NUTLEY, NJ—Pag’s, a popular restaurant and caterer in Northern New Jersey, will relocate from Paramus to Downtown Nutley, Cushman & Wakefield reports.
The restaurant, which opened in 2018 on the Paramus Golf Course, will move operations to its new location at 227 Franklin Ave. in Nutley. Peg’s signed a long-term lease for the 6,300-square-foot former Kyoto Buffet Restaurant space.
Cushman & Wakefield retail leasing broker David Townes represented landlord Bao Lung Realty Corp. in orchestrating the long-term lease deal. Roman Drukarov from Berkshire Hathaway Home Services NJ acted as tenant representative for Pag’s.
This lease came together within three weeks of our bringing the space to market,” C&W’s Townes says. “Pag’s quickly saw the benefit of this high-visibility, turn-key restaurant opportunity.”
Townes adds that the building is located on “arguably the best block of Franklin Avenue,” a high-traffic downtown thoroughfare that offers a mix of dining, retail and services.
Pag’s serves both quality interpretations of classic American dining dishes and “daring new ventures into the uncharted territories of food,” according to the restaurant’s website.
HOUSTON—Corporate-owned legacy and surplus property is a growing niche within the larger corporate real estate sector.
As a reflection of that growth, Savills recently added Mark Alvarez as a senior managing director specializing in surplus property services. Based in the Savills Houston office, he will lead the new offering and serve as the firm’s subject matter expert on impaired properties.
Savills Surplus Property Consulting Services advises businesses and investors on divestment strategies and best practices for monetizing assets and mitigating risk on compromised real estate at a single site or across a portfolio. Its program focuses on capturing the reuse value and mitigating the risk associated with divesting such properties.
“In the last five years, we have made continuous efforts to expand our advisory services to offer a broader, more holistic perspective for our industrial and logistics clients,” said Adam Petrillo, senior managing director, head of industrial services. “Mark’s industry-leading experience and unique approach to optimizing outcomes at the intersection of real estate and risk management will greatly benefit our new and existing clients, especially those seeking to unlock trapped or intrinsic value in properties otherwise too risky to touch.”
Alvarez joins Savills with more than 25 years of experience in managing multi-million dollar portfolios of legacy or surplus property. Alvarez and his team have extensive experience in developing, underwriting and planning the reuse of impaired real estate. Its clients include multinational companies, investment banks, commercial developers and public agencies.
Prior to Savills, Alvarez spent four years as the director of the surplus properties program at Arcadis, where he managed all aspects of portfolio management for a wide variety of multinational clients. From 2012 to 2015, he worked as the regional regeneration manager for North America at BP America Inc.
“The firm has invested heavily in forward-thinking solutions and strengthened its professional teams across North America, and I look forward to leading and expanding our offering in the area of impaired properties services,” Alvarez said.
Savills Surplus Property Consulting Services helps clients reduce liability and creates a value-add divestment strategy–whether on a single property or an entire portfolio. Core services have expanded and now include due diligence, valuation, reuse analysis, remediation strategy, transaction management, financial-reuse underwriting and divestment strategies. Its specialists are experts in strategic divestment and risk mitigation.
“The fundamental difference with our program is our approach to characterizing properties: we’ve learned that understanding the reuse–and planning the remedial strategy around a reuse plan–can drive a more efficient remedial strategy with cost savings upwards of 30%,” Alvarez tells GlobeSt.com. “Furthermore, with our integrated services, we can now offer our clients access to private equity, brokerage and project management services, effectively creating a full-service program from initial site due diligence to divestment.”
JACKSONVILLE, FL—Consolidated-Tomoka Land Co. announced the purchase of The Strand, an approximately 212,000-square-foot shopping center in Jacksonville, Florida for $62.7 million. The Strand is 95% occupied and has four anchor tenants: Hobby Lobby, Best Buy, 2nd & Charles and the PGA Superstore.
Mark E. Patten, Consolidated-Tomoka’s SVP and CFO, tells GlobeSt.com that the seller was not disclosed. He describes the property as a great value.
“It’s a terrific market and a great location,” Patten says. “We’re familiar with the area and have other assets in the commercial retail corridor there.”
The weighted average lease term for the leases of all 20 tenants at the Strand is approximately 9.5 years. The Strand is adjacent to the 1.4 million square foot St. Johns Town Center, the upscale super-regional open-air mall co-owned and managed by the Simon Property Group that is home to over 150 tenants including Tiffany’s, Louis Vuitton, Tesla, Apple and Nordstrom.
Consolidated-Tomaka previously purchased five ground leases that are outparcels of the Strand, which were purchased as part of the acquisition of a portfolio of eight ground leases located in that commercial retail corridor. The Strand will be leased and managed by Colliers International Northeast Florida, Inc. on behalf of Consolidated-Tomaka.
The company purchased the property using 1031 like-kind exchange proceeds from the October 2019 transaction with Magnetar Capital representing the sale of a controlling interest in the company’s remaining land portfolio for $97 million. With the completion of the acquisition of the Strand, the company has reinvested approximately $86 million of the Magnetar proceeds.
Consolidated-Tomaka has approximately $116 million of additional 1031 like-kind exchange proceeds from the sale of 20 assets to Alpine Income Property Trust in November 2019. The company intends to reinvest the remaining approximately $125 million of proceeds during the first half of 2020.
PHILADELPHIA—The joint venture of Nightingale Properties and Wafra Capital Partners has secured a $388-million in refinancing deal for its 1500 Market St. office tower from JP Morgan.
Sources closed to the deal say the loan includes a large component for leasing costs and other property improvements.
The refinancing was arranged by Newmark Knight Frank and Walker & Dunlop. 1500 Market St. is a 1,759,410 square-foot, Class A office and retail asset in the Market Street West submarket.
1500 Market is located in the heart of Philadelphia’s CBD, and is the only office complex in Philadelphia CBD that features its own on-site subterranean parking garage, as well as underground access to Philadelphia’s best-in-class transportation network (SEPTA). The complex’s Centre Square offers numerous food options, retail offerings, conference facilities and a fitness center.
1500 Market consists of two towers, rising 36 floors in the East Tower, and 43 floors in the West Tower, which are connected by a three-story atrium and a 450-spot parking garage that offers direct access to Philadelphia’s regional rail and subway lines.
The property also is known for the Claus Oldenburg “Clothespin” sculpture that stands at its front plaza and, as a result, it is often referred to as the Clothespin building.
The Newmark Knight Frank team was led by Dustin Stolly and Jordan Roeschlaub, vice chairmen and co-heads of debt & structured finance, along with Nick Scribani, Chris Kramer, Dylan Kane and John Gallagher. The Walker & Dunlop team was led by David Rosenberg and Mark Silbersher, managing directors.
“The Philadelphia office market has seen immense momentum and rent growth over the past few years and the well capitalized Nightingale and Wafra partnership is in ideal position to capitalize on the favorable market dynamics,’ says Walker & Dunlop’s Rosenberg.
The Nightingale/WCP JV is currently the second-largest office landlord in Philadelphia, the largest privately-owned office landlord in Philadelphia, controlling approximately a quarter of the office inventory in the CBD. Wafra is heavily invested in Philadelphia as Nightingale’s capital partner at 1500 Market, 1635 Market, 1835 Market and 1500 Spring Garden. Outside of their joint venture with Wafra, affiliates of Nightingale hold JV interests in The Bellevue and 1418 Walnut in Philadelphia, where it also serves as the property manager.
WEST ELIZABETH, NJ—The developers of the Vinty mixed-use project here has secured $77.75 million in financing for the venture.
Brokerage firm JLL worked on behalf of LeCesse Development Corp. and MAS Development Group to secure a $55-million construction loan through Citizens Bank and Lakeland Bank for the Vinty. JLL also reports that the developers also secured preferred equity from Marble Capital, LP. Proceeds will fund the ground up development of the project that calls for 267 residential units and 37,000 ground feet of retail space.
The project is due for completion in first quarter 2021.
The Vinty will be developed on a 2.48-acre site at the corner of Union and W. Grand streets across the street from the Elizabeth NJ Transit Station.
The project will consist of four stories of residential units with 25 studio, 175 one-bedroom and 67 two-bedroom floor plans above 37,000 square feet of retail and office space and a 274-space parking garage.
The JLL Capital Markets team representing the developer included managing directors Jeff Julien, Rob Hinckley, Michael Klein, Steven Klein and director Mark Mahasky in the financing deal.
“Both banks quickly understood the strength of the market, depth of the unit and community amenities that will be developed and the appeal of the site’s location steps from the train to Newark Liberty Airport, Newark Penn Station and the PATH to New York City,” Michael Klein added. “These factors will draw renters to Vinty for years to come.”
The community’s amenity package will include a fitness center, yoga/cycling studio, virtual golf simulator, resort-style pool with hot tub and cabana seating, outdoor summer kitchen with grills, community lounge and entertainment room, dog park, resident greenhouse, outdoor theater and package concierge system. Home interiors will feature high-end finishes such as quartz countertops, stainless steel appliances, modern cabinetry, undermount sinks, smart home features, in-unit washers and dryers, plank flooring and walk-in closets.
SAN FRANCISCO—Maximus Real Estate Partners was founded in 2012 by Rob Rosania and Seth Mallen. Rosania acquired his interest in the 152-acre Parkmerced in 2005.
Thereafter, he and his local team negotiated a development agreement with the city and began repositioning the property to become a model of sustainable urban living. Rosania and his team secured new entitlements in 2011.
Maximus has now recapitalized and cleared the way for financing Phase 1 of its long-term revitalization project. With a loan package of $1.775 billion from Barclays, Citi and Apartment Investment and Management Company/Aimco, Maximus has successfully refinanced Parkmerced. Maximus previously bought out Fortress Investment Group and refinanced Parkmerced in 2014.
Aimco’s portion was $275 million. It also acquired a 10-year option to acquire a 30% interest in the partnership and in so doing, participate in its substantial development pipeline. The option to acquire a 30% interest in the partnership is for 10 years at an exercise price of $1 million, increased by 30% of future capital spending for development/redevelopment of the property.
This is the first phase of a long-term master plan. The recapitalization enables Maximus to initiate Phase 1of its planned revitalization of Parkmerced (approximately 2,000 new apartments), with the intention of securing construction financing in early 2020 and breaking ground later next year.
With San Francisco’s booming employment market including the nation’s highest year-over-year job growth along with a deepening housing shortage, the new development comes at a critical time.
“We will now be able to build nearly 2,000 new homes in the next few years–a huge delivery of new housing at a time when San Francisco desperately needs it,” Rosania said.
The fully developed property will include nearly 10,000 homes, 80,000 square feet of office space, 230,000 square feet of retail space, a new elementary school and 64,000 square feet of amenities.
Maximus was advised by Pat Hanlon at Ackman Ziff, and Adam Spies and Douglas Harmon of Cushman & Wakefield.
“Of our recent major large-scale residential sales and recapitalizations around the country, Parkmerced is special,” Harmon tells GlobeSt.com. “We have been fortunate to be the advisor on five different sales or recaps of this property over the last 20 years beginning with Leona Helmsley’s sale for $326 million in 1999. Over the years, the valuation of this premier asset has steadily increased and this latest transaction now values the property at $2.1 billion. Our 2015 record sale of Peter Cooper Stuy Town for $5.44 billion and last year’s $905 million sale of Spring Creek Towers/Starrett City were monumental large-scale multifamily transactions, but Parkmerced is the deal that we have transacted multiple times and it will continue to benefit from its location in one of the most sought-after residential markets in the country–the Bay Area in Northern California.”
Parkmerced has a scenic westside location with 152 acres, 3,221 existing apartment homes and the vested right to develop 5,679 market-rate apartment homes. The re-envisioned Parkmerced will feature an updated design, vastly improved mass transportation and an emphasis on sustainability, likely making it the only carbon-neutral neighborhood in the world.
“The recapitalization of San Francisco’s Parkmerced, the largest private residential property in Northern California, will help build 2,000 new homes with the ability to add an additional 4,000 units over time,” Spies tells GlobeSt.com. “This will also allow for ample room to grow the retail offerings, build a school and offer modern amenities at a very important time for the San Francisco housing market.”
San Francisco’s highly educated tech and finance-heavy workforce earns a median income of $130,000 per year, ranking number out of the top 50 US markets. Its multifamily rents have increased at a 4.12% compound annual growth rate during the last 20 years, fifth in the nation. Its median home price is $1.1 million, first in the nation with a home price-to-income ratio of 8.5 to 1.
A $210 million construction loan obtained by Miami developer Fort Partners from Madison Realty Capital for the Four Seasons Hotel and Private Residences Fort Lauderdale is believed to be a record for residential construction loans in the city.
Construction is underway, more than 60 percent of the units have been pre-sold, and occupancy is scheduled for 2021.
New York-based Madison Realty is a 15-year-old real estate private equity firm that’s closed more than $12 billion in transactions. The company is led by managing principals John Zegen, Brian Shatz and Adam Tantleff.
Nadim Ashi, founder of Fort Partners, said the project at 525 N. Fort Lauderdale Beach Blvd. will help redefine Fort Lauderdale as an international destination. Ramzi Achi is a company principal.
“This unprecedented construction loan reaffirms our confidence in this luxury development as well as our extraordinary teams’ ability to create the most sought-after residential and hospitality experience in Fort Lauderdale,” Ashi said Monday in a news release.
The 22-story hotel and condominium development will include 148 guest rooms and 83 residences ranging from one- to four-bedroom units. Each residence will offer outdoor terraces with views of the Atlantic Ocean and Intracoastal Waterway. Two-bedroom units start just under $3.6 million.
Fort Partners also owns the Four Seasons Hotel and Residences at The Surf Club at Surfside, Four Seasons Resort Palm Beach and Norman’s Cay in the Bahamas.
Coastal Construction is building the new tower, and Lehrer Cumming is the construction manager.
The development’s design team includes London-based interior designer Tara Bernerd, who designed The Principal London and Thompson Hotels, and hospitality designer Martin Brudnizki, who has designed five London restaurants.
Miami architect Kobi Karp and landscape architect Fernando Wong bring South Florida expertise to the design team.
The development will include a spa, fitness center, two pools, beach butler service and yachting services. The building will have a pet concierge and on-call veterinarian. Kitchen cabinets will have antique bronze fittings, and the marble baths will have oak vanities with brushed nickel fittings.
The building across the street from the beach is between the Private Residence at Fort Lauderdale Beach and the W Fort Lauderdale to the south and Conrad Fort Lauderdale Beach to the north.
Madison Realty has plunged money into two other large South Florida developments.
In July, the company issued a $225 million loan, the biggest deal of its kind so far this year in Palm Beach County, for the third phase of the Via Mizner mixed-use project in Boca Raton. The package covered a $215 million construction loan and a $10 million mezzanine loan.
The lender also originated a $65 million first mortgage in 2017 for the 15-story Riva luxury condo on the Middle River in Fort Lauderdale.
The Four Seasons brand founded in 1960 operates 110 hotels and resorts, 38 urban residential properties and resort destinations in 46 countries. More than 50 projects are in the planning and development stages.
NEW YORK CITY – Moin Development, a real estate development company under the Moinian Group, has secured $135 million in financing from KeyBank Real Estate Capital and South Korea based Fidelis Asset Management for the Mondrian Park Avenue hotel located at 444 Park Avenue South. JBA Equities arranged the financing.
Financing included the KeyBank senior mortgage of $110 million and the $25 million mezzanine loan from Fidelis. Proceeds were used to refinance the existing mortgage and fund reserves J.P. Morgan financed two years ago, Jonathan Aghravi, principal at JBA Equities, tells GlobeSt.com.
Moin converted what was once a 15-story office building into the 190-key, 20-story hotel, which opened in October 2017. Journal Hotels, a hospitality manager and operator, manages the hotel, while In Good Company manages the food and beverage component.
Located on East 30th Street and Park Avenue South in NoMad, the luxury hotel was recently voted one of the best 25 hotels in New York City by Conde Nast Traveler 2019 Readers’ Choice awards.
Like much of the retail industry today, the grocer landscape is in a state of flux. New competitors have entered the market, online continues to chip away at brick and mortar, rightsizing is rampant and traditional grocers are charting their next moves. These moves include everything from evaluating the abundance of second-generation space to acquisition/disposition strategies and balancing e-commerce platforms as grocers look to adapt in this ever-evolving world. On top of that, the industry is facing some negative press coverage, which continues to over exaggerate the demise of brick-and-mortar retail.
In fact, the grocery industry is actually expanding. Overall industry revenue has grown an annualized 0.9%, on average, between 2014 and 2019, according to market research firm IBISWorld. Grocers show no sign of slowing, as the $654.6 billion industry is predicted to grow at an annual rate of 1 percent through 2024.
But just where do these growth opportunities lie for investors? What markets, store size, tenants, format types, co-tenants and demographics will yield the best results, and which grocery-anchored assets are likely to be at risk and why?
To best determine these answers Faris Lee Investments has struck a partnership with MTN Retail Advisors, a Salt Lake City-based provider of market insights that help retailers, municipalities, developers and real estate investors answer their most challenging market questions with as much certainty as possible. MTN’s proprietary analytics include more than 125 real estate, shopping centers and grocery tenant attributes, as well as records on more than 28,000 active US grocers. This number is expected to jump to 40,000 records over the next 18 months.
“The importance of having this type of granular information is that MTN has a long history of markets and market trends,” Doug Munson, principal and founder of MTN, says. He adds that the company can watch and predict trends and other disruptors, and then understand what the key metrics and influences are that either promote the real estate opportunity and strength of the operator, or shy away from them.
Paired with Faris Lee Investments’ advisory expertise, this partnership will utilize MTN’s analytics through valuation, underwriting and risk-opportunity assessment to examine the real estate in any local market for the benefit of the occupier, investor/developer, and lender.
The Growing Influence of Grocers
There are many reasons why grocery-anchored shopping centers continue to be a darling among many retail investors. They tend to boast lower cap rates, increasing prices and are generally more internet-resistant than other retailers. Add to that a strong economy, low unemployment and high consumer confidence, and it’s easy to see the value in these anchor tenants, which bring consumers through their doors an average of 1.7 times a week.
However, the industry is not without its challenges – and these aren’t just limited to the grocer.
“Our mantra at MTN is ‘as the grocer goes, so goes the rest of the shopping center,’” Munson says. “The grocer is an influencer to any shopping center. Obviously, a strong grocer will draw more customers. A weaker one, less so. The impact on co-tenants is huge.”
Rick Chichester is president and CEO of Faris Lee Investments
MOORESTOWN, NJ—Marquee Brands LLC reports it has emerged as the successful bidder for the intellectual property, e-commerce business and other assets of Destination Maternity Corp., which is headquartered here.
Marquee Brands was the stalking horse bidder for Destination Maternity and its trademarks: Motherhood Maternity, A Pea In The Pod and Destination Maternity. With the acquisition, Marquee Brands will diversify its women’s fashion division and add scale to its directly managed e-commerce platform. Marquee Brands currently operates across women’s fashion, men’s fashion, active & outdoor and home & food divisions.
Multiple published reports state that Destination Maternity Corp. cancelled its bankruptcy auction and declared Marquee Brands the winning bidder. The cancellation was disclosed in a court filing Monday, which indicated no other qualified bids were received by last week’s deadline, according to a report in the Philadelphia Inquirer. The deadline to submit qualified bids ended Dec. 5.
Marquee Brands states is evaluating all aspects of the current business, including its network of retail stores, but states it “intends to transform the business model to better compete in the digital age, focused on building an engaged online community of new and expecting mothers and developing rich content to support their journeys. Marquee Brands is working with a consortium of best-in-class partners to deliver technical and fashion-forward maternity apparel collections to consumers. Marquee Brands also intends to embrace existing and new strategic marketing partnerships with prominent third parties who offer a complementary product or service to its customers and help them navigate the next stage of motherhood.”
The sale is subject to final approval by the United States Bankruptcy Court for the district of Delaware at a hearing scheduled on Thursday, Dec. 12. It is expected that the transaction will close by Dec. 20.
Marquee Brands’ bid of approximately $50 million involves the purchase the Destination Maternity’s e-commerce businesses, intellectual property, leased departments within department stores and baby specialty stores, strategic marketing partnerships and the right to designate certain inventory and related assets for sale by its partners, Gordon Brothers and Hilco Merchant Resources.
The bid of approximately $50 million also involves the assumption of certain liabilities and represents a baseline bid. The application for approval of Marquee Brands as the stalking horse bidder was filed with the bankruptcy court on Nov. 29.
Marquee Brands, which has offices in New York and Los Angeles, is a leading global brand owner and marketer. Owned by investor funds managed by Neuberger Berman, a leading employee-owned investment management firm. The company’s brands include: Martha Stewart, BCBGEneration, BCBGMAXAZRIA, Ben Sherman, Body Glove, Bruno Magli, Dakine and Emeril Lagasse.
Destination Maternity’s 446 stores operate under three retail flags: Motherhood Maternity, A Pea in the Pod and Destination Maternity. The company currently has 491 leased departments within Macy’s, buybuy BABY and Boscov’s. The company stated in an announcement in October that during the bankruptcy proceedings it planned to sell some of its stores. In its bankruptcy filing, Destination Maternity stated it would commence to shutter no fewer than 175 locations by Oct. 28 and no fewer than 35 additional locations by Nov. 1.
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