Professional Documents
Culture Documents
Mortgage 06 12
Mortgage 06 12
Q&A:
Robert Verrone
Alan Wiener
Power Profile:
June 2012
/ Contents
05
Jotham Sederstrom Editorial Director Daniel Geiger Daniel Edward Rosen Staff Writers Sam Chandan Joshua Stein Columnists Michael Stoler Contributor
20
Editors Letter 02 News Exchange 04
Mortgage originations, note sales, investments, industry research Bank of Chinas 1515 Broadway loan Arcturus helps settle Atlantis debacle Ariel Propertys multifamily sales report CBRE Capital Markets Debt & Equity on the move Washington Trusts NYC activity
24
Barbara Ginsburg Shapiro Associate Publisher Robyn Weiss Director of Real Estate Peter Lettre Photo Editor
Workforce 18
Dean Quigley Art Director Mark Stinson Production Manager, Designer Lauren Draper Designer Lisa Medchill Advertising Production
Power Profile 20
In-Depth Look 11
HPD under scrutiny as residents, left holding mortgage, question where $4.5 million in renovations went by Daniel Geiger
OBSERVER MEDIA GROUP Jared Kushner Publisher Elizabeth Spiers Editorial Director Christopher Barnes President Barry Lewis Executive Vice President Jamie Forrest Associate Publisher, Senior Vice President Michael Woodsmall Editorial Manager Zarah Burstein Marketing Manager
Scheme of Things 14
Q&A 28
Steins Law 16
Of Interest 32
Mark Pasquerella Controller Tracy Roberts Accounts Payable Manager Accounts Receivable Ian McCormick
An index of all the people, places, addresses and companies mentioned in this issue
Mostly Multifamily
This months issue of The Mortgage Observer has a pretty solid multifamily focusfrom the affordable, agencygenerated fare happening in the city today to where one of the major players in loan securitizations, pre-crisis, has landed since. Many of the names should be familiar to followers of The Commercial Observers Power 100, which hit stands May 8. For this months Power Profile, for instance, I spoke with Wells Fargo Multifamily Capitals Alan Wiener, who came in at number 33 on that esteemedand always controversiallist. Hes a wealth of information, and I enjoyed learning more about some of the projects that Wells Fargo has a hand in financing in New York City, which, after a while, seemed like most of the major ones. It was also interesting because, as a former New York director for the U.S. Department of Housing and Urban Development, Mr. Wiener helped to organize President Jimmy Carters 1977 visit to the South Bronx. Those images provided me with my first glimpse of a scale of urban decay thereto unknown to this kid from Virginia. The last thing Ill say about it is that it was a real lesson in irony, or at least duality. Raised in the Bronx, the son of a candy store owner, and a staunch advocate for affordable housing, Mr. Wiener was visited April 14 at his home by two busloads of protesters from an Occupy Wall Street spinoff, the 99% Spring. The Mortgage Observer also got to speak with Rob Verrone, the founder of Iron Hound Management and number 93 on the Power 100 rankings, for the Q&A this month. A Wachovia alum, like Mr. Wiener, Mr. Verrone talked about the thought process that went into founding the advisory firm in early 2009 and the brisk business he has seen since. Then, lastly as far as the Power 100 is concerned, we took at look behind the scenes of SL Greens massive loan for 1515 Broadway, where it has recently been announced Viacom would not only release its current space, but over time expand into all of the buildings leasable space. SL Greens Marc Holliday and Andrew Mathias topped this years Power 100. Otherwise, all the usual great features are included in this, our third issue, including mortgage charts and columns by Sam Chandan and Joshua Stein. As always, let us know what you think and please share your deals and tips.
Bringing you low fees, great rates and local market expertise.
How did Chase become the nations leader in multifamily lending? With great rates, low fees and a deep understanding of the local marketin communities just like yours. If you have an apartment building to purchase or renance, call us today to learn how we can put our resources to work for you.
LOW F E ES
G R E AT R AT ES
S T R E A M L I N E D P RO C ESS
Originations
{ $775 million loan will now replace } previous financing, also from BOC.
Viacoms lease renewal and expansion at 1515 Broadway, which will lead to its taking the entirety of the assets leasable space, was preceded by one of the largest commercial mortgage loans the city has seen recently. The Bank of Chinas penchant for Class A Manhattan office buildings, and its history at 1515 Broadway, led to the deal. The $775-million first mortgage the bank provided recently will allow owner SL Green Realty Corp. to replace $447 million in financing that had been in place since 2009also from the Bank of China. SL Green officials said the difference will be used to pay for the transaction and for general corporate purposes. Simon Cices, a partner in the New York office of Atlanta-based Troutman Sanders, represented the Bank of China in both the 2009 loan and this most recent refinancing. He told The Mortgage Observer that the loan was negotiated both with and without Viacom in mind. The outside date for Viacom to make its decision had not yet arrived, but the bank basically did its analysis under either scenario, which is the right thing to do for any conservative bank, Mr. Cices said, adding that the bank has been a client for 12 years now. We think this is a great loan to makeits a great property. The loan is for a term of seven years and was brokered by HFF, according to sources. Familiarity with the building, with SL Green and with Viacom as a tenant definitely helped move the process along, Mr. Cices said, even with several balls in the air at once. The Bank of China has made other loans to SL Green600 Lexington Avenue is a loan that they have, 3 Columbus Circlethere are a few, Mr. Cices explained. So there is an ongoing relationship and trust between the two companies. This one went pretty quickly. From term sheet to closingId like to say two months. Since we had represented the Bank of China in 2009, when they did the last iteration of the loan, we were very familiar with the Viacom lease as it existed, and since they were by far the largest tenant it made the legal analysis much easier. But in the beginning, he said, referring to his rela-
ing to a CBRE spokesman. It has a 60 percent loanto-value ratio and was provided by Citibank. This nonrecourse financing enabled an off-shore owner to effectively recapitalize previously unencumbered assets for a 10-year period at a historically low interest rate, CBRE Capital Markets executive vice president Keith Braddish said about the financing. Mr. Braddish secured the loan with vice president Jason Gaccione, also of CBRE Capital Markets, and Michael Blum, a vice president in CBREs Retail Services Group. 145 Spring Street is an eight-story, mixed-use building. It has roughly 15,400 square feet of rentable space, including six apartment units and groundfloor retail spacewhich is currently occupied by Maje, a clothing line. Located about a block and a half away, 474 Broome Street is a 2,500-square-foot retail condominium occupied by Custo Barcelona.
1550 Broadway
tionship with Bank of China. it started small and slowly and as they developed knowledge of America and New York they have made some decent sized loans outside of New York. But New York is a particular focus of theirs. He has been representing them for 12 years, he said. But in the beginning it started small and slowly and as they developed knowledge of America and New York they have made some decent sized loans outside of New York. But New York is a particular focus of theirs for obvious reasons since theyre based in New York. As far as placing other New York-area financing, the bank is always open to new opportunities. In any business in this world in todays economy, they say, If youre not moving forward, youre moving backward, Mr. Cices said. Theyre always looking.
Exchange
loan per square foot in our market here in New Jersey, Mr. Mikula said. At $13.6 million, the loan would come out to roughly $324 per square foot. The lender is Cantor Commercial Real Estate, which is helmed by executive managing director and chief executive Anthony Orso. CCRE recently announced a new, $634.5-million issuance of CMBS, designed to target middle-market borrowers. Mr. Mikula speculated that this loan was being bundled in that issuance. CCRE didnt return phone calls seeking confirmation. Claremont Corporate Center was completed in early 2010 and is already 100 percent leased to five tenants, including Alterra Capital. It sits 22 miles to the west of Manhattan.
Miscellany
{ Arcturus Group advised two hedge funds in theB-notes.} settlement. Together they held $120 million in
Kerzner International, a resort operator based in the Bahamas, underwent a restructuring last week that has paved the way for the transfer of its Atlantis resort in the Bahamas to creditors. New York-based Arcturus Group advised two hedge funds in the settlement. Canyon Capital and Trilogy Capital together held roughly $120 million in B-notes that were secured by the resort. The updated settlementrevised from an earlier and subsequently blocked agreement that caused those B-note holders to balktransfers ownership of the resort to a fund managed by Brookfield Asset Management. This resolution follows a rather complicated process that Arcturus co-founder Jonathan Mayblum told The Mortgage Observer required an in-depth understanding of the asset in question as well as of the stakes for all involved. The first thing it involves is trying to understand what everyones ownership in the asset is, Mr. Mayblum said. Once you understand that its really looking at all the debt holders and understanding their positions. In this case, that may have been easier said than done. Some parties owned their stake in the resort at par when it was originally bought, while others had bought in at a significant discount. And that means that everybody has a different objective as to what they want to accomplish, Mr. Mayblum explained, and you have to find if there is some common or middle ground that will accomplish what everybody needs. Arcturus was retained by the hedge funds in December 2011, following talks that would have led to Brookfield owning the resort under terms Canyon, Trilogy and other B-note holders found unacceptable. Mr. Mayblum said that Arcturus, a real estate advisory firm, was able to better them. It was not necessarily that Brookfield would be a bad owner of the asset, Mr. Mayblum said. As a matter of fact the settlement now leads to Brookfield now owning the asset. But I would say now the new loan is under market rate terms and conditions. The agreement also includes a settlement. The Brookfield fund swapped $175 million of debt for Kerzners equity interest, according to a release from Kerzner International. Sources said the move was necessitated by the fact that Kerzners debt was over leveraged. The company also announced the sale of a 50 percent ownership interest in its Atlantis The Palm resort in Dubai to Istithmar World. It will continue to manage both properties. With substantially less debt and a more flexible operating structure, Kerzner is well positioned for sustainable long-term growth as a global management company, company chairman Sol Kerzner said in a prepared statement. We are committed to working together with Brookfield Fund, Istithmar and our other partners to continue blowing away our customers at all of our resorts and properties around the world.
Edgewater Harbor
50 percent loan-to-value ratio, he said. And its right on the Hudson River, with unobstructed views and it looks across 96th Street so by the left-hand side you see the George Washington Bridge, straight ahead you see 96th Street and the panorama of Manhattan.
Propelled by this loan and other activity over the first quarter of 2012, the firm saw a 110 percent increase in the loans it closed, compared to the first quarter of 2011. Asked if any particular type of loan caused this uptick, Mr. Bergman said not really. The one area there has been more of an increase is in retail nationally, he said, because Wall Street is trying to lend again. Ira Zlotowitz, president of Eastern Union, also referenced an increase in Wall Street lending in a statement about the firms first-quarter volume. While Eastern Union enjoys excellent relationships with key banks nationwide, we have also begun closing numerous deals with Wall Street lenders offering commercial real estate loans, he said. He added that these loans are often priced lower than those offered by standard commercial banks. The firm said that it is currently placing $150 million each month in new commercial loansmany of them through Wall Street lenders.
nightspot Gun Bar. Though if Mr. Shah has his way, more retail and nightlife is headed there soon. He said that DelShah Capital will be entering into a joint venture with Villa Pacri. In addition it has applied to the Landmarks Preservation Commission seeking permission to open a rooftop bar there, which Mr. Shah hopes will happen by next summer. One of the other things thats going to be kind of interesting is that were going to be doing some retail pop-up shops in the Gun Bar space, he said, adding that Gun Bar is closed three or four days a week during the daytime. He said that negotiations are still underway with retailers, whom he declined to mention by name. However, he described the prospects as high-end.
Capital One Bank sold DelShah Capital the note on the property.
DelShah Capital has snapped up the note on a 26,000-square-foot, five-story Meatpacking district building it had been eyeing for several monthstaking the first mortgage and senior liens on 55 Gansevoort Street from lender Capital One Bank. The firm plans to renovate some floors to create office space. It may also partner with a restaurant currently occupying space in the building. Michael Shah, principal and chief executive of DelShah Capital, told The Mortgage Observer that the deal was complex because a restaurant, Villa Pacri, occupies several floors there. There was a tenant in the space that had the rights to most of the floors, so we had been talking to the tenant in conjunction with the lender and restructured the tenants lease as well, Mr. Shah said. The negotiations didnt really focus on the term, they focused on them giving back certain spaces at the landlords option. Mr. Shah said that his firm had a previous relationship with the lender, which sped the negotiations along. It wasnt just a first mortgage, he explained. It was a first mortgage and a series of liens that all in all, probably exceed the value of the building. Effectively, the lender controlled the building. The amount owed on the senior liens is roughly $30 million. In addition to Villa Pacri, 55 Gansevoort is home to
Commercial Loans and Lines of Credit Cash Management Services Asset Based Lending Commercial Real Estate
For a higher level of personal service, connect to www.tdbank.com/commercialbanking or call 1-888-751-9000.
TD Bank. N.A. | Loans subject to credit approval. Equal Housing Lender | TD Bank Group is a trade name for The Toronto-Dominion Bank. Used with permission. For detailed credit ratings for The Toronto-Dominion Bank and TD Bank, N.A. visit http://www.td.com/investor/credit. Credit ratings are not recommendations to purchase, sell, or hold a financial obligation inasmuch as they do not comment on market price or suitability for a particular investor. Ratings are subject to revision or withdrawal at any time by the rating organization.
though sources identified Moishes Self Storage at 35 Ryerson Street as the self-storage facility in question.
Bethpage Federal Credit Union Originates Loan for 621 West 46th Street
A $6.4-million mortgage was taken for 621 W est 46th Street, a 21,800-square-foot mixed-use building thats home to ground floor retail as well as nightlife spot Hudson Terrace. According to sources, the loan was provided by Bethpage Federal Credit Union. It is a five-year, fixed-rate loan on a 30 year amortization at 4.5 percent. The loan was arranged by HKS executive vice president Joseph Piraino, who couldnt be reached for comment. W est End Development Corporation is the borrower.
Miscellany
though individual bids will be considered, the pool might best be sold in large chunks, maybe even to a single institutional investor, since these have shown increased aggression of late. Its going to be attractive to institutional investors as well as local owner-operators who might be interested in bidding for specific assets, Mr. Sledge said. But more to the point, the institutional investors who have been growing more aggressive and have outbid to a large degree recently the loan-to-own local players are going to come after this portfolio as well. The dozens of assets securing the pool are diverse and spread from coast to coast. However, in the New York tristate area they include a $12-million industrial and coldstorage facility in Brooklyn and a Melvile office property saddled with an unpaid balance of $10 million. The asset class spectrum is broad, Mr. Sledge told The Mortgage Observer. Its pretty much everything that youd expect to see from a special serviceryou have office, retail, multifamily, industrial, hospitality, manufactured housing, self storage. And the list kind of goes on and on. Interest, he added, has already been strong. This is due in part to collateral that is typically very solid in comparison to other bank loan sales that are out there currently in the Will Sledge market, Mr. Sledge said. Oversight of the properties by CW Capital Asset Management has helped as well. You have structured documentation because these assets were originated to be sold into securitization so that documentation is fairly straightforward and clean, he said. And you have good data because you have an active asset management process on CWs behalf, so you dont have many holes in terms of trying to fill in the blanks in terms of whats happened from the point of origination to today. As to how, and if, the pool is broken up, Mr. Sledge said that its too early to tell but that price will dictate the direction.
CL Tower
$13,000,000 | 12-story high-rise
Atlanta | Bethesda | Chicago | Dallas | Ft. Lauderdale Irvine | Nashville | New Orleans | New York | Walnut Creek
five residential units in the building. Michael Shah, principal and chief executive of DelShah, said his team was very excited about the acquisition. Mr. Shah said plans included touching up the condos. Morgan Lofts is a high-quality asset in a fastgrowing submarket of Manhattan, Mr. Shah said. The property has been negatively impacted by the financial crisis and we are confident our involvement will strengthen the financial and operating capacity of this asset. Mr. Shah shared that he had also just resolved the bankruptcy on 118-120 South Second Street in the Williamsburg section of Brooklyn, receiving payment for the senior lien. DelShah had paid all cash for a nonperforming note on that property last year for $5.1 million and had been working through creditor litigation and a bankruptcy. The result was a $7.1 million payoff from the owner.
creasingly willing to provide discounts and write-downs. Today given, one, an increase and improvement in markets and, two, the fact that theyve earned their way out of some of these problems, they have the flexibility to write down, Mr. Zegen said. Were seeing a lot of transactions happen because of that throughout the country. The other deals that put MRCs volume over the $25-million mark include the note on an 80,000-squarefoot office building, with retail component, in the Boerum Hill section of Brooklyn.
Industry Research
10
Look
The bank has had a presence in the New York marketplace for more than a decade.
Paulo Garcia of Mercantil Commercebank the company increased its presence in Long Island when it reached an agreement to acquire 56 Citizens Financial Group branches in New Yorkprimarily in Stop & Shop supermarketsfor $3.25 million. The transaction gave the bank an additional $325 million in deposits and another 52 Stop & Shop branches, including 29 on Long Island, eight in Westchester County and six in New York City. Word is that Peoples United plans to increase its presence in the metropolitan market with the hiring of a team of seasoned lenders to develop a market in multifamily real estate financing. In 2005, Sovereign Bank and Spains Santander established a strategic partnership, and on Jan. 30, 2009, Sovereign joined the Santander Group. Sovereign Bank has been and continues to be a major force in the financing of multifamily residential properties in New York City and the region. Last summer, the bank announced the hiring of four senior executives from foreign banks who previously were active lenders in the marketplace. Over the past nine months the team has been active in participating in the loan participations for many of the major real estate transactions in New York City, including the construction loan for Extell Developments mixed-use hotel and luxury condominium on West 57th Street. BankUnited, with $11.3 billion in assets as of Dec. 31, 2011, also plans to enter the New York City marketplace. On Feb. 29, 2012, it completed its acquisition of New York City-based Herald National
mately $3.5 billion. A few years ago, the bank opened its commercial real estate loan origination office in Grand Central Tower on East 42nd Street. In January, the bank completed the acquisition of Brooklyn Federal Savings Bank, adding five branches to its network, with two in Brooklyn and three in Long Island, and approximately $390 million in deposits. In the fall of 2010, Investors Bancorp completed the largest acquisition in its history, acquiring 17 branches and approximately $600 million in deposits from Millennium BCP. The branches were located in New Jersey and New York. In February 2011, Astoria Financial Corp., with assets of $18.1 billion, announced that Astoria Federal Savings, its wholly owned subsidiary and the largest thrift depositary in New York, hired the multifamily and commercial real estate lending team from Sovereign Bank. Gary Honstedt joined the bank to serve as senior vice president and director of multifamily/ commercial real estate. He leads a team of six, who will work to bring about the companys re-entry into multifamily lending in the New York City area. In December 2010, Peoples United Bank acquired Smithtown Bancorp, the parent of the Bank of Smithtown. Over the past decade, the Bank of Smithtown has been one of the most active lenders providing commercial real estate financing. This year,
11
Provident fulfills a need for clients seeking custom real estate banking solutions.
Bank, which had three locations in the area. Another recent acquisition thats driving an entry into the New York market is Provident Banks pending $40.5-million, all-cash purchase of New Yorks Gotham Bank. The transaction is expected to close in the third quarter of 2012. One of the most active multifamily lenders during the last real estate cycle was Washington Mutual. After the bank was taken over by JPMorgan Chase in September 2008, a number of Washington Mutual executives joined Chase to originate multifamily lending around the nation and in the tristate region, where the bank hopes to provide up to $5 billion in multifamily financing this year. We are excited to expand our business in the NYC metro area as the fundamentals behind the commercial real estate market have remained extremely strong here throughout the cycle, particularly in the multifamily space as there continues to be a shortage of rental housing throughout the area, Jason Pendergist, head of commercial term lending at JPMorgan
Chase, said in a prepared statement. As the nations largest apartment lender, Chase has the best platform in the industry for delivering fast and right, low-cost financing solutions to owner-operators of stabilized, cash flow-producing commercial real estate assets, and we look forward to the opportunity to share our client-focused service with the New York market. Earlier this year Provident Bank announced that it too had entered the New York City market and has staffed up accordingly in its Midtown Manhattan offices. David Bagatelle, executive vice president and NYC market president, said the bank was drawn to the New York City market because of the density of quality clients here. He added that those clients are well suited to the banks business model of highly personalized service. Providents niche, he said, was that it fulfills a need for clients seeking custom real estate banking solutions that small banks and mega banks are equally not designed to deliver. Warba Bank, an Islamic bank based in Kuwait, commenced operations in April 2010. The Kuwaiti government, represented by the Kuwait Investment Authority, owns 24 percent of Warba Bank. In April, the bank announced the conclusion of a financing deal to purchase a property in Long Island City and develop it as a multifamily residential complex. Warba Bank provided $20 million to finance the purchase of the land. Mercantil Commercebank, N.A. is one of the largest privately held banks in South Florida. It is owned by a Venezuelan companyMercantil Servicios Financieroswhich is the largest provider of financial services in that country. The Coral Gables, Fla.-based bank operates a New York branch in a landmarked townhouse at 11 East 51st Street and plans to increase its lending for commercial real estate in the area. The bank has had a presence in the New York marketplace for more than a decade, explained Paulo Garcia, a vice president in its real estate department. In 2011 we provided close to $100 million in financing for real estate assets in the tristate area, and this year we are planning to expand the scope of financing and volume. Our focus will be on assets that include multifamily, mixed-use, retail, office, medical office and industrial. Another out-of-state bank seeking to enter the metropolitan real estate financing arena is Washington Trust. It recently provided a $10.4-million commercial mortgage to a local developer for the financing of the SpringHill Suites by Marriott Long Island Brookhaven, a 128-room hotel in Bellport, N.Y. Last October, San Juan, Puerto Rico-based Doral Bank hired a group of real estate professionals to staff up a new platform that will finance buyers of distressed loan portfolios, warehouse lines for bridge loans and the banks own bridge lending program.
Jason Pendergist of JPMorgan Chase The team is headed by Nicholas Santoro, a seasoned real estate lender, and includes Tim Zietara and, most recently, David Cohen. Three established credit unions based in the greater NYC area have joined the ranks of active lenders providing construction as well as permanent financing. One of the most active is Bethpage Federal Credit Union, the largest credit union on Long Island with more than $4.7 billion in assets. As of Feb. 29, 2012, Bethpage also ranked number one in asset size for New York State. It was listed in the Top 20 in the nation. The two other active players in the market include Queens-based Melrose Credit Union, with more than $1 billion in assets, and New York Citys Progressive Credit Union, with assets in excess of $600 million. These three institutions have provided more than $1.5 billion in real estate financing over the past few years. With the real estate market improving in the tristate region, expect other lenders to join the ranks of financial institutions providing much-needed financing. Remember, as the lyrics to New York, New York promise, If I can make it there, Ill make it anywhere.
12
Mortgage Charts
The Mortgage Observer has compiled a months snapshot of top commercial real estate financings in New York City. This month we take a look at refinances versus purchases, top recent lenders, total sales by borough and the six zip codes that saw the most action. Data are drawn from Actovia, which tracks mortgage information and streamlines leads from city records.
Top 10 Lenders
For April, New York Community Bank once again retained the top slot among lenders. Deutsche Bank cracked the top 10 with 31 transactions recorded for the month. Investors Savings Bank saw nine more transactions recorded for the month of April but still dropped a slot as the top 10s totals for the month increased to 497. BANK MAR 2012 145 73 45 43 41 33 25 21 18 16 BANK APR 2012
New York Community Bank Signature Bank JP Morgan Chase Astoria Federal Savings Bank US Bank Capital One Flushing Savings Bank Deutsche Bank Investors Savings Bank Dime Savings Bank of Williamsburgh
108
80 66 48 41 37 33 31 30 23
Capital One JP Morgan Chase Astoria Federal Savings Bank Dime Savings Bank of Williamsburgh NCB Investors Savings Bank Flushing Savings Bank
203
204
Apple Bank
418
409
33 26 23 20 20 20
163 94 97 56 58
181 105
73
14
Steins Law
16
agencies themselves have been reticent on this issue even as they crowd out private lenders in the most contested segments of the market. The tight relationship between Treasury yields and the enterprises funding costs has allowed apartment interest rates to trend to historic lows. Across all lenders, the average long-term fixed-rate apartment mortgage carried an interest rate of 4.3 percent in the first quarter. For shorter-term mortgages, interest rates were below 4 percent as often as they were above. Segments of the market with the highest density of lenders also registered the lowest rates and spreads, even after controlling for measures of property quality. Debt yields follow a similar pattern, regularly falling below 9 percent as lender density increases. Among the facilitating structures, both Fannie Mae and Freddie Mac have been increasingly active in securitizing multifamily loans. Fannie Mae issued $7.1 billion in multifamily mortgage-backed securities (MBS) in the first quarter. As of mid-May, Freddie Mac had brought six K Certificate deals to market. As apartment market conditions have improved, the strong inflow of financing from the agencies and other market contestants has turned into a mixed blessing. Holding all else equal, access to low-cost financing
necessarily exerts upward pressure on asset prices. The apartment market in the first quarter reflects a degree of buoyancy that fundamentals alone cannot explain. Similar to our fourth-quarter 2011 analysis, updated metrics show an increasing sensitivity in new apartment loans to interest rate risks, the potential for a change in the agencies apartment mandate, changes in housing tenure bias and the potential for an exaggerated supply response in some parts of the country. Even so, the determination that loan qualitymeasured in terms of default probability and projected loss severityis weakening does not depend on an expectation that property cash flow will decline. While underwriting to current cash flow and healthy occupancy and rent trends limit the risk of term defaults, the analysis shows that cash flow gains between origination and maturity may prove insufficient to offset the impact of higher interest rates on value and refinancing costs. Interest rate risks are most acute in scenarios where the feedback of improving fundamentals in lending standards persists and where the effective subsidy from agency financing is ultimately removed from the market. Whether that structural shift will take place is an open question that the agencies themselves cannot
answer. On May 14, the Federal Housing Finance Administration released a draft strategic plan for its role as regulator of the enterprises. Three and a half years into its conservatorship, the FHFA has to contend with competing pressures. Under its mandate, the enterprises must be returned to solvency in a manner that minimizes taxpayer losses. At the same time, the FHFA would have the agencies toe the line on specific policy proposals, such as principal forgiveness for troubled single-family homeowners. The FHFAs strategic plan makes no specific mention of the enterprises multifamily lines of business. In its most recent conservatorship plan, however, it signaled to Congress that both Fannie Mae and Freddie Mac would be required to assess the viability of its multifamily operations without government guarantees. Whereas the formal existence of the enterprises is within the purview of congressional mandates, the FHFA may sidestep the political gauntlet in the multifamily arena. Sam Chandan, PhD, is president and chief economist of Chandan Economics and an adjunct professor at the Wharton School. The views expressed here are his own. He can be reached at dsc@chandan.
TO GET YOUR DEAL DONE, YOU NEED LAWYERS WHO KNOW THEIR WAY AROUND.
With a long history of handling the most complex commercial real estate transactions, a deep knowledge of the unique realities of the New York market, and a wealth of relationships forged in real estate and government, the lawyers of Cozen OConnor are prepared to help you with your transactional, development and litigation needs.
Abby M. Wenzel New York Office Managing Partner 212.883.4997 | [email protected] | 277 Park Avenue | New York, NY 10172 For more information, visit us online at www.cozen.com. 575 Lawyers | 21 Offices | 2012 Cozen OConnor
17
Multiservice law firm Loeb & Loeb is boosting its national real estate department with the addition of two partners specializing in real estate finance. Steven Steven Kornblau Kornblau and David Kostman have both joined the firms real estate department from the New York office of Bryan Cave LLP. Theyve brought with them an associate, Emily Rakowicz. Mr. Kornblau concentrates his practice on real estate finance, CMBS, property acquisitions and sales, leasing and development. He was a partner at Bryan Cave. Meanwhile, Mr. Kostman, who was counsel at Bryan Cave, particularly focuses on the origination, sale, securitization and servicing of commercial mortgage loans. Steven and David will add significant depth to our already robust real estate department, said Loeb & Loeb chair Michael Beck. This expansion of our team will help us continue to deliver the best in legal counsel to our real estate clients across the country.
president and managing director of Auction.coms Residential Capital Markets Division. Having worked on that side of the industry, Andrew has a unique understanding of how our clients operate and will strengthen the already high level of service we provide.
Leslie Loffman has joined the New York office of Proskauer as a tax partner. Mr. Loffman, regarded as an expert in REIT tax law, was most recently a partner at DLA Piper, where he was co-chair of the firms REIT practice. Les is the real deal when it comes to REITs, said Peter Fass, a Proskauer partner and co-head of the firms Real Estate Capital Markets Group. There isnt another lawyer out there who is as fluent as Les on the topic of complex real estate investments. Mr. Loffman provides listed and non-listed REITs, as well as private investment funds, with tax structuring and business advice. Hes a co-chair of the Practicing Law Institutes Annual Real Estate Tax Forum in New York and serves on the advisory boards of the National Real Estate Institute and Tax Management Inc.
GTIS Partners has brought Drucilla Richards on board as a managing director of Capital Markets. She hails from TCAP Associates, a real esDrucilla Richards tate industry-focused executive search firm, which she founded. TCAP closed in April 2012. Ms. Richardss past work also includes senior management positions at Morgan Stanley, Legg Mason and Trammell Crow. Over an institutional real estate career that spans 30 years, she has managed or co-managed 20 REIT IPOs. Tom Shapiro, the president and founder of GTIS, said, Adding a real estate professional of Drus caliber to manage our client services team is a key element of our growth strategy to continue to provide excellent service to our existing clients as well as expand our institutional investor base.
Board of New Y ork. The move follows a unanimous vote by the groups Board of Governors. Mr. Litwin has been a REBNY member since 1980 and was elected to Leonard Litwin the Board of Governors in 1985. Hes been secretary since 1991. In 2009, he received the Harry B. Helmsley Distinguished New Yorker Award, given to a member for a lifetime of exceptional accomplishment in the profession and for invaluable contributions to New Yorks civic welfare.
Andrew Platt has joined Auction.com as managing director of the companys New York-based Capital Markets team. He had most recently been workAndrew Platt ing with UBSs Financial Institutions Group. He has also worked as a senior member of the fixed income teams at Lehman Brothers, Bank of America and UBS. Our success is fueled by our relationships with lenders and investors, said Beth OBrien, executive vice
Marcus & Millichap Real Estate Investment Services has rehired Michael Rothstein as a senior associate in its Manhattan office. Of late from Besen & Associates, Mr. Rothstein repMichael Rothstein resents investors in the disposition of multifamily and mixed-use investment properties. He rejoins M&M after leaving in 2010. Its a pleasure to welcome Michael back to the firm, VP and regional manager J.D. Parker said of the rehire. His in-depth knowledge of the New York metro areas real estate market makes him an asset to our private clients. In 2007, four years into his first stretch at M&M, Mr. Rothstein earned a National Achievement Award and a Gold Sales Award from the firm. He said that he returned to the firm because of its unique brokerage platform, culture of collaboration and unparalleled access to investment capital from all over the country.
The Mortgage Bankers Association recently presented its annual Burton C. Wood Legislative Service Award to Michael Berman, founder and member of the Board of Managers of CW Financial Services and president and CEO of CWCapital. According to the MBA, the award is given each year to an association member employee as recognition for suMichael Berman perior service to the association and the real estate finance industry as a whole. It is named after the late MBA legislative counsel Burton Wood, who died in 2010. MBA president and CEO David Stevens said that the group owed a debt of gratitude to Mr. Berman for his instrumental role in placing MBA at the center of the most important debate that will impact the future of mortgage lending in this country, a reference to a proposal created by the associations Council on Ensuring Mortgage Liquidity. Mr. Stevens said the MBA last year supported a nearly identical plan as one of three options in the White Paper on Reforming Americas Housing Market.
Leonard Litwin, president and CEO of Glenwood Management, has been named the first-ever Lifetime Honorary Chairman of the Real Estate
Keefe, Bruyette & Woods recently hired Charles Lucas as head of European Equity Capital Markets. Hell oversee public and private placements of hybrid equity securities at the bank. Mr. Lucas was most recently the managing director of Equity Capital Markets at Royal Bank of Scotland. In his new position, hell report directly to KBW Limiteds CEO, V asco Moreno, who said that the firm is committed to continuing to grow its core European business and thrilled to have someone with Charless experience join our team. Send tips to Carl Gaines at [email protected].
18
Up to $15,000 for a high-efficiency condensing boiler plus additional incentives for insulation Up to $20,000 for an energy management system Up to $50 each for most high-efficiency light fixtures in common areas ($150 for bi-level fixtures) In-unit improvements worth over $100 per unit to help residents save money and energy Expert advice and energy surveys to determine eligible energy-saving opportunities for your building
CONED.COM/GREENTEAM
OR CALL 1-877-634-9443 TO SPEAK TO AN ENERGY REPRESENTATIVE
*Based on eligibility
20
Profile
Mr. Wiener reveals all about Wells Fargos multifamily lending secrets. Hint: Its big.
by Carl Gaines
Alan Wiener called the whole thing weird. And, indeed, for several reasons it was an unusual scenario: two busloads of folks from the Bronx 99% Spring, an Occupy Wall Street offshoot, gathered on his lawn on Saturday April 14, 2012, a beautiful spring day. The buses had pulled up to the private drive leading to his Rye home as men, women and children took the short walk to Mr. Wieners property. Heidi Hynes, a spokeswoman for the group, told The Mortgage Observer that they chose Mr. Wiener because hes in charge of multifamily mortgages and because the Bronx is filled with multifamily housing. Also, she said, he lives in Rye, which wasnt far to travel. According to Ms. Hynes, Mr. Wiener is part of the predatory banking system that had over-financed mortgages and then received bailout money, even as programs for poor kids in the Bronx were cut. Heres where it gets weird, at least somewhat. Mr. Wiener, as group head of Wells Fargo Mulitfamily Capital, is inarguably part of a massive banking system. Hed be the first to tell you that the bank generated $6.5 billion in permanent multifamily lending last year, making it the largest such lender in the country. The bank also sat atop the Mortgage Bankers Associations list of commercial real estate/multifamily finance firms for 2011 in a vast number of categories, including the broad category of total originations. In the tristate area, tucked among these originations are all the projects one would expectlike the $525 million Wells Fargo helped provide for Gotham West. It held $150 million. But the bank also originated a $531 million Freddie Mac loan to refinance Starrett City in 2009, keeping 5,881 housing units affordable for another 30 years. Upcoming this year, in a deal that Mr. Wiener anticipates will close by late summer, is an intended $600 million loan to refinance the Bronxs Co-op City, which would keep its 15,000 units affordable for another 35 years. Adding to the weirdness factor, Mr. Wiener served for several years in the late '70s and early '80s as the New York director for the U.S. Department of Housing and Urban Development, during which time the agency insured and funded more than 50,000 new and renovated multifamily units. As part of the Wells Fargo system, Mr. Wieners dominion is vast and the result of the banks longstanding role as a big commercial real estate lender. Were a huge real estate bank, he told The Mortgage Observer recently in his office. Our philosophy is who we lend to. If you look at the downturn in 08, Wells fared fine. And why did it fare fine? Because of who we lend to. We actually like to get paid back. Today that means financing deals for the likes of the Gotham Organization, Starwood, Blackstone and the Related Companiesall organizations able to see an upside to building ever-popular multifamily housing in New York City, where the 421-a tax abatement
21
Its about your history. If its a nonrecourse loan and you say Here are the keys, were o.k. with that.
Bobby Vans steakhouse near his office. He explained that it has its advantages. One, youre consistently in the market, he said. So even in the down times we were in the market. If you look at some other bankstake a look at JPMorgansometimes theyre in real estate, sometimes theyre not. Consistently, Wells Fargo has always been in real estate, and being in the market and being such a large player in the market gives us the opportunity to actually pick who we want to lend to. Like many lenders, relationships and character are a key factor in the decision-making process for Mr. Wiener and his colleagues. In fact, many of the big-name developers currently on the banks roster of clients followed him to Wachovia when he sold his company, American Property Financing, to the bank in May 2006. APF was focused on financing and loan servicing for the multifamily sector throughout the United States. And in New York it was the top multifamily lender. Mr. Wiener, as founder and chairman, had built it to such a size that its loan portfolio was more than $10 billion. By comparison, at Wells Fargo, the multifamily lending portfolio is at $70 billion. When Wells Fargo agreed to buy Wachovia for $15.1 billion in 2008, many of Mr. Wieners high-end, top-tier borrowers once again followed him. Wells had never done business with a lot of them, he said. Id been their permanent lender, many of them, for a while. And now Wells is doing a ton of construction lending to them as well. He said he brought Two Trees Management Co. to Wells Fargo to do balance sheet lending after doing its permanent lending through Wachovia. The same for Related and Gotham and Glenwood. This led to financing for projects like Two Trees Mercedes House at 555 West 53rd Street, done in conjunction with JPMorgan Chase and the New York State Housing Finance Agency. For phase one, Wells Fargo provided the entire $70 million. For phase two, it is holding $115 million out of $230 million. It also led to upcoming pools of financingslike developer Jeffrey Levines the Ohm at 312 11th Avenue in Chelseaa $120 million hold, out of $191 million. Mr. Wiener was born in the Bronx, where his father owned a candy store and, later, a liquor store. He graduated from the University of Pennsylvania and got his law degree from Georgetown. While at HUD in 1977, he helped to organize President Jimmy Carters iconic tour of the South Bronx, which drew attention not only to the blight there but
means most rentals go up as 80/20 projects. Mr. Wiener said that Wells Fargo has a large pipeline of 80/20 program developments going into 2012 and 2013 and that theyre with the normal guys youd think wed do business with. The bank truly does do business with all the usual suspects in the New York City area. Being the largest means having the luxury of choice and the ability to be extremely selective. Mr. Wiener and Michael Kaczynski, a senior vice president at the bank whose focus is construction loans, both said that theyll consider new clients, but only after a thorough vetting process. Were very selectivetop tier, Mr. Kaczynski explained. We dont go too far down market. Its really about your history, Mr. Wiener interjected. If its a nonrecourse loan and you say, Here are the keys, were o.k. with that. But if you had a guarantee on a deal and you didnt honor it, were not o.k. with that. This rarely happens, said Mr. Wiener, who couldnt recall a time when the bank had been burned on a deal in the tristate area. The sheer volume of the banks real estate lending activity is a topic Mr. Wiener revisits again weeks later, over chopped Caesar salad and soft-shell crabs at a
22
June 2012
/ Power Profile
Will O'Hare
also to the issue of urban decay throughout the country. Three years later, in 1980, he received an award from President Carter, in recognition of his public service and work at the agency. From HUD, he went to financial services firm Integrated Resources, where he worked as a vice president, directing the acquisition and financing of multifamily real estate, including affordable apartment units. I did real estate tax syndicationsdoing both debt and equity on apartments, including affordable, he said of his time at Integrated Resources. He told The Mortgage Observer that he thinks helping to provide affordable housing is important and that its something he believes in. Integrated Resources went belly up in 1989 and Mr. Wiener stayed on until 1991, before leaving to found American Property Financing. At Wells Fargo, its clear that hes managed to carve a core, close-knit group of employees in the midst of a bank whose overall size, as he concedes, makes it pretty depersonalized. A name yelled from his corner office, where he might be found typing with one finger, yields that persons presence in rapid fashion. He calls people kiddo. Capiche is used to check the comprehension of a topic hes explaining.
Hes affable, yet clearly demanding. I encourage smart people to work for meI appreciate it, he said one afternoon in his office. My attitude is as follows: The more I get involved in your business, thats not a good thing for you. I dont like surprises. That no-nonsense attitude coupled with his knowledge of the industry has made him an invaluable resource outside of the bank. Hes on the board of the Phipps Houses Group, a nonprofit affordable housing advocacy group, and has been on the executive board of the Real Estate Board of New York for many years. REBNY president Steven Spinola, who has known Mr. Wiener for 25-plus years, said he regularly draws on that knowledge. Alan is the kind of person who, once he meets you, makes every effort to get to know you well and stay in touch, and so he just started to get more and more involved in REBNYs activities and became somebody that I would go to regularly, and continue to go to, for advice and input on issues, Mr. Spinola said when reached by phone. Asked the nature of that advicewhat topics Mr. Wiener was most valuable at doling out advice onMr. Spinola cited the nexus of his finance and policy experience. Obviously, in terms of financial issuesof loans and what it takes for a project to get financing, Mr.
Spinola said. Throw in his knowledge from his days at HUDso the information that hes got stored in that head of his about housing and financing housingand then you throw in his city days as well as his federal HUD days. He also brings a good political sense to those discussions and to the advice that he gives. Those HUD days seem to be particularly useful for advancing affordable housing projects like Coop City. Mr. Wiener said he called New York Gov. Andrew Cuomoa former HUD secretaryand got him to agree for the state to take the first loss position. Andrew understood completely, because he used to be HUD secretary and he saw the dynamics of this deal, Mr. Wiener said. He agreed that the state would take a first lossthat doesnt mean theyre putting up cash. But in the event of a loss to HUD, the state and city take the first $70 million. That makes all the difference in the world. For the immediate future Mr. Wiener said he would stay at the bank. He said he thinks their business is really well run, that they know what theyre doing and that theyre extremely well respected. What I tell the people at Wells is, he said, if Im having fun, if I like what I do, happy to stay.
23
24
Cliffcrest
25
26
You have houses where the plumbing is back-pitched so the water tends to back up in the house and flood.
Melissa Shelter
fundamental problem that any qualified contractor would not make the mistake of creating. In the case of Cliffcrest, HPD didnt do the work itself. The building was ushered through its conversion into a renovated co-op by a partnership called SHUHAB, a venture between two nonprofit agenciesUHAB and Settlement Housing. Citing the potential for upcoming litigation, neither would comment on Cliffcrest, including Lee Warshavsky, Settlement Housings associate director and general counsel. According to Cliffcrests co-op board president, Mr. Burroughs, who said he has been a resident at the building for 10 years, it was SHUHAB that helped select a contractor and managed the construction process. The contractor that did the renovation, Dellwood Construction, appears to no longer be in business. As residents, we were not invited to participate and were essentially cut out of the process, Mr. Burroughs said. That contention was contested by both a spokesman at HPD and a source at UHAB, who did
not want to speak on the record. Both said that, in the end, Cliffcrests residents were responsible for overseeing the work and that if the construction job went bad, it was their own fault. Yet questions loom about why HPD would bankroll a multimillion project with novices at the helm. The agency provided and continues to hold a roughly $3-million loan against the property. Bank of America financed the rest, about $1.5 million of the loan, but sold off the debt years ago to the nonprofit group Community Preservation Corporation, an organization that itself has come under scrutiny in recent months for investment choices that have gone sour. A resident at Cliffcrest named Tom said that HPD and UHABs claim that residents were involved in the renovation wasnt wholly false. He said that a single resident at the property, a woman named Ms. Fincher, who had been the president of its tenant association when it was still a rental building, was appointed by SHUHAB as a tenant representative. But both he and Mr.
Burroughs said that she received compensation from SHUHAB for that position of responsibility and hence was incentivized not to scrutinize the work nor encourage questions or skepticism from the buildings tenants. For Tom, a former bus driver for the MTA, the problems are especially distressing. Lured by the prospect of owning his own apartment in a building that was going to be fixed up, he poured his life savings, about $20,000, into buying a unit at Cliffcrest in 2006. As for HPD, the prospect of a potential improper allocation of funds comes at a sensitive time. Earlier this year, Wendell Walters, one of the agencys senior level executives, pled guilty to accepting kickbacks from contractors whom he then helped to win bids to do work on HPD construction jobs. We dont have any proof yet that this is a fraud, Mr. Bailey said of Cliffcrest. But it certainly seems suspicious. No work was done and yet close to $5 million was spent. Where did the money go?
27
Robert Verrone
The Mortgage Observer spoke to Iron Hound principal Robert Verrone this month about why he started the firm and the importance of managing client expectations.
by Carl Gaines
The Mortgage Observer: You founded Iron Hound in early 2009. Can you talk about the volume of loan modifications that youve done this year and since opening shop? Robert Verrone: Since opening shop weve done about $6.3 billion in modificationsthats 70 deals. This year weve closed 12 deals at $989 million.
What was your thought process when starting Iron Hound? When Wachovia came to an end, I was going to start up a hedge fund with the gentleman whom I sublease space fromits called Scogginand its a hedge fund thats been around for 20 years. We were going to start Scoggin Capital Real Estate, but then Lehman Brothers happened and the world ended so I just evolved and went into doing workouts full time. As the commercial real estate market improves, do you have to adjust your focus at all? As the market improves, the pace of workouts is definitely going to slow down but I dont see my workout business going away anytime soon. There are still billions and billions of dollars of deals that have to be restructured. And were probably one of the only shops in the country doing it. Everyone else who started it kind of went away. But we are expanding our product linewere doing some mortgage brokerage, raising some equity, and were in the process of finalizing a little fund to buy residential homes in Pennsylvania for rent. As far economic indicators are concerned, do you keep you eye on any particular one? The amount of loans in special servicing and CMBS. Thats not really an economic indicator but thats really the one thing that I look at to see how delinquencies are going in CMBS. But we all look at unemployment, job growth, interest rates and inflation.
Where do you see CMBS going this year? I think its only going up. I started in the CMBS business in 94 and it was a $10 million business, then a $20 million business and a $25 million business. It kept on going up and up. I think were in that same modewhat, $50 million this year? I dont know what the number is supposed to be but its going in the right direction. Whats a typical restructuring like? The typical restructuring is that there is not a typical restructuring. Every lender has a different game plan that they like to follow. Every asset manager within every lender typically has a different game plan that they like to follow. But what typically happens is that we get engaged. If its a CMBS loan, we work with the borrower and the lender to get the loan transferred to the special servicer. Then we do a very high-level underwritingour job is to understand the asset as well as the client understands it. We then formulate a plan to approach the lender and come up with what we think is a good restructuring. Sometimes were like a life coach, because a lot of borrowers think their properties are worth more than they actually are and a lot of lenders think the properties are worth more than they actually are. It sounds like a lot of managing a lot of peoples expectations. Is that the most difficult part? Its setting expectations, managing expectations and picking your battles. If they have 10 things they want to win theyre just not going to get 10. Youre going to get some and the lenders going to get some and most likely the lender is going to get more than the borrower. But youve got to pick your battles and youve got to hold your ground and youve got to know whats important to you. Were very good at knowing which lender has certain hot buttons and were very good at not being afraid to tell our customers when theyre wrong, when its just not going to happen. So, yeah, we manage a lot of expectations. There have been questions lately about not just the return of CMBS but CMBS in its riskier forms. Do you think this is a good thing? I wont say if its a good thing or a bad thing. I have not seen underwriting standards deteriorate to the levels that they got to in 07. And I dont follow the CMBS market as closely as a lot of people may think. Do I think its a good thing or a bad thing? I dont know if I should be the one saying that. I dont have enough information to know if its a good thing or a bad thingI just know that the informations out there. People are well educated and they can make their own decisions about whether they want to make a loan or buy a loan. Do you think that your role originating and repackaging loans leading up to the financial crisis was misunderstood? The facts are pretty plain, pretty out there. One is, if you look at the most recent research report, Wachovia has the lowest realized loses of any CMBS originator since CMBS started. Eighty basis points so our collateral performance has been great. There are still a lot of things that can happen to change that. Thats number one. Number two is, I think the people who know, know that in 07 when the market changed, Wachovia was one of the first institutions to realize the market change and literally started selling collateral very quickly. Myself and the guys I work with were the guys who sold $10 billion plus of mezz and D notes in 07 that would have sold in 08 at prices significantly less than what we got in 07. Everyone thought we were kind of nuts for selling as quickly as we did in 07. We sold things for 90 cents on the dollar in 07 but three months later it was selling for 70 cents on the dollar. So I think we acted appropriately, we understood the risks that we had and we moved fast. We ran a very profitable business for a very long time. And we made our mistakes. I admit we definitely made some mistakes, but we acknowledged them and we got through them as quickly as we could.
28
REPORT
Week of May 28, 2012:
THE
STOLER
Wells Fargo Bank Sydell Group
The Stoler Report-Real Estate & Business Trends airs on CUNY TV, Channel 75 in NYC:
Tuesday: 2 AM, 11 PM Wednesday: 8:30 AM, 2:30 PM & 10:30 PM Friday: 5:30 AM Saturday night: 12 Midnight Sunday: 10:30 AM
Building New York-New York Life Stories airs on CUNY TV, Channel 75 in NYC:
Monday: 10:30 AM, 4:30 PM & 10:30 PM Wednesday: 5:30 AM Thursday: 11:30 PM Saturday 12 Noon & 12:30 AM Sunday: 6 PM
www.stolerreport.com or www.michaelstoler.com
24|7
Up-to-the-minute news NOW for New Yorks real estate market: In New York, real estate is a spectator sport and an obsession. The Commercial Observer on Observer.com is the daily x for the real estate-obsessed, providing access to the minute-by-minute accounts of the latest deals, the winners and losers, the stats, proles and more.
ambitious construction projects and the people who planned, designed and built them. This years nominees are: John Jay Colleges Criminal Justice Infrastructure project; the Court Square Subway Station Healthcare project; the Liberty Luxe/Liberty Green Education project; The Dream Hotel; and the Two Gotham Center Public Space. Greater New York Construction User Council 2012 Chairmans Reception; the Related Companies MiMA building, 440 West 42nd Street, 6 p.m. Contact Joel Park at 212-450-7300 or email him at [email protected] for more information or to register.
A group of New York City teen leader participants of the nonprofit Girls Quest will get a birds eye view of the citys male-dominated real estate industry by spending a day with the professions movers, shakers, brokers and leaders. Whole Foods Market, Tishman Construction Group and Prudential Real Estate are just a few of the events sponsors. New York Commercial Real Estate Women Crew Careers: Building Opportunities program; Extell Developments International Gem Tower, 50 West 47th Street. Contact Linda Alexander at 212-2477940 or email her at Linda@alexandermktg. com for more information or to register.
14
Comedic genius and Eastern Consolidated executive managing director David Schechtman will be honored when the March of Dimes hosts its 31st Annual Invitational Golf Tournament. Funds raised by the event help support prenatal wellness programs, research grants, advocacy efforts and neonatal intensive care unit family support programs. Help the organization reach its tournament goal of $150,000. March of Dimes 31st Annual Invitational Golf Tournament; The Creek golf club, 1 Horse Hollow Road, Locust Valley, N.Y., 10:30 a.m.-12:30 p.m. Call 516-628-6265 for more information or to register.
11-13
Looming federal tax initiatives will be dissected and analyzed by none other than Dean Zerbe, the national managing director of AlliantGroup and former senior council and tax counsel of the Senate Finance Committee. Expect a no-nonsense discussion of current tax policies and what to expect from Capitol Hill. Meanwhile, David McKelvey, a CPA at Friedman LLP, will weigh Repairs vs. Capital Expenditures with regard to the new temporary IRS regulations property owners are now being pressured to comply with. The AlliantGroups An Insiders Look into Current Tax Policies panel discussion; the Yale Club, 50 Vanderbilt Avenue, 8-9 a.m. Contact Stacey Reynolds at 212-8427649 for more information or to register.
Seen through the prism of commercial mortgage-backed securities and balance sheet lending, syndicated columnist George Will discusses the most crucial issues facing commercial real estate this year. Co-chairs of this alway well-attended annual CRE Finance Council conference in Washington D.C. include Keith Gollenberg of Oaktree Capital Managemetn; Richard Jones of Dechert LLP; Gregory Michaud of ING Investment Management and John Mulligan of Fundcore Finance Group. Expect tremors across the Beltway. CRE Finance Council annual conference; JW Marriott Hotel, Washington, D.C. Visit www.crefc.org for more information or to register.
21-22
The non-traded real estate investment trust industry continued its strong growth last year with a estimated $8.3 billion raised in new capital, 11 new product offerings and assets reaching approximately $84 billion. So its no surprise that the Information Management Network returns for its annual New York Non-Traded REIT symposium, a muchanticipated event that lures some of the fields biggest names. Speakers will discuss key regulation changes and strategies being buzzed about in this specialized market sector. Information Management Network Ninth Annual New York Non-Traded REIT Industry Symposium; Marriott Downtown, 85 West Street. Visit www.imn.org for more information or to register.
6-7
12
Investment strategies, recapitalization and sourcing of debt and equity financing will be discussed when the well-respected think tank the Urban Land Institute hosts its Real Estate Capital Markets Conference. Featured speakers include Jacques Gordon, a global strategist at LaSalle Investment Management, and Robert Mellman, the senior economist and managing director of JPMorgan Chase. Among New York real estate professionals, however, names like Robert Ivanhoe, Robert Lieber and Ron Kravit might draw even more attention. Urban Land Institute Real Estate Capital Markets Conference; Sentry Conference Centers, 730 Third Avenue. Visit www.uli.org or call 800-321-5011 for more information or to register.
Join CoreNet Global for its Third Annual Women of CoreNet Global NYC Reception, presented by the Womens Special Interest Group (SIG) and co-leaders Shelly Bloch, director of real estate at Skadden Arps, and Gayle Matthei-Meredith, chief marketing officer at Cassidy Turley. This year, the group will honor one asyet unnamed woman for her contribution to New Yorks real estate and finance industries. CoreNet Global Network Womens Special Interest Group networking event; Le Parker Meridien Penthouse, 119 West 56th Street. Visit www. corenetglobal.org for more information or to register. The Greater New York Construction User Council will once again bestow honors on some of the states most
28-29
As many as 400 professionals from the interconnected worlds of banking, investing, special servicing, auctioneering and loan salesand did we mention banking, an industry from which about 35 percent of attendees hail?will descend on Atlanta for Off-Market RADARs and Information Management Networks forum on Special Assets and Real Estate Workouts. Among a litany of confirmed guests, expect standout lectures from Wachovia structured transactions chief Thomas Deane and Berkadia Commercial Mortgages Michael Carp. Off-Market RADAR-Information Management Network Southeast Bank/Financial Institutions Forum on Special Assets and Real Estate Workouts; Hyatt Regency, Atlanta. Email [email protected] for more information.
31
An index of all the people, places, addresses and companies mentioned in this issue
17,21
11 East 36th Street . . . . . . . . . . 10 11 East 51st Street . . . . . . . . . . 12 118-120 South Second Street . . . . . . . . . . . . . . . . . . . . . . . . . . 10 145 Spring Street . . . . . . . . . . . . . 4 1515 Broadway . . . . . . . . . . . . 2, 4 1535 Broadway . . . . . . . . . . . . . . 31 156-168 Bleecker Street . . . . . 8 2 Sawgrass Drive . . . . . . . . . . . . . . 8 3 Colombus Circle . . . . . . . . . . . . 4 312 Eleventh Avenue (Ohm) . . . . . . . . . . . . . . . . . . . . . . . . . 22 35 Ryerson Street . . . . . . . . . . . . . 8 350 Park Avenue . . . . . . . . . . . . . . 8 474 Broome Street . . . . . . . . . . . . 4 55 Gansevoort Street . . . . . . . . . 6 555 West 53rd Street (Mercedes House) . . . . . . . . . . . . 22 600 Lexington Avenue . . . . . . . 4 621 West 46th Street . . . . . . . . . 8 938 St . Nicholas Avenue . . . . 24 AlliantGroup . . . . . . . . . . . . . . . . . . 31 Alterra Capital . . . . . . . . . . . . . . . . . . 5 American Property Financing . . . . . . . . . . . . . . . . . 22, 23 Anglo Irish Bank . . . . . . . . . . . . . . 11 Apple Bank . . . . . . . . . . . . . . . . . . . 14 Archetype Mortgage Capital . .6 Arcturus Group . . . . . . . . . . . . . . . 5 Ariel Property Advisors . . . . . 10 Astoria Federal Savings Bank . . . . . . . . . . . . . . . . . . . . . . . . 11, 14 Astoria Financial Corp . . . . . . . 11 Atlantis The Palm . . . . . . . . . . . . . 5 Auction .com . . . . . . . . . . . . . . . . . . 18 Bagatelle, David . . . . . . . . . . . . . . 12 Bailey, Adam Leitman . . . 24, 27 Bank Hapoalim . . . . . . . . . . . . . . . 11 Bank of America . . . . . . . . . . . . . 27 Bank of Ireland . . . . . . . . . . . . 10, 11 Bank of Smithtown . . . . . . . . . . 11 Baydala, Terry . . . . . . . . . . . . . . . . 10 Beck, Michael . . . . . . . . . . . . . . . . . 18 Bergman, Abe . . . . . . . . . . . . . . . . . 6 Berkadia Commerical Mortgage . . . . . . . . . . . . . . . . . . . . . . 31 Berman, Michael . . . . . . . . . . . . . 18 Besen & Associates . . . . . . . . . . 18 Bethpage Federal Credit Union . . . . . . . . . . . . . . . 8, 12 Blackstone . . . . . . . . . . . . . . . . . . . . 21 Bloch, Shelley . . . . . . . . . . . . . . . . 31 Bloomberg, Michael . . . . . . . . . 24 Blum, Michael . . . . . . . . . . . . . . . . . 4 Braddish, Keith . . . . . . . . . . . . . 4, 8 Brooklyn Federal Savings Bank . . . . . . . . . . . . . . . . . 11 Bryan Cave LLP . . . . . . . . . . . . . . 18 Burroughs, Carlton . . . . . . 24, 27 Cantor Commerical Real Estate . . . . . . . . . . . . . . . . . . . . . 5 Canyon Capital . . . . . . . . . . . . . . . . 5 Capital One . . . . . . . . . . . . . 6, 11, 14 Carp, Michael . . . . . . . . . . . . . . . . . 31 Carter, Jimmy . . . . . . . . . 2, 22, 23 Cassidy Turley . . . . . . . . . . . . . . . . 31 CBRE Capital Markets Debt & Equity Finance . . . . 4, 8 Chandan Economics . . . . . . . . . 17
2
Chandan, Sam . . . . . . . . . . . . . 2, 16 China International Capital Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 China Trust Bank . . . . . . . . . . . . 10 Christie, Chris . . . . . . . . . . . . . . . . 31 Cices, Simon . . . . . . . . . . . . . . . . . . . 4 CIT Real Estate Finance . . . . . . 5 Citizens Financial Group . . . 11 Claremont Corporate Center . .4 Cliffcrest . . . . . . . . . . . . . . . . . . 24, 27 Cohen, David . . . . . . . . . . . . . . . . . 12 Community Preservation Corporation . . . . . . . . . . . . . . . . . . . 27 Coop City . . . . . . . . . . . . . . . . . 21, 23 CoreNet Global . . . . . . . . . . . . . . . 31 Cornerstone Real Estate Advisors . . . . . . . . . . . . . . . . . . . . . . . . 8 Corus Bank . . . . . . . . . . . . . . . . . . . 11 Cotter, Joseph . . . . . . . . . . . . . . . . . 5 Cuomo, Andrew . . . . . . . . . . . . . . 23 Custo Barcelona . . . . . . . . . . . . . . . 4 CVS Pharmacy . . . . . . . . . . . . . . . . . 8 CW Capital Asset Management . . . . . . . . . . . . . . . . . . . 8 CW Financial Services . . . . . . . 18 CWCapital . . . . . . . . . . . . . . . . . . . . 18 Deane, Thomas . . . . . . . . . . . . . . . 31 Dechert LLP . . . . . . . . . . . . . . . . . . 31 Dellwood Construction . . . . . . 27 DelShah Capital . . . . . . . . . . . 6, 10 Department of Housing Preservation and Development . . . . . . . . . . . . . . . . . 24 Deutsche Bank . . . . . . . . . . . . . . . 14 Dime Savings Bank of Williamsburgh . . . . . . . . . . . . . 14 DLA Piper . . . . . . . . . . . . . . . . . . . . . 18 Doral Bank . . . . . . . . . . . . . . . . . . . . 12 Eastern Union Commerical . . 6 Extell Developments . . . . . . . . . 11 Fannie Mae . . . . . . . . . . . . . . . . 17, 21 Federal Housing Finance Administration . . . . . . . . . . . . . . . 17 Fincher, Ms . . . . . . . . . . . . . . . . . . . 27 First Central Savings Bank . . 10 Flushing Savings Bank . . . . . . 14 Freddie Mac . . . . . . . . . . . . . . . 17, 21 Fremont Savings & Loan . . . . 11 Friedman LLP . . . . . . . . . . . . . . . . 31 Fundcore Finance Group . . . 31 Fusco, Cate . . . . . . . . . . . . . . . . . . . . 8 Gaccione, Jason . . . . . . . . . . . . 4, 8 Galligan, Matt . . . . . . . . . . . . . . . . . 5 Garcia, Paulo . . . . . . . . . . . . . . 11, 12 Georgetown Law School . . . . 22 Girls Quest . . . . . . . . . . . . . . . . . . . . 31 Glenwood Management . . .18, 22 Gollenberg, Keith . . . . . . . . . . . . 31 Gordon, Jacques . . . . . . . . . . . . . 31 Gotham Bank . . . . . . . . . . . . . . . . . 12 Gotham Organization . . . .21, 22 Gotham West . . . . . . . . . . . . . . . . . 21 Grand Central Tower, East 42nd Street . . . . . . . . . . . . . 11 Greenock Capital . . . . . . . . . . . . . 4 GTIS Partners . . . . . . . . . . . . . . . . 18 Gun Bar . . . . . . . . . . . . . . . . . . . . . . . . 6
11
Herald National Bank . . . . . . . . 12 HFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 HKS Capital Partners . . . . . . . . . 6 Holliday, Marc . . . . . . . . . . . . . . . . . 2 Honstedt, Gary . . . . . . . . . . . . . . . 11 HSH Nordbank . . . . . . . . . . . . . . . 11 HUD . . . . . . . . . . . . . . . . . . . . . . . 22, 23 Hudson Terrace . . . . . . . . . . . . . . . 8 Hynes, Heidi . . . . . . . . . . . . . . . . . . 21 IndyMac . . . . . . . . . . . . . . . . . . . . . . . 11 Information Management Network . . . . . . . . . . . . . . . . . . . . . . . 31 ING Investment Management . . . . . . . . . . . . . . . . . . 31 Integrated Resources . . . . . . . . 23 Internal Revenue Code . . . . . . 16 Investors Bancorp . . . . . . . . . . . . 11 Investors Bank . . . . . . . . . . . . 11, 14 Iron Hound Management Co . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 28 Ivanhoe, Robert . . . . . . . . . . . . . . 31 Jarvis, Rebecca . . . . . . . . . . . . . . . 31 JMC Holdings . . . . . . . . . . . . . . . . . 8 Jones, Richard . . . . . . . . . . . . . . . . 31 Joshua Stein PLLC . . . . . . . . . . . 16 JPMorgan Chase . . 12, 14, 22, 31 Justice 4 Homeowners . . . . . 24 Kaczynski, Michael . . . . . . . . . . 22 Kapachi, Ayush . . . . . . . . . . . . . . . . 6 Keefe, Bruyette & Woods . . . 18 Kerzner International . . . . . . . . 5 Kerzner, Sol . . . . . . . . . . . . . . . . . . . 5 Klett, George . . . . . . . . . . . . . . . . . 11 Kornblau, Steven . . . . . . . . . . . . . 18 Kostman, David . . . . . . . . . . . . . . 18 Kravit, Ron . . . . . . . . . . . . . . . . . . . 31 Kuwait Investment Authority . . . . . . . . . . . . . . . . . . . . . . 12 Landmarks Preservation Commission . . . . . . . . . . . . . . . . . . . . 6 LaSalle Investment Management . . . . . . . . . . . . . . . . . . 31 LeggMason . . . . . . . . . . . . . . . . . . . . 18 Lehman Brothers . . . . . . . . . . . . . 28 LePoisson Rougue . . . . . . . . . . . . 8 Levine, Jeffrey . . . . . . . . . . . . . . . . 22 Liberty Pointe Bank . . . . . . . . . 11 Lieber, Robert . . . . . . . . . . . . . . . . 31 Litwin, Leonard . . . . . . . . . . . . . . 1 8 Loeb & Loeb . . . . . . . . . . . . . . . . . 18 Loffman, Leslie . . . . . . . . . . . . . . . 18 Lucas, Charles . . . . . . . . . . . . . . . . 18 M&T Bank . . . . . . . . . . . . . . . . . . . . . 6 M&T Trust . . . . . . . . . . . . . . . . . . . . 10 Madison Realty Capital . . . . . . 10 Maje . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 MarcAurele, Joseph . . . . . . . . . . . 8 March of Dimes . . . . . . . . . . . . . . 31 Marcus & Millichap Real Estate Investment Services . . .18 Marriott Long Island Brookhaven . . . . . . . . . . . . . . . . 8, 12 Mathias, Andrew . . . . . . . . . . . . . . 2 Matthei-Meredith, Gayle . . . . 31
8
Mayblum, Jonathan . . . . . . . . . . . 5 McKelvey, David . . . . . . . . . . . . . 31 MCR Development . . . . . . . . . . . . 8 Mellman, Robert . . . . . . . . . . . . . 31 Melrose Credit Union . . . . . . . . 12 Mercantil Commercebank, N .A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Mercantil Servicios Financieros . . . . . . . . . . . . . . . . . . . 12 Meridian Capital Group . . . . . 10 MFA Financial . . . . . . . . . . . . . . . . 10 Michaud, Gregory . . . . . . . . . . . . 31 Mikula, Jon . . . . . . . . . . . . . . . . . . . . 4 Millenium BCP Bank . . . . . . . . 11 Mission Capital Advisors . . . . . 8 Moishes Self Storage . . . . . . . . . 8 Moreno, Vasco . . . . . . . . . . . . . . . . 18 Morgan Stanley . . . . . . . . . . . . . . . 18 MTA . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Mulligan, John . . . . . . . . . . . . . . . 31 National Resources . . . . . . . . . . . 5 NCB . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 New York Community Bank . .10 New York State Housing Finance Agency . . . . . . . . . . . . . . 22 North Fork Bank . . . . . . . . . . . . . 11 Oaktree Capital Management . . . . . . . . . . . . . . . . . . 31 OBrien, Beth . . . . . . . . . . . . . . . . . 18 Orso, Anthony . . . . . . . . . . . . . . . . . 5 Park Avenue Bank . . . . . . . . . . . 11 Parker, J .D . . . . . . . . . . . . . . . . . . . . 18 Pendergist, Jason . . . . . . . . . . . . 12 Phipps Houses Group . . . . . . . 23 Piraino, Joseph . . . . . . . . . . . . . . . . 8 Platt, Andrew . . . . . . . . . . . . . . . . . 18 Progressive Credit Union . . . 12 Proskauer . . . . . . . . . . . . . . . . . . . . . 18 Provident Bank . . . . . . . . . . . . . . . 12 Prudential Real Estate . . . . . . . 31 Rakowicz, Emily . . . . . . . . . . . . . 18 Real Estate Board of New York . . . . . . . . . . . . . . . 18, 23 Related Companies . . . . . . 21, 22 Richards, Driscilla . . . . . . . . . . . 18 Risk Building . . . . . . . . . . . . . . . . . . 4 Risk, William Dr . . . . . . . . . . . . . . 4 Ross, Stephen . . . . . . . . . . . . . . . . 31 Rothstein, Michael . . . . . . . . . . . 18 Royal Bank of Scotland . . . . . 18 RWN Real Estate Partners . . . 8 Santander Group . . . . . . . . . . . . . 11 Santoro, Nicholas . . . . . . . . . . . . 12 Schechtman, David . . . . . . . . . . 31 Scoggin Capital Real Estate 28 Scorsese, Martin . . . . . . . . . . . . . 11 Senate Finance Committee . . 31 Settlement Housing . . . . . . . . . . 27 Shah, Michael . . . . . . . . . . . . . 6, 10 Shapiro, Tom . . . . . . . . . . . . . . . . . 18 Shetler, Melissa . . . . . . . . . . . . . . . 24 Shkury, Shimon . . . . . . . . . . . . . . 10 SHUHAB . . . . . . . . . . . . . . . . . . . . . . 27 Signature Bank . . . . . . . . . . . . . . . 11 Skadden Arps . . . . . . . . . . . . . . . . 31
11
SL Green . . . . . . . . . . . . . . . . . 2, 4, 14 Sledge, Will . . . . . . . . . . . . . . . . . . . . 8 Sovereign Bank . . . . . . . . . . . . . . . 11 Spinola, Steven . . . . . . . . . . . . . . . 23 SpringHill Suites . . . . . . . . . . 8, 12 Starrett City . . . . . . . . . . . . . . . . . . 21 Starwood . . . . . . . . . . . . . . . . . . . . . . 21 Stein, Joshua . . . . . . . . . . . . . . 2, 16 Stevens, David . . . . . . . . . . . . . . . . 18 Stop & Shop Supermarkets . . . 11 Superior Bank . . . . . . . . . . . . . . . . 11 TCAP Associates . . . . . . . . . . . . . 18 The Bank of China . . . . . . . . . . . . 4 The Dream Hotel . . . . . . . . . . . . . 31 The Greater New York Construction User Council . . 31 The Lofts at Edgewater Harbor . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Mortgage Bankers Association . . . . . . . . . . . . . . . . 18, 21 The Wharton School . . . . . . . . . 17 Tishman Construction Group . . . . . . . . . . . . . . . . . . . . . . . . . 31 Todd, Chuck . . . . . . . . . . . . . . . . . . 31 Trammell Crow . . . . . . . . . . . . . . . 18 Trilogy Capital . . . . . . . . . . . . . . . . . 5 Troutman Sanders . . . . . . . . . . . . 4 Two Gotham Center . . . . . . . . . 31 Two Trees Management Company . . . . . . . . . . . . . . . . . . . . . 22 U .S . Department of Urban Housing and Urban Development . . . . . . . . . . . . . . 2, 21 UBS Financial Institution Group . . . . . . . . . . . . 18 UHAB . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Unilevers Research and Development . . . . . . . . . . . . . 5 University of Pennsylvania . . 22 Urbane Land Institute . . . . . . . 31 US Bank . . . . . . . . . . . . . . . . . . . . . . . 14 Van, Bobby . . . . . . . . . . . . . . . . . . . 22 Verrone, Rob . . . . . . . . . . . . . . 2, 28 Viacom . . . . . . . . . . . . . . . . . . . . . . 2, 4 Villa Pacri . . . . . . . . . . . . . . . . . . . . . . 6 Vornado Realty Trust . . . . 10, 31 Wachovia . . . . . . . . . . . . . . . 2, 22, 28 Walters, Wendell . . . . . . . . . . . . . 27 Warba Bank . . . . . . . . . . . . . . . . . . . 12 Warshavsky, Lee . . . . . . . . . . . . . . 27 Washington Mutual . . . . . . . 11, 12 Washington Trust . . . . . . . . . 8, 12 Wells Fargo . . . . . . . . . . . . 2, 22, 23 Wells Fargo Multifamily Capital . . . . . . . . . . . . . . . . . . . . . . 2, 22 West 57th Street . . . . . . . . . . . . . 11 West End Development Corporation . . . . . . . . . . . . . . . . . . . . 8 Whole Foods Market . . . . . . . . 31 Wiener, Alan . . . . . . . 2, 21, 22, 23 Will, George . . . . . . . . . . . . . . . . . . 31 Wood, Burton . . . . . . . . . . . . . . . . 18 Zegen, Joshua . . . . . . . . . . . . . . . . 10 Zerbe, Dean . . . . . . . . . . . . . . . . . . . .31 Zietara, Tim . . . . . . . . . . . . . . . . . . . .12 Zlotowitz, Ira . . . . . . . . . . . . . . . . . . 6
E F
32
PAUL J. RICHARDS/AFP/Getty ImAGeS; HAnnAH mAttIx; RUSty CLARk; PRoPeRty SHARk; Anne-CHRIStIne PoUJoULAt/AFP/GettyImAGeS
The most comprehensive lead generation tool for finding commercial mortgage and real estate opportunities!
ACTOVIA offers the most powerful and easy to use
system for finding and following up on lead opportunities for mortgage refinancing and real estate on commercial buildings. You can drill right down to the segment of the market that YOU want using over 30 data points including rate, prepayment penalty, and rollover date. With the REAL OWNER NAME, contact information and complete building profile, you will close your deal!
Let us sh ow you! Please ca ll for your complem ent demo & t ary rial today.
When sophisticated institutional owners nationwide seek an entrepreneurial and creative approach, they think of One Firm: Ackman-Ziff. Youre close to the money because were close to the money.
$130,000,000
Joint Venture Equity Multi-Family
Maryland
$10,500,000
Construction Hotel
New Jersey
$19,800,000
Debt Office
Ohio
$28,250,000
Debt Office
Delaware