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Jeff Quinlivan joined Kolter Group of Del-ray Beach, Fla., last month as president of its new multi-family development unit. He spent the previous 10 months as an executive vice president at Florida East Coast Industries, and before that, he was at Wood Partners for seven years, depart-ing as a managing director. Kolter, which develops condominiums and single-family homes, is expanding to rentals, with an initial focus on Florida and the

Benderson Bags Large Supermarket PortfolioBenderson Development has paid Kroger about $625 million for a portfolio of 28

big-box stores in the largest retail-property trade since 2019.The deal, which closed last week, totaled 4.5 million sf, mostly in the Pacific

Northwest, that Kroger operates under its Fred Meyer brand. The grocery giant leased back the stores on an absolute triple-net basis for 25 years, at a combined starting base rent of $25 million.

Marcus & Millichap’s Institutional Property Advisors unit ran the marketing pro-cess, which attracted a pool of about 20 bidders that pushed pricing past initial expectations of $600 million. Benderson, of University Park, Fla., will see an ini-tial annual yield of under 4%, stingier than anticipated, according to market pros. Although the exact price couldn’t be learned, that capitalization rate translates to at least $625 million.

The deal is a rare piece of positive news in the retail sector, which has seen sales plummet since the pandemic hit early last year. It also illustrates how net-leased

See BAGS on Page 16

Banks’ Bad Debt Stays Low Despite CrisisNonperforming commercial real estate debt on the biggest banks’ balance sheets

doubled last year but remains a sliver of total holdings — dashing hopes of a buying spree for opportunistic investors, at least for now.

Amid the downturn sparked by the pandemic last year, nonperforming loans made up 0.86% of the commercial mortgages on the balance sheets of the 325 larg-est U.S. banks at yearend, up from 0.41% a year earlier, according to regulatory data compiled by Trepp Bank Navigator. The figure has remained below 1% since 2015 and is a fraction of the all-time peak of 8.6% hit in 2010.

The low levels of bad debt are due in part to a host of forbearance measures implemented to assuage the effects of shutdowns enacted to curb the virus’ spread. As those accommodations expire, however, the level of troubled debt is expected to tick higher, stoking optimism that more distressed opportunities could shake loose

See BANKS on Page 10

JV Shopping DreamWorks HQ Outside LA DreamWorks Animation’s headquarters in suburban Los Angeles is on the block,

setting the stage for one of that market’s biggest trades since the beginning of the pandemic.

The campus consists of seven buildings totaling 497,000 sf in Glendale. Hana Asset Management of South Korea and Ocean West Capital of El Segundo, Calif., have given the listing to Newmark. The property is expected to fetch $350 million, and a sale at that $704/sf price would give a buyer an initial annual yield approach-ing 4.5%. The duo paid $290 million, or $583/sf, for the complex in 2017.

Market pros attribute the 21% jump in value to the fact that demand for such single-tenant properties under long-term leases with investment-grade tenants has soared amid the pandemic. So has interest in studio space and the fortunes of the tenant’s parent, Comcast.

Moreover, big single-tenant office deals are rare in the Los Angeles area and areSee DREAMWORKS on Page 17

11 TOP BANKS IN DISTRESSED ASSETS

2 Repositioned Chicago Offices Offered

2 Student-Housing Portfolio Pitched

2 Luxury Houston Rentals Up for Grabs

4 Large NJ Office Building Available

4 Class-A Offices in Oklahoma Teed Up

4 WHI Finishes Marketing Largest Fund

6 South Florida Rental Towers Marketed

8 JV Shops Dallas-Area Office Complex

8 Investment Pros Start Apartment Shop

8 Bids Sought for New Mass. Rentals

9 Fla. Hotel Sale Is Biggest Amid Crisis

9 New Offices Near Dallas on the Block

9 Bay-Area Office Building Listed

14 Acadia Pitches NJ Shopping Center

14 Norfolk, Va. Office Property Shopped

15 Mass. Site Suited for Life-Science

16 Industrial Shop Seeking to Add 3 Pros

MAY 5, 2021

THE GRAPEVINE

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Repositioned Chicago Offices OfferedHearn Co. and Fortress Investment are shopping a renovated

office tower in Chicago that could fetch bids of up to $215 mil-lion, or $297/sf.

The 723,000-sf tower at 2 North LaSalle Street is being pitched as a value-added play, with steady income from a large anchor tenant as well as room to fill some vacancy and lift rents. Hearn, of Chicago, and Fortress, of New York, have given the listing to JLL.

The tower is 78% occupied, below the 89% average for Class-A space in the surrounding Central Loop neighborhood. The City of Chicago occupies about a third of the building on a long-term lease and plans to exercise an extension option that will bring its total to 45% of the rentable space. Overall, the weighted average remaining lease term is nine years.

The vacancy is concentrated in the top floors of the 26-story tower. Such space tends to lease up faster and at higher rents compared with mid- and ground-level space.

A substantial renovation project in 2017, which included upgrades to the lobby and the addition of an amenity floor, positioned the 1979-vintage building to compete with newer properties. It has a fitness center, bike storage and conference space.

The building is at the corner of West Madison Street, among shops, restaurants and hotels. It is within a few blocks of a com-muter rail station.

Hearn and Fortress took full control of the property in 2016 after the owner, a Harbor Group International joint venture, defaulted on its securitized loan. Office sales in Chicago have lagged since the pandemic struck last year, but a fresh batch of sizable listings is geared to test investor interest.

Student-Housing Portfolio PitchedA student-housing developer is shopping five properties

with a combined value of roughly $190 million.The complexes, with a total of 692 units (1,545 beds), are near

the campuses of large universities in five states: Illinois, North Carolina, Tennessee, Arkansas and Mississippi. The estimated valuation works out to about $274,000/unit ($123,000/bed).

Rael Development of Dallas tapped Newmark to market the portfolio. Investors may bid on individual properties or any combination, but the preference is to strike a deal with a single buyer.

The average unit size at the five properties is 906 sf and rent per bed is $809. The portfolio has an 84.3% occupancy rate and is 36.3% preleased for the 2021-2022 school year.

Every floorplan has bed-to-bath parity, a key feature for ten-ants.

The listing is being pitched as an opportunity to achieve scale in the student-housing sector and acquire recent-vintage properties adjacent to major universities. The complexes are all less than 0.1 mile from college campuses, and all the universi-ties have sports programs that compete in the American Ath-letic, Big Ten and Southeastern Conferences.

The properties are:•Gather Illinois, at 410 North Lincoln Avenue, Urbana, Ill.

School: University of Illinois. Built: 2021. Units: 225. Beds: 364. Price: $70 million, or $311,000/unit ($192,000/bed).•Gather Uptown, at 400 South Greene Street, Greenville,

N.C. School: East Carolina University. Built: 2018. Units: 127. Beds: 404. Price: $45 million, or $354,000/unit ($111,000/bed).•Gather Southern, at 3655-3695 Southern Avenue, Memphis.

School: University of Memphis. Built: 2015. Units: 136. Beds: 435. Price: $34 million, or $250,000/unit ($78,000/bed).•Gather Dickson, at 333 St. Charles Avenue, Fayetteville, Ark.

School: University of Arkansas. Built: 2016. Units: 100. Beds: 238. Price: $25 million, or $250,000/unit ($105,000/bed).•Gather Oxford, at 207 Hathorn Road, Oxford, Miss. School:

University of Mississippi. Built: 2016. Units: 104. Beds: 104. Price: $13 million, or $125,000/unit ($125,000/bed).

Investors are being told that at the Gather Illinois property, new ownership could continue a plan to operate one section, which has a separate elevator, as an extended-stay hotel — or instead, could add 37 student-housing beds.

Luxury Houston Rentals Up for GrabsInvestors are getting a crack at a new luxury high-rise in

Houston valued at roughly $150 million.The 357-unit Drewery Place was built in 2019. At the esti-

mated value of $420,000/unit, a buyer’s initial annual yield would be 4.15%.

Australian developer Caydon Property built the 27-story tower. In February, Canyon Partners Real Estate of Los Angeles acquired a $45 million preferred equity stake in the property. CBRE has the listing.

The studio to two-bedroom apartments average 1,000 sf. They have home-automation technology, wood floors and nat-ural stone counters in the kitchens and bathrooms. Most units have balconies.

Marketing materials tout the property’s “resort-style” ame-nities on the sixth and seventh floors, including a fitness center, a library lounge, a yoga studio and coworking spaces. Tenants have access to services that include dry-cleaning pickup/drop-off, housekeeping, valet parking and dog walking.

There’s also nearly 13,000 sf of ground-floor retail space that’s 75% occupied.

The building, at 2850 Fannin Street, is in Houston’s densely populated Midtown section, between the city’s two largest employment centers and close to restaurants and nightlife. It’s also near a light-rail station connecting to the central business district and to Texas Medical Center, the world’s largest medi-cal center.

May 5, 2021 2Real EstateALERT

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Large NJ Office Building AvailableA Northern New Jersey office building fully leased to a phar-

maceutical company is on the block with an estimated value exceeding $140 million, which would surpass the market’s top price for a single-property office trade since the pandemic struck just over a year ago.

The 333,000-sf property, in Nutley, is occupied long term by Eisai of Tokyo as its U.S. headquarters. It is part of what’s known as the ON3 life-science campus, which includes other properties on a 116-acre parcel.

At the estimated value of about $420/sf, a buyer’s initial annual yield would be 4.5%, based on $6.3 million of net oper-ating income. The thin yield is a testament to competition for single-tenant properties with investment-grade tenants.

The 15-story property, at 200 Metro Boulevard, has 17 years remaining on its lease to Eisai. The triple-net lease has 2% annual rent bumps and will generate $123 million of contrac-tual revenue, according to marketing materials. Eisai is rated AA- by Japanese rating agency R&I.

Eastdil Secured is advising the owner, a group led by local developer Prism Capital. In September 2016, the Prism venture bought the sprawling former F. Hoffman-La Roche campus from company parent Roche Holding for $102 million.

The group has since been repositioning the property, which has five buildings, several of which have been sold. The rede-velopment includes offices, life-science space, hotel rooms and apartments. One 550,000-sf building is fully leased to Hacken-sack Meridian School of Medicine.

The campus is along Route 3, 10 miles west of Midtown Manhattan.

A trade at the estimated value would be the largest in North-ern New Jersey for a listing that debuted since March 2020, according to Real Estate Alert’s Deal Database.

The current pandemic-era record is Asia Investment Man-agement’s $59.7 million purchase in October of the 235,000-sf property at 85 Challenger Road in Ridgefield Park. KABR Group sold the property via JLL.

Class-A Offices in Oklahoma Teed UpAn office complex in Tulsa, Okla., is up for grabs and could

fetch $110 million from value-added investors.One and Two Warren Place totals 970,000 sf. Bids are

expected to come in at $113/sf. Gemini Rosemont Commercial Real Estate of Los Angeles has given the listing to Newmark.

The Class-A complex is 73% leased, and the marketing cam-paign is touting the opportunity to lease up the vacant space. Investors have been told the investment-grade tenancy pro-vides stability, while rent bumps provide income growth.

MetLife developed Warren Place in 1983 and 1987. It com-mands the highest rents in the city, according to marketing materials.

The complex is at 6100 and 6120 South Yale Avenue, near East 61st Street. It’s 2 miles from the Southern Hills Country

Club, which will host the 2021 Senior PGA Championship and the 2022 PGA Championship.

Warren Place has attached garages with nearly 3,500 spaces. The complex is connected to a DoubleTree Hotel, and there are restaurants nearby. The 20-story One Warren Place totals 470,000 sf, while the 19-story Two Warren Place totals 490,000 sf.

Gemini, then acting as Rosemont Realty, paid $130 million, or $135/sf, for the complex in 2012. The seller was Parmenter Realty of Doral, Fla.

Big office trades are rare in Tulsa, with only a dozen prop-erties worth at least $25 million changing hands in the past two decades, according to Real Estate Alert’s Deal Database. The last time an office trade topped $100 million was a record $150 million deal in 2014. Only three office properties have ever crossed that threshold, including the previous sale of Warren Place.

WHI Finishes Marketing Largest FundWHI Real Estate held a final close this week on its fifth and

largest fund, which exceeded its equity target.The Chicago manager garnered $385 million for WHI Real

Estate Partners 5, ahead of its $325 million goal. The fund will target a 13% to 15% return via acquisitions across property types nationwide. With leverage, the fund will have as much as $1.1 billion of buying power.

WHI lined up the equity from university endowments, foundations, pensions, family offices and others. PJT Park Hill of New York acted as placement agent.

The operator has focused on acquiring middle-market prop-erties suitable for repositioning, typically in joint ventures with local operators. It historically also has bought distressed assets, lent against them and done ground-up development.

WHI was formed in 2010, when a firm led by veteran inves-tors James Orth and David Rosenbaum merged into William Harris Investors, the family office of philanthropist Irving Har-ris. In its early years, the firm made middle-market real estate investments for the Harris family and others. In 2015, manag-ing principals Orth and Rosenbaum, along with principals Brad Beelaert and Brad Hannah, acquired the Harris family’s stake in the operation.

WHI’s first four funds, with sidecars, raised a combined $669 million of equity. All are fully invested.


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South Florida Rental Towers MarketedTwo luxury apartment buildings near Miami are on the

block, with bids expected to come in around $105 million.The properties, part of the Wake Biscayne Bay complex in

affluent North Bay Village, have a total of 338 units that are 98% occupied. The estimated value is roughly $311,000/unit.

Newmark is representing the owner, a partnership of Angelo, Gordon & Co. of New York, La Jolla, Calif., investment shop InterWest Capital and Mast Capital of Miami Beach.

North Bay Village is a three-island community between Miami and Miami Beach. The listed property consists of two 10-story waterfront buildings: the 160-unit North Tower, built in 1962, and the 178-unit Point Tower, completed in 1966. The properties have 1,000 feet of frontage on Biscayne Bay. Marketing materials note that most units have unob-structed views of Biscayne Bay, Miami Beach and downtown Miami.

The North Tower, at 7525 East Treasure Drive, has one- to three-bedroom units that average 875 sf and rent for an aver-age of $2,100, or $2.40/sf. The Point Tower, at 1900 South Treasure Drive, has one- to three-bedroom units that average 1,047 sf and rent for an average of $2,200, or $2.10/sf. Ameni-ties include three pools, a fitness center with yoga studio, a sun deck and a grilling area.

The current owners completed a multimillion-dollar reno-vation in 2018 that included new pool decks, a new sea wall

and upgrades to the lobby and fitness centers. As part of that program, they updated 40% of the units in the Point Tower, which command rent premiums of $250.

The pitch is that a buyer could boost income by improving the remaining 60% of the units in the Point Tower as well as under-taking light renovations at the North Tower. Suggested upgrades include wood-style flooring in the bedrooms, new bathroom fix-tures, recessed lighting and smart-home technology.

The partnership acquired the buildings in 2016 for $75.5 million as part of a fractured condominium deal from Walnut Creek, Calif.-based Owens Financial, which bought the proper-ties out of foreclosure in 2010.

The 2016 purchase included all 160 units at the North Tower, 155 of 178 units at the Point Tower, and 15 of 160 units in a third building, called the Middle Tower. The current own-ers subsequently purchased all separately owned condo units in Point Tower and repositioned it as a full rental property. The Middle Tower continues to operate as a condominium and is not included in the listing.

CorrectionAn April 28 article, “CalCHA Buying 2 East Bay Rentals,” trans-posed the sellers of two California apartment properties. Berk-shire Residential Investments and Bay West Development sold the 313-unit Aster in Dublin, and Reliant Group sold the 280-unit Mira Vista Hills in Antioch.



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JV Shops Dallas-Area Office ComplexA joint venture is marketing an office portfolio in suburban

Dallas that could fetch $105 million from value-added inves-tors.

The offering consists of four Class-A buildings totaling 506,000 sf and 8.8 acres of land suitable for development at the Royal Ridge office complex, in the Las Colinas submarket of Irving. Bids are expected to come in at about $208/sf.

JLL is marketing the property for the joint venture between Partners Group, of Switzerland, and Accesso Partners, of Hal-landale Beach, Fla. Investors have been told they can bid on the entire package, sub-portfolios or individual properties.

The office space is 87% leased with a weighted average remaining lease term of 7.4 years. The pitch is that the strong occupancy and lengthy lease terms provide stability, while the vacant space, below-market rents and potential development offer upside potential.

In-place rents average 28% below market rates, according to marketing materials. That should provide a new owner room to raise rates upon rollover, investors have been told.

Arts and crafts retailer Michaels is the largest tenant and fully occupies the 124,000-sf Royal Ridge 3. That building, completed in 1999, is at 3939 West John Carpenter Freeway. Michaels recently moved its headquarters into the building and has 10.8 years of term remaining on its lease. The company reported $5.2 billion of revenue in 2020 and has a B credit rat-ing from S&P.

The 134,000-sf Royal Ridge 4, at 3625 West Royal Lane, was built in 2000 and is fully leased. American Honda Finance, that building’s biggest tenant, occupies 99,000 sf on a lease with 10.4 years remaining. The other tenant, Sedgwick, leases 35,000 sf and has 4.7 years of lease term remaining.

Royal Ridge 1 totals 145,000 sf at 7979 North Belt Line Road. It was constructed in 1998 and is 71% leased. The building has one tenant, Frontier Communications (103,000 sf, 5.6 years).

Royal Ridge 2 has 104,000 sf at 8081 Royal Ridge Road. It was built in 1998 and is 81% leased. It has three tenants: Cartus (62,000 sf, 1.9 years), Vibra (11,000 sf, 3.2 years) and Kobie Mar-keting (9,700 sf, 1.9 years).

Within 3 miles of the portfolio, there is 27.4 million sf of office space, 2.9 million sf of retail space, 13,400 multi-family units and 2,118 hotel rooms, according to marketing materials. Class-A office rents have grown 3.5% annually on average over the past decade. Average household income is $121,000.

Investment Pros Start Apartment ShopA new investment shop aims to buy, renovate and reposition

Class-B apartment properties in high-growth Southwest and Southeast markets.

Intellego Capital is led by real estate and finance veterans Edward Lange, Darin Buchalter and Stewart Whitman. The Nor-walk, Conn., startup will target workforce-housing properties built between 1970 and 2011, with at least 150 units.

Lange most recently was chief executive of Harrison, N.Y.-based Maxx Properties for four years. Before that, he spent 10 years at BRE Properties of San Francisco, where he was chief financial and chief operating officer.

Buchalter has worked as an advisor to executive manage-ment teams, directors and counsel at publicly traded and private real estate companies for nearly 30 years, both inde-pendently and in leadership roles at Ankura Consulting of New York, Navigant Consulting of Chicago and Ernst & Young.

Whitman most recently served as a managing director at Societe Generale for six years and previously had the same title at RBS and Credit Suisse.

Workforce housing is generally described as apartments affordable to essential workers such as police officers, teachers and nurses, as well as employees of retail, lodging, leisure and similar businesses.

Lange said those properties represent “a resilient, investible asset class supported by long-term demand drivers.” They have provided stable returns throughout the pandemic, with occu-pancy levels maintained at or above 94% and rent collections above 90%, he said.

Target cities include Charlotte, Denver, Las Vegas, Nashville, Orlando, Phoenix, Raleigh, Salt Lake City, Tampa and Greater Washington. Intellego said those markets are forecast to gener-ate approximately 4% rent growth through 2023.

“The demand and need for quality workforce housing pres-ents a terrific value opportunity for investors,” Lange said. “Reno-vating and repositioning Class-B apartment communities serves the enormous ‘renter by necessity’ customer base and realizes the return potential embedded in these properties.”

Bids Sought for New Mass. RentalsA new garden-style apartment complex is up for grabs in a

western suburb of Boston.The 204-unit property, in Berlin, could attract bids of

about $82 million, or $402,000/unit. The owner, a partnership between Cleveland apartment developer NRP Group and HQ Capital of New York, has given the listing to Walker & Dunlop. At the estimated price, a buyer’s initial annual yield would be in the low 4% range.

The seven-building complex, called the Rockwell, is at 12 Tyler Road. It was completed last year and is 95% leased. The units have one and two bedrooms that average 1,143 sf. Average market rent is $2,450, or $2.14/sf. The median tenant income is $101,868.

About 10% of the property’s units are designated as afford-able at varying income levels.

Units have wood-style plank flooring, granite counters, stainless-steel appliances and washer/dryers. Amenities include a clubhouse, a pool, a fitness center and a “gear garage” stocked with bikes, kayaks and other recreational equipment. There are 309 surface and 70 garage parking spaces.

The property is near Interstates 495 and 290 and is 40 miles west of Boston.




Fla. Hotel Sale Is Biggest Amid CrisisHost Hotels & Resorts is closing this week on its purchase of

the luxury Four Seasons Resort Orlando at Walt Disney World, the largest single-asset hotel trade since the onset of the pan-demic.

The REIT is paying $640 million for the trophy 445-room hotel and adjoining land in Lake Buena Vista. It’s one of just a handful of Florida hotels ever to sell for more than $1 million/room.

Hodges Ward Elliott represented the seller, a joint venture between Silverstein Properties and Dune Real Estate, both of New York. The duo had put the hotel on the block early last year, but the marketing campaign, like many others, was halted when the onset of the pandemic shut down travel and tanked hotel performance nationwide.

As previously reported, Host, of Bethesda, Md., approached the owners with an offer, initiating negotiations. Buyers increas-ingly are targeting high-quality hotels in popular domestic vacation markets, which are anticipated to rebound faster with vaccine distribution accelerating. As a result, such properties are trading at or above pre-pandemic pricing.

The Orlando resort was completed by a Silverstein-Dune partnership in August 2014. Four Seasons Hotels of Toronto owns a small, non-controlling interest. The luxury property is on the grounds of Walt Disney World, and is surrounded by a high-end residential community.

The resort includes an 18-hole golf course that was the Dis-ney Osprey Ridge course. There’s a 5-acre waterpark with a lazy river, multiple pools, a spa, and recreation and fitness facilities. The resort carries a five-diamond rating from AAA.

The largest single-property hotel trade to cross the fin-ish line in the last year closed just last week, when Sunstone Hotel Investors acquired the 130-room Montage Healdsburg in Northern California’s wine country for $265 million, an eye-popping $2 million/room. The luxury hotel, which just opened in December, was sold by Ohana Real Estate Investors.

New Offices Near Dallas on the BlockVanTrust Real Estate is marketing a recently built office

building in the Dallas area that could command bids of $105 million.

Offices Two at Frisco Station totals 210,000 sf in Frisco, a fast-growing, affluent city just outside Dallas. Offers are expected to come in at $499/sf, which would put the initial annual yield at 5.8%. Newmark is marketing the property for VanTrust of Kansas City, Mo.

The building was completed last year and is 93% leased, with a weighted average remaining lease term of 10.8 years. There’s no major rollover until 2026, and 90% of the leased space is occupied by publicly traded companies. Rent bumps will boost net operating income 2.9% annually over the next decade, according to marketing materials.

The property is part of Frisco Station, a $1.8 billion mixed-use project being developed by VanTrust along with Hillwood

Development and the Rudman Partnership, both of Dallas. VanTrust is the office developer, while the other two firms are handling multi-family and other aspects of the project.

The marketing campaign is touting the building’s loca-tion adjacent to the headquarters and practice facility for the Dallas Cowboys football team. There are 30 restaurants, five hotels with 760 rooms, urban lofts and apartment buildings with 2,700 residences, and 32 acres of parks, trails and green spaces nearby, according to marketing materials. The Frisco Station community was built with infrastructure for 5G tech-nology.

Nearly half of the space in Offices Two at Frisco Station is leased by companies that use it for their headquarters. That includes the largest tenant, home healthcare provider Addus HomeCare, which occupies 75,000 sf under a lease that matures in 2031. Other major tenants are: beverage conglomerate Keurig Dr Pepper (61,000 sf until 2037), technology company MTX Group (20,000 sf until 2029) and managed healthcare com-pany Magellan Health (18,000 sf until 2026).

Frisco is one of the nation’s fastest growing cities according to the U.S. Census. Since 2010, its population has grown 71% to 200,000. The median household income is $127,000. Nearly two-thirds of residents have a bachelor’s degree or higher.

VanTrust sold Offices One at Frisco Station in 2019. MetLife paid $92 million, or $398/sf, for that 231,000-sf property. CBRE brokered the deal.

Bay-Area Office Building ListedAn office property in the San Francisco Bay Area worth

about $100 million is being pitched as a potential life-science expansion play.

Shoreway Innovation Center totals 150,000 sf in Belmont. Local shop Westlake Realty has tapped CBRE to market the Class-A property.

The four-story building is 82% leased, with a weighted aver-age remaining lease term of less than three years. The pitch is that a buyer will be able to raise rates upon rollover. The 7-acre site also can accommodate an additional 300,000 sf of life-sci-ence development.

The San Francisco Peninsula has 23 million sf of life-science space that is 98.5% leased, according to marketing materials. The average asking rent is between $69/sf and $81/sf. There’s just 1.5 million sf of space under construction.

Shoreway Innovation Center is in the mid-peninsula life-science cluster. The area is home to companies such as 23andMe, Amgen, Gilead Sciences, Illumina, Johnson & Johnson and Merck. The property is 10 miles south of the larger South San Francisco life-science cluster.

The building is at 1301 Shoreway Road along U.S. Highway 101, a mile from the Belmont Caltrain station. It was com-pleted in 1983 and has had significant recent capital improve-ments, including modernization of the elevator, heating and air conditioning, and electrical systems. It has 571 parking spaces.


Banks ... From Page 1

down the road.All told, the top banks have just $15.4 billion of nonper-

forming loans on their books. There is another $2.1 billion of foreclosed properties, but 20% of that total belongs to just one regional bank in Texas focused on distressed loans.

Meanwhile, hundreds of billions of dollars have been raised for opportunistic and distressed investing — drastically skew-ing the supply-demand curve and helping support property values.

“It won’t be the tsunami we were all expecting last March and April,” said James Jordan, principal and portfolio manager at Taconic Capital of New York. “You will see a decent distressed opportunity, but it won’t be like the [global financial crisis] because of all the capital flooding into the system.”

Market participants pointed to several factors they say have helped banks maintain stronger balance sheets than in past crises. First, in the wake of the Great Recession, banks wrote lower-leverage loans and held higher reserves that left them better positioned to absorb the shock of future dislocations.

Further, between the Federal Reserve and Congress, the U.S. government has flooded the market with liquidity and encour-aged forbearances, extensions and other modifications that

allowed banks to avoid classifying as many loans as nonper-forming.

“The reason banks have been less aggressive than they were a decade ago is that everyone learned the ‘pretend and extend’ game to avoid being a forced seller into an illiquid market,” Jor-dan said.

Finally, the strong economy is propping up property values. Stock indexes are at or near all-time highs, and unemployment levels continue to fall.

“Balance-sheet lenders still think this a blip,” said Dennis McKeen, who works on distressed deals for Cygnus Capital of Atlanta. “They say, ‘Let’s work with our borrowers and see where we can come together.’ Banks are still taking a wait-and-see approach, and that’s a little surprising.”

Jonathan Davis, founder of Boston-based Davis Cos., said the federal government practically ensured that banks could more easily handle distress by taking action to keep the financ-ing markets functional last year.

“Regulators have done an incredible job of maintaining liquidity in the system and not allowing short-term volatility to destroy value,” he said. “Are prices down? A little bit, but not so much, generally speaking, that it’s putting pressure on the underlying debt.”

Davis, who has invested in multiple economic downturns, said the government’s work to keep liquidity in the market has been a win for banks and borrowers.

“It keeps the market orderly,” he added. “If lenders and equity investors believe there’s going to be liquidity for their assets under almost any circumstances, they’re going to be will-ing to invest and lend with less of a risk premium.”

Matt Anderson, a managing director with Trepp, said one clue as to how banks already have positioned themselves to avoid selling off loans at large discounts is their risk reserves.

Bank of America, Citigroup, J.P. Morgan and Wells Fargo set aside a combined $33.3 billion of fresh capital to cover poten-tial loan losses in the second quarter of 2020, according to a Trepp analysis. In first-quarter 2021 earnings reports, the banks reported that they had negative $9.1 billion in loss provi-sions — meaning they had clawed back some of the money set aside last year for losses, instead counting it toward net income.

“Although the Covid-related disruption to the economy is not yet over, the recalibration of loss expectations is a clear sig-nal that the banks think their current loss reserves should be sufficient to handle future charge-offs of bad loans,” Trepp said in an April 20 blog post.

Anderson called that a “double win” for the banks. “There’s plenty of capital available to snap up any distressed properties, and with the economy in a growth mode right now, the pricing on those distressed assets is going to be pretty advantageous for the sellers.”

Davis agreed that ultimately investors will pay up for dis-tressed deals, which will lower returns. “The fact of the matter

See BANKS on Page 16


Amount ($Bil.)Nonperforming commercial mortgages $12.2Nonperforming multi-family mortgages 0.9Nonperforming construction and land loans 2.3Total foreclosed properties 2.1Total distressed real estate 17.5Total real estate assets 1,783.7

Source: Trepp Bank Navigator

Commercial69.7%

Multi-family5.1%

C&L13.1%

Foreclosed properties

12.0%

Distressed Commercial Real EstateOn the Books of the Top 325 BanksAs of Dec. 31, 2020

RANKINGS



Top 40 Banks in Nonperforming Real Estate Loans at Yearend 2020 Nonperforming Commercial Real Estate Loans Total Construction Nonperf./ CRE Loans Commercial Multi-family and Land Total ’19-’20 CRE Loans ($Mil.) ($Mil.) ($Mil.) ($Mil.) ($Mil.) % Chg. (%) 1 Wells Fargo, San Francisco $126,300.0 $1,443.0 $33.0 $50.0 $1,526.0 180.5 1.2 2 J.P. Morgan, New York 125,303.0 534.0 58.0 379.0 971.0 266.4 0.8 3 M&T Bank, Buffalo 37,468.5 802.4 15.4 120.5 938.4 348.6 2.5 4 Goldman Sachs, New York 10,333.0 231.0 0.0 446.0 677.0 660.7 6.6 5 Bank of America, Charlotte 73,692.0 453.0 8.0 83.0 544.0 4.2 0.7 6 BBVA USA, Houston 16,070.1 441.7 1.5 25.8 469.1 314.2 2.9 7 Citigroup, New York 25,833.0 285.0 155.0 7.0 447.0 3,092.9 1.7 8 U.S. Bancorp, Minneapolis 36,935.0 380.0 12.0 41.0 433.0 448.1 1.2 9 PNC, Pittsburgh 36,183.8 315.9 54.8 16.7 387.5 245.8 1.1 10 MUFG Americas, New York 18,390.0 349.3 4.2 6.7 360.3 2,272.8 2.0 11 Morgan Stanley, New York 14,158.0 347.0 0.0 0.0 347.0 308.2 2.5 12 CIBC, Chicago 16,024.7 26.1 0.0 284.6 310.7 437.9 1.9 13 Capital One, McLean, Va. 32,050.0 175.1 108.4 9.8 293.3 323.0 0.9 14 Truist, Charlotte 58,010.0 253.0 0.0 34.0 287.0 117.4 0.5 15 Citizens Financial, Providence, R.I. 17,881.3 239.2 0.3 2.9 242.5 491.0 1.4 16 Regions Financial, Birmingham, Ala. 14,171.0 213.0 0.0 3.0 216.0 148.3 1.5 17 TD Group, Wilmington, Del. 29,447.2 167.9 10.1 17.2 195.2 31.6 0.7 18 Banco Popular, San Juan, P.R. 8,740.0 160.0 2.0 29.0 191.0 48.1 2.2 19 CIT Group, Livingston, N.J. 10,465.9 138.6 38.7 3.2 180.5 15,731.4 1.7 20 Fifth Third Bancorp, Cincinnati 15,465.3 142.5 4.5 22.2 169.2 231.8 1.1 21 TCF Financial, Detroit 9,807.0 145.6 3.0 7.5 156.1 290.5 1.6 22 Santander Holdings USA, Boston 15,733.0 76.5 72.4 2.2 151.1 185.8 1.0 23 BMO Financial, Wilmington, Del. 11,320.0 112.9 2.1 22.8 137.8 60.1 1.2 24 KeyCorp, Cleveland 15,590.4 120.1 15.4 1.2 136.7 19.4 0.9 25 Bankunited, Miami Lakes, Fla. 8,363.1 107.7 21.9 7.0 136.5 78.3 1.6 26 Huntington Bancshares, Columbus, Ohio 10,295.6 117.3 0.8 2.6 120.8 154.6 1.2 27 BNP Paribas USA, New York 15,597.7 84.7 12.9 7.9 105.5 60.0 0.7 28 S&T Bancorp, Indiana, Pa. 3,701.5 103.9 0.8 0.4 105.1 247.3 2.8 29 People’s United, Bridgeport, Conn. 15,643.0 64.2 2.1 29.3 95.7 65.8 0.6 30 Beal Financial, Plano, Texas 913.3 79.0 3.7 8.1 90.7 260.6 9.9 31 Hope Bancorp, Los Angeles 8,630.1 69.4 0.9 18.7 89.0 14.0 1.0 32 OFG Bancorp, San Juan, P.R. 1,081.2 79.5 0.2 8.0 87.7 43.5 8.1 33 Sterling Bancorp, Pearl River, N.Y. 10,893.1 46.1 4.5 30.0 80.6 174.9 0.7 34 Associated Banc-Corp, Green Bay, Wis. 7,071.5 77.7 0.0 0.4 78.1 1,493.8 1.1 35 Synovus Financial, Columbus, Ga. 17,510.8 72.1 0.1 3.7 76.0 318.0 0.4 36 F.N.B. Corp., Pittsburgh 9,493.1 69.1 4.2 2.2 75.5 58.3 0.8 37 Western Alliance Bancorporation, Phoenix 9,922.7 71.0 0.0 1.9 72.9 181.9 0.7 38 Sandy Spring Bancorp, Olney, Md. 6,113.1 51.7 1.2 16.5 69.4 198.3 1.1 39 Great Western Bancorp, Sioux Falls, S.D. 4,539.8 53.5 1.5 14.3 69.3 1,049.5 1.5 40 First Midwest Bancorp, Chicago 5,015.5 47.5 4.2 15.6 67.3 41.9 1.3 TOTAL FOR TOP 40 BANKS 910,157.3 8,747.5 657.9 1,781.9 11,187.4 202.2 1.2 TOTAL FOR TOP 325 BANKS 1,783,693.5 12,227.5 919.9 2,253.3 15,400.6 147.0 0.9


RANKINGS



Construction and Land Loans Total Nonperforming Nonperf./ 2020 2019 ’19-’20 2020 2019 ’19-’20 Total ($Mil.) ($Mil.) % Chg. ($Mil.) ($Mil.) % Chg. (%)

1 CIBC, Chicago $1,347.2 $1,147.1 17.4 $284.6 $12.5 2,179.8 21.1 2 Sterling Bancorp, Southfield, Mich. 206.7 179.7 15.0 41.9 0.0 20.3 3 Goldman Sachs, New York 3,982.0 3,343.0 19.1 446.0 83.0 437.3 11.2 4 Community Bank System, Dewitt, N.Y. 149.6 168.9 -11.4 14.8 0.0 9.9 5 OFG Bancorp, San Juan, P.R. 116.6 76.1 53.3 8.0 8.5 -5.4 6.9 6 Silver Queen Financial, Greenwood Village, Colo. 199.2 212.8 -6.4 12.2 0.0 6.1 7 Hope Bancorp, Los Angeles 309.1 312.2 -1.0 18.7 14.0 33.6 6.1 8 First Bancorp, San Juan, P.R. 217.5 115.2 88.7 12.8 9.6 33.3 5.9 9 Sterling Bancorp, Pearl River, N.Y. 642.9 467.3 37.6 30.0 0.4 6,812.4 4.7 10 Bank Leumi Le-Israel, New York 608.6 594.3 2.4 23.3 0.0 3.8 TOTAL FOR TOP 325 BANKS 272,911.9 253,155.5 7.8 2,253.3 856.2 163.2 0.8 Source: Trepp Bank Navigator

Top Banks in Ratio of Nonperforming Commercial Real Estate Loans Commercial Mortgages Total Nonperforming Nonperf./ 2020 2019 ’19-’20 2020 2019 ’19-’20 Total ($Mil.) ($Mil.) % Chg. ($Mil.) ($Mil.) % Chg. (%)

1 Sterling Bancorp, Southfield, Mich. $143.6 $158.2 -9.2 $20.8 $0.0 52,020.0 14.5 2 Beal Financial, Plano, Texas 840.1 1,063.2 -21.0 79.0 20.6 283.8 9.4 3 OFG Bancorp, San Juan, P.R. 936.3 1,021.7 -8.4 79.5 51.9 53.1 8.5 4 Stearns Financial, St. Cloud, Minn. 143.7 164.5 -12.6 11.0 16.7 -33.9 7.7 5 American Bancorp, Dickinson, N.D. 352.2 296.3 18.9 19.0 10.9 75.1 5.4 6 Hawthorn Bancshares, Jefferson City, Mo. 474.8 444.6 6.8 25.3 1.3 1,817.4 5.3 7 Goldman Sachs, New York 5,103.0 6,641.0 -23.2 231.0 6.0 3,750.0 4.5 8 New York Private Bank & Trust, New York 655.1 675.9 -3.1 26.7 45.1 -40.7 4.1 9 Middlesex Bancorp, Natick, Mass. 1,019.1 1,003.8 1.5 40.8 0.4 9,526.2 4.0 10 First Bankers Trustshares, Quincy, Ill. 175.4 178.6 -1.8 7.0 2.8 150.6 4.0 11 BBVA USA, Houston 11,208.0 11,176.0 0.3 441.7 104.6 322.3 3.9 12 Park National, Newark, Ohio 1,614.2 1,474.1 9.5 63.6 35.1 81.1 3.9 13 S&T Bancorp, Indiana, Pa. 2,697.6 2,868.2 -5.9 103.9 28.8 260.2 3.9 14 MUFG Americas, New York 9,481.3 10,097.0 -6.1 349.3 13.5 2,492.8 3.7 15 Landmark Bancorp, Manhattan, Kan. 145.8 113.2 28.8 5.3 1.4 267.9 3.6 16 Kearny Financial, Fairfield, N.J. 1,111.2 985.8 12.7 39.3 5.6 604.5 3.5 17 M&T Bank, Buffalo 22,837.1 22,245.3 2.7 802.4 149.0 438.6 3.5 18 Bank Leumi Le-Israel, New York 1,421.7 1,493.3 -4.8 43.1 62.2 -30.8 3.0 19 Axos Financial, Las Vegas 915.9 961.6 -4.7 27.3 1.9 1,314.2 3.0 20 Morgan Stanley, New York 12,093.0 14,131.0 -14.4 347.0 85.0 308.2 2.9 TOTAL FOR TOP 325 BANKS 1,130,139.9 1,092,557.6 3.4 12,227.5 5,068.6 141.2 1.1

RANKINGS

Multi-Family Mortgages Total Nonperforming Nonperf./ 2020 2019 ’19-’20 2020 2019 ’19-’20 Total ($Mil.) ($Mil.) % Chg. ($Mil.) ($Mil.) % Chg. (%)

1 RCB Holding, Claremore, Okla. $51.4 $47.5 8.2 $12.9 $0.0 25.0 2 Hawaiian Electric Industries, Honolulu 105.6 101.9 3.7 15.8 0.0 15.0 3 Beal Financial, Plano, Texas 64.3 78.7 -18.3 3.7 3.9 -6.6 5.7 4 Hometrust Bancshares, Asheville, N.C. 85.3 94.6 -9.9 4.1 5.3 -22.8 4.8 5 New York Private Bank & Trust, New York 446.4 449.0 -0.6 21.3 16.6 28.6 4.8 6 Community Trust Bancorp, Pikeville, Ky. 115.7 101.2 14.4 4.3 4.4 -1.0 3.7 7 Midland States Bancorp, Effingham, Ill. 276.0 153.3 80.1 10.2 6.2 64.4 3.7 8 WSFS Financial, Wilmington, Del. 448.7 601.3 -25.4 10.9 0.9 1,184.7 2.4 9 National Bank Holdings, Greenwood Village, Colo. 68.8 55.8 23.2 1.5 0.0 2.2 10 Citigroup, New York 8,632.0 7,916.0 9.0 155.0 5.0 3,000.0 1.8 TOTAL FOR TOP 325 BANKS 380,641.7 360,802.7 5.5 919.9 310.5 196.3 0.2



RANKINGS

Banks With Largest Holdings of Foreclosed Commercial Properties Based on loan balances when seizure occurred

Construction 2020 2019 Commercial Multi-family and Land Total Total ’19-’20 ($Mil.) ($Mil.) ($Mil.) ($Mil.) ($Mil.) % Chg. 1 Beal Financial, Plano, Texas $429.5 $0.0 $0.0 $429.5 $2.6 16,155.5 2 Wells Fargo, San Francisco 94.0 0.0 9.0 103.0 86.0 19.8 3 KeyCorp, Cleveland 96.3 0.0 0.0 96.3 10.5 821.1 4 Capital One, McLean, Va. 93.9 0.0 0.0 93.9 1.0 8,971.0 5 Bank of America, Charlotte 74.0 0.0 12.0 86.0 121.0 -28.9 6 J.P. Morgan, New York 85.0 0.0 0.0 85.0 41.0 107.3 7 International Bancshares, Laredo, Texas 49.8 0.0 9.3 59.2 68.6 -13.8 8 Truist, Charlotte 51.0 0.0 4.0 55.0 28.0 96.4 9 First Bancorp, San Juan, P.R. 44.1 0.3 6.3 50.6 54.7 -7.4 10 First Citizens Bancshares, Raleigh 28.0 0.1 16.9 44.9 50.3 -10.7 11 TD Group, Wilmington, Del. 33.9 0.0 0.3 34.2 41.0 -16.7 12 BancFirst, Oklahoma City 28.5 0.0 1.4 29.9 5.1 483.5 13 TCF Financial, Detroit 28.4 0.0 0.4 28.7 24.2 18.9 14 BOK Financial, Tulsa, Okla. 21.7 0.0 3.2 24.9 10.9 128.6 15 Ameris Bancorp, Atlanta 18.3 0.0 4.2 22.5 29.8 -24.6 16 Bancorp, Wilmington, Del. 17.6 0.0 4.4 22.0 23.7 -7.1 17 Hilltop Holdings, University Park, Texas 8.9 0.0 11.9 20.8 15.9 30.5 18 United Bankshares, Charleston, W.Va. 3.4 2.1 15.3 20.7 9.3 123.8 19 Hope Bancorp, Los Angeles 19.5 0.0 0.3 19.8 22.3 -11.2 20 Fifth Third Bancorp, Cincinnati 17.4 0.1 0.8 18.2 35.4 -48.6 21 Great Western Bancorp, Sioux Falls, S.D. 10.0 0.0 8.0 18.0 37.3 -51.7 22 Hometown Community Bancorp, Morton, Ill. 15.0 0.0 2.9 18.0 20.2 -11.2 23 Midland States Bancorp, Effingham, Ill. 15.5 0.0 2.3 17.7 4.0 342.9 24 East West Bancorp, Pasadena, Calif. 15.8 0.0 0.0 15.8 0.1 12,559.2 25 Wintrust Financial, Rosemont, Ill. 10.0 0.7 4.7 15.4 13.5 14.0 26 Regions Financial, Birmingham, Ala. 5.0 0.0 10.0 15.0 24.0 -37.5 27 Simmons First National, Pine Bluff, Ark. 7.9 0.0 7.1 15.0 14.6 2.8 28 EB Acquisition Co., Dallas 13.5 0.0 1.0 14.5 1.1 1,225.3 29 Banco Popular, San Juan, P.R. 10.3 0.0 4.0 14.3 18.5 -22.6 30 Pacwest Bancorp, Beverly Hills 13.0 0.0 0.2 13.2 0.4 2,899.5 31 Associated Banc-Corp, Green Bay, Wis. 12.9 0.0 0.3 13.1 15.7 -16.5 32 Seacoast Banking Corp. of Florida, Stuart, Fla. 6.0 0.0 6.7 12.7 12.1 4.4 33 First Bancshares, Merrillville, Ind. 6.7 0.0 5.8 12.5 7.2 72.6 34 Atlantic Union Bankshares, Richmond, Va. 9.9 0.0 2.6 12.4 7.4 68.5 35 Spend Life Wisely Co., Durant, Okla. 3.8 0.0 8.3 12.1 9.8 23.6 36 Premier Financial Bancorp, Huntington, W.Va. 0.8 10.8 0.4 12.1 11.1 9.6 37 Heartland Financial USA, Dubuque, Iowa 3.3 0.5 8.0 11.8 11.9 -1.2 38 Midland Financial, Oklahoma City 8.9 0.0 2.4 11.3 11.4 -0.9 39 South State Corp., Winter Haven, Fla. 8.0 0.0 3.1 11.1 10.2 8.8 40 PNC, Pittsburgh 2.1 0.7 8.1 10.9 35.5 -69.4 TOTAL FOR TOP 40 BANKS 1,421.4 15.3 185.3 1,622.0 947.5 71.2 TOTAL FOR TOP 325 BANKS 1,692.9 23.3 362.7 2,078.8 1,593.2 30.5



Acadia Pitches NJ Shopping CenterAcadia Realty is marketing a fully leased New Jersey shop-

ping center that’s worth about $50 million.The 153,000-sf Paramus Plaza is along one of the nation’s

busiest retail corridors in affluent Bergen County, 15 miles northwest of New York. At the estimated value, a buyer’s ini-tial annual yield would be 6.5%. JLL is shopping the property for Acadia, a REIT in Rye, N.Y.

The marketing campaign is touting its stability, especially the lengthy weighted average remaining lease term of 10.3 years, with no expirations before June 2029. Hobby Lobby anchors the shopping center, and other tenants include Ash-ley Homestore, BluePearl Pet Hospital, Chipotle, Marshall’s and Skechers. The property has net leases with rent bumps that provide income growth.

The shopping center is on 13 acres at 545 State Route 17 South in Paramus. Some 130,000 vehicles pass along that highway each day. Average household income in Paramus is $163,000. Paramus Plaza is near the Garden State Parkway and Interstates 80 and 95.

The Route 17 retail corridor generates $5 billion in annual sales, according to marketing materials. Nearby retail proper-ties include Westfield Garden State Plaza, an upscale mall with 300 stores. Other tenants in the area include Home Depot, Ikea,

Trader Joe’s, Whole Foods, several animal hospitals and car dealerships such as Lamborghini, Land Rover and Mercedes-Benz.

Paramus Plaza is within the State Route 4/Route 17 sub-market, which has 12 million sf of retail space that is 94.8% leased. Occupancy has remained above 94% since 2010. The submarket has average asking rents of $37.40/sf, among the highest in the nation, according to marketing materi-als. There are no retail properties under construction in the submarket, which keeps upward pressure on occupancy and rents.

Acadia has not been a very active player in the investment sales market during the year since the pandemic began, according to Real Estate Alert’s Deal Database. It has sold only one property: a 129,000-sf Home Depot in Bloomfield, N.J. Benderson Development paid $16.4 million for that store in February. Acadia hasn’t bought any properties since January 2020, but it has $100 million in acquisitions under contract, according to its earnings report released last week.

Norfolk, Va. Office Property ShoppedHarbor Group International has listed a Class-A office

building in Norfolk, Va., that’s expected to trade for about $75 million.

The 370,000-sf World Trade Center is being pitched as hav-ing stable income and the ability to improve returns as leases at below-market rents expire. A valuation of $203/sf would produce a 7.27% first-year yield. Harbor Group, a local invest-ment manager, has given the listing to Colliers.

The property is 89% leased to 25 tenants, with a weighted average remaining lease term of 6.2 years. In-place rents are about 10% below the property’s asking rates. The ros-ter reflects a mix of industries, including maritime-related companies and operations such as Port of Virginia, Virginia International Terminals and Virginia Ship Repair Association. There also are law firms, finance and insurance companies, and government units.

No tenant leases more than 11% of the property’s space. Four of the five largest tenants have leases that run until 2027 or later, and the fifth is currently negotiating to extend beyond its 2023 expiration.

The nine-story building at 101 West Main Street has a dis-tinctive exterior that bends with the curve of Main Street. There’s a three-level atrium with a skylight and terraces with views of the Elizabeth River and Town Point Park across the street. The property also has a social club with event space. It’s near shops, restaurants and hotels in downtown Norfolk.

In the past five years, the building has received $1.5 mil-lion of renovations that included upgrades to the mechanical systems, the infrastructure and the lobby.

Harbor Group paid $54 million, or $147/sf, in 2008 to acquire the property from UBS Global Asset Management. At the time, it was 88% occupied but slated to lose a large ten-ant.



https://www.adisa.org/

Mass. Site Suited for Life-ScienceTwo suburban Boston parcels are being pitched as an oppor-

tunity to develop life-science space.The properties, in Watertown, could accommodate about

200,000 sf of laboratories. Bids are expected to come in around $45 million. Cushman & Wakefield has the listing.

The offering consists of a 3.8-acre site that’s now occupied by a roughly 50,000-sf grocery store, at 560 Pleasant Street, and a 1-acre parking lot across a side street at 532 Pleasant Street. The owner is the Russo family, which has operated farms and shops in the area since the early 1900s. The family is willing to discuss keeping its market on the site or relocating.

Current zoning would allow for a three-story life-science building on the larger site, provided the smaller lot was reserved for parking. To develop additional space, a buyer would have to

seek approvals and include a parking structure.Continued red-hot demand for lab and life-science space

has nearly filled the favored submarkets in Cambridge and Boston and pushed into neighboring cities. Watertown, which borders Cambridge and Boston, has a growing cluster of life-science properties. Its 1 million sf of space is 95% occupied, and asking rents are $75/sf on a triple-net basis — up 25% since 2019.

Properties near the offered parcels are slated for life-science use. Griffith Properties and DRA Advisors plan to convert an adjacent 145,000-sf building, at 580 Pleasant Street, into labs. A mile away, in Waltham, TPG paid $340 million in December for two adjacent life-science complexes, Centerpoint and Gauge, with a combined 615,000 sf. The capitalization rates worked out to a thin 3.5%. Cushman represented the seller, a unit of Hilco Global.


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Industrial Shop Seeking to Add 3 ProsFresh off a final close for its sixth value-added fund, Pen-

wood Real Estate Investment is looking to make three hires.The West Hartford, Conn., industrial-fund operator wants

to add a senior vice president of acquisitions, an assistant port-folio manager and a senior real estate manager.

The buy-side post can be in Los Angeles or Orange County, Calif., and would report to head of production Zack Flynn. Can-didates should have at least seven years of experience.

The assistant portfolio manager would report to chief investment officer John Hurley and be based in West Hartford. Recruits should have seven to 10 years of experience in portfo-lio/asset management, acquisitions or capital markets.

The asset-manager position, also in West Hartford, requires at least seven years of experience. Duties include overseeing properties in Southern California and New Jersey. Strong skills with Argus and Excel are expected. The person would report to senior vice president Christine Kubas.

Interested candidates can email Donna Lucente for more information at [email protected].

Penwood was formed in 2003 by principals Richard Chase, Hurley and Karen Nista, all of whom previously worked together at Cigna.

The shop in March held a final close for the $381.5 mil-lion Penwood Select Industrial Fund 6. The fund targets a 13% return by purchasing or developing industrial properties in Southern California, New Jersey and Eastern and Central Pennsylvania. With leverage, the fund has some $750 million of buying power.

Banks ... From Page 10

is, if it has the word ‘distress’ on it, it’s being bid up,” he said.More distressed debt may yet emerge. In fact, as forbear-

ances end, moratoriums on foreclosures run out and banks reclassify loans as nonperforming, vulture investors are hope-ful they’ll find pockets of opportunity.

“The one question that’s got to be on everybody’s mind is what happens when the Fed turns the screws down on forbear-ance,” Davis said. “How is the market going to change? ... When that holiday on classification goes away, that has the prospect of being a game changer.”

While struggling retail and hotel properties are behind much of today’s distressed debt, Taconic’s Jordan believes that the future of office work also will play into how much oppor-tunity emerges. Over the next few years, distress will start to become clear as waves of new leases are signed at materially lower rents, thereby lowering asset valuations.

“The office side is extremely nuanced and idiosyncratic,” Jordan said. “It’s asset-, market-and even company-specific in the decisions that will be made there.”

Wells, which has the largest commercial real estate portfolio of any U.S. bank, continued to hold the most distressed debt at yearend. It had $1.53 billion of nonperforming loans on its books, up from $544 million a year earlier.

J.P Morgan followed, with $971 million of bad loans. M&T Bank ($938.4 million), Goldman Sachs ($677 million) and BofA ($544 million) rounded out the top five.

For foreclosed properties, Beal Financial of Plano, Texas, had the most bank-owned real estate at $429.5 million, an enor-mous increase from just $2.6 million in 2019. Beal focuses on distressed debt, and its strategy is to acquire problem loans and work them out.

With $103 million of bank-owned real estate, Wells was the only bank that also had more than $100 million in foreclosed properties.

The Trepp Bank Navigator data is based on reporting by U.S. banks, including those that have foreign ownership, but excludes the holdings of foreign banks’ U.S. branches and agen-cies, which are reported separately.

Bags ... From Page 1

assets, especially those with strong tenants in essential retail businesses, have emerged as a bright spot amid the disrup-tion.

The sale follows another big net-lease retail deal in March, which had been the largest struck during the pandemic. Inland Real Estate paid $295 million for a portfolio of 11 New Eng-land supermarkets, totaling 748,000 sf, fully occupied by gro-cer Stop & Shop under 20-year leases. JLL brokered that sale for a partnership between Winstanley Enterprises of Concord, Mass., and Surrey Equities of Eatontown, N.J. That sales price also exceeded initial expectations.

Benderson’s acquisition from Kroger is the largest retail trade since December 2019, when Realty Income paid $1.2 bil-lion to buy a nearly 5 million-sf portfolio from CIM Group, rep-resented by Eastdil Secured.

The marketing campaign touted the Kroger properties as having “high-quality locations and long-term investment grade tenancy.” Kroger, one of the largest retailers in the U.S., is rated Baa1/BBB by Moody’s and S&P. Fred Meyer, a unit of the Cincinnati-based company since 1998, helped pioneer the superstore concept — offering grocery and pharmacy depart-ments, banking services and products including clothing, jew-elry, home goods electronics and sporting goods.

The portfolio acquired by Benderson includes 15 proper-ties in Oregon — three in Salem, two in Eugene and one each in Albany, Beaverton, Corvallis, Dalles, Medford, Oregon City, Portland, Roseburg, Springfield and Tualatin.

There are 10 stores in Washington: two in Tacoma and the others in Bellingham, Everett, Longview, Lynnwood, Puyallup, Richland, Shoreline and Vancouver.

The remaining stores are in Anchorage, Alaska, and Garden City and Nampa, Idaho.

Benderson, which also invests in office, industrial and hotel properties, has remained aggressive during the pan-demic, making six purchases worth over $1.5 billion, includ-ing the Kroger deal. Founded in 1949, it owns more than 800 properties totaling 45 million sf in 40 states, according to its website.



DreamWorks ... From Page 1

offered much less frequently than in other West Coast markets such as San Francisco, Seattle and Silicon Valley, where big technology companies more often take up huge blocks of space.

The DreamWorks headquarters is on 15 acres at 1000 Flower Street. It was built in 1997 and renovated in 2009. The campus features a 165-seat theater, a recording studio, green rooms, a commissary, a library and a helipad.

DreamWorks fully occupies the property under a lease that runs until 2035. The studio has produced 39 feature films since 1998, earning three Academy Awards and 41 Emmy Awards. It also has developed hundreds of hours of content for Netflix since 2015.

Comcast acquired DreamWorks in 2016, paying $3.8 billion. The cable company has a market capitalization of $261 billion and an A- credit rating from S&P. Its equity value has climbed 309% in the past decade, and 56% since the onset of the pan-demic, according to marketing materials.

The property is within the Los Angeles Media Triangle sub-market, where Class-A space is 96.2% leased. Budgets for origi-nal content have grown 77% over the past three years, according to marketing materials, driving up demand for studio space.

Surging demand for content from streaming services such as Amazon, Apple, HBO, Hulu and Net-flix has dramatically increased the value of studio space, a phenom-enon accelerated by the pandemic. Glendale, like nearby Burbank, is home to a growing number of media and entertainment giants. Disney, NBC Universal and Warner Brothers all have offices there.

The biggest office trade in the Los Angeles area since the pan-demic started, and one of the larg-est in the nation, involved three studios and five nearby Class-A office properties in Hollywood in July. In that transaction, Black-stone paid Hudson Pacific Proper-ties of Los Angeles $808.5 million, or $753/sf, for a 49% stake in the 2.2 million sf portfolio. The Black-stone-Hudson Pacific joint ven-ture created by the acquisition has rights to build another 1.1 million sf of office and production space at the locations and is seeking studio acquisitions in the Los Angeles area and other markets.

Only one other Los Angeles office trade has exceeded $350

million since the start of 2020: the $430 million September sale of U.S. Bank Tower, a 1.4 million-sf downtown skyscraper.

New York’s investment-sales market also is benefiting from interest in studio space. The city had a major studio sale recently, with another on the block and several development projects underway.

In September, Hackman Capital and Square Mile Capital paid $482 million for Silvercup Studios, a New York com-pany led by brothers Alan Suna and Stuart Suna. That deal, brokered by Eastdil Secured, was for three campuses in Long Island City, Queens, and the Bronx that consist of 23 sound-stages totaling more than 240,000 sf and 265,000 sf of office/production space.

Meanwhile, Kaufman Astoria Studios, run by CEO Hal Rosenbluth, is weighing offers that it recently received for its sprawling campus in the Astoria section of Queens. The prop-erty could change hands at around $600 million. It’s unclear if the studio will retain an ownership stake. Investment bank Jefferies has been tapped for the assignment.

At least two other studio projects are planned in Astoria, including a 650,000-sf facility to be built by a partnership led by actor Robert DeNiro.


Week in ReviewHeard on the Beach: Casino Royale4/23/2021In 2015, Green Street introduced the Global Property Allocator (GPA), a monthly report that ranks property sectors in the US, UK, and Continental Europe based on the unlevered long-term returns they are expected to deliver.

Data Center Insights: Stealthily Big in Europe4/25/2021The European data center market is benefiting from strong secular tailwinds, while development by private investors and public REITs is accelerating.

Lodging Insights: Digging Deeper into Market Outlooks 4/23/2021 Green Street’s current forecast for U.S. hotel M-RevPAF growth calls for a sharp “V” shaped recovery in ’22 and full recovery to pre-Covid levels by ’24 despite lower business travel.

If you are not a Green Street client and are interested in learning more about our commercial real estate research, insights and analytics, please contact us and we will get back to you shortly.

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Southeast. Executive search firm BCGI Baron Consulting arranged the hire.

Joshua Schwalbe and Saul Scherl have started a new shop, Maple Hill Real Estate Investors. The Northern New Jersey company will chase value-added deals across property types in the Northeast and Southeast, targeting acquisitions from $10 million to $50 million. As managing principal, Schwalbe runs day-to-day operations, while Scherl, an executive with Howard Hughes Corp., is a general partner investor and advisor. Schwalbe left Atlantic Creek Real Estate in March and before that worked at Blackpoint Partners with Scherl.

Erin Beitz joined Rockhill Manage-ment, an affiliate of Rockpoint Group, as a senior vice president to expand its multi-family platform. She previ-ously spent nearly nine years at Carmel Partners, most recently as a senior vice president with oversight of the firm’s East Coast portfolio. Based in Rockhill’s

Boston headquarters, she reports to Tom Gilbane, a managing principal at Rockpoint. Search firm Keller Augusta arranged the hire.

Brian LeBlanc left Feinberg Properties last week to open an office for Roers Cos. in Nashville. He spent the past eight years in Feinberg’s New York headquarters. At Roers, LeBlanc will lead the Minnetonka, Minn., firm’s Southeast expansion, focusing on market-rate apartments. Initial markets include Atlanta, Nashville, Raleigh and Tampa. Roers is led by brothers Brian and Kent Roers and Jeff Koch. LeBlanc had prior stints at Carlton Group, AllianceBernstein and Westbrook Partners.

Acquisitions pro Jane Yang left Meadow Partners last week. Her plans are unclear. Yang spent eight years at the New York fund shop’s headquarters, leaving as a director. She previously spent three years in the commercial real estate group of Lehman Brothers.

Hanover Co. last month added Will Putnam as a development director to

source and execute apartment projects in Southern California. He’s based in the Houston shop’s Los Angeles office. Putnam joined from Sonder of San Francisco, where he was a senior director of real estate for a year and a half. Before that, he spent four years at SummerHill Apartment Communities as vice president of acquisitions.

Derek Jensen joined RealtyMogul last month as a director of acquisitions for the Los Angeles-based crowdfunding platform. He’s based in San Diego and buys apartment properties in the South-east and West. Jensen reports to chief executive Jilliene Helman. Previously, he spent 14 years as vice president of acqui-sitions at San Diego-based Pacifica Cos.

Mel Fish joined Buligo Capital last week to help the Israeli firm build a U.S. industrial platform. He came from industrial giant Exeter Property after spending two years at that fund shop in Conshohocken, Pa. Fish is a senior associate at Buligo, based in Haverford, Pa. The firm is best known as a multi-family player in the U.S., but it also owns hotel and retail properties.


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