4.1 million SqFt of PDX office space in 40 buildings sells for $1 Billion in one sale

[MarkDaMan]

$1 billion sale to flip 40 area buildings
Real estate - A N.Y. firm buys then gears up to sell 4.1 million square feet of Portland-area office space
Thursday, February 15, 2007
DYLAN RIVERA
The Oregonian

Flipping a house is one thing, but flipping billions of dollars in office space is quite a feat.

It turns out, The Blackstone Group of New York will be the largest owner of Portland-area office space for only a few weeks.

That's because the private equity firm that bought Equity Office Properties Trust last week for $39 billion is wasting no time breaking up the real estate empire that includes 4.1 million square feet in the Portland area.

Blackstone has a contract to sell its Portland portfolio to Shorenstein Properties of San Francisco for more than $1 billion in a deal that could close in about a month, executives familiar with the deal said.

That's about 40 buildings -- from Umpqua Bank Plaza downtown to almost all of Lake Oswego's prime Kruse Way office market -- trading hands in the blink of an eye.

The company also reportedly has another deal to sell Equity's Seattle and Washington, D.C. portfolios, totaling 16.5 million square feet.

"It's mind-boggling," said Gary Griff, an investment broker with the Cushman & Wakefield firm in Portland. "This is trading like stocks and bonds rather than real estate."

The Shorenstein family's entry into Portland means most of the portfolio will likely be locked up for years and rents for tenants will jump, Griff predicted. The company, led by Doug Shorenstein and founded by his father Walter, has bought and held skyscrapers for decades. In 1992, it started pooling investors in private funds that have bought and sold in six to eight years.

Nationwide, Shorenstein controls 16.7 million square feet of offices worth $6 billion.

If it wanted to, Shorenstein could build Equity's planned office tower near the Hawthorne Bridge, Griff said.

"I would not be surprised."

Dylan Rivera: 503-221-8532; dylanrivera@news.oregonian.com
http://www.oregonlive.com/business/o...760.xml&coll=7

[Snowden352]

So, what does this mean, exactly? No First and Main? If true, then Multnomah might get that site after all... funny, huh? (I'm not laughing)

[Urbanpdx]

That is pretty amazing. Equity made a bundle selling to Blackstone and Blackstone flips for more! Wow.

[Urbanpdx]

I would be pretty pissed if I was an Equity shareholder. Makes me want to invest with Blackstone though.

Blackstone’s Bid for Equity Office Prevails

By TERRY PRISTIN
The New York Times
Published: February 8, 2007
The feverish competition over Equity Office Properties Trust, the nation’s largest office landlord, ended today with the original suitor, the Blackstone Group, coming out on top.

Enlarge This Image

Tim Rue/Bloomberg News
An Equity Office property.
Related
Shareholder Vote Today Could Settle Fight for Office REIT (February 7, 2007)

More on DealBook »
Investors had been waiting to see whether Vornado Realty Trust would try to top Blackstone’s latest all-cash offer of $55.50 a share, which was approved last night by Equity Office.

It did not happen. This morning, Vornado announced it was withdrawing its bid. “Vornado concluded that the premium it would have to pay to top Blackstone’s latest bid, protected by a twice increased breakup fee, would not be in its shareholders’ interest,” the company said in a statement.

Then, a few hours later, Equity Office shareholders voted to approve the $39 billion bid by Blackstone, a private equity company.

Barry Vinocur, the editor of REIT Wrap, a daily newsletter about real estate investment trusts, said before Vornado withdrew that Blackstone had already amassed the votes necessary for shareholders to approve the merger.

Vornado’s chief executive, Steven Roth, had said that buying Equity Office would make his company the dominant real estate investment trust in the office sector, with a strong portfolio of ”irreplaceable assets” in the markets where it is hardest for developers to put up new buildings. In addition to office buildings, the company owns shopping centers and showroom space.

Blackstone is considered likely to sell much of the Equity Office portfolio within months of the transaction, which would be the largest leveraged buyout ever.

Though Vornado’s bid was higher at $56 a share, it would be paid in cash and stock. Analysts said Blackstone’s offer was superior because it could close as soon as Friday.

Green Street Advisors, a research company in Newport Beach, Calif., which earlier recommended a vote in favor of Vornado, endorsed the Blackstone bid yesterday.

On Sunday, Vornado offered to pay the cash portion of its bid several weeks — instead of several months — after a merger agreement is signed. Vornado said its final bid would address Equity Office’s concerns that the original deal posed too much risk for shareholders. Though Vornado shareholders would still have to approve the issuance of stock, the tender offer portion of the transaction would not need their approval, the company said.

Equity Office said Vornado had not allayed all its concerns. It said Vornado needed to agree to pay Equity Office hundreds of millions of dollars if the deal fell through.

Documents filed yesterday with the Securities and Exchange Commission showed that on Monday, Equity Office pressed Blackstone to come up with more cash. Several major investors had made it clear that they preferred Vornado’s richer offer and thought the risks had been exaggerated.

Later that day, Jonathan D. Gray, a senior managing director at Blackstone, told Richard D. Kincaid, the president of Equity Office, that he would be willing to pay $55.25 a share, provided that the breakup fee that Vornado would have to pay Blackstone was increased to $700 million from $500 million.

Pushing for more, Mr. Kincaid asked Mr. Gray if Blackstone would add another 25 cents a share. It would, Mr. Gray told him, but only if the breakup fee rose to $720 million and the company did not postpone today’s shareholders’ meeting.

http://www.nytimes.com/2007/02/08/bu...rssnyt&emc=rss

[zilfondel]

So... rents go up, getting closer or surpassing new construction per sq foot prices, then we see possibly more highrises downtown.

Nice too that much of the increase will be in specialty non-downtown markets... might make downtown yet even more attractive for businesses to locate to, as it is already cheaper than Kruse!

[JoshYent]

hmmmmmmm both good results and bad results but more on a person by person basis i suppose...........

but either way this will benefit portland as a whole

[MarkDaMan]

Shorenstein closes $1B Oregon property deal
Portland Business Journal - 2:18 PM PDT Wednesday, March 28, 2007

A San Francisco company has closed on its $1 billion purchase of a portfolio of properties in the Portland area.

The purchase, Shorenstein Properties' first in the Portland market, consists of 46 properties totaling over 4 million square feet and three development parcels that could support an additional 550,000 square feet of office space. The seller was the Blackstone Group of New York City, which acquired the assets through its recent $39 billion purchase of Equity Office Properties Trust in Portland.

Shorenstein CEO Douglas Shorenstein said that the quality and diversity of the portfolio would be exceedingly difficult for Shorenstein Properties or any other investor to replicate through individual purchases over time.

The deal includes the Umpqua Bank Plaza and Congress Center in downtown Portland; three parcels in Johns Landing; 16 properties in Beaverton; seven properties in Tigard; and 17 properties in Lake Oswego.

Shorenstein made the purchase for its eighth investment fund, formed late last year with $1.1 billion in committed capital, including $100 million from Shorenstein.
http://www.bizjournals.com/portland/...=et75&hbx=e_du

[JoshYent]

dang! these guys buy it like its nothing...

[MarkDaMan]

San Francisco firm takes over as top local landlord
Portland Business Journal - April 20, 2007
by Wendy Culverwell
Business Journal staff writer

Shorenstein Properties LLC, Portland's newest and largest office landlord, is wasting little time making its mark on the market.

The family-owned real estate investment company is making immediate plans to build one and perhaps two new office buildings at Kruse Oaks in Lake Oswego's Kruse Way, and is pressing ahead with its predecessor's plans to construct a 15-story office tower at Southwest First Avenue and Main Street in downtown Portland.

"The fundamentals of the downtown market will support new office construction," said Charles Malet, executive vice president and director of asset management leasing for the San Francisco-based firm.

Shorenstein Properties bought the Portland portfolio of offices and business parks formerly owned by Equity Office Properties Trust from Blackstone Group in March.

The portfolio consists of 46 properties totaling more than 4 million square feet, which makes Shorenstein Portland's largest landlord.

The 4.1 million square feet represent Portland's leading business properties: Umpqua Bank Plaza, Congress Center, Nimbus Center, Lincoln Center, Kruse Way and three properties in Johns Landing.

The company's leaders, including Doug Shorenstein, chairman and chief executive officer, spent the early part of this week visiting the Rose City and introducing themselves and their business to the Portland executive community.

The Portland portfolio represents about 40 percent of the equity investment of Shorenstein's $1.1 billion Eighth Fund.

In all of its funds, Shorenstein partners with major college endowments and foundations as well as families.

The Yale Endowment is its largest investor, followed by the Shorenstein Family.

It views itself as a long-term holder, typically owning properties for 20 years or more, though it says it is nimble enough to sell assets if market conditions are right. Doug Shorenstein said a key element of the company's investment strategy is to purchase properties that will remain well-leased even in a down market.

Along with the real estate, Shorenstein hired Equity's Portland-based staff to manage the properties. Matt Cole, who led the Equity team, is now senior vice president and regional leasing manager for Shorenstein.

"We felt like the people we inherited are good people who know what they're doing," said Glenn Shannon, Shorenstein president.

In addition to the Equity crew, Shorenstein added about six new employees to take over responsibilities once handled in Chicago by Equity's corporate office.

Doug Shorenstein said his company became interested in Portland when it started investing in Seattle a few years ago.

It likes the steady Portland market, which has grown consistently for 11 of the past 13 years, and its vaunted lifestyle reputation. The urban growth boundary, which constrains development, is an attractive feature, as is the stellar portfolio Equity amassed in the years before the company was bought by Blackstone.

The new owner is making one change that should be welcome news to the local office brokerage community.

Where Equity relied on in-house staff to represent it in tenant negotiations, Shorenstein is enlisting outside brokers. It has already hired Grubb & Ellis Co., CB Richard Ellis Inc., Pacific Real Estate Partners Inc. and NAI Norris Beggs & Simpson Commercial Real Estate Advisors to handle leasing negotiation.

Malet said Shorenstein has a standing strategy of using outside brokers to represent it and has had success.

The other Eighth Fund investments include Class A offices in Boston and Washington, D.C., and Media Studios North, a 916,413-square-foot media and entertainment complex in Burbank, Calif.

wculverwell@bizjournals.com | 503-219-3415

http://portland.bizjournals.com/port...ml?t=printable

[Snowden352]

I couldn't find the old office space thread, so I'm posting here. 'salright?

Update: Commercial leases
Portland Business Journal - 10:07 AM PDT Monday, April 23, 2007
Major commercial lease activity reported in the past week:

Petco and Victory Packaging have signed leases at ProLogis Park PDX, a new master-planned industrial park in development about four miles from Portland International Airport. ProLogis Park PDX consists of three facilities totaling 283,000 square feet. When complete, it will contain four distribution centers totaling 5218,400 square feet. Petco, the San Diego-based retailer of pet-related products, agreed to lease 62,000 square feet. It is expanding from a smaller facility and will use its space as a warehouse to serve stores throughout the Northwest. The new facility will be one of six regional Petco distribution centers nationwide. Seth Dudley of The Studley Co. represented Petco. Victory Packaging, based in Houston, provides packaging logistics. It leased 30,000 square feet. It was represented by Mark McClung of Cushman and Wakefield, and by Jeff Lindenberger and Todd Mason from McDade Smith Gould Johnston Mason and Co.
Anthro Corp., a high-tech furniture maker, leased 24,000 square feet of industrial space from Tualatin Industrial Ventures. Steven Klein and Peter Stalick of GVA Kidder Mathews represented Tualatin Industrial Ventures; John Fettig of Capacity Commercial Group represented Anthro.
The Oregon Institute of Technology leased 27,236 square feet of office space at the AmberGlen Business Center. Keith Young and Peter King of GVA Kidder Mathews represented the landlord; Pat Schreck of Melvin Mark Brokerage Co. represented OIT.
Tigard-based G.A.P. Supply Corp., operating as Johnstone Supply, signed a lease for an 18,200-square-foot expansion at the Quad 205 Business Park in Vancouver. William Connelly of Eric Fuller & Associates Inc. represented the landlord, McMorgan and Co. of San Francisco. Johnstone warehouses heating and cooling parts and supplies.
Sacagawea Inc. of Beaverton has leased 7,553 square feet in the AAA of Oregon and Idaho building 8555 S.W. Apple Way in Portland for a residential real estate office. Chris Johnson and MaryKay West of NAI Norris Beggs & Simpson represented Sacagawea. Greg Gonzalez of Doug Bean and Associates represented AAA.
Northwestern Mutual Life Insurance leased 18,555 square feet of office space at the Yamhill Plaza office building, 221 S.W. Yamhill St. in Portland. Chris Johnson and MaryKay West of NAI Norris Beggs & Simpson represented Northwestern Mutual. The landlord is American Property Management.
Alpha Card Systems, which sells identification card machines, has leased 12,000 square feet of flex/industrial space at the Boones Ferry Business Park. John Medak and Jennifer Medak of NAI Norris Beggs & Simpson represented Alpha Card Systems; Stu Peterson at Macadam Forbes represented Boones Ferry Business Park LLC.
Multnomah Defenders Inc. has leased 11,321 square feet of office space at the Yeon Building, 522 S.W. Fifth Ave. in downtown Portland. Tom Becic of Melvin Mark Brokerage Co. represented Multnomah Defenders. Pierre Ardantz of Norris & Stevens Inc. represented the landlord, Evergreen Portland LLC.
Blaser Die Casting has signed a lease for 38,500 square feet of industrial space at Marine Drive Distribution Center III, 7507 N. Marine Drive in Portland. Aaron Watt and Greg Nesting of Norris & Stevens Inc. represented Blaser Die Casting. Sean McCarthy of GVA Kidder Mathews represented the landlord, LIT Industrial Limited Partnership.

[MarkDaMan]

^good stuff, usually jobs follow expansions...