of Seattle-based Wright Runstad & Co., said his private company has the best of both worlds in that regard. Wright Runstad manages Chicago-based Equity Office Properties' Northwestern portfolio and partners in a few joint ventures with the office giant.
The urban/suburban debate was also a point of interest. "I do see a rebound on the part of the cities, but I don't see a reversal or slowdown in suburban development," Taylor said. "The ability to have your office close to tenants' residences is extremely important."
The panel also offered a few solutions on how to underwrite "credit challenged" high-tech clients:
* Some developers and landlords are requiring huge deposits that some emerging tech companies just do not have. Taylor's Corporate Development Services recently insured a high-tech tenant's lease for two years' rent. The tenant pays the premium, which is $.30 per sq. ft. per year.
* Another solution is to make the building more generic to limit risk and have the "credit challenged" pay for tenant improvements. With a more generic building, if the high-tech company tanks, the space should be easier to fill, Hillgren suggested.
Norberg clearly expects some emerging tech companies to tank and tighten credit enhancement for their more fortunate brethren. When that happens, he expects office owners and developers to demand returns similar to what venture capital companies get from their high-tech clients.
Big money in the Big Apple CTL Capital and Capital Lease Funding, both based in New York, have completed a $230 million private placement to provide long-term, fixed-rate financing for 2 Broadway, a 1.6 million sq. ft. office tower in New York. The property will be occupied by the New York City Transit Authority, the Triborough Bridge and Tunnel Authority, and the Metropolitan Transit Authority.
Capital Lease Funding and CTL Capital structured the deal as a 30-year self-amortizing credit loan. The single class of securities was not rated.