The 620-unit Northampton Apartments in Largo, Md., located roughly 15 miles outside of Washington, D.C., has come under new ownership. Acting in a partnership, Morgan Properties and DRA Advisors acquired the multi-family property from Equity Residential for approximately $94.7 million 

It’s the rare multi-family investor that does not want a piece of the metropolitan Washington, D.C., apartment market. “There is a dramatic lack of available product to acquire compared to the significant amount of capital that is focused on buying in the D.C. metro area,” Scott Melnick, a managing director with JLL, told Commercial Property Executive. 

Northampton is a big piece. Occupying 50 acres at 67 Harry S. Truman Dr., the property consists of 47 structures that sprouted up in a two-part process. The first phase of the apartment community opened in 1977 and the second phase debuted10 years later. Today the property is in a prime position to capitalize on the strong demand for rentals in the area–a demand to which there appears to be no end in sight.

“There is a strong influx of young professionals that want to live in D.C. Metro, and the supply of new rental deliveries in the area will actually start decreasing due to condo switches,” Melnick said.

On a more local level, Northampton has even more advantages, given that, as Melnick noted, it sits in a submarket that has minimal new supply on the horizon.

CIM Group, of Los Angeles, and Kushner Companies, of New York, have purchased the 26-story office building at 2 Rector Street in Manhattan’s Financial District, CIM and the seller, Savanna, announced late last week. The terms of the transaction were not disclosed.

The Beaux-Arts building was built in 1907 and encompasses about 466,000 net rentable square feet. Its ornate façade has been preserved by the Trust for Architectural Easements (formerly known as the National Architectural Trust).

The property is across the street from the historic Trinity Church and is just blocks from the World Trade Center development, with several major subway lines, ferry services and PATH trains to New Jersey.

Laurie Grasso from Hunton & Williams represented Savanna on the sale.

At the end of 2007, Savanna had initially acquired part of 2 Rector Street’s first mortgage from a bank. After the property lost its largest tenant in 2009, Savanna originated a mezzanine loan to fund the re-tenanting of a large block of vacant space. In 2012, Savanna acquired the majority interest and control through a partnership with Stellar Management.

Allied Partners and Brickman have something to sing about. The real estate investment company and the private equity firm have completed the acquisition of The Brill Building, the landmark Manhattan tower that has long been synonymous with the music scene, for $185.5 million. Allied and Brickman purchased the 175,000-square-foot office and retail property from Invesco Real Estate and Stonehenge Partners Inc. in a deal that, when anticipated building renovation and leasing costs are incorporated, has a total value of $250 million. 

The change of ownership, brokered on the sellers’ behalf by Eastdil Secured, comes approximately six years after the asset last changed hands in a $151 million transaction. Allied and Brickman relied on Starwood Property Trust for a $158.5 million first mortgage loan to acquire the Brill Building, and the team secured $40 million in financing from Square Mile Capital Management L.L.C. 

An 11-story structure that has stood at 1619 Broadway since 1931, the Brill Building was designed by Victor Bark Jr. in the Art Deco style that Allied plans to respect in the process of transforming the property into a state-of-the-art destination envisioned as a creative environment for tenants in the fashion, arts, media and entertainment industries.  The Songwriters Hall of Fame will call the building home, and according to Allied, additional office and retail leases are presently in the works.

But it’s not just the Brill Building’s history as a longtime music business hub that Allied believes will help reel in occupants.

As Eric Hadar, chairman of Allied, told Commercial Property Executive, it’s also the property’s “location in Times Square, excellent foot traffic for retail tenants and the new and dynamic space we are going to create.”

Real estate services firm Newmark Grubb Knight Frank has been tapped to spearhead leasing of the retail space at Brill Building and Brickman will oversee leasing for the office segment. 

The Brill Building renaissance is scheduled for late 2014.

Chatham Lodging Trust is about to enter Pittsburgh city limits. The hotel REIT just inked a deal to acquire the Hyatt Place Pittsburgh/North Shore from its developer, a joint venture involving Continental Cos. and Rockridge Capital L.L.C. With the completion of the off-market, non-brokered relationship transaction, Chatham will have increased its presence in the greater Pittsburgh area by 178 guestrooms.

“We already own two hotels outside of Pittsburgh,” Dennis Craven, Chatham CFO, told Commercial Property Executive. “We like hotels that tie in with the energy sector, and Pittsburgh is benefiting from the energy-related business and companies that are locating offices close to the action.”

Hyatt Place first opened its doors in December 2010, welcoming guests ranging from Pittsburgh Pirates fans attending events at PNC Park next door to business travelers seeking proximity to downtown Pittsburgh, just across the river. “The energy-related growth, expanding Fortune 500 companies and the up-and-coming entertainment district, where the hotel is located, are all driving demand,” Craven added.

Chatham will rely on property-specific debt and borrowings under its secured revolving credit facility to finance the $40 million purchase of the hotel. And the REIT will keep management responsibilities in the family. Island Hospitality Management, which is 90 percent owned by Chatham president and CEO Jeffrey Fisher, will take on the duties. And the Hyatt brand is not new territory for the REIT. As Craven noted, “We own through our joint venture, five Hyatt House Hotels, so are familiar with the Hyatt reservation systems and have an excellent relationship with Hyatt.”

But it’s not all about the Hyatt flag; Chatham is maintaining brand diversity in its portfolio. Earlier this year, the REIT snapped up the new 112-room Hampton Inn Portland Downtown Waterfront Hotel in Portland, Maine, for $28 million, and shelled out nearly $35 million on the purchase of the 197-room Courtyard by Marriott Houston Medical Center Hotel in Houston.

“Chatham seeks premium-branded, select-service and extended-stay hotel segments in strong markets with multiple demand generators and high barriers to new competition,” Craven concluded. “We have a strong presence along both coasts, as well as in select markets like Pittsburgh, and our recently acquired hotel in Houston.  We like markets that are influenced by energy or have a large medical presence.”

The Hyatt Place Pittsburgh acquisition is on schedule to close by June 17.

Scott Butera, Foxwoods Resort Casino president & CEO

Foxwoods Resort Casino and Muss Development L.L.C. have signed a partnership agreement to build a destination resort style casino and hotel on a 500-acre site in Liberty, New York.

The proposed $300 to $600 million deal was struck by Foxwoods Resort Casino president and CEO Scott Butera and Muss Development president Joshua Muss, just days after New York Governor Mario Cuomo introduced legislation to authorize three destination resort casinos in Upstate New York, including one in the Catskills region.

“This is a perfect match for us,” Butera said in a company statement. “Our long-term growth plans include the development of new destination resort casinos called for in the Governor’s plan, and this site is exactly what we’re looking for in terms of size and location.”

Foxwoods, which has recently restructured its operation in Connecticut and owns and operates North American’s largest destination resort casino, has been looking to expand to the New York market for some time. If its joint venture is approved by the legislature, the resort will be built adjacent to the site of the former Grossinger’s Hotel, with a groundbreaking held in a matter of months.

Muss Development owns 50 acres near an 18-hole golf course, where the company once built some model homes for an aborted housing development. The other 450 acres is around the lake that runs behind the long-abandoned hotel.

“We’re long-term players and have held this site for years in the hope of finding the right partner at the right time,” Muss said.  “Foxwoods brings the development, gaming and resort expertise to truly produce a first class experience. Our acreage is situated perfectly for a large-scale gaming and resort project, with additional development possible for workforce and resort style housing.”

According to Butera, the project would produce thousands of construction and permanent jobs for residents throughout the Catskills, including Sullivan and Delaware Counties.

“Recognizing the job-creating economic development potential of more than one casino, the legislature previously approved a plan to site three casinos in the Catskills,” Butera added. “For the Catskills to realize all the economic benefits of a true gaming destination, more than one resort casino should be allowed to operate there. We will continue to work with the governor’s office and members of the legislature to make it happen.”

Whatever plan is adopted by the legislature will be up for voter approval in November.

Carey Watermark Investors Inc. has made its first New York City acquisition with the $113 million purchase of the 226-room, 24-story Holiday Inn Manhattan 6^th Avenue in Chelsea.

Combined with $8.4 million in planned capital improvements and acquisition-related costs, the  New York City-based hotel REIT’s total investment in the property is approximately $121.4 million. The purchase was financed with $80 million of debt.

The hotel, built in 2008, is at 125 West 26th Street between 6^th and 7^th avenues in the Chelsea section of Manhattan. The property, located in the Midtown South submarket, is near Penn Station, Madison Square Garden, Herald Square, Times Square and the Empire State Building. Prime Café, a 2,400-square-foot restaurant and adjoining lounge is leased to a third-party operator but provides food and beverage services to the hotel. Amenities include a business center and fitness center.

“The opportunity to enter this market through the acquisition of a relatively new, well-located property with an established operating history, strong initial cash returns and the potential for future appreciation made it an ideal investment for Carey Watermark,” CWI CEO Michael Medzigian said in a news release.

Medzigian said that New York City is the most active hotel investment market in the United States. The Big Apple saw $2.7 billion in hotel transactions in 2012. Though the number of investments is expected to drop slightly this year, it is still expected to reach between $2.3 and $2.4 billion, according to the Jones Lang LaSalle’s Hotels & Hospitality Group’s Hotel Intelligence New York Report.

“The New York lodging market is the strongest performer of the top-25 U.S. hotel markets with a 35 percent RevPAR premium over the next highest market,” the report stated. “Manhattan is expected to add over 3,200 additional hotel rooms in 2013, a 4 percent increase over 2012 supply, representing higher growth than any major urban market in the U.S. While the new supply will be quickly absorbed, it will contribute to temper the market’s overall RevPAR growth potential for the year.”

PKF Hospitality Research L.L.C. said in its Hotel Horizons Research Snapshot Report for June-August 2013 that tourism continues to be robust in Manhattan, where RevPAR was up nearly 15 percent in February and March this year. New York City officials estimate 52 million tourists visited in 2012, up 44 percent in the past decade.

The New York City purchase comes one week after Carey Watermark announced it had acquired the Hutton Hotel, one of Nashville’s top hotels, for a total investment of $77.3 million. The 247-key, four-star boutique hotel is located in the city’s West End neighborhood near the major entertainment venues and the Music City Convention Center.

In March, Carey Watermark made two separate acquisitions. The first was a five-property Hilton-branded portfolio that it purchased for about $104 million, including $64.5 million in debt. The portfolio comprises the 131-key Hilton Garden Inn Baton Rouge Airport in Louisiana; the 105-key Hampton Inn & Suites Legacy Park-Frisco in Dallas; the 119-room Hampton Inn & Suites Atlanta Downtown; the 144-room Hampton Inn & Suites Memphis-Beale Street and the 133-room Hampton Inn Birmingham-Colonnade in Alabama. The second March purchase was a 132-room Courtyard by Marriott property in Pittsburgh.

Five Columbus Circle, the 225,700-square-foot office tower at 1790 Broadway in Manhattan, has been refinanced to the tune of $55 million. With the assistance of Meridian Capital Group L.L.C., the owner, 1790 Broadway Associates L.L.C., reeled in a senior loan from a national balance sheet lender.

A 21-story, landmark structure with 8,600 square feet of ground-level retail space, Five Columbus Circle was originally developed in 1911 as the home of the U.S. Rubber Co.  The lender came through with a loan featuring a 10-year term with full-term interest-only payments at a rate of 3.45 percent. According to Meridian, more than a few were eager to provide financing for the asset, given its location and stable operating history. And surely, Five Columbus Circle’s occupancy level didn’t hurt either. The Carrere & Hastings-designed building–home to the likes of Columbia Artists Management, Columbia University and Fordham University–is 96.5 percent occupied. 

Well-sponsored, high-quality office buildings in good locations with high occupancy levels clearly attract attention in the capital markets, but lenders are certainly keeping open minds these days. A full tenant roster, for example, is not necessarily a prerequisite.

“There is plenty of liquidity for well-located properties with vacancy,” Aaron Appel, managing director at meridian, told Commercial Property Executive. “Most institutions would offer floating rate 3-5 year term debt which would provide capital to stabilize the asset and allow the borrower to then re-enter the market for longer term debt.  Most long-term capital is lent solely based on in-place cash flow, to the extent that exists in an unstable asset, institutions will provide long-term capital based off a multiple of the in-place cash flow.” 

It almost seems like old times–but it’s not. “There is a prevailing sense the market place is beginning to resemble the irresponsible lending parameters of 2006/2007, given some of the low-debt yields getting financed,” Appel said. “I would say that the market is competitive, but even low-debt yield loans have significant amounts of pure equity behind them rather than sub-debt and financially engineered capital stacks which were prevalent in 2006/2007.”

The hot Midtown South office market in Manhattan saw a trophy property change hands this week with Clarion Partners L.L.C. acquiring 100-104 Fifth Ave, a 17-story, 277,412-square-foot building from the Kaufman Organization and Invesco Real Estate for $230 million.

“100 Fifth Avenue is one of the top institutional-quality assets in the Midtown South submarket,” Gary Rufrano, a director at Clarion Partners, a New York-based real estate investment manager, said in a news release. “The Class A vacancy rate in the area is just 3.2 percent and with limited potential for new competition, we are very pleased with this addition to our portfolio.”

Studley’s Capital Transaction Group handled the sale.

“The interest in Midtown South properties among institutional investors has grown exponentially over the least several years,” Woody Heller, executive managing director of Studley’s Capital Transaction Group, said in the release. “This is entirely justified by the appeal of the area and spaces to many of the city’s fastest-growing tenants.”

The property, located near Union Square between 15^th and 16^th streets, is two contiguous buildings that were built in 1906 and 1911. When Kaufman and Invesco bought the site in 2010 for $93.5 million, they began a $9 million capital improvement plan to upgrade and modernize the French Gothic building. Renovations included upgrades to the lobby, buildings systems, elevators, security and HVAC. Kaufman, which is being retained as the property’s exclusive leasing and managing agent, began leasing up the repositioned building with technology, new media, fashion, advertising, finance and real estate clients. The building is now fully leased with tenants like Apple iAd and Yelp, which has its New York headquarters at the site and recently took another 29,505 square feet, according to the Union Square Partnership. The New York Times reported in October that Timberland, the New Hampshire-based outdoor footwear and apparel company, had taken 9,500 square feet for a showroom under a 10-year lease.

“After repositioning, rebranding and leasing the property, our partnership decided that this was the right time to sell 100-104 Fifth Avenue and that Studley was the right firm to market it. The Midtown South market is active and we believe that investors from across the country want to own here. This sale marks one of the largest deals in the neighborhood so far this year,” Fred Leffel, president of Kaufman’s New Ventures division, said in the release. “We’re happy to still lend our expertise to the building by staying on as the leasing and managing agent.”

Rents in the building, which has floors that are structurally aligned to create a flexible, loft-style plan that many tech companies like, have reportedly been in the $50 to $55 per square foot range, about average for the neighborhood. In its Manhattan Office Market Report for April, Cassidy Turley said the overall asking rents for Midtown South were up 3 percent to $57.60 per square foot. The commercial real estate services firm noted that Midtown South “is the only market where current average asking rents have surpassed its historical highs, which are 16 percent higher than 2007 asking rents.”

The Union Square Partnership put the Union Square neighborhood’s vacancy rate at 2.6 percent and the overall Midtown South vacancy rate at 8.6 percent in its 2013 Commercial Market Report. The report by the non-profit neighborhood advocacy group noted that 100-104 Fifth Avenue had three of the top lease transactions for the 2012, including the Yelp expansion. The other tenants listed in the report were Knewton, Inc., which took 16,000 square feet and  FirstMark Capital, which leased 10,600 square feet.

With the assistance of Jones Lang LaSalle’s Capital Markets division, the California State Teachers Retirement System has landed $112 million in financing for Lincoln Place, a 503,800-square-foot office complex in Arlington, Va.  SunTrust Banks Inc. provided the funds for the suburban Washington, D.C., property, which is fully leased to the U.S. Drug Enforcement Agency.

“There was a strong showing of interest from a variety of lenders, especially from banks and life companies,” Wes Boatwright, managing director of JLL’s Capitals Markets Group told Commercial Property Executive. 

SunTrust’s non-recourse financing for Lincoln Place came in the form of a 10-year, floating rate loan. “The transaction is a perfect example of how banks have modified their risk profiles and are now providing longer term loans to high-quality sponsors with well-located, Class A assets,” Boatwright said.

CalSTRS has owned Lincoln Place since 1999, when the pension fund acquired the property for $156 million. Consisting of two 12-story towers, the complex made its debut in 1988 with the addresses of 600 and 700 Army Navy Dr., and has been home to the DEA ever since. The federal government agency recently renewed its lease, as it has done every five years since moving into the buildings.

There’s nothing like a Class A property with a 100 percent occupancy level to seize the attention of the lending community. Lincoln Place ticks those boxes and then some. “Good assets with solid income streams and good credit borrowers will have no trouble attracting financing from life insurers and banks eager to choose from the pick of the litter,” PwC and the Urban Land Institute predicted in their 2013 Emerging Trends in Real Estate report.

The Blackstone Group has refinanced a 16-property, 4,798-room hotel portfolio and golf course/tennis club with a $581 million loan obtained from GE Capital Real Estate.

The properties were acquired in 2006 when Blackstone, a New York private equity real estate investment company, bought MeriStar Hospitality Corp., a former Bethesda, Md.,-based hotel REIT, for $2.6 billion. The merger of MeriStar, which at the time owned 57 hotels in major markets and resort locations, and affiliates of Blackstone was completed in May 2006. Earlier in the year, Blackstone had acquired 10 of MeriStar’s Florida assets for $367 million.

A team from HFF, led by senior managing directors Trey Morsbach and Dan Peek and managing director John Bourret, secured the three-year, floating rate loan that has two one-year options. Bourret told Commercial Property Executive the key to the loan was “a high level of prepayment flexibility.”

“There was a lot of flexibility with the loan. That’s pretty unique to GE,” he said.

Bourret said the deal was a refinance of their acquisition loan from 2006.

“The hotels have very strong fundamentals and with the low interest-rate environment, it was just a prime time for Blackstone to refinance and continue operating the properties until they decide to exit,” he told CPE. “All of the properties have seen pretty substantial ramp ups over the last 12 to 18 months coming out of the downturn. The timing was right to execute this plan.”

The portfolio is comprised of 12 full-service hotels, four boutique hotels known as The Inns of Sanibel in Sanibel Island, Fla., and The Dunes Golf and Tennis Club in Sanibel Island. The full-service hotels are: Sheraton San Francisco Fisherman’s Wharf in San Francisco; Hilton Irvine-Orange County Airport and Marriott Irvine, both in Irvine, Calif.; Doubletree Austin in Austin, Texas; Doubletree Suites Indianapolis-Carmel in Carmel, Ind.; Hilton Clearwater Beach Resort in Clearwater, Fla.; South Seas Island Resort in Captiva Island, Fla.; DoubleTree Orlando-Universal in Orlando, Fla.; Hilton Cocoa Beach Oceanfront in Cocoa Beach, Fla.; Hilton Key Largo Beach Resort in Key Largo, Fla.; The Ritz-Carlton Pentagon City in Arlington, Va.; and the Marriott Princeton-Forrestal in Princeton, N.J.

Blackstone continues to be very active in the hotel sector, including the acquisition announced this week of a 751-room, four-property Hilton Select Service portfolio from Sage Hospitality and Apollo Global Management. The sales price wasn’t released but the portfolio includes three Hilton Garden Inns located in Atlanta, Denver and Orlando, Fla., and a Homewood Suites in San Francisco. In April, Blackstone said it agreed to purchase the leasehold interest in the 1,230-room Hyatt Regency Waikiki Beach Resort and Spa in Honolulu for $450 million from a joint venture of Goldman Sachs’ Whitehall Street Real Estate Investment Fund and Hyatt Hotels Corp.

HFF has arranged financing for several high-profile hotels this spring, including securing a $230 million loan package for The Breakers Resort in Denver on behalf of The Bascom Group L.L.C That deal comprised a $165 million first mortgage from Bank of America and CIBC, a $26.25 million mezzanine loan and $38.75 million of preferred equity from Prudential Real Estate Investors’ U.S. Real Estate Debt Fund.

Darcy Stacom, of CBRE Group

In a truly international deal, a 40 percent stake in Manhattan’s iconic General Motors Building traded hands last Friday, it was announced yesterday by CBRE, which brokered the sale. A source close to the deal, but who insisted on anonymity, told Commercial Property Executive that the purchase was for $1.4 billion and that the building as a whole is valued at $3.4 billion.

The transaction is reportedly the largest New York investment sale since 2008.

The buyers were the Sungate Trust, formed for the benefit of the family of Zhang Xin, and M. Safra and Co. Inc., the New York–based investment firm of the Safra family.

The Safra family is, of course, the Lebanese-Brazilian-Jewish clan that has long been associated with private banking, hedge funds and philanthropy.

Ms. Zhang is, with her husband, Pan Shiyi, a co-founder of SOHO China, the largest CRE developer in Beijing, and one of the most prominent businesswomen in China.

The two buyers bought the 40 percent stake together, but in or as what specific structure was not disclosed.

The sellers were the Goldman Sachs U.S. Real Estate Opportunities I fund and Meraas Capital. Darcy Stacom

Bill Shanahan, of CBRE Group

and Bill Shanahan of CBRE Group arranged the sale, Meraas Capital was also advised by CBRE Global Investors, and Goldman Sachs served as financial advisor to U.S. Real Estate Opportunities I.

Meraas Capital (a division of Meraas Holding, of Dubai), Boston Properties and Goldman Sachs had purchased the GM Building, as part of a portfolio of prime office buildings in Manhattan, in 2008. Boston Properties continues to hold the other 60 percent ownership share in the building and also manages the tower.

Built in 1968 to a design by Edward Durell Stone, the GM Building occupies the entire block between Fifth and Madison avenues and 58th and 59th streets. Tenants of the 50-story, 2 million-square-foot tower include the Estee Lauder Companies; Icahn Enterprises; law firm Weil, Gotshal and Manges; and the Apple store on Fifth Avenue.

Gregory Murphy, of Natixis

Natixis Real Estate Capital L.L.C. has come through for Chetrit Group once again. The direct lender recently provided Chetrit–along with partners Clipper Equity and Robert Wolf of Read Property Group–with a $128 million loan for the purchase and predevelopment of the former Cabrini Medical Center complex on E. 19th St., in Manhattan. The team will transform the approximately 395,300-square-foot property into a 372-residence luxury multi-family destination. 

The one-year loan, which comes with a floating rate and an option for one three-month extension, lays the groundwork for Chetrit and partners to move forward with their plan for redeveloping the five-building site, which last traded in 2010, when an affiliate of Memorial Sloan-Kettering Cancer Center acquired it for $83.1 million.

“What attracted us to this transaction is that the luxury rental market in Manhattan is very strong, with extremely low vacancies,” Gregory Murphy, managing director, head of Natixis Real Estate Finance Americas, told Commercial Property Executive. “The Chetrit Group is a repeat borrower of ours and are extremely competent in this area, and they’ve performed well for us.” In 2011, Natixis provided the company with $85 million in acquisition and renovation financing in the form of a 36-month balance-sheet loan for the acquisition and repositioning of the legendary Hotel Chelsea.

By bringing new multi-family units to the housing market, the Chetrit team will be feeding Manhattanites’ increasing appetite for accommodations. The onetime medical center has location on its side, a fact that was not lost on Natixis. “The property’s located in the Gramercy Park submarket which is a very strong and desirable location within Manhattan,” David Schwartz, vice president, Natixis Real Estate Finance Americas, told CPE.

In general, life has come back to the capital markets in the real estate world and Natixis sees only increased activity ahead. “I think right now the markets have regained a lot of their liquidity,” Murphy said. “Transaction volume in real estate as a whole is up significantly over the last couple of years and we see the lending market fairly deep and ready to support that kind of transaction volume.”

Community Development Trust and Proto Property Services have teamed up on a $52 million project to buy and rehabilitate a 19-story, 380,000-square-foot apartment building in Coney Island, an area in Brooklyn, N.Y., hit hard by Hurricane Sandy.

Ocean Towers is a 360-unit property located one block from the beach at West 24^th Street between Mermaid and Surf avenues. The property was built in 1973 under the New York state Mitchell-Lama affordable housing program. The seller was not identified but Brian Dowling, vice president of Community Investments for CDT, told Commercial Property Executive that the previous owner had tried unsuccessfully to move the apartments to market rate.

CDT, a private REIT that provides capital for the preservation of affordable housing across the United States, is committed to keeping the Ocean Towers units affordable for at least the next 30 years, Dowling said. Over 14 years, the New York City-based REIT has invested more than $850 million in debt and equity capital and created and preserved more than 32,500 units of affordable housing in 42 states. The REIT also owns nearly 5,000 units of affordable housing. This will be CDT’s first New York City project.

“We saw an excellent opportunity to preserve those units long term and at the same time enter our home market in a pretty big way,” Dowling told CPE. “We are also working with a partner that has experience doing similar redevelopment in other parts of New York City, including Brooklyn, on a similar scale.”

Proto, also based in New York City, has rehabilitated more than 1,200 occupied units in the city, including two large-scale properties in Brooklyn. The firm will be the managing member, general contractor and property manager at Ocean Towers. Work there will include converting electric heat to natural gas heat with high-efficiency boilers that will be installed above Sandy flood levels; installing individual electric meters, replacing all the elevators; upgrading common areas and the parking lot and improving security.

The residents will remain in place during the renovations, Dowling said. Work will start in 25 vacant apartments, he added. The entire rehabilitation is expected to last 18 months. Once the work is completed, the property’s rents will be regulated under New York City’s Rent Stabilization guidelines. Most of the current residents already have rent subsidies, Dowling said.

“Our rehabilitation of Ocean Towers will make the building more energy-efficient and provide for resiliency again future storms,” CDP president & CEO Joseph Reilly said in a news release. “The fact that Hurricane Sandy impacted so many areas of New York where affordable housing was already scarce makes this acquisition all the more important.”

The purchase and renovations are being funded with $10 million of equity from CDT and Proto and a $35 million acquisition loan originated by Enterprise Community Loan Fund Inc., a subsidiary of Enterprise Community Partners, Inc., through the New York City Acquisition Fund. Managed by Forsyth Street Advisors, the $150 million NYAF is collaboration among Enterprise, the City of New York, major foundations and New York’s public and private community investment groups to provide flexible capital for acquisition and pre-development costs to developers of affordable housing in the city’s five boroughs. The $35 million Ocean Towers loan is the largest transaction originated through NYAF.

The project is also expected to receive $4.5 million from the New York City Department of Housing Preservation and Development through its Article 8A Loan Program that provides loans for multi-family rehabilitations. Other funding will include a $1 million loan from Enterprise’s Bank of America Energy Efficiency Loan Program and the possibility of another $400,000 from the New York State Energy Research and Development Authority. Long-term financing will be provided by The Community Preservation Corporation, which has issued a commitment for a $35 million, 30-year mortgage insured by the State of New York Mortgage Agency and funded by the New York City Employees Retirement System.

“Not only will this project allow for much needed improvements and bring this former Mitchell-Lama property under rent stabilization allowing for long-term affordability, it will also set a precedent for the future development of resilient, environmentally responsible housing in storm-prone regions,” Shola Olatoye, Enterprise’s vice president &New York market leader, said in the news release.

The state’s Mitchell-Lama Housing Program was signed into law in 1955 and was designed to create affordable rental and cooperative housing. Nearly 270 housing developments with 105,000 units were constructed under the program, which allowed developers to get tax abatements and low-interest mortgages subsidized by the city, state and federal governments.

Liberty Property Trust acquired 2100 M St., N.W., 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.

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.

Mill Creek Residential Trust, of Dallas, will hold a groundbreaking ceremony in Morristown, N.J., today for the 268-unit first phase of Latitude, a luxury apartment development. The project reportedly is the first large-scale residential development to be undertaken in Morristown in almost four years. The building’s cost has not been disclosed.

The 258,300-square-foot first phase will comprise studio and one-, two- and three-bedroom rental homes and a 350-space parking garage incorporated into the structure. The project’s location, at Early Street and Speedwell Avenue, is walking distance from downtown Morristown.

Apartments will feature 9-foot ceilings, walk-in closets, patios/balconies (in select residences), lofts (in select residences), washers and dryers, granite countertops and energy-efficient stainless-steel appliances. Amenities planned for Latitude include a fitness center outfitted for cardio, strength, spin and yoga; a rooftop deck; lounge with fireplace; business center; and game room.

Despite the community’s upscale nature, 26 deed-restricted, affordable rental apartments also will be part of the first phase.

Initial occupancy for Latitude is planned for next year.

The project’s second and third phases will add more residential units, as well as non-residential uses, both designed to blend with the existing architecture along Speedwell Avenue, Rich Murphy, managing director with Mill Creek, told Commercial Property Executive.

Latitude is roughly half a mile from the Morristown station on New Jersey Transit’s Morristown (Green) Line; commuter trains run from there to Hoboken Terminal or directly to New York’s Penn Station.

When the New Jersey Department of Transportation established its Transit Village Initiative in 1999, Morristown was one of the first municipalities to join.

The median age of Morristown’s approximately 18,500 residents is not quite 35, and one-third are foreign-born, according to the U.S. Census Bureau. The median household income is estimated at $62,600, though 13.2 percent of Morristown residents are below the poverty line.

Backed by a $660 million loan from a London investment fund, Silverstein Properties said it will begin construction this fall on a $950 million, 82-story skyscraper in Downtown Manhattan that will comprise a 185-room Four Seasons hotel and 157 luxury condos.

At 926 feet, it will be the tallest residential building in Downtown Manhattan and one of the tallest buildings in New York City. Located at Park Place and Church Street in Tribeca, the Four Seasons Hotel and Private Residences New York, Downtown, is expected to open by 2016. Now being called 30 Park Place, the site is the former Moody’s headquarters then known as 99 Church St. Silverstein Properties and the California State Teachers’ Retirement System (CalSTRS) bought the site from Moody’s in 2007. Silverstein unveiled plans for the hotel-condo project in January 2008 during an update on rebuilding efforts at the nearby World Trade Center site. But plans were put on hold following the fiscal downturn that started several months later causing credit markets to freeze.

Five years later, the project is moving ahead now that the financing has been secured from The Children’s Investment Fund Management L.L.P. of London.

“This project perfectly fits our investment strategy in New York City, which includes other high- end residential projects such as 432 Park Ave. and 737 Park Ave.,” Martin Frass-Ehrfeld, partner at TCIF, said in a news release. He said the fund was excited “to provide financing to a pristine group of partners.”

Larry Silverstein, president & CEO of Silverstein Properties, Inc., said the new tower will become a new and distinct landmark in the city’s skyline.

“It will join and enhance a world-class neighborhood that is already home to a dynamic blend of modern office towers, private residences, high-end retail and dazzling public spaces,” he said in the statement. “Downtown is fast becoming a vibrant, integrated, mixed-use destination on a scale not seen in New York City since Rockefeller Center in 1939.”

Robert A.M. Stern Architects is designing the building and the private residence floor plans and interiors. Yabu Pushelberg is designing the hotel interiors. SLCE Architects is the Architect-of-Record. Tishman Construction is the general contractor. The firm, which built 7 World Trade Center for Silverstein Properties in 2006, is also the general contractor for 3 and 4 World Trade Center. Corcoran Sunshine Marketing Group expects to begin marketing and selling the condos in spring 2014.

“We are thrilled that the project at 99 Church is slated to go forward and contribute to the tremendous growth in Lower Manhattan’s hospitality industry,” a spokesperson for the Alliance for Downtown New York, told Commercial Property Executive. “As the buildings at the World Trade Center site come online and major tenants, including Conde Nast, open their doors in Lower Manhattan, this hotel and others will serve as a huge draw to the city’s leisure and business travelers.”

Before 9/11, there were six hotels in the area. There are now 18 and the number of hotel rooms has grown by 78 percent to 4,100, the spokesperson noted, adding that there should be 23 hotels with more than 5,100 rooms south of Chambers Street by 2014.

The spokesperson added that the alliance partnered with NYC & Co. beginning two years ago to showcase the area’s recovery and revitalization. The international campaign urging visitors to stay in Lower Manhattan hotels and eat and shop in the area has been very successful.

When it opens, the Four Seasons will feature three floors of lobbies, lounges, a restaurant, ballrooms, meeting facilities, a spa, fitness center and pool. The hotel entrance will be on Barclay Street and there will be a second entrance to the restaurant on Church Street. The public rooms of the hotel will overlook a landscaped public plaza.

“Adding a second hotel to our existing iconic property in New York on 57^th Street, will be a great addition to the portfolio of the Four Seasons,”  Scott Woroch, executive vice president worldwide development, Four Season Hotels and Resorts, said in the news release.

Silverstein Properties and the Four Seasons are also teaming up in Orlando, Fla., where the world’s largest Four Seasons resort is under construction on the northeast portion of Disney World. The 445-room luxury resort is expected to open in July 2014.

JEMB Realty has signed existing tenant ASA College to a lease extension and expansion that will see the higher-educational institution more than double its space at JEMB’s Herald Center, a 10-story, 250,000-square-foot retail and office property at the southwest corner of 34th Street and Broadway.

The college currently occupies space on the first three floors of the property but with its new deal, ASA will leave that space and move to 112,000 square feet on the fourth, fifth, sixth and seventh and floors of Herald Center by June. The lease also allows further expansion when an additional 48,000 square feet becomes available early next year.

“We positioned the building by establishing it as multi-use with retail, office and school,” Joseph Jerome, JEMB Realty’s president, told Commercial Property Executive. “It’s a building within a building concept. We’ve allowed the tenant to establish its own identity, have control of its own elevator bank and now they own the whole top of the building.”

The expansion will allow ASA College to consolidate classroom and administrative space from elsewhere in the city to one convenient midtown location.

“They will be using the bulk of the space for classrooms and adding some administrative room as well,” Jerome said. “We started to build in January and they will be moving in the next 10 days. The additional space will be ready in the next 12 months.”

As part of the deal, JEMB will create a dedicated ASA ground floor lobby entrance on the 33rd Street side of Herald Center and give the college exclusive use of the elevators servicing their floors.

“Most of their students take mass transit and every subway line and every bus just converges on this corner,” Jerome said. “They’ve been at the property for 10 years and enrollment really grew and they attribute a portion of that to location.”

According to Jerome, the space that was occupied by ASA College will be converted into more than 50,000 square feet of prime retail space at one of the most heavily trafficked, high-visibility corners in the world.

Currently, the building is undergoing a renovation of its outside façade, removing the black glass panels on the first three floors and replacing them with transparent panes that will enable retailers to better showcase their brands and goods to the more than 100 million pedestrians who pass the property each year. Jerome added that floors 4-10 will also be transformed with LED panels, creating a light display that will invigorate Herald Square.

“The building has tremendous exposure on 33^rd, 34^th and Broadway and it will be a focal point of Herald Square,” Jerome added. “It will be a major presence on one of the busiest shopping streets in the city, if not the country.”

JEMB acquired the building in 1986.

The Hampshire Cos., owner of the newly redeveloped office building at 175 Park Ave. in Madison, N.J., has obtained financing to the tune of $75 million for the fully leased, 270,000-square-foot property. 

HFF orchestrated the deal on behalf of the owner and noted that there were more than a few lenders interested in providing financing for 175 Madison, which serves as the new headquarters of Realogy Corp. They had their reasons. “[It's a] Class A, newly renovated, award-winning building with a long-term lease,” Jon Mikula, senior managing director with HFF, told Commercial Property Executive. He added that the fact that there was an “excellent sponsor” was a strong draw as well. 

Cantor Commercial Real Estate Lending L.P. provided the financing, which came in the form of a 10-year, fixed-rate loan. Hampshire plans to utilize the proceeds to retire the existing construction financing debt on the asset.

311 Arsenal St.

Athenahealth Inc. has acquired the historic 11-building, 760,000-square-foot Arsenal on the Charles office campus in Watertown, Mass., from Harvard University for $168.5 million, it was announced yesterday. The purchase closed last Friday.

Avison Young, of Toronto, represented Athenahealth in what reportedly is the largest user-buyer transaction in Boston so far in 2013; Athenahealth began occupying space in the complex (initially 133,000 square feet) in 2005.

Avison Young principals Steve Cook in Boston and Suzanne Martinez in Chicago represented Athenahealth, and Harvard University represented itself.

Athenahealth provides cloud-based services for medical practice management, care coordination, medical billing and electronic health records.

The company has grown to become one of the area’s largest tech tenants and had been seeking up to 500,000 square feet for its corporate headquarters. The purchase reportedly followed a two-year search of properties and development sites throughout the Boston area by Avison Young and Athenahealth.

Given Athenahealth’s ongoing expansion requirements, Martinez said in a release, “long-term ownership is a financial home run when compared with a long-term lease.”

The choice reportedly was also driven by a lack of existing product and the high cost of new construction, coupled with the fact that Athenahealth’s employees were already happy with the Arsenal on the Charles’ location and amenities.

The campus is more than 90 percent leased. Athenahealth currently occupies 250,000 square feet, and other major tenants include Harvard Business School Publishing (100,000 square feet), Bright Horizons (90,000 square feet) and Boston Sports Clubs (50,000 square feet). The 29-acre complex is managed by The Beal Companies, Boston,

All 11 buildings on the campus were built around 1816 and rehabbed in 2000, Cook told Commercial Property Executive.

The buildings comprise three Class A offices (totaling 228,300 square feet), five Class B offices (totaling 485,750 square feet), two small Class C offices (totaling 22,680 square feet) and a Class B flex/R&D building of 13,000 square feet, according to information provided to CPE by Cook.

Harvard acquired the property in 2001, but after the economic downturn decided to use property closer to its main campus for institutional needs and instead leased the Arsenal on the Charles.

Although the complex has evolved to accommodate Digital Age high tech, it was once an example of Industrial Age high tech.

The campus is called Arsenal on the Charles, said Cook, because it was once part of the 90-plus-acre Watertown Arsenal, founded by the U.S. Army in 1816 as an ordnance storage depot. During the Civil War, the arsenal was expanded and began manufacturing gun carriages, and the complex was hugely expanded again during World War I.

Starting in 1968, the Army began to downsize its operations at Watertown, a process that was completed in 1995. One of the other redevelopments at the former arsenal is Arsenal Mall, a 502,000-square-foot shopping center owned by Simon Property Group.

American Campus Communities, Inc., has begun construction on a 325-unit faculty and staff housing project at Princeton University, its second development at the New Jersey school but the REIT’s first that’s not for students.

The Merwick-Stanworth project, located on two contiguous university-owned sites just north of the main campus along Route 206/Bayard Lane, will be built in phases with completion expected in three years. The first 127 units are slated for delivery by summer 2014 with the remaining 198 units to be ready between late 2015 and summer 2016. They will consist of one-, two- and three bedroom apartment and townhome units and are expected to receive LEED Silver certification.

The dollar amount of the development was not released by ACC or by Princeton University. ACC, an Austin, Texas, based REIT, will develop, own and manage the Merwick-Stanforth housing units through a 70-year ground lease. The deal is being done under ACC’s American Campus Equity (ACE) program, in which ACC serves as the college or university’s sole partner and doesn’t charge them fees up front. ACC gets financial returns through long-term cash flow and benefits of ownership. The REIT has used ACE on other developments including Portland State University, University of New Mexico, Arizona State University and Northern Arizona University, according to an ACC spokesperson. ACE was used on a student housing project at Drexel University, due to open this fall, she said.

“Many factors are taken into account when a university and ACC decide to do a tax-exempt structure or an ACE transaction,” the ACC spokesperson told Commercial Property Executive. “Lately, we’ve seen a pretty even split between the two models.”

While this is ACC’s first faculty and student housing project in the United States, it is the firm’s second development at Princeton University. The REIT is also building the Lakeside Graduate Student Housing project south of Faculty Road. Scheduled for completion in summer 2014, Lakeside replaces the Hibben and Magie apartments and will have capacity for 715 residents in 329 units.

Both developments are part of the University’s Housing Master Plan, which began in 2005 to upgrade campus housing facilities.

“We are honored to help deliver premier housing for Princeton faculty and staff,” Bill Bayless, American Campus CEO, said in a news release. “By providing an affordable housing option with updated amenities and located in a vibrant neighborhood convenient to campus, this community will be a wonderful place to live.”

As part of the municipality of Princeton’s 20 percent affordable housing requirement for new residential projects, apartments for low-and moderate-income families will be included in the Merwick-Stanworth buildings. Those units are available to the general public.

In recent months, ACC, the largest owner, manager and developer of student housing in the U.S., has also made news for purchasing a large portfolio. The REIT picked up a 19-property, 12,049-bed student housing portfolio for about $863 million from Kayne Anderson Advisors, L.P. affiliates. It comprises properties at 14 universities including Michigan State University, Louisiana State University, University of Kentucky, University of Southern California and Virginia Commonwealth University.

Bethesda, Md.—The Meridian Group, a real estate investment and development firm based in Bethesda, Md., has acquired Science Applications International Corp.’s landmark 18-acre corporate headquarters campus at Tysons Corner in Northern Virginia.

The purchase was made through Meridian’s $160-million discretionary real estate fund, Meridian Realty Partners I. Meridian’s purchase includes SAIC’s 600,000-square-foot three-building headquarters complex, and Meridian will lease back one of the buildings for seven years. The other two buildings will be vacated within a year. A fourth building with a surface parking lot is currently vacant and will be demolished for redevelopment.

“Tysons is the downtown of Northern Virginia, and is the 12th largest office market in the country. It has the largest concentration of retail space between DC and Miami, and will increase its attraction to employers due to its Beltway access, new HOT lanes and four new Metro stations,” Gary Block, The Meridian Group’s managing director, told Commercial Property Executive. “This transaction provides us with the ability to participate in the transformation of one of the largest office markets in the country into a dynamic live-work-play atmosphere.”

The property is located on Route 7 at the new Tysons Central 7/Greensboro Metro station, and it has the closest existing buildings to Metro anywhere in Tysons. Bounded by Westpark Drive and Greensboro Drive, the property sits in a major submarket of Tysons known as “The Hill” near Tysons Galleria Mall.

“The Greensboro area of Tysons, in particular, offers what we believe can be the true urban core of Tysons, and the property is right at the center of that,” Block said. “As tenants today are increasingly looking to relocate to newer, more efficient space, we believe the property is uniquely-situated to meet that demand at different price points, with new development competing at the upper end of the Tysons market and our existing, renovated buildings offering an extremely competitive product for more price sensitive tenants that are also seeking amenity rich, efficient space.”

According to Block, Meridian will start a $20-million renovation plan that includes repositioning and rebranding the three building complex, which will include an overhaul of the buildings’ mechanical system, renovation of all common areas including the main lobby, corridors, elevator cabs, ceilings (including lighting and sprinkler systems), fitness facilities, and restrooms, as well as creating exceptional outdoor work and social gathering spaces.

It will also create a new grand entrance to the complex immediately adjacent to the new Metro station, which should afford additional retail opportunities.

“Our investment philosophy is to acquire institutional quality assets in ‘path of growth’ locations near Metro rail stations, highway interchanges and retail or mixed-use projects;  and, with value-creation potential,” Block said. “This transaction represents well the strategy that we have devised for our $160 million+ discretionary private equity fund.”

Park Place, a $131 million, 12-story multi-family building funded by the AFL-CIO Building Investment Trust and to be developed by Bijou Properties and built by Tishman Construction, will break ground tomorrow (Tuesday) in Hoboken, N.J.

Unusually, the 262,000-square-foot building will include, along with its 212 market-rate apartments, both 13,000 square feet of retail space and 32,000 square feet of educational space. The latter was required by city approvals, and there is no specific tenant in mind, a spokesperson for the AFL-CIO Building Investment Trust (BIT) told Commercial Property Executive.

The building’s owner is an entity wholly owned by the BIT. The site at 1415 Park Ave., near Weehawken Cove and about five blocks from the Hudson River, was previously a parking garage, according to the spokesperson.

Like previous BIT projects, Park Place will be built by union labor; it’s expected to create about 650 union construction jobs. It joins a $1.4 billion BIT development pipeline comprising 10 projects around the United States.

Since its inception 25 years ago, the BIT, a collective investment fund for which PNC Bank, N.A., is the trustee, has directly or indirectly invested in 29 projects worth more than $2 billion in New York and New Jersey, including some 3,000 housing units and nearly 3 million square feet of commercial real estate.

Park Place is designed to attain LEED Gold status. Founded in 1999, Hoboken-based Bijou focuses on green development along the Hudson waterfront. Recent projects include Garden Street Lofts, New Jersey’s first LEED Gold residential high-rise); The Hostess Factory, a 42,000-square-foot retail restoration including a 20,000-square-foot green roof; and Edge Lofts, a mid-rise rental building at 1405 Clinton St.

Hudson County’s effective apartment rents are the highest in Northern New Jersey, at $2,742 per month, according to a second-quarter 2013 report from Marcus & Millichap. Job growth in the region continues to exceed the national average, and multi-family demand is expected to be boosted for a few more quarters by both families displaced by Hurricane Sandy and construction workers to be moved to the region to find rebuilding work.

Brack Capital Real Estate, a global real estate investment and development company, has sold The James New York, a luxury hotel in New York’s popular SOHO neighborhood, for approximately $85 million to an undisclosed buyer.

“There is an enormous appetite in the current market for income-producing assets that can generate cash. In an environment where interest rates are at historical lows and the future is unclear, investors that are looking for safe returns don’t have too many alternatives,” Issac Hera, BCRE’s CEO, told Commercial Property Executive. “The James New York presented such a great opportunity for buyers. Analyzing these facts, BCRE decided that it was the right time for us to realize the value we created at the James New York and look for new opportunities.”

Located at 27 Grand St., the 114-room hotel will continue to operate with Denihan Hospitality Group carrying on management, along with notable chef David Burke remaining to produce the highly acclaimed food and beverage menu.

Developed in 2010, the hotel was designed by ODA in collaboration with Perkins Eastman and Thomas Schlesser. The property features meticulously designed guestrooms and suites; sleek and spacious amenity spaces; renowned restaurants David Burke Kitchen and the Garden at David Burke; and a coveted rooftop lounge, called Jimmy, which includes jaw-dropping city skyline views, a private pool with cabanas and a bar with both indoor and outdoor seating.

The hotel includes spacious corner guestrooms with panoramic city views, one-bedroom suites and an impressive penthouse loft on the 15th floor. All rooms include carefully honed reclaimed materials complemented by a serene color scheme, to create a modern and inviting space. Additionally, the amenity spaces are bright and expansive, offering open, inviting common spaces not typically seen in comparable boutique properties. 

According to Hera, once value was created and the right opportunity presented itself, the company decided to realize its investment and focus efforts on locating its next opportunity to create value.    

“Downtown Manhattan is attracting many visitors and hotel guests that are looking for a unique experience of New York compared to what they would encounter in such locations as Midtown or Times Square,” he said. “This trend provides the opportunity for developers like BCRE to bring very unique assets, like the James New York, to the market that offer a distinctive design and program for discerning guests. We are continuing to focus on this market and are currently working on developing two hotels in the Downtown area that will be as unique and distinctive as the James New York and, I am confident, will be just as successful.”

The temporary halt in development of Boston Properties’ 1 million-square-foot office project at 250 W. 55th St. in Midtown Manhattan grows smaller and smaller in the rearview mirror as building activity moves closer toward completion, and Arup is the latest participant in the endeavor to achieve a major goal. The engineering and consulting firm just reached substantial completion of the structure and envelope of the $1 billion building.

It was back in 2009 when Boston Properties suspended construction of 250 W. 55^th, but since 2011, when law firm Morrison & Foerster L.L.P’s pre-lease of 180,000 kick-started the project again, work has been moving forward at a steady clip.

Arup, which is teamed with the architectural firm of Skidmore Owings and Merrill L.L.P. on the design of the LEED-certified tower, has been quite crafty in realizing its objectives. The firm’s design integrates a creative viscous damping system that allowed for the reduction of steel tonnage by 10 percent and provided unanticipated additional elbowroom in the 40-story high-rise. “The firm’s engineering innovations helped us save $5 million and gave us more usable space per floor,” Robert Schubert, senior vice president of construction at Boston Properties, said in a prepared statement.

Indeed, 250 W. 55th is well on its way to completion. In May 2012, general contractor Turner Construction Co. topped out the structure, which, before year’s end, became 46 percent pre-leased with the 20-year lease comment to 246,000 square feet by another law firm. The building is on track to open its doors in early 2014.

The Paramount Building, a landmark Manhattan office tower carrying the address of 1501 Broadway in Times Square, is among the latest assets to benefit from the lending community’s fondness for New York City. Relying on the assistance of real estate finance and advisory firm Meridian Capital Group L.L.C., Paramount Leasehold L.P., owner of the 788,000-square-foot property, obtained $130 million in financing, a portion of which will be used to fund an improvement program. 

Cantor Commercial Real Estate provided the ownership with a 10-year full-term interest-only loan with an enviably low annual fixed-rate of 3.16 percent.

“The irreplaceable location, credit quality and leverage [attracted lenders],” Keith Kurland, senior vice president with Meridian, told Commercial Property Executive. 

Paramount Leasehold plans to invest in excess of $50 million of the loan proceeds in the renovation and repositioning of the 33-story high-rise. The Art Deco-style building, which made its debut in 1926 as Paramount Pictures’ East Coast home base, got its last makeover in 2006. With Tobin | Parnes Design Enterprises onboard to help maintain the architectural integrity of the Rapp and Rapp-designed structure, Paramount Leasehold is planning a transformation that will help reel in the growing number of office users seeking premier, modernized accommodations.

The capital markets appear to be wide-open to real estate endeavors in New York City, from purchases to developments for veritably all asset types; it’s not just about apartments anymore. And Meridian has been keeping busy facilitating deal after deal for clients. Earlier this week the firm announced it had negotiated $115 million in acquisition and construction financing for the Flatotel hotel, which the new owner plans to convert to a luxury condominium community. In March, Meridian arranged a $128 million loan for the acquisition of a development site on First Ave. in the Murray Hill neighborhood, and joined forces with Eastdil Secured to orchestrate $275 million in permanent financing for the purchase of the fee position in the 1,300-room Milford Hotel. 

“Having recently placed debt and equity for a wide variety of transactions including office, ground-up development, retail, hotel and multi-family, there is no dearth of capital in the New York City market,” Kurland added. “The challenge remains in marrying the deal with the right financing solution.”

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SL Green Realty Corp. and Vornado Realty Trust recently locked in two tenants to occupy two full floors at Manhattan’s 280 Park Ave., the 1.2 million-square-foot office tower that the co-owners are presently redeveloping to the tune of $125 million. Blue Mountain Capital and Promontory Financial Group L.L.C. signed leases totaling nearly 100,000 square feet at the property, which is being reinvented as a top-of-the-line, state-of-the art office destination. 

Businesses in the financial industry appear to be quite keen on 280 Park, located in the Grand Central Terminal submarket. They have their reasons. “[You have a] world-class redevelopment, large 50,000-square-foot floor plates in base, and 20,000-square-foot tower floors are ideal sizes,” Steven Durels, executive vice president and director of leasing and real property with SL Green, told Commercial Property Executive. “And there is limited supply of available space anywhere on Park Avenue.” 

Blue Mountain entered into a 10-year lease agreement, committing to the entire 12th floor of the 43-story building. The asset manager already calls 280 Park home, as it currently occupies approximately 22,300 square feet on the 40th floor under a short-term lease. 

Promontory, presently Blue Mountain’s neighbor on the 40th floor, also expanded its occupancy at 280 Park with a 10-year lease agreement. And the risk management consulting firm will stay close to Blue Mountain when it sets up shop in every square foot on the11th floor, marking a notable increase from its current 19,500-square-foot digs occupied under a short-term lease.

With the Blue Mountain and Promontory agreements, 280 Park is now 62 percent leased. It’s not the highest number but the increased leasing activity at 280 Park over the last year belies the current state of the Grand Central submarket. According to a report by commercial real estate services firm CBRE Group Inc., which represented the property owners in the transaction, Grand Central experienced negative absorption totaling 940,000 square feet in the first quarter of 2013.

Regardless of any recent ups and downs in the various submarkets, Manhattan remains one of the strongest office markets in the country and its future continues to look bright. “Tenants are more confident in the direction of the economy now that we’re past the presidential election, the budget/tax issues are beginning to be dealt with by Congress, corporate profits are strong, stock market at record levels, employment gains have continued for an extended period and the Euro debt crisis has been resolved,” Durels said. “Consequently tenants are investing in their businesses for long term growth and making real estate decisions accordingly.”

The iconic — but long-vacant — Kingsbridge Armory in The Bronx will be redeveloped into the world’s largest indoor ice facility, the $275 million Kingsbridge National Ice Center, the project’s developer, KNIC Partners L.L.C., announced Tuesday.

The ice center’s backers include NHL Hall of Famer and former New York Ranger Mark Messier and figure skater Sarah Hughes, gold medalist in ladies’ singles at the 2002 Olympics. KNIC Partners founder Kevin Parker spent a decade on the management board of a major global bank and was also the founder of a $7.5 billion hedge fund and global head of a $750 billion asset management platform.

An individual who’s familiar with the project and spoke with Commercial Property Executive on condition of anonymity said that the redevelopment will be funded through a combination of equity and debt.

The 575,000-square-foot armory, reputedly the world’s largest, covers almost all of a nearly 5-acre site. Its 180,000-square-foot main drill floor measures 300 feet by 600 feet, more than a full city block, and is spanned by pairs of vaulted steel trusses that rise 110 feet above the drill hall floor.

The 750,000 square-foot KNIC will feature nine year-round indoor rinks (three Olympic- and six NHL-sized): five on the main floor and four on two platforms elevated about 40 feet above the main floor. The 5,000-seat center show rink will host major hockey and figure skating events.

The facility will also feature a wellness center, dressing and locker rooms, concession space, retail space, and parking for about 480 cars.

Hosting hockey, figure skating, speed skating, synchronized skating, ice dancing and curling, the KNIC is expected to be an international sporting destination on par with Yankee Stadium and Madison Square Garden in attendance, drawing more than 2 million visitors a year.

The project is scheduled for groundbreaking in late 2014, following a comprehensive public and environmental review, according to a separate release from the city. The first phase, consisting of five ice rinks, 50,000 square feet of community space, concessions and parking, is expected to be complete by September 2018. The remainder of the project is expected to open in September 2019.

Completed in 1917, the armory is considered an outstanding example of military architecture, with Romanesque arches, vaulted ceilings, decorative brick and terra cotta, and large battlement towers. Beneath the drill floor, a 105,000-square-foot basement and 207,000-square-foot sub-basement formerly housed offices, a garage, rifle and pistol ranges, a dining room, a gymnasium, and an auditorium.

In 1982 the armory was listed on the National Register of Historic Places. Its military use essentially ended in 1993, and in 1996 it was turned over to the city, which since then has invested about $30 million in environmental cleanup, replacement of the roof and repairs to the façade.

Parts of the 2006 movie “I Am Legend,” starring Will Smith, were filmed at the armory.

Chetrit Group and Clipper Equity have taken a major monetary step forward with their plan to add new luxury condominiums to the Midtown Manhattan market. The partners just secured a $115 million loan to fund the $180 million acquisition of the Flatotel, as well as the $250 million redevelopment of the property from a 288-room lodging destination to a 173-residence, mixed-use condominium community.

Chetrit and Clipper snapped up the Flatotel from a joint venture involving Rockpoint Group, Atlas Capital and Procaccianti Group. Meridian Capital Group L.L.C. was aboard to orchestrate the acquisition and construction financing for the property, which stands 47 stories at 135 West 52nd St.

In this post-credit crunch environment, lenders have been eager to support apartment projects–due in no small part to the significantly high demand for rentals–but their interest in endeavors in the yet-to-fully-recover condominium market has not been nearly as strong. However, there are always exceptions, always a standout that captures more attention than the rest. The Flatotel opportunity was just such an exception.

“The desirable midtown location coupled with strong sponsorship and low basis made the deal attractive to the lending community,” Ronnie Levine, managing director of Meridian, told Commercial Property Executive.

The transaction supplied Chetrit and Clipper with a three-year, non-recourse interest-only loan with a floating LIBOR-based interest rate. Additionally, terms of the agreement provide the borrowers with the option to avail themselves of a one-year extension. 

With the loan in hand, Chetrit and Clippers’ vision for the Flatotel moves closer toward realization. The partners plan to create the upscale for-sale residences on 37 stories of the tower, while reserving five floors for a 64,000-square-foot office condominium component.

The conversion of the Flatotel may very well be right on time, as demand for condominiums in Manhattan is on the upswing. From the first quarter of 2012 to the first quarter of 2013, sales increased 6.3 percent, according to a report by residential brokerage firm Douglas Elliman Real Estate. And sales prices inched up 1 percent year over year.

Helena Durst & DSNY Commissioner John Doherty

The Helena apartment building on Manhattan’s West Side is the first in New York City to offer residents regular food scrap collection through the city’s Organics Collection Program, according to The New York City Department of Sanitation (DSNY) and The Durst Organization.

The program helps the city reduce trash disposal costs, achieve its recycling goals and limit greenhouse gas emissions by removing from the trash stream and recycling such organic materials as food scraps, soiled paper and plants.

Residents collect their organics in small kitchen containers, depositing them in larger organic collection bins in their floor’s trash room.

The residents of the Helena, located 601 W. 57^th St., will divert approximately 35 percent of their waste from landfills to composting facilities.

“This will have tremendous environmental benefits because, instead of the waste being trucked hundreds of miles away, it can compost locally,” said Helena Durst of the Durst Organization.

Recycling compostable materials is very important to her family, Durst adds. Her father was the founder of one of New York’s largest organic farms, and composting was begun at McEnroe Organic more than two decades ago, she says. “DSNY approached us based upon our experience composting in our commercial portfolio,” she added, noting the challenges of implementing the program have been minimal. “The education of our residents has been relatively simple, as are the logistics of collection.”

Items that may be composted include food scraps such as fruits, vegetables, egg shells, pasta, tea bags, coffee grounds and filters, baked goods, meat, bones, flowers, houseplants and soiled tissues, paper towels, napkins and paper plates.

Items that may not be composted include such things as plastics of any kind, liquids, foam items and animal waste, cigarettes and ashes and medical waste.

Once collected, the organics from the Helena building will be combined with organic material collected from some New York City schools and transported to a local DSNY compositing facility.

At that site, it will be processed and eventually transformed into compost that may be used in community gardens, street trees, parks, and neighborhood beautification programs.

“Recycling our organics can have measurable, positive effects on our city and the environment,” said Ron Gonen, DSNY’s deputy commissioner for recycling and sustainability. “Compostable organics make up about a third of our residential waste stream. With residential composting, we have the opportunity to keep these materials out of landfills and help lower our export costs. In addition, those materials will turn to compost, to nourish the trees and plans throughout the city. It’s a win-win proposition.”

This article was written for CPExecutive.com and Multi-HousingNews.com

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