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See GRAPEVINE on Back Page
2 CMBS Issuers Creep Back Into Market
2 Deka Lends on Luxury Hotel in SF
2 Loan Sought on New Rentals in NJ
4 M&T Lends on Manufactured Homes
4 Normandy Seeks NJ Office Mortgage
6 Bridge Corrals $1.8 Billion of Equity
6 HFF Recruits 3 Debt Pros in DC
8 Marathon Debt Fund Holds First Close
8 Benefit Street Shops More Mezz Debt
10 Troubled-Loan Tallies Dip Again
12 ORIX Exits Special-Servicing Arena
13 INITIAL PRICINGS
Carlyle Group has hired Mathew Feldman as a managing director in its credit-opportunities unit, whose investments include commercial real estate debt. Feldman started this week in the Wash-ington fund shop’s New York office. He reports to Alex Popov, who heads the unit within Carlyle’s global credit business. Feldman was previously an investment professional at Davidson Kempner Capital of New York. He had a prior stint at Square Mile Capital, also of New York.
Originator Charles Kim joined Narrative Capital of Los Angeles last month as a managing director. He’ll write bridge and mezzanine loans and preferred equity. Kim spent the past two years in a similar role at Realty Mogul, also in Los Angeles, and before that, was a vice president at Colony Mortgage Capital. The move reunites Kim with his former boss at
Blackstone Eyes Another Big BioMed LoanBlackstone is looking to line up an $840 million floating-rate mortgage on a fully
leased office/laboratory property in Boston.The proposal is the latest move by the giant fund operator to refinance proper-
ties acquired via its $8 billion buyout of BioMed Realty in October 2015. Blackstone financed that purchase with multiple loans on the San Diego REIT’s 18.8 million-square-foot portfolio and has been refinancing those mortgages over the past few months.
Blackstone isn’t using a broker to pitch the lending assignment on the 704,000-square-foot Center for Life Science Boston — by far BioMed’s largest hold-ing and one of the top office/lab properties in the U.S. The bidding deadline is Sept. 20, which represents an unusually quick turnaround time.
When it acquired BioMed, Blackstone put individual mortgages on some of the REIT’s biggest properties, because their sizes and high quality garnered advantageous
See BLACKSTONE on Page 6
Barclays Staffing Up for Balance-Sheet PushBarclays is laying the groundwork to significantly increase its balance-sheet
originations.The bank has hired syndications pro Kristin Larson Khanna as a director to take a
senior role in the effort. Khanna was at HSBC for the past three years as head of U.S. syndications and previously spent about a decade at Wells Fargo. At Barclays, she’ll build a syndications team that will enable the bank to pursue large loans and sell down portions to other lenders.
Khanna will start in October following a gardening leave. She’ll be joined by Shazim Hasan, a vice president who is moving over this month from Aozora Bank. They will be part of the group headed by mamaging director Larry Kravetz, which has focused primarily on commercial MBS lending. Khanna will report to Brian La Belle, a director who oversees distribution of mezzanine and whole loans.
The balance-sheet program will primarily write floating-rate loans for institutionalSee BARCLAYS on Page 6
M&T Financing Converted Brooklyn ComplexM&T Bank has agreed to lend $250 million to a Rockwood Capital partnership
that redeveloped seven contiguous warehouses along Brooklyn’s waterfront into office and retail space.
The 443,000-square-foot complex, called Empire Stores, has an estimated value of about $415 million, putting the leverage at about 60%. The floating-rate loan will have a term of five years, including extension options. Eastdil Secured is arranging the financing for New York-based Rockwood and its partners, Midtown Equities of New York and HK Organization of Brooklyn.
The property is at 53-83 Water Street, near the foot of the Brooklyn Bridge, in an area that’s seen significant commercial and residential development over the past few years.
The brick warehouses, constructed between 1869 and 1885, were used mainly for coffee storage until the 1960s, when they were largely vacated. In 2013, the
See BROOKLYN on Page 12
THE GRAPEVINE
SEPTEMBER 8, 2017
CMBS Issuers Creep Back Into MarketThe expected September surge of commercial MBS offerings
got off to a slow start with just one deal in the market this week.The pace of fresh offerings should pick up next week, includ-
ing two conduit transactions that yesterday were still in the pre-marketing phase.
The first post-Labor Day deal, an $800 million single-bor-rower issue, could price by today. It’s backed by a floating-rate acquisition loan to Stonemont Financial on 95 net-leased prop-erties encompassing 6.8 million square feet of high-quality office, industrial and retail space in 20 states. J.P. Morgan, Deutsche Bank and Barclays originated the mortgage for the Atlanta investment manager on Aug. 11, along with two mez-zanine loans totaling $274.1 million.
The $1.1 billion debt package has a two-year term, with three one-year extension options. Stonemont used the pro-ceeds to finance its $1.3 billion purchase of the portfolio from Oak Street Real Estate Capital of Chicago. The collateral proper-ties are fully occupied by single tenants under triple-net leases — all running until at least 2024, with a weighted average remaining term of 11.3 years.
The conduit issues on deck include a $1.1 billion offering by Citigroup, Barclays, Starwood Mortgage and Principal Commercial Capital (CGCMT 2017-P8). The other is a $916 million offering by Jefferies LoanCore, Deutsche and Citi (COMM 2017-COR2). Both are expected to start making the rounds with investors by early next week.
Roughly another $14 billion of CMBS issues are slated to hit the market this month — ending a brief pause in the recent flood of offerings. Just two deals have priced since mid-August (see Initial Pricings on Pages 13-14). But one of those was the largest this year.
That transaction, which priced on Aug. 31, is backed by the $2.1 billion senior portion of a floating-rate debt package that J.P. Morgan and Deutsche originated Aug. 1 on 460 hotels in the Motel 6 chain, which is owned by Blackstone (MOTEL 2017-MTL6). The $2.3 billion refinancing came with a two-year term and five one-year extension options.
Elsewhere in the new-issue market this week, Deutsche, Bank of America and Citi were running the books on a single-family rental deal for Starwood Waypoint Homes, formerly known as Colony Starwood Homes. The $771.2 million offer-ing (SWH 2017-1) is collateralized by a floating-rate mortgage on 4,443 properties, in eight states, that the Scottsdale, Ariz., firm bought in the secondary market and then rented. The loan, which will be funded when the securitization closes, has a two-year term, two one-year extension options and another for 15 months. Starwood Waypoint is in the process of merging
with Blackstone’s Invitation Homes unit, which is also a regular issuer of such deals.
Deka Lends on Luxury Hotel in SFDeka Bank has originated a roughly $80 million mortgage
on the St. Regis San Francisco hotel.The five-year floater was swapped to a fixed rate at the clos-
ing, three weeks ago.Qatar Investment Authority acquired the 260-room property
late last year for $175 million, or $673,000/room, from Mar-riott International of Bethesda, Md. It’s unclear if the sovereign wealth fund used debt financing at the time.
Marriott had assumed the luxury property a few months earlier via its $13 billion takeover of Starwood Hotels & Resorts of Stamford, Conn. Qatar Investment was already in negotia-tions to buy the St. Regis from Starwood before the Marriott takeover was concluded.
Under the agreement, Marriott stayed on as the hotel’s operator. Qatar Investment announced it would undertake a significant renovation of the rooms and public areas. The prop-erty, which opened in 2005, has several restaurants, a fitness center, a lap pool, a spa and more than 20,000 square feet of event space.
The St. Regis is in a 42-story tower at 125 Third Street that includes separately owned residential condominiums. The property is adjacent to the San Francisco Museum of Modern Art and near Yerba Buena Gardens, on the edge of the Financial District.
Loan Sought on New Rentals in NJAn LCOR partnership is seeking a $60 million fixed-rate loan
on a new apartment complex in New Jersey.Most of the proceeds would be used to retire an approxi-
mately $49 million loan that Wells Fargo originated in 2013 for the construction of the 258-unit Valley & Bloom complex, at 34 Valley Road in Montclair.
LCOR, a Berwyn, Pa., developer that is majority-owned by California State Teachers, teamed up on the apartment project with Pinnacle Cos. of Montclair. The duo is pitching the 10-year financing assignment to insurance companies via HFF.
The property encompasses two six-story buildings. The apartments, which have up to three bedrooms, are fully leased. Twenty-six are set aside for moderate-income residents. There is also some 40,000 square feet of ground-level retail and office space that is mostly leased. The retail tenants include Clifton Savings Bank.
The residential amenities include a spin and yoga studio, indoor bike storage, a rooftop lounge and a garage.
Valley & Bloom is part of the township’s “Montclair Center Gateway Redevelopment Plan,” which was designed to encour-age mixed-use development and pedestrian traffic on the west-ern edge of the affluent suburban New York community. The plan includes a 151-room hotel scheduled to open in the com-ing months.
September 8, 2017 2Commercial Mortgage ALERT
Drill down deep into our market statistics. Go to the Market section of CMAlert.com and click on “CMBS Market Statistics,” which lets you see the data points behind all the charts that Commercial Mortgage Alert publishes each week. It’s free.
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September 8, 2017 4Commercial Mortgage ALERT
M&T Lends on Manufactured HomesM&T Realty Capital has provided $74.1 million of Fannie Mae
funding to refinance 11 manufactured-housing communities in upstate New York.
The individual floating-rate loans have 10-year terms, with interest-only payments for the first five years. After that, they amortize on a 30-year schedule.
The collateral encompasses 2,391 pad sites owned and operated by a joint venture between Horizon Land of Crofton, Md., and Federal Capital of Chevy Chase, Md. The partnership bought the portfolio in 2015 for $88 million from Morgan Man-agement of Pittsford, N.Y. At the time, the properties had 2,413 sites, valued at roughly $36,000 apiece.
The largest community is the 411-site Gypsum Mills, at 6392 Plastermill Road in Victor, 18 miles southeast of Rochester. Its amenities include a heated pool, a nine-hole golf course and a community center with a fitness room.
The other properties range from about 65 sites to roughly 365. Nine are also in the northwestern part of the state: two in Batavia, two in West Bloomfield and one each in Albion, Clif-ton Springs, Hamlin, Newfane and Williamson. The remaining community is in Ballston Spa, 30 miles north of Albany.
Horizon manages 58 manufactured home communities in nine states, encompassing about 9,700 sites.
Normandy Seeks NJ Office MortgageThe owner of a New Jersey office park wants to refinance it
with $75 million of fixed-rate debt.Normandy Real Estate is seeking a 10-year mortgage on the
351,000-square-foot Park Place, a Class-A complex in Florham Park, about 30 miles west of Manhattan. HFF is pitching the deal to insurance-company lenders.
The proposed debt would replace a three-year floating-rate loan of $65.5 million provided in 2015 by First Niagara Bank and Principal Real Estate Investors. Normandy, a fund opera-tor based in Morristown, N.J., used around $4 million of the proceeds to refurbish the buildings and add tenants. The occu-pancy rate is now around 95%.
Normandy put the property, at 200-230 Park Avenue, up for sale earlier this year, also via HFF, but no sale resulted.
The 30-acre campus encompasses four buildings of three stories each. Tenants include the Fairleigh Dickinson School of Pharmacy, M&T Bank, law firm Schenck Price and Penn Mutual Life.
The complex includes a conference center, a fitness center and parking for more than 1,400 vehicles. A free shuttle runs to NJ Transit’s Convent Station a mile and a half away. Park Place is just off Route 24, which connects Interstates 78 and 287, two miles north.
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September 8, 2017 6Commercial Mortgage ALERT
Bridge Corrals $1.8 Billion of EquityBridge Investment completed raising $1 billion of equity for
its second debt fund late last month.The Salt Lake City shop has also lined up an additional $830
million from limited partners that can be co-invested alongside the fund in specific plays. Such “sidecar” investments boost the buying power of fund operators. Bridge has already invested about half of the combined equity.
With the final close, Bridge exceeded its $750 million goal for Bridge Debt Strategies Fund 2. The predecessor vehicle completed raising $370 million of equity last year.
Bridge invests in Freddie Mac B-pieces, floating-rate senior mortgages, mezzanine loans and preferred equity. Jim Chung is chief investment officer of the debt platform.
HFF Recruits 3 Debt Pros in DCHFF has hired three loan brokers in Washington.Dan Martin and Chris Hew, who both previously worked at
Walker & Dunlop, will place debt on all property types. Martin is a managing director, and Hew is a senior director. At Walker & Dunlop, Martin was a senior vice president, and Hew was vice president.
Meanwhile, Jamie Leachman joined the multi-family team as a senior director, focusing on private-label and agency loans. He previously was a managing director at Newmark.
Also, Nicole Brickhouse, who joined HFF in 2013 as an ana-lyst, was promoted to director. She focuses on the placement of multi-family debt.
All four staffers report to Sue Carras, co-head of the Wash-ington office.
Blackstone ... From Page 1
pricing and terms. J.P. Morgan led a $720 million floating-rate debt package on the Center for Life Science. Oxford Properties took down the $100 million junior portion.
Since May, Blackstone has lined up nearly $3 billion of float-ing-rate loans on BioMed properties, portions of which were securitized:
•Citigroup, Deutsche Bank and Barclays supplied a $1.3 bil-lion debt package on 15 office/lab properties encompass-ing 2.2 million sf.•Citi and Deutsche originated a $465 million debt package
on 18 office/lab properties, totaling 1.4 million sf, in seven states.
•Morgan Stanley and ING Real Estate Finance originated a $400 million debt package on the 282,000-sf building at 650 East Kendall Street and a garage at 350 Kendall Street in Cambridge, Mass. In conjunction with the financing, BioMed bought out the 80% interest in the properties that it didn’t already own from Prudential affiliate PGIM Real Estate.
•Goldman Sachs originated a $373 million debt package on the 349,000-sf office building at 500 Kendall Street in Cambridge.•Deutsche wrote a $295 million loan on the 303,000-sf
office building at 675 West Kendall Street in Cambridge.The 18-story Center for Life Science, which was completed
in 2008, is at Three Blackfan Circle in the Longwood Medi-cal Area, which is known for its concentration of life-science companies and research entities, including Harvard Medical School.
The tenants include Beth Israel Deaconess Medical Center, Boston Children’s Hospital, Dana-Farber Cancer Institute and the Immune Disease Institute.
Barclays ... From Page 1
borrowers on properties in major markets. While syndicating portions of the loans, it plans to serve as administrative agent on the deals.
“The addition of Kristin and Shaz to the group makes an important statement that we expect to be a meaningful player in this space,” said Kravetz.
Several market pros said Barclays has been interested for some months in expanding its U.S. balance-sheet operation. Like many other foreign lenders, the U.K. bank has moved in and out of that market over the years in response to fluctua-tions in the economy and its internal strategic goals.
Barclays served as bookrunner on $2.8 billion of U.S. CMBS deals in the first half of this year, ranking eighth among under-writers.
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September 8, 2017 8Commercial Mortgage ALERT
Marathon Debt Fund Holds First CloseMarathon Asset Management has raised $215 million of ini-
tial equity for a hedge fund that originates bridge loans on tran-sitional properties.
The vehicle, Marathon Real Estate Debt Fund, began invest-ing on June 30, and the word is the sponsor plans to solicit up to $300 million of total equity, according to sister publication Hedge Fund Alert.
Marathon is targeting unleveraged returns of 500 bp over Libor by writing short-term, senior mortgages. With leverage, investors are being told they can expect a net return in the low teens.
The New York debt fund operator apparently crafted the vehicle at the request of limited partners in its Marathon Struc-tured Product Solution Fund, which has $380 million under management. Its mandate includes real estate debt, aircraft leases and advances on pharmaceutical royalties.
The new vehicle is the latest example of a hedge fund manager starting or expanding a commercial real estate finance business. Shelter Growth Capital, a Stamford, Conn., firm led by former Goldman Sachs executive Dan Sparks, recently began soliciting at least $150 million for a closed-end fund that would invest in both bridge loans and mezzanine debt on commercial properties.
Marathon’s assets under management totaled $13.8 billion
as of June 30. The firm was founded in 1998 by chief execu-tive Bruce Richards and chief investment officer Louis Hanover. Senior managing director Scott Schwartz oversees real estate investments.
Benefit Street Shops More Mezz DebtBenefit Street Partners is looking to sell another portfolio of
performing mezzanine debt that it acquired via its takeover of the former Realty Finance last year.
The latest offering consists of four cross-collateralized loans, totaling $31.6 million, on 13 select- and full-service hotels encompassing 2,083 rooms in eight states. The interest-only loans to Shaner Hotels of State College, Pa., were originated in 2014 with 10-year terms and 10% coupons.
The package is expected to fetch at least 95 cents on the dollar. First-round bids were due yesterday. HFF, which is advising New York-based Benefit Street, will invite the leading bidders to sub-mit final offers, most likely during the third week of this month.
“This is a unique opportunity to acquire a good-sized, sub-debt position with a double-digit yield,” said HFF managing director Brock Cannon.
One of the collateral hotels is independent. The rest operate under the Marriott, Courtyard by Marriott, Fairfield Inn, Resi-dence Inn and Holiday Inn brands.
The largest loan, for $12.5 million, is backed by the equity interest in four hotels encompassing 605 rooms. The properties are in Newport, R.I., Jacksonville Beach, Fla., Durham, N.C., and Edina, Minn. On a weighted-average basis, the debt yield for that pool was 12.7% and the debt service coverage ratio was 2.37 to 1 as of March.
Also included in the portfolio are an $8.1 million loan tied to seven properties totaling 733 rooms in Florida, Georgia, Pennsylvania and West Virginia (debt yield 12.3%, debt service coverage ratio 2.29 to 1); a $7.1 million loan on the 402-room Pittsburgh City Center Marriott (11.5%, 2.14 to 1); and a $3.9 million loan on the 343-room Chattanooga Marriott Down-town (15.4%, 2.87 to 1).
The mezzanine loans are subordinate to $193 million of uncrossed, amortizing loans with matching maturities that J.P. Morgan originated simultaneously in October 2014 and later securitized via five conduit offerings (JPMBB 2014-C26 and 2015-C27 through 2015-C30).
Benefit Street, the debt-investment arm of Providence Equity, took over external management of Realty Finance last Septem-ber and renamed the nontraded REIT Benefit Street Partners Realty in February. Efforts to sell off the assumed mezzanine debt and reinvest the proceeds in senior mortgages kicked off with the fourth-quarter sale — also brokered by HFF — of five mezzanine loans, totaling $47 million, on retail, hotel and office properties in eight states. A New York fund shop won the bidding for that portfolio at a price close to par value. As previ-ously reported, Benefit Street also recently tapped JLL to broker the sale of $24 million of performing mezzanine loans on office and retail properties in four states.
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Ben Milde, Head of Loan Originations(646) 362-6504 or [email protected]
FIXED RATE LENDING PROGRAMS
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10-YR FIXED RATE, $60MM Single Tenant | Refinance | New York, NY
10-YR FIXED RATE, $58.2MM Office | Acquisition | Santa Clara, CA
7-YR FIXED RATE, $29.5MM Office | Acquisition | Boca Raton, FL
10-YR FIXED RATE, $16.6MM Multifamily | Refinance | Denton, TX
10-YR FIXED RATE, $14MM Office | Acquisition | Duluth, GA
Self-Storage | Acquisition | Belleville, NJ
September 8, 2017 10Commercial Mortgage ALERT
Troubled-Loan Tallies Dip AgainTwo key gauges of commercial MBS loan performance
showed slight improvement again last month.The percentage of CMBS loans in the hands of special ser-
vicers decreased by 8 bp, to 6.28%, according to Trepp. The fig-ure is at its lowest level this year, after peaking at 6.6% in April. The volume of mortgages in that category slipped to $25.5 bil-lion as of Aug. 31, down from $25.9 billion a month earlier — marking a sixth straight monthly decline.
Meanwhile, the portion of past-due loans collateralizing CMBS deals rated by Fitch dipped by 1 bp, to 3.59% as of Aug. 31. That followed a 12-bp drop in the delinquency rate in July from the high for the year of 3.72%, at the end of June.
The largest mortgage added to Fitch’s delinquency roll in August was a $124.1 million fixed-rate loan to New York investor Mark Karasick on a St. Louis office property called Metropolitan Square. After originating the 10-year mortgage in 2005 as part of a $150 million debt package, Wachovia securitized the senior $125 million portion in a $3.3 billion pooled offering led by that bank and Nomura (WBCMT 2005-C21).
The 987,000-square-foot property has struggled since the crash, leading to a 2012 loan modification that reduced the interest rate and provided Karasick with three, one-year exten-sion options contingent on prescribed debt-yield hurdles. Only two of those extensions were exercised, and the loan defaulted at maturity on Aug. 11.
The Metropolitan Square debt contributed to last month’s 24-bp jump in the office-loan delinquency rate, which now stands at 6.06%. The past-due rate for hotel loans increased by 9 bp, to 2.87%. The corresponding rates held steady at 0.69% for multi-family debt and dropped in each of the other three major property sectors.
Factoring in paydowns, Fitch’s tally of loans at least 60 days behind on payments or in foreclosure or maturity default declined slightly to $12.6 billion in August. Another $297 mil-lion of loans were late by 30-59 days.
Last month’s dips in the delinquency and special-servicing rates were mitigated by reductions in the aggregate outstanding CMBS balances that serve as the denominators for the calcula-tions. The volume of Fitch-rated deals shrank to $352.4 billion, from $353.1 billion. Trepp, meanwhile, pegged the overall size of the CMBS universe at $406.9 billion, down from $407.5 bil-lion.
Month Year August Earlier Earlier (%) (%) (%)Retail 6.17 6.18 4.79Office 6.06 5.82 4.55Industrial 3.93 4.27 4.05Mixed-use 3.38 4.20 4.01Hotel 2.87 2.78 3.85Multi-family 0.69 0.69 0.79Other 0.80 0.81 0.72OVERALL 3.59 3.60 3.15
0%
2%
4%
6%
8%
10%
12/08 12/09 12/10 12/11 12/12 12/13 12/14 12/15 12/16
CMBS Delinquencies
Source: Fitch
Percentage of loan balances in Fitch-rated U.S. CMBS that are delinquent by at least 60 days or in foreclosure
Office
Overall
As of Aug. 31 Portion of Loan Type Share of Share of In Special Special All CMBS Balance Servicing Servicing LoansCollateral ($Mil.) (%) (%) (%)Office $8,651.7 7.90 33.88 26.92Retail 8,552.2 6.82 33.49 30.80Hotel 3,790.6 6.58 14.84 14.17Multi-family 1,377.6 3.97 5.39 8.52Industrial 1,240.9 6.93 4.86 4.40Other 1,925.4 3.12 7.54 15.19TOTAL 25,538.5 6.28 100.00 100.00
0%
2%
4%
6%
8%
10%
12%
14%
12/09 12/10 12/11 12/12 12/13 12/14 12/15 12/16Source: Trepp
CMBS Loans in Special Servicing
Balance as percentage of all U.S. CMBS loans
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September 8, 2017 12Commercial Mortgage ALERT
ORIX Exits Special-Servicing ArenaORIX USA shuttered its special-servicing unit last week, cit-
ing the negative impact of accounting rules that went into effect after the market downturn.
Managing director Mark Pakes, who headed the eight-person unit, will be leaving to take a similar job with an unidentified company. The other staffers were transferred to asset-management and related roles.
ORIX is retaining the B-pieces it has acquired, but has trans-ferred its unspecified amount of special-servicing contracts to KeyBank. In 2005, ORIX sold $26 billion of master- and primary-servicing rights to Key.
While ORIX was a special servicer for almost two decades, it wasn’t active in recent years. It last won a new-issue contract in 2015. Also, third-party investors transferred special-servicing rights to ORIX for several transactions, and the company was named backup special servicer on three transactions.
The rules that created a problem for ORIX are collectively known as FAS 167, which were added in 2010 to the require-ments laid down for securitizations by the Financial Accounting Standards Board. Those rules forced B-piece buyers to consoli-date the entire balance of commercial MBS offerings on their balance sheets.
That meant, for example, that a $40 million investment in a B-piece from a $1 billion conduit deal had to be booked on ORIX’s balance sheet as $1 billion of assets, necessitating a cor-
responding increase in liabilities and/or equity.“These rules altered our growth strategy in the CMBS sec-
tor and ultimately led us to exit our special-servicing business,” said Jim Dunn, president of ORIX Real Estate Americas. “We shifted resources to areas with superior growth and profitabil-ity potential without the associated accounting inefficiency.” He noted that the firm is looking to boost its origination of bridge and construction loans and plans to continue investing in CMBS.
Brooklyn ... From Page 1
Rockwood group won the right to redevelop the site and signed a 96-year ground lease with the City of New York.
M&T provided the Rockwood group with $95 million of con-struction debt in 2014. A portion of the row of structures was topped with a glass-and-steel addition, increasing the size to six floors. About 370,000 sf is used for offices, 67,000 sf for retail space and the small remaining portion for other purposes.
The complex, which opened last summer, was 87% leased as of mid-June. It is among the few Brooklyn properties that command rents on par with Manhattan rates, and the lending assignment was said to have spurred stiff competition.
Home-goods retailer West Elm leases 140,000 sf for its head-quarters and a retail store. Among the other tenants are United Technologies and several media companies, including advertis-ing firm 72andSunny.
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September 8, 2017 13Commercial Mortgage ALERT
INITIAL PRICINGSINITIAL PRICINGS
Motel 6 Trust, 2017-MTL6 Pricing date: Aug. 31
Property types: Hotel (100%). Concentrations: California (45%). Loan contributors: J.P. Morgan (60%) and Deutsche (40%). Risk retention consultation parties: J.P. Morgan and Deutsche. Notes: J.P. Morgan and Deutsche teamed up to securitize the $2.08 billion senior portion of a $2.3 billion floating-rate debt package they had originated for Blackstone on 460 Motel 6 hotels. The collateral also includes Blackstone’s equity interest in Motel 6’s franchise con-tracts and intellectual property. The 52,929-room portfolio was appraised at $2.86 billion, and the Motel 6 franchise was valued at $207 million. The interest-only debt package, orig-inated on Aug. 1, has a two-year term, with five one-year extension options. The securitized debt is pegged to one-month Libor plus 224 bp. The debt package also includes a $225 million mezzanine loan, pegged to Libor plus 695 bp, which was separately securitized in an unrated transaction (MOTEL 2017-M6MZ). Blackstone used $1.97 billion of the proceeds to retire debt that was securitized in 2015 (MOTEL 2015-MTL6 and MOTEL 2015-M6MZ). After factoring in closing costs and reserves, Blackstone had $286.5 million left over. The investment manager controls the properties via its $13.3 billion Blackstone Real Estate Part-ners 7 fund. To comply with risk-retention rules, J.P. Morgan and Deutsche are retaining Classes “RR Interest” and “RR Certificates,” which effectively equal a 5% vertical strip. Deal: MOTEL 2017-MTL6. CMA code: 20170216.
Closing date: Sept. 11
Amount: $2,075.0 million
Seller/borrower: Blackstone
Lead managers: J.P. Morgan,
Deutsche Bank
Co-managers: Academy Securities,
Drexel Hamilton
Master servicer: KeyBank
Special servicer: KeyBank
Trustee: Wells Fargo
Certificate administrator: Wells Fargo
Offering type: Rule 144A
Amount Rating Rating Rating Subord. Coupon Dollar Maturity Avg. Life Spread Note Class ($Mil.) (S&P) (Fitch) (Kroll) (%) (%) Price (Date) (Years) (bp) Type A 641.820 AAA AAA AAA 67.44 L+92 100.000 8/15/34 1.93 L+92 Floating B 226.670 AA- AA- AA- 55.94 L+119 100.000 8/15/34 1.93 L+119 Floating C 167.200 A- NR A 47.46 L+140 100.000 8/15/34 1.93 L+140 Floating D 220.970 BBB- NR BBB- 36.25 L+215 99.750 8/15/34 1.93 L+228 Floating E 348.460 BB- NR BB- 18.57 L+325 99.750 8/15/34 1.93 L+338 Floating F 316.445 B- NR B- 2.52 L+425 99.750 8/15/34 1.93 L+439 Floating G 49.685 NR NR B- 0.00 L+575 99.750 8/15/34 1.93 L+589 Floating RR Interest 62.250 NR NR NR 8/15/34 1.93 Floating RR Certificates 41.500 NR NR NR 8/15/34 1.93 Floating X-CP(IO) 1,005.328* BBB- NR AAA 8/15/18 Floating X-EXT(IO) 1,256.660* BBB- NR AAA 8/15/34 Floating *Notional amount
September 8, 2017 14Commercial Mortgage ALERT
INITIAL PRICINGSINITIAL PRICINGS
Citigroup Commercial Mortgage Trust, 2017-1500 Pricing date: Aug. 18
Property types: Office (100%). Concentrations: Pennsylvania (100%). Loan contributors: Citi (100%). Notes: Citi securitized the $240 million senior portion of a $300 million floating-rate debt package it had originated for Nightingale Properties and Wafra Capital to finance their acquisition of the Centre Square office complex, at 1500 Market Street in Philadelphia. The partnership acquired the property from Equity Common-wealth for $328 million. The interest-only debt package, originated on July 14, has a two-year term, with three one-year extension options. The securitized debt is pegged to one-month Libor plus 263 bp. The debt package also includes a $60 million mezzanine loan, pegged to Libor plus 700 bp. In conjunction with the deal, the Nightingale team funded $42.2 million of reserves. Deal: CGCMT 2017-1500. CMA code: 20170213.
Closing date: Aug. 30
Amount: $240 million
Seller/borrower: Nightingale Properties,
Wafra Capital
Lead manager: Citigroup
Co-manager: Academy Securities
Master servicer: Wells Fargo
Special servicer: Cohen Financial
Operating advisor: Trimont Real Estate Advisors
Trustee: Deutsche Bank
Certificate administrator: Citigroup
Offering type: Rule 144A
Amount Rating Rating Subord. Coupon Dollar Maturity Avg. Life Spread Note Class ($Mil.) (S&P) (MStar) (%) (%) Price (Date) (Years) (bp) Type A 108.752 AAA AAA 54.69 L+85 100.000 7/15/32 1.88 L+85 Floating B 25.589 AA- AA 44.02 L+110 100.000 7/15/32 1.88 L+110 Floating C 19.192 A- A 36.03 L+125 100.000 7/15/32 1.88 L+125 Floating D 23.542 BBB- BBB 26.22 L+185 100.000 7/15/32 1.88 L+185 Floating E 31.986 BB- BB 12.89 L+250 100.000 7/15/32 1.88 L+250 Floating F 18.639 B B+ 5.13 7/15/32 1.88 Floating HRR 12.300 B- B 0.00 7/15/32 1.88 Floating X-CP(IO) 153.533* A- AAA 7/15/29 Floating X-NCP(IO) 153.533* A- AAA 7/15/32 Floating
*Notional amount
September 8, 2017 15Commercial Mortgage ALERT
WORLDWIDE CMBS
US CMBS
LOAN SPREADS
ASKING SPREADS OVER TREASURYS ASKING OFFICE SPREADS
REIT BOND ISSUANCE
UNSECURED NOTES, MTNs ($Bil.) MONTHLY ISSUANCE ($Bil.)
Data points for all charts can be found in The Marketplace section of CMAlert.com
0
10
20
30
40
50
60
70
80
J F M A M J J A S O N D
2017
2016
MONTHLY ISSUANCE ($Bil.)
0
3
6
9
12
15
J A S O N D J F M A M J J A S
Spread (bp) New Issue
Fixed Rate Avg. Week 52-wk (Conduit) Life 9/6 Earlier Avg.
AAA 5.0
10.0 S+47
S+87 S+48 S+87
51 98
AA 10.0 S+143 S+140 143
A 10.0 S+180 S+175 209
BBB- 10.0 S+353 S+345 456 Dollar Price Week 52-wk Markit CMBX 6 9/6 Earlier Avg.
AAA 100.5 100.5 99.9
AS 101.2 101.2 100.4
AA 100.3 100.4 99.1
A 95.4 95.5 96.4
BBB- 85.4 85.8 89.9
BB 77.9 78.2 82.3 Sources: Trepp, Markit
Month 9/1 Earlier
Office 158 142
Retail 151 140
Multi-family 141 136
Industrial 146 138 Source: Trepp
130
140
150
160
170
180
190
200
O N D J F M A M J J A S
10-year loans with 50-59% LTV
CMBS TOTAL RETURNS
CMBS INDEX
Total Return (%)
Avg. Month Year Since As of 9/6 Life to Date to Date 1/1/97
Inv.-grade 6.0 0.1 4.2 233.5
AAA 5.8 0.1 3.9 216.2
AA 7.2 0.1 4.6 104.7
A 6.6 0.0 6.2 93.7
BBB 6.8 0.0 9.3 107.8 Source: Barclays
05
10152025303540
J F M A M J J A S O N D
2017
2016
012345678
J A S O N D J F M A M J J A S
70
80
90
100
110
120
130
140
O N D J F M A M J J A S
NEW-ISSUE SPREAD OVER SWAPS
CMBS SPREADS
10-Year AAA
WORLDWIDE CMBS ISSUANCE ($Bil.)2016 2017
01/06/00 J 0.0 0.0 Year-to-date volume ($Bil.)
01/13/00 0.1 0.2 2017 2016
01/20/00 0.2 0.4 US 55.4 41.3
01/27/00 0.9 2.1 Non-US 0.4 1.1
02/03/00 F 3.3 3.4 TOTAL 55.7 42.4
02/10/00 6.1 3.602/17/00 7.4 5.602/24/00 10.3 5.903/02/00 M 11.4 6.703/09/00 13.2 9.303/16/00 14.6 11.603/23/00 16.0 13.103/30/00 17.8 15.604/06/00 A 19.8 16.804/13/00 20.0 17.004/20/00 20.9 18.404/27/00 22.4 19.705/04/00 22.4 21.005/11/00 M 24.3 22.505/18/00 26.1 25.505/25/00 29.9 27.406/01/00 30.1 29.006/08/00 30.1 29.306/15/00 J 31.1 32.706/22/00 31.2 37.206/29/00 31.8 39.107/06/00 32.5 39.107/13/00 J 33.5 41.607/20/00 35.8 42.607/27/00 36.3 46.508/03/00 37.9 49.708/10/00 A 39.5 52.908/17/00 42.4 55.708/24/00 42.4 55.708/31/00 42.4 57.809/07/00 42.4 57.809/14/00 S 42.709/21/00 45.909/28/00 48.710/05/00 51.310/12/00 52.310/19/00 O 53.210/26/00 54.411/02/00 58.211/09/00 63.511/16/00 65.111/23/00 N 67.911/30/00 71.212/07/00 71.912/14/00 76.5
MARKET MONITOR
xxx 1Commercial Mortgage ALERT
AGENCY CMBS SPREADS
FREDDIE K SERIES Spread (bp)
Avg. Week 52-wk Life 8/31 Earlier Avg.
A1 5.5 S+46 S+46 49
A2 10.0 S+59 S+59 64
B 10.0 S+145 S+140 227
C 10.0 S+230 S+220 373
X1 9.0 T+115 T+115 173
X3 10.0 T+260 T+260 409
Freddie K Floater L+40 L+40 Week 52-wk 8/31 Earlier Avg.
10/9.5 TBA (60-day settle) S+63 S+62 72
Fannie SARM L+41 L+42 Source: J.P. Morgan
FANNIE DUS
Spread (bp)
Avg. Week 52-wk Life 8/31 Earlier Avg.
A1 5.5 S+46 S+46 49
A2 10.0 S+59 S+59 64
B 10.0 S+145 S+140 227
C 10.0 S+230 S+220 373
X1 9.0 T+115 T+115 173
X3 10.0 T+260 T+260 409
Freddie K Floater L+40 L+40 Week 52-wk 8/31 Earlier Avg.
10/9.5 TBA (60-day settle) S+63 S+62 72
Fannie SARM L+41 L+42 Source: J.P. Morgan
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September 8, 2017 16Commercial Mortgage ALERT
Colony, Todd Sammann, founder and managing principal of Narrative. The firm is looking to add at least one more originator and two more underwriters by yearend.
BB&T unit Grandbridge Real Estate Capital has tapped Gordon R. White 3d to head its BB&T Real Estate Funding platform, which originates balance-sheet bridge loans and other commer-cial mortgages. White, an executive vice president, replaced Kirk Booher, who departed in July. White formerly was Grandbridge’s market leader in Raleigh. He’s now based in the firm’s Charlotte headquarters, reporting to chairman Tom Dennard.
HFF has hired Rebecca Van Reken as a managing director in Orlando. She handles debt and equity transactions in Central and Northern Florida under senior managing director Michael Weinberg. Van Reken most recently was executive vice president at A10 Capital,
and previously worked at CapitalSource and CNL Real Estate, all in the Orlando area.
Lee Levy joined Goldman Sachs’ mer-chant-banking unit last month. Levy spent the past two-and-a-half years at TPG Real Estate Finance, where he was a managing director. His background also includes stints at Deutsche Bank and Morgan Stanley.
Varde Partners has added a director of structured finance in New York. Missy Dolski, who joined the Minneapolis investment firm last month, lines up deals and builds relationships for its Varde Mortgage platform. Dolski reports to managing director Matt Kennedy. She was previously at Wells Fargo.
Robert Tonnessen this week joined Newmark’s debt and structured-finance team in New York as associate director. He spent the past two years at LoanCore Capital, where he was an associate working on originations of commercial MBS, mezzanine and short-term loans and arranging debt-fund acquisitions.
At Newmark, Tonnessen reports to vice chairmen Jordan Roeschlaub and Dustin Stolly.
KeyBank is in the market for up to six senior originators to write mortgages on multi-family, affordable housing, healthcare and other property types. Candidates should have at least three years of experience and could be based in Seattle, Philadelphia, Chicago, Washington or New Haven, Conn. Contact Morgan Pease at [email protected].
Prime Finance wants to hire a capital-markets analyst in New York to work on financial modeling, analytics, structuring and transactional support. Candidates should have 1-3 years of experience. Contact Karen Sieverding at [email protected].
Citigroup is looking for an analyst to join its CMBS team in New York. The recruit would report to director Rick Simpson. Applicants should have 1-2 years of related experience. Send resumes to Elizabeth Merino at [email protected].
