RFR at it again in Manhattan; acquires trophy for $120M New York-based RFR Holding LLC has acquired 17 State Street in Lower Manhattan for approximately $120 million. RFR purchased the 42-story, 540,000 sq. ft. Class-A building from New York-based Savannah Teachers Properties Inc. RFR Realty will manage the property, which is 95% leased.

Alliance buys Highwoods' Central Fla. portfolio Denver-based Alliance Commercial Partners, in partnership with Minnetonka, Minn.-based Cargill Financial Services Corp., has closed on the acquisition of a 12-property, 969,707 sq. ft. Orlando office portfolio from Raleigh, N.C.-based Highwoods Properties Inc. The Alliance partnership also acquired a nine-property portfolio in Tampa, Fla., totaling 1.16 million sq. ft. Total consideration for both portfolios was $165.3 million.

Orlando, Fla.-based NAI Welsh will lease and manage Alliance's Orlando portfolio.

Aventis, IDT land New Jersey headquarters sites Two New Jersey-based companies - International Discount Telecommunications (IDT) and Aventis Pharmaceuticals - have lined up new headquarters in Newark, N.J., and Bridgewater, N.J., respectively. IDT has begun moving from five Hackensack locations into its new headquarters, 520 Broad Street in Newark, which is the former headquarters of Mutual Benefit Life Insurance Co. IDT signed a 20-year lease with three 10-year options for the 484,000 sq. ft. building with Florham Park, N.J.-based Kushner Cos., which acquired the building for $10.5 million last summer.

Aventis Pharmaceuticals, the U.S. subsidiary of Aventis S.A., has signed a lease for the company's North American Commercial Operations in Bridgewater, N.J., at Somerset Corporate Center. Parsippany, N.J.-based SJP Properties will develop Aventis' two eight-story office buildings that total 310,000 sq. ft. Terms of the agreement were not disclosed.

Construction has begun on the development, and the first building is expected to be completed by the first quarter of 2001. The second building is scheduled for completion within three months of the first building.

In November, Aventis leased a 340,000 sq. ft. facility in Parsippany from SJP that serves as Aventis' interim North American headquarters.

Lend Lease adds three trophies to its display case Atlanta-based Lend Lease Real Estate Investments Inc. closed out an active 1999 with three office acquisitions in three of the United States' hottest markets. In Atlanta's Buckhead submarket, Lend Lease acquired One Atlanta Plaza for $115 million. Lend Lease acquired the building from Sumitomo Life Realty, the American subsidiary of Sumitomo Life of Japan, on behalf of The Florida State Board of Administration.

Built in 1986, the 33-story office tower contains 618,000 sq. ft. of rentable space and is 99% leased.

In Boston's South Station submarket, Lend Lease acquired 745 Atlantic Avenue on behalf of Value Enhancement Fund III LLC, a $450 million fund managed by Lend Lease. Built in 1989, 745 Atlantic Avenue is a 11-story, 168,300 sq. ft. Class-A building that is fully leased. Terms of the transaction were not disclosed.

In Washington, D.C., Lend Lease acquired Franklin Court - 1099 14th St. NW - on behalf of a pension fund client. Lend Lease reportedly paid $115 million for the 11-story, 443,289 sq. ft. building. PW/MS Operating Partnership LP, a venture formed by affiliates of the Morgan Stanley Real Estate Fund, New York-based Paine Webber Inc. and Florham Park, N.J.-based Gale & Wentworth sold the Class-A trophy. Cassidy & Pinkard/Sonnenblick-Goldman, a partnership between the Washington, D.C., and New York-based investment bankers, respectively arranged the transaction.

Center City Philadelphia revs up for 2000 Two end-of-1999 deals may signify the resurgence of Philadelphia's Center City. Delaware Investments, based in Philadelphia since its founding in 1929, signed a 10-year lease expansion in Commerce Square, while Boston-based Leggat McCall Properties acquired Four Penn Center, a vacant 20-story office building.

Delaware Investments will lease a minimum of 365,000 sq. ft. in One and Two Commerce Square from a partnership headed by Thomas Realty Partners LP The minimum requirement represents a 70,000 sq. ft. expansion over Delaware Investments' current lease, which expires in April 2002. In addition, Delaware Investments has options on an additional 200,000 sq. ft. of Commerce Square office space over the life of the lease.

Leggat McCall acquired Four Penn Center from the Government of Singapore for an undisclosed amount, and plans to spend about $25 million during the next 18 months to completely redevelop the 525,000 sq. ft. structure. Redevelopment includes total asbestos abatement and demolition of the building's interior finishes, lobby renovation, new systems and elevators and new landscaping. The exterior of the building will undergo a complete reconditioning as well, including refurbishing existing limestone panels and replacement of single-pane windows with more energy efficient glass.

MacFarlan Holdings counts its blessings in Dallas CBD An investment partnership controlled by MSDW Southwest Partners, a venture between Morgan Stanley Real Estate Fund III and Dallas-based MacFarlan Holdings Ltd., has purchased an 80.5% condominium interest in Dallas' Thanksgiving Tower, a 50-story, 1.35 million sq. ft. Class-A property in downtown Dallas. The partnership acquired the Thanksgiving Tower interest from the government of Singapore for a reported $95 million.

A separate investment group owns about 20% of the building.

Houston's ABB Building finds buyer Los Angeles-based Madison Partners represented 3150 Briarpark LP - a foreign concern that asked to remain anonymous - in the $69.8 million acquisition of the ABB Building in Houston's Westchase submarket. Resource Real Estate Partners and Brannan Goddard Co., both of Atlanta, represented the seller, Austin, Texas-based Simmons, Vedder & Co., which completed the building in early December.

The nine-story, 487,788 sq. ft. building is leased to ABB, an affiliate of Zurich-based electrical engineering giant ABB Asea Brown Bovari.

LJ.P. Morgan Mortgage Capital closes $100M loan Atlanta-based J.P. Morgan Mortgage Capital Inc. has refinanced a $100 million loan with a $30 million earn-out provision with a joint venture between New York-based Max Capital and Credit Suisse First Boston for 1440 Broadway in New York. The acquisition loan is a three-year floating-rate deal with New York-based APC Realty Advisors as the broker of record.

The $30 million earn-out provision can be used for tenant improvements as the building, which is about 50% occupied, is leased.

What more can we say about Washington, D.C.? The Washington, D.C., area continues to thrive. In a deal arranged by Grubb & Ellis of Washington, D.C., a subsidiary of Northbrook, Ill.-based Grubb & Ellis, Fannie Mae has purchased 4250 Connecticut Avenue NW for an undisclosed amount. Grubb & Ellis represented Dallas-based Archon, the building's former owner.

Fannie Mae will renovate the 204,361 sq. ft. building, which is near the company's Washington, D.C., headquarters. The building was formerly used by the University of the District of Columbia, and is located in the Van Ness submarket in northwest D.C.

Also in the District's CBD, Chatham, N.J.-based Wellsford Commercial Property Trust sold 1275 K Street to locally based JBG Cos. for $43.4 million. Since Wellsford acquired and renovated the 12-story, 225,000 sq. ft. building in 1997, occupancy has risen from 80% to 92%. The sale price represented a 8.7% cap on net operating income and a 9.1% cap on projected 2000 NOI. According to Wellsford, the sale generated a 26% internal rate of return for the two-years the company held the building.

"Whenever we lease an asset over 90% and can sell it at less than a 9.5% cap, we realize our gain and redeploy our capital," says Richard Previdi, president of Wellsford Commercial Properties Trust.

After the sale, Wellsford acquired 401 N. Washington St. in Rockville, Md., for $19.5 million. The company plans to redevelop the 248,000 sq. ft., Class-B property into Class-A office space. Wellsford acquired more than 500,000 sq. ft. of space in the Baltimore/Washington, D.C., corridor in 1999.

A duo of Maryland deals One late-1999 deal in Maryland put Newton, Pa.-based Brandywine Realty Trust closer to its divestiture goals, while another - a 50,000 sq. ft. prelease - gave the go-ahead for the development of Blackwell I, a 120,999 sq. ft., Class-A building in Gaithersburg, Md. Brandywine sold 100 West Road in Towson, Md., to Annapolis, Md.-based Maryland State Retirement and Pension Systems for $16.3 million, or $136 per sq. ft.

The Towson office building was Brandywine's last Maryland holding. Last year, the company sold approximately $150 million in assets as part of its capital recycling plan to repurchase stock, pay off debt and invest in other developments.

A joint venture between Tysons Corner, Va.-based Atlantic Realty Cos. and Rockville, Md.-based Foulger-Pratt Construction Inc. broke ground on Blackwell I before the end of 1999. Rydex Inc., currently located in Rockville, has preleased Blackwell I's top two floors for its new headquarters. The building is scheduled for completion this fall.

The joint venture acquired the 11 acre Blackwell site in June, and plans to build an additional 105,000 sq. ft., as well as Blackwell Road. The project's total cost is more than $21 million.

German firm nabs Boston 'jewel box' The Boston office of Dallas-based Trammell Crow Co. has negotiated the $38.6 million sale of One Liberty Square in Boston. Trammell Crow represented Simsbury, Conn.-based Hart Advisors Inc. and procured the purchaser, Transatlantica Real Estate GmbH, a Hamburg, Germany, and Atlanta-based investment advisory firm.

The 157,585 sq. ft. "jewel box" building is in Boston's financial district.

Houston's ABB Building finds buyer Los Angeles-based Madison Partners represented 3150 Briarpark LP - a foreign concern that asked to remain anonymous - in the $69.8 million acquisition of the ABB Building in Houston's Westchase submarket. Resource Real Estate Partners and Brannan Goddard Co., both of Atlanta, represented the seller, Austin, Texas-based Simmons, Vedder & Co., which completed the building in early December.

The nine-story, 487,788 sq. ft. building is leased to ABB, an affiliate of Zurich-based electrical engineering giant ABB Asea Brown Bovari.

A breath of fresh air in White Plains The Staubach Co., Dallas, has secured a 120,000 sq. ft. headquarters lease for Atlas Air Inc. in the Texaco headquarters building in White Plains, N.Y. The lease is the first major transaction completed in Westchester County, N.Y., in three years, and could be a catalyst for reviving large transaction activity in the area, according to The Staubach Co.

The lease consolidates Atlas Air's Golden, Colo., corporate headquarters and its operations center at John F. Kennedy International Airport. The company plans to begin moving to the new location this spring.

"We had outgrown our existing facilities in Golden and at JFK, so we were pressed to find a space that would support our growth," says Michael Chowdry, chairman, CEO and president of Atlas Air. "This location perfectly accommodated our needs and brought our staff and management teams together."

Atlanta: Will the Phoenix continue to rise? Over the past few years, Atlanta's office market - and industrial and most everything else - has raised fears of overbuilding, especially in some suburban submarkets. And let's not even get into NREI's hometown traffic and sprawl woes.

Grubb & Ellis' 2000 Real Estate Forecast breakfast at Atlanta's Ritz-Carlton Buckhead delved into the issues that will shape Atlanta's commercial real estate markets this year and into the first few decades of the new century. Lead by local industry veteran and new executive vice president and managing director Rick Lackey Jr., the Atlanta office of Northbrook, Ill.-based Grubb & Ellis expects to radically raise its profile in Atlanta and the rest of the Southeast this year and in years to come.

Grubb & Ellis senior vice president and high-tech group chief Jim Simpson - a 25-year vet in the Atlanta commercial real estate arena - predicts at least a 20-year technological revolution that will spread across Atlanta, which is already home to MindSpring, BellSouth and iXL. Simpson expects Atlanta to emerge as a high-tech leader on the national and international stage.

Simpson also points to Atlanta's Central Perimeter and North Fulton submarkets as high-tech hot points, with Cherokee County to the north also a potentialbright spot for high-tech relocations and expansions. Of course, we'd be remiss not to mention BellSouth's plans to develop about 3 million sq. ft. of office space around MARTA transit stations and MindSpring's and iXL's recent CBD leases of 264,000 sq. ft. and 360,000 sq. ft., respectively.

"Atlanta is a sleeping giant with the high-tech companies that are here or coming here," says Simpson. "The speed at which these dot-com companies are coming to Atlanta has created a need for short-term office space."

Grubb & Ellis predicts completions and absorption will continue to decline in the metro Atlanta area with more than 4 million sq. ft. completed and slightly less than 4 million sq. ft. absorbed this year. Grubb & Ellis expects this trend to continue in 2001. Analysts predict that one or two high-rise office buildings are expected to break ground in the Downtown submarket, while Midtown will have three or four begin construction - but not all that have been announced.

The vacancy rate forecast calls for CBD rates to continue to fall to near 10% in 2001, after hovering around 20% only a few years ago. The suburban vacancy rate is expected to surpass that of the CBD and hit 12% by 2001, according to Grubb & Ellis' forecast. North Fulton is expected to remain the leading suburban submarket.

The number of high-growth companies in the Atlanta area should lead to a vibrant sublease market and great opportunities for companies that specialize in providing short-term office space. But with construction continuing to outpace absorption, rent increases are expected to be incremental at best, says Phillip Barry, senior vice president of the investment services group in Grubb & Ellis' Atlanta office.

"Even with Atlanta's job growth, as long as these trends continue, it will be more difficult for rents to rise faster than the rate of inflation," says Barry.

On the investment side, Grubb & Ellis expects properties to continue to trade before officially entering the marketplace, with sellers offering product to a select group of potential purchasers. Still, excessive price inflation is not anticipated for Atlanta, as investors are expected to keep a realistic view of the market and maintain a sense of balance and stability.

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