New PPL Plaza owners detail plans for property improvements

ALLENTOWN, Pa. – The PPL Plaza in Allentown is headed in a new direction and preparing for a new name.

The new owners invited media inside for a tour Wednesday after purchasing the property in a sheriff’s sale last month.

The building, though 16 years old, was way ahead of its time and offers a lot of modern features.

The biggest change up is the plaza. The new owners want to make it more of a communal space. The water fountains go, but they’ll add more places for people to sit and beef up entertainment.

The PPL Plaza has a spectacular lobby skylight, rooftop gardens and countless eco-friendly features.

The PPL Plaza building was sold at a sheriff’s auction to Somera Road for 16 million, a fraction of what it cost to build it. It most recently was home to Talen Energy, a PPL spinoff.

The owners aim to make the building once again attractive to tenants, who recently have gone for newer, cheaper builds thanks to the Neighborhood Improvement Zone.

The old PPL Plaza Is in the NIZ, and the new owners could be eligible for NIZ benefits for new improvements like upgrading the lobby and revamping the plaza space.

Ian Ross says there’s a lot of vendor interest in the vacant restaurant space, especially with 2,000 ADP employees soon to move in just down the street.

“A lot of vendors want to play into that and be accessible from a street front perspective,” Ross said.

About a half a dozen companies have already expressed interest in moving into the building.

“Companies are saying I want to be downtown,” Ross said.

The new owners aren’t naming those companies, but they say they expect tenants will start moving in by the end of the summer.

 

Original post: https://www.wfmz.com/news/lehigh-valley/new-ppl-plaza-owners-detail-plans-for-property-improvements/1081928942

New PPL Plaza owner shows off building, expects tenants this year

PPL Plaza in downtown Allentown has posed something of a conundrum for its new owner, Somera Road.

The New York commercial real estate firm typically acquires distressed properties in need of some obvious renovations. While the PPL Plaza (or, its previous ownership group) has certainly faced financial distress, the 16-year-old LEED Gold-certified structure is already “hands-down the architectural gem” of Somera Road’s portfolio, founder and managing principal Ian Ross says.

“We’ve banged our heads against the wall trying to figure out how to make it a better space,” Ross said in the atrium of the building prior to a tour Wednesday.

He later said it might be the “nicest vacant office building in the country.”

Ross reiterated his conviction that the more than 200,000 square feet of office space is of superior quality to any other office building in the city, and he promised to lease it at cheaper rates than anywhere else downtown.

Prospective tenants like that value proposition, he said. A half dozen are actively looking at the seven full floors of office space, he said, and three are interested in the retail space on the southeastern corner of the ground floor. Somera Road hopes to begin announcing tenants in the next three to four months and have its first tenants move in this fall.

“The interest has been astounding,” Ross said. “We’ve barely gotten started.”

Somera Road, which owns 55 buildings with about 11 million square feet of space across nearly 40 cities, has hired original building architect Robert A.M. Stern to consult on some modest upgrades.

That includes a redesign of the lobby, including new furniture and removing security turnstiles; fresh foliage in “winter gardens” on the third and fifth floors; and some demo work on the top two floors to create more open spaces attractive to today’s tenants.

It also wants to bring food trucks to the outdoor plaza, as well as more events and seating, Ross said. (It will feature the main stage of the city’s Blues, Brews & Barbecue festival June 8).

“We want it to again be the focal point of downtown,” he said.

Somera Road officially added the office building and accompanying parking garage at 940 Linden St. to its portfolio after submitting the top bid of $16 million at a sheriff’s sale last month.

Liberty Property Trust built the $60 million project in 2003 for PPL Energy Supply, which later became Talen Energy after the parent company headquartered next door spun it off.

A firm led by investor Joshua Safrin bought the property for more than $90 million in 2006, taking out a $83 million mortgage. The debt proved too much, and it’s been mired in foreclosure proceedings the past two years following a mortgage default in late 2016.

The previous ownership group argued the financial distress was a result of an unfair playing field created by the city’s Neighborhood Improvement Zone, where developers can tap into certain state and local taxes to pay the debt service on their construction loans.

It filed numerous lawsuits against the city and the Allentown Neighborhood Improvement Zone Development Authority, including a claim that the tax subsidies offered competitors constitute a “de facto taking of the property for which just compensation must be paid.” Talen moved three blocks last year into City Center Investment Corp.’s Tower 6, where rent per square foot was up to 30 percent cheaper.

In April, Lehigh County Judge Doug Reichley ruled against the former owners.

Somera Road, the new owner, claims it too has been unfairly hurt by the NIZ. On May 9, it filed a notice of appeal before Commonwealth Court.

According to Lehigh County Court records, Somera Road took on Wells Fargo’s obligations in the mortgage foreclosure judgment. That amounts to about $56 million, Ross said. Somera Road bought Wells Fargo’s interests in the mortgage last year for roughly $18.4 million, according to Trepp, a New York firm that monitors commercial property mortgages that have been bundled into bonds.

Somera Road also was one of the investors that sustained a considerable loss on the JP Morgan Chase mortgage-backed security that included the PPL Plaza loan, Ross said.

“We think we have a viable claim,” Ross said. “There was an artificial supply created in this market that unjustly burdened this building.”

City spokesman Mike Moore declined to comment Wednesday on Somera Road’s claim.

The building still has a few tenants: PPL Gold Credit Union, a restaurant and a BB&T bank branch on the first floor, along with some PPL Electric Utilities employees on the third floor. Somera Road said the third floor will again be vacant in a few months.

While the firm is open to leasing all the office space to a single tenant, Ross said it’s leaning toward multiple tenants, with most taking one floor and a marquee player taking the top two floors, which features an outdoor garden.

Morning Call reporter Andrew Wagaman can be reached at 610-820-6764 or awagaman@mcall.com

 

Original post: https://www.mcall.com/news/local/allentown/mc-nws-allentown-ppl-plaza-somera-tour-20190529-vwqtxvktajhrvmtrx35nj4qzdq-story.html?outputType=amp

Fairgrounds site sells

A fairgrounds-area property has sold for about $9.3 million — three times the amount at which it last changed ownership hands a mere four years ago — and its warehouse is slated for a major overhaul from a New York City company.

The address is 1414 Fourth Ave. S., with the property located within an opportunity zone and near Wedgewood-Houston. The buyer was commercial real estate firm Somera Road, which plans to convert the building to creative office and retail uses. According to a release, the project will be called WeHo Crossing and will eventually offer 60,000 square feet of office space and 12,500 square feet of retail and restaurant space. An early-2020 completion is eyed.

The seller was 4th Avenue South Ventures GP. The partnership acquired the roughly 4-acre property in January 2015 for about $2.9 million, according to Metro records.

Lance Bloom, a vice president with Colliers International Nashville, brokered the deal.

Grooms Engine Warehouse previously occupied the now-empty building, which spans about 115,000 square feet and opened in 1950.

The sale is the equivalent of about $80.40 per foot (based on the building’s size).

“As Nashville grows and becomes a prominent global business hub for the knowledge economy, we are seeing substantial demand increase for offices that provides unique and creative workspaces for the millennial employee set. WeHo is no doubt on the verge of becoming the next big neighborhood of Nashville,” Ian Ross, principal of Somera Road, said in the release, adding the site is near the future SoHo House, restaurants, apartments, condos and makerspaces.

“It’s exciting to watch this neighborhood grow right before our eyes and it’s hard to find a more rapidly developing ‘cool’ neighborhood across the country,” he added.

According to the release, Somera Road has enlisted Manuel Zeitlin Architects for design. Charlie Gibson, Cushman & Wakefield, will represent Somera Road on office leases, with Elam Freeman, Baker Storey McDonald Properties Inc., representing the company on retail leases.

Of note, Somera Road plans to update a Gulch property home to a former Gibson Guitar facility. The company will undertake a 45,000-square-foot mixed-use development at the Church Street site, which was the subject of legal action after Gibson decided to sell the property to a different New York investor. The remaining structure at the site was once home to Gibson’s Valley Arts brand (read here).

Somera Road previously acquired a nearby property, also from Gibson, at which it currently is retrofitting what had been a piano showroom so as to accommodate a bowling and arcade facility. The firm also owns two Gibson properties in Memphis, the result of what were the Nashville-based guitar company’s 2018 restructuring efforts. Nashville-based ESa is overseeing architectural work at the future bowling building, the address for which 1121 Church St.

The Somera Road Fourth Avenue South transaction represents the latest in various real estate moves involving properties located near The Fairgrounds Nashville (read herehere and here), Wedgewood-Houston and Chestnut Hill.

Established by Congress in the Tax Cuts and Jobs Act of 2017, opportunity zones are tools designed to stimulate low-income and transitioning communities with private capital. The law provides a federal tax incentive for investors to re-invest their capital gains into so-called opportunity funds.

Originally published by the Nashville Post: https://www.nashvillepost.com/business/development/commercial-real-estate/article/21065663/fairgrounds-site-sells-for-triple-2015-price 

AUTHOR William Williams

Investor sees potential in center that was one of St. Louis’ most delinquent properties

Village Square Center in Hazelwood spans nearly 22 acres, is about 40 percent occupied and was last renovated in 2006.

Appraised for $4.2 million and owing more than $18 million on its mortgage, the center was named one of St. Louis’ most delinquent properties at the end of last year by data analytics firm Trepp.

And for Somera Road Inc. the dilapidated mixed-use development ticked all of its boxes.

The New York-based commercial estate investment firm targets value-add, opportunistic acquisitions. Over the past three years, Somera Road has invested nearly $1 billion in 9.5 million square feet across the U.S., including in Kansas City, Indianapolis and Memphis. Property types under Somera range from industrial to student housing, said founder and Managing Principal Ian Ross.

Of particular interest are properties distressed due to bankruptcy, partnership disputes, and in the case of Village Square Center, loan defaults.

“We take a very active asset management approach to turn the lights back on,” Ross told the Business Journal.

Built in 1965 as a retail destination for north St. Louis County, Village Square was converted into an office park in 1998. Cash flow issues led the loan to be transferred to a special servicer in 2010 and a foreclosure followed in 2012. The property’s appraised value fell 84 percent over a 12-year period to $4.2 million at its most recent appraisal in May 2018, according to Trepp. (Several free-standing buildings at Village Square are not part of the loan’s collateral, Trepp added.)

Its position along one of the most traveled corridors in the region at Lindbergh Boulevard and Interstate 270, proximity to office development near St. Louis Lambert International Airport and such long-term tenants Convergys Corp. and Concentra Health made Village Square the right opportunity, Ross said.

Somera Road bought the property at auction for an undisclosed price and closed on the deal in mid-December.

“The optionality with regards to its existing bones, as well as the magnitude of the physical dirt, provides a lot of options,” Ross said.

Somera is working with the city of Hazelwood, which commissioned a market study in 2016, on the best options for redevelopment. The firm’s managing director, Fergus Campbell, and senior associate, Michael Ervolina, met with City Manager Matt Zimmerman and Community & Economic Development Coordinator Becky Ahlvin as recently as last week. Somera has also met with architects and brokers from such firms as CBRE, Colliers, Balke Brown Transwestern and L3 Corp.

It’s early to project when residents and commuters could see progress at Village Square, Ross said, but he added that “we want to embrace what’s good about the property.”

“It has excellent tenants already. We want to make it an even better working environment.”

By Steph Kukuljan – Reporter, St. Louis Business Journal Jan 29, 2019, 2:24pm CST

Original Post: https://www.bizjournals.com/stlouis/news/2019/01/29/investor-sees-potential-in-center-that-was-one-of.html

TPG Lends $60M for Downtown Kansas City Office Tower Acquisition

TPG Real Estate Finance Trust has provided $60.2 million to Somera Road to finance the acquisition of 30-story office tower in Kansas City, Mo.’s financial district, according to HFF, which arranged the debt.

The floating-rate bridge debt helped facilitate Somera’s off-market acquisition of Kansas City’s City Center Square building, a 657,070-square-foot office tower at 1100 Main Street.

Leon McBroom and Mark Katz comprised the HFF debt placement team that represented Somera Road.

“This was a highly stressful closing that bridged the holidays and the new year – the teams were incredibly responsive and professional, working around the clock to get this deal over the finish line,” Ian Ross, a principal at Somera Road, said in a prepared statement. “We have been a long-time believer in continued growth of the downtown [Kansas City] market and we believe the timing and the supply and demand dynamics are just right to bring this asset back to Class A status.”

Specifically, the debt proceeds will finance renovation, rebranding and repositioning efforts aimed to make the asset the “premier downtown office tower” in the city, according to information from HFF.

The additions will include a fitness center and tenant lounge, dining options, a renovated lobby, a hospitality center and a conferencing center. Somera will also add retail terraces and public seating to the property’s exterior.

A spokeswoman for TPG RE Finance Trust told Commercial Observer in a statement that while the firm typically targets larger loans in primary markets, it looks to provide this type of transitional financing in secondary markets to strong sponsors.

Built in 1979 and designed by , the building encompassing an entire city block and two-acre lot and has a Kansas City streetcar stop located outside the entrance to the property. The tower is home to the Kansas City Business Journal, law firm Dollar Burns & Becker, data advertising firm Pinsight Media, and marketing analytics firm Alight Analytics. There’s also a U.S. Post Office and a Country Club Bank on-site. Colliers International Senior Vice President Phil James handles leasing at the property.

In February 2018, Commercial Observer reported that City Center Square backed the second-largest loan ($32.5 million) in Värde Partners’ first ever collateralized loan obligation (CLO) transaction, known as VMC 2018-FL1. At the time of securitization, the asset was only 52 percent leased, with 70 tenants, making it one of the riskier assets in the $368 million pool.

In the deal, which was rated by Kroll Bond Rating Agency (KBRA), the CLO’s KLTV—a loan-to-value-like indicator derived from KBRA’s cash-flow analysis—was at 128.3 percent, which was riskier than any CLO transaction the agency had rated the previous year in 2017.

BY MACK BURKE JANUARY 29, 2019 3:45 PM

Original post: https://commercialobserver.com/2019/01/tpg-lends-60m-for-downtown-kansas-city-office-tower- acquisition/