The iconic 2.2 million-square-foot Prudential Plaza in Chicago will be upgraded and repositioned thanks to a $100 million recapitalization and ownership change at the Class A office towers in the city’s East Loop neighborhood.

An investment group led by Mark Karasick of 601W Companies and Michael Silberberg of Berkley Properties now has the controlling interest in a new partnership with longtime owner and operator, BentleyForbes. The Los Angeles-based private real estate investment firm bought the property, comprised of the 41-story One Prudential Plaza at 130 E. Randolph St. and the 64-story Two Prudential Plaza at 180 N. Stetson Ave., for $470 million from Shorenstein Properties in 2006.

BentleyForbes has been trying to restructure its debt for the last several months before it defaulted on its loans.

“We couldn’t be happier. It’s a long-term win for the property. It will allow it to continue to be a gem of the East Loop submarket,” Chad Lasdon, managing director at BentleyForbes, told Commercial Property Executive.

The new partners plan to immediately move forward with a significant asset improvement program, including redevelopment of the retail concourse, which features more than 90,000 square feet of retail space. The group will focus its immediate attention on One Prudential Plaza, which was built in 1955 and recently lost a significant tenant when law firm Baker & McKenzie L.L.P. gave up about 250,000 square feet of space. Another large tenant, Integrys Energy Group, Inc., does not plan to renew its lease for approximately 196,000 square feet when it expires in 2014. Two Prudential Plaza was built in 1990.

“The partnership is committed to the long-term ownership of the towers and is investing significant resources to attract both traditional and progressive companies to Prudential Plaza that are seeking to secure a Class A office space at one of Chicago’s landmark addresses,” the new ownership stated in a news release.

Prudential Plaza occupies a full city block overlooking Michigan Avenue at East Randolph Street. It has unobstructed views of Lake Michigan, Michigan Avenue, Grant Park, Millennium Park and the Chicago River.

Lasdon didn’t have details on the redevelopment and when work would begin but called it a “broad-based improvement program.”

“It creates an opportunity to reposition, to do some capital expenditures and put new tenants in,” he said. “It’s a big win and will really bring this building back to where it needs to be.”

Lasdon thanked Karasick and Silberberg and the investment team.

“We appreciate the hard work that the new investors have done to help make this happen,” he said. “It’s a great deal in the long run.”

601 W Companies and Berkley Properties, both based in New York, have been active in the Chicago office market. They were part of the investment team that purchased the Bank of America Building at 231 S. LaSalle Street in November 2012 for $97 million. An affiliate of Berkley Properties bought the 915,000-square-foot Civic Opera Building at 20 N. Wacker Dr. in February 2012 for $126 million.

Inland Real Estate Corp. acquired the 50 percent ownership stake in IN Retail Fund held by its joint venture partner, New York State Teachers Retirement System, for $121 million in cash, making it the sole owner of the 2.3 million-square-foot Midwest retail center portfolio.

IN Retail Fund was established by Inland, an Oakbrook, Ill.-based REIT, and NYSTRS in 2004. It currently has 13 shopping centers, most located in the Chicagoland area, and is valued at approximately $395.6 million. The acquisition capitalization rate is 6.7 percent. The portfolio has total current outstanding mortgage debt of about $152.2 million, plus other related assets and liabilities, according to an Inland news release.

Clarion Partners, the real estate investment manager representing NYSTRS, issued its own news release stating the sale was for $197.3 million.

“The difference between $121 million in cash noted in our release and NYSTRS’s number of $197.3 million is NYSTRS’ portion of secured debt on the portfolio,” an Inland spokesperson told Commercial Property Executive.

“While we have enjoyed a successful partnership with Inland, the opportunity to exit at this pricing level on a highly efficient basis was very compelling,” Mark Weld, a managing director at Clarion Partners in charge of the portfolio for NYSTRS, said in the Clarion release.

Inland President and CEO Mark Zalatoris also used the word “efficient” in his comments about the transaction.

“This venture has been a capital-efficient way for the company to acquire premier retail assets while enhancing our yield on investment,” he said in the Inland release. “However, the opportunity to acquire NYSTRS’ interest at this time advances our strategic goals to increase the size and quality of our consolidated portfolio, simplify our ownership structure and strengthen our balance sheet.”

As of March 31, the portfolio was 97.5 percent leased. It is comprised of 11 neighborhood, community and power shopping centers in the Chicagoland area; one neighborhood retail center in a suburb of Minneapolis-St. Paul; and one community retail center near Racine, Wis. The acquisition increases the amount of total assets owned by Inland to $1.6 billion. Inland’s consolidated portfolio now derives 65.1 percent of its net operating income from properties in Illinois and 16.3 percent of NOI from Minnesota properties. Wisconsin assets will comprise approximately 5.7 percent of NOI, according to Inland.

The REIT’s top five retail tenants are Roundys, 5.8 percent of the consolidated portfolio’s annual base rent; Safeway, 3.8 percent; AB Acquisitions (Jewel Food Stores), 3 percent; CarMax, 2.9 percent, and TJX Companies, 2.8 percent.

The largest shopping center in the IN Retail Fund portfolio is Orland Park Place, a 592,495-square-foot power retail center in Orland Park, Ill., that includes Old Navy, Bed, Bath & Beyond, Dick’s Sporting Goods, Marshall’s and Ross Dress for Less. Two other Chicagoland shopping centers with more than 200,000 square feet each are Randall Square in Geneva, Ill., which also has Marshall’s, Old Navy and Bed, Bath & Beyond as tenants, and Woodfield Commons E/W in Schaumburg, Ill., which features Toys R Us, REI and Hobby Lobby.

Several grocery stores are included in the portfolio, including Food 4 Less, Jewel Food Stores, Whole Foods Market, Cub Foods and Pick ‘N Save.

“The joint ventures we have established with institutional partners such as NYSTRS, have been instrumental in advancing our growth objectives,” Zalatoris said in the Inland release. “Since its formation in 2004, the IRC-NYSTRS joint venture has added more than $300 million in gross value to our total portfolio and provided approximately $8.5 million in high-margin fee income as of March 31, 2013.”

The REIT is paying for the acquisition with the proceeds of a public offering expected to have net proceeds of between $91.6 million and $105.3 million, before expenses, as well as cash on hand and its $175 million credit facility.

Inland is a self-administered and self-managed publicly traded REIT that owns and operates open-air shopping centers and single-tenant properties primarily in the Midwest.

NYSTRS is the second largest public investment system in New York and one of the largest systems in the United States.

Clarion Partners, based in New York City, has offices throughout the U.S. and in Mexico, Brazil and England. It has more than $28 billion in total assets under management. Also this week, Clarion acquired 100-104 Fifth Ave., a 17-story, 277,412-square-foot, Class A, office property in New York City’s Midtown South submarket for $230 million.

SpringHill Suites, Louisville

During the period between the closing of its initial public offering in February 2011 and the end of 2012, Summit Hotel Properties Inc. amassed a portfolio of  24 properties, and with the recent purchase of six assets for an aggregate $170.1 million, there appears to be no end in sight to the company’s shopping spree.

“These acquisitions squarely hit the marks of our simple strategy; top brands in top markets,” Dan Hansen, president & CEO of Summit, said in a prepared statement.

Summit added 786 guestrooms to its collection in one fell swoop with the $153 million purchase of four hotels from White Lodging Services Corp. The deal took the lodging REIT to new territory, literally. The 135-guestroom Fairfield Inn & Suites by Marriott and the 198-guestroom SpringHill Suites by Marriott in Louisville, Ky., mark Summit’s debut in the southern city. The company made its entrée into Indianapolis with the remaining two properties, a 156-guestroom SpringHill Suites by Marriott and a 297-guestroom Courtyard by Marriott. 

In addition to completing the White Lodging transaction, Summit just snapped up a Holiday Inn Express & Suites in Minnetonka, Minn., and a Hilton Garden Inn in neighboring Eden Prairie, for a total of $17.1 million, thereby increasing its presence in metropolitan Minneapolis by 190 guestrooms. 

And evidently, there’s more to come. In research released just days ago, wealth management and private equity firm Robert W. Baird & Co. notes that Summit’s outlook remains solid and that it expects the REIT to carry on buying assets in both one-off and portfolio deals.

“Summit continues to grow its portfolio and is gradually moving toward more urban, higher-growth assets similar to its recent acquisitions in downtown Indianapolis and Louisville,” Michael Bellisario, research analyst with R.W. Baird, told Commercial Property Executive. “The company has a full pipeline and is still seeing limited competition from other buyers, which has allowed Summit to acquire properties at attractive yields.” 

Other additions to Summit’s rapidly expanding group of hotels this year include the 252-room Holiday Inn Express property on San Francisco’s Fisherman’s Wharf, which the REIT picked up for $60.5 million through a joint venture, and a three-property portfolio of Hyatt hotels that came with a price tag of $36.1 million. Summit also entered into a definitive agreement to become the new owner of five assets in metropolitan New Orleans in a deal valued at $135 million.

The Wolff Co., of Scottsdale, Ariz., has acquired the 3,098-unit “Oasis Portfolio” of 14 apartment communities in metro Las Vegas, the company announced Tuesday. The purchase price was $200 million and the transaction closed on May 23, a Wolff spokesperson told Commercial Property Executive.

The seller was Sierra Nevada Multifamily Investments, L.L.C., a joint venture between DRA Advisors, New York, on behalf of an institutional client, and a subsidiary of Camden Property Trust, Houston.

“This portfolio represents an excellent mix of assets with strong in-place operations and a potential value-add opportunity as the market continues its recovery,” Fritz Wolff, CEO of The Wolff Co., said in a release. “We are continuously seeking similar opportunities nationally.”

The 14 properties are: Oasis Bay (128 units), Oasis Crossing (72), Oasis Emerald (132), Oasis Gateway (360), Oasis Island (118), Oasis Landing (144), Oasis Meadows (383), Oasis Palms (208), Oasis Pearl (90), Oasis Place (240), Oasis Ridge (477), Oasis Sierra (208), Oasis Springs (304) and Oasis Vinings (234).

In September 1998, Plan Sponsor magazine praised Camden Property Trust’s acquisition of Oasis Residential Inc. and the subsequent spinoff of $248 million in assets.

Camden reportedly liked the idea of acquiring Oasis, as a way of diversifying its holding geographically, but recognized that the transaction would, paradoxically, give it too much concentration in Las Vegas, about 26 percent of Camden’s total units.

The solution lay in forming Sierra Nevada Multifamily Holdings (with an unnamed U.S. pension fund) and putting about 5,100 units into the new entity, with Camden retaining a 20 percent stake.

As of March 1, 2013, Camden owned interests in and operated 192 properties totaling 65,005 apartment units across the United States.

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.”

Surging demand, new retail concepts and stirrings of new development were the talk of the Las Vegas Convention Center on Monday during the first day of RECon, the International Council of Shopping Centers’ annual spring convention. It is impossible to tell how many deals will emerge from the event, but as thousands of real estate professionals roamed the vast halls of the 3.5 million-square-foot facility, participants reported a sense of renewed optimism about the market.

“Going into the show, we have more meetings this year than last year,” said John Bacon, vice president of marketing with Cole Real Estate Investments. As of Monday morning, the firm’s acquisition team had scheduled about 240 meetings and the leasing team had about 110 meetings on the calendar. “Our leasing people were getting calls as late as Friday night” from attendees hoping to schedule meetings at the last minute, Bacon added.

Conversations with a variety of attendees revealed optimism fueled by stepped-up interest in investment sales, leasing and development. “The net-lease industry as a whole is hot,” said Stan Johnson Co. managing director Harold Briggs Monday morning at the firm’s booth in the convention center’s south hall. The company’s net-lease retail transaction volume posted a 50 percent year-over-year increase during the first quarter, outperforming the company’s office and industrial sales growth by a considerable margin. One noteworthy net-lease retail trend is the participation of institutional investors, particularly in the $50 million to $100 million range, Briggs reported. “You’ll see five or six institutional buyers compete for portfolios of 15 to 20 assets,” he said.

Owners exhibiting at the show confirmed on Monday that renewed tenant interest is pushing them to adjust their tactics. Scott Prigge, senior vice president of property operations for Regency Centers Corp., said that pet supply stores, fitness centers and fast-casual restaurants are leading the way. Quick-Service restaurants, said Prigge, “can’t get enough space.”

Underscoring his point, a variety of fast-casual restaurant brands like Subway, Smashburger and Jersey Mike’s are using RECon as a bully pulpit to bring attention to their expansion programs and identify suitable space for new locations. Demand for space in desirable locations has improved to the point that Regency aims to backfill a vacant space with the best possible tenant. This year the company is also rolling out a company-wide campaign to review best practice in customer service.

Other restaurant niches besides are commanding the attention of RECon attendees. Chef-driven restaurants are catching on, especially as part of redevelopment in core urban areas that appeal to members of Generation X and Generation Y, according to James McCandless, director of retail for Streetsense, a diversified Bethesda, Md.-based consulting, design and development firm that is a member of the X Team network of service providers and consultants. Another X Team member, Legend Retail Partners, recently rolled out its new Urban Legend affiliate in an effort to tap into the growing chef-driven restaurant market, reported Legend partner David Larson.

In the second and third major moves in less than a week, Ares Commercial Real Estate Corp., Chicago, has agreed to acquire EF&A Funding L.L.C. (d/b/a Alliant Capital L.L.C.) for about $62.8 million in cash and stock and has also named a new co-CEO, Todd Schuster, the REIT announced Wednesday.

Alliant Capital L.L.C. will become a wholly owned taxable REIT subsidiary of ACRE. (Alliant Capital Ltd., which provides affordable housing tax credit equity, is not included in the acquisition and will remain a part of The Alliant Co.)

Alliant Capital L.L.C. focuses on lending, asset management and servicing in the multi-family sector and specializes in the origination and servicing of multi-family loans through the Fannie Mae DUS program. Its servicing portfolio is about $3.9 billion in multi-family loans with mortgage servicing rights at a fair value of about $61.0 million.

In addition, Alliant Capital L.L.C. recently was approved to originate loans insured by the Federal Housing Administration and to securitize those loans through Ginnie Mae.

Schuster’s appointment as co-CEO of ACRE, where he joins existing CEO John Bartling Jr., clearly is connected to the Alliant Capital acquisition, because Schuster is a board member of an affiliate of Alliant Capital L.L.C., as well as a current ACRE board member.

“As a leading commercial real estate finance CEO, Todd’s significant insights in running GSE and FHA/Ginnie Mae platforms will be invaluable to the success of this acquisition,” Bartling said in a release.

Schuster was the founder of CW Financial Services and its CEO from 1991 to 2009.

Through a spokesperson, Ares declined to comment further on either action.

These moves are hard on the heels of last week’s announcement by ACRE parent Ares Management L.L.C., Los Angeles, that it would purchase AREA Property Partners, essentially quadrupling Ares Management’s total committed capital, to $8 billion, once AREA’s real estate equity investments in North America and Europe are added.

The Alliant Capital acquisition, Bartling said “will enable ACRE to better meet the short- and long-term financing needs of multi-family owner/operators in an asset class that has performed well over the long-term, especially in the past five years.”

It’s reportedly expected to benefit ACRE shareholders in several ways.

* Alliant Capital L.L.C.’s national direct origination platform focused on Fannie Mae and FHA/Ginnie Mae multi-family loans scales up ACRE’s platform and enhances its direct origination capabilities.

* The addition of Alliant Capital L.L.C.’s focus on long-term multi-family GSE loans to ACRE’s background in providing multi-family bridge loans will let ACRE offer “a complete turnkey financial solution for multi-family owners/operators seeking short- and long-term financing options.”

* Adding Alliant Capital L.L.C.’s $3.9 billion servicing portfolio (about 1,000 loans) diversifies ACRE’s revenue stream.

A $118 million, 16-property office portfolio fully leased to federal agencies through the Government Services Administration is on the market and attracting  interest from both U.S. and international buyers.

“This is getting a lot of attention and a lot of discussion,” Colin Cavill, a member of Colliers International GSAXCHANGE group that is marketing the 273,000-square-foot portfolio for West Second Street Associates, told Commercial Property Executive.

Cavill, managing director of Colliers International’s GSAXCHANGE, said the size of the portfolio is unusual in the GSA space.

“This is a very rare opportunity to pick up a portfolio that has geographic and tenant agency diversity in this space,” he added.

The properties are occupied by GSA tenants including the Social Security Administration, Internal Revenue Service, Immigration and Customs Enforcement, Department of Veterans Affairs and Customs and Border Protection. Seven of the properties are in Michigan; three in Ohio; two each in Florida and Texas and one each in Colorado and Minnesota. They were all build-to-suit and the oldest was built seven years ago. Two are still under construction but close to completion. The properties range in size from 6,000 to 40,000 square feet. The remaining average lease term is 10 years.

Cavill said the ongoing sequestration affecting the federal government budget does not affect these properties.

“Because these are long-term leases that have firm terms, there is not going to be any disruption of the rents,” he said.

Cavill said the GSA properties attract investors because they “provide a steady income stream and consistent yields.”

He told CPE that WSSA, a Flint, Mich.,-based developer and long-term property manager that specializes in GSA buildings, was selling the portfolio to redeploy the capital into other parts of its business.

But he added, “They’re not getting out of the GSA market.”

Cavill said the portfolio had been marketed for about two weeks, both inside and outside the U.S.  He expects bids to be submitted by May 21.

“We hope by early summer it will be closed,” he said.

The federal government is the largest single occupant in the U.S., leasing or owning more than 3 billion square feet of real estate. GSAXCHANGE, which is part of Colliers Government Solutions, is an investment sales and capital markets platform that deals solely with government-leased assets. Joining Cavill on the WSSA portfolio team are Bob Cottle and Darrin Kennedy.

“WSSA selected Colliers Government Solutions because of the deep federal-sector knowledge we provide, enabling us to better market the positive attributes of this portfolio,” Kurt Stout, executive vice president, Government Solutions at Colliers Internationl, said in a news release. “We are thrilled to have this opportunity to represent such a large portfolio of GSA properties, and look forward to expanding our presences in several strong markets.”

The Colliers Government Solutions platform consists of six services focused on government real estate: leasing, investment sales, finance, property management, appraisal and tax appeal. Members of the group work in teams to provide clients with solutions to deal with the often complex requirements of government-leased properties.

A new breed of high-rise architecture is in the process of being born, thanks to the collaborative efforts of modern design pioneers. Envisioned as the best sustainable option for meeting world housing demands and decreasing global carbon emissions, wooden mega-structures are now one step closer to becoming a reality.

Photo credit: eVolo

“Big Wood,” a conceptual project submitted by architect Michael Charters to the eVolo 2013 Skyscraper Competition, builds on the premise that wood, when harvested responsibly, is one of the best tools architects and engineers have for reducing greenhouse gas emissions and creating healthy communities. Aspiring to become one of the greenest skyscrapers in the world, Big Wood challenges the way we build our cities and promotes timber as a reliable platform to support tomorrow’s office and residential towers.

Whereas the building industry accounts for 39 percent of man-made carbon emissions, according to the eVolo architecture and design journal’s announcement of Charters’ honorable mention win, timber emerges as a greener alternative to standard structural systems. In addition to its eco-friendly properties, timber is technically and economically competitive compared to steel and concrete, and can be employed in a broad range of building structures. “Recent studies have proved the success of 20- to 30-story mass timber structures,” according to eVolo,  while the use of hybrid systems would enable developers to go even higher with their projects.

Combining technological advances with conservation and sustainability features, Big Wood stands out as a masterpiece of modern engineering. It is a prototype on mass timber construction that offers the possibility to build more responsibly while actively sequestering pollutants from our cities.

To be developed along the Chicago River in the Windy City‘s South Loop neighborhood, the mixed-use university complex is built on a mass timber system. In yet a further sustainable step, the lumber used is not just locally grown and milled but the South Chicago tree farm from which it was obtained is on a remediated brownfield site that once sheltered the South Works steel mill and now bvenefits the entire area by extracting toxins from the soil as well as carbon dioxide from the air.

The astounding high-rise features three different housing types, retail, a library, a media hub, a sports complex, parking, as well as a community park and garden.

“Known as the birthplace of the skyscraper, Chicago is an optimal location for a prototype in mass timber construction,” writes Carlos Arzate in his description of the project in eVolo. “Similar to the rapid innovation in building technology that occurred in the early 1900s, ‘Big Wood’ is positioned to be a catalyst for a new renaissance in high-rise construction, forever changing the shape of our cities.”

Widely recognized thanks to the architectural efforts of Michael Green, a progressive architect who plans to erect a 30-story wooden skyscraper in Vancouver, the groundbreaking concept strives to address the major challenges of climate change, urbanization and sustainable development. In collaboration with structural engineer Eric Karsh, Green developed a mass timber panel approach solution for tall buildings called FFTT (Finding the Forest Through the Trees), which is adaptable to various architectural forms, including office and residential uses.

Dentons, the world’s seventh-largest law firm, has extended its lease in Willis Tower for 15 years. The global law firm, formerly known as Sonnenschein and more recently as SNR Denton, is relocating within the building and taking up to 144,000 square feet of new space.

“Dentons is one of the building’s longest-standing tenants and its extension shows the significant value that the law firm and others see in the building,” Mike Kazmierczak, senior vice president of leasing for U.S. Equities Asset Management, told Commercial Property Executive. “Dentons knows everything about Willis Tower; its operations, management, location, amenities and infrastructure. Even after being heavily pursued by other properties, Dentons’ decision to remain in the building after so many years is a testament to Willis Tower’s market position as a leading environment for business.”

The extension bolsters Willis Tower’s standing as a prominent hub for global commerce as it continues to meet the demanding needs of today’s leading businesses. According to Kazmierczak, when Willis Tower was built by the Sears Corp., it was engineered and designed in a way that has allowed it to stand the test of time.

“It remains, from a technology and infrastructure perspective, competitive with today’s newest buildings,” he said. “As a result, Willis Tower is able to serve and easily adapt to the needs of a full spectrum of companies from large corporations to the world’s leading law firms to leading tech companies.”

The new lease will mean brand new space for the firm, to be built out before the move. Dentons will remain in its current space in the building until the new space is completely built out. Mary G. Wilson, managing partner of the Chicago office of Dentons, cited Willis Tower’s flexibility, efficient floor plates and superior amenities as primary factors in the decision to remain in the building.

“Willis Tower meets the technology, infrastructure and location needs of our global law firm,” she said in a company statement. “We evaluated dozens of alternatives and concluded that reinventing our physical space within Willis Tower will best meet the needs of our professionals and clients.”

Willis Tower’s ownership has positioned itself to actively lease the building both with renewals and new tenants. And, based on recent deals that have closed, the flexibility Willis Tower offers is a positive attraction for tenants of all sizes.

“This particular lease extension speaks to the fact that Willis Tower goes above and beyond to provide the best business environment, amenities location and services for existing and prospective tenants,” Kazmierczak said. “It is significant when any new tenant decides to move into the building, but it sends an even stronger message when a long-term tenant explores the market and decides to stay.”

Willis Tower completed more than one million square feet of leasing in 2012. United Airlines expanded its lease by moving its global headquarters to the building, where it had already had built out its operations hub. Another headquarters move into Willis Tower is ShopperTrak, a retail technology company. Other recently signed deals include companies like eTrade. 

Kazmierczak said that all of these recent developments speak to the building’s intensely creative management and ownership group continuing to provide the latest amenities. For example, the building recently made headlines for offering the city’s first bike valet program at a commercial building. This action builds on the innovative spirit inherent in other building investments like the introduction of Willis Tower Skydeck’s The Ledge, a signature Chicago visitor experience, which exceeded 1.6 million visitors last year.

Jim McGill, Prologis senior vice president

Prologis Inc., of San Francisco, has signed a build-to-suit agreement with Subaru of America for a 715,000-square-foot distribution center in the Indianapolis area, the developer announced Wednesday.

The state-of-the-art, cross-dock facility will be built at Prologis Park Lebanon, near major freeways and the Indianapolis International Airport, and will serve as a regional parts distribution center. The project’s price was not disclosed.

“The record low supply of large industrial facilities continues to drive build-to-suit solutions in many markets around the country, including Indianapolis,” Jim McGill, Prologis senior vice president, said in a release. “With occupancies rising for the past two years, Indianapolis remains a compelling regional market.”

“Subaru has been setting sales records for the past five years, and we are structuring our operations to reflect that,” Gary Palanjian, Subaru of America vice president of parts and service, said in the same release. “This new facility allows us to better serve our retailers, as well as support our growing operations at our manufacturing plant in Lafayette, Ind.”

Prologis Park Lebanon is a 56-acre parcel that Prologis bought in 2003, McGill told Commercial Property Executive. Despite its being designated as a park, he added, the Subaru of America distribution center will be the sole development there.

McGill added that at least in the central region (Texas up through the Midwest), the shortage of available distribution facilities 500,000 square feet and larger is among the factors driving the BTS market. He added that a 145,000-square-foot building on which Prologis broke ground in September 2011 was the company’s first spec building since the recession.

With demand softening recently among larger users in markets like Chicago, Dallas–Fort Worth and Indianapolis, McGill said, demand is shifting to older properties and mid-market customers. Still, he said, absorption numbers are looking good in almost all of the region’s major markets.

Prologis has seen a spate of sizable BTS deals in recent months. Though McGill believes that the industrial market, like the overall economy, is on the way back up, he characterizes this flurry of activity as a “blip.”

Just so far this year, Prologis has signed four major BTS deals.

* On March 25, it announced that it would build a 770,000-square-foot distribution center in Pataskala, Ohio, near I-70 just east of Columbus. The client is SpeedFC, a provider of e-commerce services. 

* On Feb. 13, Prologis signed two BTS agreements, totaling 609,000 square feet, with BMW of North America. One building, of 326,500 square feet, will be built at Prologis Redlands Distribution Center 11, in California’s Inland Empire submarket. The second, at Prologis Park 20/35 in the Dallas market, will be 282,000 square feet initially, with expansion capabilities to 370,000 square feet. 

* And on Jan. 22, Prologis nailed down an agreement with Amazon.com for a more than 1 million-square-foot fulfillment center at nearly 90 acres at Prologis Park Tracy Phase II, in Tracy, Calif.

Equus Capital Partners, Ltd., a private equity real estate fund manager, has sold a 330-unit student housing facility in Chicago for $58.5 million to a joint venture of Atlas Real Estate Partners, Marc Real Residential and Angelo, Gordon and Co.

“Equus has a 25-year history as a value-add owner/operator, so when we purchased this property in 2003 we immediately initiated a strategy of converting this conventional market-rate apartment building into an 882-bed student housing community,” Greg Curci, vice president at Equus, told Commercial Property Executive. “This conversion to student housing led to an immediate increase in NOI.”

Located at 2 East 8th St., in the heart of Chicago’s South Loop, the 28-story high-rise facility is proximate to Columbia College, Roosevelt University and more than 20 other schools. It’s comprised of 882 beds and includes 20,000 square feet of first floor retail and a four-story parking garage.

During its ownership, Equus executed a number of significant capital improvement, which allowed it to secure a five-year master-lease with Columbia College for 60 percent of the beds.

“This helps provide a degree of stability to the property’s income, which helps take some burden off of the leasing teams and makes the property more financeable,” Curci says. “Not many master-lease secured student housing communities come available in the core of first-class cities like Chicago.”

According to Curci, student housing has fared very well in this market and he doesn’t believe the current sequester will have any effect on the student housing market.

An affiliate of Equus acquired 2 East 8th Street as part of a three-property portfolio in 2003. In this sale, the seller was represented by Chris Bancroft and Chris Epp of ARA Student Housing Group and Susan Lawson and Todd Stofflet of ARA Chicago.

At the time of sale, the property was 96 percent leased.

Equus’ portfolio now consists of more than 24 million square feet of office, retail, student housing, and industrial properties and nearly 18,000 apartment units in more than 70 communities located throughout the United States.

Burnham Center

Alliance Partners HSP L.L.C. has acquired downtown Chicago’s 580,000-square-foot Burnham Center office building from Harbor Group International for $94.6 million. Alliance, the East Coast arm of real estate firm The Shidler Group, sealed the deal just five months after the historic property hit the market, and six years after HCI paid $79.5 million for the asset. 

The lending community looked kindly upon Alliance’s pursuit. “There were many lenders interested in providing financing for Burnham Center, with a heavy concentration of CMBS capital sources,” Ian C. Russell, a vice president with commercial real estate services firm Jones Lang LaSalle, told Commercial Property Executive. JLL marketed the asset on behalf of the seller and orchestrated acquisition financing for Alliance. “Lenders were attracted to Alliance’s strong reputation, the quality and location of the asset, improving fundamentals of the Chicago leasing market and the upside potential for the Sponsor to improve the value of the collateral through active asset management.”

Carrying the address of 111 W. Washington St., the 22-story tower has been part of the Chicago skyline since 1914 and carries the distinction of being one of the last existing buildings designed by celebrated architect Daniel Burnham. While it holds a spot on the National Register of Historic Places, Burnham Center, isn’t showing its age, having undergone a major renovation in 1985 and, recently, a $4.2 million capital improvement program. And Alliance has its own plans for upgrading the property as it looks ahead to a long-term hold. 

Burnham Center is home to a bevy of notable tenants. Tribeca Flashpoint Media Arts Academy occupies more than 100,000 square feet; Cook County claims nearly 65,000 square feet and online food ordering service GrubHub relocated its headquarters to a 60,000-square-foot space in the building in 2012. However, there is room for more, as the building is only 75 percent occupied. Alliance has tapped JLL to spearhead leasing.

Omni Hotels Corp. has gotten its hands on a total of $250 million in financing for a group of three properties encompassing the Omni Fort Worth, Omni Houston and Omni Chicago. The hotel company relied on commercial real estate and capital markets services provider HFF to arrange the loan, which was provided by Prudential Mortgage Capital Co.

Prudential was just one of many lenders eager to provide financing for the premier hotels. “The transaction was very well received, and there was a diversity of lender types,” Whitaker Johnson, a senior managing director with HFF, told Commercial Property Executive.” 

The three properties are among the leading hotels in their markets. The 614-room Omni Fort Worth made its debut in 2009, sprouting up just across from the 400,000-square-foot Fort Worth Convention Center. Four hours to the south, the 378-room Omni Houston, part of Omni’s portfolio since 1992, provides 378 guestrooms in the Houston’s coveted Galleria/Uptown submarket. And in the Windy City, the 347-room Omi Chicago, which was a Hyatt Regency property before Omni acquired and converted it in 1993, offers a location at the core of the Magnificent Mile.

“I think the quality of these assets and the quality of the sponsor was the primary reason it was well received by the market,” Johnson said. “The premium that is typically associated with hotel financing was virtually non-existent in this transaction.”

The deal dovetails with experts’ capital markets predictions for 2013. According to PwC’s annual Emerging Trends in Real Estate report: “In the debt markets, it will be ‘more of the same’–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.”

Drawing on the assistance of commercial real estate services firm Jones Lang LaSalle Inc.’s Capital Markets group, LaSalle Investment Management Inc. has landed $125 million in financing for the acquisition of the mixed-use Onterie Center in Chicago. New York Life Insurance Co. provided the funds for LaSalle’s $188 million purchase of the premier office and residential property from Metropolitan Properties of America Inc., which had shelled out $131 million for the complex in 2006.

Keith Largay

How did the lending community view the opportunity to provide financing for Onterie Center? “Very favorably,” Keith Largay, a senior vice president with JLL Capital Markets, told Commercial Property Executive. “We received a fair amount of interest from both banks and life companies.”

And it’s no wonder. Onterie, which has graced the Chicago skyline since 1986, ticks all the boxes. It sits in a coveted area adjacent to Lake Shore Drive; its 615 residential units, located in a 60-story tower and an 11-story building designed by Skidmore, Ownings & Merrill, command top dollar; and the property’s 102,600-square-foot office component is fully leased. Additionally, the 16,000 square feet of ground-level retail space provides the “play” element in the live-work-play destination.

LaSalle, which is part of the JLL group of companies, will set aside part of the financing it obtained from New York Life for upgrades and renovations down the road.

The capital markets are, indeed, open for business. JLL believes lender response to opportunities like Onterie will only increase this year. “We see 2013 being very strong, as there is a great deal of capital in the market, with very few great offerings to match with it,” Largay said. “Competition for prime assets such as this will continue to be fierce.”

The Shops at Old Orchard – West Bloomfield, Mich.

A major retail purchase in Florida and Michigan is currently in the works. Ramco-Gershenson Properties Trust announced this week that they have entered into an agreement to buy out partner Clarion Partners’ 70 percent ownership interest in 12 of the 15 Florida and Michigan shopping centers they own and operate as Ramco/Lion Venture L.P. These assets (detailed below) were primarily acquired in 2004 and 2005.

The transaction is being funded with approximately $151.9 million in cash and the assumption of Clarion Partners’ pro-rated share of debt of approximately $104.9 million, making the total estimated acquisition cost $256.8 million. The deal is expected to close by the end of the second quarter.

A day after making the purchase public, Ramco-Gershenson announced an upsized public offering of seven million common shares at $15.55 per share with proceeds being directed at the 12-property purchase, though the offering is not conditioned on the completion of the acquisition.

The 12 shopping centers represent 2.2 million square feet and are all anchored by grocery and/or value-oriented retailers. Occupancy is strong, just over 93 percent, and the annualized base rent is approximately $14.51 per square foot. In 2012 the 12 centers generated $27 million in income, which equates to a 7.4 percent cap rate on the aggregate asset value of $366.8 million. Getting the centers to operate at this level took a little work, according to Dennis Gershenson, president & CEO of Ramco-Gershenson.

Cypress Point – Clearwater, Fla.

“A significant amount of the shopping centers saw some strong re-tenanting,” Gershenson told CPE. “There were a number of the assets that had both Circuit City and Linens ‘n Things in them, and we have replaced them all not just with other uses, but with viable destination oriented retailers.”

This tactic, combined with strong local demographics—all the Michigan properties are located in Oakland County, the tenth-highest income county in the United States with a population over one million—has led to particularly strong occupancy.

“Our Michigan assets in total, even in the worst of times, never fell below 92 percent, and at the present time we are at over 95 percent occupied in Michigan,” Gershenson said, adding that Florida assets are in the 92 to 93 percent range.

Things are looking up for retail over the next year on the macro level as well, according to data released by the U.S. Department of Commerce on Wednesday. February brick and mortar retail and food services sales were up 1.1 percent from January, and 4.6 percent above February 2012.

Just because Ramco-Gerhenson is buying out Clarion Partners in this portfolio doesn’t mean that the joint venture is through. The companies have confirmed a mutual desire to buy up to $350 million of additional shopping centers over the next several years, focusing on stable, high-quality assets in leading metro markets.

Hunter’s Square – Farmington Hills, Mich.

“I think that Clarion’s willingness not only to continue the venture with the three assets that are still jointly owned, but to buy back up to the total allocation at the get-go, speaks volumes about our relationship,” Gershenson said. “They are looking for very stable core assets as far as acquisitions are concerned, and we see their desire for those kinds of assets complimenting what we are looking for—properties where we can add value.”

The Florida shopping centers, which represent 58 percent of the acquisition, include:

• Mission Bay Plaza (Boca Raton), 263,721 square feet, anchored by The Fresh Market, Golfsmith, LA Fitness, OfficeMax, and Toys “R” Us.
• Marketplace of Delray (Delray Beach), 238,901 square feet, anchored by Ross Dress for Less, Winn-Dixie, and Office Depot.
• Cypress Point (Clearwater), 167,280 square feet, anchored by The Fresh Market, and Burlington Coat Factory.
• West Broward (Plantation), 152,973 square feet, anchored by DD’s Discounts (a division of Ross Dress for Less) and Save-A-Lot.
• Village Plaza (Lakeland), 146,755 square feet, anchored by Big Lots.
• Vista Plaza (Jensen Beach), 109,761 square feet, anchored by Bed, Bath & Beyond, Michaels, and Total Wine & More.
• Treasure Coast Commons (Jensen Beach), 92,979 square feet, anchored by Barnes & Noble, OfficeMax, and Sports Authority.
• Cocoa Commons (Cocoa), 90,116 square feet, anchored by Publix.

The Michigan shopping centers, which represent 42 percent of the acquisition include:

• Hunter’s Square (Farmington Hills), 354,323 square feet, anchored by Bed, Bath & Beyond, Buy Buy Baby, Loehmann’s, Michaels, Marshalls, and TJ Maxx.
• Winchester Center (Rochester Hills), 314,575 square feet, anchored by Bed, Bath and Beyond, Dick’s Sporting Goods, Marshalls, Michaels, and PetSmart.
• Troy Marketplace (Troy), 217,754 square feet, anchored by Nordstrom Rack, LA Fitness, Golfsmith, PetSmart, and Total Hockey.
• The Shops at Old Orchard (West Bloomfield), 96,994 square feet, anchored by Plum Market, an upscale grocer.

 TGM Associates, a New York-based multi-family investor, has purchased TGM Willowbrook, a two and three-story garden property, totaling 712 units in 76 buildings, located in Willowbrook, Ill., for $101 million.

“We are very excited to bring TGM Willowbrook into our multi-family portfolio,” John Gochberg, TGM Associates’ COO, said in a prepared statement. “TGM Willowbrook will complement other TGM Communities in Illinois, offering even more premium apartment living options in the area.”

The property was previously known as The Communities of Ascot Glen, which was owned by RREEF and managed by Lincoln Property Management.  HFF marketed the properties on behalf of the seller. HFF also secured a $75 million 10-year, 3.745 percent fixed-rate loan through M&T Realty Capital Corporation.

Located at 6060 Laurel Lane on Highway 83, TGM Willowbrook consists of one- and two-bedroom floor plans averaging 847 square feet each. Units feature oversized balconies, patios and generous closets in each apartment. Select apartments feature authentic, wood-burning fireplaces. A number of the apartments were partially renovated in 2010.

Community amenities include two fitness centers, two clubhouses, three outdoor swimming pools, three tennis courts, a sand volleyball court, game room, business center and dog walking trails. There’s also an abundance of parking space.

Situated in DuPage County, the property sits just 20 miles southwest of downtown Chicago, conveniently located near all major highways. It’s also less than a half hour from O’Hare International Airport. The community offers convenient access to public transportation via Metra Station for easy commuting into Chicago or other parts of the region.

TGM Willowbrook was 95 percent occupied at the time of the sale.

TGM Associates also has two additional properties in the area having purchased TGM Springbrook in Aurora last December and TGM Park Meadows in Schaumburg last April.

The HFF investment sales team representing the seller was led by executive managing director Matthew Lawton, managing directors Marty O’Connell and Sean Fogarty, and associate director Wickliffe Kirby.

Walgreens is building a net-zero energy store in Evanston, Ill., that will use solar and wind power, geothermal heating and cooling and other energy-saving technologies to generate electricity and reduce its usage by more than 40 percent.

The announcement from the nation’s largest drugstore chain comes in the same week that Walmart said it had placed solar panels on 12 Walmart stores and Sam’s Clubs throughout Ohio.

For both companies this week’s news is just the latest of many green initiatives they and other companies are using in their buildings. Walgreens has said it wants to reduce its energy consumption 20 percent chain-wide by 2020. Walmart’s goal is to eventually use renewable energy for all its power needs.

“We are investing in developing a net-zero store so we can learn the best way to bring these features to our other stores. Because we operate 8,000 stores, we believe our pursuit of green technology can have a significant impact on the nation’s environment,” Thomas Connolly, Walgreens vice president of facilities development, said in a company release.

The Evanston store is located at the intersection of Chicago Avenue and Keeney Street, where the company is demolishing an old Walgreens store. The location is close enough to Walgreens’ headquarters in Deerfield, Ill., so engineers can keep a close eye on the building and see if it reaches its goal of net zero energy use.

The company’s plans for the store include installing 800 rooftop solar panels and two wind turbines. Engineers will drill down 550 feet into the ground to obtain geothermal energy for heating or cooling. Energy efficient building materials will be used along with LED lighting and carbon dioxide refrigerants for heating, cooling and refrigeration equipment. They are hoping the store will generate 265,000 kilowatt hours per year and only use about 200,000 kilowatt hours.

Walgreens is aiming to have the store achieve LEED platinum status, the most stringent designation given by the U.S. Green Building Council. For the past year, the chain has worked with the city of Evanston and vendors including Trane, CREE Lighting, Acuity Lighting, Cooper Lighting, CalStar Products, GE Lighting, Geothermal International, SoCore Energy, Wing Power and Camburas and Theodore Architects.

Walmart worked with SolarCity to put 12 solar installations atop stores in Ohio – Austintown, Fairfax, Franklin, Greenville, Loveland, Middletown, Milford, Toledo, Xenia, Youngstown and two in Cincinnati. The company said each installation should provide between 10 and 15 percent of each store’s total projected electricity needs. The stores are expected to save a combined total of 5,500 metric tons of carbon dioxide emissions, equivalent to taking 1,100 cars off the road.

“Walmart’s installation of solar on 12 store rooftops is the largest solar commitment ever made by a retail business in Ohio,” Bill Spratley, executive director of Green Energy Ohio, said in a Walmart news release.

A month earlier, Walmart also installed solar panels on three stores in Hawaii, doubling the number of Walmart stores powered by solar energy in the state.

Both Walmart and Walgreens made the Solar Energy Industries Association’s list of the top 20 commercial solar customers in the United States. Walmart placed first on the list published in November, with 65,000 kilowatts of solar energy installed at its properties. Walgreens came in at No. 10 with 8,163 kW. Others on the list include Costco Wholesale at No. 2 followed by Kohl’s department stores; IKEA; Macy’s; McGraw Hill; Johnson and Johnson; Staples, Inc.; and Campbell’s Soup.

Walmart placed first and Walgreens second in the group’s list of total number of solar energy systems installed by companies. Walmart had 144 and Walgreens had 134, as of November.

The SEIA report notes that the falling cost of solar energy has encouraged American businesses to make the investments. The survey looked at 42 companies finding that they had installed at least 321 MW (megawatts) of solar capacity at more than 750 locations in at least 26 states and Puerto Rico. The group expects that number to keep climbing as more companies realize “solar provides predictably priced electricity for 20 to 30 years,” often making it more cost-effective than buying electricity from the local utility.

A joint venture of City Center Realty Partners L.L.C., of San Francisco, and Angelo, Gordon & Co., of New York, has acquired the 320,000-square-foot office portion of the Plaza Seven building at 45 S. Seventh St. in downtown Minneapolis, the companies announced late Thursday. 

The Class A office building occupies floors 18–36 of the Plaza Seven mixed-use tower, which is in the Nicollet Mall corridor and connected to the city’s skyway system. The purchase includes the building’s 315-space heated underground parking garage.

The Plaza Seven tower also includes retail and a Radisson hotel, which is undergoing renovations to become a Radisson Blu.

The office portion will be managed by City Center Real Estate Services, a CCRP affiliate, and leased by Jones Lang LaSalle.

CCRP plans to undertake an extensive elevator modernization project for the building, as well as potentially making other building improvements, CCRP president Mark Stefan told Commercial Property Executive. He added, however, that the office building’s previous owner, Carlson, of Minnetonka, Minn., had recently completed renovations of the public areas.

The offices’ current occupancy is about 60 percent, said Stefan, who called his company’s purchase of the building “a lease-up play,” noting that CCRP was attracted by Plaza Seven’s “great location.”

In all, Stefan said, “We like the Minneapolis market long-term.”

CCRP’s other Minneapolis properties include the 350,000-square-foot TractorWorks building, a former John Deere tractor factory at 800 N. Washington Ave. in the North Loop neighborhood, and the former Superior Plating site, a 5.5-acre parcel acquired last June.

And there appears to be a bit more to like in Minneapolis lately, according to a fourth-quarter 2012 report from JLL. The office market in the Minneapolis CBD includes about 14.3 million square feet of Class A space, which currently has an average total vacancy of 11.3 percent.

Though net absorption in 2012 totaled only 71,500 square feet, or 0.5 percent, no office space is currently under construction in the CBD, and the JLL report expects upward pressure on rents. For example, Plaza Seven is cited as one of the few buildings with available contiguous spaces of 75,000 square feet or more. The current average Class A asking rent is $29.27.

KBS Real Estate Investment Trust III has acquired the RBC Plaza, a 678,045-square-foot, mixed-use office building in downtown Minneapolis from Brookfield Office Properties for $118.1 million.

The Newport Beach, Calif.-based REIT plans to turn between 50,000 and 60,000 square feet of the existing retail space at the 40-story Class A tower into offices. The property, which is currently 83 percent leased to 34 tenants, has 609,368 square feet of office space and 68,677 square feet of retail space above an underground parking garage. The current average weighted lease is 6.9 years and the tenants are paying a total of $8.6 million a year in rent or about $16.08 per square foot, according to a KBS filing with the U.S. Securities and Exchange Commission.

Built in 1991, the mixed-use property is located in Minneapolis’s financial district along Nicollet Mall, a popular downtown shopping area and connected via the city’s Skyway to a multi-building retail complex that occupies two city blocks. KBS plans to renovate the third and fourth floor of what is currently the Graviidae Common II into office space.

The REIT also plans to upgrade the office amenities, conference rooms, fitness facility and to renovate the lobby, Rodney Richerson, KBS regional president, said in a prepared statement. In all, the planned renovations are expected to cost around $3.8 million.

“Brookfield, the seller, has done a wonderful job of running the asset, however the pending closing of one of the anchor retailers provides an exciting opportunity to rethink the four-story retail section of this project,” Richerson said in the release.

Giovanni Cordoves, vice president of asset management at KBS Capital Advisors, told Commercial Property Executive that the plan is to create a large block of open office on the third and fourth floors of the retail portion of the project.

“Although it could be built out as a more traditional office space and multi-tenant, it will likely attract large open floor plan users who are looking for a unique urban setting, with more visibility and exposure than your typical office space,” he said. “The proximity to the streetscape coupled with a Nicollet Mall address, provides an urban vibrancy at what should be a very competitive rental rate. Based on our market research, we anticipate that this 50,000- to 60,000 square feet will be the largest available contiguous block of office space on Nicollet Mall.”

Cordoves added that the goal for future retail tenants is “to create a tenant mix that caters to the office tenants of RBC Plaza and the general downtown office population.” He said the plan would include fast casual restaurants, white tablecloth dining and service retail offerings.

Cordoves is the REIT’s advisor who will oversee management of the property. KBS has hired Cushman & Wakefield/Northmarq to manage and lease the asset. Sonja Dusil will be in charge of leasing and Theresa Elveru will lead the property management team.

Brookfield was represented in the deal by Tom O’Brian and Terry Kingston of Cushman & Wakefield/Northmarq and Mike Winn and Tom Richey of Cushman & Wakefield/Denver.

Late last year, Brookfield sold another of its Minneapolis assets – the Minneapolis City Center at 33 South 6^th Street – to Shorenstein Properties L.LC. for $202.5 million. The 50-story mixed-use complex is located near the RBC Plaza. It occupies a block bounded by Nicollet Mall, Hennepin Avenue and 6^th and 7^th streets. That 1.6 million-square-foot property also contained four stories of retail along with 1.1 million square feet of Class A office space. Brookfield stated in a Nov. 20, 2012, news release that it had netted approximately $106 million in the sale of the non-core asset. Brookfield, based in Toronto, has been focusing most of its efforts on New York City, Washington, D.C., Houston, Los Angeles, Denver, Boston and Seattle.

Companies affiliated with KBS already own two other properties in the greater Minneapolis area: the 288,458-square-foot Tower at Carlson in Minnetonka, Minn., and Watertower Apartments, a 228-unit, mixed-use apartment community in Eden Prairie, Minn.

For KBS REIT II, its plan to convert part of the RBC Plaza’s retail area into Class A office space is probably a wise move. The Twin Cities office market, which includes St. Paul, Minn., is “in the best shape since 2007,” according to a report in the January edition of The Compass published by Cushman & Wakefield/Northmarq. The report notes that the office market posted nearly 1 million square feet of positive absorption in 2012 and “is poised for accelerated growth in 2013.” With an overall vacancy of 9.7 percent for Class A office space and “few options for large space users” in the Minneapolis CBD last year, the CRE services firm expects rents to rise this year.

More than a year after paying $217.5 million in cash for 200 W. Madison, a Class A office tower in Chicago’s West Loop, Multi-Employer Property Trust has taken out a $105 million mortgage on the 928,040-square-foot property.

Prudential Mortgage Capital Co. provided the 10-year, fixed-rate loan for MEPT, which acquired 200 W. Madison in September 2011 from a joint venture of Tishman Speyer, Pearlmark Real Estate Advisors L.L.C. and a major U.S. pension plan.

Dave Hendrickson and Keith Largay of Jones Lang LaSalle Inc.’s Chicago office arranged the transaction. Sarah Teunis, a director with Prudential Mortgage Capital’s New York City office, partnered with Bryan McDonnell, a principal with its Arlington, Va., office, on the deal. Bentall Kennedy is MEPT’s real estate advisor.

“This building’s quality and central location, combined with the quality of the sponsorship, made this transaction extremely attractive,” Teunis said in a statement.

Built in 1983, the 45-story tower has been significantly renovated over the years and is now LEED Silver and Energy Star certified. It is located on the eastern border of the West Loop, near highways and commuter transportation lines and a short walk to the Ogilvie Transportation Center and Union Station. The building has a three-story glass atrium and a saw tooth façade that allows as many as eight corner offices or conference rooms per floor. Floor-to-ceiling glass perimeters allow for unobstructed views from the east and south sides.

When MEPT purchased the property, it was 88 percent leased, with a mix of tenants including law firms and financial services groups. MEPT said in a release then that it planned on being a long-term owner and would seek to attract more high-quality tenants. Transwestern, which has its Chicago and Midwest regional headquarters in the building, was named the leasing and management agent for the property shortly after the acquisition.

More recently, MEPT and Bentall Kennedy acquired 475 Sansome, a 21-story, 353,269-square-foot office tower in San Francisco, for an undisclosed amount. The acquisition, announced in December, fits the Washington, D.C.-based trust’s criteria for high-end office properties located in CBDs of major U.S. cities. The fund is also seeking to invest in grocery-anchored retail centers and multi-family properties.

Prudential Mortgage Capital is a national, full-service commercial and multi-family mortgage finance business with more than $72.7 billion in assets under management and administration as of Sept., 30, 2012. Based in Newark, N.J., it recently provided an $85 million, 15-year fixed-rate loan to MD Carlisle and JD Carlisle for Kips Bay Plaza, a 171,325-square-foot, grocery-anchored retail center in the Kips Bay section of Manhattan. Located on Second Avenue between 30^th and 32^nd streets, the property recently added a Fairway Supermarket. Other tenants include an AMC movie theater, Rite Aid, Petco, Staples and TD Bank.

Win Properties Inc., a Westchester, N.Y.-based privately-owned investor, developer and portfolio manager, has refinanced a 56-retail property portfolio with ING Investment Management for $62.4 million.

The portfolio, which includes primarily free-standing single-tenant retail properties, consists of buildings located in 17 states: Arizona, California, Connecticut, Florida, Illinois, Indiana, New Jersey, New Mexico, New York, Massachusetts, Michigan, Mississippi, Missouri, Oregon Tennessee, Utah and Virginia.

HFF, with assistance from real estate analyst David Fowler, arranged the financing for Win Properties. The portfolio consisted of 52 properties that were existing collateral with ING and four new retail properties that were cross-collateralized into the portfolio.

“They are combined properties that were previously financed by separate loans into a larger portfolio to take advantage of economies of scale and historically low rates,” Mike Tepedino, HFF’s senior managing director, told Commercial Property Executive. “Rates are at historic lows and the borrower was able to refinance for a 15-year-term.”

That new collateral includes tenants such as Capital One, Crumbs Bake Shop, Morgan Stanley, Pottery Barn, Sports Authority and Tiffany & Co.

“The new collateral was mostly located in affluent towns in Fairfield Conn., with superior tenancy, i.e. Tiffany’s and Pottery Barn,” Tepedino added.

HFF was able to secure a $58.4 million fixed-rate portion for a 15-year term, and a $4 million floating-rate portion for a five-year term. The loan will also be serviced by HFF.

The properties are predominately retail and are either downtown Main Street, freestanding or community strip shopping centers.

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In what’s being touted by industry leaders as Chicago’s largest office sale in 2012, the 1.1 million-square-foot office building at 540 W. Madison St. came under new ownership in a $350 million sale-leaseback transaction. A joint venture consisting of real estate players Joseph Mizrachi, David Werner, Eyal Ben-Yosef and David Alcalay acquired the premier downtown high-rise from Bank of America, which will continue to occupy 750,000 square feet of the tower.

In addition to the 31-story building, which was developed by Hines in 2003 and also offers 12,500 square feet of ground-level retail space, the office destination at 540 W. Madison features an adjacent development site that can accommodate a second office structure.

It was the kind of deal that attracted the lending community, just as a picnic invites ants. The quality of the sponsorship, the 10-year-old property’s 91 percent occupancy level and trophy status in the highly desirable West Loop submarket were hard to ignore. As noted in a prepared statement by Peter Nicoletti, a managing director with Jones Lang LaSalle, the commercial real estate firm that marketed the asset and secured the financing for the buyer, more than a few life insurance companies, banks and CMBS lenders expressed interest. Ultimately it was Deutsche Bank that supplied the partnership with acquisition financing in the form of a five-year, interest-only loan at a fixed rate.

For its part, Bank of America gets to stay put in its digs and, should the bank desire, avail itself of the option to vacate 400,000 square feet of space at the LEED Gold-certified building after three years.

The 540 W. Madison trade topped the sales list by quite a margin in 2012, but it was hardly the only major office transaction of the year. Harbor Group International grabbed the 1.2 million-square-foot One South Wacker for roughly $230 million. GlenStar Properties L.L.C. and USAA Real Estate Co. acquired the 1.3 million-square-foot Chicago Board of Trade Building complex at 141 W. Jackson Blvd. for $152 million.

Sales volume in Chicago’s Class A market in 2012, however, may very well be destined for a bit of a downslide. Supply is the issue.

“The problem that you see is if you have a Class A building, you are going to say, ‘ It would make more sense for me to refinance because I can borrow at a very inexpensive rate if I’m 50 percent levered; I can pull some cash out or I can increase my levered return,’” Art Burrows, a senior vice president with commercial real estate services firm NAI Hiffman, told Commercial Property Executive. “That’s a better option than selling and being in a liquid position and making next to no money on it. So the challenge you’re going to face going forward is people who have bought the Class A buildings recently don’t have that incentive to sell, so I think there’s going to be a shortage of product.”

Hilton Kansas City

Laurus Corp., a private real estate investment and development firm, has acquired the Hilton Kansas City Airport hotel in Kansas City, Mo., its fifth hotel this year and the second in less than a week.  A few days earlier, the company had closed on the Hilton San Antonio Airport Hotel in San Antonio, Texas.

The Los Angeles-based firm has made six acquisitions this year, five of them hotels and all of them located near major metropolitan airports. The firm’s sixth acquisition was a three-story, Class A office building in the Southpointe Business Park near Pittsburgh that was purchased in September.

“This is Laurus’ second closing on a Hilton property in the past week and completes our sixth acquisition for 2012,” said Andres Szita, chairman and co-founder of Laurus. “Both the Hiltons offer investors quality full-service hotels in markets that have experienced significant RevPar growth over the past 12 months.”

“The recognizable strength of the Hilton brand and its reservation system adds credibility and liquidity avenues for both properties, and implemented operational efficiencies will position the hotels for a strong and stable return for investors” said Philip Cyburt, CEO.

The purchase prices were not disclosed. Laurus Corp. officials could not be reached for more information on the acquisition costs.

Cyburt said both purchases were made with a capital allocation from the company’s Ethika Fund. Laurus partnered with Lowe Enterprise Investors for instutional capital for both the Kansas City and San Antonio hotels. Cyburt noted that the instutional capital from Lowe on the Kansas City hotel came from a separate account investment managed on behalf of Ohio PERS. The San Antonio purchase also used institutional capital from NXT Capital L.L.C.

The Kansas City hotel has 347 guest rooms and suites and 21,000 square feet of meeting space. It is located on Interstate 29 and less than five minutes from the Kansas City International Airport. The hotel has more than 6 million square feet of office space surrounding it, including General Motors, Ford Motors, Harley-Davidson, Toyota and Sony. Major attractions are nearby including the NASCAR track at the Kansas City Speedway and Kansas City Zoo.

“The Kansas City market features robust demand drivers and various value-add opportunities through renovation, operation efficiencies and management,” said Jean Paul Szita, president and CFO.

He said the company was planning an $8 million renovation of the property at 8801 NW 112th St., including modernizing the restaurant, lobby, restaurant and bar. Guest rooms, meeting space and common areas will also be revamped.

The firm plans to spend about $9 million at the San Antonio hotel, located at 611 Northwest Loop 410. The hotel will get a total upgrade including rooms and common areas. The 14-story hotel has 384 guest rooms and 16,000 square feet of meeting space.

“The hotel’s amenities, including the large flexible event space, are ideal for its dominant position in this submarket,” said CIO Austin Khan. “The hotel captures a large share of demand, but we believe that revenue can be further increased through our expansive renovation program.”

Located on 3.7 acres, it is near high-end residences, more than 10.5 million square feet of office space and the North Star mall, a major regional shopping center and a top tourist attraction in the city along with the River Walk and Alamo. The hotel is about eight miles from downtown San Antonio and less than two miles from the San Antonio International Airport.

“The Hilton hotel acquisition aligns with our opportunistic investment strategy of acquiring real estate at a good basis located in growth markets with dynamic job centers in regions that have historically responded to the economic recovery well above the national average,” Cyburt said of the San Antonio purchase.

Earlier this month, Laurus acquired the Sofitel Miami Hotel, a 14-story luxury property with 281 rooms and 17,351 square feet of meeting space. The 10-acre site includes 1.3 acres that could be used for future development of a Class A office building or an additional 100 rooms. Located at 5800 Blue Lagoon Drive, the hotel is adjacent to Miami International Airport and the Waterford Business Park. Laurus plans $4.5 million in upgrades at that hotel.

In July, the firm purchased the Hilton Salt Lake City at Salt Lake City International Airport, a 288-room full-service hotel that is adjacent to Interstate 80 and the Salt Lake International Center. Laurus formed SLC Hotel Partners, L.LC. to acquire this property, which has more than 13,000 square feet of flexible meeting space. It plans to renovate the hotel, but did not say how much it planned to spend on renovations.

Earlier in the year, the company acquired the Ramada Suites Hotel at the New Orleans Airport, a 130-room select service hotel at the entrance of the James Business Park and adjacent to the airport. Purchased in March, the hotel has more than 3,000 square feet of meeting space, two restaurants, and a business and fitness center. Laurus formed New Orleans Hotel Partners, L.L.C. to buy the hotel. It plans to upgrade the property and rebrand it as a Holiday Inn Express franchise. The firm did not release the estimated costs for the renovations.

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In its first acquisition since entering the hot student housing market, Campus Evolution Villages L.L.C., a subsidiary of Lauderhill Partners L.L.C., has acquired properties with a total of 1,762 beds for $46.5 million from Gulfstream Capital Partners.

Known as the Campus Core portfolio, the properties are: a 120-unit, 360-bed community in Warrensburg, Mo., that serves students of the adjacent University of Central Missouri; a 120-unit, 432-bed community that serves students from Louisiana Tech University and Grambling State University in Ruston, La.; a 156-unit, 480-bed community that serves students of the University of South Carolina Upstate in Spartanburg, S.C.; and a 140-unit, 490-bed community serving students at Murray State University in Murray, Ky. Each of the assets has been branded as a Campus Evolution Villages property.

The properties were all built in 2008 and are in walking distance to their campuses. The communities have a combination of two-bedroom, three-bedroom and four-bedroom units with resort-style amenities, including 24-hour computer labs, fitness centers and pools.

“They are in very good condition and do not need any capital improvements,” Andrew Stark, CEO of Campus Evolution Villages, told Commercial Property Executive.

Stark said the acquisitions were partly funded by a “very significant equity” investment from Barry Reichmann and associates of Reichmann International Development Corp., a Toronto-based real estate holding company with properties in the United States, Canada, Mexico and the United Kingdom. Reichmann has been active for years in the seniors housing market in the U.S. and Canada, but this is the family’s first investment in the student housing market, according to Stark.

Lauderhill Partners is a diversified merchant banking firm headquartered in New York City that was launched in June. Stark and his partner Evan Denner launched the firm with the intention of focusing on the student housing business. Stark said it then formed Campus Evolution L.L.C., the overall student housing company, and Campus Evolution Villages, L.L.C., which owns and manages the student housing assets. The companies are a joint venture between Lauderhill and Waterbridge Capital L.L.C. Stark did not say how much Waterbridge Capital invested in the Campus Evolution companies.

Stark, a principal and executive managing director of Lauderhill Partners serves as CEO of Campus Evolution Villages and COO of Campus Evolution. Denner, a Lauderhill principal, is CEO of Campus Evolution and Chief Investment Officer of Campus Evolution Village. He had been CIO of merchant banking at Cantor Fitzgerald before leaving to form Lauderhill. Stark had served as executive managing director at Cantor Real Estate before he stepped down to launch Lauderhill with Denner.

Lauderhill acquired United Campus Housing Management Group in June and folded it into Campus Evolution Villages. The amount paid to acquire the management company was not disclosed. Mark Harries, who had been CEO of UCHMG, is now chairman of Campus Evolution Villages. By combining the new assets with the properties UCHMG was already running, the new company now manages more than 7,500 beds across the U.S. Harries has a long career in student housing, including co-founding and serving as principal of Asset Campus Housing, and working in top management positions at other well-known student housing firms. Stark met Harries while Harries was at American Campus Communities. That firm became the first in the student housing sector to go public on a U.S. stock exchange.

Denner described the acquisition of UCHMG as a pivotal event for Lauderhill and Campus Evolution.

“Like Mark, Andrew was an early pioneer in the student housing business. Their combined knowledge and insight into the sector is profound,” Denner said.

Stark said the firm is ready to close on another student housing purchase, possibly by the end of this year. He said 2013 will be an active year for Campus Evolution Villages.

“We expect to be in a significant acquisition growth period throughout the year,” Stark said.

He said they were “very selective” in targeting student housing assets for acquisition with the top two criteria being located near growth universities and in markets that “are not heavily supplied with other privatized student housing.”

The sector is growing rapidly. In 2011, there were 97 transactions up from 71 in 2010 and 32 in 2009, according to the Student Housing Research Report for 2011 from the National Student Housing Group at Colliers International. That group, headed by top student housing brokers Dorothy Joffe Jackman and Travis Prince, was formed in January 2012 to focus on the student housing niche and grow Collier’s business in it.

The Capital Markets Multi-Housing 2012 Annual Market by CBRE noted that “national student housing pricing trends have increased 10 percent over 2010 and have surpassed their 2007 peak.” The report also stated there was an increase in REIT buyers and developer sellers in the fourth quarter of 2011.

“This variability in property trades is a good sign of investor confidence in the asset class and a return to a more diverse investor pool,” the CBRE report added.

CBRE predicts private student housing to keep increasing along with the rise in student enrollment. Almost all of the student rental demand is from the so-called Generation Y, those aged 15 to 32 who are making up 25 percent of the current U.S. population. The market is also expected to be strong because universities are finding it harder to fund on-campus housing to meet the demand. Other experts say the tough economy has lead more young people to enroll in college and stay longer because of the soft job market.

Stark said he still thinks there is “significant growth in the sector.”

“There is a true lack of supply for most of the markets in this country,” he said, adding that private companies will take up more of the responsibility for providing the student housing. “The private sector has the ability to move quickly and be able to spend the dollars.”

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Courtesy Steve Becker/beckermedia.com

The 2012 Global Real Estate Markets Conference hosted by the James A. Graaskamp Center for Real Estate (Wisconsin School of Business) featured a premier keynote panel with some of our industry’s top CEOs. The venue at the main dining room of the New York Stock Exchange was a fitting one given that the main course of conversation was where to invest in the current climate of economic recovery. The overall tone was one of cautious optimism.

“We no longer fear that the light at the end of the tunnel is the train coming towards us,” said Bob Toll, executive chairman, Toll Brothers. “We are out there buying. Almost all of the markets are operating on a normalized basis. Even Vegas, which was seen as a death market, has come back in that it has reset itself.”

Toll added that he has seen a tremendous recovery in residential real estate in 2012, especially since the last six years were akin to “walking across the desert.” Still, Toll pointed out that the global economy is more connected than ever before, meaning no market is an island.

“To think that what goes on in Europe is not going to impact us is just silly. It is acting like an ostrich with its head in the sand,” he added. “What goes on in Europe, Asia, India, or a little place like Israel—for God’s sake it is half the size of New Jersey and it can blow the whole world up—all has an impact.”

In spite of even greater success he expected for 2013, Toll still remained concerned over the uncertainty emanating from Washington. He was not alone.

“While our tenants are doing pretty good, and are perhaps ready to expand, they are not hiring new people because they don’t understand the regulatory or tax environment they are working under,” said Ric Clark, CEO of Brookfield Property Partners. “We think that the economy will take off if Congress can get the debt in order. I like to think that at the end of the day the right thing will be done.”

Clark also feels that the United States is almost back to normal, and pointed out that consumer confidence has returned to his mall business, which has seen stores sales increase on a per-square-foot basis for three straight years to a current all-time high. His office business is also doing well, with 7 million square feet in leases signed in 2012, the company’s third highest number ever. As far as markets with room for growth, Clark remains bullish on Europe.

“We are more excited about Europe than anywhere else at the moment,” he said. “The condition of the banks and balance sheets are worse there than they are here. They can’t step up, so that is where we step in.”

But Jeff Schwartz, co-founder & chairman, Global Logistics Properties, was not so keen on Europe as far as the logistics asset class is concerned.

“We don’t want to be in Europe simply based on price,” Schwartz said. “Core high-quality Class A assets are very expensive on a risk-adjust basis.”

Global Logistics Properties is, however, very optimistic about Brazil. In fact, the company closed a joint venture investment to the tune of $2 billion on Thursday, Nov. 29. Schwartz’s company also remains strong on China. GLP is actually the largest provider of modern logistics space in both China and Japan with more than 177 logistics parks in 38 cities. He didn’t seem too concerned over slowing growth in China either.

“It is hard to call 7.7 percent GDP growth year to date falling apart. The rest of the world would die for that. China is still a massive opportunity,” he said, adding that the logistics sector is poised for continued growth thanks to the rise of e-commerce.

Brookfield has been in Brazil for the past 35 years, though Clark says that the company has only “done well in the last 10 years, don’t ask about the first 25.” He attributes the recent success to 50 percent of the population being under 30 years old, which means there is a huge emerging middle class. Other positive attributes of Brazil are political and financial houses that are in good order.

“We are going to invest more in Brazil,” Clark said. “At the moment we only have retail malls and high-rise residential, but we are building our first office there.”

As far as Asia is concerned, Brookfield does plan to enter the market at some point, in spite of the cost of admission being pretty steep. For now they have a few people in China and India doing research. Toll wasn’t revealing whether or not Toll Brothers had any plans for China (they are a public company after all), saying that “We had some involvement looking around, and I don’t want to say anything more than that.”

In the meantime, Toll is happy with how things are looking in Queens, Hoboken, Jersey City and Long Island, which are closer to his roots.

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Morguard Corp., an Ontario, Canada-based investor, agreed to purchase Alta at K Station, an 848-unit multi-family complex in Chicago’s West Loop, for $300 million, with the acquisition expected to close at the end of December.

Located at 555 West Kinzie St., the property consists of two towers built on an eight-level parking and retail podium with 848 residential units, 700 above-grade parking stalls and 12,000+ square feet of high-street retail.

“This opportunity allows Morguard Corporation to expand its footprint in the U.S. and execute on our U.S. growth strategy to acquire high-quality core assets,” Rai Sahi, Morguard Corporation’s Chief Executive Officer, said. “We’re building on our successful track record of ownership and management of real assets to deliver shareholder value.”

The 37-story and 41-story towers were completed for occupancy in 2010 and currently have an occupancy rate of approximately 94 percent.

Alta at K Station offers studio, one-, two- and three-bedroom eco-friendly units and is LEED Gold certified.

Residents will have access to a 32,000-square-foot club featuring a professional fitness center, sun terrace, business center, party suite, lounge, home theatre and swimming pool.

Alta at K Station sits directly on the city’s urban rail system on a 1.7 acre site.

Morguard expects to finance the purchase of Alta at K Station with a mortgage in the principal amount of approximately $200 million for a term of 10 years, bearing interest at 3.29 per per annum; and other available sources of funds. The deal amounts to $353,774 per unit.

Morguard will assume management of the complex on March 1, 2013.

It’s been a busy fourth quarter for Morguard this year, as the company has acquired more than $700 million worth of property in that time, including a 95 percent equity interest in the Toronto Airport Marriott Hotel.

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Retail Properties of America, Inc. has sold the Aon Hewitt property, an 818,686-square-foot office property in Lincolnshire, Ill., for $148 million to an unidentified buyer.

The REIT used the proceeds to pay off $117.7 million of mortgage debt and accrued interest on the entire Aon Hewitt campus. RPAI still owns 343,000 square feet on the Aon Hewitt East Campus, which is fully leased to Aon Hewitt, a global provider of insurance, human resources solutions and outsourcing services.

The sale brings RPAI closer to its year-end goal of disposing of $450 million to $550 million in assets. So far this year, the Oak Brook, Ill.,-based REIT has sold $414.4 million of non-core and non-strategic assets, including earnouts, pad sales and a deed-in-lieu transaction. The Aon Hewitt property was among the $185.5 million and 1.2 million square feet in dispositions completed since Oct. 1. Those sales also included four single-tenant properties.

The REIT said all its 2012 debt maturities have been addressed.

“The culmination of the Aon Corporation lease extension and the subsequent sale of this property, over the past four months, highlights our active approach to asset management and our continued ability to achieve our stated strategic initiatives that we set out earlier in the year,” said Shane Garrison, RPAI CEO and chief investment officer. “We are pleased with the team’s progress toward meeting our target of $450 million to $550 million of asset sales by the end of 2012.”

Assets sold during the third quarter included 13 former Mervyns’ locations in California. The portfolio, which at the time of sale was 99 percent leased and featured four Hobby Lobby, four Kohl’s and five Burlington Coat Factory properties, was sold for $100.4 million. Proceeds of the sale of the 13 assets paid off the entire outstanding loan on the 23-asset Mervyns portfolio. When the sale was announced in August, Garrison said he expected the remaining 10 Mervyns’ properties to be sold by the end of December.

Another large asset RPAI sold in recent months was the Cost Plus distribution center in Stockton, Calif. The 1.04 million-square-foot distribution site was purchased by American Realty Capital Trust III for $63 million. The tenant in the two buildings at the time of the August sale was Bed, Bath & Beyond, Inc., which had bought Cost Plus World Market, a smaller home goods retailer, in May for about $495 million.

The asset disposition is part of RPAI’s 2012 strategic plan, which included changing the REIT’s name from Inland Western to Retail Properties of America, Inc., in March to better reflect its core business as an owner and operator of shopping centers across the United States. The portfolio now consists of more than 40 million square feet across approximately 275 properties in 35 states.

Penn National Gaming, Inc. submitted two proposals for a new gaming and entertainment destination in Iowa’s Woodbury County to the Iowa Racing & Gaming Commission to possibly build its trademark Hollywood Casino.

One proposal is for a $160 million downtown Hollywood Casino Sioux City, which would be built on a 10-acre site in the center of one of the prime areas that the Sioux City Planning Division has identified as a preferred casino zone. The other is for a $167 million Hollywood Casino Siouxland in Woodbury County.

The Hollywood Casino Sioux City property would feature a 33,000 square-foot casino floor with 750 slot machines, 20 live table games and a five-table poker room. It would also feature a 6,000 square-foot multi-purpose event center with a 500-seat concert venue and include structured parking for 800 vehicles and a 300-space surface lot.

Non-gaming dining and entertainment amenities would include a fine-dining steakhouse, casual grille, casino bar and sports pub.

A $40 million phase II expansion with a 150-guestroom hotel as well as space for an additional 50 slot machines, five table games, five new poker tables and additional food and beverage options is also part of the development plan.

Hollywood Casino Siouxland would be a $167 million project located south of Sioux City and would include a 150-room hotel as part of its phase I construction. It would consist of a similar-sized casino floor, multi-purpose center and the same non-gaming dining and entertainment amenities.

“With our recent record of developing new properties in a number of markets and reflecting our financial strength as an ability to deliver on the commitments we’ve made, those are critical distinguishing factors,” Peter Carlino, Penn National Gaming’s chairman and CEO, told Commercial Property Executive. “We believe our Sioux City proposals are the best way forward for the community and we believe each proposal represents the strongest option for Woodbury County and the State of Iowa.”

The proposals are similar in scope, but the unique characteristics of each location will allow the IRGC to determine which type of facility would best serve the region and the State of Iowa.

While the number of proposed gaming projects in recent years that have not been completed is many, Penn National has had considerable success with building first-class gaming and entertainment resorts in urban locations, most recently with casinos in Toledo and Columbus, Ohio. Overall, it operates 29 facilities in 19 jurisdictions. Penn National also owns the Argosy Sioux City riverboat casino.

Penn National is looking forward to the chance to work with the IRGC and other local leaders to develop whichever of the proposals they feel is best suited and most beneficial to the city and state of Iowa.

“Penn National requires no financing to move forward with our proposals and can fund either of these projects with cash flow from existing operations,” Carlino said. “Both of our proposals also allow Penn National to introduce Sioux City to our Hollywood brand, which invokes the glamour of 1930s’ art deco Hollywood.”

If approved, either proposal will create more than 800 new construction jobs as well as 400 jobs at the facility upon opening.

The IRGC plans to make a decision on submitted proposals on April 18, 2013. If chosen, each Hollywood project would take approximately 18 months to complete.

Shovels are traditional for ground-breaking ceremonies, but Related Midwest’s restart last Thursday of another developer’s downtown Chicago high-rise, stagnant since 2008, reportedly used a sledgehammer instead. The reason was that the building, at 111 W. Wacker Drive on the Chicago River’s south bank, had already gotten up to the 28th floor when construction stopped.

Related Midwest’s plans are for a 60-story, 950,000-gross-square-foot, LEED Silver tower with 504 luxury apartments (from studios and convertibles to three-bedrooms), 470 parking spaces, and street-level restaurant and retail space. Completion is scheduled for spring 2014.

Originally planned as Waterview Tower, a 90-story building consisting of a 200-room Shangri-La hotel and 233 luxury residential condos, the long-stalled structure was acquired from previous owner Waterview L.L.C. by Related Real Estate Recovery Fund, a distressed–real estate fund, in July 2011. Related subsequently went into a joint venture with Clark Wacker L.L.C. to revive development at the site.

“While the condo market is making a return, the high-end rental market is still a desired commodity for many Chicagoans,” Curt Bailey, president of Related Midwest told Commercial Property Executive. When coupled with strong locations and upscale amenity packages, he added, “the flexibility that renting provides continues to make renting a good option for many downtown.”

Currently, Related Midwest is developing another luxury rental high-rise, at 500 North Lake Shore Drive, and is marketing One Evanston, a condo development in that inner-ring suburb. And soon the company will also begin marketing three marquee condo projects in Chicago’s South Loop.

“Both our Evanston and the South Loop properties are more suited for homeownership,” Bailey said, “as they consist mostly of two- and three-bedrooms, as opposed to our luxury rental apartments, which are primarily studios, convertibles and one-bedrooms.”

The design and construction team for 111 W. Wacker includes Lend Lease U.S. Construction, Handel Architects L.L.P., of New York, and Chicago-based Epstein and Kara Mann Design.

On Sept. 28, CPE reported that Related had obtained $115 million in construction financing from U.S. Bank, with Bank of America as syndication agent.