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January 6, 2011


See our third story below for a list of upcoming Bisnow events.

Yesterday, Shorenstein bought Chicago’s 350 W Mart Center from a Vornado subsidiary for $228M, a significant buy in a market where Shorenstein’s presence had dwindled to one other property. What Vornado got from the deal? A sweet $54M profit.
The 1.2M SF building—home to the Chicago Sun-Times, AT&T, Comcast SportsNet Chicago, Ogilvy & Mather, electronic trading firms GETCO and Ronin Capital, a 535-key Holiday Inn with conference facilities, and others—is the first purchase for Shorenstein’s 10th fund ($1.2B, $75M of that from Shorenstein and the rest from foundations, endowments, pension funds, and high-net-worthers). Marshall Field developed the Merchandise Mart complex in 1930, and 350 W Mart was completed in ’77 (when it was serenaded by the dulcit tones of Andy Gibb's "I Just Wanna Be Your Everything"). Vornado got both properties in ’98 by acquiring Merchandise Mart Properties Inc.
This morning, Merchandise Mart Properties prez Mark Falanga told us that after Vornado bought the building for a reported $81M in ’98 and converted it from apparel showroom to office (there hadn’t been a lobby or windows, and it’s also now LEED Gold), it no longer fits MMPI’s core focus. He says lease rollover there is staggered.
Yesterday’s Chicago deal was for $190/SF, besting Shorenstein’s purchase of San Fran’s 890k SF Market Square (above, also a merchandise mart) for $110M, or $124/SF, last year. It’s being renovated to be a LEED Gold HQ for Twitter, which will move in this summer, and will be the largest contiguous block of "creative" office space in San Fran.


Rosen Partners managing director Dan Rosen tells us his NYC firm and Moscow’s Alfa Group have formed a JV to go after what all other investors are going after, East Coast properties. The partners could spend $1B, and they’re looking hard so they can get started right away, looking for multifamily, hospitality, and office. The goal is $100M-plus price points (he emphasized the “plus” part). Still, value-add and stalled projects will have a place alongside trophies. Dan says his firm and Alfa chairman Mikhail Fridman first worked together in the early ’90s when Rosen was investing in Russia.

Start 2012 off right with Bisnow’s insightful events, addressing the issues that mean most to you and your business. Plus, as always, awesome schmoozing!
Boston 1-12 Multifamily Summit  
DFW 1-12 Texas Hotel Investment Summit    
DC 1-12 Future of Media: Women   
Austin 1-17 Future of the I-35 Corridor   
NYC 1-17 Healthcare Real Estate Summit
NJ 1-18 Northern Jersey State of the Market  
San Fran 1-18 Healthcare Summit
Tysons Corner 1-18 Tysons Corner: The Next US City
Chicago 1-19 Industrial Summit 
Atlanta 1-20 Hotel Investment Summit 
San Antonio 1-24 Multifamily Summit
DC 1-24 Economic and Political Summit
DFW 1-25 Healthcare Summit
LA 1-25 State of the Market
Houston 1-26 Capital Markets Summit
DC 1-26 The Future of Mobile Entrepreneurs
Baltimore 1-31 Affordable Housing Summit

As more capital floods the student housing market, REITs are now pulling back from buying and focusing instead on funding new student housing developments. That's according the brand new research from Red Capital's research director Dan Hogan (with VP Joe Mandeville). Since 2010, nearly $3B in student housing traded, much of that with REITs. But as prices got “closer to fair value” through 2011, REITs started looking at alternatives. Caps currently average 5.5% to 7%, 150 or so basis points higher than multifamily. But Dan cautions that we'll see some investment leveling off as college enrollment plateaus in the next few years (people returning to work in the Post-Great Recession world).

Construction is under way on New Charlesview Residences in Boston, the largest new private multifamily development to start last year in terms of investment ($207M). It’s being developed by The Community Builders and Charlesview Inc. TCB SVP Bev Bates tells us planning started in 2003; it took nearly a year to finalize the JV with Charlesview Inc, a group of volunteers that managed the original Charlesview affordable housing project for 40 years. And then it took another three years and dozens of compromises (density, height, percentage of affordable housing, amount of green space, and what to order for lunch) to get entitlements.

The JV was arranging financing when the economy melted down in ’08. Luckily, Harvard wrote a big check (it will own the site of the original Charlesview upon completion of this project), and TCB was able to lock in $30M of bridge financing from AEGON, an insurance company funded by Google. The initial plan called for 282 units and a broader mix of incomes, but it landed at 240 units and 100 for-sale condos. 80% of the condos and 30% of the rentals are market rate. The project opens in fall 2013 and will include new streets, a public park, community center, 14k SF of retail, and underground parking for 243 cars. It’s being designed by CBT Architects.

Steve Becker
In a ceremony this week honoring his service to the Churchill Centre and his years of humanitarian work, Strategic Hotels founder and CEO Laurence Geller (yep, that's him with Sam Zell) was entered into the Most Excellent Order of the British Empire, as a Commander, no less. We hear that due to some botched paperwork in the British Foreign Office, Laurence was given the title CBRE instead of the standard CBE associated with the honor. Because it's frowned upon to disobey the queen, he'll be leaving his post at Strategic Hotels to work as a tenant rep. This happened before when famed hotel magnate Joey Ramone was mistakenly given a CBGB. You know the rest. All kidding aside, this is a tremendous and thoroughly-deserved honor for a true ambassador of the CRE industry. We congratulate you Laurence Geller, CBE, and ask you humbly, did the Queen give you a sword?
Hey, we dropped a contact lens. Can you just check and see if it fell under your desk? Tell sibley@bisnow.com if you find it.
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