REITs continue to acquire big name portfolios into fourth quarter In three separate transactions and property types, some big names in commercial real estate have been purchased, acknowledging that REITs are focusing on what group gets the bigger deal.
In a deal approved by shareholders in September, Fort Washington, Pa.-based Pennsylvania Real Estate Investment Trust (PREIT) (ASE:PEI) acquired The Rubin Organization, a Philadelphia-based real estate company, for an estimated $260 million. PREIT acquired 95% controlling interest in four existing shopping centers and two under construction, altogether totaling 2.9 million sq. ft. New York-based Lehman Brothers acted as financial adviser to PREIT in the deal.
In another transaction that is slated to close in this month, BRE Properties Inc., a San Francisco-based apartment REIT, purchased Atlanta-based Trammell Crow Residential's western U.S. apartment portfolio for $600 million. The portfolio contains 7,478 multifamily units in California, Colorado, Arizona, Utah and New Mexico. The deal brings BRE's portfolio to 21,000 apartment units valued at $1.7 billion.
In the seniors housing arena, Extendicare Inc., a seniors housing provider based in Toronto, has acquired Lima, Ohio-based Arbor HealthCare Inc. for $325 million, or $45 per share. Extendicare has 279 facilities in North America and had $1.08 billion in revenue last year.
Alternative Living Services merges with Sterling House In an October merger agreement, Alternative Living Services Inc. (ALS) (AMEX:ALI), an assisted living development company based in Brookfield, Wis., and Wichita, Kan.-based Sterling House Corp. (AMEX:SGH) have joined forces to create the nation's largest assisted living company. As a result of the merger, ALS has over 200 residences presently in operation throughout 20 states. The new company will carry the ALS name and has the capacity to accommodate more than 8,500 residents. ALS opened its 100th facility in Rochester, N.Y., during September and presently has 170 new properties under construction. Current annual revenues are in excess of $115 million.
Boston Capital launches newest equity offering at $40 million Boston Capital Corp., a full-service real estate and investment banking firm based in Boston, launched its latest equity offering in September. The $40 million fund is called Boston Capital Tax Credit Fund IV -- Series 31 and is a diversified portfolio of 25 affordable housing properties with 1,293 units in nine states. The firm's Series 30 fund, a $25 million offering, sold out in September.
Washington Mortgage closes largest Fannie Mae transaction Vienna, Va.-based Washington Mortgage, part of The WMF Group, completed a $375 million master revolving credit facility in September for The Town & Country Trust, an equity REIT based in Baltimore. The financing uses a credit facility developed by Fannie Mae (NYSE:FNM) with terms of the facility allowing it to be increased to $450 million. Town & Country obtained an initial $300 million by using Fannie Mae fixed-rate mortgage-backed se curities (CMBS). It is a 10.5-year interest-only loan, with the remaining $75 million in the facility being funded at a variable rate, interest-only loan at 10.5% rate cap for the life of the loan. Collateral for the security includes 35 multifamily properties with geographic dispersion throughout the Mid-Atlantic region.
Credit Suisse First Boston and Continental Wingate sign pact Continental Wingate Mortgage Group (CW), based in Boston, and New York-based Credit Suisse First Boston signed an agreement in September providing CW with an open-ended line of credit. The new "Continental Wingate Direct Program" enables the firm to offer low competitive spreads on conduit mortgage loans on multifamily as well as other commercial property types. One goal for the program is $1 billion in closed loans for 1998. In 1997, CW is expected to reach $600 million to $700 million in commercial loans.
Wellsford Real Properties enters into agreement to acquire VLP In a definitive agreement worth approximately $180 million, New York-based Wellsford Real Properties Inc. (ASE:WRP) and Value Property Trust (NYSE:VLP), a publicly traded commercial real estate firm based in New Brunswick, N.J., have entered into an agreement in which, upon completion, WRP will sell 13 properties for $65 million in VLP's portfolio of 21 office, industrial and retail properties. Completion of the agreement is set for January 1998. WRP will pay VLP shareholders $130 million in cash and issue 3.35 million shares of common stock.
Glenridge Realty Trust acquires properties for $249.8 million In September, Glenridge Realty Trust (GRT) (NYSE:GLB), a San Mateo, Calif.-based REIT, closed two transactions acquiring 37 properties worth $249.8 million. The first deal was worth $103 million and included 10 properties, which were funded by $13.6 million in UPREIT units and $89.4 million in cash. The 10 properties contain 755,006 sq. ft. and are 100% leased. Product types include office and industrial facilities.
Secondly, GRT completed a previous acquisition of 27 properties from five funds sponsored by T. Rowe Price for approximately $146.8 million in cash. The properties are located in 12 states and comprise 2.9 million sq. ft. in office, industrial and retail space.
Citicorp and Wells Fargo Bank refinance $100 million of debt Wells Fargo Bank, based in San Francisco, and New York-based Citicorp Securities Inc. (CSI) closed a $100 million senior credit facility to refinance the debt and fund Davidson Hotel Partners L.P., (DHPLP) based in Memphis, Tenn. The credit facility will secure the repositioning of its portfolio in line with strategic management plans in key markets. The refinancing is secured by 14 DHPLP properties and will fuel the company's acquisition of the partnership interests in Blackstone Real Estate Advisors and Starwood Capital. The DHPLP portfolio is managed by Davidson Hotel Co. which operates 26 hotels totaling more than 6,000 rooms nationwide.
Host Marriott Corp. completes initial seniors housing expansion Host Marriott Corp., based in Bethesda, Md., has completed 419 units in its first phase expansion of the Forum Group portfolio, which Host Marriott purchased in June 1996 for $433 million. The first phase cost $44.5 million and the entire expansion plan will add 1,060 units in 16 communities to Host Marriott's portfolio. The expansion is slated for completion by January 1999. Host Marriott has set a goal of completing 500 units by year-end 1997.
Reckson Associates enters industrial arena Melville, N.Y.-based Reckson Associates Realty Corp. (NYSE:RA) entered into an agreement to invest $150 million and acquire controlling interest in the Morris Cos., a large developer of "big box" industrial properties based in Secaucus, N.J., marking its entrance into the industrial facilities arena. Initially, Reckson will invest $87 million for a 68% interest in the Morris Cos. and be renamed Reckson/Morris Industrial. Reckson anticipates a beginning net operating income yield of10% annually. The portfolio consists of 23 industrial properties, including two under way totaling nearly 4 million sq. ft., and located throughout northern and central New Jersey.
Cornerstone Properties signs $350 million agreement Cornerstone Properties Inc., a New York-based self-administered office REIT, has signed an agreement with Bankers Trust Co. and Chase Manhattan Bank, both based in New York, to increase its acquisition line of credit from $200 million to $350 million. The agreement is based on the closing of the acquisition of a 10-building portfolio purchased from the Dutch Institutional Holding Co.
Alex Palmer & Co. starts new $25 million VA facility Nashville, Tenn.-based Alex Palmer & Co. started construction in October on a new $25 million Department of Veterans Affairs regional office and outpatient clinic located in San Diego. The four-story, 135,000 sq. ft. facility will enable the Veterans Affairs office to process claims for veterans in the San Diego area. Set for completion in November 1998, the building will include a 40,000 sq. ft. outpatient clinic that features state-of-the-art diagnostic equipment, an audiology site and a mental health clinic.
TriNet Corp. completes stock offering valued at $100 million TriNet Corporate Realty Trust Inc. (NYSE:TRI) has completed its initial public offering (IPO) of 4 million shares of 8% Series C cumulative preferred stock at a gross value of $100 million. Liquidation preference is valued at $25 per share with a five-year call and an annual dividend on the stock of $2 per share. TriNet will use the proceeds to reduce debt on the company's unsecured revolving acquisition credit line. The firm's portfolio consists of 103 properties comprising nearly 15.4 million sq. ft. of office and industrial space in 25 states. TriNet has a total market capitalization of approximately $1.3 billion.
Philips Services Corp. signs an alliance with C&W, Royal LePage Philips Services Corp., a fully integrated resource recovery company based in New York, has signed a strategic alliance agreement with New York-based Cushman & Wakefield (C&W) and Montreal-based Royal LePage Ltd., one of Canada's leading full-service real estate firms. The alliance will provide industrial redevelopment services to "brownfield" sites located throughout North America. Brownfield sites are abandoned parcels of contaminated industrial property. In the United States the General Accounting Office estimates the number of sites at between 130,000 and 400,000. As a combined resource base, the new alliance makes Philips, C&W and Royal LePage the largest brownfield redevelopment group with 20,000 employees, 600 offices and $3 billion in revenue.
Avalon Properties announces a 45.3% increase in EBITDA Wilton, Conn.-based Avalon Properties Inc. (NYSE:AVN) has announced an increase of 45.3% or $28.4 million for the first three quarters vs. $19.6 million for the same period in 1996. The third quarter increase was 11% for $19.47 million vs. $14.08 million in the same quarter for 1996. Per common share, the REIT acknowledged $.51 per share for the third quarter 1997 over $.46 per share in 1996.