the insider’s weekly guide to the commercial mortgage...
TRANSCRIPT
1 | july 31, 2015
New York-based Chetrit Group and Clipper Equity took a $280 million se-nior loan and $65.5 million in mez-zanine debt for their condominium
conversion proj-ect in Manhattan’s Gramercy Park,
Commercial Observer Finance has learned.
Natixis Real Estate Capital led the se-nior debt deal, which closed on Wednesday, according to a person with knowledge of
the deal. Malaysia-based Maybank, Bank of China, Investors Bank and TD Bank
took part in the loan, while Apollo Commercial Real Estate Finance provided the mezzanine debt.
The three-year senior loan carries two one-year extension options, the person in the know told COF.
Meridian Capital Group Senior Managing Director Ronnie Levine and
Atlanta-based Columbia Property Trust agreed to buy the office condomin-ium at 229 West 43rd Street, formerly known as The New York Times Building, and is seeking a $300 million bridge loan to finance the purchase.
The real estate investment company an-nounced it would pay $516 million for the 345,701-square-foot condo comprising more than half of the 589,617-square-foot building from Blackstone Group. The 12 stories of office space are currently 98 per-cent leased, Columbia announced in a press release.
Some of those tenants include Yahoo, which leases 192,518 square feet on five floors, according to CoStar. Snapchat, the picture messaging app company, leases two
See Columbia Property... continued on page 5See Chetrit and Clipper... continued on page 3
Atlanta Real Estate Firm Seeks $300M for NYT Building Office Condo Buy
wo
od
s ba
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t
The LEAD
Chetrit and Clipper Land $345M Global Debt Deal for
Gramercy Square Condos
In This Issue
5 Atlanta Real Estate Firm Seeks $300M for New york Times Building Office Condo Buy (cont.)
5 Rockrose Finalizes $270M Construction loan for 43-25 Hunter Street in lIC 7 Developer lands $48M Construction loan for Flatiron District Condo Tower 7 jll Arranges $46.8M loan for Mink and jDS Miami Condo Development 9 Story Wells Fargo Refinances jersey Office Redevelopment 9 NyCB Refinances 15-17 Park Avenue in Deal Brokered by Meridian
“Auction.com was experiencing explosive
growth and was looking for immediate scalability.”
—Steven Powell From Q&A on page 11
EXCLUSIVE
The Insider’s Weekly Guide to the Commercial Mortgage Industry
FINANCE WEEKLY
Gramercy Square rendering
2 | july 31, 2015
CAPS FEES
On all New Stabilized Purchase
$135K
EASTERN UNION FUNDING
Ira Zlotowitz, President 917-597-2197 [email protected]
MORTGAGE BROKERAGE
at
Since Eastern Union introduced the “$250K Capped Fee” initiative a year ago, our deals over $10,000,000 doubled. By lowering the cap to $135,000, Eastern Union plans to triple their production
of large deals within the next 12 months.
Loan Amount Standard 1% Fee Eastern Union’s Fee
$25,000,000 $250,000 $135,000
$50,000,000 $500,000 $135,000
$100,000,000 $1,000,000 $135,000
3 | july 31, 2015
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Managing Director Steven Adler negotiated the debt deal. A spokesman for Meridian de-clined to comment.
The borrowers purchased the for-mer Cabrini Medical Center at 224 to 228 East 20th Street and 209 to 225 East 19th Street in May of 2013 for $152 million from S.K.I. Realty, an affiliate of Memorial Sloan Kettering Cancer Center.
Once completed, the development, known as Gramercy Square, will house 223 luxury condos throughout four buildings connect-ed by a private garden and wellness pavil-ion. One of the buildings is being constructed from the ground up, while the other three are being redeveloped.
Memorial Sloan-Kettering bid on the five buildings that comprised Cabrini Medical Center at an auction in January of 2010 and closed the $83.1 million sale in October that same year, public records show.
Cabrini Medical Center closed in 2008 and filed for Chapter 11 bankruptcy in 2009, ac-cording to published reports.
A spokeswoman for Chetrit Group de-clined to comment, while a spokeswoman for Natixis Real Estate Capital could not immedi-ately comment. Representatives for Clipper Equity could not be reached by press time.—Danielle Balbi and Damian Ghigliotty
Chetrit and Clipper...continued from page 3
Gramery Square rendering
4 | july 31, 2015
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floors for 26,167 square feet.“Acquiring this iconic property with such
strong tenancy and below-market rents at attractive pricing compared with other New York transactions enables us to increase exposure in what will be our second larg-est market, while spreading out lease ma-turities and capital commitments,” Nelson Mills, Columbia’s president and chief exec-utive officer, said in prepared remarks.
Columbia plans to finance the buy with a $300 million six-month bridge loan, which would cover almost 60 percent of the cost, and other short-term borrowings, the com-pany said in the release. A Columbia spokes-man told Commercial Observer Finance that the real estate firm was currently speak-ing with several potential lenders.
Blackstone bought the office portion of the building in 2011 for $160 million, ac-cording to The Real Deal, which first re-ported news of the sale. The investment firm went on to pour $105 million into the 102-year-old building and lure in new ten-ants. A Blackstone spokesman did not re-turn a request for comments.
The New York Times was in the building from its opening in 1913 until 2007, when it moved to 620 Eighth Avenue. Kushner Companies in May announced it purchased the 250,000-square-foot retail condo for $296 million, which houses Discovery Times Square, Guy’s American Kitchen & Bar and Guitar Center, The New York Post reported.
[Jared Kushner, the CEO of Kushner Companies, owns Observer Media, which publishes COF.]—Terence Cullen
229 West 43rd Street
Columbia Property...continued from page 5
Rockrose Development Corp. closed a $270 million construction loan for its huge 80/20 apartment
complex at 43-25 Hunter Street in Long Island City, the
firm’s president, Justin Elghanayan, told Commercial Observer Finance.
The developer negotiated the fi-nancing directly with Wells Fargo, TD Bank and Capital One. Wells Fargo served as the leading lender in the transaction to fund roughly half of the $543 million project, Mr. Elghanayan said.
The loan was facilitated through the sale of $85 million in tax-exempt bonds and $185 million in taxable bonds is-sued by the New York State Housing Finance Agency.
The 974-unit multifamily develop-ment in LIC’s Court Square district will contain a 14-story low-rise rental tower and a 50-story high-rise rental tower.
Under the state’s 421a tax incen-tive program, 195 apartments will be set aside as affordable units for a 30-year period for renters earning up to 60 percent of the area median income. The remainder of apartments will be rent-stabilized market-rate units.
The residential towers under con-struction mark the largest 80/20 proj-ect in New York outside of Manhattan, according to the developer.
“Historically, the 80/20 program only really worked in Manhattan, where the rents have been high enough to carry the affordable units,” Mr.
Elghanayan said. “But now the rents have risen in the outer boroughs to the point where an 80/20 starts to make sense.”
The apartment complex is due for completion in 2017. Construction on the project is currently up to the 10th floor of the low-rise tower. The com-plex’s amenities will include a health club, yoga room and yoga deck, three other roof decks, multiple lounges and a pet-washing station.
Rockrose has invested in the Court Square district of LIC for more than two decades. Last August, the develop-ment firm fully leased up its 709-unit luxury residential tower Linc LIC, which sits across the street from 43-25 Hunter Street.
The company is in the process of redeveloping the nearby Eagle Lofts complex at 43-22 Queens Street. Rockrose will renovate an existing building there and build a tower around it to create 780 rental loft apartments. The firm is currently deciding whether or not that property will contain an af-fordable component, Mr. Elghanayan said.
In total, the developer plans to build 2,500 rental units in Court Square and is seeking restaurateurs and indepen-dent retailers to create a new shopping destination on Jackson Avenue.
“We’re fortunate that Long Island City has become such a desirable place to live that market-rate rents can support the creation of affordable units,” Mr. Elghanayan said.—Damian Ghigliotty
Rockrose Finalizes $270M Construction Loan for 43-25 Hunter Street in LIC
Rendering of 43-25 Hunter Street
EXCLUSIVE
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6 | july 31, 2015
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7 | july 31, 2015
CIT provided a $48 million construc-tion loan to Arun Bhatia of New York-based Bhatia Development Corp. and Jeffrey
Katz, chief executive offi-cer of Sherwood Equities, for the development of a
condominium tower in the Flatiron District, Commercial Observer Finance has learned.
The partnership between Mr. Bhatia and Mr. Katz purchased an existing three-story building at 10 West 17th Street from non-profit Catholic Medical Mission Board for $28.3 million, according to a spokesperson for Bhatia Development. Once construction is completed, the site will house a 16-story build-ing with 16 residential condo units.
The financing, which carries a three-year term with two one-year extension options, marks CIT’s first transaction with both of the borrowers, said Meggan Walsh, deputy group head and managing director at CIT Real Estate Finance.
“We’ve been aware of both sponsors for quite awhile,” Ms. Walsh told COF over the phone. “Arun has completed some student housing projects, and Jeffrey has been active in New York for many years, so we considered both primary targets for the kind of sponsors we like to work with.”
Richard Horowitz, principal at New York-based Cooper-Horowitz, brokered the deal. “I’ve been fortunate to do business with both sponsors for over 20 years and am excited to be part of another successful project by them,” he said.
The total project is estimated to cost the developers $64 million, Mr. Horowitz said. The New York-based architecture firm Beyer Blinder Belle will design the condo tower. Units in the new building will feature 10-foot ceilings. The completed property will con-tain storage spaces and a 24-hour concierge on site.
“The existing building has a 45-foot-wide frontage, which is very rare, so it will lay out very graciously for three-bedroom units,” Ms. Walsh said. “The buildings on the other side are landmarked, so there will be very nice southern views.”
The location is seeing prime demand for residential properties, she noted, especial-ly with 10 West 17th Street’s quick access to seven subway lines. “A lot of users in the area are from the TAMI space, so this seems like the right product in the right market for those buyers or families,” she said.
Construction on 10 West 17th Street will commence in early 2016 and is due for com-pletion in the summer of 2017.
Representatives for Sherwood Equities could not be reached.—Danielle Balbi
Developer Lands $48M Construction Loan for Flatiron District Condo Tower
EXCLUSIVE
New York-based real estate invest-ment and advisory firm Vanbarton Group provided JDS Development
and Mink Devel-opment with a $46.8 million loan
for a proposed condominium tower in Miami’s South Beach, Commer-cial Observer Finance has learned.
The land acquisition and pre-de-velopment financing for the planned tower—to be called Monad Ter-race—carries a one-year term with a fixed interest rate, a source familiar with the deal told COF.
JLL arranged the financing on be-half of the New York developers.
“Lenders were drawn to Miami’s thriving international market, abun-dance of multinational firms and proximity to the area’s top employ-ers,” Denny St. Romain, a manag-ing director at JLL who worked on
the deal, said in prepared remarks.The waterfront site, located at
West Avenue and Biscayne Bay, will house a roughly 274,000-square-foot condo tower, including more than 60,000 square feet of parking, with upscale finishes and amenities. The developers have yet to decide on an exact address to use for the site.
“This is one of the only new, large-scale developments in the area, and will be one of the top condominium assets in Miami due to best-in-class sponsorship,” JLL Managing Direc-tor Aaron Appel said. “We expect it will appeal to both international and domestic buyers.”
A spokeswoman for JDS develop-ment declined to comment. Repre-sentatives for Mink Development and Emmes Asset Management could not be reached.—Danielle Balbi
JLL Arranges $46.8M Loan for Mink and JDS Miami Condo Development
EXCLUSIVE
South Beach Miami
8 | july 31, 2015
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These programs are hosted by Michael Stoler, President of New York Real Estate TV, LLC, Managing Director of Madison Realty Capital, real estate commentator for 1010 WINS AM.
9 | july 31, 2015
New York Community Bank lent $30 million to refinance a multifamily proper-ty on Park Avenue owned by Queens-based
Samson Management, sources involved in the deal told Commercial
Observer Finance.The 16-story property located at 15-17
Park Avenue, on the Northeast corner of 35th Street and Park Avenue in Manhattan’s Murray Hill neighborhood, contains 97 apart-ment units and 2,810 square feet of office space.
The property, which is within walking dis-tance to Herald Square and Grand Central Terminal, was designed and built in 1924 by New York developer Fred F. French.
Meridian Capital Group negotiated the seven-year refinance, which carries a fixed interest rate of 3.50 percent and interest-on-ly payments for the full term. Meridian Vice President Avi Weinstock and Vice President Chaim Tessler negotiated the debt deal.
“Meridian was able to create competition in the marketplace for this loan based on the sponsorship, location and quality of asset,” Mr. Tessler said. “By doing so, we achieved a favorably priced and flexible structure that maximizes cash flow through a seven-year, in-terest-only period.”—Damian Ghigliotty
NYCB Refinances 15-17 Park Avenue in Deal Brokered by Meridian
15-17 Park Avenue
EXCLUSIVE
Wells Fargo provided the Philadelphia-based real estate management firm Rubenstein Partners a $28.5 million, five-
year loan to refinance a New Jersey office proper-ty, Commercial Observer
Finance has learned.Rubenstein and its partner, Onyx Equities,
recently completed a redevelopment plan for the 305,000-square-foot, class-A office building at 211 Mount Airy Road in Basking Ridge.
Affiliates of the partnership purchased the building in 2013 from the Santa Clara, Calif.-based technology firm Avaya, which just signed a 61,676-square-foot lease there.
“Our redevelopment has transformed this
property from a somewhat dated 1980s-vintage traditional corporate campus into a modern-ized multi-tenant asset with improved ameni-ties that is considerably more competitive in its market,” Stephen Card, regional director of the Mid-Atlantic region at Rubenstein, said in prepared remarks provided to COF.
“We believe that these positive changes, combined with the long-term Avaya lease and significant interest from additional tenants, made 211 Mount Airy an appealing prospect for financing,” he added.
The redeveloped office property contains a
full cafeteria, 127-seat auditorium and on-site conference center. The partnership also re-placed the building’s concrete skin with a glass curtain-wall system to bring more light into tenant spaces.
“We were excited to participate with this ex-perienced and talented partnership in the re-positioning of 211 Mount Airy into a modern and competitive office option for tenants in the Basking Ridge market,” Yorick Starr, a senior vice president with Wells Fargo Commercial Real Estate, said in prepared remarks.—Dan-ielle Balbi
Wells Fargo Refinances Jersey Office Redevelopment
EXCLUSIVE
211 Mount Airy Road rendering
10 | july 31, 2015
The Takeaway“Office markets have been slow to recover from the recession, and the recovery has been more uneven than that of other property types,” said Sean Barrie, an analyst with Trepp. “Increasing occupancy and rent growth have been the primary drivers of market-by-market improvement in the office sector in 2015. This momentum should help borrowers with maturing loans that need to be refinanced. Borrowers should be very encouraged by that statement as there is currently $93.6 billion of office loans maturing between now and the end of 2017, with $38 billion and $41 billion coming due in 2016 and 2017, respec-tively. Improving office market fundamentals have also helped borrowers. More than 86 percent of office CMBS loans disposed in the first six months of 2015 paid off without a loss.”
Source:
Office Maturing Loans
2015 2016 2017 2018 2019 2020
27.38%
28.76%33.89%
26.79% 22.51% 26.50%
140
All Other Office
120
100
80
60
40
20
9
$Bill
ions
Losses on Disposed Office Loans
2010
06
2010
10
2011
02
2011
06
2011
10
2012
02
2012
06
2012
10
2013
02
2013
06
2014
06
2013
10
2014
02
2014
10
2015
02
2015
06
4.0 60%
3.050%
2.0
40%
30%
1.020%
10%
0.0 0%
Billi
ons
Disposed w/Loss
Disposed w/o Loss
M.A. Loss Sev (6 mo.)
11 | july 31, 2015
Q+A
Commercial Observer Finance: What’s the story behind the creation of Situs?
Mr. Powel: Situs was founded in 1985 in Houston as a brokerage and property man-agement company. It was tough going in Houston at the time, given the lingering ef-fects of the recent oil crises, tax reform and savings and loan crisis.
By 1990, the market changed dramati-cally with the formation of the Resolution Trust Corporation. What followed were several years of REO and note sales that created tremendous opportunities and laid the foundation for what has become Situs today, a global real estate loan asset management and advisory firm. Situs now serves the entire U.S. and Europe from 15 offices and 600 of the best colleagues you could hope for.
What are some of your company’s services that lenders and borrowers would find most useful?
Functions like loan underwriting, due diligence, loan servicing, asset manage-ment and valuations became customer fo-cused, and we leverage scale to deliver best practices, industry-leading technology and experienced and seasoned professionals in a cost contained, variable staffing model.
Two of our businesses experiencing tremendous growth include our Situs RERC Valuation Business and Financial Institution Group. Situs RERC focuses on the valuation of Level-3 bank assets, illiq-uid debt and equity assets for the pension funds and private equity sectors. Demand for these professional services result from new regulations associated with CCAR and DFAST data reporting and valuation transparency. The Financial Institutions Group works directly with Situs RERC and Situs’ due diligence teams to provide a variety of credit risk analytics and regula-tory policy related services, which specifi-cally address the requirements for banks of all sizes.
How much of a role does technology play in your strategy right now?
Aside from how our clients are using technology to ease their workflow, Situs’ recent deal with Auction.com is a good example of how technology is shaping the industry. Less than 10 years ago, buy-ing a commercial property online—with-out ever physically visiting the site—was
unfathomable. Now that is commonplace and Situs is there ensuring that the buyers have the most up-to-date due diligence in-formation on those properties.
How exactly did that partnership come about?
Auction.com was experiencing explo-sive growth and was looking for immediate scalability. Situs had both seasoned real es-tate due diligence professionals and tech-nology it could offer Auction.com.
Why was this year the right time for Stone Point Capital’s acquisition of Situs?
Stone Point Capital’s relationship with Situs actually started back in 2009, before our acquisition by Lewis Ranieri’s firm Helios. In 2009, Situs was repositioning due to the financial crisis, but it was too early for a firm such as Stone Point to make an investment, as the recovery had not started. Over the next two years the mar-ket rebounded and in 2011 Situs teamed up with Ranieri to scale our business and meet the overwhelming demand we were seeing.
How will the acquisition allow Situs to further its advisory capacity?
As we continue to evolve our services to remain on the forefront of our clients’ needs, expect Situs to expand in the areas of residential analytics, market data and process management technology as we build out the company to be the go-to pro-fessional services advisory firm in the real estate debt and equity investment space.
Steven PowelFounder and Chief Executive Office of Situs
Steven Powel
321 West 44th Street, New york, Ny 10036
212.755.2400
Damian Ghigliotty Editor
Danielle Balbi Staff Reporter
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