1 | JANUARY 8, 2016

With the maturity wave rising higher, the commercial mortgage-backed securities market is already seeing some major deals in

the first month of the year.Citigroup is gearing up

to provide a $300 million CMBS loan to the 91-year-old family-op-erated real estate firm Haymes Investment Company for its of-fice property at 5 Penn Plaza in Midtown Manhattan, Commercial Observer Finance can first report.

The 10-year deal, which has yet to close, will refinance a $203 million CMBS loan on the property that is due to mature next year. In April 2007, J.P. Morgan Chase provided the borrower with the previous mortgage, which was securitized in JPMCC 2007-LD11, and is the third largest deal in

the conduit, comprising 6.4 percent of its total collateral.

The sponsor informed Moody’s Investors Service late last year that it planned to de-fease on the J.P. Morgan loan—meaning Haymes would replace the debt with U.S. Treasuries that replicate the cash flows of

the loan and, in doing so, would avoid prepayment penalties. (A December 2015 report from Moody’s stated that a potential defeasance of the 5 Penn Plaza loan would not affect its ratings of the J.P. Morgan conduit.)

But Haymes stuck with the CMBS mar-ket for reasons that were not disclosed. The new loan from Citigroup will be securitized in the next few weeks, one person close to

Roy Donahue “Don” Peebles is get-ting ready to seal the deal on a $334 mil-lion construction loan from Bank of

America Merrill Lynch to finance the conver-sion of 108 Leonard

Street in Tribeca, Manhattan into luxury condominiums.

The financing is expected to close on Jan. 8, two people familiar with the matter told Commercial Observer Finance.

The Peebles Corporation acquired the late 19th-century landmark—the single largest building ever sold by the City of New York—for $160 million in December 2013, ac-cording to a source with intimate knowledge

See Peebles... continued on page 3See Citigroup... continued on page 3

Don Peebles Scores $334M Construction Loan From Bank of America for 108 Leonard Conversion

The LEAD

In This Issue

3 ICBC Lends $212M for Kuafu’s 1 MiMA Buy 5 Wells Fargo Lends $158M on Related Beal Boston Project

7 Werner and AVR Take $180M CMBS Loan From Citigroup 7 MetLife Lends $145M on Silicon Valley Shopping Center

9 Office Properties Account for Almost Half of December’s Top 10 CMBS Defaults 11 CBRE Brokers $137M Loan on MetLife Office Portfolio

11 Meridian Negotiates $118M Acquisition Financing for Queens Multifamily Buy

“One of the trends I am seeing is that the “crowd”

is no longer individuals—it is increasingly expanding

to include institutions.”—Jilliene Helman

From Q&A on page 18

The Insider’s Weekly Guide to the Commercial Mortgage Industry

FINANCE WEEKLY

EXCLUSIVEEXCLUSIVE

Citigroup to Close $300M CMBS Deal on 5 Penn Plaza

2 | JANUARY 8, 2016

Thank you to the lending community. Your continued confidence and trust allowed Meridian to close

more than $35 billion in financing last year and remain America’s most active debt broker.

MeridianCapital.com

Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare Co-ops· Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops· Mixed Use · Student Housing Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit· Recapitalization Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit· Recapitalization Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit· Recapitalization · Office · Retail · Multifamily · Hotel Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops· Mixed Use · Student Housing Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare Co-ops· Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit· Recapitalization · Office · Retail · Multifamily · Hotel Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare Co-ops· Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · LandAcquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare Co-ops· Mixed Use · Student Housing · Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit Recapitalization · Office · Retail · Multifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops· Mixed Use · Student Housing Land · Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · RetailMultifamily · Hotel · Industrial · Self-storage · Healthcare · Co-ops · Mixed Use · Student Housing · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Office · Retail · Multifamily · Hotel · Industrial

$35 BILLION IN 2015

COFW – $35 – January 2016.indd 1 1/7/16 2:38 PM

3 | JANUARY 8, 2016

of the deal. Goldman Sachs provided acqui-sition financing to Peebles for the purchase, public records show.

The developer later teamed up with the Israeli-based American real estate compa-ny Elad Group for the conversion project and tapped the international architecture firm Beyer Blinder Belle to lead the design efforts.

“Tribeca was one of the hottest markets in the city even back in 2012,” Mr. Peebles told Commercial Observer in regards to the project in a November 2015 interview. “It was one of the early markets to recover and Downtown was very hot.”

The 419,000-square-foot property had once served as the headquarters of New York Life Insurance Company and more recently housed New York City Criminal Court.

Redevelopment plans for the 13-story

building call for 151 new residential condo units, according to records filed with the New York City Department of Buildings in July 2015.

The conversion of the landmarked build-ing, which has an alternate address of 346 Broadway, will also include a 7,210-square-foot community facility and about 2,200 square feet of commercial space. Peebles and Elad had plans to include a boutique hotel in the building, but no details about the hotel appeared in the developers’ most recent fil-ings with the DOB.

Jordan Casella, a senior vice president on Bank of America’s commercial real es-tate banking team for the New York and New Jersey markets, led the $334 million construction loan on behalf of the lender, according to one of the two sources.

A representative for Bank of America de-clined to comment. Mr. Peebles could not be reached for comment in time for publica-tion.—Damian Ghigliotty

Peebles...continued from page 1

the transaction said on the condition of anonymity.

The 24-story building, which sits on Eighth Avenue between West 33rd and West 34th Streets, is 98.5 percent leased. The building contains 630,551 square feet of of-fice space and 26,273 of retail space, accord-ing to CoStar. Office tenants include Sirius XM Radio and the Visiting Nurse Service of New York. CVS is a ground-floor retail tenant at the property.

Jon Estreich, the founder and president of New York-based brokerage Estreich & Company, worked on the new CMBS deal.

A representative for Citigroup declined to comment. Representatives for Haymes Investment Company and Estreich & Company were not available for comment. —Danielle Balbi

Citigroup...continued from page 1

108 Leonard Street

ICBC Lends $212M for Kuafu’s 1 MiMA Buy

Industrial and Commercial Bank of China provided a $211.6 million loan to Kuafu Properties and the U.S. arm of Shanghai Construction Group to fund the two firms’ acquisition of 1 MiMA Tower, New York City records show.

The $260.8 million purchase leaves the partnership with the top 13 floors of Related Companies’ and TIAA-CREF’s MiMA, a 63-story residential tower at 460 West 42nd Street in Midtown Manhattan. Kuafu and SCG plan to convert the 151 rental units into “afford-able luxury” condominiums. The  financing from ICBC carries an 81 percent loan-to-cost ratio, based on the acquisition price.

When construction on the massive rental tower began in 2009, the top floors were de-signed as condo units, with studios starting at around $700,000. But as the recession lin-gered, Related chose to keep all of the units as apartments for rent. Available two-bed-room rental units at MiMA start at $9,995 per month, while studios start at more than $4,000, according to StreetEasy.

Commercial Observer first reported in July 2015 that the joint venture partners were planning to buy the upper portion of the property, while the bottom 50 floors will remain rental units.

Shang Dai, Kuafu’s chief executive officer, said at the time that the new condos will offer “something luxury—but still affordable.”

“That’s not something you see a lot of in the market,” Mr. Dai said, adding that Kuafu and SCG will “give buyers the opportunity to upgrade.”

At the time, the New York-based Chinese developer declined to say what the individ-ual condos would cost, but industry sourc-es speculated that the newly converted units would start at around $1.5 million.

The residential tower, located between Ninth and 10th Avenues in Hell’s Kitchen, contains 44,000 square feet of amenity space, including an Equinox Fitness gym, swimming pool, basketball court and pet care facility. The property opened in early 2012.

Representatives for Kuafu and ICBC de-clined to comment about the acquisition fi-nancing.—Danielle Balbi

1 MiMA Tower

4 | JANUARY 8, 2016

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Multifamily | Retail | Mixed Use | Offi ce

5 | JANUARY 8, 2016

Wells Fargo Lends $158M on Related Beal Boston Project

Related Beal tapped roughly 10 different fi-nancing sources to fund a 14-story, $230 mil-lion mixed-use development in Downtown

Boston, including a $158 million debt and equity package from Wells Fargo.

The sponsors—a partnership formed by Related Companies and the Boston-based Beal Companies in 2013—are constructing a 239-unit below-market-rate rental build-ing totaling 248,000 square feet; an attached 220-key hotel totaling 146,000 square feet, restaurant and retail space totaling 10,000 square feet; and an above-ground parking garage.

Construction on the one-building mixed-use project began this week and the project is due for completion in 2018.

As part of the financing, which closed late last month, Wells Fargo originated an $85.8 million tax-exempt construction loan on the affordable residential component and a $65 million taxable construction loan on the hotel component.

The project also received $7.6 million in 4 percent Low Income Housing Tax Credits from the federal government, of which Wells Fargo purchased 49 percent, Citigroup pur-chased 49 percent, and Boston Capital, as a syndicator, purchased the other 2 per-cent. The Massachusetts’ Department of Housing and Community Development also provided $7.1 million in state LIHTC, which Boston Capital is also syndicating.

Citigroup also provided a $3.6 million sub-ordinate loan to serve as both construction and permanent financing. That loan does not amortize and carries a reduced interest rate.

“We love the hotel financing business, but what really got my group’s interest is the affordable nature of the project,” Duane Mutti, senior vice president of the commu-nity lending and investment team at Wells Fargo, told Commercial Observer Finance. “It is bringing much needed affordable to low-, moderate- and middle-income peo-ple in Boston, and that’s a large unmet need. Related came up with a very complex financ-ing structure that is delivering much-needed workforce housing.”

Additionally, Related Beal received $3 million from Massachusetts’ Affordable Housing Trust Fund, the Boston Globe re-ported, while Boston Properties and hos-pitality and food provider Delaware North contributed $10.5 million. The two firms’ nearby development TD Garden requires a contribution to the city’s affordable housing programs.

Related Beal’s development, dubbed Parcel 1B, sits on a state-owned site, so the developers entered a 99-year land lease with the state of Massachusetts Department of Transportation. The project also received a 121a tax abatement because of its affordable component, meaning that a portion of the taxes on the property will be subsidized for the first 15 years.

“I congratulate the team at Related Beal for reaching this early milestone in rede-veloping Parcel 1B,” Boston Mayor Martin Walsh said in a press release announcing that the project’s financing had closed. “They were able to work creatively to secure the fi-nancing needed to bring this unique project to fruition, and I look forward to the ground breaking.”

Mr. Walsh is focused on bringing more housing options to the city, through his “Changing City: Boston 2030” plan, which

calls for 53,000 new residential units, includ-ing 44,000 new workforce housing units, to be built by 2030.

The Parcel 1B development, which is lo-cated on Beverly and Causeway Streets in the Bulfinch Triangle, a historic district of Boston, was originally meant to hold 239 af-fordable and market-rate units, but the de-velopers changed their plan in April 2015, choosing to make all of the rental apartments below market rate.

Twenty percent of the apartments will house individuals and families earning be-tween 40 and 60 percent of area median in-come (AMI), while the remaining units will house individuals and families earning be-tween 80 and 165 percent AMI, according to Mr. Mutti and his team at Wells Fargo.

The 2015 AMI in Boston was $68,950 for individuals and $98,500 for families of four. Sixty percent of AMI qualifies as individuals earning $41,350 or less and families of four earning $59,100 or less, while 80 percent of AMI qualifies as individuals earning $55,150 or less and families of four earning $78,800, according to the Boston Redevelopment Authority.

Representatives for Related Beal and Citigroup did not respond to inquiries by time of publication.—Danielle Balbi

Parcel 1B Rendering

EXCLUSIVE

6 | JANUARY 8, 2016

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MetLife Lends $145M on Silicon Valley Shopping CenterThe Chicago-based real estate firm

Heitman landed a $145 million loan from MetLife on Pacific Commons, a massive

retail property in Silicon Valley, Commercial Observer Finance has

learned.The 12-year loan replaces existing debt

on the 993,432-square-foot shopping cen-ter and carries a 46 percent loan-to-val-ue ratio, according to a spokesman for the lender. The amount of the previous financ-ing was not disclosed.

Heitman, a development and invest-ment firm, acquired the property in 2013 from Catellus, a mixed-use land developer.

Retail tenants at the 840-acre shop-ping center include Costco, Lowe’s, Target, Dick’s Sporting Goods, Men’s

Wearhouse, Toys “R” Us, and Nordstrom Rack, while food and beverage tenants in-clude Applebee’s, Cold Stone Creamery, Five Guys and Krispy Kreme. The prop-erty also contains a movie theater run by Century Theatres.

Heitman has a $31.2 billion global

portfolio of retail, office, multifamily, in-dustrial, self-storage and specialty assets under management, according to the com-pany’s website.

A representative for the sponsor did not respond to inquiries by time of publica-tion.—Danielle Balbi

EXCLUSIVE

Werner and AVR Take $180M CMBS Loan From Citigroup for Denver Sheraton Hotel Buy

Citigroup originated a $180 million com-mercial mortgage-backed securities loan to AVR Realty Company and David Werner

Real Estate Investments for its purchase of the fee simple interest beneath a

Sheraton Hotels and Resorts property in Denver, Commercial Observer Finance can first report.

The New York real estate investors ac-quired the fee position in the land under the Sheraton Denver Downtown Hotel from a partnership between a Goldman Sachs Group real estate investment fund and California-based Chartres Lodging Group for $210 million, a source with knowledge of the deal said on the condition of anonymity.

The 10-year CMBS loan to the new owners carries a fixed interest rate of 4.5 percent and interest-only payments for the full term, ac-cording to Meridian Capital Group Senior Managing Director Drew Anderman, who brokered the debt deal. Mr. Anderman de-clined to comment on the purchase price.

The Sheraton Denver Downtown Hotel, located at 1550 Court Place, is the largest hotel in Colorado, totaling 22 sto-ries and 1,231 units. The hotel has six on-site food and beverage outlets, as well as 133,000 square feet of event space spread across 46 ballrooms, boardrooms and meet-ing rooms. The property also contains a con-nected 53,000-square-foot office building, a 5,000-square-foot fitness center and an

outdoor heated pool.Both the acquisition and the financing

closed in mid-December. The $180 million securitized debt deal stands out as one of sev-eral big year-end transactions in what turned out to be a slower CMBS market in 2015 than many had predicted early in the year.

Still, total CMBS issuance came to roughly $101 billion in 2015, compared with $93.1 bil-lion in 2014, according to data from Trepp.

Representatives for AVR Realty and Citigroup declined to comment. David Werner was out of the country and could not be reached for comment.—Damian Ghigliotty

Sheraton Denver Downtown Hotel

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8 | JANUARY 8, 2016

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Office Properties Account for Almost Half of December’s Top 10 CMBS Defaults

In December, the top 10 commercial mort-gage-backed securities loans to hit special servicing totaled $619.4 million—nearly half

of which were deals col-lateralized by office, ac-cording to data provided to

Commercial Observer Finance by Trepp.The largest of $272.7 million in office loans

included a $122 million CMBS deal on 2 Gateway Center in Newark, N.J., which COF first reported was facing imminent monetary default back early last month.

The 771,531-square-foot property is part of the Gateway Center office complex, lo-cated near Newark Pennsylvania Station, and currently accounts for 6.4 percent of the Deutsche Bank-sponsored conduit CD 2006-CD3.

In August, the Port Authority vacated its 157,853 square feet of space in the building, but that’s not the only vacancy issue that 2 Gateway is facing.

“The Prudential Insurance Company of America backed 36 percent of the space in 2 Gateway, but decided to leave for a new head-quarters that was being constructed,” said Sean Barrie, an analyst at Trepp. “The last debt service coverage ratio on the property was 1.38x for the first half of 2015 while occupancy was at 99 percent. Occupancy as of September, however, was down to 80 percent and that will fall further once Prudential departs.”

Ben Korman, principal at C&K Properties—the owner of the 18-story office building—told COF in December that despite an aggressive leasing campaign, special ser-vicing was the only option as the firm “must take this necessary procedural step to ensure that we are able to continue to provide first-rate ownership and manage of this asset for the long term.”

Two Investcorp retail portfolios with properties across the country trailed behind 2 Gateway, each respectively carrying debt of $96.1 million and $88.3 million. Both loans, which are set to mature in February, make up the largest two notes the Bear Stearns-sponsored conduit BSCMS 2006-PW11, each accounting for 18.4 percent and 16.9 percent of the deal’s remaining collateral.

After those two came the Foothills Mall in Tucson, Ariz. with $76.6 million in unpaid debt, and the DHL Center in Breinigsville, Pa. with $55.9 million in debt.

The Wachovia Tower loan, which is collat-eralized by what is now called the Wells Fargo Tower in Baltimore, came in sixth with a cur-rent balance of $48.8 million. The 25-story

office tower is 72 percent occupied and be-hind on mortgage payments. According to servicer commentary, the property’s DSCR dropped because of a decrease in average rent-al rates. The loan is the fifth largest note in the Deutsche Bank-sponsored conduit COMM 2006-C7, accounting for 3.7 percent of the deal’s remaining collateral.

The $37.1 million mortgage backed by Prince George Center II, a suburban office in Hyattsville, Md., matured on Dec. 8, 2015 and faces major vacancy troubles ahead. The General Services Administration occupies 392,578 square feet of the 394,578-square-foot property, and plans on vacating its space upon its lease expiration in April 2016.

Belk Headquarters, a single-tenant occu-pied suburban office in Charlotte, N.C. came in eighth place, with a $34.6 million mortgage that matures in April.

A $30 million loan on Woodhill Circle Plaza, a retail property in Lexington, Ky.,

followed and, lastly, a $29.4 million CMBS loan on the Raleigh Office Centre in Southfield, Mich. came in as the 10th largest.

Default is not the only issue that the loans face, and those issues could represent a larg-er problem in the market as a whole. With the start of 2016 marking the middle of the matu-rity wave, countless loans are in need of refi-nancing, especially given that more than $201 billion of that debt was originated in 2006, topped off by more than $229 million origi-nated in 2007.

“As 2015 came to a close, many borrowers looked to refinance loans with 2016 maturity dates,” Mr. Barrie of Trepp noted. “However, plenty of loans set to mature are mired in spe-cial servicing, which could hinder the refinanc-ing process.”

In fact, most of the 10 largest loans in hands of their special servicers are set to mature this year, if they haven’t already. —Danielle Balbi

EXCLUSIVE

2 Gateway Center

10 | JANUARY 8, 2016

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CBRE Brokers $137M Loan on MetLife Office PortfolioCBRE Capital Markets arranged a

$136.5 million loan from Wells Fargo to fund Oak Street Real Estate Capital’s ac-

quisition of five MetLife office buildings totaling 1.3 million square feet,

Commercial Observer Finance has learned. The five-year, interest-only loan, which

closed on Dec. 28, 2015, carries two one-year extension options. The floating inter-est rate on the financing was fixed via a swap at the time of closing.

“We are very pleased to start a relation-ship with MetLife,” Marc Zahr, a managing partner at Oak Street, told COF by phone. “Their real estate and credit is stellar, and their long-term commitment to occupy these locations and be our partner is some-thing that we find valuable.”

The Chicago-based private equity real estate firm finalized a sale-leaseback with MetLife, purchasing the properties for roughly $210 million. As a result, the financ-ing carries a 65 percent loan-to-cost ratio.

The portfolio is comprised of five differ-ent offices—of which MetLife is the sole tenant—located at 501 U.S. Highway 22 in Bridgewater, N.J.; 344 Madison Avenue in Morristown, N.J.; 5950 Airport Road in Oriskany, N.Y.; 9797 Springboro Pike in Dayton, Ohio; and 700 Quaker Lane in Warwick, R.I.

The insurance giant signed a 12-year tri-ple net lease at the office properties, with 2 percent annual increases in rent.

“These properties are an excellent ad-dition to our net lease portfolio, which is designed to create stable long-term cash flow backed by investment-grade cor-porate credits,” Jim Hennessey, man-aging partner and chief financial officer of Oak Street, said in prepared remarks provided to COF. “We believe our ability to execute complex transactions quickly provides tremendous value to our tenants and investors.”

CBRE Executive Vice President Peter Marino and Associate Elizabeth Arnold

of the firm’s Downtown Chicago office and Executive Vice President Shawn Rosenthal and Senior Vice President Jason Gaccione of the firm’s Midtown Manhattan office worked on the deal.

 “The financing was structured to provide Oak Street with a strong leveraged return with the flexibility to execute on their busi-ness plan going forward,” Mr. Marino said. “Oak Street’s ability to close on the acquisi-tion of a complex portfolio in a compressed timeline over the holidays was extremely impressive.”

Representatives for Wells Fargo and MetLife declined to comment.—Danielle Balbi

EXCLUSIVE

700 Quaker Lane

New Jersey-based Treetop Development closed on a financing package for the pur-chase of a Queens, N.Y., multifamily portfo-

lio, Commercial Observer Finance can first report.

California-based ACORE Capital provided the $118 million in debt for Treetop’s acquisition of eight buildings in Flushing and Elmhurst, according to Meridian Capital Group, which arranged the financing.

The three-year deal carries a Libor-based floating rate, two one-year extension options and full-term interest-only payments.

“The financing we used in this transaction was very creative. Rather than using a first mortgage and a mezzanine loan, we used a ve-hicle referred to as a ‘stretched first’ through the lender, ACORE,” Treetop Principal Azi Mandel said in prepared remarks provided to COF. “In this type of financing, a single lender—usually a fund—provides both the senior and mezza-nine loans and blends the rates.”

Treetop will invest approximately $10 mil-lion in capital expenditure and interior up-grades throughout all of the properties, Mr. Mandel said. The sponsor retained the archi-tectural firm Woods Bagot to renovate all of the lobbies and common areas and upgrade each building’s exterior foliage.

Meridian Senior Managing Director Ronnie Levine and Vice Presidents Isaac Lifshitz and Aggelos Sklavenitis negotiated the deal.

“Our client intends on proactively manag-ing this portfolio through the close monitoring of leasing and expenses as well as an accretive building-wide renovation and capital improve-ment program,” Mr. Levine said. “They have successfully executed this strategy numerous times in the past and have a stellar track record for value creation at the asset level.”

Treetop bought the 608-unit portfolio in December for $138 million, Crain’s New York Business reported at the time. That gives the debt deal a loan-to-value ratio of about 85

percent.The buildings, seven of which are in

Flushing, range from 50 to 65 years old. The properties combined total 546,169 square feet, which include residential, commercial, storage and garage space.

Meridian closed more than $35 billion in financing in 2015—a new annual record for the national commercial mortgage brokerage giant.

A representative for ACORE did not return a request for comment.—Terence Cullen

132-57 Sanford Avenue

Meridian Negotiates $118M Financing for Queens Multifamily Buy

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12 | JANUARY 8, 2016

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Iron Hound Management Company’s one-year-old lending arm, IH Capital, and Bank of New York Mellon Corp. fund-

ed a $120 million loan facility to refinance a six-story building—which

houses the Hollister Co. flagship—at 600 Broadway in Manhattan, Commercial Observer Finance can first report.

The borrowers, Aurora Capital Associates, the Adjmi family’s A&H Acquisitions and the Chera family’s Crown Acquisitions, are using proceeds from the 10-year line of credit to replace a $72.6 mil-lion mortgage originally provided by the now-shuttered Anglo Irish Bank in January 2008. The previous debt had changed hands twice after and was most recently acquired by SunTrust Bank in February 2014, city re-cords show.

The borrowers will cash-out a portion of the facility—which closed on Dec. 18—and the remainder will be set aside for capital reserves.

The financing, which carries a 50 percent

loan-to-value ratio, will be securitized in the commercial mortgage-backed securi-ties market in the first quarter of 2016. BNY Mellon has been outsourcing its CMBS busi-ness to Iron Hound’s lending arm for the past year, said Robert Verrone, a principal at the New York-based firm.

“We have a five-year, exclusive agreement with Bank of New York Mellon,” Mr. Verrone told COF. “We provide the expertise and orig-ination in partnership with the bank, and we did a little over $1 billion [in CMBS transac-tions] in our first year.”

The property, which sits on the corner of Broadway and Houston Street in Soho, is fully leased and contains 65,192 square feet of space, according to PropertyShark.

Hollister, a subsidiary of Abercrombie & Fitch, occupies retail space in the building totaling 37,600 square feet. The gym chain 24 Hour Fitness occupies the remaining 19,314 square feet of retail space, with the fit-ness center located on the building’s upper floors.

The current owners bought the building

from Olmstead Properties for $71.4 mil-lion in 2008, according to city records.

Representatives for A&H Acquisitions and Crown Acquisitions did not respond to inquiries by press time. A representative for Aurora Capital Associates declined to com-ment.—Danielle Balbi

Hollister Soho Flagship Building Gets $120M Refi From Iron Hound and BNY Mellon

600 Broadway

WorkforceWalker & Dunlop has hired Matthew

Baldwin, formerly an associate director at Berkadia Commercial Mortgage, to join the Bethesda, Md.-based company’s capital markets team.

Mr. Baldwin will be based out of the firm’s Tampa, Fla., office, and will structure and place debt on office buildings, retail centers, hotels and industrial and multifamily prop-erties, according to a company announce-ment. Before joining the Walker & Dunlop team from Berkadia, he worked as a senior financial analyst at Northmarq Capital and an associate at then-called CB Richard Ellis.

Over the past few years, Walker & Dunlop has been expanding its capital markets platform, which focuses on bro-kering commercial real estate loans to life insurance companies, banks and com-mercial mortgage-backed securities con-duits. In November 2014, the company acquired Johnson Capital, growing its loan

origination and servicing platform.“Walker & Dunlop was historically a mul-

tifamily lender focused on originating loans with Fannie Mae, Freddie Mac and HUD,” said Bill Wein, senior vice president and chief production officer at the company. “But Matthew Baldwin is joining a platform today that has access to a much wider array of capi-tal to meet the diverse financing needs of his clients.”

Mr. Baldwin holds an M.B.A. from University of North Carolina Chapel Hill’s Kenan Flagler Business School.

Michael Smith of the New York-based law firm Herrick, Feinstein has been pro-moted to a partner in the law firm’s real es-tate department, the company announced this week.

Mr. Smith, who is based in Herrick’s New York office, primarily represents develop-ers. His practice is focused around the life cycle of different developments, from land

acquisition and assemblage, transfers of de-velopment rights, joint ventures, and zoning. He also represents lenders and investors on real estate financing transactions.

“We are excited to announce Michael’s promotion within our growing real estate practice, one of the largest in New York City,” Belinda Schwartz, chair of Herrick’s real es-tate department, said in prepared remarks. “Michael is an experienced and trusted advi-sor for the firm’s real estate clients, who will continue to rely on him to develop creative solutions to their development, zoning, con-struction, financing and acquisition needs.”

Mr. Smith, who earned his J.D. at Washington University School of Law in St. Louis, is admitted to practice law in New York and New Jersey, and is a LEED Accredited Professional. Prior to joining the team at Herrick, he worked as an associate at Drinker, Biddle & Reath.

His promotion was effective as of Jan. 1, 2016.

14 | JANUARY 8, 2016

TIMES SQUARE: THE NEXT ACT1675 Broadway | January 26, 2016 | 7:45AM - 10:00AM

Times Square is the dynamic heart of Midtown Manhattan, with its many millions of square feet of office space. While tenants have more commercial rental options than ever, the creativity, energy and edge of Times Square has helped it retain its status as a center for media & entertainment and gain ground as a hotbed of technology & innovation. Cutting edge firms have moved to Times Square because of the neighborhood’s status as the "Crossroads of the World,” as well as the more practical appeal of its proximity to a dozen subway lines, key transit hubs like Penn Station and Grand Central Terminal, over 30 historic Broadway theaters, and dozens of other entertainment venues, cultural establishments and restaurants. Join our panel as they discuss what’s next for Times Square.

Welcome remarks to be provided by Adam Spagnolo, SGA.

For sponsorship information, contact Robyn Reiss at rreiss@observer.com or 212.407.9382

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ALBERT BEHLER Chairman, Chief Executive

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WILLIAM C. RUDIN CEO & Vice-Chairman, Rudin Management Company, Inc.

TIM TOMPKINS President,

Times Square Alliance

MODERATOR JONATHAN MECHANIC

Chairman, Real Estate Department, Fried Frank

BRIAN WATERMAN Vice Chairman & Principal,

Newmark Grubb Knight Frank

FEATURED SPEAKERS

15 | JANUARY 8, 2016

An elite Upper East Side all-girls institu-tion in Manhattan is looking to issue $75 million in tax-exempt revenue bonds to help fund its pricey renovation project, according to public records.

The proceeds from the bonds will be used to help finance the $120 million renovation of The Chapin School’s existing eight-sto-ry, 132,000-square-foot facility at 100 East End Avenue on the northwest corner of East 84th Street. The independent not-for-prof-it has 770 students in kindergarten through 12th grade.

In addition to the bond sales, the school will get financing from a bridge loan, pro-ceeds from a four- to six-year capital cam-paign and endowment funds, according

to the Build NYC Resource Corporation project cost/benefit analysis. Build NYC Resource, which is administered by the New York City Economic Development Corporation, needs to approve the debt is-suance and would receive fees for its involve-ment in the bond sales.

Chapin, founded as a primary school in 1901, is just the latest private school to look to issue bonds to finance campus construc-tion. As Bloomberg News reported in July, The Brearley School, Riverdale Country School, Saint Ann’s School and La Scuola d’Italia Guglielmo Marconi all were ap-proved to issue debt.

Chapin’s renovation plans call for the con-struction of a three-story addition for a new

gymnasium and more space for performing arts programs, reconfiguration of space for more classrooms, an additional cafeteria, a design studio for the robotics program and other science, technology, engineering and mathematics curriculum as well as a new nursing facility providing student care.

In the fall, the city’s Board of Standards and Appeals approved the three-story ad-dition, extending the building up to 186 feet from 117. Construction commenced in May 2015 and is slated for completion by late-2018.

Chapin’s director of communications said: “I’m unable to comment at this time, as we are in the midst of the process.”—Lauren Elkies Schram

Manhattan Private School Seeks $75M Bond Financing for Renovation Project

24-7VISIT COMMERCIALOBSERVER.COM

16 | JANUARY 8, 2016

Mortgage Bankers Association of NYPO Box 7361 | Hicksville, NY 11802-7361Phone: 516 997 3707Fax: 516 997 1979Email: mbaofny@verizon.net

Mortgage Bankers Association of New YorkEducational Breakfast Panel

Co-Hosted with

Sponsors Media Sponsors

• Crowdfunding platforms have closed a meaningful number of transactions with some having gone full cycle with return of capital and gains to investors. Hear from the experts how this was done.

• What are the pros and cons to Crowdfunding?• Title III of the JOBS Act was passed and will go into effect

in early 2016, thereby legalizing retail crowdfunding and opening the marketplace to mainstream investors, what does this mean to developers and crowdfunding platforms?

• How do crowdfunding platforms work and add value to real estate developers?

• Why should middle market developers consider crowdfunding as a legitimate part of their capital stack?

• How are multi-tiered capital stacks being completed using crowdfunding?

WHENWednesday, January 20, 20168:00 a.m.-10:00 a.m.Registration Opens 7:45 a.m.Program Start 8:30 a.m.

LOCATIONOffices of Loeb & Loeb, LLP345 Park Avenue, NYCLight Breakfast Fare

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The MBAofNY is proud to present a panel made up of top market experts utilizing Crowdfunding along with pre-panel networking over a light breakfast.

MODERATOR PANELIST

PANELIST PANELIST

Jilliene HelmanCEO and Founder RealtyMogul.com

William SkelleyFounder and CEO iFunding

King DavidsonSenior Vice President,Real EstateFundrise

Jacob SacksPrincipalCayuga Capital Management

CROWDFUNDINGThe Hottest Topic in Middle Market Finance!

17 | JANUARY 8, 2016

“Just under $90 billion in CMBS loans will mature in 2016,” Sean Barrie, an analyst at Trepp, said. “The Fed’s mod-est interest rate hike will probably do little to deter borrowers from refinancing their loans, though not every loan is locked in for a refinancing. Perhaps the largest loan set to mature in 2016 that has its refinancing in question is 280 Park Avenue. Backed by over $429 million of debt, this 1,206,807-square-foot office tower in midtown Manhattan is just 70 percent occupied as of the end of June 2015. Watchlist commentary states that management anticipates a climb in occupancy once their renovations on the property are finished. However, the property is generating a meager 0.59x debt service coverage ratio through the first six months of 2015, and that number will not improve significantly until more tenants arrive. Though the note matures in June 2016, the backing property still carries a very low loan to value of 34.8 percent. Another large loan with a refinancing in doubt is the Bank of America Plaza in Atlanta. This 1,253,499-square-foot office is backed by $363 million of debt split between a $263 million piece and a $100 million slice. With over $195 million in combined appraisal reductions on the loan, and a half-empty building, this could turn into one of the more notable loan liquidations to start 2016.”

Source:

The Takeaway

Largest Troubled Loans Maturing in 2016

Property Name

Deal Name

Current Loan Balance

Model Maturity Date

City State Property Type

Current LTV

DSCR (NCF)

Financials As Of

Occupancy Current Delin-quency Status

Special Servicer Status

280 Park Avenue

CSMC 2006-C4/CSMC 2006-C5

$429,441,907.00 June 15, 2016 New York N.Y. Office 34.8 0.59 January 2015 - June 2015

70 percent Current No

Warner Building JPMCC 2006-CB15 $292,700,000.00 May 12, 2016 Washington, D.C.

D.C. Office 75.1 0.6 January 2015 - June 2016

71 percent Current No

Bank of America Plaza

JPMCC 2006-CB17/JPMCC 2006-LDP9

$363,000,000.00 Oct. 12, 2016 Atlanta Ga. Office 153.6 0.78 January 2015 - June 2015

46 percent REO Yes

Investcorp Retail Portfolio

GCCFC 2006-GG7 $248,400,000.00 April 10, 2016 Various Various Retail 98.7 1.77 FY 2014 93 percent Current No

Westfield Centro Portfolio

JPMCC 2006-LDP7 $240,000,000.00 July 15, 2016 Various Various Retail 177.9 1.29 FY 2014 82 percent Foreclosure Yes

Schron Industrial Portfolio

GCCFC 2005-GG5 $198,663,417.80 Jan. 10, 2016 Various Various Industrial 332.9 0.07 January 2015 - June 2015

36 percent REO Yes

Americold Portfolio

JPMCC 2006-LDP9

$194,000,000.00 Dec. 15, 2016 Various Various Industrial 80 0.89 FY 2014 92 percent Current No

Marriott - Chicago

WBCMT 2006-C25 $178,505,729.40 April 15, 2016 Chicago Ill. Lodging 64.6 1.65 FY 2014 76 percent Current No

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19 | JANUARY 8, 2016

Q+A

Commercial Observer Finance: You launched  RealtyMogul.com  in 2013. How did you know it was the right time?

Ms. Helman: I don’t think you ever know it’s the right time. Real estate is fairly archaic and I saw an opportunity to disrupt the old way of doing things. My co-founder Justin Hughes, our chief technology officer, and I started with a $110,000 real estate loan in Los Angeles. From there, our company just kept growing. We put in a lot of hard work to get it to where it is today. But we were also strategic. We saw a marketing opportunity with the Jumpstart Our Business Startups Act and also saw the success of other on-line marketplaces in financial services like LendingClub in consumer credit and OnDeck in small business. 

How much capital has been raised through the platform?  

To date, investors have invested more than $185 million through RealtyMogul.com.

What are some of the trends you are seeing in the crowdfunding niche right now?

The basic concept of crowdfunding has been around for a long time. You see it being applied to a number of different industries, including health care, video games and even movies. Crowdfunding is the way of the fu-ture for the average consumer to collabora-tively use the Internet to influence. Within the real estate industry, one of the trends I am seeing is that the “crowd” is no longer individuals—it is increasingly expanding to include institutions and institutions are ac-tively buying whole real estate loans from the RealtyMogul.com marketplace.

This may make us one part real estate crowdfunding and one part marketplace lending, but at the end of the day it allows us to give real estate sponsors and borrow-ers access to the full capital stack through one online marketplace. We can originate equity through our accredited individual investors and debt through our network of institutional investors. That makes us a plat-form that simplifies real estate investing for all parties involved.

What does the platform’s user base look like?  

We have over 20,000 accredited investors, over 20,000 real estate companies and signifi-cant institutional investors who have hundreds of millions of dollars to purchase real estate investments.

What does RealtyMogul.com offer insti-

tutional investors? Deal flow. We see hundreds of transactions

submitted to our online marketplace each month and spend countless hours sourcing real estate investments so institutional inves-tors don’t have to. We also pre-vet every trans-action and make the process as frictionless as possible through our technology to execute the transaction online.

What was one of the more interesting or

challenging deals you worked on in 2015? The Bristol investment was a breakthrough

debt and equity combo transaction. We provid-ed $1.5 million in equity capital through our in-dividual accredited investor network and also originated the first mortgage, a $7.5 million bridge loan with a three-year term and two one-year extensions priced at Libor plus 5.25 percent that has now been sold to an institu-tional investor.

Jilliene HelmanChief Executive Officer and Founder of RealtyMogul.com

Jilliene Helman

1 Whitehall Street, New York, NY 10004

212.755.2400

Damian Ghigliotty Editor

Danielle Balbi Staff Reporter

Terence CullenLauren Elkies Schram

Contributing Writers

Cole Hill Copy Editor

Barbara Ginsburg Shapiro Associate Publisher

Lisa Medchill Advertising and Production Manager

OBSERVER MEDIA GROUP

Jared Kushner Publisher

Joseph Meyer Chief Executive Officer

Matthew Talomie Chief Revenue Officer

Ken Kurson Editorial Director

Robyn Reiss Executive Director

and Associate Publisher

Thomas D’Agostino Controller

Laurence Rabinowitz General Counsel

For editorial comments or to submit a tip, please email Danielle Balbi at dbalbi@commercialobserver.com.

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