Philip Blumberg Blog

Blumberg Capital Partners Video

Where Will We Be in a Year? Philip Blumberg of Blumberg Capital Partners talks about where he expects to see the economy in the next year, and some of the troubles looming sooner in the markets.  For more real estate news and information, visit Blumberg Capital Partners.

Federal Reserve Cuts Rates

The Federal Reserve cut its benchmark interest rate by another half percent Wednesday, and indicated further cuts may be necessary as policy makers try curb an economic recession. "Recent policy action, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time improve credit conditions and promote a return to moderate economic growth," the Fed said in a statement.

The vote to approve both rate cuts was unanimous, though policy makers acknowledge that downside risks to economic growth remain, a clear signal that they are prepared to continue lowering rates. As explained in a Washington Post article, the rate cut is designed to guard against the risk of a devastating downturn. In normal times, Fed rate cuts make it cheaper for businesses to borrow money to expand and for consumers to get auto loans, home mortgages and credit card debt. But in the current crisis, with banks reluctant to lend at any price, the rate's impact is uncertain.

"We're in a downward spiral that's going to take at least six months to get through," said Kurt Karl, chief U.S. economist at the reinsurer Swiss Re, who expects the Fed to cut the rate to half a percent. "The next time they meet, the situation may be better in the credit markets, but the economy is going to be very dire."

For more real estate news and information, visit Blumberg Capital Partners.

Faris Lee Sells Two California Properties for $8.25M

Faris Lee Investments has completed the sale of two single-tenant retail properties occupied by Tutor Time, a subsidiary of A.B.C. Learning Centers Limited, the largest publicly traded child care service provider in the world, totaling $8.25 million. The properties are both located in Southern California in the cities of Walnut and Rancho Cucamonga.

The property located in Walnut at 21639 E. Valley Blvd. was sold for $4.15 million to a private investor from Redwood City, California according to a crefeed.com report. Jeff Conover, senior managing director of Faris Lee Investments, represented the seller, Walnut Preschool LP from Glendale, Calif. The buyer was represented by August Wen of Century 21. According to Conover, the property sold at a 6 percent cap rate and offered the buyer a 15-year lease remaining with Tutor Time and multiple options to renew. The buyer, who was in a 1031 Exchange, was represented by Clark Everitt of Investment Real Estate Associates.

For more real estate and investment news, visit Blumberg Capital Partners.

Intercontinental Acquires Capitol Center for $47M

Intercontinental Real Estate Corporation has announced the acquisition of Capitol Center in Columbia, SC, a 460,292 square foot Class A Office tower located in Columbia’s Central Business District. The seller, Parkway Properties Inc., received net cash proceeds from the sale of approximately $45.8 million, which were used to prepay the $18.1 million first mortgage plus related mortgage prepayment expenses and reduce amounts outstanding under the company's line of credit. Parkway will recognize a gain on the sale of approximately $11.7 million and expenses related to the prepayment of the mortgage of approximately $2.2 million in the third quarter of 2008.

Capitol Center was 97.5% occupied as of Sept. 1 according to a Columbia Regional Business Report article. This Class A facility is the tallest building (25 stories) in South Carolina and arguably the most prominent building in Columbia, defining the city’s skyline. Thomas Taranto, Director of Acquisitions, Asset and Portfolio Management at Intercontinental stated, "The acquisition of Capitol Center gives Intercontinental one of the most desirable office towers in South Carolina. The property offers a stable occupancy, ideal location and preeminent reputation in the marketplace. Capitol Center also is an exciting opportunity to bolster our presence in the Southeast. It will be a great addition to our US REIF portfolio."

For more real estate news and information, visit Blumberg Capital Partners.

$1.4B Candlestick Plan Gains Approval in San Francisco

A $2 billion agreement between the City of San Francisco and developer Lennar will finance the redevelopment of Candlestick Point and Hunters Point Shipyard, providing 7,500 permanent jobs, 10,000 new homes and 300 acres of parks and a site for the 49ers new football stadium, according to a GlobeSt article. The plan that the city and Lennar have drafted was approved last week by the joint Community Area Committee, a coalition of citizen groups, and will now go to the San Francisco Redevelopment Agency and the Board of Supervisors for their approvals.

"After many years of public input, we are excited to be advancing this project and progress in Bayview-Hunters Point," said Kofi Bonner, President of Lennar Urban's Bay Area division. "In June, San Franciscans voted overwhelmingly in favor of this development. Today, this financing plan is proof of our commitment - in spite of these challenging economic conditions - to the vision of a new community in southeast San Francisco."

Lennar will offer to pay $100 million to the 49ers to help finance the cost of building a new stadium at Hunters Point Shipyard. The environmental clean-up of the stadium site is scheduled to be performed in 2009, which would allow the 49ers to complete construction of a new stadium by 2013 if they accept the city's offer. Additional key features of the development include: 600,000 square feet of regional retail space at Candlestick Point and 100,000 square feet of retail space to serve new neighborhoods at Hunters Point Shipyard, 2,150,000 square feet of office space to serve "green" business, science, technology, research and development and industrial uses, and a permanent space for the Hunters Point Shipyard artist community and the International African Marketplace.

For more real estate news and information, visit Blumberg Capital Partners.

Blumberg Capital Partners Video

Current CRE Standings: Philip Blumberg of Blumberg Capital Partners discusses the current condition of commercial real estate investments and his expectations of the market for the coming year. For more real estate news and information, visit Blumberg Capital Partners.

$47M Construction Loan Secured for Dallas Mixed-Use Project

The Dallas office of HFF (Holliday Fenoglio Fowler, L.P.) has secured a $47.35 million construction loan for Brick Row, a mixed-use development under construction in Dallas, Texas, according to a MortgageMag report. A three-bank syndication which was led by Colonial Bank, along with Texas Capital Bank and Broadway Bank, provided the three-year construction loan.

"Projects such as Brick Row are essential in defining the new landscape of transit oriented development in the Dallas-Fort Worth metroplex, and represent viable and rewarding investment product for real estate firms to add to their portfolio for many years to come," said HFF managing director Andy Scott, who worked exclusively on behalf of the borrower, a joint venture partnership between Winston Capital Corp., L&B Realty Advisors and the Michigan Employees' Retirement System. The mixed-use nature of the project and its one-of-a-kind location helped attract the Michigan institutional investor as a partner.

Brick Row is the third large mixed-use development going up near one of the city's light-rail stations. Upon completion in mid-year 2010, Brick Row will consist of 500 multi-family units and 16,000 square feet of ground-level retail space configured around two central parking structures. Designed by Dallas-based BGO Architects, the property is situated in a park like setting along Spring Valley and Greenville Avenue in the north Dallas suburb of Richardson.

For more real estate news and information, visit Blumberg Capital Partners.

Agree Rejects $328M Buyout Bid

Michigan-based Agree Realty Corporation (ARC) today announced that its Board of Directors has unanimously rejected an unsolicited acquisition proposal valued at $328.7 million from Compson Holding Corporation to acquire ARC, according to a Wall Street Journal article. Compson, which made a $38.75-a-share bid two years ago, made an offer of $27.50 a share in an Oct. 13 letter to Agree Realty Chairman Richard Agree. ARC determined that the bid was "inadequate" and that "continuing to implement the Company’s long-term business plan would maximize stockholder value". The latest offer amounted to a 25% premium to the Oct. 10 closing price.

Agree Realty Corporation is engaged in the ownership, management and development of properties which are primarily single tenant properties leased to major retail tenants and neighborhood community shopping centers. Agree Realty owns and operates a portfolio of 68 properties, located in 16 states and containing 3.4 million square feet of leasable space.

For more real estate news and information, visit Blumberg Capital Partners.

Joint Ventures Sells DC Office Building, New Owner Repositions

1620 L Street in Washington, DC has been purchased from a joint venture between TIAA-CREF and Chicago-based Equity Office. The John Buck Company (JBC) acquired the property for an undisclosed amount, but the transaction marks the firm's second acquisition in 60 days. Financing was provided by New York based Hypo Real Estate Capital Corporation according to a crefeed.com article. JBC will provide asset management out of its Chicago office while Cassidy & Pinkard Colliers will provide management and leasing services.

Built in 1989, 1620 L Street is a 12-story, 164,079 square foot Class B office property located in the heart of Washington D.C.’s Golden Triangle business district, just four blocks north of the White House. Tenant’s enjoy proximity to three metro stations, easy access to expressways, all major thoroughfares and the nearby Connecticut Avenue retail corridor. Although the asset is 97% leased (current tenants include the U.S. Bureau of Land Management, MetLife, Cresa Partners, the National Association of Independent Schools and Liberty Mutual), JBC plans to reposition the asset to Class A with a capital improvement program including upgrades and repairs to the garage, façade, lobby and elevators in an effort to retain the current tenants and attract new firms to the building.

For more real estate news and information, visit Blumberg Capital Partners.

Blumberg Capital Partners in the News

Blumberg Capital Partners was recently featured in an article on Totalsecurization.com. "Blumberg Looks to Raise $1B for Distressed Fund".

An excerpt:

Blumberg said he anticipates most distressed commercial plays to be in refinancings and acquisition loans, unlike residential, where much more new building was done. "There was not as much development; office building was really a toned-down market." he said, also noting with the economy heading toward recession and commercial property owners unable to raise rent, sell or refinance, they will be more frequently handing properties over to banks in distressed situations. "Commercial properties is going to be the next wave the government will have to deal with."

To read the rest of this article, click here.