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Kilroy seeks approval for project buy; Brookfield Property eyes co-working space

Commercial real estate

* Kilroy Realty Corp. is asking South San Francisco city leaders to approve the sale of the potential $2 billion Landing at Oyster Point project to its subsidiary, the San Francisco Business Times reported. Kilroy was reported to have agreed to acquire the first two phases of the biotechnology project in September 2017, the publication said, adding that the overall project could span 2.25 million square feet.

Kilroy also has a right of first offer to acquire the Bay Area project's third and fourth phases. The development is a project of Oyster Point Development LLC, whose main shareholder is China's Greenland USA.

The report noted that the South San Francisco area is seeing considerable development of biotech space with HCP Inc. in the final stages of its Cove at Oyster Point project and BioMed Realty Trust Inc. developing the first phase of its Gateway of Pacific project.

* At the Catalyst conference co-hosted by Honest Buildings and Convene, Brookfield Property Partners LP Chairman Ric Clark said his company is "excited" by opportunities in retail real estate despite the bad headlines about malls, The Real Deal reported. The company, which is buying mall real estate investment trust GGP Inc., is also redeveloping seven malls into open-air town centers, the report added.

Clark also mentioned that Brookfield Property considered launching a co-working business but decided against it in favor of partnering with or buying a co-working business. Brookfield Property parent Brookfield Asset Management Inc. and private equity firm Onex Corp. attempted to acquire serviced office company IWG PLC earlier in 2018.

* Pennsylvania Real Estate Investment Trust said its retail-focused portfolio offers densification opportunities to include 5,000 to 7,000 residential units in the Philadelphia and Washington, D.C., markets and 1,500 to 3,000 hotel units across a dozen properties.

* The State Teachers Retirement System of Ohio acquired a roughly 20% stake in Related Cos. LP's and Oxford Properties Group's 10 Hudson Yards development in Manhattan, N.Y., for $431.9 million, The Real Deal reported, citing property records. The project is a 52-story, 1.7 million-square-foot office tower at the corner of 10th Ave. and W. 30th St.

* Swift Real Estate Partners acquired the first 12 stories, encompassing 220,000 square feet of office and retail space, at the 1390 Market St. building in San Francisco from Broadreach Capital Partners for $110 million, the San Francisco Business Times reported. The 29-story, 89%-leased tower, formerly known as Fox Plaza, includes upper floor apartments owned by Essex Property Trust Inc.

* Swift Real Estate also secured a $150 million loan from ACORE Capital for its recent acquisition of a three-building office complex in El Segundo, Calif., The Real Deal reported, citing unnamed sources. The 550,000-square-foot complex, sold by GI Partners and CalPERS for an undisclosed price, is fully occupied. It previously changed hands for $112.5 million in 2013, the report added.

* Mills Properties Inc. sold The Orion building, a 178-unit residential development in St. Louis, to Canadian real estate investment company Brass Enterprises Inc. for $80 million, the St. Louis Business Journal reported, citing the buyer. Mills Properties developed the $55 million building in the Central West End and it opened in 2016, according to the report.

A Whole Foods Market occupies more than 38,000 square feet on the ground floor of The Orion on a 20-year term lease with six five-year term extensions, the publication added.

* An affiliate of multifamily manager Dayrise paid $104 million to acquire the 17-acre Reserve at Hoffman Estates apartment complex in Hoffman Estates, Ill., The Real Deal reported, citing property records.

Bahrain-based Investcorp sold the property, which includes 21 three-story buildings, to ICS Hoffman Estates LLC, which obtained an $81.5 million acquisition loan from Greystone, the report added.

* Meritage Properties LLC is buying the 1100 G St. NW office building across from Metro Center in Washington, D.C., for $54 million, in partnership with a Japanese institutional investor, the Washington Business Journal reported, citing Meritage CEO Andrew Nathan and the D.C. Recorder of Deeds.

The 110,000-square-foot, 11-story property was previously sold in 2008 to a partnership between J Street Cos. and UBS Global Asset Management. J Street left the partnership years ago, the report noted. The building was originally built in 1969, according to the report.

* A study by research firm CoStar Portfolio Strategy found that class B office buildings can compete with newer buildings and even command higher rents if they have top internet connectivity performance and infrastructure, National Real Estate Investor reported. The study analyzed the impact of WiredScore Certification evaluations on rents and occupancy in Manhattan.

* The vacancy rate for the Chicago area's big-box industrial properties declined to 9.2% in the first quarter from 9.6% in the previous quarter, marking the first drop in two years, The Real Deal reported, citing Colliers International. The vacancy rate in the first quarter of 2017 was 7.5%.

The decrease was attributed to a drop in new supply, which came in at roughly 2.8 million square feet in the first quarter, compared to over 4.3 million square feet in the fourth quarter of 2017. The overall vacancy rate for the industrial market was 6.67%, the report noted.

* Ohio Public Employees Retirement System invested only "close to a quarter" of its planned $500 million allocation for closed-end real estate funds in 2017, IPE Real Assets reported, citing a board meeting document that disclosed that a $123 million commitment to the Lubert-Adler Real Estate Fund VII-B.

Citing industry sources, the report noted that the shortfall is reflective of pension funds' increased caution with their commitments as real estate markets are thought to be nearing the end of the present market cycle.

The day ahead

Early morning futures indicators pointed to a higher opening for the U.S. market.

In Asia, the Hang Seng was up 0.60% at 31,234.35, while the Nikkei 225 gained 0.31% to 23,002.37.

In Europe as of midday, the FTSE 100 had risen 0.80% to 7,841.15 and the Euronext 100 was up 0.64% at 1,088.32.

On the macro front

The Chicago Fed National Activity Index is due out today.

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