Mesa West Capital looked at the Hyatt Regency San Francisco’s impressive performance, its increasingly strong market and its solid ownership and decided to put its money where its mouth is. The portfolio lender has provided a partnership involving affiliates of Dune Real Estate Partners L.P. and DiNapoli Capital Partners L.L.C. with a $130 million first-mortgage loan for the refinancing of the 802-room hotel in downtown San Francisco.

“In the context of the hotel world, definitely lenders are warming up to the San Francisco hotel market because it’s arguably, outside of New York, the strongest hotel market in the United States,” Thomas E. Callahan, co-president & CEO-West, with PKF Consulting USA, told Commercial Property Executive.

Dune and DiNapoli snapped up the Hyatt Regency San Francisco from a subsidiary of Strategic Hotel Capital L.L.C. in 2007, after which point the team initiated a major renovation program at the 19-story property. Built in 1973 along the waterfront at 5 Embarcadero Center, the lodging destination sits in the bustling Financial District and features 67,000 square feet of function space, as well as a fitness center, restaurant and lounge.

As Ronnie Gul, principal with Mesa West, noted in a press release on the refinancing deal, the Hyatt Regency San Francisco is “outperforming the market in both rate and occupancy.” It’s an impressive achievement given the enviable strength of the city’s hotel market. The lending community may not be as keen on the hospitality sector as it is on multi-family, however, there are always exceptions and San Francisco’s hotel market is one of them.

“Room rates and RevPAR are extremely high,” Callahan said. “Most hotels’ occupancies are in excess of 80 percent, room rates of most hotels increased 14 to 15 percent in 2011 over 2010, and most people are forecasting room rates to increase at 8 to 10 percent this year.”

Furthermore, he added, there is no new construction on the horizon in San Francisco, as opposed to New York, where a fair number of new rooms are scheduled to come online.

The San Francisco hotel market’s positive fundamentals and strength are the keys to opening the door to financing in the current environment. “The truth is, of course, most lenders aren’t really excited about hotels per se, but if you are a lender looking to lend money on hotels, San Francisco is perceived as one of the best markets you can be in.”

A rendering of the renovations at 680 Folsom St.

Riverbed Technology, an IT firm in San Francisco, has just found itself a new home. Courtesy a transaction handled by TMG Partners and financial partner Rockwood Capital L.L.C., the firm just signed a 167,788-square-foot lease at 680 Folsom St. in the city’s SoMa district. Riverbed, which currently sits at 199 Fremont St., will move into the second through sixth floors of the soon-to-be 522,000-square-foot, Class A space with a 10-year lease term. Jones Lang LaSalle Inc. represented the tenant in the transaction.

The move was precipitated by both Riverbed’s increase in space needs – the firm pulled in more than $550 million in 2010 revenue despite being founded as recently as 2002 – but also due to 680 Folsom’s current $87 million renovation project. The modernization, which also extends to the adjacent three-story building at 50 Hawthorne St., is set to complete in 2013 and includes an increase of more than 100,000 square feet of space.

San Francisco’s mayor, Ed Lee, called the move a “successful real estate transaction that will create jobs and drive innovation in our city.” And, according to a fourth-quarter 2011 report by JLL, the tech sector is leading the way in that regard. Leasing activity exceeded 9.5 million square feet last year, and technology firms represented 35 percent of that total – with high-demand areas such as Mission Bay / China Basin and SoMa districts garnering the largest Class A asking rents in the city, at $56.69 and $54.00 per square foot, respectively.

“We’re making this investment to support our long-term growth and cement our commitment to the city of San Francisco, Jerry Kennelly, Riverbed’s co-founder & CEO, said. “We think the city is the right location to attract the best talent and provide a thriving environment for our current employees.”

“High-tech industry growth during 2011 drove the best market performance in more than a decade,” the JLL report noted. “Some are raising concerns about the market trajectory and depth of high-tech based demand. Data indicate more growth ahead and another strong year in 2012, but posting numbers achieved in 2011 may prove challenging considering the lack of expansion from other industries and the amount of new supply expected to enter the market.”

Capitalizing on what will likely be a strong year for retail, Clarion Partners has acquired a 187,000-square-foot shopping center in Covington, Wash., for $31 million. The purchase was made on behalf of one of the firm’s clients.

“Covington is a highly desirable, family-oriented town with strong employment and household growth,” Stephen Latimer, a managing director at Clarion, said. “With its outstanding list of tenants and attractive location, the center is well positioned to take advantage of the expanding retail sales and improving economic fundamentals anticipated for the area.”

According to a third-quarter 2011 report by services firm Marcus & Millichap Real Estate Services Inc., Latimer’s sentiments are correct. Leasing velocity has been increasing rapidly in the entire Seattle-Tacoma market, with core areas leading the way but with suburban locations also seeing the benefits of growth. “In the past 12 months,” the report noted, “institutional and high-net-worth buyers resumed multi-tenant acquisitions, targeted core-anchored centers.” The area’s addition of 48,000 jobs through 2011 – led by the tech sector – increased payrolls by an average of 2.9 percent.

The shopping center is 98 percent leased, and Home Depot serves as the anchor tenant. Other tenants include Bank of America, Verizon Wireless, UPS, International House of Pancakes, and Remax, as well as numerous local businesses. Annual income averages over $90,000 within five miles of the property. In addition to the center, Covington is home to a number of national retailers, and acts as a retail hub for the surrounding region. New construction in the area is generally limited by high design standards and a lack of developable land parcels.

Omninet Capital has closed on the purchase of Commerce Office Park, a 285,368-square-foot institutional-quality office campus at South Eastern and East Slauson avenues in Commerce, Calif., Omninet, which is headquartered in Beverly Hills., Calif., announced Monday. A dollar amount was not released.

The five-building Class A office property is situated on six separate parcels in the Los Angeles Basin, giving the buyer the option of selling off the buildings individually in the future.

Dan Vittone, senior vice president, and Alan Pekarcik, executive vice president, of Voit Real Estate Services’ Irvine office, represented both Omninet and the seller, Thompson National Properties, on behalf of the tenant-in-common owners of record, in the sale. Kevin Shannon, Scott Schumacher and Ken White of CBRE Group Inc. and Tom Sheets of Cushman & Wakefield Inc. also represented the seller.

The park has access to several major Los Angeles freeways, including the Long Beach I-710, Santa Ana I-5, SR-60, San Gabriel I-605 and Century I-105.

Commerce Office Park is 90 percent leased, predominantly to departments of Los Angeles County and the State of California, said Vittone, who added, “This investment offers the buyer the ability to increase rents over time.” Michael Daniel, a partner at Omninet, said that with this acquisition, the company ends 2011 with more than $200 million in commercial acquisitions.

Los Angeles’ Class A office market was sluggish in the fourth quarter, according to a report by Cresa Los Angeles. Leasing activity was slow, and the overall availability rate of 19.1 percent remained near its 2010 peak. The average for Class A space was $32.16.

The technology sector appears to be starting to expand, the report commented, but most other industries “continue to find ways to do more with less … office space.” Most submarkets reportedly are struggling with high vacancy and soft demand, and lackluster leasing is expected to continue for most of this year.

The Internal Revenue Service, acting through Government Properties Income Trust, just signed a 10-year, 531,976-square-foot lease renewal at 5045 E. Butler Ave. in Fresno, Calif. Marcy Owens Test and William Hill of Jones Lang LaSalle Inc.’s Government Investor Services group represented the building owner, Government Properties Income Trust, while the GSA was self-represented.

“The owners, Government Properties Income Trust, have a long-standing relationship with the IRS and are pleased it will continue into the future,” Test, who is a senior vice president with JLL, said. “This lease is meaningful for the City of Fresno as the government is committing to another ten years and we appreciate their efforts in completing this lease renewal prior to its expiration.”

Additionally, Government Income Properties Trust closed a five-year, $350 million unsecured term loan on the same day as the closing of the Fresno deal. The loan matures on Jan. 17, 2017, and was signed at LIBOR plus 175 basis points. At the time of the deal, the agency said it would use the proceeds to repay part of its outstanding debts from an existing $550 million credit facility as well as to possibly fund future acquisitions.

A report by the Building Managers and Owners Association that was released earlier this month found Fresno to be the most inexpensive office market in the country – out of the 278 markets surveyed – on the basis of total fixed and operating expenses. Total operating expenses include all expenses incurred to operate office buildings, including utilities, repairs/maintenance, cleaning, administrative, security and roads and grounds. Fixed expenses include real estate taxes, property taxes and insurance. In Fresno, the average was $4.25 per square foot, defeating second-place finisher Jackson, Miss., which came in at $4.97.

Lenders continue to look favorably upon the multi-family market, and student housing is no exception. Acting on behalf of AIG Global Real Estate Investment Corp., real estate and capital markets services firm Holliday Fenoglio Fowler L.P. has obtained a $56 million loan for Sterling Collwood, a premier student-housing property near San Diego State University in San Diego.

Collwood sits on seven acres approximately one mile from the SDSU campus. The apartment community opened its doors in 2010, featuring 260 units in three buildings. M&T (FNMA) provided AIG with a seven-year loan carrying a 4.57 percent fixed-rate for the refinancing of a construction loan on the property.

The glory days of loans being handed out like candy are just a distant memory. Extreme caution is the key characteristic of the capital markets right now. However, the multi-family sector was the first to bring lenders off of the sidelines and it continues to be a favorite for financing. But while it’s not just any asset that can lock in a good loan, Sterling Collwood makes the grade.

It’s new, it’s 99 percent leased and the prospects for maintaining high occupancy for the near future get an A-plus.  ”Demand for off campus housing is about 15,000 units more than what the local area is currently providing, thus positioning Sterling Collwood for long-term success,” Zachary Koucos, associate director with HFF, said. And the property’s holding of a coveted designation is unlikely to hurt; Sterling Collwood is the first asset in San Diego to be certified LEED-Gold by the U.S. Green Building Council.

Nationally, the student housing sub-sector of multi-family remains strong, having held a position near the top of the class throughout the economic downturn. Demographics, like the continued upswing in enrollment, are good. “Generation Y, the progeny of the enormous Baby Boom cohort continues to swell the ranks of Americans aged 18 to 24 years, the sweet spot for full-time college enrollment,” according to a recent report by Red Capital Group, a multi-family debt and equity provider.

In what is being described by commercial real estate industry experts as Orange County, Calif.’s largest industrial consideration of 2011, Menlo Equities snapped up the Irvine Crossings project, a 420,000-square-foot industrial warehouse and data center property in Irvine. Menlo acquired the high-quality asset from Irvine Crossings L.L.C. in a transaction valued at $47 million.

Occupying nearly 22 acres of land, the facility carries the addresses of 17871 Von Karman Ave. and 17836 Gillette Ave., and encompasses approximately 310,000 of industrial space and 110,000 square feet of data center accommodations. Tenants include cloud computing and collocation services provider Savvis and third-party logistics company 3PL, which leased 180,600 square feet during the third quarter of 2011. The property is 100 percent occupied.

Voit Real Estate Services represented both the buyer and seller in the transaction. “Irvine Crossings was a value-add deal in a great location,” Trent Walker, a senior vice president with Voit, noted in a prepared statement. “The in-place industrial rents were low, and there is the ability to expand the data center, making this a stable investment with upside potential.”

Financing to the tune of $155.3 million has been put in place for a 2,184-unit apartment portfolio in metropolitan Seattle, courtesy of CBRE Group Inc.’s capital markets team. Acting on behalf of the Holland Partner Group and Invesco, joint owners of the nine properties, the real estate services firm arranged the funds for the refinancing of the portfolio through Freddie Mac’s CME program.

“The agency was good to work with and our client appreciated their moving quickly,” Mike Wells, managing director for CBRE’s Portland operations, told Commercial Property Executive. “Particularly with a portfolio or something this large, things might move along slowly but it actually went together quickly and there was a lot to accomplish, so that was appreciated.” The financing came in the form of a seven-year, fixed-rate loan with two years of interest-only, followed by a 30-year amortization.

Holland and Invesco have owned some of the assets since 2004 and the rest since 2005. Spanning several Seattle-area neighborhoods — Lynnwood, Everett, Kent, Tumwater, Renton and University Place — the garden-style apartment properties range in age from 16 to 29 years and boast an average occupancy level of nearly 95 percent.

Current conditions bode well for the continued success of the portfolio, as well as Seattle-area apartments in general “The markets in the Northwest are, overall, recovering economically,” Wells said. “The Seattle-Puget Sound area more so than the rest of the region, in part due to employers like Boeing, which is doing well again, Amazon, Microsoft and others, including a whole host of young entrepreneurial technology companies.”

Essentially, the demand exists and it is on the upswing with no end in sight. “The apartment market has tightened up considerably in the Northwest, with vacancies having decreased considerably and rents moving up, and that looks to be a continuing trend.”

Monarch at Shadowridge, a 314-residence apartment community has changed hands in what Jones Lang LaSalle Capital Markets, the real estate services firm that represented the seller, describes as the one and only trade of a Class A apartment property in San Diego County in 2011. A joint venture consisting of Archon Group and Monarch Group sold the asset to a client of Invesco Real Estate.

Monarch made its debut at 1850 Thibiodo Rd. in late 2005. At the close of the transaction, the apartment community was 94 percent occupied, which dovetails with the current state of the local market.

Metropolitan San Diego’s apartment market closed 2011 with a vacancy rate of 4.9 percent, according to a report by multifamily investment banking firm Hendricks & Partners, and with only a single 368-unit property having come online last year, demand is expected to drive the vacancy rate down to 4.5 percent in 2012 and 4 percent in 2013.

With demand and rental rates on the rise, investors are becoming increasingly eager about getting their hands on San Diego office properties. PwC ranks the sunny Southern California city fourth on its list of buy recommendations in the firm’s Emerging Trends in Real Estate 2012 report. In reference to the San Diego market, PwC notes, “Apartment investors always do well.”

The Swig Co. has just added a downtown Los Angeles office building to its portfolio with the acquisition of 617 W. 7th St. from a joint venture sponsored by Alliance Commercial Partners. Financial terms of the transaction are being kept under wraps. However, the 218,000-square-foot property last traded in 2006 when Alliance picked it up for approximately $28 million.

Sited on a corner lot, 617 7th first opened its doors in 1923 as the headquarters of the Union Oil Co. The 12-story building, which also features ground-level retail space, underwent a comprehensive makeover in 2001 and today, it offers the requisite high-tech infrastructure with the atmosphere cased in a historic structure. Instead of a tenant roster of law offices and financial entities, 617 7th features a list of occupants that includes the likes of international architectural design firm Perkins + Will, software developer Cyberdefender and the Chicago School of Psychology.

Swig has been actively pursuing its strategy of repositioning its portfolio to focus on key markets. During the fourth quarter of 2011, the private investment company sold the 460,000-square-foot Arco Center complex south of Los Angeles in Long Beach after acquiring the 86,000-square-foot, 1920s-era office building at 595 E. Colorado, along the Rose Parade route in downtown Pasadena, just outside of downtown Los Angeles.

Downtown Los Angeles office structures, however, do not trade every day. There were just two transactions in the third quarter of last year: the 213,000-square-foot building at 800 W 6th sold for $49.5 million and the 70,000-square-foot property at 1212 S. Flower St. was picked up for $18 million.