MEPT COMMITS $113.1 MILLION TO A JOINT VENTURE DEVELOPMENT OF BLOCK 6, A 409-UNIT MULTI-FAMILY ASSET IN SAN FRANCISCO. The $212.0 million project is located at 299 Fremont Street in the “SoMa” district, in close proximity to the $4.7 billion Transbay Transit Center, which is under construction. This investment is consistent with MEPT’s strategic objective to increase the Fund’s allocation to the multi-family sector in primary markets with strong demand. The high-rise apartment complex is located within blocks of numerous employers in the Financial District and will cater to the area’s large population of Echo Boomers (the 19-34 year old workforce) with floor plans that feature luxury finishes and appliances—even a bicycle storage and repair facility. Furthermore, Block 6 will seek to achieve U.S. Green Building Council’s® Leadership in Environmental and Energy Design (LEED®) Gold certification and will create more than 2,500 “green jobs” for members of the local Building Trades.
MEPT PROVIDES A $95.0 MILLION SENIOR LOAN FOR DEVELOPMENT OF HOLLYWOOD 959 IN LOS ANGELES. Consistent with the Fund’s strategic goal to increase its allocation to CBD assets in primary markets, MEPT’s investment in the 241,500 square foot office project is a seven-year term loan that will yield an attractive 8.0 percent preferred return for the Fund. The investment is structured to mitigate construction and lease-up risk and is critical in the financing of the $138.1 million project, which also includes an in-place $25 million subordinated HUD Loan and $18.1 million of developer equity. MEPT will share in net cash flow and net resale proceeds pursuant to a distribution waterfall. The property is centrally located within the Hollywood submarket and numerous television and movie studios are nearby. Hollywood has seen a resurgence spurred by significant public and private investments in infrastructure, retail, entertainment, hotel, and residential developments. Demand in the submarket is strong for new, creative office space due to robust job growth in the technology, media, and entertainment sectors.
MEPT RECEIVES TOTAL GROSS PROCEEDS OF $128.1 MILLION FOR THE SALE OF FIVE ASSETS IN THE MILESTONE BUSINESS PARK IN THE WASHINGTON, D.C. AREA. The Milestone Business Park is a 42-acre campus comprised of over 634,000 square feet in three office buildings, one flex building and a land parcel of 7.6 acres. MEPT originally purchased two buildings and land parcel in 2004, and later developed two additional buildings between 2006 and 2012. MEPT achieved LEED certification for the three office buildings. In line with the strategic plan of reducing its allocation to suburban office assets and the Washington, D.C. market, MEPT targeted the assets for sale. Matan Asset Management, a local, privately-held real estate investment firm, was the purchaser.
IN SEPTEMBER, MEPT SOLD THE BURLINGTON OFFICE PARK ASSETS FOR A TOTAL GROSS SALE PRICE OF $109.0 MILLION. The 47-acre Burlington Office Park in suburban Boston consists of four office buildings, totaling 486,719 square feet, and a land parcel. MEPT acquired Burlington Office Centre I in 1991, and later developed three additional office buildings in phases from 1998-2009. MEPT targeted the office park for sale as part of MEPT’s strategic goal of reducing the Fund’s allocation to suburban office assets. MEPT garnered a very favorable response to the sale, receiving over 15 offers for the portfolio. MEPT sold the business park to a joint venture between the Davis Companies and Principal Real Estate Investors who together represented the David Investments Ventures Fund II.
MEPT RECEIVED $33.6 MILLION IN GROSS PROCEEDS FROM THE PAYOFF OF A LOAN ON CRANBERRY WOODS. In August of 2009, MEPT sold Cranberry Woods, a four-building suburban office park built by MEPT in the Pittsburgh market. As part of the sale, MEPT provided seller-financing through a five-year term, mezzanine loan to the buyer, McKnight Realty Partners. During the third quarter, the current owner took advantage of available capital in the market, refinanced the property and paid off the loan to MEPT before the original term expired.
AT THE END OFTHE QUARTER, MEPT SOLD NORTH BY NORTHWEST LAND IN INDIANAPOLIS FOR A GROSS SALE PRICE OF $1.8 MILLION. Between 1992 and 2008, MEPT acquired two buildings and developed other distribution facilities in the North by Northwest Business Park, eventually increasing the square footage to approximately one million square feet of industrial space. The operating assets were sold to a Midwest-based real estate fund in the fourth quarter of 2009; however, MEPT retained the land parcel within the park. In line with MEPT’s strategic objective to reduce its exposure to land holdings, MEPT targeted the asset for sale. The land parcel was sold to Becknell Industrial, a private firm specializing in the development, management and long-term ownership of industrial properties nationwide.
IN APRIL, MEPT OBTAINED $81 MILLION IN FINANCING FOR 475 SANSOME STREET. MEPT purchased the 90 percent-leased, 353,686 square foot office building in San Francisco
in the fourth quarter of 2012 for $162.8 million. MEPT secured the fixed-rate, 10-year loan at a rate of 3.25 percent with Prudential Insurance Co. MEPT’s debt maturity ladder is staggered by maturity date to avoid large refinancing requirements, and borrowings are structured to minimize interest rate exposure.
IN THE SECOND QUARTER, MEPT SECURED $55 MILLION IN SHORT-TERM FINANCING TO FUND THE SECOND PHASE OF DEVELOPMENT AT ELAN UPTOWN. Phase II of this multi-family project in Minneapolis includes 387 units and complements the 203 units currently under construction
in Phase I. Phase II broke ground in the second quarter. In keeping with the Fund’s commitment to responsible property investing, Elan Uptown is designed to achieve U.S. Green Building Council® Leadership in Environmental and Energy Design Silver certification. Additionally, the project will generate over 1.5 million “green” job hours for members of the local Building Trades.
MEPT SOLD RIVER RUN, A 374-UNIT SUBURBAN, MULTI-FAMILY PROPERTY FOR $54.5 MILLION IN GROSS PROCEEDS IN JUNE. The Chicago-area apartment complex was acquired by MEPT in 2002, one year after completion. As part of MEPT’s strategic goal to reduce the Fund’s allocation to assets in suburban
markets, MEPT targeted the 97 percent-leased asset for sale. River Run was purchased by an owner/operator of commercial real estate who has been an active buyer in the Chicago market.
DURING THE QUARTER, MEPT SOLD WESTBROOK CORPORATE CENTER FOR TOTAL GROSS PROCEEDS OF $49.7 MILLION. The 187,653 square foot, suburban office building in the Philadelphia market was built by MEPT in 1998 and fully leased to Teva Pharmaceuticals USA, the largest FDA-approved generic pharmaceutical manufacturer in the U.S. In line with MEPT’s strategic goal of reducing its allocation to suburban office assets, MEPT targeted the asset for sale. After securing a 10-year lease extension from the sole tenant, MEPT was able to command a premium price for the asset. Westbrook Corporate Center was sold in an all cash purchase to a subsidiary of CapLease, Inc., a publicly-traded real estate investment trust.
IN JULY, MEPT SOLD THREE INDUSTRIAL ASSETS IN THE ST. LOUIS MARKET FOR TOTAL GROSS PROCEEDS OF $26.1 MILLION. MEPT built West 70 Commerce Center I, III and V, totaling over 527,000 square feet, in 1996 and 1999. The assets are fully leased to multiple tenants. MEPT targeted the assets for sale due to anticipated capital expenditures at the properties. MEPT sold the properties in an all cash purchase to Exeter Property Group, a real estate private equity group.
AT THE END OF THE SECOND QUARTER, MEPT RECEIVED TOTAL GROSS PROCEEDS OF $23.3 MILLION FOR THE SALE OF CHEYENNE CORPORATE CENTER IN LAS VEGAS. The 420,000 square-foot, fully-leased distribution facility
was built by MEPT in 2004. Anticipating future leasing risk since the submarket has high vacancy and negative absorption, MEPT marketed the asset for sale. Prologis, a $22 billion, publicly-traded industrial real estate investment trust, purchased the asset in an all cash transaction.
FOR THE FIFTH CONSECUTIVE YEAR, BENTALL KENNEDY, THROUGH ITS WORK ON BEHALF
OF MEPT, WAS AWARDED THE ENERGY STAR PARTNER OF THE YEAR AWARD BY THE U.S. ENVIRONMENTAL
PROTECTION AGENCY (EPA) IN MARCH. In addition, Bentall Kennedy received
the prestigious Sustained Excellence Award for the third year in a row. The
Sustained Excellence Award is given to a select number of organizations that
exhibit outstanding energy management performance and practices year after year,
and Bentall Kennedy has deployed industry-leading initiatives throughout the
IN JANUARY, MEPT RECEIVED TOTAL GROSS PROCEEDS OF $91.3 MILLION FOR THE
SALE OF TWO ASSETS IN SUBURBAN LOS ANGELES óCORPORATE POINTE AND DEVRY AT WEST
HILLS. MEPT targeted the 11-building, 987,428 square-foot office park in
the northwest San Fernando Valley for sale because it was not a long-term strategic
asset for the portfolio and had low occupancy. The sale enabled MEPT to reduce
its suburban office allocation while increasing overall occupancy of the MEPT
portfolio. After receiving interest from several buyers, MEPT proceeded with
an all cash offer from Brookfield Property Group, an alternative asset manager
with more than $150 billion in assets under management.
IN FEBRUARY, MEPT RECEIVED TOTAL GROSS PROCEEDS OF $59.5 MILLION FOR THE
DISPOSITION OF CABRILLO TECHNOLOGY CENTER IN SAN DIEGO. MEPT built the 285,585
square-foot office building in 1999 and the property performed well for the
Fund over the years. However, with deteriorating submarket fundamentals and
the upcoming lease expiration of the main tenant, MEPT anticipated future leasing
challenges and higher expenses in the coming years. As a result, MEPT marketed
the asset for sale and the property was purchased in an all-cash transaction
by a joint venture of IDS Real Estate Group and CalSTRS.
DURING THE QUARTER, MEPT SOLD THREE ASSETS IN SUBURBAN CHICAGO FOR TOTAL
GROSS PROCEEDS OF $23.5 MILLION. Totaling nearly 500,000 square feet and
notable for energy-efficient achievements, Greenspoint Office Building and Greenspoint
Office Building III were built by MEPT between 1989 and 1999 and Barrington
Pointe was acquired in 1994. The northwest suburban Chicago submarket where
these assets are located had been suffering from persistently high vacancy and
deteriorating market conditions which affected MEPTís ability to re-lease vacant
space. As a result, MEPT targeted the three buildings for sale, consistent with
MEPTís strategic goal of disposing of older office assets in suburban markets.
The assets were purchased by the Lincoln Property Company on behalf of the Teachersí
Retirement System of Illinois (TRS).
IN FEBRUARY, MEPT SOLD A LAND PARCEL IN THE WEST 70 COMMERCE CENTER BUSINESS
PARK IN ST. LOUIS FOR $3.4 MILLION. MEPT was approached by a prior tenant
in the West 70 Commerce Center industrial park to purchase the land at a price
above the Fundís carrying value. The buyer is a Missouri-based manufacturer
who has a large presence in the area and previously acquired a building in the
business park from MEPT in 2005.