2014 Distinguished Achievement Awards: The Winners (Extended Edition)
- Jun 23, 2014
The July 2014 issue of Commercial Property Executive presented the winners of the fourth-annual Distinguished Achievement Awards, which honored some of the most impressive deals, projects and strategies of 2013. We received submissions from brokers, lenders, developers and investors in eight categories, and our panel of judges (listed below) selected winners in seven of them. What follows are extended details of those award-winning entries.
You may also want to view:
- The presentation in the digital edition;
- A slideshow featuring photos, aerial views and other representations of the winning properties; and
- A video featuring interviews with the judges about what these deals signify for today’s real estate market.
Property: The New Jersey Center of Excellence at Bridgewater
Landlord: Sanofi-Aventis US L.L.C.
Tenant: Ashland Inc. and Kashiv, a subsidiary of Amneal Pharmaceuticals L.L.C.
Brokers: Daniel Loughlin of JLL
Lease Size: Ashland: 200,000 SF of R&D, laboratory and office space. Kashiv: 145,000 SF of pharmaceutical development, laboratory, office and warehouse space.
Property Size: 1.2 million square feet
The Story: When Sanofi-Aventis US L.L.C. opted to shut down its multi-building research campus at 1041 Rte. 202/206 in Bridgewater Twp., N.J., following its corporate reorganization and acquisition of Genzyme, it took a different route. Working with JLL in a market already rife with empty pharmaceutical space, it opted to repurpose and rebrand the site as The New Jersey Center of Excellence at Bridgewater. Making the site attractive to buyers entailed rezoning the property for multi-use and possible future redevelopment. At JLL’s suggestion, it opted to add retail and hospitality space to the front portion and plans to add residential units on the site, as well, to benefit the surrounding neighborhood. Following the rezoning, JLL secured two long-term leases for 30 percent of the available space and 40 percent of the primary research-and-development space: Ashland Inc. took 200,000 square feet, relocating from Wayne, N.J., shifting 300 high-paying jobs to the town and county and keeping it within the state. Kashiv, a subsidiary of Amneal Pharmaceuticals L.L.C., took 145,000 square feet, expanding its presence in the town and state and creating about 150 new jobs. Tenant fit-outs totaled $10 million. JLL later sold the campus to a joint venture of locally based Advance Realty and CrossHarbor Capital Partners L.L.C. for $45 million.
Judges Praised: The repositioning of a single owner-occupied campus for multiple occupants, zoning changes for mixed-use and other uses, achieving two leases in a tough market, surmounting more challenges than most of the submitters.
Submitted by: JLL
Property: Brookfield Place, 250 Vesey St., New York City
Landlord: Brookfield Office Properties
Tenant: Jones Day
Brokers: Mitch Steir, Matt Barlow and David Goldstein of Studley represented Jones Day; Jerry Larkin and David Cheikin of Brookfield represented the owner in house.
Lease Size: 330,000 square feet
Property Size: 8.5 million square feet in five buildings
The Story: Brookfield Office Properties attracted law firm Jones Day to move to Brookfield Place in Lower Manhattan from Midtown. The lease, of the top eight floors of the property, took up a portion of the 4.6 million square feet formerly occupied by Bank of America/Merrill Lynch and helped drive leasing momentum for the complex. Several large leases followed, with a total of 1.2 million square feet signed last year. Brookfield has sought to diversify its tenant base in the property, and spent $250 million to reposition its retail and common areas, including opening 14 fast-casual eateries and six sit-down restaurants, a waterfront marketplace and a curated collection of more than 30 luxury and aspirational retailers.
Judges Praised: Surmounting the challenge of getting a major law firm to move from Midtown to Downtown, satisfying the tenant while contributing to the landlord’s strategy. Brookfield’s history as a strong competitor.
Submitted by: Brookfield Office Properties
Best Sale—Single Asset
Property: 650 Madison Ave., New York City
Seller: The Carlyle Group
Buyers: Vornado Realty Trust, Crown Acquisitions, Oxford Properties and Highgate Holdings
Brokers: Eastdil Secured represented the seller.
Property Type: Office and retail
Property Size: 600,000 square feet
Selling Price: $1.3 billion
Sale Date: June 2013
Year Construction Completed: 1957 (renovated 1987)
Days to Close: 120
Lender: Goldman Sachs, Deutsche Bank
The Story: In selling 650 Madison Ave. , The Carlyle Group achieved one of the few sales last year to top $1 billion and the highest price per foot ever paid in an office and retail transaction in Manhattan, at $2,160 per square foot. The sale also represented quite a profit for Carlyle, which acquired an undervalued property in 2008 for $680 million and invested $30 million to reposition the office component (including renovation of the entrance, lobby and elevators), launched a pre-build program offering some of the most high-end tenant build-outs in the state, and replaced and renovated a number of core building systems. It leased 425,000 square feet during its ownership and increased net operating income by 121 percent.
Judges Praised: It achieved the highest price ever paid in Manhattan. Did an unbelievable job on repositioning the site. “A lot of engineering got done to get that price.”
Submitted by: The Carlyle Group
Best Sale—Single Asset
Property: Mesa Gateway, 3740 S. Signal Butte Road, Mesa, Ariz.
Seller: First Solar Inc.
Buyer: Platypus Development L.L.C. (Apple Inc.)
Brokers: Cushman & Wakefield of Arizona Inc. represented the seller; buyer was represented in house.
Property Type: Industrial
Property Size: 1.3 million square feet
Selling Price: $113.6 million
Sale Date: November 2013
Year Construction Completed: 2012
Days to Close: 45
The Story: First Solar built the Mesa Gateway facility to manufacture solar panels, but an oversupply of the product on the world market forced it to change plans as it was completing the facility. That left a large, soon-to-be-empty site in the Metro Phoenix area, a situation of concern for the community. Cushman & Wakefield of Arizona’s Jim Wilson and Michael White were hired to market the building, and they were approached by a buyer’s representative expressing interest in purchasing the property quickly and retrofitting it for an unnamed client. What would normally have meant a year of work was completed in 45 days. In what proved to be the largest real estate transaction last year in Arizona, the facility was purchased for Apple supplier GT Advanced Technologies, with an anticipated 1,300 construction jobs needed to prepare the facility and an anticipated 700 workers to be employed there. First Solar, which was using the facility for network operations, had to utilize trucks 24 hours a day to move equipment and materials out of the building in time for the closing, and the deal had to be transacted in complete secrecy.
Judges Praised: The timing was good and although Apple’s rep approached them, they got Apple to enter the market. “That’s a big deal.”
Submitted by: Cushman & Wakefield Inc.
Property: Washington Real Estate Investment Trust Medical Office Building Portfolio
Seller: Washington Real Estate Investment Trust
Buyer: Harrison Street Capital
Brokers: Cassidy Turley represented the seller.
Portfolio Size: 1.5 million square feet
Portfolio Make-up: Medical office buildings
Occupancy at Time of Sale: 85 percent
Selling Price: $500.8 million
The Story: Washington Real Estate Investment Trust owns a diversified portfolio of properties in the Washington, D.C., area. It sold its medical office assets as part of an effort to reposition its portfolio. The largest transaction in the company’s 53-year history, it worked for 10 months on the sale of the properties to Harrison Street Capital, in four transactions, the largest two of which were completed in November 2013 for $307.2 million (the final two closed in January).
Judges Praised: Big portfolio, a lot of buyers would say “I’ll buy half” but this was a real portfolio sale. It attracted a lot of bidders, although it’s not the typical office portfolio—and it is the perfect portfolio for Harrison Street. Portfolio sales are challenging because of the varying quality among assets; the broker has to be able to demonstrate the value across the entire pool, and they did.
Submitted by: Cassidy Turley
Project: Stack House Apartments and Supply Laundry Building, Seattle
Owner/Investor: Vulcan Inc.
Project Type: Mixed-use
Developer: Vulcan Inc.
Financier: State Farm
Builder: Exxel Pacific Inc.
Architects: Runberg Architecture Group (exterior), two 9 design (interior), The Berger Partnership (landscape)
Date Construction Commenced/Completed: February 2012/October 2013
Total Financing: $75 million construction/perm
Project Size: 251,476 square feet, including 278 rental apartments, 26,446 square feet of office, 13,953 square feet of retail and an underground parking garage
The Story: Vulcan Real Estate combined restoration and adaptive reuse in the creation of a mixed-use complex benefiting from multiple public-private partnerships. The project entailed redeveloping the 107-year-old Supply Laundry Building—an historic landmark—into an ultra-sustainable office and retail project and developing two new apartment buildings, which it named the Stack House Apartments after the 140-foot smoke stack that once served the Supply Laundry Building. The office and retail building was geared toward attracting local employees that could walk, bike or use public transit, and Vulcan partnered with the city of Seattle Department of Plannign and Development and the Preservation Green Lab to pilot a performance-based energy code compliance path, gaining greater flexibility to meet energy code requirements while targeting more extensive energy performance. The 278-unit apartment buildings both achieved LEED for Homes Platinum certification through a variety of sustainable measures, including the installation of a reverse cycle chiller in one. The buildings, which include 20 percent of units for people earning 65 to 85 percent area median income, also feature garden spaces including a rooftop community pea patch and an indoor winter garden. And the property overall features planted swales developed in partnership with Seattle Public Utilities along the street right-of-ways to intercept and clean storm water runoff designed to remove about 92 percent of contaminants before discharge into Lake Union. The southeast apartment building was 91 percent pre-leased before the first tenant moved in, and the buildings together were 83 percent leased as of March 2014, with 40 percent of residents working within walking distance. The commercial building is 100 percent leased.
Judges Praised: There were a lot of moving parts, Vulcan exhibited a strong ability to work with the local government, the focus on affordable housing. Clearly, they can make the economics work, when it is always difficult with adaptive reuse. Very ambitious, well executed, well received by the community, creative. They liked the way they talked about looking beyond energy efficiency applications. Rents are better than the pro formas. They were impressed by the pea patch. Good presentation in the submission.
Submitted by: Vulcan Inc.
Project: Panasonic Headquarters, Two Riverfront Plaza, Newark, N.J.
Owners/Investors: Matrix Development and SJP Properties
Project Type: Office
Developers: Matrix Development and SJP Properties
Financier: PNC Bank
Builder: Skanska USA Building
Architect: Gensler Architects, Thornton Tomasetti for structural design services
Brokers: Sales/Leasing: SJP Properties/Newmark Grubb Knight Frank
Date Construction Commenced/Completed: April 2012/July 2013
Occupancy Date: August 2013
Total Cost: $150 million
Project Size: 340,000 square feet
The Story: Matrix Development and SJP Properties worked with Panasonic to achieve a highly sustainable new headquarters for the electronics giant in Newark, N.J. The move led to creation of new state legislation, after the owner of Panasonic’s existing headquarters filed a suit challenging a New Jersey Economic Development Agency award of the Urban Transit Hub Tax Credit; state and local officials worked to achieve the deal, resulting in GROW NJ, which expanded job-creating tax incentives statewide. The new headquarters, proximate to one of the largest transportation networks in the country and 15 minutes from New York City, will bring 1,000 employees to Newark, along with about 600 construction jobs. The property is aiming for LEED Gold for New Construction and LEED Platinum for Interiors, and will incorporate green technologies geared toward reducing its carbon footprint by 50 percent.
Judges Praised: The public-private partnership, urban tax credit and work to improve air quality and incorporate natural light.
Submitted by: SJP Properties and Matrix Development
Most Effective Repositioning/Turnaround Strategy
Project: 110 Tower, 110 SE Sixth St., Fort Lauderdale, Fla.
Owner/Investor: Genesis Capital Partners XI Ltd.
Project Type: Office
Financier: American National Insurance Co.
Property Manager: Transwestern
Brokers: Cushman & Wakefield (office); The Comras Co. (retail)
Landscaping: Landscape Maintenance Professionals
Date Repositioning Commenced/Completed: 2010/2013
Date of Original Construction: 1988
Occupancy Before/After Repositioning: 35 percent/75 percent
Total Project Cost: $20 million
Return on Investment: 20 percent
Property Size: 340,274 square feet of office; 41,456 square feet of retail and a parking garage
The Story: Formerly the AutoNation Building, the 30-story, multi-tenant 110 Tower underwent renovation and repositioning that resulted in the first LEED Gold for Existing Buildings multi-tenant building in downtown Fort Lauderdale and the first Energy Star-qualified building in the CBD. Genesis Capital Partners chose to retrofit the building both to reduce its carbon footprint and to make it more appealing to new tenants. It brought in Transwestern as the building manager and a new partner in its sustainability efforts, and it also reached out extensively to tenants for input and to keep them in the loop. Efforts ranged from improving the ground floor lobby and upper floor common area to upgrading finishes, adding parking spaces, renovating restrooms and upgrading mechanical and operating systems to adding a highly reflective roof surface and roof vegetation, retrofitting plumbing and lighting, and introducing green cleaning, recycling and other improvements.
Judges Praised: Renovated with tenants in place and kept them happy, when it can be difficult to keep tenants happy under normal circumstances, through such creative means as putting art on temporary walls, good communication. Increased occupancy and improved costs. A good project, with reduced risk because it is across from City Hall, giving Ft. Lauderdale a vested interest in seeing it lease up.
Submitted by: Genesis Capital Partners XI Ltd.
Most Effective Repositioning/Turnaround Strategy
Project: The Outlet Collection, Seattle
Owner/Investor: Glimcher Realty Trust
Project Type: Retail
Developers: Glimcher Realty Trust
Financier: Funded from Glimcher’s credit facility
Builder: IBEX Construction
Landscaping: Signature Landscaping
Date Repositioning Commenced/Completed: May 2012/October 2013
Occupancy Before/After Repositioning: 89 percent/95 percent
Total Project Cost: $35 million
Property Size: 928,137 square feet
The Story: When Glimcher Realty Trust acquired The SuperMall of the Great Northwest in 1998, it was a popular spot, with a Mount Rainier/Space Needle theme and a mix of full-price and value retailers. But as the market expanded, that changed, and sales ultimately fell to the low $200s per square foot. Glimcher saw opportunity, however, based on market data, industry input, barriers to entry for newcomers, growth in its The Outlet Collection brand and the property’s location in an otherwise outlet-free sector of the city (it also remained the largest enclosed outlet mall in the Pacific Northwest). It determined inclusion in The Outlet Collection would be a benefit and commenced a $35 million redevelopment and rebranding effort. It installed all new flooring, lighting, entrances, furniture and family restrooms, plus mall-wide Wi-Fi and new interior and exterior seating areas incorporating indigenous materials reflecting the Pacific Northwest landscape. It also added a new, more visible dining emporium with more authentic food options and a children’s soft play area, as well as a new interior concourse connector, and revitalized the merchant space. Then it reached out to the community with a $1.2 million marketing program. The redevelopment is projected to deliver an 8 percent return on investment, positive NOI growth and nearly double sales per square foot. Already, traffic increased 14 percent in fourth quarter 2013 over the previous year, overall sales volume increased 14 percent and comparable sales increased 8 percent, while sales per square foot increased 37 percent from pre-renovation levels.
Judges Praised: Repositioning a retail outlet is very tough to do, especially given the growth of e-commerce. Glimcher knows retail and recognized an opportunity. It took an old, tired mall and did something with it. Emphasis on sustainability, low maintenance. Glimcher’s pride in the outcome came through in its submission. They really are marketing themselves as a good neighbor.
Submitted by:Glimcher Realty Trust
Best Financial Structure
Property: 50 West St., New York City
Borrower: Time Equities Inc.
Financier: Elliott Management
Brokers: Cushman & Wakefield Inc.
Transaction Size: $493million, including $110 million preferred equity from Elliott Management, $288 million in senior debt from a six-bank syndicate and $95 million in sponsor equity
Transaction Type: Preferred equity
Property Type: Condominium development
Loan to Value: 85 percent
Length of Loan: five years
Number of Days it Took to Close: About 200
The Story: Seeking to move forward with plans to construct a 63-story residential project featuring larger units and targeting families, Time Equities Inc. approached Cushman & Wakefield Inc. for help lining up financing. It had a term sheet from PNC Bank to lead the syndication of approximately $290 million in construction financing, air rights and some predevelopment work completed, and the site promised to benefit from negotiations with the city of New York to be at the receiving end of a bridge over the West Side Highway from Battery Park City. It needed help finalizing the loan and raising $110 million in additional capital, and the lender had very strict covenants prohibiting subordinate debt and restrictions against transferability and any change of control, along with a number of other limitations. Cushman & Wakefield identified Elliott Management, a large and established hedge fund that had not previously made many meaningful direct real estate investments and even fewer development projects. Elliott readily agreed to participate, in exchange for a preferred return and a small participation, although its position had to be structured with more debtlike characteristics. Ultimately, Cushman & Wakefield lined up five members of the bank syndicate, all of which found benefit in Elliott’s greater involvement in the project, and Time did not have to contribute additional equity to complete the project.
Judges Praised: The deal had more hair than stabilized apartments, and challenging to get the senior financing provider to go along with the stipulations, complicated capital stack, zoning challenges, new development on a small site, unconventional sources: a hedge fund new to the real estate world.
Submitted by: Cushman & Wakefield Inc.
Best Financial Structure
Property: Fort Lincoln Senior Village I and II, Washington, D.C.
Borrower: Fort Lincoln Senior Village No. 1 Associates and Fort Lincoln Senior Village No. 2 Associates
Financiers: Beech Street Capital, a Capital One Company
Transaction Size: $21.3 million
Transaction Type: Refinancing
Property Type: Multi-family
Size and Age of Property: 363 units total, built in 1977 and 1978
Type of Financing Involved: Freddie Mac fixed-rate recourse loan
Loan Length: 10 years
The Story: Seeking refinancing as a means to control long-term debt and generate funds to reinvest into two multi-family complexes, the borrowers, affiliates of Fort Lincoln Realty Co., retained Adam Bieber of Beech Street Capital. The two properties, totaling 363 units and located in Northeast Washington, D.C., were constructed in the late 1970s but more recently underwent HVAC PTAC replacements, new boilers and kitchen upgrades. Freddie Mac won the competitive bidding for the project, and worked with Bieber and his team at Beech Street to achieve a loan with an extended interest-only period. Exceeding the borrower’s expectations, they provided $21.3 million in 10-year fixed-rate capital markets execution loans, with 10 years interest only and 9.5 years of yield maintenance.
Judges Praised: The deal was financied as interest only during the renovation period and was recourse despite it being an income-producing property. It was not an easy location to finance. The refi market is small, but they pulled a rabbit out of a hat.
Submitted by: Beech Street Capital
Most Innovative Corporate Strategy
Name of Strategic Effort: Diversification of services
The Story: With billions of dollars of tenant-in-common and Delaware Statutory Trust programs expected to be sold as their loans mature in the next few years, Behringer anticipates increased demand for high-quality 1031 replacements. Attributing this demand to a growing interest in tax-deferred structures, higher risk-adjusted returns and stable income in a low-yield environment, coupled with reduced tolerance for risk and volatility and a desire for passive real estate ownership, it launched Behringer Net Lease Advisors. The new business is designed to offer both co-ownership and single-owner alternatives, operating through the DST structure. Branded National Income Properties, each portfolio will employ a single-purpose net lease investment platform and will address the investment requirements and risk tolerances of the specific investor pool. All of its investments will be single-tenant net lease properties leased to investment-grade and other creditworthy tenants, brand names with proven business formats and strong financial backing. Its first offering, launched on June 1, 2013, was fully subscribed.
Judges Praised: Behringer is trying to become a market maker for its own investors. If it can get a big enough pool, it will have people trading in and out of it; it is offering different investment programs for various pools of investors.
Submitted by: Behringer
Most Innovative Corporate Strategy
Company: Avison Young
Name of Strategic Effort: Strategic growth plan
The Story: In 2008, Avison Young launched a strategic initiative to build a unique type of commercial real estate company. Driven by a set of four differentiating factors, it pursued growth that initially expanded its offices and employees in Canada and then across the U.S. Last year, it grew from 1,178 employees in 43 offices with 43 million square feet under management to 1,505 employees in 53 offices with 66 million square feet under management, drawing on the differentiators: a principal-led business model, free of “silos,” embracing an open-source philosophy to ensure best-in-class service and a focus on expansion both geographically and in expertise. The company incentivizes its employees for the highest possible level of client service and encourages internal collaboration through alignment of principal interests.
Judges Praised: The company is trying to build a different type of brokerage company, growing via an old-fashioned partnership model that is a good way to attract brokers from other firms. It is trying to be innovative, trying to align structure with outcome. “I think Mark (Rose) is thinking more outside the box (than other service providers).”
Submitted by: Avison Young
- Ray Cirz, chairman & senior managing director of Integra Realty Resources;
- Glenn Brill, managing director of real estate solutions for FTI Consulting;
- Jay Epstien, chair of the U.S. real estate practice and co-chair of the global real estate practice for DLA Piper;
- Marilyn Kane, founding partner & president of Iridium Capital.