Discounted office asset deals on the rise; Regency to buy Urstadt Biddle

S&P Global Market Intelligence offers our top picks of real estate news stories published throughout the week.

The number of troubled office buildings being sold at a huge discount is growing, indicating that the slump in the sector is transitioning into a new phase, The Wall Street Journal reported.

In the early stages of real estate market downturns, property owners usually shy away from making deals as they try to seek loan extensions or other remedies rather than sell assets at a loss. Now, office property owners have been disposing of troubled assets at marked-down prices, a sign that weak demand is expected to linger.

The report cited private equity firm Blackstone Inc., which in April sold the two-building Griffin Towers office park in Santa Ana, Calif., for $82 million, less than the $129 million it paid for the property in 2014.

Principal Financial Group Inc. also sold an office building in Parsipanny, NJ, for $14.3 million, less than the $52 million it paid in 2008, according to the report.

CHART OF THE WEEK: US REIT capital offerings down in April

⮞ US equity real estate investment trusts raised a total of $3.19 billion in April, a 42.8% drop from the $5.59 billion raised a month earlier and down 61.3% on an annual basis.

⮞ Communications REIT Crown Castle Inc. raised the highest amount during the month, securing $1.35 billion through two debt offerings.

⮞ Single-tenant REIT Realty Income Corp. came in second with $1 billion.

M&A

– Regency Centers Corp. agreed to buy fellow retail REIT Urstadt Biddle Properties Inc. in an all-stock deal worth approximately $1.4 billion, including assumed debt and preferred stock.

Financing

– Five Star Development secured a construction loan worth $585 million from Madison Capital for The Ritz-Carlton Paradise Valley, The Palmeraie, a mixed-use development in Paradise Valley, Ariz., Commercial Observer reported. The project, which is slated to open in 2023, will comprise more than 160,000 square feet of retail, residential and hotel space.

– JSB Capital Group secured $219.9 million in recapitalization for its 631-unit Landmark South, a multi-housing community in Doral, Fla. JLL Capital Markets arranged a $154.1 million Freddie Mac multifamily loan and secured $65.8 million of preferred equity from Pensam.

Property transactions

– DRA Advisors LLC is selling a portfolio of retail properties concentrated in the US Midwest worth about $540 million, Greenstreet's Real Estate Alert reported. The portfolio spans 3.7 million square feet across 24 shopping centers, 21 of which are in Illinois and Minnesota, according to the report.

– The Moinian Group Development Corp. and Bushburg Properties agreed to divest the 467-unit rental building at 123 Linen Blvd. in Brooklyn, NY, for up to $335 million, according to PincusCo.

– VICI Properties Inc. agreed to purchase four casino properties in Canada from Century Casinos Inc. for a total of C$221.7 million in cash. Following the transaction, the seller will lease back Century Casino & Hotel Edmonton, Century Casino St. Albert and Century Mile Racetrack and Casino in Edmonton, Alberta, and Century Downs Racetrack and Casino in Calgary, Alberta.

– Starwood Capital Group Management LLC sold the Urban Centre office complex in Tampa, Fla., to Ally Capital Group for $123 million, according to the Tampa Bay Business Journal. The two-tower property is in the city's Westshore business district and comes with an attached parking garage, according to the report.

– M&R Development, Bucksbaum Properties and an affiliate of The Dinerstein Co. Inc. paid $100 million to buy the 148-unit Addison & Clark, an apartment and retail complex in Chicago. The property features nearly 145,000 square feet of retail space and about 400 parking spaces, according to CoStar.

US REIT average short interest unchanged in April

LaSalle ups stakes in 24 REITs, doubles Retail Opportunity Investments holding

Land & Buildings adds Independence Realty Trust to its REIT portfolio in Q1

Cohen & Steers adds Xenia Hotels & Resorts to REIT portfolio in Q1

US banks well-positioned to handle CRE defaults even as rates rise