Fully leased premier office properties continue to be at the top of buyers’ list and Wells Core Income REIT has just added one such asset to its portfolio. The REIT recently acquired Franklin Center, a 200,600-square-foot office building in the Baltimore submarket of Columbia, Md., from Principal Real Estate Investors.

In addition to being occupied in its entirety by a creditworthy tenant, scientific and technology applications company SAIC, Franklin Center is also new — and green. The seven-story building made its debut in 2008, and it has earned LEED Gold certification by the U.S. Green Building Council.

The length of SAIC’s lease is unclear; however, Wells Core REIT should not have too much of a challenge maintaining a full tenant roster at Franklin Center should SAIC depart. The property, located near Fort Meade and the U.S. Department of Defense’s U.S. Cyber Command, sits in an area where the prospect for long-term demand for office space is on the rise. It has everything to do with jobs.

“Driven by numerous expanding industries, the Greater Baltimore area is ahead of the curve when it comes to market stabilization,” a report by commercial real estate services firm Cassidy Turley noted. “Market conditions should start to show signs of improvement with the influx of more than 15,000 jobs due to the DoD’s Base Realignment and Closure of 2005. The National Security Agency’s increased hiring efforts to support its cyber security initiatives should also have a positive economic impact on the area.”

It’s seen a flurry of activity in just a few months of its existence. Yesterday, Griffin-American Healthcare REIT II picked up $166.5 million worth of commercial real estate from the partnership of Westport Capital Partners and Reichmann International Development Co. in the form of ten skilled-nursing facilities across the Southwest.

Affiliates of Westport will continue to operate the facilities, and entered into a master lease with an initial term of 15 years with Griffin-American after the deal was struck. The portfolio features 1,364 beds in the ten facilities.

Just two weeks ago, Griffin-American spent $174 million on 11 facilities – ten skilled-nursing centers and one medical-office building – that totaled approximately 454,000 square feet. “Demand for healthcare services will only increase in the future,” Griffin-American CEO & president Danny Prosky told Commercial Property Executive. “As Baby Boomers continue to turn 65 over the next 18 years, and along with the general aging of the population, we’re bullish on growth and demand for the sector.”

In early December, amid its spinoff from former owner Grubb & Ellis Co., the healthcare REIT purchased an eight-property medical-office portfolio for $112 million. After that transaction, Prosky mentioned that, under his leadership, Griffin-American would be “aggressively acquiring quality, income-generating healthcare properties throughout the country and expects to own a portfolio of 73 buildings valued at nearly $710 million … in the next few months.”

Westport saw the sale as a win for its balance sheet. Russel Bernard, managing principal with the firm, noted that Westport grew the company’s operating income by a double-digit compounded growth rate for the first time since 2007. “The team was able to achieve this performance by repositioning the assts, driving improved occupancy and concentrating on census mix,” he said. “We are very pleased with the outcome of this transaction.”

Westport and RIDC have held a majority interest in the Westport portfolio since 2007.

Sierra Providence East Medical Plaza I in El Paso, Texas

Continuing in its quest for “stabilized assets that show cash flow above and beyond rent,” according to president & COO Danny Prosky, the newly minted Griffin-American Healthcare REIT II has made an 11-property pickup for $174 million. Ten of the properties are skilled-nursing facilities, and the remaining one is a medical-office building. Together, the portfolio totals approximately 454,000 square feet.

“Demand for healthcare services will only increase in the future,” Prosky told Commercial Property Executive. “As Baby Boomers continue to turn 65 over the next 18 years, and along with the general aging of the population, we’re bullish on growth and demand for the sector.”

The ten nursing facilities, built between 1969 and 1999, are master-leased through 2027 through affiliates of Wellington Healthcare Services L.P., and were acquired from unaffiliated third-party affiliates of the same. Griffin-American financed the acquisition through the assumption of nine Housing and Urban Development loans totaling $70.5 million, the assumption of a $12.7 million loan from Capital Funding Group, $38.4 million in borrowings under a credit line with Bank of America and $20 million in borrowings under a credit line with KeyBank. The remainder was funded from net cash proceeds received from the offering.

The ten facilities are located in Georgia, Tennessee, Alabama and Louisiana.

The remaining medical-office building, Sierra Providence East Medical Plaza I, is located on the 42-acre campus of Sierra Providence East Medical Center in El Paso, Texas. The property is 90 percent leased to 13 tenants. It was acquired from PHT Investment Holdings L.L.C..

Griffin-American is certainly making large strides in a short amount of time. As CPE previously reported, the REIT was declared post-effective by the Securities and Exchange Commission on Jan. 6 of this year after splitting from its original sponsorship under Grubb & Ellis Co. On Jan. 3, the entity was officially renamed from Grubb & Ellis Healthcare REIT II to Griffin-American Healthcare REIT II. To date, the REIT has purchased 66 buildings for an aggregate price of $605 million.

“The good news for healthcare is that demand is growing everywhere,” Prosky said.

The Scotia Centre in Calgary

Less than two years after CANMARC Real Estate Investment Trust completed its initial public offering, there appears to be no end in sight to its shopping spree as the REIT commits to the purchase of three commercial properties. With the closing of the acquisition, CANMARC will have enhanced its portfolio by 664,400 square feet of office and retail space located from one end of Canada to the next.

In Calgary, Alb., CANMARC will take its co-ownership to sole ownership with the purchase of the remaining 50 percent interest in Scotia Centre, a premier 630,400-square-foot office building downtown. The 42-story high-rise encompasses 546,400 square feet of office space, as well as 84,000 square feet of retail space on a three-story concourse. The price tag on the property, sited adjacent to a light rail transit station, is $140 million.

CANMARC will also add the 283,000-square-foot Woodside Square in Toronto, Ont., to its portfolio for nearly $59.3 million. Occupying a 24.5-acre site spanning a full city block, the enclosed, single-story community shopping center also features a 9,000-square-foot mezzanine level with office accommodations and a movie theater.

Marché Jonquière, a 66,200-square-foot mall in Jonquière, Que., will also come under the REIT’s ownership. The grocery-anchored neighborhood strip center will come at a cost of approximately $13.8 million.

CANMARC plans to finance the purchase of the three properties through $94 million in new mortgages, cash on hand, funds from credit facilities and the assumption of $37 million of debt.

“With these three accretive acquisitions today, CANMARC continues to deliver on its strategy of building a solid footprint of office and retail properties in key real estate markets across Canada,” Jim Beckerleg, president and CEO of CANMARC, noted in a prepared statement. ” We have maintained a steady pace of growth since our initial public offering in May 2010, with fourteen accretive acquisitions and a strong track record of organic growth.

Following on the heels of the New York Stock Exchange’s de-listing of Grubb & Ellis Co.’s stock for falling below a threshold of $15 million in average global market capitalization over a consecutive 30-day trading period, the company has finalized the transfer of the dealer and advisory agreements of its REIT – formerly the Grubb & Ellis Healthcare REIT II – to a co-sponsorship between American Healthcare Investors L.L.C. and Griffin Capital Corp.

The new vehicle, called Griffin-American Healthcare REIT II, was declared post-effective by the Securities and Exchange Commission as of Jan. 6, 2012.

As Commercial Property Executive previously reported, the REIT has been in talks to transition to Griffin-American since at least November of last year, and has still been making acquisitions in the meantime – most recently picking up an eight-property medical-office portfolio for $112 million.

The REIT’s leadership structure will remain unchanged, led by chairman & CEO Jeff Hanson and president & COO Danny Prosky since its inception. “With the successful conclusion of our transition, we are completely focused on the expansion of our portfolio of clinical healthcare real estate and positioning the company for a successful liquidity event for our stockholders in the future,” Prosky said.

On Nov. 7, 2011, Los Angeles-based Griffin Capital Corporation was selected, along with American Healthcare Investors, to serve as co-sponsor of Grubb & Ellis Healthcare REIT II by the independent members of its board of directors.  Griffin Capital Securities was selected to serve as the dealer manager of the REIT’s offering.  As a result, on Jan. 3, 2012, the REIT was renamed Griffin-American Healthcare REIT II.

Vornado Realty Trust rang out the old year by completing a $330 million refinance for 11 Penn Plaza, a 1.1-million square-foot office building in Manhattan. The REIT, which specializes in office properties, realized proceeds of about $126 million from the deal after repaying the existing loan and associated closing costs.

The seven-year loan bears interest at Libor plus 2.35 percent, which on Jan. 3 was 2.64 percent. The loan amortizes based on a 30-year schedule beginning in the fourth year.

The 23-story structure dates from 1923, with renovation work done in 1982. Major office tenants include AMC Networks, Macy’s, Rainbow Holdings and Madison Square Garden. It is one of a cluster of properties that Vornado owns in the area; others include One and Two Penn Plaza, 100 W. 33rd St. and 330 W. 34th St.

Vornado, like many other debt-holders, has been taking advantage of the persistent low-interest climate and the fact that lenders are keen on Manhattan properties once more to refinance to its benefit. In December, the company set up a joint venture with the Kushner Cos., the owner of 666 Fifth Ave., which allowed for the conversion of an existing $1.2 billion mortgage into a $1.1 billion A-note coupled with a $115 million B-note.

Retail REIT Taubman Centers Inc. has completed its $560 million purchase of three shopping centers–one in Nashville and two in Palm Desert, Calif.–from Davis Street Properties of Evanston, Ill., Taubman announced late last week.

The three centers are The Mall at Green Hills in Nashville and The Gardens on El Paseo and El Paseo Village, which are across the street from each other in Palm Desert.

Though built in 1955, the 887,000-square-foot Mall at Green Hills has been expanded and renovated multiple times, according to Taubman. Its most recent expansion added a 149,000-square-foot Nordstrom that opened in September; the store is Nashville’s only Nordstrom. Other anchors are Dillard’s and Macy’s.

The two adjacent properties in Palm Desert operate as an open-air fashion-oriented specialty center. The Gardens on El Paseo was built in 1998, and El Paseo Village was completed in 2010. They total 236,000 square feet of GLA and are anchored by Saks Fifth Avenue.

The $560 million consideration consists of the assumption of $206 million of debt, $281 million in installment notes and the balance in 1.3 million partnership units (based on a value of $55 per unit) in Taubman Realty Group L.P. The 3.125 percent installment notes are fully cash collateralized, with funds drawn from Taubman’s lines of credit.

According to a November report from CoStar Group Inc., Nashville’s retail market improved slightly in the third quarter, with vacancy decreasing to 6.4 percent from 6.7 percent in the previous quarter. Net absorption was 455,000 square feet, and vacant sublease space decreased by 38,000 square feet. Quoted rents increased from the second quarter, to $13.68 per square foot.

The Palm Desert area is a somewhat different story, according to October figures from the Ontario, Calif., office of Marcus & Millichap Real Estate Investment Services. They suggested that the retail vacancy rate in Riverside and San Bernardino counties would end 2011 at 11.7 percent, or up about 0.2 percent from a year earlier. The Coachella Valley, which includes Palm Desert, reportedly has a retail vacancy rate of 17.7 percent, the highest in the two-county area.

Taubman Centers, a REIT, specializes in regional and super-regional shopping centers and owns, manages and/or leases 27 properties in the United States.

Behringer Harvard Multifamily REIT I Inc. has just entered into a new co-investment partnership with one of the world’s largest pension funds, advised by Heitman L.L.C., a multinational real estate investment management firm with more than $23 billion of assets.

As a result of the partnership, the Heitman-managed entity has acquired minority interests in 15 multi-family communities across eight states. The total portfolio, which has 4,100 apartment units, is slightly more than one-third of the REIT’s entire portfolio under management and is valued at more than $1 billion.

The Behringer REIT has been busy in the second half of 2011, purchasing the 132-unit luxury multi-family Renaissance in Concord, Calif., in September and selling the 390-unit Waterford Place apartment community in Dublin, Calif., in May.

“This additional infusion of institutional co-investment capital provides further market validation of the institutional quality of the asset portfolio our REIT has assembled thus far, as well as its perceived value,” Mark Alfieri, COO of the REIT, said. “As our REIT continues to expand its asset portfolio, we will constantly evaluate both strategic acquisition opportunities and disposition opportunities.”

The partnership with Heitman represents the REIT’s second co-investment partnership with an international institutional investor. In 2007, the REIT entered into a co-investment partnership with PGGM Private Real Estate Fund. PGGM initially committed $100 million for co-investments with the REIT, and then subsequently increased its commitment to $300 million.

To complete the Heitman transaction, interests in 12 multifamily communities were sold by PGGM. A co-investment presence in the REIT’s portfolio has been retained by PGGM through ownership interests in 15 other multifamily communities.

In addition to the interests sold by PGGM, the REIT sold to the Heitman-managed entity minority interests in six multifamily communities. In three instances, both the REIT and PGGM sold interests they held in the same multifamily communities to the Heitman-managed entity.

Amid the process of furloughing a small percentage of its workforce – with more cuts to come in the next few weeks – Grubb & Ellis Co. is seeing at least one part of its investment arm make some positive moves. Grubb & Ellis Healthcare REIT II Inc., a non-traded REIT with a board of directors independent from Grubb, has purchased an eight-property medical-office portfolio for $112 million.

The offices, built between 1996 and 2008, are located in Arizona, California, Florida, Georgia, South Carolina, Texas and Washington, and together total approximately 451,000 square feet. The REIT’s president & COO, Danny Prosky, saw an opportunity in the hot medical-office market, noting that his firm is “aggressively acquiring quality, income-generating healthcare properties throughout the country and expects to own a portfolio of 73 buildings valued at nearly $710 million … in the next few months.”

And the next few months will bring many changes for the REIT, Commercial Property Executive has learned. An industry source familiar with the workings of the deal told CPE that, in addition to the 24 corporate-office Grubb workers furloughed before Thanksgiving, the same fate will await some in satellite offices in the coming weeks. The source noted that, since Grubb & Ellis’ attempt to find a buyer is still in the works – the firm is 30 days through a review process with NYC-based C-III Capital Partners and Colony Capital L.L.C. – things are far from certain at this point.

What is certain, however, is that Grubb & Ellis Healthcare REIT II will become Griffin-American Healthcare REIT II as of Jan. 8, 2011. At that time, the REIT’s sponsorship will be transferred to an arrangement with American Healthcare Investors L.L.C. and Griffin Capital Corp.

A report by services firm Marcus & Millichap Real Estate Investment Services Inc. expects that demand for medical-office properties will remain strong over the long term, noting that “at 11.5 percent, medical-office vacancy has retreated 70 basis points from its late-2009 peak, though it remains 140 basis points above pre-recession levels.” Fortunately, demand will stay poised for strong growth, with the 65-year-old-plus segment of population forecast to expand by 36 percent, or 15 million individuals, over the next 10 years.

One of the Federal Deposit Insurance Corp.’s six regional offices will be staying put in its current space for a while. The federal banking oversight agency has re-upped for 102,619 square feet at Ten 10^th Street in Atlanta’s Midtown submarket, the building’s owner, Parkway Properties Inc., said Monday.

Among the building’s inaugural tenants, FDIC has taken space at Ten 10^th Street since 2002. Today the agency occupies nearly a quarter of the 410,624-square-foot building, which is also known as Millennium in Midtown. Terms of the deal were not revealed by Parkway Properties, which described the lease only as “long-term.”

Although there was no specific information disclosed about the price points for FDIC’s lease, asking prices for available spaces in the building  are several notches higher than average prices for comparable office space in the Atlanta market.  Parkway’s Web site lists asking rents for other available spaces in the building at $28.50 per square foot. In comparison, Marcus & Millichap Real Estate Investment Services Inc. estimates that average asking rents for Class A office properties in the Atlanta metropolitan area were $24.12 per square foot at midyear.

“The building provides this crucial federal agency a modern, Class A space with the latest high-technology infrastructure,” said Parkway senior leasing associate Mike Werner, who teamed with senior vice president & senior asset manager Bill Hollett to represent the property in house. FDIC was represented by David Kilborn, a senior vice president in the local office of Grubb & Ellis Co.