By Suzann D. Silverman<\/p>\n
The July 2013 issue of\u00a0<\/em>Commercial Property Executive<\/em>\u00a0presented the winners of the third-annual Distinguished Achievement Awards, which honored the brokers, lenders, developers and others that completed some of the most impressive deals, projects and strategies of 2012. We received submissions in eight categories, and our panel of judges (listed below) selected winners in six of them. What follows are extended details of those award-winning entries.<\/p>\n You may also want to view:<\/p>\n The Winners<\/strong><\/p>\n Best Lease<\/strong> Property<\/em>: One New York Plaza, New York City Best Lease Property<\/em>: 350 Mission St., San Francisco Best Sale\u2014Single Asset Property<\/em>: Essex House, New York City Best Sale\u2014Single Asset Property<\/em>: Washington Design & Office Center, Washington, D.C. Best Sale\u2014Portfolio Property<\/em>: Amazon Global Headquarters, Seattle Best Sale\u2014Portfolio Property<\/em>: 31 California Bank Branches Best Development\/Redevelopment Project<\/em>: Brookfield Place Perth, Perth, Australia Best Development\/Redevelopment Project<\/em>: Devon Energy Center, Oklahoma City Best Financial Structure Property<\/em>: Palmer House Hilton, Chicago Best Financial Structure Property<\/em>: Co-op City, New York City\n
\n First Place<\/strong><\/p>\n
\nLandlord<\/em>: Brookfield Office Properties
\n<\/span>Tenant<\/em>: Morgan Stanley
\n<\/span>Brokers<\/em>: Barry Gosin, Brian Waterman and Romel Canete\u00a0of Newmark Grubb Knight Frank represented the tenant; the landlord was represented in house by Jerry Larkin and Duncan McCuaig.
\n<\/span>Lease Size<\/em>: 1.2 million square feet
\n<\/span>Property Size<\/em>: 2.6 million square feet
\n<\/span>Lease Length<\/em>: 17 years
\n<\/span>The Story<\/em>: When Brookfield Office Properties signed Morgan Stanley to the largest lease in New York City since 2008, it achieved a major strategic priority in locking in the occupancy until 2029. Prior to the April 2012 signing, Morgan Stanley had occupied 782,000 square feet subleased from Wells Fargo in 2005 (and formerly occupied by Wachovia) and 34,000 square feet leased directly from Brookfield. The new direct lease expands its occupancy by approximately 337,000 square feet. The property at the southern tip of Manhattan was built in 1970 and renovated in 1995. It was 75.5 percent occupied at the time of the lease.
\n<\/span>Judges Praised<\/em>: The deal kept the building from going dark; it was located downtown, in a \u201csore spot,\u201d and it had to work for both the owner and the sublessor. With Morgan Stanley now a bank, it is a regulated entity, further complicating negotiations.
\n<\/span>Submitted by: Brookfield Office Properties<\/em>\u00a0<\/span><\/p>\n
\n<\/span>Second Place<\/span><\/strong><\/p>\n
\nLandlord<\/em>: Kilroy Realty Corp.
\n<\/span>Tenant<\/em>: Salesforce.com
\n<\/span>Brokers<\/em>: Christopher Roeder, David Churton and Ted Davies of Jones Lang LaSalle Inc. represented the landlord; Dan Harvey of Cushman & Wakefield Inc. represented the tenant.
\n<\/span>Lease\/Property Size<\/em>: 444,274 square feet
\n<\/span>The Story<\/em>: Within two months of acquiring a development site across from the new Transbay Transit Center in the tightly occupied South Financial District of San Francisco, Kilroy signed salesforce.com to the entire planned 27-story building. Salesforce.com has been establishing a central hub in the high-tech city, having leased 400,000 square feet at 50 Fremont St. early in 2012, subsequently relinquishing plans to build a 2 million-square-foot headquarters campus in Mission Bay, on land it acquired in 2010. Kilroy broke ground in April on the LEED Platinum-designed tower, which incorporates open-plan workspace concepts with high ceilings and plenty of natural light. The building will also feature a 50-foot open-air entry lobby with a 40 by 75 foot electronic media display. The development is estimated to cost $250 million, with an additional $25 million if the company receives entitlements for three more stories.
\n<\/span>Judges Praised<\/em>: Salesforce was going into a campus in China Bay, but Kilroy approached the company with its location, offering to rebuild it to user specifications. Jones Lang LaSalle advised Kilroy to issue REIT shares as a financing alternative, which was cheaper for the tenant and alleviated the need to pursue a loan.
\n<\/span>Submitted by: Jones Lang LaSalle Inc.<\/em><\/p>\n
\n<\/span>First Place<\/span><\/strong><\/p>\n
\nSeller<\/em>: Dubai Investment Group
\n<\/span>Buyers<\/em>: Strategic Hotels & Resorts Inc. and KSL Capital Partners L.L.C.
\n<\/span>Brokers<\/em>: Arthur Adler, Jeffrey Davis and Gilda Perez-Alvarado of Jones Lang LaSalle Inc.\u2019s hotel & hospitality group, Americas represented the seller, with Mathew Comfort of the real estate investment banking group leading the acquisition financing team.
\n<\/span>Property Type<\/em>: Hotel
\n<\/span>Property Size<\/em>: 509 hotel rooms, nine condominium units and commercial spaces including food and beverage, meeting rooms and retail space.
\n<\/span>Selling Price<\/em>: $362.3 million, or $712,000 per room
\n<\/span>Sale Date<\/em>: September 2012
\n<\/span>Year Construction Completed<\/em>: 1931
\n<\/span>Length of Time to Close<\/em>: Six months
\n<\/span>Lender<\/em>: Bank of America Merrill Lynch
\n<\/span>The Story<\/em>: In March 2012, Jones Lang LaSalle\u2019s hotel & hospitality group launched a marketing campaign to sell the historic Essex House hotel on behalf of Dubai Investment Group. The Middle Eastern investor had purchased the hotel from Strategic Hotels & Resorts in 2007 and subsequently completed a comprehensive renovation, renaming it the Jumeirah Essex House. The marketing process, already challenging due to financing that was set to mature in September 2012 and the need to deal with a condominium board and labor union, was further complicated when the general manager resigned. Operator Jumeirah Group flew in a representative from Dubai to fill in during the more than 100 inspections of the property by potential investors from around the world, and the brokerage team ultimately lined up Marriott International\u2014which owned the property from 1969 until 1985\u2014to operate it under the JW Marriott flag, the first in New York City, and in August lined up a joint venture of Strategic Hotels and an affiliate of KSL Capital Partners as the buyers. During the six-week time frame that followed, Jones Lang LaSalle sourced a $190 million first mortgage with Bank of America Merrill Lynch.
\n<\/span>Judges Praised<\/em>: The hotel had to be repositioned, and the deal involved a \u201cvery independent\u201d the condo board and global players. The seller was unpredictable. The in-place financing was expiring, which made the timing \u201caggressive,\u201d but the seller has money so it wasn\u2019t crucial. The lack of an operator gave it flexibility. It was under a lot of scrutiny because of the location. Hotel deals are tough, but Jones Lang LaSalle\u2019s hotel group is very capable and so could quickly identify the best buyer.
\n<\/span>Submitted by: Jones Lang LaSalle Inc. Hotels & Hospitality Group, Americas<\/em><\/p>\n
\n<\/span>Second Place<\/span><\/strong><\/p>\n
\nSeller<\/em>: Vornado Realty Trust
\n<\/span>Buyer<\/em>: Affiliates of Hobby Lobby Stores Inc.<\/span>Brokers: Bill Collins, Paul Collins, Drew Flood, Jud Ryan and James Cassidy of Cassidy Turley represented the seller; Lincoln Property Co. represented the buyer.
\n<\/span>Property Size<\/em>: 811,122 square feet
\n<\/span>Selling Price<\/em>: $250 million
\n<\/span>Date of Sale<\/em>: July 2012
\n<\/span>Year Construction Completed<\/em>: 1920s
\n<\/span>The Story<\/em>: Vornado Realty Trust acquired the Washington Design & Office Center as part of its larger purchase of the Kennedy Family\u2019s Merchandise Mart assets for $625 million in 1998. With the mart business hurt by the national recession, it sold all but the Chicago Merchandise Mart last year, announcing all of the deals in early July, with the Washington properties and the Boston Design Center closing in the third quarter. The Washington Design Center is 78 percent occupied, largely by interior design vendors, while the Washington Office Center is home to the Small Business Administration and other government agencies under long-term leases. The REIT engaged Cassidy Turley to sell both together or separately, viewing the Design Center as a value-add opportunity with the challenge of having been a special-purpose asset with windows on only one side of the building but the benefit of transferable development rights. Together , the buildings comprise an entire block along the Federal Center Metro station, the closest private-sector asset to the U.S. Capitol Building and congressional offices in the city\u2019s Southwest sector. The two buildings sold to the Green family of Oklahoma City, owners of the Hobby Lobby chain of craft stores, who plan to open a national Bible museum in the design center, housing their significant collection of Biblical and other religious manuscripts.
\n<\/span>Judges Praised<\/em>: This was a fire sale of a failing enterprise, but it was complex and offered value add for the buyer.
\n<\/span>Submitted by: Cassidy Turley<\/em><\/p>\n
\n<\/span>First Place<\/span><\/strong><\/p>\n
\nSeller<\/em>: Vulcan Inc.
\n<\/span>Buyer<\/em>: Amazon.com
\n<\/span>Brokers<\/em>: Kevin Shannon, Todd Tydlaska, Ken White, Tom Pehl, Dwight Newell, Ray Attisha, Reid MacKay, Bill Shanahan, Val Achtemeier and David Stinebaugh of CBRE Group Inc. represented the seller.
\n<\/span>Portfolio Size<\/em>: 1.8 million square feet in 11 buildings on 8.4 acres
\n<\/span>Portfolio Composition<\/em>: Office buildings, including 100,000 square feet of retail (eight restaurants and cafes, a bank branch and a medical clinic)
\n<\/span>Occupancy at Time of Sale<\/em>: 99.6 percent
\n<\/span>Selling Price<\/em>: $1.2 billion, or $641 per square foot
\n<\/span>The Story<\/em>: On Aug. 30, 2012, Vulcan Inc. announced it was listing Amazon\u2019s campus in South Lake Union for sale, with a desire to sell all 11 buildings by year-end. Vulcan, which developed them in six phases (the first in partnership with Schnitzer West) between April 2010 and September 2012, offered them separately, with plans to reinvest the capital into further development of the massive and highly successful South Lake Union neighborhood of Seattle. Among the assets were nine newly constructed buildings ranging from five to 12 stories and two historic rehabs with office lease terms of 14 to 16 years. The buildings all include green features, such as operable windows, rooftop gardens, a green wall, a rain garden, open space and adaptive reuse of the historic buildings, one of which won Historic Seattle\u2019s \u201cBest Rehabilitation\u201d award, and Phases II through V are LEED Gold certified. Amenities include two restaurants operated by Seattle chef Tom Douglas and the neighborhood\u2019s only medical clinic and pharmacy. The properties attracted both national and international interest, but Amazon itself entered into an agreement on Oct. 5 to purchase all of the assets, making a non-refundable deposit of approximately $23 million (which increased to $51 million) to guarantee the year-end closing\u2014and closed the deal in six separate transactions ranging from $614 to $670 per square foot on Dec. 21. The largest office transaction in the United States last year, the deal marked Vulcan\u2019s first sale of completed buildings and two of the phases set local records for price per square foot in the Seattle metro area.
\n<\/span>Judges Praised<\/em>: A huge deal involving multiple buildings in a growth market, the broker and owner realized at some point the greatest value would be in selling to the occupant. Historically, owner-users pay the highest price, and Amazon would be able to capitalize on financial benefits no one else could get.
\n<\/span>Submitted by: Vulcan Inc. & CBRE Group Inc.<\/em><\/p>\n
\n<\/span>Second Place<\/span><\/strong><\/p>\n
\nSeller<\/em>: Large Financial Institution
\n<\/span>Buyer<\/em>: Footprints, Retail Branches, Fortus Property Group and Consolidated-Tomoka
\n<\/span>Brokers<\/em>: Jones Lang LaSalle Inc. represented the seller.
\n<\/span>Property Size<\/em>: 31 buildings totaling 289,330 square feet in Northern and Southern California
\n<\/span>Occupancy at Time of Sale<\/em>: 100 percent leased to large financial institution
\n<\/span>Selling Price<\/em>: $70.4 million, or $243.4 per square foot
\n<\/span>Number of Bidders<\/em>: More than 70, including more than 30 portfolio offers and more than 40 sub-portfolio offers, within six weeks
\n<\/span>The Story<\/em>: A large financial institution, seeking to take advantage of market conditions, hired Jones Lang LaSalle to market 31 properties, primarily in the greater San Francisco and Los Angeles metropolitan areas, with plans to lease them back. The institution was committed to 15-year triple-net leases with no landlord responsibilities, 5 percent rent rate escalations every five years and three five-year renewal options at 95 percent of fair market rent. The brokerage firm launched its marketing campaign in July 2012, including e-marketing, offering flexible bidding and bids on individual assets and geographically oriented sub-portfolios in order to maximize pricing. Bidders ranged from high-net-worth individuals to offshore investors to public and private REITs, and the final cap rates came in in the mid- to high 4 percent range.
\n<\/span>Judges Praised<\/em>: The number of offers achieved in such a short timeframe was impressive, achieved due to the reach of the broker. Bank branches are not a \u201cmajor food group\u201d and come with issues, but it was a big portfolio, and people are always looking for yields.
\n<\/span>Submitted by: Jones Lang LaSalle Inc.<\/em><\/p>\n
\n<\/span>First Place<\/span><\/strong><\/p>\n
\nOwner\/Investor\/Developer<\/em>: Brookfield Office Properties
\n<\/span>Architect<\/em>: Hassell, Fitzpatrick & Partners
\n<\/span>Project Type<\/em>: Office and retail
\n<\/span>Date Construction Commenced\/Completed<\/em>: August 2008\/September 2012
\n<\/span>Project Size<\/em>: 953,000 square feet
\n<\/span>Occupancy<\/em>: 100 percent
\n<\/span>The Story<\/em>: Five years in the making, Brookfield Place, at 125 St.Georges Terrace, is intended as a premier business address helping to bring a \u201cnew, vibrant inner-city precinct to life.\u201d The 45-story office tower is fully leased to BHP Billiton, PricewaterhouseCoopers and Barrick Gold, and is attached to four refurbished landmark buildings featuring restaurants, bars and retail (including a fitness center and childcare). Awarded a five-star Green Star \u2014 Office Design v2 certified rating by the Green Building Council of Australia, representing \u201cAustralian Excellence\u201d in environmentally sustainable design, the tower features energy-efficient heating, ventilation and air-conditioning systems, high-performance glazing and lighting, as well as a greywater system designed to recycle as many as 2,640 gallons of water a day, including rainwater run-off. The elevators have the fastest car speeds in the southern hemisphere, and the floors\u2014which feature side-core construction on the northern side, reducing cooling requirements by absorbing the majority of the solar load while maximizing floor plates and providing a southern view of the Swan River\u2014include zoned lighting with motion sensors\u00a0 and two control panels per floor. The property, with steel frame and concrete construction, also features 100 percent back-up power for tenants, carbon dioxide monitoring in the parking lots, as well as 550 bike spaces, 900 lockers and 55 showers. A second tower is planned for 345,000 square feet on 16 floors.
\n<\/span>Judges Praised<\/em>: An example of the kind of placemaking Brookfield is known for, the project puts Perth on the map with \u201ca neat combination of heritage buildings and new construction.\u201d A nice example of mixed-use and sustainable design, incorporating civic space, 100 percent pre-leased with solid tenants, taking advantage of demand in the area.
\n<\/span>Submitted by: Brookfield Office Properties<\/em><\/p>\n
\n<\/span>Second Place<\/span><\/strong><\/p>\n
\nOwners\/Investors<\/em>: Devon World Headquarters L.L.C., a subsidiary of Devon Energy Corp.
\n<\/span>Development Manager<\/em>: Hines
\n<\/span>Builder<\/em>: Holder-Flintco Joint Venture
\n<\/span>Architect<\/em>: Pickard Chilton, design architect; Gensler, programming & interiors; The Office of James Burnett and Murase Associates, landscape architects; Kendall\/Heaton Associates Inc., architect of record
\n<\/span>Brokers (Sales\/Leasing)<\/em>: Cushman & Wakefield Inc., real estate advisor to the owner
\n<\/span>Project Type<\/em>: Office building
\n<\/span>Date Construction Commenced\/Completed<\/em>: Oct. 2, 2009\/Oct. 18, 2012
\n<\/span>Occupancy Date<\/em>: March 19, 2012
\n<\/span>Total Cost of Project<\/em>: $750 million
\n<\/span>Project Size<\/em>: 1.35 million square feet on 7.52 acres
\n<\/span>The Story<\/em>: Previously located in five separate buildings in Oklahoma City, Devon Energy Corp. sought to consolidate into one space within the city while at the same time benefiting the city itself. It purchased a brownfield site with both surface and structured parking at TK address that had been designated for redevelopment by the Oklahoma City Urban Renewal Authority as a mixed-use Galleria with retail and other uses but languished until Devon\u2019s proposal was accepted in 2008. Devon set goals of providing a robust, modern business platform that would also help attract and retain talent, engage and connect with the surrounding community and help transform the city. It designed the building so as not to \u201cturn its back on any part of the city, thus acknowledging the current urban core north and east while preserving the flexibility to spur development west and south.\u201d With 2.5 acres of publicly accessible parks and plazas, a six-story atrium at the entrance, a five-story podium housing conference and training facilities and re-establishing an east-west block connection along the historic Main Street, a promenade accessing the 81,000 square feet of restaurants and meeting space, plus a 50-story, 850-foot curtain wall and the 1910-built, 110-room Colcord Hotel, it has already attracted a number of business and civic functions. And the company itself has increased its \u201coffers made to acceptances\u201d recruiting rate from its historical mid-70 percent range to more than 90 percent since the building opened. Devon moved more than 2,200 employees into the building through 15 moves over six months. The property, certified LEED-NC Gold v.2, also features innovative water use reductions and use of recycled and regionally sourced building materials. A more than $100 million TIF targeted off-site public improvements, including redevelopment of the 14-acre Myriad Botanical Gardens and extensive streetscape improvements throughout the CBD.
\n<\/span>Judges Praised<\/em>: Brownfield development and a public-private partnership made this an achievement that also went the extra mile for employees.
\n<\/span>Submitted by: Devon Energy Corp. & Hines<\/em><\/p>\n
\n<\/span>First Place<\/span><\/strong><\/p>\n
\nFinancier<\/em>: JP Morgan
\n<\/span>Borrower<\/em>: Thor Equities
\n<\/span>Financing Brokered By<\/em>: Matt Comfort, Keith Largay, Dave Hendrickson and John Nugent of Jones Lang LaSalle Hotels
\n<\/span>Size of Transaction<\/em>: $365 million
\n<\/span>Type of Transaction<\/em>: Refinancing
\n<\/span>Type of Property<\/em>: Hotel
\n<\/span>Size of Property<\/em>: 1,639 rooms and 57,000 square feet of retail space
\n<\/span>The Story<\/em>: Thor Equities L.L.C. purchased the 140-year-old, 24-story hotel in the heart of the Chicago Loop for $230 million from longtime owner Hilton Hotels Corp. in August 2005, in a transaction brokered by Jones Lang LaSalle. It obtained $362.7 million in loans from Anglo Irish Bank the following year, and in October 2008 completed a $131 million renovation to strengthen the hotel\u2019s operating performance and market positioning. Last year, it refinanced to benefit from low interest rates; the floating-rate financing included a $175 million senior loan from J. P. Morgan Chase Bank N.A. and mezzanine loans from Capital Trust Inc., Macquarie Group, Apollo Global Management L.L.C. and Och-Ziff Capital Management Group L.L.C. It proved to be the biggest brokered financing in the Chicago MSA for the year. (Thor recently put the hotel up for sale.)
\n<\/span>Judges Praised<\/em>: A classic hotel but not 21<\/span>st<\/sup> century modern, that has long been under renovation, it presented a financing challenge with different levels of finance involving intercreditor agreements. It is in an historic, phenomenal location, and Hilton should have renovated it a long time ago.
\n<\/span>Submitted by: Jones Lang LaSalle Inc.<\/em><\/p>\n
\n<\/span>Second Place<\/span><\/strong><\/p>\n
\nFinanciers<\/em>: Wells Fargo Multifamily Capital (Cathy Pharis and Alan Wiener)
\n<\/span>Borrower<\/em>: Riverbay Corp.
\n<\/span>Transaction Size<\/em>: $621.5 million
\n<\/span>Transaction Type<\/em>: Refinancing with additional funds for repair and future replacements