February – Briefs/Sales & Development

Essex Agrees to Buy BRE for $4.3B; Kite Realty Group Acquires 2.1 MSF Retail Portfolio; MetLife, Norges Bank Kick Off JV with 1.3 MSF Boston Acquisition; Alliance Residential JV Closes $160M Apartment Acquisition; KBS REIT III Completes Largest Acquisition to Date; Pebblebrook Snags 355-Room Radisson in San Fran; Grubb, Rubenstein Team Up on Raleigh-Durham Office Play; ARC NYRR Buys Manhattan Office for $529M.

Essex Agrees to Buy BRE for $4.3B

0214_CPE_Sales_EssexPropertyRival multi-family REITs BRE Properties Inc. and Essex Property Trust have reached a merger agreement that creates a dominant West Coast player in the apartment arena. BRE Properties will merge into Essex in a cash and stock deal worth $4.3 billion. Closing is expected for the first quarter of 2014.

Michael Schall, president & CEO at Essex, will continue to serve in those roles after the acquisition is complete. It is unclear what role, if any, BRE CEO Constance Moore will play in the new multi-family REIT.

Kite Realty Group Acquires 2.1 MSF Retail Portfolio

Kite Realty Group completed the $307 million acquisition of a 10-property retail portfolio spanning four Southeastern states. CBRE Group Inc. arranged the sale on behalf of a New York-based real estate private equity firm. Four properties are located in Florida, three are located in Alabama, two are in Texas and one is in Georgia. Anchor tenants include Publix, Wal-Mart, The Fresh Market, TJ Maxx, Marshalls, Steinmart, Sports Authority, Old Navy and PetSmart. Occupancy stood at 93 percent at the time of the sale. The acquisition brings Kite Realty Group’s total portfolio to 78 properties, or nearly 12 million square feet.

MetLife, Norges Bank Kick Off JV with 1.3 MSF Boston Acquisition

MetLife Inc. and Norges Bank Investment Management have formed a joint venture among their affiliates to invest in Class A office properties in key U.S. markets over an extended period. The first investment was One Financial Center, a 46-story, 1.3 million-square-foot Class A office building in Boston’s financial district. Norges Bank Investment Management purchased its 47.5 percent share of the asset from Beacon Capital, while MetLife increased its current share by 2.5 percentage points. While the industry is familiar with MetLife and its $55.1 billion in real estate assets, it shouldn’t be a stranger to Norges Bank Investment Management. The firm manages the Norwegian Government Pension Fund Global, which had $810 billion in assets as of the end of the third quarter of 2013.

Alliance Residential JV Closes $160M Apartment Acquisition

One of the year’s (WHICH YEAR? 2013?) largest multi-family trades in California closed with the $160 million sale of Coronado Bay Club. The 549-unit community is located in Coronado, Calif., and was acquired by a joint venture of Alliance Residential and a large institutional investment fund. Jones Lang LaSalle’s Capital Markets team marketed the property on behalf of LaSalle Investment Management. The 18-building community is composed of three-story, garden-style buildings situated on 13.9 acres on the bay across from downtown San Diego.

KBS REIT III Completes Largest Acquisition to Date

KBS Real Estate Investment Trust III has completed its largest acquisition to date with the purchase of 500 W, Madison in Chicago. The 1.5 million-square-foot tower, also known as Citigroup Center, was picked up for $421 million plus closing costs. With the closing of this most recent deal, KBS REIT III has acquired $1.3 billion in assets. The 40-story property has 64,000-square-feet of retail space on the first two levels, with 45 stores and restaurants. Occupancy at the LEED Gold-certified asset was 93 percent at the time of purchase.

Pebblebrook Snags 355-Room Radisson in San Fran

Pebblebrook Hotel Trust has closed its acquisition of the Radisson Hotel Fisherman’s Wharf and Retail for $132 million. The 355-room hotel, which also comes with 44,000 square feet of prime street-level retail space, is located in the heart of Fisherman’s Wharf in San Francisco. Davidson Hotels & Resorts has signed on to manage the asset, which occupies an entire block of the wharf across from Pier 39. Built in 1965 as a 250-room hotel with 14,000 square feet of retail, the asset was expanded in 1999 with the addition of 105 units and 30,000 square feet of retail. A $4.5 million renovation was completed in 2012.

Grubb, Rubenstein Team Up on Raleigh-Durham Office Play

Building off the success of the repositioning of a former GlaxoSmithKline property in 2012, Grubb Properties and Rubenstein Partners have again partnered to acquire, renovate and market two Class A office buildings in Raleigh-Durham, N.C. The newly acquired property, totaling 467,000 square feet, is a two-building campus that telecommunications company Ericsson built in 1995 and 2000. The campus is located in the Research Triangle Park/I-40 office submarket. Rubenstein and Grubb have a strong track record in the North Carolina market.  Most recently, the groups acquired and repositioned a former GlaxoSmithKline property located in Imperial Center, just outside the Research Triangle Park.  Within the first year of ownership, one of the two buildings—rebranded as Newcastle North and South—was fully leased as the world headquarters of a prominent global supplier of composites and resins.

ARC NYRR Buys Manhattan Office for $529M

American Realty Capital New York Recovery REIT Inc. now owns more than $2.1 billion in assets, topped off by the $528.6 million acquisition of the fee-simple interest in 1440 Broadway, a 25-story office building in the Times Square South submarket of Manhattan. NYRR, which is a publicly registered, non-traded REIT owned by parent company American Realty Capital Properties, acquired the asset from a subsidiary of Rockpoint Group L.L.C. The deal was funded with $307.4 million in proceeds from an initial public offering and a drawdown of $221.2 million on the REIT’s unsecured $390 million credit facility with Capital One Bank, among other lenders.