Blackstone Group LP is in advanced discussions to sell four Los Angeles office towers for significantly more than $1 billion to a group led by West Coast landlord Douglas Emmett Inc., according to people familiar with the talks.
The deal, if completed, would be one of the largest office sales in Los Angeles in recent years and would mark a significant expansion by Douglas Emmett, one of the biggest office landlords on the West Coast.
Executives of Douglas Emmett, a real-estate investment trust that went public in 2006, have long craved the Blackstone-owned buildings, repeatedly telling investors they wanted to own the private equity giant’s properties in the area.
The buildings being sold are four towers with a combined 1.7 million square feet in the Westwood section of Los Angeles, an area in the western part of the city that commands relatively high office rents, though less than top neighborhoods like Beverly Hills or Santa Monica. Continue reading “BLACKSTONE IN TALKS TO SELL FOUR LA OFFICE TOWERS – WSJ”→
A piece from Goldman Sachs economists Zach Pandl and Jan Hatzius: – Federal Reserve looks likely to begin raising short-term interest rates in December – Based on our economic forecasts, we currently expect the FOMC to raise the funds rate by 100bp next year:
Federal Reserve looks likely to begin raising short-term interest rates in December
Based on our economic forecasts, we currently expect the FOMC to raise the funds rate by 100bp next year
One hike per quarter
We see the risks to this forecasts as skewed to the downside at the moment
For economic growth in 2016:
US economy likely to be driven by domestic demand … in particular consumer spending
Forecast GDP will increase by 2.25% Q4/Q4 next year
Narrow and broad measures of unemployment have fallen significantly
We all know how expensive nursing homes can be, often running into five figures each month.
And it’s not just cost, most of us would be happier close to our families when we become too old to cope alone or we require nursing care. Well check this out, this nifty idea combines a nursing home environment with a ‘Granny Pod.’
Grannypods
The MedCottage supports the idea of family-managed healthcare. The MEDCottage is a mobile, modular medical home designed to be temporarily placed on a caregiver’s property for rehabilitation and extended care. Simply stated, it’s a state-of-the-art hospital room with remote monitoring available so caregivers and family members have peace of mind knowing they are providing the best possible care.
These pre-fabricated and pre-equipped medical cottages can be installed in a backyard behind a caregiver’s home (zoning laws permitting), and hooked up to the existing sewer, water and power lines.
The inside maintains a comfortable home, using the space efficiently to create sleeping, living and bathing areas. Equipped with the latest technical advances in the industry, MEDCottage was made to assist with many care-giving duties. Using smart robotic features, it can monitor vital signs, filter the air for contaminants, and communicate with the outside world very easily. Sensors alert caregivers to problems, and medication reminders are provided via computers.
3 models: 288 sq ft – 299 sq ft – 605 sq ft
Electricity and water connected directly to homeowner’s utilities
A kitchen with a small refrigerator, microwave, and medication dispenser.
Bedroom and additional accommodation for a caregiver’s visit.
The bathroom is handicapped accessible.
The units are equipped with interactive video an devices that monitor vital signs like blood pressure and blood glucose, and transmit real-time readings to caregivers and physicians. The basic MEDCottage is about 12 by 24 feet, or the size of a master bedroom, has vinyl siding, double French doors (to accommodate a wheelchair and hospital equipment) and looks like a small bungalow.
The Huntington Hotel Group has purchased a 5.7-acre parcel of land in Agoura Hills with plans to build two limited-service hotels on the site totaling 225 rooms.
LOS ANGELES—The Huntington Hotel Group has purchased a 5.7-acre parcel of land in Agoura Hills with plans to build two limited-service hotels on the site totaling 225 rooms. There is a tremendous demand for limited-service hotels in the Ventura County market, which has a hotel occupancy rate of 77%, and several hotel developers were interested in the property.
The property is located at 29508 Roadside Drive along the 101 freeway.
“There is quite a bit of demand right now along the 101 corridor between Calabasas and into Ventura County for limited-service type hotels, like Marriott Courtyards and Hilton Garden Inns,” John Battle, a principal at Lee & Associates LA North/Ventura office, tells GlobeSt.com. “Every time they build one, it seems to be successful, so they continue to build. They generally need two to three acres, depending on the size; they generally have 140 rooms and they are all usually the same type of format. It is a very good model, and it works well in areas like this where there is a good employment base and lots of rooftops where people have visitors over the weekend that need to stay nearby.” Battle represented the buyer and seller in the transaction, along with principals Mike Tingus and Grant Fulkerson.
Noting the high demand for limited-service hotels, the sales team shopped the property to hotel developers specifically, executing a targeted marketing plan rather than a wide-scale marketing plan, and received ample interest. “We basically took it to the people that we knew would have interest and who would be willing to meet us on pricing that was fair,” says Battle. “Because of our relationships, we know who the
developers are and we knew who would like to be there.”
The seller, Selleck Development Group, has owned the property for 20 years, and never persued potential uses for it. Because it sat vacant for so long, the site, which is not entitled, has gotten numerous cold calls from developers. Tingus says that they received calls from a lot of the developers that could never use the property, like multifamily developers. The city of Agoura Hills has a lengthy approvals process, and was looking for a development that would generate tax revenue, explains Tingus, making a hotel the perfect fit.
In general, there is almost no available raw land in the Ventura and Calabasas market. “We have sold a bunch of the land in the entire marketplace over the last four-to-five years,” Tingus tells GlobeSt.com. “There is only a handful of land parcels larger than an acre left. There are only so many uses that this land will allow.” The buyer purchased the site for $6.5 million, and has not yet finalized construction plans.
LOS ANGELES—Why are sale-leasebacks and build-to-suit deals so popular? According to Andrew White, CCIM, managing director of the western region at Gladstone Commercial REIT, and a moderator at the recent RealShare Net Lease Westconference here, the answer is because “Cap rate spread to treasury is still high.”
The “Opportunities” panel discussed the opportunities in sale-leasebacks and the advantages of build-to-suit developments. Panelist Peter Deltondo, director of Marcus & Millichap Net Leased Retail Group, said that the most aggressive capital he is seeing in this space is from the 1031 buyers. “Most of them are coming out of the apartment sector and they are paying the most aggressive cap rates.” Continue reading “BIG DEMAND FOR NET LEASE PROPERTIES”→
America’s busiest ports reported a decline in imports during the key peak shipping season for the first time in at least a decade, sparking fears of a broader economic slowdown in the U.S.
The question is, what does a slowdown in economic activity mean to the economy in general, and real estate in particular?
Retail tenants are moving out into fringe-street locations–locations that are parallel or perpendicular to a high street–to avoid rising rents.
LOS ANGELES—Retail tenants are moving out into fringe-street locations—locations that are parallel or perpendicular to a high street—to avoid rising rents. According to a new report from JLL, which GlobeSt.com has seen exclusively, high-street rents have increased as much as 100% in some markets. It is a trend that happens often in peak market conditions when rents begin to crest, and the fact that it is starting to happen now, indicates that we are at or approaching the peak of the cycle.
“Our business is as cyclical as it gets,” Jason Charms of JLL, tells GlobeSt.com. “When rents start to crest and break through levels of previous ‘peaks’ in the cycle, retailers are going to look at areas that can give them a bit more bang for their buck. There’s always going to be a trade off between sales volume and occupancy cost. For example, if the marketing exposure of being on a Rodeo Dr. isn’t important, the lower occupancy cost of being on Brighton Way may well offset the drop in sales.”
In Los Angeles, retail tenants in Santa Monica and Beverly Hills, where high street rents have skyrocketed, are looking for fringe spots where retail sales better justify rents. “We are starting to see retailers consider “fringe” areas due to purely economic reasons. Smart retailers are constantly on the lookout for the new, upcoming areas, in part due to price,” says Charms. “It’s becoming quite difficult to make money at some of the rent numbers we are beginning to see. The larger corporations can write off the occupancy cost as a marketing/advertising expense but the smaller companies don’t have that luxury.”
Charms is currently marketing a space at 420 North Camden, a fringe location of Rodeo Drive, near the Golden Triangle. Retail tenants who fall into this category—someone who is concerned about or can’t afford the high rents on Rodeo Dr. but want the prestige of the area and the traffic that overflows from Rodeo Dr., would be the perfect fit for the location, says Charms, who has been advising his retail clients to find these spots as a solution to the rental increases.
Outside of fringe street locations, Charms says that retailers don’t have many options for avoiding high rents. “The easy answer here is to talk ‘online presence this, digital sales that,’ but we are seeing strong data show that consumers still enjoy a full retail experience,” he says. “Downsizing their retail footprint is always an option. It says more about the overall economy than anything else.”
Savvy retailers are finding multiple ways to adapt at this point in the cycle. In addition to leasing fringe locations, some retailers are also leasing multiple spaces within a single dense urban submarket to control the path of travel and gain more market share.
LOS ANGELES—If a good deal comes along with good yield and credits that you can get comfortable with, whether the deal is in a secondary or tertiary market isn’t the main focus. That was according to panelists on the “Investment and Transaction Outlook panel atRealShare Net Lease West on Thursday.
“LOS ANGELES APARTMENT GROSS RENT MULTIPLIERS REACH HISTORIC LEVELS”
Los Angeles Non Rent Controlled Apartments reached a milestone gross rent multiplier (GRMs) of 15 times rental at the end of the second half of 2015 according to the Hanes Company. Cap rates for all apartments fell to 4.66% at the end of the second half of the year. Since the reported expenses for most small apartments are unreliable, I have used the GRM as a more accurate index. GRMs on the Westside are reported at 17 to 21 times rental. My own comps that track Echo Park and Silver Lake show GRMs at between 14 to 15 times rental from 10 to 12 times rental a few years ago. My research can find no GRMs this high or cap rates this low going back to the 1920s. A Los Angeles Times article from 1998 reports a Grubb Ellis Survey showing 1998 GRMs at 5.75 times rental. The previous peak occurred in the second half of 2006 when GRMs reached 14 times rental, according to Hanes Company data.
We are at the apex of the perfect storm driving these yields. First, interest rates are also at historic lows. Investors are starved for yield. Second, we are witnessing the move of highly educated young people and tech/media/biomed companies to certain urban cores. “Unlike previous generations, today’s college graduates younger than 40 — the nation’s largest demographic — are moving in droves to neighborhoods in San Francisco, Seattle or New York, Portland economist Joe Cortright said. Companies are also increasingly setting up in or near city centers, offering well-paid jobs to those graduates, Cortright said. As more people move to urban cores, they’re competing for a limited number of rentals. Housing construction is still lagging behind pre-recession levels, data show. (Los Angeles Times , November 15, 2015).
However, despite these trends, one has to reflect whether to buy at these levels reflects value investing or shrewd marketing timing.
Carson’s proposed NFL stadium got a boost Monday, when the FAA released a preliminary report that poses challenges for Inglewood’s proposed $1.8B NFL stadium project. The report stated that the stadium’s location is “presumed to be a hazard to air navigation” and warned that the stadium could interfere with radar that tracks inbound planes to LAX. The report stated that the configuration of the stadium between two runways, coupled with the uncertainty of its reflective properties, is the FAA’s main objection to the stadium.
The findings offer the developer, St. Louis Rams owner Stan Kroenke, solutions for overcoming this issue, including reducing the stadium’s height by more than 100 feet and reshaping the exterior or covering some surfaces with material that absorbs radar or isn’t reflective. But this would add additional costs and time to the 290-acre mixed-use project, which has already been designed and entitled, and site work to prepare for construction is nearing completion. This week Carson’s stadium developer, Carson Holdings LLC, a JV of the San Diego Chargers and Oakland Raiders, announced that The Walt Disney Co CEO Bob Iger had been tapped to lead the proposed Carson NFL stadium effort. This was a coup for the Carson stadium backers, since Disney owns ESPN, and Iger already has a working relationship with many NFL owners and Commissioner Roger Goodell.
A piece from Goldman Sachs economists Zach Pandl and Jan Hatzius: – Federal Reserve looks likely to begin raising short-term interest rates in December – Based on our economic forecasts, we currently expect the FOMC to raise the funds rate by 100bp next year:
WESTSIDE REALTY ADVISORS - REAL ESTATE MARKET NEWS 
You must be logged in to post a comment.