Southfield Town Center Possibly Up For Sale

[D_Town]

Town Center owner weighs 4 purchase offers
http://www.crainsdetroit.com/article...urchase-offers


The owner of the Southfield Town Center is considering offers to buy the landmark office complex, in default on its mortgage with $138 million owed.

New York City-based Blackstone Group LP is considering four offers from local and out-of-state buyers for the 2.2 million-square-foot Class A office complex, north of 10 Mile Road between M-10 and Evergreen Road, according to real estate sources.

Those offers are between $160 million and $170 million, sources say. Blackstone purchased the five-building complex in 1999 for $270 million, according to real estate information service CoStar Group Inc.

According to commercial mortgage backed securities data from Bloomberg LP, Blackstone is unable to pay the balance due on a $235 million mortgage on the property originated in 2004 by Irving, Calif.-based Greenwich Capital Financial Products Inc. The loan was transferred to Wells Fargo Bank NA for special servicing.

A loan modification letter originally stipulated that Blackstone pay the balance by Nov. 5, 2012. The complex was appraised this summer at $177.5 million, 45 percent below a 2004 appraisal of $321 million, according to the Bloomberg loan data.

According to a real estate source, an out-of-state buyer that has never purchased real estate in metro Detroit is currently the highest bidder.

The complex is 32 percent vacant, according to Bloomberg. The Southfield Class A office market had a 26 percent vacancy rate during the third quarter, according to data provided by the Southfield office of Newmark Grubb Knight Frank.

Matt Farrell, executive principal/partner of Bingham Farms-based Core Partners Associates LLC,said the Southfield Town Center offers good amenities such as the Westin Hotel — which would not be included — and restaurants on site. It also has a campus-like setting.

"Those are all big, big pluses," Farrell said.

But there are some drawbacks.

"The downside, potentially, is that the newer culture, the younger technology-based firms are looking for that warehouse/potentially downtown-like setting that gives them walkability," Farrell said.

According to CoStar, the largest tenants are GlobalHue Inc., with 109,000 square feet; Fifth Third Bank, 106,000 square feet; and AlixPartners LLP, 63,000 square feet.

Denver-based HFF Inc. is marketing the complex and has hired Southfield-based NAI Farbman to represent Blackstone locally in the sale. The Southfield office of CBRE Inc. is responsible for leasing the property.

Kristen Murphy, associate director of marketing for HFF, would only confirm that the complex is for sale.

NAI Farbman, through a spokeswoman, declined comment.

Among large office complexes in metro Detroit, the Southfield Town Center, built in 1975, is second in square footage only to the 5.5 million-square-foot Renaissance Center in total size.