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1 | September 26, 2014
JLL secured $150 million in acquisition fi-nancing from J.P. Morgan on behalf of a joint venture between Blue Mountain Capital
and Aimbridge Hospitality, Mortgage Observer Weekly has exclusively learned. The J.V. pur-chased a 16-property select-ser-
vice hotel portfolio with assets in Kentucky and Ohio.
The 1,776-key portfolio features seven Courtyard by Marriotts, seven TownPlace Suites and two SpringHill Suites hotels in Cincinnati, Cleveland, Columbus and Toledo, according to JLL. The properties recently un-derwent upgrades.
See J.P. Morgan... continued on page 3
J.P. Morgan Provides $150M for Kentucky, Ohio Hotel Portfolio
The Insider’s Weekly Guide to the Commercial Mortgage Industry
Westchester landlord Robert Weisz, of RPW Group, received a $58 million ac-quisition loan for the purchase of a
162,000-square-foot office building at 240 West 35th Street, Mortgage Observer Weekly can exclusively report.
The five-year acquisition loan from The Union Labor Life Insurance Company on behalf of its Separate Accounts closed on Tuesday night, a person familiar with the transaction said on background. The un-wieldy name refers to Ullico’s real estate in-vestment group.
Mr. Weisz’s private real estate in-vestment firm finalized its $80.2 mil-lion acquisition of the 18-story office property from Hidrock Realty at the same time.
The transaction marks the first Manhattan buy for RPW, which is the largest private owner of office space in Westchester County. Mr. Weisz was not avail-able for comment in time for publication.
The Garment District surrounding Penn Station has become increasingly attractive to real estate investors in the past year due to its upside potential, the person in the
know said. Asking rents in Midtown South, which includes the Garment District, aver-age $67 a square foot, according to CBRE’s latest Manhattan Marketview Office Snapshot.
The property, built in 1924, contains retail space on the ground floor. That space is cur-rently occupied by the Spanish restaurant and hookah bar Café Nunez.
Hidrock bought the office building locat-ed between Seventh and Eighth avenues for $58 million in August 2008, city records show. Hidrock put $6 million into capital im-
provements on the building, which included renovations to the lobby, new elevators and updated HVAC systems, as Commercial Observer reported when the full-service real estate firm put the building on the market in January 2013. Wells Fargo provided a $40 million loan
on the office property in July 2013, accord-ing to previous loan documents.
Richard Horowitz of Cooper-Horowitz arranged the acquisition loan from Ullico’s real estate investment arm. The broker and lender both declined to comment.
—Damian Ghigliotty
The LEAD
MOW EXCLUSIVE
MOW EXCLUSIVE
Westchester Developer Receives $58M Loan for
First Manhattan Buy
“Ugait, cor in henim dit eum ent euguer in verate.
Ugait, cor in henim vullam nulput prat, sis
dit eum ent” —Name Here
From Name of article on page X
In This Issue
1 Westchester Developer receives $58m Loan for First manhattan buy
1 J.p. morgan provides $150m for Kentucky, Ohio Hotel portfolio
3 bluestone buys Distressed Debt, takes Deed on Suburban Conn. portfolio
5 AY brokers $25m refi for Staten Island mixed-Use project
5 IDb refinances Columbus Circle Hotel
7 bancorp bank provides bridge Loan on Denholtz Jersey Office property
9 Capridge buys Austin Office park With $13m From mesa West
“The market is flush with capital and
this is driving transaction
activity” — Chris Niederpreum From Q&A on page 12
2 | September 26, 2014
New York Boston Miami San Francisco & Los Angeles212.697.3333 617.371.2425 305.503.1107 Coming Soon
Debt, Mezzanine, Equity and Investment Sales
3 | September 26, 2014
The two-year floating-rate loan has two one-year extension options, a source familiar with the deal told Mortgage Observer Weekly.
The seller was not disclosed.“Superior sponsorship, coupled with the
fact that all of these quality assets had just come out of significant capital upgrades, drove diverse lender interest in the portfolio,” said Dustin Stolly, executive vice president with JLL, in a statement provided to MOW. “Today’s floating-rate debt market continues to provide attractive loan structures for large portfolio financings, particularly in the select-service hotel space.”
Mr. Stolly worked with JLL Senior Vice President Brett Rosenberg on the transac-tion. —Guelda Voien
J.P. Morgan....continued from page 1
The Bluestone Group took title to ap-proximately 400 units in garden-style multi-family properties in suburban Connecticut,
Mortgage Observer Weekly has exclusively learned.
The apartments are spread across three Class-B properties
in suburban Hartford.Bluestone bought the non-performing debt,
which had a face value of $33 million, for $30 million, from lender New York Community Bank, in May, and Bluestone late last month negotiated a deed in lieu of foreclosure, a source close to the deal told Mortgage Observer Weekly.
The sites—the Manor House in Bloomfield, Williamsburg Apartments in Windsor and Northwood Square in Newington—hold 375,000 square feet of rentable area, accord-ing to Barry Altmark, a senior vice president at Bluestone. He declined to comment on the pricing on the deal.
Mr. Altmark said the firm plans to do major capital improvements to unlock the value of the properties. “The acquisition of this port-folio is part of our overall strategy of adding value to distressed assets through hands-on management,” he told MOW via email.
Bluestone has been very active in the pur-suit of NPL’s in the tri-state area, closing in excess of $150 million in NPL buys in the past year, according to Mr. Altmark. The firm is ac-tively pursuing further deals in the REO and opportunistic debt areas.
An email to NYCB was not immediately returned.
—Guelda Voien
Bluestone Buys Distressed Debt, Takes Deed on Suburban Conn. Portfolio
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MOW EXCLUSIVE
4 | September 26, 2014
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5 | September 26, 2014
Southport Plaza, a mixed-use office prop-erty in Staten Island, refinanced with a $25 million CMBS loan from Barclays Capital,
Mortgage Observer Weekly has exclusively learned.
Avison Young’s Peter Rotchford and Justin Piasecki
arranged the deal, according to a representa-tive for the firm.
Southport Plaza, at 1150 South Avenue, is a 200,000-square-foot mixed-use prop-erty that boasts tenants such as Xerox, First Data Corporation and Supreme Chocolatier.
“Avison Young leveraged its depth of lender relationships and knowledge of the New York City real estate market to en-able our client to capitalize on the current window of opportunity, as lenders compete for quality properties, and interest rates continue to remain historically low,” Mr. Rotchford said in a statement provided ex-clusively to MOW. “We identified a lender that was impressed with the strength of the sponsor and stable cash flow of the asset, and secured a 10-year CMBS financing at a
sub 4 percent interest rate.”Southport Plaza’s owner, John Wambold,
is a Wall Street executive and owner/inves-tor, who works primarily in Long Island and New York City.
Current rents at the building, developed in 1999, run $22 per square foot, according to listings on Loopnet.com.
“I was very impressed with Avison Young’s
depth of market knowledge, professional-ism and their ability to deliver very aggres-sive financing options,” Mr. Wambold said. “From the first phone call until the day we funded, they were with us every step of the way, providing information and guidance to get our loan closed at a lower rate than we ever thought we could achieve.”
—Damian Ghigliotty
AY Brokers $25M Refi for Staten Island Mixed-Use Project
Southport Plaza
MOW EXCLUSIVE
Israel Discount Bank of New York provided a $31.5 million mortgage to the private real estate partnership Berit Realty, to refinance its 6 Columbus hotel, lo-cated at 308 West 58th Street in Midtown, according to a press release from the lender’s legal counsel, Richmond, Va.-based Hunton & Williams.
The boutique hotel, managed by Sixty Hotels, con-tains 88 suites and rooms and a Blue Ribbon Sushi Bar & Grill.
IDB Bank is the lead lender in the deal with participa-tion from co-lender affiliates of the Israeli pension fund advisor Clal Insurance Company Ltd.
“We look forward to working with IDB and Clal on the future successes of our hotel,” one the property’s own-ers, Dan Rosen of the privately held investment firm Rosen Partners LLC, told Mortgage Observer Weekly.
The debt replaces a $32.5 million loan provided by Eurohypo AG—now known as Hypothekenbank Frankfurt AG—in August 2008, public records show.
IDB Bank declined to comment on the refinancing, which closed on Sept. 18.
“We are very pleased to have advised IDB in the inaugu-ral loan under a new program, and its first with Clal,” said Carl Schwartz, co-chair of the Hunton & Williams global real estate practice, in a written statement. “The program enables IDB to leverage its balance sheet to the advantage of its customers.”
—Damian Ghigliotty
IDB Refinances Columbus Circle Hotel
Columbus Circle
6 | September 26, 2014
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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.
7 | September 26, 2014
The Bancorp Bank, a 14-year-old domestic Internet bank, provided floating-rate bridge fi-nancing to Denholtz Associates to recapitalize a 132,721-square-foot office property the firm owns in Matawan, N.J., Mortgage Observer Weekly first learned.
HFF worked on behalf of the private development and man-agement firm to secure the three-year $14.5 million loan on Metro Park South, which is located at 100 Matawan Road, off of the Garden State Parkway.
Proceeds from the non-re-course loan will go to paying off existing debt, commencing a cap-ital expenditure program on the building’s common areas and funding upcoming tenant im-provements and leasing com-missions to stabilize the office property, according to the broker.
The loan is part of a $20.7 mil-lion transaction including joint-
venture equity from Denholtz affiliate Palatine Capital Partners, which was brokered by Cushman & Wakefield’s eq-uity, debt and structured finance team.
Rents in the four-story office property, which contains a five-story atrium that extends below the ground floor, run between $22.50 and $26 a square foot, ac-cording to the commercial real estate listing service LoopNet. The building was constructed in 1986.
Director Michael Klein, Senior Managing Director Jon Mikula and Associate Director Michael Lachs led the HFF debt placement team representing the borrower.
“The borrower was seeking a loan that would provide them with the capital needed to refresh the building’s image in the mar-ket,” Mr. Klein said in a written
statement. “Upgrades to the lobby and common areas as well as the building’s exterior will help draw small and mid-size tenants that want to be located south of the Driscoll Bridge to an already tight submarket.”
Bancorp, which is publicly traded on the NASDAQ stock ex-change, offers commercial and government-guaranteed loans as well as healthcare solutions and institutional banking services, ac-cording to the company’s website.
“Bancorp quickly understood the borrower’s needs and was able to provide a non-recourse loan structure that will enable Denholtz Associates to execute its business plan,” Mr. Mikula said. “Their process was seam-less and they were able to close in approximately 30 days, which helped the borrower meet their upcoming loan maturity.”
—Damian Ghigliotty
Bancorp Bank Provides Bridge Loan on Denholtz Jersey Office Property
100 Matawan Road
8 | September 26, 2014
UPCOMING MORTGAGE OBSERVER ISSUES:
Issue Issue
Mortgage Observer is a monthly glossy magazine dedicated to in-depth coverage of the commercial real estate finance industry, delving into the trends driving commercial real estate finance and the lending philosophies of those in control of the purse strings.
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Companion to Mortgage Observer, Mortgage Observer Weeklyprovides industry updates and news to 12,000 real estate insiders. The weekly PDF newsletter is emailed directly to industry players every Friday morning.
To receive Mortgage Observer Weekly, please visit:commercialobserver.com/mortgage-observer-weekly-signup
For subscriptions contact Marissa Mule at 212-407-9367 [email protected]
For advertising information please contactBarbara Ginsburg Shapiro, Associate Publisher, at 212-407-9383, [email protected].
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9 | September 26, 2014
Mesa West Capital provided a $12.6 million first mortgage to CapRidge Partners for the acquisition of Canyon
at Wild Basin, an Austin, Texas, office property. CapRidge is an Austin-based landlord and build-
ing manager co-founded by Steve LeBlanc, former CEO of REIT Summit Properties.
The 74,580-square-foot Class A office complex is located at 115 Wild Basin Road. The three-story building was de-veloped in 1999 and is 81 percent leased, according to a representative for Mesa West, to a variety of technology and mar-keting firms.
The seller was Boston-based Intercontinental Real Estate Corporation, an investor that manages
private equity investments. The pur-chase price was not disclosed.
Loan proceeds were used to pur-chase the building, but will also fund a lease-up and improvements to common areas. Local leasing broker Silberman Properties lists the asking rent in the building as $14.50 per square foot, accord-ing to their website.
“The venture is led by locally based CapRidge Partners which has a proven track record of acquiring and turning around well located, underperforming properties throughout Texas, through efficient management and leasing,” Mesa West Assistant Vice President Jason Bressler, said in a statement provid-ed exclusively to MOW. “Our financing helped them acquire a quality asset with tremendous upside in a submarket with
single digit vacancy, limited new supply and a high barrier to entry.”
With this financing, Mesa West has originated $85 million in non-recourse first mortgage debt on commercial real estate assets in Austin, the firm’s repre-sentative said.
Austin has emerged as a tech hub in re-cent years. According to statistics from Transwestern, a national commercial real estate brokerage, the average sales price per square foot for an Austin office property has risen 23.75 percent in the last year—from $240 per square foot in the second quarter of 2013, to $297 per square foot in the same period this year.
Andy Scott and Jim Curtin at HFF in Dallas arranged the financing for Canyon at Wild Basin.
—Guelda Voien
CapRidge Buys Austin Office Park With $13M From Mesa West
MOW EXCLUSIVE
The Carlton Group hired David Tessier as managing director and to co-head its hospitality group, according to a statement from Carlton Chairman Howard Michaels. Previously, Mr. Tessier has served as CFO/CIO of Turnberry Associates and Kerzner International Resorts. Turnberry has been a serious player in South Florida, in-cluding redeveloping the Fontainebleu hotel in Miami. He has also held roles at Hilton Hotels Corporation, Marriott International, Ian Schrager Hotels and Intercontinental Hotel Group, ac-cording to the statement from Carlton.
“Tessier is a master technician who un-derstands all facets of the hospitality busi-ness which will provide him with unique insight into helping Carlton’s clients sat-isfy their hospitality objectives, including raising large amounts of capital, trans-action support and repositioning or re-branding of asset,” said Mr. Michaels.
NewBridge Bancorp announced that NewBridge Bank has established three new lines of business within its commercial lending operations. This follows its recent establishment of a middle-market banking group, aimed at serving larger corporate clients. The new areas of focus include commercial
banking, commercial real estate and business banking.
“The newly established CRE group will also serve larger corporate clients with comprehensive real estate lending needs,” a statement said.
Marianne Chaney was also promot-ed to executive vice president and direc-tor of commercial real estate, according to the statement. Ms. Chaney joined the bank in 2013 and is based in the bank’s Charlotte office.
CBRE Group announced that Charles Maggio joined the company’s healthcare group as managing director specializing in “healthcare design and planning, construction, development management and integrated strategic real estate solutions.” Previously, Mr. Maggio was a managing director with JLL, according to a statement from CBRE. CBRE also added Jeanette I. Rice as head of investment research in the Americas. She will be based in the Dallas office. Previously, Ms. Rice has done consulting work for vari-ous companies, including Brookfield Asset Management and Invesco, a
statement from CBRE said.
Thorofare Capital, a Los Angeles-based alternative investment manag-er, announced that Ginn Downing and Rizwan Mahmud have joined the com-pany. They will hold the titles of senior vice president, originations and direc-tor of investments, respectively. Ms. Downing was most recently a vice pres-ident at ReadyCap Commercial. Mr. Mahmud joins from Minneapolis-based Värde Partners, another alternative in-vestment manager.
Tom Marano joined the manage-ment advisory board of London-based TowerBrook Capital Partners, the firm announced.
“As a 30-year veteran of the U.S. mort-gage industry, Tom brings a wealth of ex-perience and a strong grasp of the overall mortgage banking industry. Through his experience at Bear Stearns and ResCap, Tom brings a unique perspective, having both strong capital allocation and oper-ating expertise,” said Jonathan Bilzin, a managing director at TowerBrook, in a statement from the firm. “We have known Tom for a while and are thrilled to partner with him to evaluate new op-portunities in the sector.”
Workforce
10 | September 26, 2014
invites you to attend
MARY ANN TIGHEChief Executive Officer,
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ANDREW ESSEXVice Chairman,
Droga5
PANELISTS & MODERATOR
JONATHAN MECHANICChairman of Real Estate Dept.,
Fried Frank
LARRY SILVERSTEINChairman,
Silverstein Properties
DENNIS FRIEDRICHChief Executive Officer,
Brookfield
Join us for our fall breakfast panel, where top developers and industry influencers of New York City real estate explore the significantly higher profile of Lower Manhattan. The panel will discuss the development and revitalization downtown, and how this renaissance will affect the city in the coming years. Learn more about Lower Manhattan's meteoric rise from the leaders who lay the foundation for this impressive growth.
WEDNESDAY, NOVEMBER 5TH8-10AM
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Questions? Call 212-407-9316
A Breakfast Panel Discussing the Development and Higher Profile of Lower Manhattan and the Launch of the 2014 Owners Magazine
with Andrew Essex, Dennis Friedrich, Larry Silverstein, Mary Anne Tighe, and Jonathan Mechanic
11 | September 26, 2014
The Takeaway“CMBS losses since 2010 (excluding losses less than 2 percent) show a fairly strong link between how long loan resolution takes and its even-tual loss severity,” said Joe McBride, a research analyst at Trepp. “The longer it takes to resolve a defaulted CMBS loan, the more fees and ad-vances will need to be repaid upon resolution, upping loss levels. Another aspect that predicts higher losses, at least for office loans, is lack of tenant diversification. Loans with very large exposure to one tenant can be very safe if that tenant is strong but can also lead to very high loss-es when that tenant vacates or can no longer pay their rent.”
Source:
Months to Recover Loan Count Loan Balance Realized Losses Loss Severity0-3 435 5,499,853,513 2,232,159,692 40.594-6 507 4,990,369,963 2,150,039,027 43.087-9 673 5,704,333,507 2,558,331,284 44.8510-12 717 5,910,862,687 2,923,441,168 49.4613-15 634 5,644,523,319 2,864,886,190 50.7616-18 561 4,358,625,140 2,496,229,794 57.2719-21 435 4,190,328,650 2,226,735,600 53.1422-24 403 3,682,267,608 2,259,769,880 61.37>24 1,230 12,331,695,548 8,902,772,627 72.19
Grand Total 5,595 52,312,859,934 28,614,365,263 54.7
Largest Tenant % (Offices) Loan Count Loan Balance Realized Losses Loss Severity0-25% 502 6,453,746,761 3,180,220,610 49.2825-50% 445 5,556,049,679 2,721,192,053 48.9850-95% 196 1,784,410,567 1,006,825,683 56.4295-100% 141 1,644,679,859 1,016,089,799 61.78
Grand Total 1,284 15,438,886,866 7,924,328,146 51.33
Twenty-Five on The Rise: Top 25 Brokers & Lenders Under 35
November 2014
Life Companies December 2014
12 | September 26, 2014
Q+A
Mortgage Observer Weekly: How did you get started in commercial real estate finance and what brought you to CIT?
Chris Niederpreum: I began my ca-reer in commercial real estate finance as a mortgage broker focused primarily on multifamily properties in the outer bor-oughs. It was a great experience—I saw a lot of deals and got to know a variety of banks. From there I transitioned into commercial banking, initially working on portfolio management, and later, under-writing. I joined CIT in late 2011 as part of a team that was hired to start the com-mercial real estate lending platform. We are a balance sheet lender and we origi-nate, underwrite, and manage the port-folio. I focus primarily on origination.
CIT Real Estate Finance in
September lead a $140 million deal for a Jersey City development by Kushner Companies the KABR Group. What is the appeal of Jersey City to you as a lender?
Jersey City is a fundamentally strong market with low vacancy in the mul-tifamily space. Jersey City offers new construction apartments with luxury amenities at a fraction of rental rates in Manhattan and many parts of Brooklyn. This pricing discount along with its prox-imity to lower Manhattan make Jersey City an appealing market. New York is always reinventing itself and neighbor-hoods like Gowanus, for example, are showing signs of transformation.
What are some other markets in and around New York that you view as sweet spots?
New York City remains a very strong market with extreme competition for
commercial real estate. Lower Manhattan, along with certain neighborhoods in Brooklyn, continue to be hot spots.
Overall, how does the commercial real estate finance industry look to you right now in terms of opportunities and competition?
Overall the competition is very strong right now. The market is flush with capi-tal and this is driving transaction activity. Opportunities remain available; however, I think it’s always a good time to be prudent, patient and responsible.
What does your team have planned for the last quarter of 2014?
We will continue to look for opportunities to lend on good real estate owned by experi-enced sponsors.
Chris NiederpreumManaging Director at CIT Real Estate Finance
Chris Niederpreum
321 West 44th Street, New York, NY 10036 212.755.2400
Guelda Voien editor
Damian Ghigliotty Senior reporter
Cole Hill Copy editor
Barbara Ginsburg Shapiro Associate publisher
Miguel Romero Art Director
Lisa Medchill Advertising and production manager
OBSERVER MEDIA GROUP
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