Philip Blumberg Blog

Blumberg Capital Partners in the News

Blumberg Capital Partners was featured in an article on Emirates Business 24|7 today titled "US-based Blumberg to invest $400min GCC and Brazil". An excerpt:

Blumberg Capital Partners, a US-based investment management company, said it will invest around $400 million (Dh1.47 billion) into developing office projects in the GCC countries and Brazil through its newly-launched $1 billion off-shore real estate fund, company's chairman told Emirates Business.

"The Blumberg Strategic Asset Fund is targeted at $1bn, taking debt into account. Around 30 per cent or less of this will fund development of office projects in Brazil and Gulf. The expected annual return on the fund is likely to be around 26 per cent to 32 per cent," Philip Blumberg said.

Blumberg Capital said it has already received commitments to the tune of around $100m from six to 10 confirmed investors from the Gulf on this closed-end real estate fund.

To read the full article, click here.

U.S. REITs Make Significant Gains

According to a report from the National Association of Real Estate Investment Trusts, REITs have gained over 5 percent through February.  "With a long-term recovery in real estate valuations ahead, there are good prospects for total returns for REITs," says Michael Hudgins, VP and global REIT strategist at JP Morgan Asset Management.

Ron Kuykendall of NAREIT suggests that the answer may lie in the fact that "investors aren't buying today's fundamentals as much as what they think tomorrow's will be."  He further belives that publicly raised funds are now being used to acquire properties from private side owners who were not able to tap into public equity markets are a contributing factor to this heightened rebound.

Dr. Sam Chandan of Real Capital Analytics concurs:  "The best-positioned REITs are facing the same general set of challenges in managing lower occupancy and rents as the rest of the marketplace.  But these REITs have also been very successful in raising capital in the public markets over the last few quarters."

For more news and information visit Blumberg Capital Partners.

Brookfield Executive Center IV Sells for $5.8M

The Endeavor Companies, a privately held real estate firm based in Chicago, has purchased the Executive Center IV in Brookfield, WI for $5.8 million from a commercial real estate subsidiary of VK Development Corporation. The building is located at 235 N. Executive Drive and boast 85,612 square feet of space, making the sale price $67.75 per square foot. Tom Shepherd, a principal and broker at Inland Companies Inc., handled the transaction for both the buyer and seller. Shepherd said in a Milwaukee Business Journal article that the office investment deal was Inland’s first in 2010 amid the real estate slowdown that has shown few signs of recovering.

The building is currently 91% occupied with tenants including the Wisconsin Institute of Certified Public Accounts, Winter, Kloman, Moter & Repp S.C., GAB Robbins NA Inc., Voit & Hamilton LLC, Wachovia Dealer Services and M&I Support Services. Endeavor will reportedly retain Inland for the leasing and management of the building.

For more news and information visit Blumberg Capital Partners.

Inland Acquires $424M Property Package

Inland Real Estate Acquisitions, Inc. (a subsidiary of The Inland Real Estate Group of Companies, Inc.), has completed its purchase of 16 shopping centers from TIAA-CREF and Developers Diversified Realty.  The combined portfolio totaled 3.5 million sq-ft of retail space for a reported $424 million.  "Consumers today are focusing on value and convenience, and the majority of these shopping centers have strong grocery and value-based tenants, like Super Wal-Mart, Publix, Kohl’s, Lowe’s, Bed Bath & Beyond, PetSmart, Staples, Dollar Tree, Marshall’s and Old Navy. We think these shopping centers will continue to perform well in all economies,” said spokesman, Mark Cosenza, VP of Inland Real Estate Acquisitions.

Inland has been an active investor during this challenging period.  For example, last month they sealed a purchase of $154 million worth of retail and residential properties in addition to this month's acquisition.  The assets included in this current package are:

• Bartow Marketplace, Cartersville, GA: 375,067 sq. ft.
• Hiram Pavilion, Hiram, GA: 363,695 sq. ft.
• Venture Point, Duluth, GA: 335,420 sq. ft.
• Pleasant Hill Square, Duluth, GA: 282,137 sq. ft.
• Stonecrest Marketplace, Lithonia, GA: 264,584 sq. ft.
• City Crossing, Warner Robins, GA: 190,433 sq. ft.
• Sycamore Commons, Matthews, NC: 265,535 sq. ft.
• Gateway Plaza, Jacksonville, NC: 101,403 sq. ft.
• Anderson Central, Anderson, SC: 223,211 sq. ft.
• Ward’s Crossing, Lynchburg, VA: 80,936 sq. ft.
  
• Sarasota Pavilion, Sarasota, FL: 324,985 sq. ft.
• Gateway Market Center, St. Petersburg, FL: 231,106 sq. ft.
• Boynton Commons, Boynton Beach, FL: 210,488 sq. ft.
• Sand Lake Commons, Orlando, FL: 189,721 sq. ft.
• Paradise Place, West Palm Beach, FL: 69,620 sq. ft.
• Universal Plaza, Lauderhill, FL: 49,505 sq. ft.

For more news and information visit Blumberg Capital Partners.

New Beige Book Released with Mixed Results

The Federal Reserve released its latest Beige Book yesterday with mixed results, revealing that the heavy winter storms in the East this winter did show impact on markets, and that commercial real estate and construction activity weakened or declined further. Beyond the "weather-related noise," the report confirms that the United States is in a phase of "gradual expansion, rather than robust growth," explained economist Zach Pandl of Nomura Securities in an article on The Globe and Mail.

The full commercial real estate excerpt from the report follows:

Commercial real estate conditions remained weak or declined further in most Districts, although some Districts noted slight stabilization or modest signs of improvement. Commercial real estate activity weakened in the Richmond, Minneapolis, Kansas City, Dallas, and San Francisco Districts, though Dallas noted that leasing fell at a slower rate and San Francisco cited increased leasing in some segments. Boston and Philadelphia said conditions remain weak, but both noted some improvement in sales of commercial space. New York reported softer activity in the New York City area but some steadying in vacancies and rents elsewhere, while St. Louis said activity remained weak throughout the District. Several Districts also noted that many tenants were pushing for, and in some cases receiving, concessions on rents. All Districts reporting on commercial construction said that activity remained weak or slow, except for some moderate boost from federal stimulus projects and other public construction. Credit for commercial development and transactions was still very difficult to obtain in several Districts, though San Francisco noted a slight improvement in financing availability.

"We're in a kind of uncertain time," said Michelle Meyer, a U.S. economist at Barclays Capital in The Washington Post. "The data is coming in mixed, but you can explain some of that because of the weather. The snow certainly confuses things."

For more news and information visit Blumberg Capital Partners.

GSA Selects JBG to Build New Headquarters for National Cancer Institute

The General Services Administration (GSA) has chosen The JBG Companies to build and own a new office campus in Maryland that will serve as the consolidated headquarters for the National Cancer Institute (NCI). The property, which will be part of the Shady Grove Life Sciences Center in Montgomery County, will include a total of 575,000 square feet in two connected buildings on what is currently a surface parking lot. JBG negotiated a 99-year long-term ground lease for the site that will host the $200 million development.

"We are thrilled to be chosen to develop a research center of such size and importance," said Rod Lawrence, principal of The JBG Companies. "GSA's award reflects well on JBG's depth, flexibility and financial strength which are all-important in this difficult real estate environment."

"The addition of NCI to our campus makes the Shady Grove area a national epicenter for cancer research," said Ronald J. Daniels, president of Johns Hopkins University. "We are excited to be a partner in providing a state-of-the- art home for this incredibly important scientific institution and its employees."

For more news and information visit Blumberg Capital Partners.

California State's $2B Office Portfolio Hits Market

The California Department of General Services has placed 11 state office properties, totaling nearly 7.3 million rentable square feet, on the market. The portfolio, valued in excess of $2 billion, is being brokered by CB Richard Ellis on a sale-leaseback basis to raise funds to keep California's government going according to a GlobeSt.com article. "This sale will allow California to pay off debt, tap equity, and lock in some of the lowest rental rates seen in years," said DGS Acting Director Ron Diedrich. "The short and long-term financial gains will be real to help shore up the state budget in the years to come."

The portfolio properties are among some of California's most energy efficient and environmentally friendly, making the properties attractive to a market that is seeking sustainable green designs. The US Green Buildings Council's Leadership in Energy and Environmental Design (LEED) certification has been achieved on nearly all of the buildings. "What the real estate investment community is looking for in today's market are secure, low-risk investment opportunities -- occupied buildings with long term, credit-worthy tenants, as well as increasingly 'green' product, both of which the State's portfolio offers," said Kevin Shannon, Vice Chairman for CBRE and the lead broker on the sale leaseback assignment. "We are confident that the expansive global marketing campaign we're launching today will attract strong national and international interest in this generational acquisition opportunity."

For more news and information visit Blumberg Capital Partners.

NAR Commercial Market Forecast

The National Association of Realtors released its Commercial Real Estate Outlook report this week, expecting no meaningful recovery in commercial real estate before 2011. "Because of the lingering impact from the deep recession over the past two years, vacancy rates will trend higher and many commercial property owners will need to make rent concessions," said Lawrence Yun, NAR chief economist.

An excerpt from the Office Market Outlook:

With a lot of sublease space currently on the market, vacancy rates in the office sector are forecast to rise from 16.3 percent in the fourth quarter of 2009 to 17.6 percent in the fourth quarter of this year; the longer term outlook is for vacancies to average 17.4 percent in 2011.

Annual office rent is projected to decline 7.2 percent in 2010, following a drop of 12.7 percent last year. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 27.3 million square feet in 2010.

For more news and information, visit Blumberg Capital Partners.

KBR Staying in Houston, Inks Largest US Office Lease Since Fall 2008

Defense contractor KBR, employing over 50,000 people worldwide, has completed a lease renewal with Brookfield Properties for a total over 1.2 million square feet of space at Houston's KBR Tower and 500 Jefferson Street, taking on an additional 234,000 square feet in both office buildings. KBR has been headquartered in Houston for some 20 years and this agreement allays any concerns over the company's previous plans to move its base to nearby Katy, TX, potentially disrupting the financial and employment impact of its presence in downtown Houston.

"We are thrilled that KBR has chosen to renew and expand office space at two of our properties in the Cullen Center complex, including the tower that bears the company's name," said Paul Layne, regional head for Brookfield Properties' Houston operations. "Expanding our downtown Houston presence is not only a good business decision, but also brings the added benefit of contributing to our City’s continued downtown revitalization," said Klaudia Brace, senior vice president of administration at KBR in a CoStar article.

For more news and information visit Blumberg Capital Partners.

AEW Set to Win Boston Property Bid

AEW Real Estate Investment Management, a Natixis Global Asset Management subsidiary, has been announced as the victorious bidder in a nearly closed auction for a desirable Boston office complex in the Longwood Medical area.  One Brigham Circle, the 200,000 sq-ft center was the prize offered by New Boston Fund.  The full details of the deal have not yet been released, however Partners HealthCare System Inc. holds the current lease on the property.

The auction was handled by Cushman & Wakefield.  “We don’t comment on potential buyers before a deal is complete, however we will say that we are very pleased with the level of interest and the number of qualified prospective purchasers that were generated by Cushman & Wakefield for One Brigham Circle," Jon Gillman, of New Boston Fund said.

For more news and information visit Blumberg Capital Partners.