Sale Marks One of the Largest Educational Property Transactions

PHOENIX, Arizona – A portfolio of five charter school properties in Florida has been sold for $71.48 million.  The transaction is one of the country’s largest educational-based property deals, striking a new level of prominence for this category of commercial real estate.

“This marks a watershed moment in the educational asset sector,” says Todd Noel, Executive Vice President and National Director Education Services Group.  “This sale helps to validate education-occupied properties within the institutional asset category of commercial real estate.”

Noel, who is based in Phoenix, and Miami-based Colliers agent Achikam Yogev handled the sale transaction.  ESJ Capital Partners of Aventura, FL sold the five schools to Charter School Capital of Portland, OR.

The portfolio includes the following charter school properties:

• Imagine South Vero – 6000 4^th St. in Vero Beach, FL
• Imagine School at Broward – 9001 Westview Dr. in Coral Springs, FL
• Championship Academy of Distinction Davie Campus – 3367 N. University Dr. in Davie, FL
• Renaissance Charter School at Plantation – 6701 W. Sunrise Blvd. in Plantation, FL
• Kids Community College – 10030 Mathog Rd. in Riverview, FL

The five schools are located in highly desirable growth markets and are operated by highly recognized charter school organizations.  Florida is a national leader in school choice and the charter school environment shows no indication of slowing down.  Charter schools are tuition-free public schools created through an agreement or “charter” typically between the school and the local district school board.  During 2015-16 school year, more than 400 new charter schools opened.  Charter school enrollment in Florida grew by almost eight percent from fall 2015 to fall 2016, demonstrating growing parental demand for high-quality educational options.

The five schools had an average of 17 years remaining on current lease commitments.  The properties range in size from 2.06 acres to 17.4 acres.  Property under-roof square footage ranges from 46,418 square feet to 74,992 square feet.

Charter School Capital is the nation’s leading provider of funding for charter schools, including growth capital and facilities financing.  Charter School Capital has provided in excess of $1 billion in funding for charter schools, providing high-quality education to more than 550,000 students across the united states.

Consolidations of Medical Practices Make Pre-2000 Buildings Obsolete

Phoenix, Arizona – Colliers International in Greater Phoenix released its third quarter 2016 Medical Office Market Report for Greater Phoenix.  The report indicates that older medical office buildings are no longer optimally functional and have put a drag on the market.  Report highlights are outlined below.  For more details, refer to the attached report or click Here to view online.

• Vacancy of Medical Office space in Greater Phoenix dropped slightly in the third quarter.  The vacancy has improved 120 basis points in the past 12 months.  The majority of improvement has been seen in off-campus properties
• Net absorption of medical office space was positive, but just 58,000 square feet in the past three months.  This is the lowest quarter for net absorption in more than a year.
• Rental rates ticked slightly higher during the third quarter, but improvement was modest and focused in off-campus buildings.  The easing pace of tenant demand is slowing the rate of rental rates.
• Investment activity during third activity showed improvements in condo building sales and a slowdown in sales of traditional medical buildings.  Quarterly pricing trends were uneven, but 2016 prices are still higher than in 2015.

One reason for slowing vacancy improvement is that older space constructed prior to 2000 was designed for smaller, private practices.  Since the Affordable Care Act was implemented, we have seen practice consolidations that require larger suites.  Smaller spaces in older buildings are proving difficult to lease, leading to higher vacancies in these buildings.  The vacancy rate in buildings constructed before 2000 is nearly twice as high as those built during this millennium.

The Greater Phoenix medical office market will continue to benefit from growing population and an expanding labor market.  Net absorption has been positive as a result of tenant growth.  Demand is picking up well in suburban markets such as the East Valley and West Valley, which has spurred new development.  The recent election has increased uncertainty about the future of healthcare, but traditional local drivers of medical office demand should remain in place.

Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.

Tuesday, the Dow climbed 67.18 points, or 0.4 per cent, to 19,023.87. The Standard & Poor’s 500 index rose 4.76 points, or 0.2 per cent, to 2,202.94. The Nasdaq composite jumped 17.49 points, or 0.3 per cent, to 5,386.35.

Benchmark U.S. crude lost 21 cents to $48.03 a barrel in New York. Brent crude, the international standard, rose 22 cents to $49.12 a barrel in London. In other energy trading, wholesale gasoline picked up 1 cent to $1.41 a gallon. Heating oil remained at $1.53 a gallon. Natural gas rose 3 cents to $2.98 per 1,000 cubic feet.

Dow surpasses 19,000 as a record-setting drive continues — The Dow Jones industrial average surpassed 19,000 for the first time Tuesday as a post-election rally drove indexes further into record territory. Discount store chains made large gains, but health care companies tumbled. Stocks opened solidly higher after setting records on Monday. They gave up some of their gains around midday but reached new highs late in the afternoon. Health care stocks slumped after weak results from medical device company Medtronic. Retailers soared after strong earnings from Dollar Tree and Burlington Stores.

100% Probability of a December Hike, Fed Funds Futures Contracts Show “The Federal Reserve is definitely lifting interest rates next month — if the market has priced a key contract correctly. According to the trading of federal funds futures contracts, there’s a 100% chance — actually, a 100.2% chance — that the Fed will lift interest rates to a range between a half-point and three-quarters of a point, up from the current 25 to 50 basis points range. (The extra 0.2% implies there’s a very small chance the Fed could be even more aggressive.)” (MarketWatch)

Why It Won’t Be Easy for Donald Trump to Repeal Dodd-Frank “Like a number of his other grandiose campaign promises, Donald Trump likely will find that peeling apart Dodd-Frank gradually will be easier than tearing it asunder. The president-elect pledged during the campaign to repeal the bank reforms that came about after the 2008 financial crisis, though it may be a stretch to call the promise a “cornerstone” of the potent populism on which the Republican won the presidency.” (CNBC)

What 40 Wall St. Tells Us About the Man Who Will Soon Be Overseeing Financial Regulatory Agencies ‘It’s entirely fitting that the actor playing Aaron Burr in “Hamilton” issued a polite but firm public plea to Vice-President-elect Mike Pence about protecting the rights of minorities in a dynamic, diverse nation. The concerns about inclusion were gracefully offered and accepted — ‘that’s what freedom sounds like,’ Pence said later. But that wasn’t the most intriguing part of the exchange. The most delicious historical detail is that the real Aaron Burr was a co-founder of a company at the site of what is now 40 Wall St. (aka the Trump Building), which happens to rank among the most profitable — and problematic — real estate holdings of the President-elect.” (New York Daily News)

US home sales reach strongest pace in nearly a decade — Americans bought homes in October at the fastest pace in nearly decade, helped out by low mortgage rates that have since started to climb following the presidential election of Donald Trump. The National Association of Realtors said Tuesday that sales of existing homes rose 2 per cent to a seasonally adjusted annual rate of 5.6 million. Sales reached their strongest pace since February 2007, a sign that the market is still healing from the collapsing prices and foreclosures that ignited the 2008 financial crisis.

Ohio BWC Redeeming TIAA-CREF Investment Over Real Estate Fund’s Restructuring “Ohio Bureau of Workers’ Compensation, Columbus, is fully redeeming its investment in the TIAA-CREF Core Property Fund, spokesman Tony Gottschlich said in an e-mail. The bureau, which oversees $25.3 billion in state insurance fund assets, redeemed its $69 million in the open-end commingled core real estate fund primarily due to the ‘complicated restructuring of the fund made by TIAA-CREF,’ Mr. Gottschlich said. TH Real Estate, TIAA-CREF’s real estate division, announced in September it would be transforming the $2 billion Core Property Fund into the U.S. Cities Fund series consisting of four open-end sector funds and one open-end diversified fund.” (Pensions & Investments)

CNBC Does the Deed, Sets Primetime Real Estate Investment Series for March “CNBC is adding some real estate to its primetime lineup. The NBCUniversal-owned business network today announced The Deed, an eight-episode original series that looks at how fortunes really are made in the unpredictable and cutthroat world of real estate flipping and development. Slated to premiere March 1, the Cineflix-produced series features Sidney Torres and Sean Conlon, two savvy multimillionaire real estate moguls who have done more than half a billion dollars in property deals between them.” (Deadline)

Why Combining Real Estate Expertise with Financial Planning is a Winning Combination “Although my articles usually focus on business leadership and entrepreneurship, my experience in corporate America prior to joining the Navy SEAL teams and the master’s degree following my service are all in real estate finance, investment and development. As an entrepreneur and business owner, I also find it prudent to also stay apprised of the best ways to make your money work for you. It is human nature to want to be right, particularly when it is your job to be the expert. That is one reason why financial planners can be quick to minimize the role of real estate assets in a client’s portfolio.” (Forbes)

ING Provides Financing for Olayan NYC Asset—Again “There’s something about Olayan America. Acting as administrative agent, ING Capital LL recently headed-up the refinancing of a $570 million senior mortgage loan collateralized by 550 Madison Ave., an 852,000-square-foot, mixed-use Manhattan office building owned by Olayan. The transaction marks the second time in five months that ING has come through with financing for the Americas investment arm of Saudi Arabia-based Olayan Group.” (Commercial Property Executive)

Fames Plaza District Fades as Manhattan Office Landscape Shifts “Lower leasing costs, more efficient office space and the hope of projecting an image more appealing to millennials are leading hedge funds and large corporations to leave Manhattan’s most-coveted business district for a rejuvenated Downtown and the trendy far West Side. The construction of gigantic new office buildings that allow tenants to use 20 percent less space is pressuring prices and driving firms like consultants BCG and law firm WilmerHale out of the tony Plaza District in Midtown Manhattan.” (Reuters)

Report: Popular Online Brand to Open Brick-and-Mortar Stores “The online retailer credited with disrupting the mattress category may be moving into the physical space. Casper, which delivers its mattresses folded in a box, has plans to open a fleet of physical stores, according to help wanted ads placed on its website, according to the New York Post. The company is hiring a director of retail to ‘build, launch our retail store fleet,’ a director of wholesale and a hospitality partnership manager, among two dozen other positions around the world, according to help wanted ads posted on a job site, the report said.” (Chain Store Age)

Highland Pellet Opens New Plant Near Little Rock “Highland Pellets has opened a new, $229 million wood-pellet facility in Pine Bluff, Ark. The plant is slated to produce 600,000 metric tons per year of wood pellets, a feedstock favored by European industrial utilities to lower their carbon footprints while providing sustainable base load power. The wood used to make the pellets will be sustainably harvested, which will reduce dependence on coal-burning power plants. Arkansas has more than 18.8 million acres of forest land, covering more than half of the state.” (Commercial Property Executive)