‘Overpriced’ Properties in Coastal Markets Force Institutional Investors To Alter Their Strategy
	Self-Storage REITs Poach Business Away From Smaller Operators
	Pollack Partners Buys Distressed Multifamily Property in Nashville for $25.3 Million
	Viking Partners Purchases $5 Million Note Secured by Shopping Center in West Michigan

Trophy office properties located in major coastal cities like Washington, D.C., New York, and San Francisco have been a favored target for investors in the wake of the Great Recession.

But with heightened tensions in the Middle East, foreign capital pouring into the United States and prices reaching pre-recession levels, institutional investors are hoping to achieve higher returns by exploring opportunities in America’s heartland.

In February, Dallas-based Invesco Real Estate purchased 1800 Larimer, the first new office tower built in downtown Denver in 25 years, for an estimated $213 million. That price equals $430 per sq. ft. for the 495,518 sq. ft. building, and set a new record price for a Denver office property.

Right now, institutions are flush with money to put to work. According to a recent survey by Kingsley Associates and Institutional Real Estate Inc. (IREI), North America’s largest tax-exempt institutional investors will plow some $30 billion into commercial real estate in 2011.

Self-storage may not be the most glamorous sector of the commercial real estate industry, but this niche has been dazzling investors with impressive returns and a stellar outlook for 2011 and beyond.

Publicly traded self-storage real estate investment trusts (REITs) posted total returns of nearly 30% in 2010, slightly outpacing the broader REIT sector and more than double the average total return for companies traded on the Dow Jones Industrial Average.

Top self-storage owners are now moving full steam ahead with solid balance sheets and a formidable plan for growth as occupancies and rents show signs of improving.

Pollack Partners has acquired Velocity in the Gulch, a Class-A luxury rental community in Nashville’s vibrant Gulch submarket, for $25.3 million, plus reserves and closing costs. The Atlanta-based multifamily developer and operator purchased the 220-unit, bank-owned property as part of a 263‐unit fractured condo project constructed in 2009.

Velocity in the Gulch was originally designed and constructed as a high-end, mixed-use community consisting of 263 for-sale condominium units situated in a mid-rise building with approximately 20,900 sq. ft. of ground floor retail. Pollack Partners plans to lease the 220 vacant units.

The retail component, owned by Nashville-based retail group MarketStreet, and the 43 sold residential units were not included in the acquisition. Holliday Fenoglio Fowler LP handled the asset sale and brokered the financing.

Viking Partners Fund I, a private equity real estate investment firm, has acquired a loan note with an unpaid balance of $5 million secured by Grand Pointe Shopping Center in Grandville, Mich.

Built in 2004, the 25,635 sq. ft. shopping center near Grand Rapids sits on 4.38 acres and is more than 50% occupied. Tenants include Verizon Wireless, GameStop and Electric Beach Tanning.

In a separate transaction, Viking announced in March the acquisition of the Milford Kroger Center in Cincinnati for $3.45 million.