InterContinental Hotels Group, the hospitality group with the largest presence in the Kingdom of Saudi Arabia, is further expanding its portfolio. IHG has inked an agreement with Dyafah Al Mutahida L.L.C. that will see a new Staybridge Suites open in the city of Jeddah. This will be the company’s first Staybridge-branded property in Saudi Arabia, under the name Staybridge Suites Hira Street.

Set to be located in central Jeddah, the 200-key hotel would be just 4.3 miles away from the city’s King Abdulaziz International Airport. It will be built on a 3.6-acre site and will include retail outlets, a healthcare facility and a multi-purpose hall. Suites are designed to render a residential ambiance that would satisfy the needs of extended-stay business guests, the brand’s target audience. Fully-equipped kitchens, free Wi-Fi, separate working areas and entertainment and communication facilities are also part of the package hotel guests can expect.

Jeddah is the second largest city in Saudi Arabia, with a population of around three million, second only to the capital city of Riyadh. The city has an important financial background, the first bank in the country being founded in Jeddah, and it is also one of the area’s primary resort cities. Jeddah was ranked fourth in 2009’s Innovation Cities Index for the Africa/Mid-East region.

IHG has its sights set on the city, as it has identified Jeddah as a major growth market for the area. InterContinental Hotels Group already operates the 300-room InterContinental Jeddah, the 323-key Crowne Plaza Jeddah, and the 319-key Holiday Inn Al Salaam Jeddah. Overall, the company operates 22 hotels in Saudi Arabia, or a total of 5,111 rooms. The Staybridge Suites brand, catering to extended stay guests, has enjoyed a large amount of success since the first facility was opened under the brand, in 1998. Around 200 such facilities are now open worldwide.

Liberty Property Trust acquired 2100 M St. NW, a Class B+, 290,762-square-office building in Washington, D.C., that has the potential to add more than 100,000 square feet, for $133.5 million from Hines.

“We have been seeking well-located acquisitions in D.C.’s core submarkets where we can apply our leasing, property management and development capabilities,” Ben O’Neil, Liberty Property Trust vice president, said in a news release. “Our existing downtown properties are 99 percent occupied and the acquisition of 2100 M Street NW provides us with an infusion of leasable space, in addition to future redevelopment and expansion possibilities.”

O’Neil said the transaction, which closed Monday, includes the conveyance of 105,000 square feet of development rights.

“The site’s zoning would permit a potential future redevelopment of the building to a maximum of 415,000 square feet,” he added.

“It’s important to note that we looked at the building from its current state as a B+ building that we think is in a very good location that we can lease at market rents,” O’Neil told Commercial Property Executive. “There are some things we could do to bring it up to an A-, but that’s probably not the best use of capital.”

The eight-story building in the Central Business District is 77 percent leased with 66,366 square feet available. Tenants include The Urban Institute, George Washington University, Social Security Administration, and the Stewart & Stewart law firm. The UPS Store and M Street Store are among the retail tenants. Rents are about $48 per square foot.

Built in 1969, the property was renovated between 2007 and 2010 by Hines, which bought the site in May 2007 through its U.S. Office Value Added Fund. Hines acquired it from Prudential Real Estate Investors, who sold it on behalf of German institutional investors in its U.S. Property Fund III. At the time, Hines officials said the Houston-based privately owned real estate firm planned to develop an additional 100,000 square feet at the site. But Hines did not add to the building during its ownership.

The site, which has an underground garage with about 275 parking spaces, is located at the convergence of three main roads in the city: M Street, New Hampshire Avenue and 21^st Street. It is four blocks from both the Red and Orange/Blue Metro rail lines and has restaurants, stores and hotels within three blocks.

Liberty Property Trust owns several office buildings in the Washington, D.C., metro area including three others in the city: 1100 17 Street NW, The Liberty Building at 1129 20^th Street NW and 1425 New York Avenue NW. The Malverne, Pa.-based REIT’s 81 million-square-foot portfolio includes 666 properties with about 1800 tenants in office, distribution and light manufacturing facilities in the United States and the United Kingdom.

The REIT bought 1100 17^th Street NW, a 12-story, 146,472-square-foot building, in December 2011 for about $50 million. When Liberty Property Trust bought the property, it was 82 percent leased. It is currently about 97 percent leased. O’Neil told CPE the REIT would use a similar strategy at 2100 M Street NW to bring the leasing up.

Hines also has substantial holdings in the Washington, D.C. metro area, including 10 office buildings and the 10-acre CityCenterDC site, where it is developing a 2.5 million-square-foot, mixed-use project. The first phase, which will include two office buildings with a total of 514,000 square feet, is under construction. In March, Hines acquired the ownership interest of its former partner Archstone Enterprises, L.P.

DAMAC Properties, the leading private developer of luxury projects in the Middle East, has announced a comprehensive expansion plan into Iraq, a previously untapped market for the development giant. And its first foray is the Princess Tower, a 26-story luxury residential project, set in the heart of the Iraqi capital of Baghdad.

“Iraq is a key market for us and the Princess Tower is a clear sign of our commitment to build luxurious living environments in a country which is seeing strong investment and capital growth,” said DAMAC Properties Managing Director Ziad El Chaar.

The $100 million Princess Tower is an ambitious project that reflects DAMAC’s confidence in the current state and the future of the Iraqi real estate market. Touted as “a beacon of hope and imminent prosperity, symbolizing the start of a new for many Iraqis,” the Princess Tower has already started development in Bagdad’s historic Al Mansour District, an area of great importance for centuries now. The luxury apartment complex will feature three-bedroom units on floors six through 22, thus bringing 68 exclusive residences to the Bagdad real estate market. Amenities, located on the uppermost floors of Princess Tower, will include a state-of-the-art health and fitness center, an infinity lap and swimming pool, Jacuzzi, spa and wellness center complete with a sauna and steam room. 24-hour power backup, off road covered parking, 24-hour security, security card access and CCTVs installed throughout public and common areas are among the security measures to be implemented at Princess Tower, ensuring only residents and authorized visitors have access to the high-end residential project. Other amenities will include 24-hour concierge service.

All units will feature a three-bedroom three-bathroom layout with the kitchen located at heart of the apartment. Units will be appointed with the highest quality marble and ceramic features, and five-star hospitality-grade furnishings. Bedrooms and living areas will be fringed by ample balconies. Apartments will range in size between 3,230 – 3,681 square feet.

With completion expected in 2016, Princess Tower will be among Bagdad’s tallest residential towers. DAMAC Properties will stay on as property manager after development completes.

DAMAC Properties has also opened an office in Baghdad’s Karrada District and is currently developing a local headquarters in the Al Mansour District. The company will also be working closely with the Iraqi Ministry of Housing as consultant on several residential and commercial projects in the greater Baghdad area. DAMAC will also be working on the master development plans of some of the country’s largest cities.

Apartment REIT MAA has increased its presence in Fredericksburg, Va., with the purchase of the Haven at Cosner’s Corner, an upscale, 260-unit multi-family community located roughly 50 miles south of Washington, D.C.  MAA picked up the year-old property from its developer, Johnson Development Associates, and has renamed it Station Square at Cosner’s Corner.

MAA got more than a collection of luxury residences with the acquisition of Cosner’s Corner; it walked away with room for growth, as the property also includes an undeveloped parcel of land. However, as an MAA spokesperson told Commercial Property Executive, the REIT has no plans for a project on the site at this time.

That’s not to say that Fredericksburg hasn’t been a source of success for MAA, which has a portfolio of approximately 50,000 apartment units spanning 13 states, predominantly in the Sunbelt region. During the company’s first quarter earnings call earlier this month, CEO Eric Bolton said that Fredericksburg, along with Lexington, Ky., and Chattanooga, Tenn., delivered top results in the REIT’s secondary markets. The numbers were based on what had been MAA’s only property in Fredericksburg at the time, Seasons at Celebrate Virginia, which the REIT acquired from Johnson Development in late 2011. 

Cosner’s Corner sits just four miles from Celebrate Virginia and MAA expects the property to perform just as well. “We feel its upscale amenities and central location to major employment hubs in combination with our proven operating platform provides an appealing choice for the rental market and will generate a terrific long-term investment for MAA,” CFO Al Campbell noted in a prepared statement.

 In the latest round of the high-stakes competition to masterplan and redevelop the 52-acre Miami Beach Convention Center, the South Beach ACE team yesterday laid out the key points of both proposals and contended not only that its plan is better, but that the Portman-CMC plan is shifting to resemble their own.

Last week, Commercial Property Executive reported on a letter of intent that Portman-CMC had sent to the City of Miami. That letter described the business and financial terms of the group’s proposal and of course emphasized what Portman-CMC believes are the advantages of its plan. <www.cpexecutive.com/cities/miami/portman-cmc-reveals-cost-effective-master-plan-for-miami-beach-convention-center/>

The exchange might be the last before Miami Beach commissioners decide which development team to choose for the $1 billion-plus project, though apparently no firm date has been set for that announcement. At that time, a public referendum will be scheduled to approve the plans or maintain the status quo.

Portman-CMC consists of a master development team (Portman Holdings, CMC Group, Bal Harbour Shops and Cirque du Soleil) and a master design team (BIG/Bjarke Ingels Group, John Portman & Associates, West 8, Fentress Architects and Revuelta Architecture International), along with engineering, construction and finance consultants.

South Beach ACE includes Tishman, UIA, architecture partnership OMA (led by Rem Koolhaas and Shohei Shigematsu), MVVA/Michael Van Valkenburgh Associates, Raymond Jungles and tvsdesign.

As to the competing plans, in broad strokes:

* The South Beach ACE plan calls for a taller facility with a smaller footprint, intended in part to free up more than 28 acres for green space, but also to improve pedestrian access through and around the site. Portman-CMC contends that its lower structure (124 feet versus 194 feet of height) won’t take views away from neighboring properties or risk casting a shadow on the nearby Holocaust Memorial.

* The Portman-CMC proposal will cost the public less, and the group will charge the city less in design and development fees. South Beach ACE counters that its financing package carries only 50.9 percent debt and that MetLife has tentatively committed to signing on as a partner, while Portman-CMC has proposed 61 percent debt and has not announced an equity partner.

* South Beach ACE touts its better integration of the convention center and hotel in one building, while Portman-CMC contends that it can build its version 19 months faster, saving the city substantial money.

The two plans will be displayed side by side at Miami Beach City Hall, Mondays through Saturdays through June 21.

The convention business is mature enough that any municipality aiming to increase its share has to wrestle the business away from someone else, Hank Staley, senior vice president at the Jacksonville office of PKF Consulting USA, told Commercial Property Executive. He contrasted Nashville’s convention center, now nearing completion and enjoying substantial presales, with Philadelphia’s new convention center, which has significantly underperformed.

Whichever proposal is accepted for the Miami Beach Convention Center, Staley said, the center is likely to do very well indeed, as the area remains extremely popular as a destination. He noted that the metro Miami hotel market has “roared back” since the worst of the recession, and in 2011 regained its 2007 peak RevPAR, one of the few major cities so far to have done so.

David LaRue

David LaRue, Forest City Enterprises’ president and CEO, has been tapped as the new chairman of the International Council of Shopping Centers for the 2013-2014 term.

He succeeds Brad Hutensky, president & principal of Hutensky Capital Partners in Hartford, Conn., who remains on the ICSC Executive Committee.

LaRue was elected by the organization’s Board of Trustees at RECon, the ICSC’s annual meeting in Las Vegas.

“Being named chairman of ICSC is a significant honor and I will strive to build on the work of prior chairmen to advance the organization’s mission and service to members,” LaRue said in an ICSC release. “I look forward to the opportunity to get closer to our members in the U.S. and abroad over the next year.”

Michael P. Kercheval, ICSC president & CEO, pointed to Forest City’s diverse real estate holdings as one of the reasons why LaRue’s election as chairman of the ICSC was a good choice.

“Our members are building shopping centers, mixed-use and other kinds of projects; they are everywhere and working in every kind of real estate,” Kercheval said in a news release.

“David heads a company that owns property across multiple categories in its core markets, and therefore his experience meshes with that of just about every one of ICSC’s members in one way or another,” Kercheval added. “Forest City is also a leader in sustainable and innovative development, all of which makes David’s nomination an exciting one as we, as an industry, embrace the future.”

Forest City, headquartered in Cleveland, owns about $10.7 billion in retail, office and residential properties around the United States, including 46 retail properties, 47 office properties and 122 residential communities. The company’s retail holdings include regional lifestyle, neighborhood and enclosed centers as well as urban, big-box and, entertainment properties. The firm’s Brooklyn, N.Y.,-based subsidiary, Forest City Ratner Cos., recently opened the Barclays Center, sports and entertainment arena that is part of the $4.9 billion, 22-acre, mixed-use Atlantic Yards development in downtown Brooklyn.

LaRue succeeded Charles A. Ratner as head of Forest City in June 2011. He has been with the company since 1986 and held numerous roles including Chief Operating Officer and Executive Vice President from March 2010 until June 2011.

An active member of ICSC for almost 20 years and a trustee since 2008, LaRue has served on the ICSC Global Task Force, which undertook a review of the organization’s programs and services. He has also been an advocate of ICSC’s Global Public Policy Efforts in Washington, D.C.

One of the priorities LaRue and ICSC will focus on during this coming year will be to push for federal legislation requiring online retailers to collect sales taxes in those states in which brick-and-mortar retailers are required to. Known as the Marketplace Fairness Act, the bill passed in the Senate earlier this month but has yet to be considered by the House of Representatives.

“Traditional physical stores cannot continue to be discriminated against by this tax policy,” LaRue said in the ICSC release. “Reform in this area would also benefit cash-strapped state and local public coffers.”

In addition to naming LaRue ICSC chairman, six members were named to the Board of Trustees. They are: William B. Horner, CFO, Fitness International; James J. Lampassi, vice president, real estate and construction, Petco; Carlos Medeiros, CEO, BR Malls; Mark L. Myers, executive vice president, head of commercial real estate, Wells Fargo Bank; Brian Smith, president and COO, Regency Centers; and Arturo Sneider, SCLS, partner, Primestor Development.

Left to right: Bill Hughes, Joe Dykstra, Joseph McKeska, Tom Roberts and Hessam Nadji assess the state of retail real estate during Marcus & Millichap’s annual panel discussion at RECon.

The panel’s moderator, Marcus & Millichap managing director Hessam Nadji, set the stage for the Monday evening discussion by pointing to retail’s broad recovery. “The consumer that was supposed to go hide in the corner—and never be back—is back,” Nadji told an audience of several hundred real estate professionals Monday at the Renaissance Hotel in Las Vegas.

Nadji noted that retail sales volume is 12 percent higher than it was at the economy’s pre-recession peak in 2007. Centers of technology, energy and trade are producing growth that is fueling job growth and retail. In another positive sign, forward-thinking retailers are meeting the challenge by embracing technology to complement their brick-and-mortar stores, he said.

Asked to speculate about vacancy trends during the next 12 months, Cole Real Estate Investments’ executive vice president Tom Roberts suggested a modest change. “The pace of vacancy reduction will pick up a bit,” he said. He expects both cap rates and interest rates to remain relatively stable during that period, a view shared by Joseph McKeska, senior vice president of real estate for Supervalu. Bill Hughes, senior vice president of Marcus & Millichap Capital Corp., responded that interest rates will likely rise during the next 12 months. Fellow panelist Joe Dykstra, executive vice president and head of acquisitions and dispositions for Westwood Financial Corp., predicted that interest rates will edge downward.

Panelists likewise commented on evolving retail real estate strategies. Prospects for financing retail are still decidedly mixed. Bill Hughes, senior vice president of Marcus & Millichap Capital Corp. cited the rising profile of securitization in retail finance. This year, CMBS accounts for 64 percent of retail financing by dollar value, a significant increase from 45 percent last year, he noted.

Citing loan terms reminiscent of the last boom, such as multiple years of interest-only payments, Hughes said, “There’s a little bit of froth out there.”  But he added that lenders are largely sticking to the more conservative credit standards that took hold after the recession. Hughes agreed with the widespread perception that many capital sources to keep a tight handle on the retail finance spigot. “Commercial banks and private funds are looking for deals to put dollars into, but it’s got to be a great story,” he explained.

Joseph McKeska, senior vice president of real estate for the grocery wholesaler and retailer Supervalu, urged the audience to view credit standards more broadly. “There’s a lot of emphasis on financial underwriting, but I think it’s also important to understand the grocer’s business plan,” he said. “You are becoming a business partner to that grocer.” In March, Supervalu completed the $3.3 billion sale of five of its grocery brands to a consortium led by Cerberus Capital Management L.P. Part of Supervalu’s restructuring strategy, the sale included $3.2 billion in assumed debt and $100 million in cash.

Other panelists also tempered their generally upbeat outlook with a strong note of caution. “The big value-add plays are really behind us,” Dykstra said. Capital sources, as well as investors, must now carefully weigh their risk tolerance. As a rule, Dykstra added, “We will not buy properties at less than a 6 cap rate. We will buy very, very few properties at less than a 7-cap.”

Cole Real Estate Investments, a diversified real estate company, has acquired The Hillshire Brands Company’s headquarters in the West Loop of Chicago’s CBD on behalf of Cole Corporate Income Trust Inc. for $97.5 million.

The 233,869-square-foot headquarters facility was recently redeveloped by Sterling Bay Cos, which entered into a long-term net lease with Hillshire. The build-out included a complete restructuring of the infrastructure and building components, plus windows were added on all four exposures to increase its natural light.

“The Cole philosophy for single-tenant acquisitions remains consistent: we look for high-quality, income producing commercial real estate in strong markets, leased to creditworthy tenants under long-term leases,” Boyd Messmann, Cole’s senior vice president of office and industrial acquisitions, told Commercial Property Executive. “The Hillshire Farms headquarters property fits our criteria.”

According to Messmann, the West Loop submarket of the Chicago Central Business District is an emerging Chicago neighborhood that provides excellent visibility and accessibility with ample nearby public transportation. The building is one of the only Class A, single-tenant office buildings in the entire area.

“The Hillshire Brands Company headquarters is a mission-critical property in a great location. The property was recently redeveloped with new infrastructure and building components, and was the 2012 NAIOP Chicago Award for Excellence winner for office redevelopment of the year,” Messmann said. “When you factor in its long-term 15-year lease with an investment-grade tenant such as Hillshire Farms, this was an attractive acquisition for Cole.”

The transaction brings CCIT’s investment portfolio to 27 wholly owned properties in 15 states, totaling approximately 4.6 million square feet with a purchase price of approximately $731.1 million. More than 65 percent of CCIT’s portfolio consists of tenants rated by Standard & Poor’s, and of those tenants more than 88 percent are rated investment grade.

Additionally, the weighted average remaining lease term is nearly 11 years and the overall average credit rating of the rated tenants in the portfolio is A-.

“Cole continues to see development and tenant expansion increase in markets nationwide, which may lead to more supply for the remaining year and beyond,” Messmann concluded. “Our portfolio management team continues to focus on identifying and acquiring fundamentally strong properties with recognized tenants in markets across the United States.”

Construction has begun on Junction Flats, a six-story, 182-unit luxury apartment building in downtown Minneapolis located near Target Field and a major transit hub. The 240,000-square-foot building is being developed by High Street Residential, a Trammell Crow Co. subsidiary, in partnership with The Carlyle Group.

The cost of the development and the amount of the equity invested by The Carlyle Group, a global alternative asset manager, were not made public. The Carlyle Group is using equity from Carlyle Realty Partners VI, a $2.34 billion fund that targets opportunistic real estate investments in North America.

“Junction Flats is located just northwest of the central business district in the North Loop, a vibrant community that offers residents a unique experience and a wide range of destinations, including entertainment venues, fine dining and specialty shops,” Grady Hamilton, principal & head of Trammell Crow’s Midwest Business Unit, said in a news release. “We have excellent partners and are pleased to be moving forward with such a unique development in the heart of the North Loop.”

“This has all the makings of a great development, a vibrant city with a strong local economy, solid supply-demand fundamentals, convenient transit options and a trusted partner in Trammell Crow Company,” added Tom Levy, a Carlyle principal.

The project is being billed as a “transit-oriented development.” The site is near I-94 and I-394 and The Interchange, a multi-modal transit hub expected to be completed next year and serve an estimated 22,000 people a day.

Located on 1.37 acres in a downtown area known as the North Loop, Junction Flats will feature studio, one- and two-bedroom units and live/work units. It will have nine-foot ceilings, balconies and patios and upgraded appliances. Other amenities include a clubroom, pool deck, fitness center, dog-wash station, bicycle storage, business center and Wi-Fi coffee lounge and a covered heated parking garage.

Junction Flats should be completed by summer 2014. It will join several other new multi-family communities under development in Minneapolis and its nearby suburbs as a strong economy is driving the rental market. Trammell Crow said last week it is teaming with another partner, Investment Real Estate Properties to develop a six-story, 260,000-square-foot multi-family project known as Arcata in the suburb of Golden Valley, Minn. Construction is expected to start soon on the development located about a 10-minute drive from downtown Minneapolis. ESG Architects, also the lead architect for Junction Flats, is the lead architect for Arcata, which will have 165 luxury units.

Employment is expected to rise nearly 3 percent in the Minneapolis area this year and is boosting the demand for rental apartments, according to the Marcus & Millichap ApartmentResearch Market Report for the second quarter. The report said the Minneapolis-St. Paul area has the second-lowest multi-family vacancy rate in the nation. It is expected to be 4 percent this year, up 80 basis points due primarily to the construction of new properties.

“Construction is already at an eight-year high and the list of planned projects continues to expand,” the report noted.

Developers are expected to deliver about 3,400 units of market rate, affordable and student housing in 2013, a 1.3 percent rise in inventory, according to Marcus & Millichap. The report said 1,200 apartments have hit the market in the past 12 months, including about 364 finished in the first quarter of 2013. The pace is expected to continue because more than 6,400 multi-family building permits were issued in the last 12 months, up 32 percent year-over-year, the report stated.

Minneapolis is also the site of a $400 million mixed-use development by Ryan Cos. for a site adjacent to the new Vikings stadium planned for the city’s Downtown East neighborhood. It is expected to have 1 million square feet of office space, 40,000 square feet of retail and more than 300 residential units and be completed by summer 2016.

Hines Global REIT Inc. has added the Campus at Playa Vista, a 325,000-square-foot office complex in the Playa Vista neighborhood of West Los Angeles, to its portfolio. The REIT acquired the premier, well-leased asset from Tishman Speyer for $218 million.

It was, roughly, a half-cash, half-debt deal for Hines, which financed the acquisition of the property with proceeds from its it public offerings and a mortgage loan of $115 million.

Developed by Tishman, the Campus at Playa Vista sprouted up on seven acres in the nearly 1,100-acre Playa Vista master-planned community in 2009, offering four four-story office buildings with the addresses of 12015, 12025, 12035 and 12045 East Waterfront Dr. The complex garnered a great deal of attention from the start. In advance of the property’s completion, lead tenant Belkin International Inc. staked its claim to 150,000 square feet for its corporate headquarters in an agreement that will keep the technology manufacturer in its two-building home until fall 2021, and the University of Southern California’s Institute for Creative Technology followed with a deal for 103,200 square feet  under a lease scheduled to expire in 2020.

Today, with a roster of seven predominantly tech-industry tenants, the Campus at Playa Vista is 97 percent leased. It’s a feat that belies the current state of the Playa Vista submarket where, according to a report by commercial real estate services firm Transwestern, the total vacancy rate in the first quarter was 33.4 percent. The vacancy rate for West Los Angeles is 16.4 percent, and in metropolitan Los Angeles it was 16.4 and 18.7 percent, respectively.

“We were attracted to this property due to its strong tenancy, recent construction, excellent access and long-term prospects for this emerging West L.A. submarket.” Doug Metzler, managing director with Hines, said in a prepared statement. “The Lower West L.A. submarket is one of the most attractive office markets on the West Coast.”

The entertainment, media and technology firms take to West Los Angeles like bees to honey, which has led to a steady increase in rents, while rates remain flat for metropolitan Los Angeles, per the report.

And investors are willing to pay the big bucks for West Los Angeles assets. The average office sale price during the first quarter was $300 per square-foot in metropolitan Los Angeles; the average price for the four leading building sales in West Los Angeles was just over $482 per square-foot. The Campus at Playa Vista sold for approximately $670 per square-foot