$300M California Hospital Expansion Gets Nod from City Council

By Adam Perrotta, News Writer

-- The City Council of Valencia, Calif., has approved the $300 million expansion plan for Henry Mayo Newhall Hospital, under which the facility will gain a new patient wing and three additional medical buildings, along with a helipad and new parking structures.

The 15-year master plan for the expansion aims to allow the hospital to better accommodate the growing population of the surrounding Santa Clarita Valley. A total of 120 new beds will be added over that time, as well as more surgery suites and new clinical services not currently provided by the facility.

“By approving the master plan, our City Council paved the way for enhanced quality of care along with greater access, more choice and more programs to serve our community, hospital CEO Roger Seaver said in a release.

The expansion is being designed with an eye toward environmental sustainability. With the approval of the city council in hand, the hospital plans to being making architectural plans immediately, with the first of the new medical buildings breaking ground in 2009. The new patient wing in the existing hospital will begin within four years.

The hospital itself will foot the bill for two thirds of the project cost via funds from operations, bonds and donations. The remaining $100 million will be provided by G&L Realty.

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Investors Await More Economic Reports, Another $800B in Bailouts Plans Announced

By Tonie Auer, Contributing Correspondent

-- On the heels of the Fed's announcement of its multi-billion dollar plans to help the economy, investors can expect a wave of economic reports today including readings on durable orders, personal income and spending, as well as a weekly report on jobless claims, according to CNNMoney.com. The Chicago purchasing managers' report, a survey of regional manufacturing, will also be released after the market opens, as is a revised reading on consumer sentiment and a report on October new home sales, CNNMoney indicated.

The administration and the Federal Reserve rolled out two new programs Tuesday that would provide up to $800 billion in an effort to get more loans flowing in such critical areas as mortgage lending, credit cards, auto loans and small business loans, the Associated Press reported. Speaking of the government bailout, late Sunday Citigroup was rescued by the government, which agreed to shoulder most potential losses from a $306 billion portfolio of risky assets, and by injecting $20 billion of new capital, in its biggest effort to prevent a large U.S. bank from failing. In yet another blow to the commercial real estate industry in the U.S., Citigroup Inc’s CEO on Tuesday blamed prior management for diving too deeply into real estate. The CEO said the company had a “tremendous concentration in the sense we put a lot of our money to work against U.S. real estate,” according to a Reuters report.

Falling home prices aren’t good news either. The S&P Case-Shiller Home Price national index recorded a 16.6 percent decline in the third quarter compared with the same period a year ago, eclipsing the previous record of 15.1 percent set during the second quarter, according to CNNMoney.com. The 10-city index is now 23.4 percent off its peak price, which came in June 2006; the 20-city index is down 21.8 percent from its July 2006 high and the national index has fallen 21 percent since the third quarter of 2006, the report cited.

In spite of all the news and reports, world stock markets were mixed today after Wall Street extended its gains, with most Asian markets in the black but European stocks failing to join the advance as major benchmarks in Germany, Britain and France dropped 1 percent or more in early trade, the Associated Press reported.

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Matrix Takes 82-Acre New Jersey Site

By Judy Feldman, Contributing Correspondent

-- Matrix Development Group has acquired an 82-acre site in New Jersey that includes a total of some 342,000 square feet across 13 office and labratory buildings. The site has 2,000 feet of frontage on the New Jersey Turnpike near exit 8A.

The price for the property has not yet been revealed.

Steven Tolkach, managing principal of Newmark Knight Frank’s Princeton, N.J., office, represented Matrix in the deal. NAI Fennelly and Larry Doyle of Preferred Unlimited represented the seller.

The 82-acre property includes 13 buildings that range from 5,000 square feet to almost 100,000 square feet, and the total property including park area adds up to a sum of 342,000 square feet. Currently the property includes partially rented offices, and laboratories as well as other spaces not yet designated. In addition, there is more space in the park for more buildings to be built.

Exit 8A of the Turnpike serves both Cranbury and Monroe Townships. The New Jersey Turnpike is reported to be the fifth most heavily traveled highway in the United States.

Matrix, a 25-year old real estate development company, was the first to buy into the Exit 8A market. Matrix Residential Properties has some $200 million in development; Matrix Golf & Hospitality has more than six properties throughout the Northeast and Mid-Atlantic regions of the country.

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REal Talk with Adam Perrotta-Tuesday

For better or worse, the government has decided that the best way to deal with the continuing economic crisis is to throw yet more money at it, today unveiling a plan to pump $800 billion more into the lending and financial markets. The major difference between the latest infusion and the $700 billion scheme passed in October (either a bailout or a rescue, depending on who you ask) is that the funds in the new plan will be used to buy up mortgage-backed securities--which was, of course, the original goal of the $700 billion TARP plan, before Treasury decided to use TARP to buy direct equity stakes in banks.

Whether the new program is an indication that TARP has been insufficient is not clear at the moment. Perhaps the government, mindful of how difficult it would be to ram even a $700 billion spending plan through Congress, balked at going whole hog back in October, and decided only now--once the public been at least acclimated to such huge numbers--to reveal the other half of the plan.

Or perhaps there was no master plan at all, and the government is just flying by the seat of their plants, with no better idea of how to fix the current crisis that do battered firms like Citibank and the Detroit Three. Given the success so far of TARP and other efforts to stabilize the economy, that somewhat rationale certianly seems possible.

More Billions for Bailouts

By Dees Stribling, Contributing Editor

-- A billion here, a billion there: pretty soon it adds up to real money, such as the $800 billion the Federal Reserve has committed to unclog the credit markets for homebuyers, small businesses and consumers.

It's a new multi-part initiative involving the purchase of about $500 billion of mortgage securities backed by Fannie Mae, Freddie Mac and Ginnie Mae, and $100 billion of debt issued by those entities as well as the Federal Home Loan Banks. The Fed is also setting up a $200 billion facility to support consumer finance, with the goal of making student, auto and Small Business Administration loans easier to get.

The market seems to like the idea of the Fed bailout this morning, with the Dow Jones index going up for a time. But then major tech stocks declined, taking the average with them, driving the index down about 40 points by mid-day, or 0.5 percent. The S&P 500 was down 0.43 percent, and the tech-oriented Nasdaq was down about 1.6 percent by mid-day.

It turns out that the economy was weaker this summer than initially believed, according to the U.S. Department of Commerce, which has revised its tally of the U.S. gross domestic product to a 0.5 percent contraction for the July-September quarter. Previously, the government had estimated a 0.3 percent contraction. In any case, the third quarter 2008 was the worst quarter since the third quarter of 2001, when GDP contracted 1.4 percent.

The S&P/Case-Shiller home price index covering house prices in 20 U.S. metro areas, published this morning, dropped 17.4 percent in September from the same month last year. In August, the decline was 16.6 percent from the previous year. Foreclosed houses added to an already bloated housing stock are driving prices downward. According to RealtyTrac Inc., foreclosures were up 25 percent in October from a year ago.

The FDIC has compiled its quarterly "problem list," or banks that it thinks are at risk of failing. On average, about 13 percent of those on the list ultimately fail. As of the end of 3Q08, the list includes 171 banks, up from 117 at the end of June. The number has been increasing since 3Q06, when the total was 47--a historic low. One hundred and seventy seems high by that comparison, but it's low compared with the total number of U.S. banks (about 8,400), and compared with the early 1990s, when roughly 1,500 banks were on the list. The FDIC doesn't disclose the names of the individual banks on the list to discourage bank runs.

Such bad numbers are bound to have a trickle-down impact on the homebuilding business, and sure enough D.R. Horton has reported its sixth quarterly loss: $799.9 million, or $2.53 a share. “Market conditions in the homebuilding industry deteriorated,” company chairman Donald Horton said in a statement, which was also an understatement.

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Harrison Street Picks Up Hefty Self-Storage Portfolio

By Scott Baltic, Contributing Editor

-- Chicago-based Harrison Street Real Estate Capital L.L.C. has acquired a portfolio of 19 self-storage facilities across six states. The buyer was described only as "a national lending institution," and the purchase price was not disclosed.

The deal, according to Harrison Street, positions the company in the top 15 owners of self-storage assets nationally, by giving it a total of more than 4.6 million square in 65 properties across 17 states and valued at well over $600 million.

Christopher Merrill, Harrison Street co-founder & managing director, told CPN that although the self-storage business is competitive, and no asset class is truly recession-proof, “We like storage…. It’s not a high-cost monthly item for the consumer.” In fact, he added, depending on the location, demand for self-storage can rise in bad times, because of homeowners and businesses downsizing to smaller premises.

Harrison Street’s overall strategy is to focus on recession-resistant asset classes such as senior housing, medical office and healthcare properties, marinas, self-storage facilities and student housing. One result of that, Merrill explained, is that the values of individual assets tend to be small. Overall, he said, Harrison Street’s properties, across the company’s entire portfolio, average between $4 million and $5 million, with the self-storage properties at the lower end of that.

The properties in this latest acquisition are in Illinois, Ohio, Florida, Rhode Island, New York and Nevada and total more than 1.4 million square feet of space across some 11,600 units. Merrill told CPN that Harrison Street found the properties attractive in terms of both quality (all have been built since 2000) and location. One, for example, is adjacent to Chicago’s McCormick Place, one of the world’s largest convention and exposition centers.

The 19 new additions will be rebranded and managed by two of Harrison Street’s exclusive property-management companies, United Storage (United Stor-All) and Morningstar Properties (Morningstar Mini-Storage).

The acquisition was made on behalf of Harrison Street Real Estate Partners II L.P., a recently-established $430 million closed-end opportunity fund with gross buying power of approximately $2 billion. With the acquisition, the fund will have acquired or commenced development on over $700 million of real estate consisting of more than 60 properties in 2008.

Harrison Street’s primary investor and sponsor is Chicago’s Galvin family, the founders of Motorola. In addition to Merrill, who was formerly a managing director and partner at Heitman L.L.C., the company’s management and investment committee consists of former Motorola chairman & CEO Christopher Galvin and Michael Galvin, a former partner in the law firm of Winston & Strawn, who also served as Assistant Secretary of Commerce from 1989 to 1992.

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AMB Leases 590,000 SF in Toronto

By Elena Gontar, Staff Writer

-- AMB Property Corp. has leased more than 590,000 square feet of industrial space to a wholly-owned subsidiary of a Fortune 100 company, stabilizing its more than 1.1 million-square-foot  development in the Greater Toronto Area West submarket.

"The fact that AMB has fully leased a 1.1 million-square-foot development six months ahead of projected stabilization demonstrates just how focused companies are right now on streamlining operations, even in this challenging environment. We are continuing to see demand for infill-located, Class A facilities at our core hub and gateway markets," Eugene Reilly, president of AMB's Americas region, said in a release.

As previously announced, AMB leased more than 532,000 square feet of the development to Vitran Logistics, a wholly-owned subsidiary of Vitran Corp. Inc. The property is located within within close proximity to the Trans-Canada Highway, major intermodal rail yards and the airport.

As of September 30, AMB's portfolio in the Greater Toronto Area totaled more than 4.3 million square feet of operating and under development properties.

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More Bad News Expected in Reports Released Later Today

By Tonie Auer, Contributing Correspondent

-- While figures released by the Paris-based Organization for Economic Cooperation and Development indicated that the U.S. is plumb in the middle of a recession now, the good news appears that the country may see some improvement by the third quarter of next year, according to a Reuters report. U.S. household wealth has taken an estimated $7 trillion hit from the tumbling housing and stock markets, and consumers are already curbing spending to try to recoup some of those losses, which hurts growth because consumer spending accounts for two-thirds of U.S. economic activity, the report stated.

Meanwhile, the Wall Street Journal reported that fresh optimism from the U.S. spilled over into Asian markets today, sending Tokyo's benchmark stock index up 5.2 percent and most regional markets higher. Before U.S. markets open today, the Commerce Department is due to release its new reading on gross domestic product, which is expected to show that economic activity contracted at a 0.5 percent annual rate in the July-September quarter, according to the consensus estimate of Wall Street economists surveyed by Thomson Reuters, the Associated Press reported. The third-quarter reading of the Standard & Poors/Case-Shiller index, a widely tracked measurement of home prices, is also due out before the Wall Street opens, too, the reported stated.

The Case-Shiller 20-city housing index dropped a record 16.6 percent in August from a year ago, the largest drop since its inception in 2000. Also today, the Federal Deposit Insurance Corp., is scheduled to give an update on how many banks were on the agency's list of troubled institutions and detail how weak the banking industry's results were in the third quarter and Treasury Secretary Henry Paulson is scheduled to brief reporters on the government's financial bailout program, as well, according to the Associated Press.

Across the world, Pakistan obtained a $7.6 billion bailout from the International Monetary Fund to help prevent the country defaulting on its debt, Bloomberg reported. The IMF has approved more than $40 billion of loans in recent weeks to prevent the global financial crisis and recession from undermining the stability of developing nations. Ukraine, Serbia and Iceland have already got funds from the IMF. Belarus has requested $2 billion and Turkey may also agree to emergency funding, the report stated.

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REal Talk with Adam Perrotta-Monday

Well, the picks are in, and the market seems to like them. I'm referring of course to today's unveiling of who will fill some marquee economic positions in President-Elect Barack Obama's administration. After the appointments--including Timothy Geithner as Treasury Secretary and former Treasury boss Larry Summers to head up the National Economic Council--were revealed this afternoon, the stock market surged, with the Dow shooting up nearly 400 points, and the S&P 500 and Nasdaq jumping as well. The rally comes after another strong day last Friday, marking a two-day gain of 891 points, the largest ever over two days, according to Dow Jones.

Investors may have been especially pleased with the selection of Geithner and Summers, both of whom will come to their respective new jobs with unique experience. As the New York Fed president and second in command to current Fed chairman Ben Bernanke, Geithner is already heavily involved in the current economic stimulus efforts, and for that reason may provide a smooth transition between administrations. Summers, for his part, already has his signature on dollar bills after serving two years as Treasury Secretary under President Clinton.

And, perhaps just as importantly to investors' conidence, neither is a veteran of the investment banking industry; considering the part many believe those institutions played in the current financial mess, that might be their biggest asset of all.

NYC's Pier 57 Attracts Trio of Renovation Proposals

By Judy Feldman, Contributing Correspondent

-- At the edge of Manhattan's Meat Packing District in Chelsea, Pier 57 abuts an area that has seen a burst of activity over the last decade. Located at the end of West 15th St. and encompassing some 375,000 square feet of waterfront space plus rooftop area, the pier is now the focus for three bids for renovation.

The Hudson River Trust, which controls the pier site, started receiving proposals in October, and will now decide between visions from The Durst Organization and C&K Properties; The Related Cos.; and Youngwoo and Associates L.L.C. The Durst and C&K submission proposes a total development budget of approximately $330 million, Related’s budget is approximately $353 million, and Youngwoo and Associates’ budget is about $191 million.

Connie Fishman, president of the Hudson River Park Trust, told CPN, “Today is the first day that the details are open to the public for view. We needed to digest what was in the proposals. Highlights of all the proposals include the concept of the big public market, similar to the San Fransisco Ferry Building.“ Fishman, who hails from San Fransisco, admits, “And that is something that would be very exciting to me. It would bring a lot of vitality to the waterfront.”

Other highlights nestled in the proposals include plenty of open spaces, plus parking spaces, a home for the Children's Museum of Manhattan, a miniature golf course, a theater, river education centers, art galleries, performance spaces, an auction house/culture center and more. The Trust will eventually grant the proposal along with a 49-year lease.

Joanna Rose, a vice president at The Related Cos. said, “We think Pier 57 offers a fantastic opportunity to create a new amenity for both the community and the city. The revitalization of our waterfront is important to our city, and Pier 57 is part of an exciting new community with great energy and excitement and in which we are already deeply involved.”

Related's plan (pictured) proposes a diverse group of uses built around waterfront activity and open space--a food marketplace and cafes, maritime education, public spaces, a headhouse park (designed by the High Line landscape architects--Field Operations) and film theaters. Their proposal includes comprehensive historic preservation of the building and a state-of-the-art ecological automated parking system.

Ben Korman, principal of C&K Properties said, “We see Pier 57 as a center of activity within Hudson River Park that celebrates the pedestrian and bicycle friendly fabric of the existing neighborhood. Our plan extends the unique and vibrant mixture of public space, cultural amenities, restaurants and retail in the West Village and Chelsea out onto the pier and we look forward to collaborating with the community to create an exciting destination with a true sense of place.”

Obviously, the choice amongst the three offers is not going to be easy, and particularly because the potential income that could be produced at Pier 57 will be important for decades. The Trust will be working with financial and real estate consultants as well as a working group of the Community Advisory Council now to review the proposals. A formal public hearing, probably at some point in February, will be held, Fishman explained, where any member of the public can come and give testimony, plus there will be a comment period for 60 days, when anyone can send comments and weigh in with their opinions.

Why the big difference in the proposed budgets? The lowest budget (coming from YWA) is low in part because they employ an architectural feature that would reuse shipping containers as modular spaces. Urban Space Management would sublease for more than 80 small designer businesses, and a theater for the Tribeca Film Festival would also become a permanent fixture. Youngwoo and Associates proposes establishing the Contemporary Culture Center and galleries, auctions and performance spaces.

Fishman said, “Once we approve a lease with the board, the developer needs to go through both an environmental impact statement and a land use review. We begin the 49-year lease when they put the first shovel in the ground.” Her guess is that construction could begin in two years.

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