Brandywine to Sell Oakland Portfolio to CIM for $412M

By Scott Baltic, Contributing Editor

-- Brandywine Realty Trust has agreed to sell a five-property, 1.7 million-square-foot portfolio in Oakland, Calif., to an affiliate of the CIM Group for a total of $412.5 million.

The price includes assumption of what will be at closing about $95.6 million in debt represented by three existing mortgage loans. Closing is scheduled for August 31.

The five properties are One Kaiser Plaza (The Ordway), 1901 Harrison Street, 1333 Broadway, 2101 Webster Street and 2100 Franklin Street. The first four were 88.7 percent occupied as of May 31, according to a prepared statement, while 2100 Franklin is an unleased, recently completed development. The purchase also includes Brandywine's condominium interest in a parking garage at 2353 Webster Street.

An affiliate of Brandywine will manage and lease the five properties for a one-year period following the closing.   

Of the $316.9 million cash proceeds due at closing, $40 million has been deferred as a two-year interest-free loan by Brandywine to CIM secured by 2100 Franklin Street and 2101 Webster Street. The REIT will also grant CIM a 15-year purchase option for Two Kaiser Plaza, a land parcel adjacent to The Ordway, and will lease to CIM 150 parking spaces there for the benefit of The Ordway’s tenants.

Lazard Frères & Co. acted as financial advisor to Brandywine, which also engaged CBRE to assist in marketing the portfolio. Brandywine has indicated that it intends to use the approximately $269.9 million of cash proceeds, and the $40 million loan to be repaid by August 2, 2010, “for the repayment of existing debt and to provide cash balances for general corporate purposes.”

In northern California, Brandywine will retain three office properties totaling 554,500 square feet and two land parcels, and will continue as a property manager and leasing agent under a series of third-party contracts.

Brandywine Realty Trust is one of the United States’ largest publicly traded, full-service, integrated real estate companies. The REIT owns, develops and manages a primarily Class A suburban and urban office portfolio totaling about 40 million square feet.

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Deloitte Plans $300M Facility Outside Dallas

By Tonie Auer, Southwest Correspondent

-- Deloitte L.L.P. plans to build a $300 million learning and leadership development center at Hillwood Development's Circle T Ranch in the Dallas suburb of Westlake.

Construction on the new facility will begin in 2009 and the center is expected to open in 2011. The facility will serve as a central destination for everyone from new hires to Deloitte senior leadership, to convene for learning and leadership development. The 750,000-square-foot campus will have 800 guest rooms. The facility is expected to result in Deloitte adding an estimated 100 new full-time jobs, with 300 to 400 new non-Deloitte jobs also being added.

The facility will feature multiple conference spaces and classrooms that will host thought leadership events by Deloitte Research and Deloitte Industry Centers; events with professors from nationally accredited universities and colleges; and networking events. They will also serve as places where Deloitte personnel can connect with mentors and colleagues.

“Deloitte had seven or eight key criteria in selecting a site,” Deloitte partner Jon Eisele (pictured) told CPN. “The site had to be very easily accessible to a major airport that handles many direct airports both domestically and internationally. DFW International Airport is about 15 minutes from Circle T, so it is very accessible.”

Eisele also said the site itself was very appealing. "[T]he attractiveness of the site is very important to us. We looked at many sites that were attractive, but Circle T fits that mold very well. It is a beautiful piece of property, he said, adding that it's location in the central part of the country was also a plus.

Deloitte has four offices in the Dallas-Fort Worth area, but none of those will be relocated, Eisele said.

“Our business is one that is entirely dependent upon our people and having the right people and enough of the right people has driven us to invest in learning and leadership as a very long term strategic issue for us,” Eisele said.

The campus will be constructed according to LEED standards established by the U.S. Green Building Council.   

The project will be located in Hillwood Development’s Circle T Ranch in Westlake, a 2,500-acre mixed-use, master planned community located 10 minutes from DFW International Airport.

Deloitte is the brand under which tens of thousands of independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management and tax services to clients.

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Pair of Austrian Developers Acquire Constantia's Real Estate Unit for $695M

By Eugene Gilligan, Senior Editor

-- Two large Austrian developers, Immofinanz AG and Immoeast AG, announced today that they have agreed to buy Constantia Privatbank AG real estate unit for $695 million.

The two developers are creating a jointly held new company, I&I Real Estate Asset Management AG, with Constantia Privatbanks’ real estate division to be incorporated into this new company.

Constantia’s business units include an asset management platform; an open-ended real estate fund with investments in Germany and Austria; a property and facility management arm; and a brokerage company.

When the transaction is completed, Immoeast will acquire 60 percent of the shares in the new venture, with Immofinanz owning 40 percent.

“Upon conclusion of the acquisition, Immofinanz and Immoeast will cover the entire real estate value chain by means of their own real estate investments and services provided by their subsidiary I&I Real Estate Management AG,” the two companies said in a joint statement released today.

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Amid Delays, WTC Price Tag Likely to Rise

By Michael Fickes, Contributing Correspondent

-- The $15 billion World Trade Center redevelopment project in Lower Manhattan will probably take one to three years longer and cost $1 billion to $3 billion more than previously estimated.

The delay was reported today in the Wall Street Journal, which cited people familiar with a report to be issued today by the Port Authority of New York and New Jersey, which owns the 16-acre WTC site.

A Port Authority spokesperson, refused comment until the report is released at 1:30 PM EST today. 

Citing state officials and real estate industry sources, the New York Post characterized the report as “the coming grim truth” in a story published Saturday. The Post story indicated that the report would outline more than 20 issues connected to cost overruns and schedules. 

New York State Governor David Paterson ordered the Port Authority's report earlier this month after expressing dismay over the state of the project’s planning and construction progress.

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Thompson's Bid to Return Caps Dramatic Month for Grubb & Ellis

By Paul Rosta, Senior Associate Editor

-- After the events of the past month, the leadership of Grubb & Ellis Co. may welcome some peace and quiet this summer.

In what could be the capper in a series of personnel shufflings, former board chairman Anthony Thompson, who helped engineered a blockbuster merger with NNN Realty Advisors, wants back on the firm’s board of directors. Thompson’s filing with the Securities and Exchange Commission expressed dismay over the company’s leadership and direction, citing in particular falling stock prices.

Grubb & Ellis executives could not be reached for an interview by today’s deadline, but the firm offered assurances that the company is moving forward. In a prepared statement, board chairman Glenn Carpenter said, “The board believes that the company has made considerable progress over the past six months integrating Grubb & Ellis and NNN Realty Advisors, making the changes, during very difficult market conditions, necessary to position the company for increased growth and shareholder value over the long-term.”

Thompson’s return to Grubb & Ellis would amount to an abrupt change of direction for the executive, who stepped down as board chairman in February. Two months later, Thompson launched a new private investment firm, Thompson National Properties L.L.C. Thompson’s move came days after Tuesday’s announcement that Robert Osbrink, executive vice president and chairman of transaction services, had left the firm and been replaced by firm's COO, Jack Van Berkel. And three weeks ago, Triple Net Properties L.L.C., which is now under the Grubb & Ellis umbrella, was cleared in an investigation by the SEC.

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Deutsche Bank Tower Deutsche Bank Tower Cleanup at WTC Forges Ahead; Removal to Follow

By Paul Rosta, Senior Associate Editor

-- After a nearly 10-month delay that followed a fatal fire last summer, cleanup of the contaminated Deutsche Bank building at the World Trade Center in Lower Manhattan is proceeding full speed ahead, a top Downtown official said yesterday.

At a meeting of the Lower Manhattan Development Corp., board chairman Avi Shick said that contractors should finish cleanup of the contaminated dust in the former Deutsche Bank by the end of the year. Work resumed last month on the deconstruction of the tower at the southern end of the World Trade Center, which was damaged beyond repair in the 2001 terrorist attacks. The deaths of two firefighters in a fire last August caused LMDC to terminate the contract of John Galt Co., the original subcontractor for the demolition, and institute a host of new safety features.

When new contractor LVI Environmental Services Inc. will be able to finish the unusual and extraordinarily complex removal of the building--also known as 130 Liberty Street--may be less certain. Instead of attempting to clean the structure and taking it apart at the same time, as John Galt was doing, LVI Environmental will complete the cleanup before resuming deconstruction. But LMDC’s goal for taking the tower down continues to be the end of 2008, a spokesperson for the agency confirmed.

The building’s removal is of keen interest to Downtown Manhattan, and not only because it is a stark reminder of the terrorist attacks. Last year JPMorgan Chase announced intentions to build a headquarters for its investment banking business on the site after the tower is removed. JPMorgan Chase’s acquisition of Bear, Stearns & Co. a few months ago raised questions as to whether the new tower would be needed. But both publicly and privately, JPMorgan Chase continues to assert its commitment to the site, even if the project is modified.

In order to address a cash-flow issue, the LMDC board agreed to advance the project $37.5 million from a $750 million funding pot dedicated to utilities. Details are still under discussion, but LMDC expects to replace the borrowed money and other funds from the building’s insurers. They are liable for 75 percent of the cost of deconstruction above $45 million.

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Transbay Project Promises Upgrades for San Francisco

By Suzann D. Silverman, Editor-in-Chief

-- It's been a long time coming, but San Francisco's Transbay Terminal is set to break ground this year. Ultimately, the plans to redevelop a blighted and underutilized transit terminal and dilapidated area promise to bring extended rail access, jobs, housing and other real estate uses to the city, according to Transbay Joint Powers Authority executive director Maria Ayerdi-Kaplan, who presented the keynote address at CPN’s San Francisco Property Opportunities conference yesterday. The authority signed architect Cesar Pelli to design the transit center in mid-May.

The multi-phase project got its beginnings in 1999, when the approval of Proposition H made it a law to “extend (commuter service) Caltrain to a new or rebuilt regional transit station on the site of the Transbay Terminal and to pursue other improvement,” according to Ayerdi-Kaplan’s presentation. The onetime rail hub serving 26 million passengers annually at its peak, which was at that point 60 years old, was blighted and outdated, and had been in use only as a bus depot since 1958. It currently serves just about seven million people, but plans are expected to increase that to more than 45 million.

The authority plans to break ground on a temporary station in November and the new transit center in 2010; phase one has an expected completion date of 2014 and phase two, 2018. Ultimately, the 40-acre redevelopment area will include 3,400 new homes, 35 percent of them affordable housing; 1.2 million square feet of office, hotel and commercial space; 60,000 square feet of retail; along with public open space. Plans for the transit center include connections between eight transit providers, among them buses, the BART subway system and an extension of Caltrain; a terminal intended for California High Speed Rail, which would connect the city to Southern California; and accommodations for a possible future Caltrain extension to the East Bay area. In keeping with the city and state’s focus on sustainable design, intentions are to achieve a LEED Silver certification from the U.S. Green Building Council for the transit center and LEED Gold for the office tower, according to Ayerdi-Kaplan. But she vowed to try to exceed that.

Thus far, the transit center site has been fully entitled and approved, although the office tower still needs to go through planning review, she said. The authority has raised half of the $4 billion anticipated to complete both phases of the project.

Following the keynote, panel discussions included a conversation between office tenants and landlords; an evaluation of the condominium and rental apartment markets; an assessment of current and future efforts and requirements for green buildings; and an update and forecast on the capital markets.

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Inmobiliaria Colonial Moves Closer to Selling Off Key Asset

By Scott Baltic, Contributing Editor

-- Spanish real estate powerhouse Inmobiliaria Colonial SA has reaffirmed its commitment to selling its 15 percent stake in Fomento de Construcciones y Contratas SA (FCC), Spain's third-largest construction company, according to a Bloomberg report.

At the end of March, CPN had covered press reports that FCC was trying to pull together a plan under which a consortium of six investors would jointly purchase Colonial’s stake in FCC.

Colonial, which is laden with 8 billion to 9 billion euros of debt, has for some months been both working to sell off individual assets and entertaining various suitors for the company itself. In the most recent development, according to Bloomberg, Colonial CEO Mariano Miguel told the company’s annual shareholder meeting in Barcelona earlier today that it’s “no longer logical” for Colonial to own the stake. At the current share price, that stake is worth about $1.2 billion. Miguel said that Colonial would sell its stake in FCC for a price between 39.54 euros a share (the current market value) and 78 euros a share, which is what Colonial paid in 2006.

Miguel also told the meeting that Colonial had received four offers for Societe Fonciere Lyonnaise SA, a French office owner/manager in which Colonial holds an 85 percent stake.

Earlier potential purchasers of Colonial included GE Real Estate Iberia, which made an unsolicited offer in January, and the Investment Corporation of Dubai, which was on again, off again with Colonial for several months earlier this year.

Colonial’s creditors, which include Calyon, Eurohypo AG, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc, have been pressuring the developer to find a buyer. The company’s debt swelled over the last few years mostly through acquisitions, including Madrid-based mall developer Riofisa SA, and the stake in FCC. About a year ago, after many years of growth, Spain’s residential property market began a sustained downturn, which collapsed Colonial’s stock price and left the company without a way to pay down its debt.

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Army, Trammell Crow Shake Hands on $500M Office Project

By Barbra Murray, Contributing Editor

--The U.S. Army's Fort Meade, located less than 30 miles from Washington, D.C., in Anne Arundel County, Md., is on track to sprout an office complex with as much as 1.7 million square feet now that the U.S. Army Corps of Engineers has reached a tentative agreement with Trammell Crow Co. for the project's development.

Trammell Crow will spend an estimated $500 million to realize the endeavor. The Fort Meade Technology Center (pictured) will be built as part of the Enhanced Use Lease program and will be situated on 173 acres of installation property near Fort Meade's Visitor Control Center. In addition to the Class A office space, the project will encompass retail offerings, park areas and recreational amenities. Trammell Crow will also take on responsibility for the development of two new golf courses and a clubhouse on the base's periphery.

In lieu of shelling out the big bucks for a ground lease of the property, Trammell Crow will pay for the land's use via in-kind services. Real estate services firm CB Richard Ellis Inc., Trammell Crow's parent company, will handle the leasing of the office space. The next step toward kicking off work on FMTC is the finalization of documents for the Department of the Army's approval. If all goes as planned, land development will get underway later this year in time to commence construction on the first building in early 2009 for completion in 2010.

Details Revealed for $6.8B Abu Dhabi Airport

By Gail Kalinoski, Contributing Editor

--An "X"-shaped design for the Midfield Terminal Complex will be the centerpiece of the $6.8 billion Abu Dhabi International Airport redevelopment, according to the officials at Kohn Pedersen Fox Associates, the project's master plan architect.

Currently the largest airport development under construction in the Middle East, Phase I of the 5.9 million-square-foot terminal (pictured) will include 42 gates and will be completed in 2012. At that time, the airport is expected to handle an additional 20 million passengers a year. Eventually there will be more than 90 gates at the airport and it is projected to process more than 50 million passengers and more than 2 million tons of cargo each year. The project will also include a new control tower, cargo buildings, additional runways and commercial development.

Kohn Pederson Fox, with headquarters in New York City, London and Shanghai, was selected in August 2006 to design the Midfield Terminal Complex. KPF is involved in various projects in the United Arab Emirates, including designing the headquarters for the Abu Dhabi Investment Authority. That design was recently cited as the Best Commercial/Office Building in the Middle East and Africa.

For the Midfield Terminal Complex, the KPF team adopted structural solutions that created large, column-free zones that will also allow for future space planning needs. The “X”-shaped plan has a large ticketing hall framed by a series of long-span steel arches supporting a soaring roof. The hall leads into a central area with a garden, a common piece of regional architecture and a nod to the capital city of the UAE, which is known as the “Garden of the Gulf.” The roof curves down the concourse piers providing shelter from the sun, but also defining the departure areas along the length of the building.

Abu Dhabi’s airport moved to its present site in 1982. As the city has grown, so had the airport’s needs. Abu Dhabi Airports Co., the owner-operator of the airport, noted that April passenger traffic had increased by 40 percent over the same month in 2007. ADAC also stated that traffic was up 34 percent for the first quarter of the year. ADAC attributed the robust growth to several factors, including the increase in business-related travel to the growing conference and exhibitions sector and the capacity growth of the home airlines, Etihad Airways.

Abu Dhabi is investing $136 billion in developing business and tourism assets, an Intercontinental Hotels Group executive told CPN on Jan. 14, 2008. John Bamsey, COO of Middle East and Africa for IGH, also stated the Abu Dhabi was aiming to increase visitor numbers from 1.35 million in 2006 to 3 million by 2015. The growth in tourism and business travel comes as the region’s population is also expected to hit more than 3 million by 2030.