1 | MARCH 18, 2016

Sometimes you just know it’s the one. That’s how Lloyd Goldman’s BLDG

Management and Ares Management felt about the $165 million loan they secured for The One, a 35-

story multifamily tower in down-town Jersey City.

Cornerstone Insurance & Financial Services provided the borrowers with the permanent loan, which has a seven-year term and a rate of 3.55 per-cent, and two years of interest-only pay-ments with a 30-year amortization schedule,

sources have told Commercial Observer Finance.

Meridian Capital Group’s Aaron Birnbaum, Carol Shelby and Dani Sabesan

brokered the financing on behalf of BLDG and Ares.

In conjunction with Urban Development Partners, BLDG and Ares built the 439-unit property at 110 First Street in 2015. The unit

mix is studios and one- and two-bedroom apartments. The asking monthly rent for a

Frankfurt-based DekaBank took the lead on a $300 million mortgage to refinance Vornado Realty Trust’s 947,000-square-foot office building at 1 Park Avenue in Midtown Manhattan, records filed with the city show.

The German bank is listed as a co-lender on mortgage documents, but the other mort-gagees were not listed. The financing is in-terest-only at Libor plus 1.75 percent and matures in March 2021, according to a press release from Vornado, which did not disclose the identity of the lenders.

DekaBank...continued on page 3BLDG...continued on page 7

German Bank Funds Vornado’s $300M Refi of Park Avenue Office Tower

The LEAD

In This Issue 3 Hakimian Organization Takes $16M Construction Loan for LIC Multifamily

5 Sports Authority Closures Impact 25 CMBS Loans

5 Bank Leumi Provides $36M for 18-story LIC Resi Tower

“In the past five to 10 years, we have expanded the footprint of our portfolio and are now in 28 U.S. states, Canada, Germany,

the Netherlands.”—David Becker

From Q&A on page 11

The Insider’s Weekly Guide to the Commercial Mortgage Industry

FINANCE WEEKLY

EXCLUSIVE

BLDG, Ares Management Get $165M for Jersey City

Apartment Tower

2 | MARCH 18, 2016

Credit is subject to approval. Rates and programs are subject to change; certain restrictions apply. ©2016 JPMorgan Chase & Co. All rights reserved. Chase is a marketing name for certain businesses of JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., Member FDIC. 176450

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3 | MARCH 18, 2016

1 Park Avenue.

DekaBank...continued from page 1

The new debt replaces a $250 mil-lion loan that Morgan Stanley provided on the building, which is between East 32nd and East 33rd Streets, in March 2011. That debt carried a 4.9995 percent rate and matured this month, the release states.

Vornado holds a 55 percent owner-ship interest in the 20-story building, and Canada Pension Plan Investment Board owns the rest. The Toronto-based investment firm originally owned an in-direct 11 percent stake in the office tower, but paid $108 million in June 2014 to in-crease its ownership to 45 percent.

NYU Langone Medical Center and NYU School of Medicine occu-py 433,264 square feet of space across 10 floors in the building, according to CoStar Group. Retail tenants at the site include Men’s Wearhouse, Citibank and Equinox Fitness.

A spokesman for Vornado declined to comment. A representative for DekaBank did not respond to inquiries for com-ment.—Danielle Balbi

Hakimian Organization Takes $16M Construction Loan for LIC Multifamily

Bank Leumi lent $15.5 million to Hakimian Organization for a ground-up residential  development at 41-32 27th

Street in Long Island City, Commercial Observer Finance can first report.

The bank provided a three-year construc-tion loan with a Libor-based floating rate and interest-only payments for the full term.

Hakimian Organization is erecting a 15-story, 43-unit multifamily tower. Amenities at the property will include a rooftop, an indoor and outdoor lounge, a fitness center and stor-age for tenants. The family-run firm acquired

the site for $5 million in May 2014, according to city records.

Merdian Capital Group’s Jeff Weinberg and Jonathan Bodner negotiated the financ-ing on behalf of the borrower.

“Meridian worked seamlessly with the lender to arrange very competitive financing, uniquely tailored to the needs of our client, for this prime Long Island City development,” Mr. Weinberg said in prepared remarks.

A representative for the bank did not re-spond to requests for comment. A represen-tative for Hakimian could not be reached. —Danielle Balbi

EXCLUSIVE

41-32 27th Street.

4 | MARCH 18, 2016

5 | MARCH 18, 2016

Bank Leumi Provides $36M for 18-Story LIC Resi Tower

Great Neck, N.Y.-based Lions Group NYC has landed a $36 million construction loan from Bank Leumi for the development of a

120-unit residential rent-al tower in Long Island City, Commercial Observer

Finance has learned. The mortgage is being used to put up an

18-story tower dubbed One Queens Plaza at 42-10 27th Street between 42nd Road and Queens Plaza South. The term of the loan is 36 months and allows Lions Group to refinance after maturity and take a permanent mortgage with the bank.

One Queens Plaza is not the Lions Group’s first venture in Long Island City. The firm was founded in the 1980s by brothers Albert Shirian and Ramin Shirian and transitioned from developing single-family homes in Long Island to constructing multifamily properties all over Queens.

“The big story is more about the area,” Aaron Shirian, a managing director at the family-run firm, told COF. “That’s what makes this property so valuable to us. We see Queens Plaza as one of the most underrated areas in the whole city. The access because of the subway is unmatched and the area becomes more and more beautiful every day.”

Aaron Shirian said that the Lions Group was

the first developer to get a permit following the rezoning of Long Island City 12 years ago. Since then, the firm has constructed The Vista at 44-15 Purves Street, The Bindery at 47-34 11th Street, 44-27 Purves Street and 10-50 Jackson Avenue. They also have four multi-family projects currently under development in the area.

“We’ve seen it really blossom into an area full of young professionals and young families,” he said. “There really was not much there be-fore. We really believe in the area and really be-lieve that it’s nowhere near its peak.”

Foundation work at One Queens Plaza has already begun and the apartment building is slated to open in the first quarter of 2018, said Eric Benaim, the founder and the chief exec-utive officer of Modern Spaces who is han-dling marketing and leasing for the residential component of the project. Architect Raymond Chan is designing the building.

Upon completion, the tower will house a mix of studios and one- and two-bedroom units, ranging in square footage from the low-400s to the low-900s.

The development will also include a park-ing lot and 8,000 square feet of ground-floor retail space, which could be divvied up for several tenants, Mr. Benaim said. Companies from Starbucks Coffee to Duane Reade have shown interest.

“We always get comfortable with the cli-ent first, and we like the Lions Group and the Shirians,” said Bank Leumi’s Christopher Gregg, who worked on the deal. “They have a great track record and have done a lot of suc-cessful developments in Long Island City.” —Danielle Balbi

One Queens Plaza.

EXCLUSIVE

Sports Authority Closures to Impact 25 CMBS Loans: Morningstar

Morningstar Credit Ratings has identi-fied 25 commercial mortgage-backed secu-rities deals totaling $980.5 million that are at risk due to the imminent closure of 140 Sports Authority locations.

On March 2, the national sports retailer filed for bankruptcy and announced the store clos-ings; another 60 still remain on the chopping block. Six of the 25 CMBS deals with exposure to the Sports Authority store closures are see-ing a greater risk of default because of potential drops in net cash flow, according to a report the agency released last week.

“I think that going into the new year you usually see some form of consolidation after the holidays,” Edward Dittmer, a senior vice president at Morningstar, told COF. “Sports Authority is a case of corporate bankruptcy and really, the case of a company that might be in a sector that is being negatively affected by Internet sales.”

Two of the largest deals at risk include a $32.2 million loan on Caruth Plaza, a shop-ping center in Dallas, and a $12.3 million mort-gage on Steger Town Crossing in Rockwall, Texas.

Sports Authority serves as the largest tenant at Caruth Plaza, occupying 28.2 percent of leas-able space. The loan comprises 2.6 percent of Wells Fargo-sponsored WFRBS 2014-LC14. During the first three quarters of 2015, the mortgage had a debt-service coverage ratio of 2.05x. Payment on the loan remains current and Morningstar analysts believe that the bor-rower will be able to cover debt service even with the store closure.

The $12.3 million Steger Town note accounts for 1.5 percent of Goldman Sachs-sponsored GSMS 2011-GC3. The CMBS loan matures in January 2019, and if Sports Authority were to abandon its space, the debt service coverage ratio could dip below breakeven, according to

Morningstar. Sports Authority is the largest tenant at the shopping center, taking up 54.8 percent of its 100,000 square feet.

Analysts also took note of other deals backed by closing Sports Authority locations, including a $5.8 million mortgage backed by the sports retailer and OfficeMax and Sports Authority in Liburn, Ga.; a $4.5 million loan collateral-ized by a Sports Authority in Calumet City, Ill.; a $2.4 million loan on a location in Virginia Beach, Va.; and a $1 million loan on a Sports Authority in Tampa, Fla.

“I’m not ready to call the end of brick and mortar retail,” Mr. Dittmer said. “It’s still a fair-ly strong and stable industry but you’re going to see pockets just like you saw with books and electronics—and now possibly sporting goods—where you may have to see some in-dustry consolidation as a result of various fac-tors, including competition from the Internet.” —Danielle Balbi

6 | MARCH 18, 2016

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7 | MARCH 18, 2016

WorkforceLadder Capital Appoints New COO and General Counsel With Two In-House Promotions

Ladder Capital’s Pamela McCormack and Kelly Porcella have been appoint-ed to chief operating officer and general counsel, respectively, the company an-nounced last week.

“Pamela is a co-founder and an inte-gral member of the Ladder management team,” Michael Mazzei, the president at Ladder, said in a press release. “Her ap-pointment as chief operating officer is reflective of her role as a successful, expe-rienced and trusted leader within the firm and in the commercial real estate finance industry generally. Kelly represents the deep bench we have developed at Ladder and has been very effective as our associ-ate general counsel to date, making this appointment a natural extension of her role and responsibilities within the firm.”

Ms. Procella joined the team at Ladder in March 2009 and since December 2013 has worked as associate general counsel, overseeing corporate governance and legal

and regulatory matters for the firm. Before coming aboard she also worked at Dillon Read and UBS.

Ms. McCormack previously served as chief strategy officer and general counsel at Ladder. Prior to co-founding the real estate investment trust, she was the head and co-head of transaction management at Dillon Read and UBS.

Ms. McCormack, along with Brian Harris and Greta Guggenheim, found-ed Ladder in 2008. Mr. Harris serves as the firm’s chief executive officer, while Ms. Guggenheim left her post as chief fi-nancial officer for the chief executive of-ficer spot at TPG Real Estate Finance Trust in January.

Borough Equities, National Condo Form Joint Venture

New York-based owner and develop-er Borough Equities has formed a joint venture with National Condo Advisors. Together, the duo will focus on provid-ing construction management services to condominium and cooperative developers,

lenders and investors.“Lenders are focused on financial risk

management and timely, safe completion of projects,” Orest Tomaselli, the chief execu-tive officer of National Condo Advisors, said. “We are confident that Borough Equities, with its extensive experience as a builder, de-veloper, owner and operator, is positioned to deliver construction management services to better manage this risk and help ensure the success of our clients’ construction and development projects.”

National Condo Advisors specializes in compliance services for clients looking for financing from Fannie Mae, the Federal Housing Administration and Veteran Affairs.

“Greater scrutiny of safety and risk management necessitates the strate-gic alignment with rising benchmarks for return on investment,” said Michael Bauer, the principal of Borough Equities. “Our joint venture with National Condo Advisors brings us a step closer to provid-ing this critical balance to developers, in-vestors and lenders who are target users of our services.”—Danielle Balbi

one-bedroom in the building is $3,550, ac-cording to Rent.com. The property also in-cludes access to a rooftop, a movie theater, a children’s playroom, a fitness center, a golf simulator, a fire pit and an outdoor swim-ming pool.

“Given the Class A nature of the asset and the tremendous strength and reputation of the sponsorship, lenders competed heavily for this credit opportunity, ultimately allow-ing Meridian to negotiate highly favorable

terms from a balance sheet lender,” Ms. Shelby said in prepared remarks.

The tower also includes 10 affordable housing units, according to an article from The Jersey Journal.

This could be the tip of the iceberg for Cornerstone and other insurance mortgag-ors, as regulatory changes and volatility in the capital markets are expected to freeze out other lenders. A number of insurance firm executives explained to Commercial Observer that they may have an advantage in today’s changing lending environment,

especially when it comes to larger deals. Earlier this month, COF reported that AIG

Global Real Estate provided The Moinian Group and Thor Equities with a $160 million loan on 245 Fifth Avenue, a 314,000-square-foot office building in Manhattan. In late-Janu-ary, Prudential Mortgage Capital Company lent $245 million to Ruben Companies on 1700 Broadway, also in Manhattan.

Representatives for BLDG and Ares did not respond to requests for comment. Calls to Cornerstone were not returned by time of publication.—Danielle Balbi

BLDG...continued from page 1

24-7VISIT COMMERCIALOBSERVER.COM

8 | MARCH 18, 2016

9 | MARCH 18, 2016

“Trepp’s February loss analysis showed a large drop in disposition volume and loss severity following near record liquidations and losses in January,” said Sean Barrie, an analyst with Trepp. “Total dispositions reached $567 million, while loss severity dropped 28 percentage points to 33.7 percent. Thirty-one out of 43 loans resolved had a remaining balance of less than $10 million. Loans backed by retail properties reported the highest liquidated balance and loan count at $267.6 million across 17 loans. The $21.8 million Phillipsburg Commerce Center [in Phillipsburg, N.J.], which took on a full loss, effectively pushed the industrial sector to the top slot for highest loss severity among the major property types.”

Source:

The Takeaway

February Average Loss Severity by Property Type - All CMBS Loans

24 7|

Property Type Loan Count Loan Balance Realized Losses Loss Severity

Retail 17 $267,645,973 $66,189,959 24.73

Office 7 $120,185,010 $46,988,220 39.10

Multifamily 3 $35,798,617 $7,323,605 20.46

Lodging 4 $69,361,501 $31,926,237 46.03

Industrial 5 $34,213,668 $24,514,321 71.65

Mixed-Use 3 $16,547,686 $3,567,344 21.56

Manufactured Housing 2 $14,771,641 $9,309,236 63.02

Self-Storage 2 $8,511,735 $1,307,387 15.36

Total 43 $567,035,832 $191,126,309 33.71

10 | MARCH 18, 2016

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Q+A

Commercial Observer Finance: How did you end up working in real estate?

Mr. Becker: My family has been in the real estate business since my grandfather began working in the industry. My grandfather had an accounting business and, in the mid-1970s, saw that there was an opportunity in New York City to acquire buildings that had tax advantages and thus became an investor and owner.

I went to business school at Tulane University in New Orleans, and when I grad-uated, I was young, ambitious and ready to work. I was always interested in different fac-ets of the real estate business. Initially, I was intrigued by new building developments but ended up realizing the underlying economics and the importance of owning real estate long term was most appealing to me. I also liked the idea that every building acquisition was a new deal.

How did you come to work at Time Equities?

Once I graduated from Tulane, I worked as an analyst for Arthur Andersen in their real estate consulting practice, advising Wall Street firms on real estate acquisitions and loans. I was offered a position at Bear Stearns in 1998, and I met with my [stepfather] Robert Kantor [the president and chief operating of-ficer] and Francis Greenburger [the chairman and chief executive officer] at Time Equities for career guidance. Since the firm was active-ly expanding their portfolio nationally and in Canada, they encouraged me to join them as an acquisitions associate. They ended up be-coming phenomenal mentors.       

What exactly does your role as manag-ing director of the firm’s equity division entail?

I help oversee various equity capital strat-egies for new acquisitions and developments, including a series of investment funds offered throughout the broker-dealer financial advi-sory community, family offices and high-net worth investors, working very closely with Francis. In the past five to 10 years, we have expanded the footprint of our portfolio and are now in 28 U.S. states, Canada, Germany, the Netherlands and the Caribbean with in-vestors located all over the country.

How much has been raised through Time Equities’ opportunity fund?

Roughly $100 million in the past two years.

Where is the company looking to invest the fund’s capital?

We are an opportunistic company that focus-es on all asset classes including office, residential, retail, industrial and parking garages. We believe it’s best to be diversified both geographically and by asset class, so we are primarily focused on properties that have good income-producing characteristics today, while also demonstrating long-term appreciation potential through lease-up, repositioning and management. We typical-ly do not put development deals in our funds (although we do develop for our own account), as our investors are more interested in predict-able returns and development is speculative and higher on the risk spectrum.

What are some of the most exciting co-in-vestments you’ve completed recently?

We recently acquired a portfolio of office properties in the Netherlands—in and around Amsterdam—at roughly $70 per square foot with going-in returns in the 10 percent unleveraged range and with additional lease-up potential. The Netherlands has gone through some economic tough times, and while there is not much avail-able bank financing, we see good underlying fun-damentals in the region.

David BeckerManaging Director of the Equity Division at Time Equities

David Becker.

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