Under the deal, Blackstone’s IndCor Properties Inc will operate about 9.5 million square feet of properties in Reno, Nevada. Prologis will buy the remaining properties that are chiefly in Pennsylvania and some in Las Vegas, the sources said.

The sources did not want to be named because they were not authorized to speak on the record about the pending deal.

Through a series of deals dating back to 2010, Blackstone will have a portfolio of about 100 million square feet of warehouse and distribution centers, managed under IndCor. That makes Blackstone one of the top three owners of warehouse and distribution centers, typically referred to as industrial real estate. IndCor’s chief executive is Tim Beaudin, the former executive vice president of Catellus Development Corp, which Prologis acquired in 2008.

If Blackstone chooses to take IndCor public, the IPO is not likely to happen this year, one source said.

The deal for the properties, comes after Blackstone announced on Monday it would buy 4 million square feet of warehouse and distribution centers from First Potomac Realty Trust (FPO.N: Quote, Profile, Research, Stock Buzz) for $241.5 million.

Within the past three years, Blackstone has digested big bites of the industrial real estate sector. Last year, it paid $770 million for 65 U.S. properties owned by Australia’s Dexus Property Group (DXS.AX: Quote, Profile, Research, Stock Buzz). It also took control of about 95 warehouse and distribution centers, a mostly California-portfolio known as CalWest, from Walton Street Capital LLC by buying the debt on the portfolio.

Rent and occupancy in the U.S. industrial real estate sector have been slowly improving over the past few years, with occupancy picking up at a more rapid rate over the past few quarters, Green Street analyst John Stewart said.

“However, the run up in asset values is definitely outstripping the improvement in fundamentals,” he said. “It says we are in a low-return world.”

Lehman first became involved in the property in 2007 when it agreed to provide about $1.5 billion in the form of a debt and equity loan to Prologis – then known as ProLogis – to acquire the properties known as the Dermody industrial portfolio. But the investment bank got stuck with the majority of the properties during the credit crisis. Lehman got stuck with 80 percent of the portfolio, and Prologis 20 percent.

Representatives from Blackstone declined to comment, and San Francisco-based Prologis was not immediately available to comment. Brokers from Eastdil Secured marketed the portfolio, which attracted “robust” interest, one source said.

This week, Lehman, which emerged from bankruptcy last year, continued its efforts to repay creditors, raising $1.88 billion selling claims it had against its former brokerage.

(Reporting by Ilaina Jonas; Editing by Phil Berlowitz and Lisa Shumaker)

Under the deal, Blackstone’s IndCor Properties Inc will
operate about 9.5 million square feet of properties in Reno,
Nevada. Prologis will buy the remaining properties that are
chiefly in Pennsylvania and some in Las Vegas, the sources said.

The sources did not want to be named because they were not
authorized to speak on the record about the pending deal.

Through a series of deals dating back to 2010, Blackstone
will have a portfolio of about 100 million square feet of
warehouse and distribution centers, managed under IndCor. That
makes Blackstone one of the top three owners of warehouse and
distribution centers, typically referred to as industrial real
estate. IndCor’s chief executive is Tim Beaudin, the former
executive vice president of Catellus Development Corp, which
Prologis acquired in 2008.

If Blackstone chooses to take IndCor public, the IPO is not
likely to happen this year, one source said.

The deal for the properties, comes after Blackstone
announced on Monday it would buy 4 million square feet of
warehouse and distribution centers from First Potomac Realty
Trust for $241.5 million.

Within the past three years, Blackstone has digested big
bites of the industrial real estate sector. Last year, it paid
$770 million for 65 U.S. properties owned by Australia’s Dexus
Property Group. It also took control of about 95
warehouse and distribution centers, a mostly
California-portfolio known as CalWest, from Walton Street
Capital LLC by buying the debt on the portfolio.

Rent and occupancy in the U.S. industrial real estate sector
have been slowly improving over the past few years, with
occupancy picking up at a more rapid rate over the past few
quarters, Green Street analyst John Stewart said.

“However, the run up in asset values is definitely
outstripping the improvement in fundamentals,” he said. “It says
we are in a low-return world.”

Lehman first became involved in the property in 2007 when it
agreed to provide about $1.5 billion in the form of a debt and
equity loan to Prologis – then known as ProLogis – to acquire
the properties known as the Dermody industrial portfolio. But
the investment bank got stuck with the majority of the
properties during the credit crisis. Lehman got stuck with 80
percent of the portfolio, and Prologis 20 percent.

Representatives from Blackstone declined to comment, and San
Francisco-based Prologis was not immediately available to
comment. Brokers from Eastdil Secured marketed the portfolio,
which attracted “robust” interest, one source said.

This week, Lehman, which emerged from bankruptcy last year,
continued its efforts to repay creditors, raising $1.88 billion
selling claims it had against its former brokerage.

Investors holding 99.3 percent of the Empire State Building
units needed to approve the plan for an initial public offering
have voted for it, according to the filing with the U.S.
Securities and Exchange Commission.

The plan calls for the building to be the centerpiece of
more than 18 properties in Empire State Realty Trust Inc
.

The latest update on the vote comes in the wake of a court
decision upholding a provision that would force a unitholder to
vote for the deal or sell back the unit for $100 once investors
holding 80 percent of the units vote for the plan. That would
enable the 100 percent backing needed under the original 1961
agreement.

So far votes representing 79.6 percent of the units in the
Empire State Building have been in favor of the plan.

Two other buildings require similar unitholder approval to
be included in the REIT. As of Wednesday, investors in 250 East
57 St. have approved the plan, according to the filing.

The REIT so far has received the 98.8 percent of the votes
needed for 60 East 42nd Street, also known as One Grand Central
Place, to be included.

The joint venture between Blackstone Real Estate Partners VII and DDR owns 44 shopping centers. Under the deal, which is expected to close in the fourth quarter, DDR will acquire the Blackstone fund’s 95 percent equity ownership in 30 of the shopping centers. Blackstone will retain 95 percent interest in the 14 properties not being acquired, while DDR will keep its 5 percent stake, DDR said.

Some of the centers DDR will own in full include Shoppers World in Boston, Woodfield Village Green in Chicago, Fairfax Towne Center in Washington, D.C. and Riverdale Village in Minneapolis.

DDR said it intends to fund the acquisition through a combination of the assumption of $398 million in existing debt, nearly $150 million from the repayment of preferred equity and mezzanine loans previously funded by DDR and proceeds from the sale of 32 million shares and unsecured debt.

The deal gives DDR the right, under certain conditions, to issue common shares to Blackstone of up to $250 million.

Shares of DDR on Wednesday closed up 13 cents, or 0.7 percent, at $19.41. In extended trading, DDR shares fell 2.9 percent to $18.85 after the deal was announced.

Citing the acquisition, DDR raised the bottom of its outlook for the 2013 range of per-share funds from operations to $1.08 to $1.11 from $1.07 to $1.11 previously.

(Reporting by Ilaina Jonas; Editing by Kenneth Barry)

The position will become effective May 20.

Pappagallo, who also was chief operations officer at Kimco
and was chief financial officer before that, will play an
integral role in executing Brixmor’s long-term business and
capital markets strategies, the company said in a statement.

In addition, he will lead the company’s finance and
accounting teams, and have some oversight of its property
operations, information technology, acquisitions, dispositions
and investor relations efforts.

The public market currently values these types of shopping
centers, which are typically anchored by grocers, 15 percent
higher than the private markets, Green Street Advisors analyst
Cedrik Lachance said.

“The odds of a public exit down the road are certainly
higher now than they’ve been for some time,” he said. “The
hiring of someone with clear, long-term public market experience
at a large competitor of Brixmor gives further weight to that
public market strategy.”

Blackstone also could sell the portfolio to another
publicly traded company, said a real estate executive who was
not authorized to speak on the record. Finding a strategic
partner to buy the portfolio would eliminate investment banking
underwriting fees. Shares would not incur an IPO discount and
their sale would not be subject to a lock up term.

“Ultimately, it really depends on the horizon that
Blackstone has on realizing market conditions and Blackstone’s
own time horizon in terms of realizing their investment,”
Lachance said.

A Blackstone spokesperson declined comment.

The company, born out of Blackstone’s 2011 acquisition of
Australian-owned Centro Properties’ U.S. properties, has a
portfolio of more than 600 U.S. properties, located in 39
states.

Meanwhile, Kimco said it named Conor Flynn, the son of
Michael Flynn who has served Kimco’s strategic adviser, as
executive vice president and chief operating officer, according
to a filing with the U.S. Securities and Exchange Commission.

The Asian shopping haven in the first quarter kept its crown
as having the world’s highest rent for prime retail properties,
at nearly 50 percent more than for similar districts such as
upper Fifth Avenue in Manhattan. Rents were more than four times
the rate in similar areas in London and Paris, according to a
report by global property advisor CBRE Group Inc.

The 10 most expensive cities for retailers benefit from
strong demand and modest new supply, a recipe for stable
record-high prime rental rates, the report released on Sunday
showed. In some markets, such as Hong Kong and London, the
sky-high rents have prompted some newcomers to look nearby. For
example, in London, Mayfair has benefited from those priced out
of Bond Street.

Annual retail rent in high-end shopping areas in Hong Kong
averaged $4,328 per square foot (36,351 euros per square meter).

“Given that space is so expensive in Hong Kong’s prime
shopping streets largely driven by continued demand from
international luxury brands, many traditional retailers have
moved into more niche secondary retail locations as they still
want to be in and access the market, but have been priced out of
the prime space,” Joe Lin, CBRE’s executive director of retail,
said in a statement.

New York ranked second among the most expensive global
retail markets, with prime rents averaging $2,970 per square
foot (24,944 euros per square meter)

Europe’s prime retail markets followed, with London at
$1,053 per square foot (8,843 euros per square meter), and Paris
at $1,050 per square foot (8,820 euros per square meter).

The supply of prime space was tight elsewhere in the Asia
Pacific region. An inflow of U.S. retailers helped Sydney
maintain its prime rent at an average of $1,018 per square foot
(8,549 euros per square meter).

Tokyo was sixth at $895 per square foot (7,519 euros per
square meter), followed by Melbourne, at $851 per square foot
(7,148 euros per square meter).

Zurich came in eighth at $822 per square foot (6,905 euros
per square meter). Brisbane’s mining and natural resource
sectors, and growing population helped push that into the top 10
with its prime retail rents up 15 percent to $739 per square
foot (6,209 euros per meter). Moscow rounded out the top 10 with
rents at $739 per square foot (6,203 per square meter).

The pending sales by Hines, an international real estate
firm, offer further evidence of the high prices U.S. commercial
real estate are now commanding.

“We did think it was a propitious time,” Tommy Craig, senior
managing director of Hines’ New York office, said.

The first property, at 499 Park Avenue, went to American
Realty Advisors, which agreed to buy the tower for an
institutional fund it manages, Hines said.

American Realty agreed to pay about $390 million, or $1,300
per square foot, for the I.M Pei & Partners-designed tower,
situated at the corner of 59th Street and Park Avenue, a source
familiar with the deal said.

That compares with $935 per square foot for the top 25
percent of Manhattan office buildings sold over the past 12
months, according to Real Capital Analytics.

Tenants in the 28-story, 300,000-square-foot property
include Cantor Fitzgerald and Hines. It is the former
headquarters of Bloomberg LP.

In a second deal, institutional investors advised by J.P.
Morgan Asset Management agreed to buy 425 Lexington, a 31-story,
750,000-square-foot office building designed by Helmut Jahn.

J.P. Morgan Asset Management has agreed to pay about $700
million, or $933 per square foot for the tower, located across
from Grand Central Terminal, the source said.

Simpson Thacher & Bartlett LLP, a law firm that occupies
about 80 percent of the building, recently extended its
595,000-square-foot lease to 2033. Canadian Imperial Bank of
Commerce (CIBC) occupies the rest of the building.

The properties were co-marketed by Doug Harmon and Adam
Spies of Eastdil Secured, and Darcy Stacom and William Shanahan
of CBRE Group Inc. Both sales are expected to close in the
summer.

RECOVERED GROUND

Top-quality buildings have more than recovered the value
they had lost in the downturn that followed the financial crisis
of 2008. In April, the Green Street CPPI All-Property Index.
which measures values of high-quality U.S. commercial real
estate, was 1 percentage point above their 2007 highs.

The index for office property values rose 6 percent from a
year earlier but was 13 percent points below the 2007 peak
level.

The pending sales of the Hines properties could push values
higher in future deals, particularly those in Manhattan, said
Michael Knott, Green Street managing director.

“I think there’s an emerging number of data points now that
they’re starting to suggest that values were higher than we
thought,” he said.

But the stock prices of some REITs with holdings in markets
such as New York have not yet caught up, Knott said.

That said, the price increases have led some publicly traded
real estate investment trusts, such as Vornado Realty
Trust, to be net sellers this year.

“My belly tells me that prices are now higher than future
prospects, and therefore we will buy carefully and this year
likely sell more than we buy,” Steven Roth, chief executive of
Vornado, said in a conference call with analysts on Tuesday.

Roth also said that prices may not yet be done.

“I do know that compared to historic prices, asset values
are very high. They may go higher. If interest rates stay low,
who knows?”

Hines is building a 470,000 square-foot office building
called 7 Bryant Park on 42nd Street near Avenue of the Americas.

The sale is expected to fetch more than $200 million, said one source who was not authorized to speak on the record.

The property consists of 297 hotel rooms and 107 condominium units, of which 73 are unsold. It also has indoor and outdoor meeting spaces, a spa, a three-tiered pool, a tennis center, six restaurants, bars and lounges, and access to shopping and golf.

Lehman has hired Jones Lang LaSalle Inc’s (JLL.N: Quote, Profile, Research, Stock Buzz) hotels and hospitality group to market the property.

Since it exited bankruptcy last year, Lehman Brothers has been selling its real estate holdings to pay off creditors. Last month it sold two buildings in Austin, Texas, and two on Park Avenue in New York. Its largest deal by far was the $6.5 billion sale completed in February of Archstone Enterprise LP, an owner of apartments that Lehman helped take private in 2007. The buyout ultimately helped push the investment bank into bankruptcy.

The island of Maui is one of the top luxury hospitality markets in the world; about 20 percent of tourists to Maui come from Asia.

Maui has seen solid growth in its tourist industry, with gains outstripping the general U.S. market. Revenue per available room, a performance metric for hotels, was up 7.9 percent last year in Maui after rising by 13.8 percent in 2011, according to Smith Travel Research. That compared with a 6.8 percent average increase for the United States in 2012, following an 8.2 percent spurt in 2011.

Jones Lang LaSalle is expected to market the property through early summer.

(Reporting by Ilaina Jonas; Editing by Leslie Adler)

The sale is expected to fetch more than $200 million, said
one source who was not authorized to speak on the record.

The property consists of 297 hotel rooms and 107 condominium
units, of which 73 are unsold. It also has indoor and outdoor
meeting spaces, a spa, a three-tiered pool, a tennis center, six
restaurants, bars and lounges, and access to shopping and golf.

Lehman has hired Jones Lang LaSalle Inc’s (JLL.N: Quote, Profile, Research) hotels and
hospitality group to market the property.

Since it exited bankruptcy last year, Lehman Brothers has
been selling its real estate holdings to pay off creditors. Last
month it sold two buildings in Austin, Texas, and two on Park
Avenue in New York. Its largest deal by far was the $6.5 billion
sale completed in February of Archstone Enterprise LP, an owner
of apartments that Lehman helped take private in 2007. The
buyout ultimately helped push the investment bank into
bankruptcy.

The island of Maui is one of the top luxury hospitality
markets in the world; about 20 percent of tourists to Maui come
from Asia.

Maui has seen solid growth in its tourist industry, with
gains outstripping the general U.S. market. Revenue per
available room, a performance metric for hotels, was up 7.9
percent last year in Maui after rising by 13.8 percent in 2011,
according to Smith Travel Research. That compared with a 6.8
percent average increase for the United States in 2012,
following an 8.2 percent spurt in 2011.

Jones Lang LaSalle is expected to market the property
through early summer.

(Reporting by Ilaina Jonas; Editing by Leslie Adler)

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The State of Michigan Retirement System is contemplating a departure, while a $20 billion open-ended fund run by JPMorgan Investment Management wants to remain a partner, according to the sources, who are not authorized to speak on the record. It could not be determined what the third partner, the New York State Teachers’ Retirement System (NYSTRS), wants to do.

Each party has different investment objectives and together they are looking at options going forward, three of the four sources said.

A spokeswoman for JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) on Friday declined to comment. NYSTRS declined to comment other than saying that as of the end of 2012, its investment in Edens was $587.3 million.

Edens declined to comment. The Michigan pension fund did not respond to a request for comment.

The partnership has a sunset clause, effective at the end of the next year, which allows any of the partners to force a sale. That triggered the talks over a range of options before the deadline, one of the sources said.

The Columbia, South Carolina-based company owns or has developed a portfolio of 111 shopping centers and other assets, generally in high-income areas along the East Coast, according to a company representative.

The centers are mostly anchored by grocery stores that include Whole Foods (WFM.O: Quote, Profile, Research, Stock Buzz), Ahold’s (AHLN.AS: Quote, Profile, Research, Stock Buzz) Giant and Stop & Shop, SuperTarget (TGT.N: Quote, Profile, Research, Stock Buzz) and Publix (PUSH.PK: Quote, Profile, Research, Stock Buzz). About a third of the retailers in each of its centers are locally owned.

It has redeveloped historic Union Market, in Washington D.C., into a marketplace with 40 local and regional vendors.

The parties have several options, including a buyout of one or both of the partners, bringing in another partner and keeping it private.

It could also sell the company to rivals such as Federal Realty Trust Investment Trust (FRT.N: Quote, Profile, Research, Stock Buzz) or Regency Centers Corp (REG.N: Quote, Profile, Research, Stock Buzz). Both real estate investment trusts have access to significant equity or debt capital.

Alternatively, the company could launch an initial public offering. Last year, Edens considered an IPO but did not proceed, another source said.

This year, the shopping center sector is outperforming the broader real estate investment trust market as well as the S&P 500 index.

As of May 2, shopping center REITs rose 20.06 percent this year, while the overall FTSE NAREIT All Equity REITs index rose 14.79 percent, according to the National Association of Real Estate Investment Trusts. The S&P 500 is up 13.3 percent.

The State of Michigan has engaged Evercore Partners Inc (EVR.N: Quote, Profile, Research, Stock Buzz) to advise it. NYSTRS has hired Green Street Advisors, and the company is working with Eastdil Secured LLC, a unit of Wells Fargo & Co (WFC.N: Quote, Profile, Research, Stock Buzz), two of the sources said.

(Editing by Frank McGurty)