published by costar group, inc. mark heschmeyer, editor ... · a new round of major u.s....
TRANSCRIPT
In this week's issue:
Debt: Deal with it. The key to surviving lies in deleveraging; the key to opportunities lies in following
those that do.
Aimco takes a $107 million hit on three California investments.
A Younan Properties' portfolio goes into special servicing.
Inland drops deal for 3 malls, leaving Feldman Properties teetering.
Sacked: 2008's brutal tally of job losses.
Macy's cuts workforce by 3.9%; reduces capital expenditures; reorganizes.
Starbucks closing 300 more stores; cutting 6,700 jobs.
CBRE, Duke complete $100 mil purchase of 2 distribution centers.
Centro sells power center to Acadia for $78 million, a 40% discount.
A new round of major U.S. corporation closures and layoffs were announced in California, Florida,
Georgia, Illinois, Indiana, Michigan, Mississippi, Nevada, New Jersey, Ohio, South Dakota, Tennessee,
Texas, Virginia and Washington.
Institutional Property Sales.
Properties Under Contract.
Property Financings.
Loan Maturity Leads on loans in Arizona, California, Florida, Georgia, Illinois, Louisiana, Maryland,
Nevada, North Carolina, South Carolina, Texas and Virginia.
Watch List of specially serviced loans and loans of concern in Arizona, California, Florida, Georgia,
Illinois, Mississippi, North Carolina, Nevada, New York, Ohio, Texas, Utah and Wyoming.
DEBT: Deal with It
The Key to Surviving Lies in Deleveraging;
The Key to Opportunities Lies in Following Those that Do
lthough complaining about the economy and the outlook for commercial real estate this year may seem
universal, two advisory firms issued somewhat contrarian reports this past week.
We're not going so far as to say that either Deloitte LLP or Advantus Capital Management Inc. has turned a blind
eye to the magnitude of troubles confronting the industry. However, both are taking a somewhat Pollyanna Whittier-
like view and asserting that, despite being hit by the economic collapse of 2008 and losing the legs that have held
the industry up to this point, there are still opportunities out there.
The key to their optimism lies in how firms deal with debt and how investors pay attention to those that do.
A
Published by CoStar Group, Inc.
Mark Heschmeyer, Editor Feb. 1-7, 2009
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2 "As they wait for financing (and deals) to flow again, commercial real estate investors can take comfort in the fact
that the sector is not as overbuilt relative to previous economic downturns or to the housing market, and that real
estate continues as a relatively attractive investment option, both at home and abroad," writes Dorothy Alpert, U.S.
Real Estate Sector Leader for Deloitte LLP, in the firm's 2009 Industry Outlook: Real Estate Challenging Times,
Emerging Opportunities.
"The current slowdown in commercial real estate activity is not about equity - there are companies that have plenty
of that," Alpert writes. "When financing at reasonable rates becomes more readily available, the floodgates should
open because real estate continues to attract domestic and international investors."
Current market conditions, however, are making financing harder than ever to obtain. The latest Federal Reserve
Board's quarterly survey of lending conditions issued this week shows that on balance, about 80% of domestic banks
reported that they had tightened their lending standards on commercial real estate (CRE) loans over the past three
months. During 2008, about 95% of domestic banks increased their loan-rate spreads, and about 80% tightened their
loan-to-value ratios.
Given those conditions, Alpert of Deloitte says that two actions, in particular, could help get transactions moving
again.
"First, if property sellers are willing to provide seller financing, they could counter banks' reluctance to lend
money," Alpert wrote. "Second, if landlords whose tenants are facing bankruptcy are willing to temporarily
restructure their lease agreements, it could keep those retailers in business and head-off the need to find replacement
tenants in a very difficult environment."
But as we mentioned up top, Deloitte's outlook is not entirely unrealistic.
"Unfortunately, she writes, "options are limited for those real estate companies whose debts mature in 2009. Until
funds from the Emergency Economic Stabilization Act begin to flow through to borrowers, the real estate industry
will continue to have little access to debt."
"Companies could try to renegotiate terms with their bank, but that is unlikely. Alternatively, companies could
institute cost-cutting measures and conserve cash to accrue the funds they need to pay down debt," Alpert continued.
"In fact, cash preservation will be an important tactic for all commercial real estate companies in the coming year -
even those with healthy balance sheets - because lines of credit could be pulled without warning."
Lowell Bolken, associate portfolio manager, real estate securities with Advantus Capital Management Inc. is looking
at opportunities among real estate investment trusts in the firm's report entitled Follow the Debt that came out this
past week.
"The direction public REIT share prices move in 2009 will partially be influenced by the direction of the economy,
which commercial real estate tends to lag," Bolken writes. "But it will also depend upon the stage REITs have
reached in deleveraging, along with the relative cost of capital. With a staggering amount of real estate debt
maturing in 2009, further market dislocation will occur. REITs will have to emerge with more heavily equity-
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3 weighted balance sheets. Those that are able to secure debt funding in 2009 will do so on much more stringent
terms, likely using a more diverse group of lending sources."
"The good news is that REITs may have a competitive advantage," Bolken continues. "Generally, REIT debt
leverage ratios going into the cycle were much more manageable than their private commercial real estate
counterparts. While the typical REIT had debt to total capitalization of roughly 45%, the typical private commercial
real estate investor borrowed at loan-to-values (LTV) of 75%. With a turnaround in the capital markets, REITs are
poised to once again tap into capital, though not as cheaply as in the past."
Advantus Capital said it continues to see a continued period of dislocation in both the equity and the debt markets
going into 2009. And because commercial real estate performance tends to lag the macro economy, it said it expects
to see more weakness in occupancy and rental rate trends across all sectors.
"However," Bolken writes, "having already touched an intraday low (Nov. 21, 2008) 75% below the Feb. 7, 2007,
peak, REIT equities may have priced in cap rate increases and weakening fundamentals."
"Without question, a turnaround in the REIT equity market will depend on a return to some form of funding
liquidity to rescue the debt side of the balance sheet. At that point, the math that is driving cap rates to higher levels
will finally reverse," he continued.
Bolken advises REIT investors to "follow the debt."
"Just as the debt market disruption led the real estate markets into the downturn, it might also provide clues about a
recovery," he writes."It is difficult to predict if and when the public debt markets will return to some sense of
normalcy. It is likely that REIT equity valuations, all else being equal, would find a new level of support, if this
occurs. A renewed source of funding would take pressure off the REITs to forcibly sell or otherwise encumber their
assets. When debt markets begin to normalize, the initial stage of healing in the markets will have begun."
Aimco Takes a $107 Mil. Hit on Three California Investments
Apartment Investment and Management Co. (Aimco) is taking a non-cash charges in its fourth quarter 2008
associated with the impairment of three real estate development assets: two California properties and an investment
in Casden Properties LLC, which holds land and other development assets in Southern California.
Based upon the decline in land values in Southern California and the expected timing of the company's
redevelopment efforts, Denver-based Aimco determined that the total carrying amount of its Lincoln Place property
in Venice, CA, was no longer probable of recovery. As such, Aimco said it will recognize an impairment loss of
$85.4 million, or $55.6 million, net of tax.
Similarly, Aimco assessed the recoverability of its investment in Treetops, a vacant property in San Bruno, CA, and
determined that the carrying value for the property exceeds its estimated fair value. Accordingly, Aimco will
recognize an impairment loss of $5.7 million for this property.
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4 As part of the March 2002 acquisition of Casden Properties Inc., Aimco acquired a 20% passive interest in Casden
Properties LLC, an entity organized to re-entitle and develop land parcels in Southern California. Aimco has
determined that its investment is not recoverable, and accordingly will recognize an impairment loss of $16.3
million, or $10 million, net of tax.
A Younan Properties' Portfolio Goes into Special Servicing
A spat with a loan holder has landed a Younan Properties Inc.' portfolio of seven office properties totaling more than
2 million square feet in special servicing. Four of the office properties are in the Chicago metropolitan area and three
are in the Dallas metro area.
The properties collective known as the YPI Transwestern portfolio are included in the ML-CFC Commercial
Mortgage Trust 2006-4, a commercial mortgage-backed securities (CMBS).
Standard & Poor's Ratings Services this past week said it is monitoring the status of the CMBS following the
portfolio's Jan. 23 transfer to the special servicer, LNR Partners Inc., due to imminent default.
The combined balance of the YPI Transwestern portfolio loans ($224.4 million, 5%) represents the third-largest
exposure in the CMBS.
The interest-only, fixed-rate loan bears interest of 5.83% and matures on Oct. 8, 2011.
In addition to the senior debt, the equity interests of the borrower secure a $36.5 million mezzanine loan held by The
GPT Group, one of Australia's largest diversified listed property groups. GPT holds the loan through a joint venture.
As of Sept. 30, GPT listed the value of the office portfolio at $286.1 million.
Officials with Woodland Hills, CA-based Younan Properties were provided opportunities to comment on this story
but had not done so by press time.
The primary loan in the CMBS was transferred to LNR after the Younan-affiliated borrower failed to provide partial
and full debt service payments for the past three months. The borrower has been withholding some debt payment as
a result of an ongoing dispute with the master servicer concerning reserves for tenant improvements and leasing
commissions.
In December 2007, the special servicer approved a lease extension and expansion request for the 200 N. LaSalle St.
property in Chicago subject to certain conditions, including that the Younan provide a guarantee for the tenant
improvement and leasing commission obligations under the lease.
The dispute originated when the borrower requested draws from the existing tenant improvement and leasing
commission reserve.
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5 Wells Fargo, the master servicer of the CMBS, denied the request because the borrower did not meet the conditions
of the December 2007 lease approval.
In November 2008, the master servicer reported that the borrower had only paid a portion of its November 2008
debt service payment. And reported again in January that it did not pay its full debt service for December 2008 or
January 2009, resulting in the transfer of the loan to special servicing.
As of the nine months ended Sept. 30, 2008, the Wells Fargo reported a combined debt service coverage of 1.06 and
occupancy of 75%.
For the same period, 200 N. LaSalle, which has the largest allocated loan balance ($92 million), reported debt
service coverage of 1. The DSC excludes the new lease (148,493 square feet or, 23% net rentable area of the
property) with a rent start date in May 2009, according to the most recent rent roll provided by the borrower.
LNR is in discussions with the borrower to resolve the dispute concerning the lease approval and reserves.
Other properties in the YPI Transwestern portfolio are as follows.
1600 Corporate Center, a 254,448-square-foot, 12-story, Class A- office building built in 1986 on 6 acres
site in Rolling Meadows, IL.
Bannockburn Corporate Center, a 205,402-square-foot, three-story, Class A office building built in 2000 on
15.517 acres site in Bannockburn, IL.
Kensington Corporate Center, an 86,107-square-foot, four-story, Class B office building built in 1986 on a
8.87 acres in Mount Prospect, IL.
6688 North Central Expressway, a 296,624-square-foot, 16-story Class A office building built in 1985 on
2.5 acres in downtown Dallas, TX.
Energy Square I, a 254,338-square-foot, 14-story Class B office building built in 1974 on 6.4 acres in
Dallas. And
Energy Square II, a 357,626-square-foot, 16-story Class B office building built in 1980 on a 3.25 acres in
Dallas.
A search for other loans to Younan Properties affiliates rolled up in CMBS deals revealed no other loan
delinquencies. Three of its loans were on CMBS watch lists as potential credit concern - all for low vacancy-related
issues due to the loss of large tenant.
Separately, Younan Properties is under contract with Prime Group Realty Trust to purchase 180 N. LaSalle St. in
Chicago. Closing on that purchase is scheduled for Feb. 18.
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6
Inland Drops Deal for 3 Malls,
Leaving Feldman Properties Teetering
By: Sasha M Pardy
Inland American Real Estate Trust terminated its agreement to assume the titles of Feldman Mall Properties'
Stratford Square, Northgate, and Golden Triangle malls in exchange for 2 million shares of Inland stock and $9.125
million in cash.
As a result of this termination, Feldman needs to raise capital from other sources in order to retire the $28.5 million
principal amount of unsecured note and preferred securities. In addition, Feldman said that in order to fund its
ongoing operations, it needs to raise additional capital or renegotiate existing debt arrangements.
Stratford Square is a 1.3 million-square-foot mall in Bloomingdale, IL, anchored by Burlington Coat Factory, JC
Penney, Kohl's, Macy's, Sears and Stratford Square Theaters.
Northgate is a 1.1 million-square-foot mall in Cincinnati, OH, anchored by Dillard's, JC Penney, Macy's and Sears.
Golden Triangle is a 764,719-square-foot mall in Denton, TX, anchored by Dillard's, DSW, JC Penney, Macy's and
Sears.
Sacked: 2008's Brutal Tally
From the start of the recession in December 2007 through December 2008, employers initiated 23,485 mass layoffs.
Each involved at least 50 people. The actions impacted 2.39 million workers. The numbers are the highest annual
levels since 2001 and 2002, respectively.
Manufacturing accounted for 33% of all mass layoff events and 41% of initial claims filed during 2008, up slightly
from 2007 (30% and 38%, respectively). The number of manufacturing claimants was highest in transportation
equipment manufacturing, 323,676, followed by food manufacturing, 72,081, and wood product manufacturing,
56,374.
Among the major industry sectors, manufacturing had the largest over-the-year increase in mass layoff-related initial
claims (+260,213) from 2007 to 2008. Within manufacturing, transportation equipment (+95,463), plastics and
rubber products (+24,638), and fabricated metal products (+23,083) experienced the largest increases from the
previous year. Administrative and waste services had the second largest increase (+78,183) among the major
industry sectors, due to more layoff activity in administrative and support services (+77,864).
Among the 50 states and the District of Columbia, California recorded the largest number of initial claims (446,480)
filed in mass layoff events during 2008, accounting for 21% of the national total.
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7 The states with the next highest numbers of initial claims were Michigan (132,468), Ohio (131,813), Pennsylvania
(128,041), and Illinois (103,685).
Eleven states--Florida, Hawaii, Indiana, Kentucky, Montana, New Mexico, New York, North Dakota, Tennessee,
Vermont, and Wyoming--recorded series highs in mass layoff claimant activity in 2008, while two states--Maine
and Virginia--reported series lows.
The national unemployment rate was 7.2% in December, seasonally adjusted, up from 6.8% the prior month and
from 4.9% a year earlier.
Macy's Cuts Workforce by 3.9%;
Reduces Capital Expenditures; Reorganizes
By: Sasha M Pardy
Macy's Inc. announced a series of cost reduction initiatives that the company expects will result in a $400 million
annual reduction in planned expenses for 2010 and $250 million for 2009. Included in the plan is a company-wide
consolidation of divisions and corporate office functions and investments in local infrastructure resulting in a net
reduction of 7,000 positions or 4% of its total workforce;
In addition, Macy's is shifting management of stores into a "My Macy's" format that will group all stores into 69
geographic districts including 10-12 stores each. This new structure will become effective in the second quarter and
will include approximately 1,200 new positions managing the My Macy's districts and regions. The company said a
new executive management team would be put in place as well.
Macy's further reduced its 2009 capital expenditure plan to $450 million, down from a previously announced $550-
$600 million. The company said no additional store closing announcements, aside from the 11 announced last
month, would be made at this time.
Starbucks Closing 300 More Stores; Cutting 6,700 Jobs
By: Sasha M Pardy
Seattle-based coffee roaster Starbucks Corp. plans to close 200 additional underperforming company-operated
stores. This is in addition to the 600 store closings the company announced in July 2008.
Internationally, Starbucks is closing 100 stores, plus the 61 store closures in Australia it announced during the
summer. Nearly all these stores will be closed by the end of Starbucks' fiscal year in September 2009.
The coffee retailer is also pulling further back on new store openings. During fiscal 2009, it plans to open 140 new
U.S. stores (down from its previous target of 200 stores) and 170 international stores (down from its previous
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8 expectation of 270 stores). Additionally, Starbucks has lowered its net new licensed store target (typically grocery
store, school, and airport locations) to 125 in the U.S. and 360 internationally. In comparison, Starbucks opened 445
net new company-operated stores and 438 licensed stores in the U.S. during fiscal 2008, as well as 786 net new
international locations.
Through these closures, as well as other "labor efficiency" initiatives, Starbucks said as many as 6,000 store
positions and 700 non-store positions (including 350 at its Seattle headquarters) would be eliminated in 2009.
Starbucks' first quarter results included a 10% decline in U.S. comparable store sales and a 6% decline in U.S. net
revenues.
CBRE, Duke Complete $100 Million Purchase
Of 2 Distribution Centers
By: Laurie Forbes
Los Angeles-based CB Richard Ellis Realty Trust and Indianapolis-based Duke Realty Corp. completed the
purchase of two build-to-suit distribution facilities totaling 2.34 million square feet in Ohio and Indiana for $99.7
million, or approximately $46 per square foot.
Duke and CBRE Realty Trust entered into a contribution agreement last May to purchase $248.9 million in
industrial property assets. The two buildings are the last of the six buildings Duke initially contributed to the joint
venture. CBRE owns 80% of the venture while Duke owns the remaining interest.
Allpoints Midwest-Building One is a 1.2 million-square-foot warehouse in Plainfield, IN, fully leased by Prime
Distribution Services Inc. The industrial at 125 Enterprise Parkway in West Jefferson, OH, measures 1.14 million
square feet and is fully leased by Kellogg Sales Co. Duke completed the bulk warehouses early last year.
"Both Columbus and Indianapolis are important warehouse/distribution markets for servicing the eastern half of the
U.S. With long-term leases to tenants in the consumer staples industry, we continue our disciplined approach to
investing in the current economic downturn," said Chuck Hessel, director of investments for CBRE Realty Trust.
The partnership plans to buy up to $800 million of newly developed build-to-suit projects through 2012. To date, the
joint venture has invested $282.3 million in seven properties in six states.
Each side used in-house representation. Please see CoStar COMPS #1623613 for more information.
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9
Centro Sells Power Center to Acadia for $78 Mil; 40% Discount
By: Sasha M Pardy
New York-based retail REIT, Acadia Realty Trust (NYSE:AKR) today announced it has purchased Cortlandt
Towne Center for $78 million from Centro Properties Group.
Cortlandt Towne Center is a 640,000-square-foot regional shopping center on E. Main St (Rte. 6) near the corner of
Lexington Ave. in Cortlandt, Westchester County, NY. Built in 1973 and renovated in 1999, the center is anchored
by Wal-Mart, A&P Food Market, Marshalls, Barnes & Noble, Regal Cinema, and Best Buy.
Until the recent loss of bankrupt anchor tenants (Linens 'n Things and Levitz Furniture) that disrupted its 95%
occupancy rate, Cortlandt Towne Center's historical net operating income was in excess of $9 million, said Acadia.
The center is now 85% occupied and brings in $7 million in net operation income.
Acadia said the $78 million purchase price, which equates to $122 per square foot, represents a 40% discount to the
center's replacement cost. Acadia's president and CEO, Kenneth Bernstein, said the REIT "may be acting ahead of
the real estate market's trough," but added the company is confident in its purchase due to the center's "great price,"
remaining category-leading tenant mix and high barrier-to-entry location.
Acadia acquired the center via its third discretionary investment fund, Acadia Strategic Opportunity Fund III LLC.
For more information, see CoStar COMPS ID# 1642699.
Closures & Layoffs
California
3M Co., 1331 Commerce Street, Petaluma is closing down and laying off 105 workers on Feb. 1.
A Firstgroup America, dba-First Transit, 5357 Valley Blvd, Los Angeles is laying off 177 workers on Feb.
28.
Adobe Systems Inc., 601 Townsend Street, San Francisco is laying off 75 workers on Feb. 3.
Adobe Systems Inc., 345 Park Avenue, San Jose is laying off 191 workers on Feb. 3.
Alza Corp., 1010 Joaquin Road, Mountain View is closing down and laying off 29 workers on March 20.
AT&T Co., 4430 Rosewood Drive, Pleasanton is laying off 27 workers on Feb. 6.
AT&T, National Customer Support, 2623 Camino Ramon, San Ramon is laying off 16 workers on Feb. 6.
Calsonic Kansei, 9 Holland, Irvine is closing down and laying off 28 workers on August 28.
Cartus, 27271 Las Ramblas, Mission Viejo is closing down and laying off 120 workers on Feb. 6.
Cnet Networks Inc., 235 Second Street, San Francisco is laying off 85 workers on Feb. 9.
Decurion Management Co., 120 North Roberson Boulevard Los Angeles, 90048 is laying off 80 workers
on Feb. 6.
Deutsch, 700 Hathaway Drive, Banning is laying off 78 workers on Feb. 21.
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10 Deutsch Industrial, Products Division, 5733 W Whittier Ave., Hemet is laying off 41 workers on Feb. 21.
Dole Fresh Vegetables Inc., 500 South Alta Street, Gonzales is closing down and laying off 186 workers on
March 1.
Domino Lasers Inc., 1904 Wright Circle, Anaheim is closing down and laying off 60 workers on Feb. 7.
Fluidmaster Inc., 30800 Rancho Viejo Road, San Juan Capistrano is closing down and laying off 27
workers on Feb. 18.
Gemological Institute America 5345 Armada Drive, Carlsbad is laying off 110 workers on Feb. 10.
Global Pharmaceutical Supply Group (GPSG), 700 Eubanks Drive, Vacaville is laying off 22 workers on
Feb. 20.
Gregg Industries Inc., 10460 Hickson Street, El Monte is laying off 81 workers on Feb. 11.
Hannibal Industries Inc., 3851 South Santa Avenue, 90058 is laying off 35 workers on Feb. 16.
JPMorgan Chase Bank, 4900,4920,4940,5020 & 5040 Johnson Drive Pleasanton, 94588 is laying off 654
workers on March 31.
JPMorgan Chase Bank, 17861, 17875, 17877 Von Karman Ave. & 17872 Gillette Ave., Irvine is laying off
34 workers on March 31.
JPMorgan Chase Bank, 123 & 201 Mission Street, San Francisco is laying off 120 workers on March 31.
JPMorgan Chase Bank, 17872 Gillette Avenue & 17875 Von Karman Avenue, Irvine is laying off 29
workers on May 1.
JPMorgan Chase Bank, 400, Main Street, 95202 is laying off 44 workers on May 31.
Kaplan Professional Schools, 25341 Commercentre Drive, Lake Forest, 92630 is laying off 55 workers on
Feb. 2.
Life Technologies, 850 Lincoln Center Drive, Foster City is laying off 40 workers on July 30.
Marriott Ownership Resorts Inc., 3130 S Harbor Blvd #150, Santa Ana is laying off 110 workers on Feb.
20.
Marriott Ownership Resorts Inc., 3130 S Harbor Blvd #150, Santa Ana is closing down and laying off 29
workers on March 6.
Marvell Semiconductor Inc., 5488 Marvell Lane, Santa Clara is laying off 46 workers on Feb. 13.
Naked Juice Plant, 435 West 8th Street, Azusa is closing down and laying off 33 workers on Feb. 13.
Pentair Electronic Packaging, 14100 Danielson Street, Poway is laying off 158 workers on Feb. 12.
Philips Lighting, 2930 S Fairview Street, Santa Ana is closing down and laying off 70 workers on Feb. 27.
Philips Lighting, 6603 Darin Way, Cypress is closing down and laying off 47 workers on March 27.
PVH Superbra/Insignia Neckwear Inc. 1735 S Santa, Ave., Los Angeles is laying off 148 workers on Feb.
15.
Ralphs Grocery Co., 3859 24th Street, San Francisco is laying off 67 workers on Feb. 14.
Ralphs Grocery Co., 3950 24th Street, San Francisco is closing down and laying off 31 workers on Feb. 14.
Ralphs Grocery Co., 1095 Hyde Street, San Francisco is closing down and laying off 17 workers on Feb.
14.
Ralphs Grocery Co., 1390 Silver Avenue, San Francisco is closing down and laying off 13 workers on Feb.
14.
Reelzchannel, 1201 W 5th, #T900, Los Angeles is laying off 64 workers on Feb. 8.
Roadway Express - Burbank, 12200 Montague Street, Pacoima is closing down and laying off 55 workers
on March 1.
San Francisco Housing Authority, 440 Turk Street, San Francisco is laying off 73 workers on Feb. 13.
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CoStar Group, Inc.
11 Seagate Technology LLC, 155 & 195, Milpitas Blvd. & 311 Turquoise Drive, Milpitas is closing down and
laying off 43 workers on April 3.
Sharp Cabrillo Skilled Nursing Center, 3475 Kenyon Street, San Diego is closing down and laying off 168
workers on April 3.
Shutterfly Inc., 3157 Corporate Place, Hayward is laying off 45 workers on April 2.
Silicon Storage Technology Inc., 1171 Sonora Court, Sunnyvale is laying off 60 workers on Feb. 15.
Solstice Capital Group Inc., 17461 Derian Ave., Suite 200, Irvine is laying off 135 workers on Feb. 9.
Starwood Vacation Ownership Inc., 190 Carousel Mall, San Bernardino is closing down and laying off 218
workers on January 19.
Stec Inc., 3001 Daimler St., Santa Ana is closing down and laying off 102 workers on March 6.
Sunesis Pharmaceuticals Inc. terminated its lease with ARE-Technology Center SSF LLC at 341 Oyster
Point Blvd. in South San Francisco, CA, which formerly served as Sunesis' headquarters and research and
development facility. Sunesis was required to pay Alexandria a base monthly rent and operating expenses
of approximately $15.7 million between February 2009 and June 2013. To terminate the lease, it paid $2.21
million.
The Western Union Co., 100 North Point, San Francisco is laying off 22 workers on June 5.
TTX Co., 10800 San Sevaine Way, Mira Loma is closing down and laying off 209 workers on Feb. 28.
Unilever Foodsolutions, 1930 California Ave., Corona is closing down and laying off 104 workers on Feb.
8.
USS-Posco Industries, 900 Loveridge Road, Pittsburg is laying off 827 workers on December 11.
Valeant Pharmaceuticals International, One Enterprise, Aliso Viejo is laying off 23 workers on March 31.
Vishay Siliconix, 2201 Laurelwood Road, Santa Clara is laying off 97 workers on Feb. 6.
Western Digital Fremont LLC, 44100 Osgood Road, Fremont is laying off 65 workers on March 2.
Western Digital Technologies Inc., 5863 Rue Ferrari, San Jose is laying off 22 workers on Feb. 6.
Wyndham Vacation Ownership, 18301 Von Karman Avenue, Suite 100 Irvine is laying off 56 workers on
Feb. 17.
Xyratex International Inc., 855 Riverside Pkwy, West Sacramento is laying off 157 workers on Feb. 16.
Yahoo! Inc., 2700 Pennsylvania Avenue, Santa Monica is laying off 77 workers on Feb. 13.
Yahoo! Inc., 701 First Avenue, Sunnyvale is laying off 295 workers on Feb. 13.
Yahoo! Inc., 2811 & 2821 Mission College Boulevard Santa Clara is laying off 173 workers on Feb. 13.
Yahoo! Inc., 3333 & 3355 Empire Avenue, Burbank is laying off 160 workers on Feb. 13.
Yellow Transportation - Santa Springs, 12250 Clark Street, Santa, Springs is closing down and laying off
83 workers on March 1.
YRC Inc., 4200 W Capitol Ave., West Sacramento is laying off 183 workers on March 1.
Florida
Chico's FAS Inc. is cutting 180 positions, or approximately 11% of the headquarters employee based at
11215 Metro Pkwy in Fort Myers, FL. The cuts were to occur starting last week.
Signature Special Event Services Inc. and Welcome Holdings LLC terminated a lease at 750 Central
Florida Parkway in Orlando, comprised of two buildings. The lease was scheduled to expire on March 31,
2012. SSES utilized the premises for storing and warehousing certain of its tent-rental products. Under the
Lease Agreement, SSES was required to pay the Landlord a base monthly rent of approximately $30,000.
Georgia, Michigan
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12 Barnes Group Inc. realigned its three-group reporting structure into two global business segments
(Precision Components and Logistics and Manufacturing Services). Precision Components is vacating its
Central Lake, MI, facility when its lease expires in September of 2009 and idling the Monterrey, Mexico
facility, both of which primarily support the transportation industry. Logistics and Manufacturing Services
is closing an Atlanta, GA, distribution center by the end of the first quarter. In addition, has frozen all
employee salaries.
Illinois
Amsted Rail Co., Inc. is laying off 363 workers at 1700 Walnut St. in Granite City on Feb. 16.
Arcelormittal is closing down and laying off 244 workers at 10726 Steel Drive in Hennepin on Feb. 20.
Caterpillar is laying off 814 workers at 14009 Old Galena Road in Mossville on Feb. 23.
Fox Valley Publications LLC is closing down and laying off 155 workers at 3101 N. Route 30 in Plainfield
on March 1.
Gareda Nursing Services, Inc. is laying off 1,458 workers at 1431 Huntington Drive in Calumet City on
Feb. 22.
General Binding Corp. is laying off 75 workers at 712 W. Winthrop Ave. in Addison on Feb. 9.
Gray Interplant Systems, Inc. is laying off 299 workers at 8801 N. University St.; Route 29 & Old Galena
Road in Peoria & Mossville on Feb. 23.
Gray Interplant Systems, Inc. is laying off 130 workers at 150 Spencer St., Bldg KK, in East Peoria on Feb.
23.
Interlake Material Handling, Inc. is possibly closing down and has decided to lay off 262 workers at 701
Interlake Drive in Pontiac on Feb. 15.
Interlake Material Handling, Inc. is possibly closing down and has decided to lay off 79 workers at 1230 E.
Diehl Road in Naperville on Feb. 15.
Kmart Corp. is closing down and laying off 85 workers at 2700 Plainfield Road in Joliet on Feb. 15.
Orval Kent Food Co. is laying off 142 workers at 120 W. Palatine Road in Wheeling on Feb. 20.
Roadway Express is laying off 136 workers at 3700 - 78th Ave. West in Rock Island on March 1.
SIRVA, Inc. is laying off 95 workers at 700 Oakmont in Westmont on Feb. 10.
SKF Sealing Solutions is closing down and laying off 169 workers at 900 N. State St. in Elgin on Feb. 27.
Indiana
Wabash National Corp. at 1000 Sagamore Pkwy South in Lafayette, IN, implemented additional cost
reduction actions that will substantially decrease its corporate overhead. It let go 25 associates, or 5% of its
salaried workforce. It has now laid off 170 workers in the past year. It has also temporarily cut salaries 10%
by moving to a 36-hour work week.
Michigan, Ohio
General Motors Corp. will cut 2,000 jobs at plants in Michigan and Ohio and it will halt production for
several weeks at nine U.S. plants over the next six months due to slow sales. GM will eliminate the second
shift at its Delta Township plant near Lansing, MI, on March 30 and the second shift at its Lordstown, OH,
factory will end April 6. About 1,200 workers will be laid off at the Michigan plant, while 800 jobs will be
cut in Ohio. The plant shutdowns come about a month after GM temporarily closed 20 factories across
North America.
Mississippi
Watch List
CoStar Group, Inc.
13 Hancock Fabrics Inc. based at 1 Fashion Way in Baldwyn, MS, is cutting 30 corporate and store support
positions, equating to approximately 9% of the corporate (non-store personnel) workforce. The cuts were
effective last week. In addition to cost reductions, the company has lowered its planned capital
expenditures for fiscal 2009 by approximately $4 million or 45% from the anticipated 2008 levels. The
2009 capital expenditures will relate primarily to the relocation of certain stores and system improvements
to enhance inventory management.
Nevada
International Game Technology based at 9295 Prototype Drive in Reno, NV, will reduce its workforce by
approximately 200 manufacturing-related positions. IGT's manufacturing functions are based mainly in
Reno with some related activities in Las Vegas.
New Jersey
The Children's Place Retail Stores Inc. plans to relocate its e-commerce business from its Secaucus, NJ,
distribution center in Harmon Cove Industrial Park to the its Southeast distribution center in Fort Payne,
AL, in June 2009. Approximately 350 positions at the Secaucus facility will be eliminated by the planned
move.
Ohio
MeadWestvaco Corp. will discontinue its MWV Calmar pump and dispensing manufacturing and
distribution operations in Washington Court House, OH. The Washington Court House facility
manufactures dispensers for the personal care and beauty industry. The company is consolidating
production and equipment from Washington Court House to its San Luis Potosi, Mexico, plant. The
transition is expected to be completed by the end of 2009. A small component manufacturing presence will
be maintained at Washington Court House. The closure will impact approximately 278 hourly and salaried
employees.
South Dakota
Hutchinson Technology Inc. will close its Sioux Falls, SD, facility at 2301 E. 60th St. North and
consolidate those operations at its Eau Claire, WI, and Hutchinson, MN, facilities by March 29.
Tennessee
Blount International Inc. will permanently close its Milan, TN, production facility. It is anticipated that the
closure will be completed during the second quarter of 2009. The Milan facility currently is one of the
seven manufacturing facilities supporting the company's core business, the Outdoor Products segment. The
Milan facility employs close to 100 employees and accounted for approximately five% of the segment's
production cost in 2008.
Texas
Unidym Inc. plans to close its operations at 16200 Park Row in Houston, TX, and consolidate its operations
in its Northern California facilities. Unidym currently leases two facilities in the Houston area. Unidym will
continue to incur rent expense for the Houston facility it currently occupies under a month to month lease
until the facilities are vacated and returned to the landlord. Unidym leases another facility in Pasadena, TX
Watch List
CoStar Group, Inc.
14 to which it was previously planning to relocate its Houston operations. Unidym is seeking to sublease this
facility and will incur rent expense until it enters into a sublease.
Virginia
Cuisine Solutions Inc. terminated its lease with Duke Shirley LLC at 85 S. Bragg St., Suite 600, in
Alexandria, VA, effective Feb. 15.
Washington
Weyerhaeuser Co. is closing two mills in Aberdeen, WA, state due to weak market conditions. The
closures include the permanent shutdown of a sawmill and its Pacific Veneer mill. The closures will affect
approximately 196 hourly and 25 salaried positions.
Nationwide
AOL based in New York is cutting up to 700 jobs, or about 10% of the Internet unit's work force, in a bid
to cut costs. Randy Falco, AOL CEO, told employees that it plans to cut the jobs in the next several
quarters. He also said that AOL will skip merit pay raises in 2009.
Boeing Co. based in Chicago, IL, plans to cut 10,000 jobs, or about 6% of its workforce. The job reductions
include 4,500 that were previously announced in the commercial-plane half of Boeing's business.
Bon-Ton Stores Inc. based at 2801 E Market St. in York, PA, is reducing its reduce corporate and store
personnel by approximately 1,150 positions.
Corning Inc. based in Corning, NY, plans to reduce its workforce by about 3,500 employees, or 13%,
before the end of the year. About 1,500 of the reductions are salaried employees. The company is also in
the process of reducing more than 1,400 temporary workers. The restructuring program will include a
selective early retirement program, global workforce reductions and consolidation of manufacturing
facilities. The company also suspended merit increases for its salaried employees.
Eastman Kodak Co. based in Rochester, NY, expects to reduce its worldwide employment by between
3,500 and 4,500 positions during 2009, approximately 14% to 18% of its total workforce. This includes the
reduction of 2,000 to 3,000 positions related to the company's 2009 restructuring program. The reductions,
which include executive positions, have commenced and the company expects to implement the majority of
the actions associated with this program in the first half of 2009.
ING will be reducing its global workforce by approximately 7,000 full-time positions this year. As part of
the restructuring, Michel Tilmant will step down from the executive board. It has appointed Jan Hommen,
currently Chairman of the Supervisory Board of ING Group, as CEO of ING Group.
Jabil based in St. Petersburg, Fl, plans to cut its manufacturing capacity in certain geographies and to shrink
its worldwide workforce of 85,000 by approximately 3,000. Approximately 10 global plant sites will be
impacted and approximately 10% of the headcount reductions will take place in the United States.
Kimberly-Clark Corp. based in Dallas, TX, is consolidating its infant and child care operations in North
America. Employees at all 23 facilities slated for sale, closure or streamlining as part of the cost reduction
plan have been notified about workforce reductions and other actions.
NEC Corp. plans to close three domestic production facilities and five other business locations and cut
9,500 jobs worldwide, about 450 of which will be in the U.S.
Oshkosh Corp. based in Oshkosh, WI, is cutting its workforce by 7%, which is in addition to the workforce
reduction concluded in the summer of 2008. In addition, it plans to close a number of underutilized
facilities, which it did not identify.
Watch List
CoStar Group, Inc.
15 Pfizer and Wyeth entered into a definitive merger agreement under which Pfizer will acquire Wyeth in a
cash-and-stock transaction currently valued at $50.19 per share, or a total of approximately $68 billion.
While the combined company will create one of the most diversified companies in the global health care
industry, it will initially mean a cut of about 8,000 jobs through elimination of duplicative job functions.
SAP with U.S. headquarters in Newtown Square, PA, intends to reduce its workforce globally by 3,000
positions to 48,500 by year-end 2009, taking full advantage of attrition as its primary means of cuts.
Sprint Nextel Corp. in Overland Park, KS, plans to eliminate 8,000 positions within the company, which is
expected to be largely completed by March 31. The positions to be eliminated will impact all levels of the
company and the impact on geographic locations will vary. The reduction total includes approximately 850
positions expected to be eliminated under a voluntary separation plan started late last year.
Standex International Corp. based in Salem, NH, plans to cut 190 jobs and consolidate plants. It closed a
Hydraulics Products group operation and consolidated the production into an existing facility. It is closing a
Cooking Solutions facility at 30 Pine St. in New Rochelle, NY, and will move production to operations in
Mexico and Wyoming. In its Engraving group, it is consolidating mold texturizing production from Detroit,
MI, facility into a Canadian facility.
Texas Instruments Inc. based in Dallas will reduce total employment by 12% through 1,800 layoffs and
1,600 voluntary retirements and departures.
Institutional Property Sales
Office
Opus Corp. sold Phase II of the Excelsior Crossings Office Campus in Hopkins, MN, to a private investor
for $52.25 million, or about $195 per square foot. The seven-story, 268,000-square-foot office building at
9300 Excelsior Blvd. is scheduled to complete construction in July. The property will be fully occupied by
Cargill. Thomas Holtz and Steven Buss of CB Richard Ellis represented the seller. Michael Fruchtman of
Real Estate Capital Partners represented the buyer. (By: Andrew Sears; CoStar COMPS #1634571)
Invesco Real Estate purchased the Jefferson building at 1225 19th St. NW in Washington, DC, from
BlackRock Realty for $26.2 million, or $360 per square foot, at a 7.3% cap rate. The 72,756-square-foot
office building was 93% occupied at the time of sale, with the recently expanded Palm Restaurant as a
major tenant. The building delivered in 1963 near Dupont Circle in the business district. James Meisel, Dek
Potts and Andy Pulliam of HFF represented the seller. (By: Marcus Robinson; CoStar COMPS #1632781)
The Foundation Group sold Plaza 5051 at 5051 Verdugo Way in Camarillo, CA. EBREM LLC purchased
the Class A medical-office building for $15.4 million, or approximately $300 per square foot. The three-
story 51,354-square-foot building was built in 2006 and was leased to a number of health care related firms
last year. The building was purchased as an investment with a cap rate of 6.78%. The building was 93%
occupied at time of sale. William Kiefer, Steve Economos and Geoffrey DeWolf of NAI Capital
represented the seller. David Wise of American Corporate Real Estate Services represented the buyer. (By:
Stephanie Phongpitag; CoStar COMPS #1632243)
Industrial
Watch List
CoStar Group, Inc.
16 The Home Depot sold two distribution centers in Alabama and Georgia to The Inland Real Estate Group of
Cos. Inc. for $59.2 million, or approximately $45 per square foot. The Atlanta-based home improvement
retailer also leased back the nearly 1.32 million square feet in industrial space for 18 years. The 1-year-old
facilities each measure 657,600 square feet. The first is at 6400 Jefferson Metropolitan Parkway in
McCalla, AL, about 20 miles southwest of Birmingham. The second one is just outside of Valdosta, GA, at
6201 Peterson Road in Lake Park. It's nearly five miles from the Florida state line and about two hours
northeast of Tallahassee. CB Richard Ellis represented Home Depot. Inland used in-house representation.
(By: Laurie Forbes; CoStar COMPS #1640340)
Hunter Douglas Real Property Inc. sold the industrial facility at 12400 Stowe Drive and an adjacent lot in
Poway, CA, to an investment group known as DEI LLC for $15 million. Upon the sale, National
Powersport Auctions signed a lease valued at $6.6 million to fully occupy the 133,125-square-foot
building. Russ Sande and John Brady of CresaPartners represented the seller. Barry Hendler, Matty
Sundberg, Bryce Aberg and Todd Murphy of Grubb & Ellis|BRE Commercial represented the buyer. (By:
Adrian Robles; CoStar COMPS #1631498)
Retail
J.S. Rosenfield & Co. closed on the acquisition of Larkspur Landing, a 172,443-square-foot (gross
leaseable area) shopping center on Larkspur Landing Circle in Marin County, Larkspur, CA. The seller,
Inland Western Retail Real Estate Trust, sold the center for $65 million. Built in 1978, the neighborhood
center is anchored by Bed Bath & Beyond and 24-Hour Fitness. City National Bank was the lead in a group
of lenders. (By: Sasha M Pardy; CoStar COMPS ID# 1635754)
Inland American Real Estate Trust closed on the purchase of a Hendersonville, TN, shopping center. The
235,144-square-foot Streets of Indian Lake shopping center was 91% occupied at the date of acquisition.
Inland paid $20.8 million in cash to and assumed a $40.8 million first mortgage from the seller, Columbus,
OH-based developer, Continental Real Estate Cos. The loan requires Inland make interest only payments at
an annual rate of one month LIBOR plus 1.5% and matures on December 1, 2011. Inland said it would
acquire an additional 21,249 square feet of the currently vacant space at the shopping center for $8 million
at a later date. (By: Sasha M Pardy; CoStar COMPS ID# 1638534)
Multifamily
Advanced Real Estate Services Inc. purchased The Courtyards, a 153-apartment unit complex at 12401
Studebaker Road in Norwalk, CA. A subsidiary of Kennedy Wilson sold the 118,600-square-foot
community for $22.9 million, or about $149,673 per unit. The sale was 1031 exchange leasehold. The pro
forma cap rate is 6.4% with a GRM of 9.2%. Stewart Weston of Marcus & Millichap represented the seller
as well as the buyer. (By: Stephanie Phongpitag CoStar COMPS #1625308)
BPG Properties Ltd. sold a 261-unit apartment complex in North Olmsted, OH, to Illinois-based JVM
Realty for $19 million, or approximately $72,796 per unit. The 572,322 square-foot property consists of 18
buildings at 5800 Great Northern Blvd. on 29.39 acres. The complex, known as Butternut Ridge
Apartments, was built in 1992. It sold at a confirmed cap rate of 7.68%. Fannie Mae financed the loan.
Rick Vidrio and Rick Brace of Hendricks & Partners represented the seller. (By: Salama Karim-Camara;
CoStar COMPS #1635596)
Watch List
CoStar Group, Inc.
17 Riveroaks Apartment Holdings LLC purchased Riveroaks, a 294-unit apartment complex at 801 Valley
Circle Drive in Saline, MI. The 254,190-square-foot complex sold for $9 million, or about $30,612 per
unit. The transaction was an REO sale, purchased from Bank of America. The cap rate at the time of the
deal was 10.6%. The complex is made up of 50 one-bedroom/one-bathroom units and 244 two-
bedroom/one-bathroom units. The average-square-footage of a unit is 865 square feet. The buyer is
planning extensive renovations and improvements to the property. The renovations are scheduled to begin
next month with a completion scheduled for this spring. Rick Vidrio, Rick Brace, Kevin Dillon, Cary
Belovicz and Andrew Bayster of Hendricks & Partners represented to seller. (By: Erica Underland; CoStar
COMPS #1638062)
Health Care
Cornerstone Growth & Income REIT Inc. purchased an assisted-living facility, Caruth Haven Court, from
SHP II Caruth LP for $20.5 million. The acquisition was funded with net proceeds raised from our ongoing
public offering and a secured bridge loan obtained from Cornerstone Operating Partnership LP. Caruth
Haven Court consists of approximately 91 assisted living units in a 75,000-square-foot building on
approximately 2.2 acres of land in the Highland Park area north of Dallas, TX. The $14 million acquisition
bridge loan matures Jan. 21, 2010, with no option to extend and bears interest at a variable rate of 300 basis
points over prime rate for the term of the loan.
Elkco Properties purchased a senior living complex at 6800 Leetsdale Drive in Denver, CO, from Sunwest
Management Inc. for nearly $11.83 million, or approximately $231,961 per unit. The assisted living facility
contains roughly 51 units, was built in 1987 and is on a 2.02-acre parcel. The buyers' contact reported that
the property was 60% occupied at the time of sale. Jacob Gehl and Scott Kantor of Marcus and Millichap
represented the buyer and the seller. (By: Jason May; CoStar COMPS #1625003)
Lender Leads
(on deals completed in the first two weeks of the year)
Property
Property
Type, Size Sale Price Lender
First Deed
Loan
Amount LTV Buyer Seller
Hampton Inn Carlsbad,
2229 Palomar Airport
Road, Carlsbad, CA
Hospitality,
94 $15,800,000 AGO Hills LLC $11,000,000 70%
Alps Lodging
2 Inc
Tarsadia
Hotels
Wilton Towers, 520 NE
20th St., Wilton
Manors, FL
Multifamily,
150 $15,100,000 First Bank $7,550,000 50%
RK
Properties
Inc
Bank of
America
Watch List
CoStar Group, Inc.
18
Ashland Farms at
North Andover (98
units), 700 Chickering
Road, North Andover,
MA
Health
Care,
64,808 $17,384,063
Green Park
Financial LP $20,030,000 115%
Benchmark
GPT North
Andover LLC Ventas Inc.
Cabot Park Village
(100 units), 280
Newtonville Ave.,
Newton, MA
Health
Care,
101,000 $15,000,000
Massachusetts
Housing
Finance
Agency $12,500,000 83%
Benchmark
GPT North
Andover LLC Ventas Inc.
Chestnut Park at
Cleveland Circle (90
units), 50 Sutherland
Road, Brighton, MA
Health
Care,
48,000 $12,568,561
Massachusetts
Housing
Finance
Agency $11,850,000 94%
Benchmark
GPT North
Andover LLC Ventas Inc.
Hidden Palms
Apartments, 14555
Bruce B Downs Blvd.,
Tampa, FL
Multifamily,
256 $14,500,000
Sovereign
Bank $9,700,000 67%
Residential
Management
Inc.
Equity
Residential
Properties
Trust
400-450 Country Club
Road, Eugene, OR
Office,
106,259 $14,750,000
Wells Fargo
Bank $9,600,000 65%
McKay
Investment
Company
LLC
Nova Ccop
Inc
Spalding Bldg, 319 SW
Washington St.,
Portland, OR
Office,
98,769 $12,500,000
Wells Fargo
Bank $5,299,425 42%
Manchester
Capital
Management
LLC
Felton
Management
Company
Under Contract
Grubb & Ellis Co. received non-refundable earnest money deposits totaling $6.25 million from an
undisclosed buyer for the Danbury Corporate Center, a class A office complex in Danbury, CT. Upon
closing, the transaction is expected to result in net cash proceeds of approximately $14 million. Grubb &
Ellis purchased the 1-million-square-foot office complex for approximately $80.8 million in June 2007.
Dover Motorsports Inc. agreed to sell Memphis Motorsports Park to Gulf Coast Entertainment LLC. Under
the terms of the agreement, Dover Motorsports will sell all of the stock of its subsidiary Memphis
International Motorsports Corp., the owner of Memphis Motorsports Park, to Gulf Coast Entertainment for
$10 million in cash. Closing is expected to take place on or about April 30, 2009 and is subject to financing
and customary closing conditions.
Watch List
CoStar Group, Inc.
19 The following properties were reported to CoStar Group this past week as having come under contract.
Property Property Type, SF Days on
Mkt
Asking Price Listing Broker
1100-1106 W Avenue K, Lancaster, CA Retail (Power Center), 12,805 227 $5,774,000 Marcus & Millichap
Pebble Place, 2140 E Pebble Road,
Las Vegas, NV
Office, 25,939 279 $8,000,000 Colliers International
Pebble Place, 2190 E Pebble Road,
Las Vegas, NV
Office, 25,939 279 $8,000,000 Colliers International
Retail; 84 Lumber, 5777 Scarlett Court,
Dublin, CA
Industrial, 18,000 95 $5,170,000 84 Lumber Company
7701 Herschel Ave., La Jolla, CA Office, 10,236 151 $6,500,000 Grubb & Ellis|BRE
Commercial
99 Alpine Drive, Dewitt, NY Multifamily, 155,880 245 $8,000,000 Sutton Real Estate
Company
Property Financings
Post Properties Inc. closed on five, cross-collateralized mortgage loans with Deutsche Bank Berkshire
Mortgage Inc., pursuant to Freddie Mac loan program, secured by mortgages on the following Post
communities: Post Briarcliff, Post Crossing and Post Glen in Atlanta, GA; Post Hyde Park in Tampa, FL;
and Post Corners in Fairfax Co., VA. The mortgage loans have an aggregate principal amount of
approximately $202.2 million, require fixed interest-only payments for the first two years and then
principal and interest payments for the remaining term of the loan based on a 30-year amortization
schedule. The loans bear interest at a fixed rate of 5.99% and mature in 10 years on Feb. 1, 2019.
Mack-Cali Realty Corp. obtained $64.5 million in mortgages for two New Jersey office properties.
Guardian Life Insurance Co. of America provided the financing. One River Centre in Red Bank received
$44.9 million. The three-building office complex at 331 Newman Springs Road was constructed in 1985
and totals 480,000 square feet. Tenants include FirstEnergy Corp., Telcordia Technologies and UBS
Financial Services. The Mack Cali Corporate Center in Clark received $19.6 million. The six-story,
182,555-square-foot office building at 100 W. Walnut Ave. is home to many tenants including Cap Gemini
Ernst & Young, Global Risk Consultants Corp. and HealthEd. The mortgages each have a 10-year term and
an interest rate of 7.25%. (By Andrew Deichler)
American Community Properties Trust secured financing that will enable it to begin construction of
Gleneagles Apartments, a 184-unit rental property in the planned community of St. Charles, MD. The
$25,045,200 loan, which was secured from Capmark Finance Inc. and insured by the U.S. Department of
Watch List
CoStar Group, Inc.
20 Housing and Urban Development (HUD) is a 40-year non-recourse permanent mortgage with an interest
rate of 6.9%. Harkins Builders, Inc. is the general contractor for the project. ACPT projects that
construction of the eight buildings will be completed over the next 14 months, and expects the first building
to be available for occupancy in the fourth quarter of 2009.
NorthMarq Capital arranged first mortgage financing of $18.9 million for Dunes at Falcon Valley, a 208-
unit multifamily property, in Lenexa, KS. NorthMarq placed the loan with one of its life insurance
correspondents for the borrower, Dunes at Falcon Valley LLC. David Farrell, senior vice president and
managing director of NorthMarq Capital’s Kansas City regional office, arranged the deal.
Comstock Homebuilding Companies Inc. entered into a forbearance agreement with Guggenheim
Corporate Funding with respect to the $13.5 million outstanding under the company's secured Comstock
Penderbrook project loan. The company had previously reported receiving a notice of default from
Guggenheim in August 2008. In connection with the forbearance agreement the original maturity date of
the loan was extended from Feb. 22, 2010, to March 6, 2011. Terms of the agreement provide for additional
incremental extensions until March 6, 2012 provided certain unit delivery requirement thresholds are met.
The interest rate in effect for each calendar year will be determined on the last day of the year, retroactively
for the year, based upon the cumulative unit settlements during the year. The interest rate will start to step
down from a high of LIBOR + 1400 bps to a floor of LIBOR + 400 bps each year based on a range of
seven to 20 unit settlements occurring in 2009 and a range of 16- to 26-unit settlements in 2010. Prior to the
execution of the forbearance agreement the interest rate spread on the loan was fixed at 600 bps over
LIBOR. In addition, the forbearance agreement provides Comstock a one-time option to retire the note
prior to May 26, 2009 at a discount of between 9% and 16% based upon when the option is exercised.
Alliant Capital closed an $11 million loan for the refinance of Village at Stoneybrook Apartments. The
256-unit garden-style community in Newport News, VA, was built in 1974 and is comprised of 16, two-
story residential buildings. The loan has a 10-year term with nine years of yield maintenance and a 30-year
amortization. The rate is fixed for the first nine years and then adjustable in the final year and was rate
locked 90 days before the loan settled. Alliant’s Tucson, AZ, office handled the transaction.
NorthMarq Capital arranged first mortgage financing of $7 million for a 46,817-square-foot Wal-Mart in
Pinellas Park, FL. Financing was based on a 7-year term and a 30-year amortization schedule. Craig M.
Bjornsund, senior vice president and managing director of NorthMarq Capital’s New York Metro regional
office, arranged the deal.
NorthMarq Capital arranged first mortgage financing of $7 million for Northpointe OffiCenter, a 52,995-
square-foot office building in Lake Mary, FL. The building is occupied by a single tenant, HF Management
Services, on a short-term lease. Financing was based on a 12-year term and a 25-year amortization schedule
and was arranged for the borrower, Northpointe OffiCenter LLC, through Protective Life Insurance Co.
Robert Hernandez, senior vice president and managing director of NorthMarq Capital’s Tampa regional
office, arranged the deal.
NorthMarq Capital arranged first mortgage financing of $6 million for a 54,415-square-foot office building
in Melbourne, FL. Live TV will occupy the entire building, which is on a land lease from the Melbourne
Watch List
CoStar Group, Inc.
21 Airport. Financing was based on a 5-year term and a 25-year amortization schedule. The borrower was
Sutton Properties of Melbourne LLC. Robert Hernandez, senior vice president and managing director of
NorthMarq Capital’s Tampa regional office, arranged the deal.
Loan Maturity Leads
Property Property Type
Current Ending
Scheduled
Balance
Maturity
Date Note Rate CMBS
Windy Hill Crossing, 2311-2343 Windy
Hill Road, Marietta, GA Retail $698,452 8/1/2009 8.33% BofA 2000-1
Huffman Mill Plaza, Huffman Mill Road,
Burlington, NC Retail $16,145,270 9/1/2009 7.17% BofA 2000-1
Zaragosa Retail Center, 835 Zaragosa
Road, El Paso, TX Retail $735,814 9/1/2009 9.37% BofA 2000-1
Farmstead Apartments, 1415 North
Country Club Drive, Mesa, AZ Multifamily $10,023,227 11/1/2009 7.97% BofA 2000-1
Cimarron Apartments, 151 East First
Street, Mesa, AZ Multifamily $5,510,089 11/1/2009 7.97% BofA 2000-1
Wellington Meadows Apartments, 9550
West Sahara Avenue, Las Vegas, NV Multifamily $16,679,082 8/1/2009 7.10% BofA 2000-1
The Mark at Salem Station, 11132-A
Sunburst Lane, Fredericksburg, VA Multifamily $9,007,313 7/1/2009 7.40% BofA 2000-1
Oasis Vista Apartments, 3300 Needles
Highway, Laughlin, NV Multifamily $7,957,896 10/1/2009 7.73% BofA 2000-1
Hickory Hills Townhouses, 22501
Iverson Dr., Great Mills, MD Multifamily $6,407,164 5/1/2009 7.16% BofA 2000-1
North Decatur Manor Apartments, 3799-F
North Decatur Road, Decatur, GA Multifamily $4,685,981 10/1/2009 8.04% BofA 2000-1
Clearbrook Apartments, 4000 West 34th
Street, Houston, TX Multifamily $2,454,293 6/1/2009 8.07% BofA 2000-1
Sunchase Square Apartments, 7317
Holly Hill Drive, Dallas, TX Multifamily $2,147,977 9/1/2009 7.99% BofA 2000-1
Casa Verde Apartments, 700-810 San
Pedro & 701-811 Navarro, College
Station, TX Multifamily $2,295,801 6/1/2009 7.41% BofA 2000-1
Watch List
CoStar Group, Inc.
22 Golden Triangle Mall, 2201 I-35E South,
Denton, TX Retail $15,313,547 8/1/2009 8.24% BofA 2000-1
Timber Ridge Apartments, 1342 North
Garden Drive, St. Louis, MO Multifamily $2,138,811 8/1/2009 8.03% BofA 2000-1
Shadowbrook Apartments, 145 Navajo
Drive, Sedona, AZ Multifamily $2,110,779 7/1/2009 7.99% BofA 2000-1
Seashore Apartments, 19822 Brookhurst
Street, Huntington Beach, CA Multifamily $1,937,359 7/1/2009 7.66% BofA 2000-1
West Oaks Club Apartments, 43120 30th
Street West, Lancaster, CA Multifamily $1,713,117 6/1/2009 7.21% BofA 2000-1
Mansfield Plaza, State Route 57,
Hackettstown, NJ Retail $7,570,403 8/1/2009 7.76% BofA 2000-1
Watch List Loans of Concern Property Property
Type, Size
CMBS Special
Servicer
Comment
Newgate Mall, 2000
Newgate Mall, Ogden, UT
Retail,
605,700 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: The property's anchor tenant,
Mervyns, occupies 77,337 square feet (12.8% NRA),
has a 7/31/2017 lease expiration, and pays $1.62
psf/year. Mervyns announced on 10/18/2008 that it
exhausted all its options under Chapter 11 and
intended to file for Chapter 7 Bankruptcy and
Liquidation. The Mervyns at this location closed
12/30/2008. The space is considered dark/current as it
continues to generate rental income for the property by
payment of Mervyn's parent firm. Macerich is handling
leasing/marketing of the space. Kohl's is considering a
sublease. The borrower continues to market the space
to other big box users in the event Macerich cannot
secure a sub-tenant. Bank of America will continue to
monitor the loan.
Watch List
CoStar Group, Inc.
23
The Commons At Royal
Palm, 511 N. State Road 7,
Royal Palm Beach, FL
Retail,
158,062 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Debt service coverage is 1.09x
with 90% occupancy. Addison House, a regional
furniture operator, was the property's fifth largest tenant
which occupied 12,069 square feet, and was paying
$16.90/sf; its lease was to expire 7/31/2008. Addison
House closed and vacated the store on 12/21/2007; the
space has been vacant since that time. On 9/18/2008,
the Master Servicer approved a 5-year lease for Dollar
Tree Stores Inc. d/b/a 'Deal$'. Annual Base Rent will be
$12.50 psf through the initial lease term. Deal$ has
three 5-year extension Options at $13.50 psf, $14.50
psf and $15.50 psf, respectively. The borrower has
agreed to fund a tenant improvement allowance of $20
psf or $241,380. Effective with the Deal$ lease,
occupancy increases from 90% to 98%; accordingly,
DSCR is expected to improve. Bank of America will
continue to monitor the loan.
Parkway Village Shopping
Center, 2255 N. University
Pkwy, Provo, UT
Retail,
157,642 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Debt service coverage is 1.04x
with 79.3% occupancy. Bank of America has requested
borrower's clarification of decreased Income and
increased expenses, as well as clarification regarding
tenants shown on the 9/30/2008 rent roll with expired
leases; awaiting a response.
Heritage Tops-Madison,
6601 N. Ridge Road,
Madison, OH
Retail,
72,236 SF
BofA
2003-2
Not in
special
servicin
g
CMBS trust comment: The property's anchor
tenant, a Tops supermarket (48,881 square feet),
went dark in 2/2005 but still pays rent ($11 psf/year)
and has not given any indication that this would
discontinue prior to their 12/31/2021 lease
expiration. Bank of America is waiting to receive
outstanding YTD 6/30/2008 and 9/30/2008 financials
and the current status of tenants shown on the
4/21/2008 rent roll with expired leases or imminent
lease rollover: Dollar Tree (12/31/2007 exp), TNT
Tanning (8/31/2007 exp), and Payday Cash Advance
(6/30/2008 exp); awaiting a response.
Country Aire Plaza, 125 S.
Weber Road, Bolingbrook,
IL
Retail,
57,371 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Tenant Linens 'n Things
occupies 32,000 square feet and has a 1/31/2013 lease
expiration. On 5/2/2008, Linens 'n Things announced in
mid-October 2008 that it has exhausted all its options
under Chapter 11, and elected to not reorganize and
stay in business. Bank of America has requested an
update regarding the borrower's plans and efforts to
lease the space; awaiting a response.
Watch List
CoStar Group, Inc.
24
Etowah Crossing Shopping
Center, 104 -194 Hicks
Drive , Rome, GA
Retail,
36,560 SF
BofA
2003-1
ORIX
Capital
Markets
Special Servicer comment: In 2002 Kroger vacated the
anchor space and it has been vacant ever since. This
has lead to a reduction in foot traffic at the subject
shopping center. The borrower has been unsuccessful
in leasing the 18,807 sf of remaining space. As of the
9/01/08 rent roll, the property is currently 48.56%
occupied. Borrower principals have made a request for
a Deed-in-lieu of foreclosure. OCM has denied the
request. Foreclosure sale is scheduled for 2/3/09.
Centura Emporium
Shopping Center, 1351
Kearns Blvd., Park City, UT
Retail,
19,910 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Park City KOK (Knights of
Columbus), which occupied 4,531 square feet, vacated
upon its 8/31/2008 lease expiration. This tenant loss
reduced occupancy below threshold. Bank of America
has requested a leasing/marketing update from the
borrower; awaiting a response.
499 Park Ave., 499 Park
Ave., New York, NY
Office,
288,722 SF
BofA
2003-2
Not in
special
servicin
g
CMBS trust comment: The loan is secured by a
portfolio of three urban office buildings totaling
1.22 million square feet (two in New York, NY, one
mid-rise in Wash, DC). Both New York properties
have 100% occupancy; the DC property has 9.7%
occupancy due to a major renovation of all office
space; which is to be completed this month. Dreier
LLP, a prominent Manhattan law firm, occupies
101,604 sf (35.2% NRA) at the 499 Park Ave
property. Dreier''s rent is $731,644.82/month or
$86.41 psf/year; its 11 leases are co-terminus
5/31/2018.Dreier LLP petitioned for bankruptcy
protection 12/19/2008 in response to a criminal
compliant filed by the SEC, charging that the firm's
founder engaged in fraud. Mr. Dreier was arrested
and jailed without bond. The borrower requested
consent to terminate the Dreier leases pursuant to
the leases' Default provision. Dreier still owes
12/2008 rent. The borrower holds a $15.5M LOC that
was required by the leases. The borrower has not
yet determined if it will draw on the LOC for past
due rent, or past due rent plus future rent. Bank of
America has requested frequent updates and will
continue to monitor the three loans.
Lincoln Center, 7100 E.
Lincoln Drive, 6510- 6590 N.
Scottsdale Road,
Scottsdale, AZ
Office,
181,120 SF,
two buildings
BofA
2003-1
ORIX
Capital
Markets
Special Servicer comment: The property was posted for
Jan. 16 foreclosure. The borrower is attempting to
acquire the funds necessary to bring the loan payments
current.
Watch List
CoStar Group, Inc.
25
Rancho Temecula Center,
27713 - 27725 Jefferson
Ave., Temecula, CA
Office,
69,124 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: The property's largest tenants
vacated early. Wingate Automotive Services occupied
4,951 square feet and vacated during 4Q-2006 prior to
its 11/30/2008 lease expiration; and Royals Mattress
Co., which occupied 3,789 square feet and had a
2/28/2008 lease expiration but vacated 5/1/2006. Bank
of America has contacted the borrower to determine
reasons for early lease terminations and obtain a
leasing/marketing update. It will continue to monitor the
loan.
911 North Buffalo Buildng,
911 N. Buffalo , Las Vegas,
NV
Office,
25,679 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: YTD 9/30/2008 debt service
coverage was 1.02x with 60.5% occupancy; The
property's largest tenant, Re/MAX, which occupied
5,454 square feet was renting on a MTM basis and
paying $13,253.22 base monthly rent but apparently is
no longer occupying the property. Bank of America has
requested the borrower's clarification regarding
Re/Max's status as well as a current marketing/leasing
update; awaiting a response.
Regal Parc Apartments,
2414 N. Macarthur Blvd.,
Irving, TX
Multifamily,
560 units
BofA
2003-2
Midland
Loan
Services
Special Servicer comment: Foreclosure was scheduled
for Jan. 6.
Amli At City Place, 2403 N.
Washington Ave., Dallas,
TX
Multifamily,
244 units
BofA
2003-2
Not in
special
servicin
g
CMBS trust comment: Debt service coverage is
1.08x with 93% occupancy. Bank of America will
continue to monitor the loan.
Regal Springs Apartments,
13030 Audelia Road ,
Dallas, TX
Multifamily,
221 units
BofA
2003-1
ORIX
Capital
Markets
Fitch Ratings comment: The loan transferred to the
special servicer in October 2008 and is 60 days
delinquent. The servicer reported year-end (YE) 2007
debt service coverage ratio (DSCR) was 0.75 times (x)
with an occupancy of 85%. Servicer comment: The
property was posted for foreclosure Jan. 6.
Sterling University Lodge,
2024 Binford St., Laramie,
WY
Multifamily,
120 units,
480 beds
BofA
2003-2
Midland
Loan
Services
Special Servicer comment: Loan was assumed on July
30, 2008 at a reduced principal balance. Receiver is
currently closing out accounts.
Sterling Univ Enclave, 706
Napoleon Road, Bowling
Green, OH
Multifamily,
120 units
BofA
2003-2
Not in
special
servicing
CMBS trust comment: The student housing complex is
among properties being acquired by American Campus
Communities. ACC's third quarter 2008 reporting
shows that occupancy has declined to 65.4%. Bank of
America will request a leasing update from the
borrower and will continue to monitor the loan.
The Pines Apartments, 5026
Watkins Drive, Jackson, MS
Multifamily,
80 units
BofA
2003-1
ORIX
Capital
Markets
Special Servicer comment:As of year-end, occupancy
was 65%. The property became REO in May 2007
Watch List
CoStar Group, Inc.
26 Buckhead Farm Comm
LLC, 2890 Hacienda Drive,
Fayetteville, NC
Mobile
Home, 295
units
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Debt service coverage is 0.87x
with 86% occupancy. Occupancy decline is due to units
being offline for upgrades. Bank of America will
continue to monitor the loan.
Coney Island Avenue
Office, 1090, 1100 & 1122
Coney Island, Brooklyn, NY
Mixed Use,
106,726 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Bank of America has made
repeated attempts to obtain the borrower's explanation
of the base rent variances and leasing updates. Bank
of America has further made numerous requests for the
borrower's outstanding quarterly financials and rent
rolls, to include chronically omitted lease expiration
dates. The borrower has remained unresponsive. Bank
of America will maintain efforts to collect, and will
continue to monitor the loan.
Snap On Tools Building,
4660 Diplomacy, Fort
Worth, TX
Industrial,
43,200 SF
BofA
2003-2
Not in
special
servicing
CMBS trust comment: Physical occupancy fell to 0%
as of 12/15/2008. Snap-On Tools, Inc., which originally
occupied the full 43,200 sf at $14.84 psf/year,
exercised its early termination right and paid the
applicable fee of $958,951. The property is being
marketed at an asking rate of $8.50. Bank of America
was notified that the borrower executed a new lease
without obtaining lender's prior approval. The tenant is
Paid-Up Oil and Gas, which signed a 5-year lease
(5/1/2008 - 4/30/2013) for drilling access on the lot
adjacent to the subject. Bank of America will continue
to monitor the loan.
Correction: An item regarding RWD Technologies layoffs in the Jan. 25-31 issue incorrectly identified the location
of the layoffs. The office at 4550 Corporate Drive in Troy, MI, is where the reductions are targeted not the office at
5440 Corporate Drive in Auburn Hills.