Real Estate Forum - July/August 2010

hyped”), India (“mired in bureaucracy”) and even Europe (“nobody does or makes anything”). But he and other trust leaders all said they believe small country debt crises will not hinder a recovery. “We’re still out there signing leases,” said Guy Jaquier, president, Europe & Asia for San Francisco-based AMB Property Corp. “People are still pulling the trigger.”—Robert Carr

Vital Signs

Canadian Pension Fund Shells Out $358M for 30-Story Telus Tower TORONTO—A joint venture of Boston’s Alcion Ventures and local partner Menkes Development has closed the $358-million sale of the 30-story Telus Tower, a 30-story, 780,000-square-foot class A LEED Gold office project at 25 York St., to a Canadian pension fund. The sale consummates a contract entered into in 2005 with the pension fund.

Alcion founding partner Martin Zieff explains that the sale also reflects the strategy that the developers executed in building the Telus Tower, which is adjacent to the Air Canada Centre, with direct access to the Air Canada Centre Galleria and Union Station. “The investment thesis for 25 York was to take advantage of the low vacancies that existed in the Toronto office market in 2005,” Zieff says. He points out that the market at the time was dominated by large tenants and a few institutional landlords, and had not delivered a new office building since the early 1990s; the average age of standing inventory was more than 30 years.

“Tenants were looking to expand or consolidate, or simply wanted new and more efficient space,” Zieff says. The Alcion-Menkes venture designed the building to offer new technology and “the competitive advantage of being the low-cost provider,” he adds. Zieff says that Alcion and Menkes “unlocked the development log-jam” by launching the building on a speculative basis and shortly thereafter securing Telus as a lead tenant.—Bob Howard

Rising Sovereign Debt Causes Concern

Rising sovereign debt in the developed world is one of the main concerns for global business leaders and financial professionals, according to 440 senior executives who participated in a survey commissioned by RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada.

1) Italy

2) Argentina

3) Turkey

4) Mexico

5) Russia

Significant chance of a G20 default (ranked from most likely to least):

1) Greece

2) Portugal

3) Spain

4) Ireland

5) Germany

Most likely to leave the Eurozone (ranked from most likely to least):

Source: RBC Capital Markets

56% say emerging markets will replace the US as a source of global growth.

58% say that the credit capacity of developed economics will diminish.

66% see an increasing growth imbalance between Europe and the rest of the world.

87% see positive growth in developed nations.

UTStarcom Completes $140M Sale SHANGHAI—UTStarcom Inc. has completed the sale of the company’s approximately 2.58-million-square-foot manufacturing plant, R&D centers and administrative offices as well as other assets related to the property located in Hangzhou to the Hangzhou-based Zhongnan Group of Cos. The total value of the transaction reached approximately $140 million.

“We are very pleased to deliver on our
commitment to monetize our underuti-
lized facility in Hangzhou, China,” says
Peter Blackmore, CEO and president of
UTStarcom, in a prepared statement.
“With this significant infusion of cash,
UTStarcom has strengthened its debt-
free balance sheet and is in a stronger
competitive position.”
Jones Lang LaSalle assisted the seller,
and points out that this deal is the largest-
ever business park investment transaction
in China to date not only size wise, but in
the total transaction amount as well. The
sale also marks the first predominant
industrial sector investment transaction in
the Hangzhou property market, accord-
ing to a prepared statement.

that companies are re-assessing their real
estate strategies in order to make better
use of their capital and focus more on
their core businesses.”
Tang says that the offer from
Zhongnan was the first offer that
UTStarcom received and “they took it.”
As to why an investor might be inter-
ested, she adds that “the appearance is
very unique, they can use some space
immediately and they would be inter-
ested for investment.”
For the Hangzhou city itself, Tang
explains that the residential sector is
the most dominant sector. For commer-
cial properties, office development is
“dominated by local developers and
mostly strata-titled sales.”—Natalie Dolce

Executive Moves

LONDON—Turnaround management and business advisory firm Alvarez & Marsal has expanded its offerings in Europe to include real estate advisory services. Scott Morey, former COO and CFO of a mixed-use and residential real estate developer in West Africa, has joined the firm in its London office as managing director and head of the European real estate practice. LONDON—Ivo de Wit has joined CB Richard Ellis Investors’ global multi-manager team as a director and global portfolio manager. He previously worked in the same capacity at ING Real Estate Select in London.