The Insider’s Monthly Guide to New York’s Commercial Mortgage Industry September 2012September 2012

Q&A The M.O. talks motivation

with HKS Capital Partners’

Jerry Swartz

CMBS: Where We’re

HeadedPOWER PROFILE

STEVE KENNY

BANK OF AMERICA RACES AHEAD

Newport TowerPrudential Mortgage

Capital’s $200 Million Refi nance

325 Hudson Street

Acquisition Loan in Place for

Jamestown

Massey Knakal Capital

Follows Client toSunshine State

Blackstone$575 Million

Loan for Industrial Portfolio Buy

The Insider’s Monthly Guide to New York’s Commercial Mortgage IndustryThe Insider’s Monthly Guide to New York’s Commercial Mortgage Industry

TMO.0912.CS3.COVER.indd 1 8/30/12 3:18:45 PM

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Commercial Mortgage Observer - Sept. 2012 Final.indd 1 8/30/12 1:14 PMUntitled-41 1 8/30/12 1:33:44 PM

321 West 44th Street, New York, NY 10036 212.755.2400

Carl Gaines Editor

Jotham Sederstrom Editorial Director

Daniel Geiger Daniel Edward Rosen

Staff Writers

Sam Chandan Joshua Stein

Columnists

Michael Stoler Contributor

Noam S. Cohen Copy Editor

Barbara Ginsburg Shapiro Associate Publisher

Robyn Weiss Director of Real Estate

Ed Johnson Production and Creative Director

Peter Lettre Photo Editor

Lauren Draper Designer

Lisa Medchill Advertising Production

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

Mark Pasquerella Controller

Tracy Roberts Accounts Payable Manager

Accounts Receivable Ian McCormick

September 2012 / Contents

Editor’s Letter 02

News Exchange 04-10Mortgage originations, note sales, investments, industry research Prudential Refinances Newport Tower for $200 M. Thor Equities’ 590 Fifth Gets $100 Million Funding for Nazarian Hotel Revealed Steiner Equities Takes $25 M. Loan for Multifamily M&T Bank Set to Acquire Hudson City Bancorp for $3.7 Billion

In-Depth Look 11Competition Hot in Multifamilyby Michael Stoler

Q&A 12Jerry Swartz of HKS Capital Partnersby Carl Gaines

Scheme of Things 14Monthly charts of commercial real estate financings in the boroughs

Stein’s Law 16How New York State Shoots Itself in the Foot on Revolving Mortgage Loans by Joshua Stein

The Basis Point 17Lenders Press Forward, but Outlook for CMBS Remains Reserved by Sam Chandan

Workforce 18Hirings, promotions, defections and appointments

Power Profile 20-23Bank of America: Off to the Racesby Carl Gaines

CMBS 24-27Keep Calm and Carry Onby Carl Gaines

Culture 28What made your summer reading lists and work wear

The Sked: September 30Our picks for the month’s must-attend events

Of Interest 32An index of all the people, places, addresses and companies mentioned in this issue

Cover Photo by Beowulf Sheehan

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2

Editor’s Letter / September 2012

For our September issue, I was lucky enough to profile Steve Kenny, Bank of America’s banking executive for New York and New Jersey. In addition to the obvious—deals like Extell Development’s One57 and Edward Minskoff’s 51 Astor Place—I was able to confirm another important piece of information: running would not be for me. See, Steve’s currently training to run in the ING New York City Marathon November 4, the early morning training for which he fits in to a work schedule that includes efforts to diversify the bank’s commercial real estate portfolio.

I also spoke to industry experts about the CMBS market, in relation to the massive amount of loans coming due the rest of the year. I was curious to learn, with the CMBS market not nearly where it was before the financial crisis, if there was any concern about being able to refinance what’s coming due. The general consensus was, well, that it’s

a complicated issue. Experts like Prudential Mortgage Capital Company’s Melissa Farrell, who I’m happy to say we’ll soon profile, said that the disposition of these loans depends on many factors. They explain why in the piece I wrote.

Even more ambitious, though, than any piece on the CMBS market and where it might head was working on our new Culture page. We’re really trying to get more of a sense of who our readers are—the folks who work in commercial real estate finance—and what it is that drives you. As summer draws to a close, a look at what made your summer reading lists proved really insightful.

Carl Gaines, Editor

Running on All Cylinders

TMO.0912.EditorsLetterCS3.indd 2 8/30/12 3:03:22 PM

Credit is subject to approval. Rates and programs are subject to change; certain restrictions apply.Products and services provided by JPMorgan Chase Bank, N.A. #1 claim based on 2011 FDIC data.©2012 JPMorgan Chase & Co. Member FDIC. All rights reserved.

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4

OriginatiOnsnews Exchange / September 2012

Prudential refinances newport tower for $200 Million

$575 Million Loan to Blackstone for Industrial

» GE Capital Real Estate has provided a $575 million loan to affiliates of a Blackstone real es-tate fund for its purchase of 66 U.S. industrial properties. The properties are located across 10 states in the South, mid-Atlantic and Midwest and were bought from Australia’s Dexus Prop-erty Group.

Frank Cohen, a senior managing director at Blackstone, said that several factors put GE ahead in the race to fund the acquisition.

“There was significant interest in financing this transaction, but GE’s creative balance sheet approach and flexible deal structure was a per-fect match for our business plan,” Mr. Cohen said. “They’ve been a responsive, experienced lender who can deliver on transactions like this.”

To his point, GECRE underwrote and closed the loan in under 45 days, according to an an-nouncement it released about the transaction, which allowed Blackstone Real Estate Part-ners VII to pick up 129 buildings and a total of 16.4 million square feet.

A spokeswoman for GECRE told The Mortgage Observer that executives were traveling and un-available for comment. However, in a prepared statement, Alec Burger, president of the North America division, said that it had a previous working relationship with Blackstone. “Our team focused their expertise and efforts on this port-folio and delivered a structure that met Black-stone’s needs,” Mr. Burger added.

Blackstone has said that it will sell its U.S. office holdings, valued at $22 billion. Concurrently, as The Mortgage Observer previously reported, the firm leased 31,000 square feet of space—the en-tire 48th floor—at Citadel Group’s 601 Lexing-ton Avenue.

CWCapital Arranges $46 Million Principal Loan

» CWCapital’s life company platform has ar-ranged a $46 million loan for a mixed-use build-ing on Manhattan’s Upper West Side. The loan was provided by Principal Real Estate Inves-tors, which said through a spokesman that it has been targeting such “attractive opportunities,” investing in multifamily throughout the New York City boroughs.

Todd Trehubenko, a CWCapital managing director, arranged the financing. The compa-ny declined to comment beyond a release about the deal, citing requested anonymity on the part of the borrower. However, Mr. Trehubenko said

Phot

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urte

sy H

FF

» Newport Tower, a 1.1 million-square-foot of-fice tower in Jersey City, N.J., has been refinanced, thanks to a $200 million first mortgage provided by Prudential Mortgage Capital Co. The loan is for seven-years, at a 3.5 percent fixed rate.

Owner Bentall Kennedy bought the building at 525 Washington Boulevard in October 2011 from Brookfield Office Properties for $377.5 million.

Marty Standiford, a vice president of acqui-sitions at Toronto-based Bentall Kennedy who worked on the original acquisition, told The Mort-gage Observer that the building was the company’s

entry to the New York City-area market and that the Jersey City location was attractive on several fronts.

“The basic reasoning was that we wanted expo-sure to metropolitan New York office, and we saw this as an opportunity to do that in a way that, in our view, gave us a tremendous rent role of blue-chip tenants in the building with long-term dura-tion leases,” Mr. Standiford said. “The Newport, Exchange Place submarket has great supply and demand fundamentals.”

Tenants include BNP Paribas and AXA Equi-table. Competition, he add-ed, is limited in the area, due to market rents that make new construction difficult to justify.

Mr. Standiford estimated that the building’s current oc-cupancy rate, taking into ac-count pending leases, is about 93 percent.

HFF arranged the loan for the borrower, led by manag-ing director Cary Abod and senior managing directors Whit Wilcox, Mike Tepedi-no and Tom Didio. The team worked on behalf of a sub-sidiary of Multi-Employer Property Trust called MEPT Newport Tower LLC. Bentall Kennedy in turn advised the subsidiary.

In June it was announced that the California Pub-lic Employees’ Retirement System had bought a one-third stake in Bentall Kenne-dy, investing $100 million in the real estate adviser. CalP-ERS said in a statement at the time that it was a move de-signed to “engage the pension fund and its staff with an expe-rienced real estate investment and management team.”

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September 2012 / News Exchange

CWCapital was “very pleased to be able to com-plete this transaction for the borrower.” He added that it is “a top-quality asset in a terrific location, with dedicated, long-term ownership.”

“We reviewed numerous options for the client and ultimately determined a life company execu-tion best met their goals for long-term, low-le-verage financing,” Mr. Trehubenko continued. “The refinancing generated a great deal of inter-est from our financing partners, which resulted in very attractive terms for our client.”

CWCapital, which Bethesda, Md.-based Walk-er & Dunlop announced plans to acquire in June, worked with CW Financial Services affiliate Rockwood Real Estate Advisors on the deal. Andre Dobrowsky represented Rockwood.

Michael Berman, president and CEO of CW-Capital, weighed in on the deal in a prepared statement as well, pointing out that it boded well for the firm’s new life insurance platform.

“Since launching our life company platform last year, we have established a strong network of relationships, including the very capable team at Principal,” he said, “which has allowed us to

assure our borrowers have access to the most competitive and flexible financing options.”

Meanwhile, a Principal Real Estate Investors spokesman said in an email to The Mortgage Ob-server that it was “attracted by the conservative nature of the loan request” and that “the bor-rower liked our terms and aggressive pricing.” He hinted that there would likely be more invest-ments to come.

“In the last three years, Principal Real Estate Investors has seen attractive opportunities and made a significant number of new investments in financing apartment properties in Manhattan, Brooklyn, Queens and Staten Island,” the email read. “That appetite for investment continues to-day, not only for apartments, but for office prop-erties as well.”

Capital One Provides 325 Hudson Street Loan

» The Mortgage Observer has learned exclu-sively that Capital One Bank has provided a

$60 million loan to Jamestown Properties to finance its recent acquisition of 325 Hudson Street, which it bought in April for $110 million from a joint venture of Young Woo & Associates and San Francisco’s Bristol Group.

The loan closed in late July, and although Jamestown declined to comment, Ben Stacks, Capital One’s market manager for greater New York commercial real estate banking, said it put the permanent financing on the building follow-ing Jamestown’s all-cash purchase of it in April.

“It was an approximately $60 million loan,” Mr. Stacks said, adding that the loan is for a five-year term. “It represents another in a line of deals that we’ve done with Jamestown. We’re very excited about our relationship with them. We view them as one of our top-tier clients and we anticipate doing more business with them in the future.”

Jamestown added the 240,000-square-foot Hudson Square property to a New York portfolio that includes Chelsea Market, 530 Fifth Ave-nue and 1 Times Square. Tenants at the tech-friendly building include Empire State College, Verizon and Level 3 Communications.

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6

News Exchange / September 2012

Thor Equities’ 590 Fifth Gets $100 Million

» Cushman & Wakefield’s Equity, Debt & Structured Finance team has arranged $100 mil-lion in floating rate financing for Thor Equities’ 590 Fifth Avenue.

Thor Equities, headed by CEO Joseph Sitt, bought the 19-story, 100,000-square-foot office and retail building in 2007 from the Feil Orga-nization for $90 million, according to data from Real Capital Analytics. Tenants there include AT&T and the NBA Store.

Dave Karson, executive managing director of Cushman & Wakefield Equity, Debt & Struc-tured Finance, told The Mortgage Observer that the loan’s terms exemplify the interest not only in New York property in general, but in retail on low-er Fifth Avenue in particular.

“I think that Fifth Avenue in the 50s has al-ways been the best retail corridor probably in the country,” Mr. Karson said. “As of the last few years, Fifth Avenue in the 40s is starting to catch up.” He attributes this, he said, to “a hard line” that used to exist at Saks and Rockefeller Center that retailers didn’t want to cross.

“Folks have realized that south of Rock Center and Saks is also a very, very attractive market, and the rents are half of what they are a block north,” he pointed out. “So ... from 49th Street down to 40th Street you’re seeing a lot of high-end, high-rent-paying retailers moving onto that strip.”

Mr. Karson said that the $100 million loan—a blend of mortgage and mezzanine—“was a low five debt yield, which is a terrific level of proceeds, and it was done at a very favorable interest rate, which I just think illustrates the demand for New York City property right now.” He declined to say what the rate provided by the lender was, but said that the bulk of the loan was the senior mortgage component.

Other team members at Cushman on the deal

included Steve Kohn, Alex Hernandez, Kate Pe-let and John Spreitzer.

A spokesman for Thor Equities didn’t return phone calls seeking comment.

Brookfield Slaps New $270 Million Loan on 4 WFC

» Brookfield Office Properties has complet-ed a $270 million refinancing of 4 World Finan-cial Center, the 1.9-million-square-foot office tower it owns as part of the World Financial Cen-ter complex in Lower Manhattan.

The deal was done by a group of banks, a source said, including Deutsche Bank, which is listed in city records as providing the loan but was part of a syndicate, according to the source. The source said Deutsche Bank provided a quarter of the debt, about $68 million.

Late last year, Brookfield reached an agreement to consolidate its ownership of 4 World Financial Center, buying a 49 percent interest that was held by Bank of America and its subsidiary Merrill Lynch, which is also a tenant in the building. In that deal, Brookfield agreed to pay $264 million for the bank’s stake and assume debt so that it could gain full control of the tower, whose base it is renovating as part of a sweeping makeover of the complex’s retail and public space.

A representative at Brookfield did not return calls seeking comment. The mortgage accounts for less than half the roughly $634 million valu-ation for the building that was set in last year’s purchase of the minority interest, a conservative level of leverage that is typical of real estate in-vestment trusts.

It’s not clear what Brookfield will do with any proceeds it generates from the new loan, but the funds could be used to help finance the over-$200 million retail renovation, which the company is just beginning work on.

Brookfield is also planning to break ground this summer on a $300 million deck over work-ing train tracks that lead into Penn Station. The platform will allow for the construction of an up to five-million-square-foot, mixed-use develop-ment—which it is calling Manhattan West—on the Far West Side. —Daniel Geiger

Funding for Nazarian Hotel Revealed

» L.A. nightclub and hotel guru Sam Nazarian has set his sights on the Midtown South submarket. As the Wall Street Journal reported recently, Mr. Nazarian will develop a boutique hotel at 444 Park

Avenue South, along with his partner, New York-based Moin Development Corp.

The Mortgage Observer has learned that the fi-nancing for the project was arranged by HKS Capi-tal Partners, in a mix of two types of financing—one of which, an EB-5, was a first for the firm.

“We actually secured the financing, which was a blend of a first mortgage from a conventional local bank in a construction facility, and we paired it with an EB-5 financing structure,” said Ayush Kapahi, a partner at HKS who worked on the deal. The inves-tors behind the EB-5 are Chinese, Mr. Kapahi said. “It just so happens that the Chinese are heavily, heavily the ones jumping onboard at this point be-cause it does require for a family to be able to invest $500,000 at a given time, so you need to have some-what of a deep pocket in order to be able to pull off the investment.”

HKS provided close to $50 million for the project, which will allow for the redevelopment of the site and the start of construction on the planned 190-key hotel. Mr. Nazarian and Moin Development bought the site in August 2011 for $45 million.

“They already acquired it,” Mr. Kapahi point-ed out. “This is the refinancing, restructuring and the construction component to get to a finished product.”

Mr. Kapahi declined to reveal the name of the lender involved in the transaction.

Asked about a time frame for the construction, David Shenfeld, a vice president at Moin Develop-ment, said that it is already underway.

“We’ve been doing demo and asbestos removal,” Mr. Shenfeld said. “But we are starting to gut it next week.”

Steiner Equities Takes $25 Million Loan for Multifamily

» Meridian Capital Group recently wrapped up $25 million in acquisition financing for Steiner Equities’ purchase of the Jardin, a 44-unit multi-family building with retail space in the Williams-burg section of Brooklyn.

The four- and five-story buildings making up the Jardin are located at 142 North 6th Street and comprise 45,521 square feet of space in all. Read Properties Inc. sold the building to Steiner Equi-ties in June 2012 for $38 million, according to data from Real Capital Analytics, which also indicated that the lender is Sovereign Bank.

Meridian managing director Aaron Appel and vice president Jonathan Schwartz negotiated the 10-year, fixed-rate balance sheet loan.

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8

News Exchange / September 2012

ElsEwhErE...paired with the spectacular location of the prop-erty, was extremely beneficial in working to quick-ly close this financing in under three weeks,” Mr. Schwartz said about the deal.

For his part, Mr. Appel added that the “transac-tion highlights how Meridian’s strong relationships and market expertise allow us to quickly obtain fi-nancing that is tailored to the client’s needs.”

The Jardin, which includes two retail spaces, was originally slated to be developed as condos but was changed to rentals before all the units sold. It has since been fully leased at an average rent of $53 per square foot.

Meridian was able to arrange the loan within a tight 18-day time frame, the firm said.

Loan Forthcoming for Carlton House Condo Conversion

» The Mortgage Ob-server has learned that a $200 million refinanc-ing of the Carlton House condominium conver-sion is in the works. Bank of America is in talks with partners Angelo, Gordon & Co. and Extell Development to provide the financing, though the

loan hasn’t closed and terms weren’t available.The refinance coincides with the JV’s agreement

to sell the 33,389-square-foot retail condominium at the site, located at 680 Madison Avenue, to Vor-nado Realty Trust. The REIT will pay $280 mil-lion for the retail there, according to reports.

The estate of Leona Helmsley sold its leasehold interest in the Carlton House—a former hotel—to Extell Development and Angelo, Gordon & Co. in 2010, setting the ball rolling.

Adam Schwartz, a managing director and head of Real Estate at Angelo, Gordon confirmed that talks were underway about refinancing the condo conversion, which is expected to result in upwards of 70 luxury apartments.

“We’re working with them on potentially re-financing the Carlton House transaction,” Mr. Schwartz confirmed, adding that the financing would either refinance Carlton House as a whole or infuse the condominium conversion project with money to fund construction.

This financing would come on the heels of an ac-quisition loan that Bank of America provided for Angelo, Gordon & Co. for a Gramercy Park office and retail project.

Massey Knakal Capital services Arranges $21 Million loan for New York Client’s Miami retail

» The Mortgage Observer has learned exclusively that Massey Knakal Capital Services has followed a New York-based client’s needs to the Sunshine State, arranging a $21 million loan for a retail prop-erty on Miami Beach’s Lincoln Road. Wells Fargo provided the 10-year, 4.5 percent loan to the spon-sor, Aurora Capital Associates. The loan-to-value ratio is 70 percent.

Garrett Thelander, managing director at MKCS, and director Morris Betesh worked on the trans-action. Joseph Tufariello, a managing director at Wells Fargo, worked on the bank’s end, the duo said.

“This was actually a loan that I had originated at Anglo Irish Bank,” Mr. Thelander told The Mort-gage Observer. “So I had an existing relationship with Aurora Capital.” Mr. Thelander joined Massey Knakal Capital Services in 2011 after working as an executive vice president at Anglo Irish Bank, where he helped set up the New York office.

The original loan was a $17 million acquisition loan that was coming due in 2012.

“The sponsor, Aurora Capital Associates, had done a great job repositioning the retail by upgrading the tenancy and increasing the rents to market rate,”

Mr. Betesh explained. “The high debt per square foot is a testament to the strength of the Lincoln Road re-tail corridor and the sponsor’s proven track record of managing high-end, urban retail assets.” The debt per square foot Mr. Betesh mentioned was $1,400.

Though Messrs. Thelander and Betesh declined to reveal the address of the Aurora Capital Asso-ciates building, Lincoln Road as a whole is a major shopping destination in the city and it has been the site of much interest lately on behalf of New York-area real estate firms. In early July, for instance, REIT Vornado Realty Trust announced that its Vornado Capital Partners fund had bought 1100 Lincoln Road, which is 97 percent leased to retail tenants like Regal Cinemas and Anthropologie. The fund bought the 167,000-square-foot property for $132 million.

Because of the value inherent in such a retail area, Mr. Thelander noted that MKCS had “found a lender here that was very familiar with Lincoln Road.” Mr. Betesh, meanwhile, emphasized the importance of the lender’s familiarity with the area as well, saying that others were “maybe not able to get their arms around the high value per square foot.”

Adam Schwartz

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News Exchange / September 2012

MiscEllaNy Prudential Mortgage Capital Kicks Off New Arm with $108M Loan

» Newark, N.J.-based Prudential Mortgage Capital Co.’s European business arm has completed its first piece of financing since launching in January 2012. The company said in June that it had provided a $108 million commercial real estate loan, secured by a portfolio of four Central London office proper-ties and grocery-anchored retail in the town of Bath, which is just over 100 miles west of London.

It’s a significant first step on the road to the com-pany’s targeted $500 million in long-term, fixed-rate senior debt transactions for 2012, it said. The debt in these transactions will be denominated in local cur-rency, bringing this first one in at £69.5 million.

“The diversification we can achieve by investing a portion of our portfolio outside of the U.S., whether it’s Europe, Japan or Mexico, is very valuable,” said Thor Orndahl, a managing director at the company who oversees its non-U.S. mortgage platform. “The current market dislocation has provided the opening we have been looking for, and our plan is to be active in Europe for many years to come.”

The company will sidestep the most troubled re-gions of Europe, focusing instead on office, logistics, multifamily and retail in large German cities as well as London and Paris. Local banks may collaborate on structuring the loans.

Greystone Servicing Corp. Arranges $21M Affordable Housing Loan

» New York’s Greystone Servicing Corp. said recently that it has arranged a $21 million loan fi-nanced by the Freddie Mac Targeted Affordable Housing Mortgage Program for 350 units of af-fordable housing in Willimantic, Conn.

The complex, Windham Heights, located at 202 Scott Road, is owned and managed by Vesta Cor-poration, which manages roughly 4,000 total units in Connecticut, Ohio, New Jersey, Indiana and D.C. Sources indicated it was renovated as recently as 2005 and that the refinancing is for about 10 years.

“Working with Freddie Mac allows us to further reach customers through a multitude of high-qual-ity products,” said Jeff Englund, who led Grey-stone’s affordable housing team on the deal. “As Greystone works closely with a number of mort-gage-purchasing enterprises, we are able to offer the best programs for our clients, and we are excited to continue working closely with Freddie Mac and our other partners to serve the multifamily mort-gage needs of the country.”

» M&T Bank said Monday that it had entered into a definitive agreement to acquire Hudson City Bancorp for $3.7 billion in stock and cash. The acquisition will see Hudson City merge into an M&T subsidiary—giving M&T access to 135 new branch locations in New Jersey, New York and Fairfield County, Conn. The deal would make

for the largest bank merger of 2012 so far.

The boards of di-rectors of each bank have approved the merger, which is now pending regulatory ap-proval and approval by the shareholders of each company.

According to an in-vestor presentation

about the merger available online, the merger will greatly diversify Hudson City’s monoline res-idential mortgage focus—99 percent of its portfo-lio as of June 30, 2012. It will create a pro forma commercial real estate platform of $17.9 billion, providing the biggest boost for M&T, however, in the area of residential mortgages.

“M&T, which was established in 1856, and Hudson City, founded in 1868, have been serv-ing their customers and communities for gener-ations, and we look forward to building on that long history and tradition together in the future,” M&T Chairman and CEO Robert Wilmers said in a prepared statement about the merger.

“As a thrift, Hudson City focused primarily on deposits and mortgages,” Wilmers continued. “M&T will build on Hudson City’s loyal custom-er base to create a comprehensive community banking franchise that provides a full range of checking and savings accounts, debit and cred-it cards, home equity loans and other lending options, plus small business and commercial banking services and our premier wealth man-agement and corporate trust solutions through Wilmington Trust.”

M&T acquired Wilmington Trust in late 2010.

Hudson City Chairman and CEO Ronald

Hermance, Jr. said that the merger “creates tremendous opportunities to build on the suc-cesses that each company has achieved individ-ually in its own markets.”

M&T is headquartered in Buffalo, N.Y. and has $80.8 billion in assets. Post merger, the bank’s pro forma balance sheet is anticipated to in-crease by roughly $28 billion, it said.

Trepp: CMBS Delinquencies at Record High

» Another month, another all-time high CMBS delinquency rate, according to data from Trepp. The company’s July 2012 U.S. CMBS De-linquency Report showed $59.5 billion in CMBS loans are now delinquent—classified as 30 days or more in arrears. This figure doesn’t include loans past the balloon date but current on inter-est payments.

The rate for July moved up 18 basis points to 10.36 percent, from June’s 10.16 percent, leav-ing $75.4 billion in loans—nearly 4,000 in all—in special servicing.

The July results seem to go against what Trepp predicted a month earlier, when senior manag-ing director Manus Clancy said that, with most of the 2007-vintage loans already past their ma-turity dates, the worst might be behind us.

“Just as the heat should break by September, investors should see some relief, too,” Mr. Clan-cy predicted. “Now that most of the 2007 loans coming due in 2012 have passed their maturity date, the delinquency rate should start to level off soon.”

In light of the July numbers, Mr. Clancy said that Trepp doesn’t expect much improvement over the next few months. “We don’t anticipate many more increases in the rate over the next six months,” he said. “The loans that were unable to refinance over the last year will continue to lin-ger with the special servicers.”

Retail was the only asset type to see improve-ment in July, its delinquency rate dropping to 8.03 percent for the month from 8.17 percent the month previous.

Robert Wilmers

M&T Bank set to acquire Hudson city Bancorp for $3.7 Billion

TMO.0912.NewsExchangeCS3_CG.indd 10 8/31/12 2:30:00 PM

11

September 2012 / In-Depth LookA comprehensive look at CRE finance trends

Record-low mortgage rates have helped to fuel refi nancing activity for residential homes. In July, the number of mortgage

applications fi led hit a three-year high. Freddie Mac also reported that 30-year, fi xed-rate mortgages averaged 3.49 percent for the week ending July 26.

Likewise, attractive rates are fueling fi nancing in the multifamily market, where fi nancing for low-leveraged rental buildings has reached its lowest levels in decades. The result? Fierce competition among lenders looking to provide fi nancing for the asset class, particularly in the Big Apple.

Interest rates as low as 3 percent for fi ve-year fi nancing, 30 to 35 year amortization at par, non-recourse are being o� ered. And borrowers are taking advantage of seven- and 10-year fi xed-rate fi nancing, which is being o� ered below 4 percent.

Commercial/multifamily mortgage origination volumes during the second quarter of 2012 were up 25 percent compared with second-quarter 2011 levels as well, according to a Mortgage Bankers Association survey that also charted a 39 percent increase from the fi rst quarter of 2012.

“Commercial and multifamily mortgage lending and borrowing continued to pick up in the second quarter,” said Jamie Woodwell, MBA’s vice president of commercial real estate research. “Every major investor group increased their lending.”

In fact, each and every day, lenders from around the region are knocking on the doors of owners of rental properties o� ering low-cost fi nancing. Some of the newest for this asset class include Connecticut-based People’s United Bank and Montebello, N.Y.’s Provident Bank.

“We are focused on growing our commercial real estate business, particularly in the multifamily segment, across the metro New York market,” said John Costa, executive vice president, commercial banking for People’s United Bank.

Competition is, and will remain, keen for these new entrants who will have to o� er exceptionally low rates to compete with leaders like Investors Bank.

“We were fortunate to begin fi nancing multifamily apartment buildings back in 2008 before it became the lending choice for many banks,” said Domenick

Cama, senior executive vice president and COO of Investors Bank. “While it’s true the combination of lower rates and more competitors has driven down spreads, we remain committed to this business.”

One of the most active lenders to this asset class is the commercial term lending division of JPMorgan Chase. The head of East for CTL, Jason Pendergist, said, “Our Chase commercial term lending business provides the greater New York-area, Boston, D.C. and Philadelphia markets with term fi nancing to owners and investors of income producing buildings with fi ve or more units.”

Astoria Financial, the holding company for Astoria Federal Savings and Loan Association, joined the ranks of lenders for this asset class in 2011. It reported in its latest earnings report that from March 31 to June 30, 2012, its combined multifamily commercial real estate loan portfolio increased by $361.2 million, or 58 percent annualized, to $2.8 billion.

New York Community Bank continues to be number one in the New York City region for multifamily. The company reported as of June 30, 2012 that multifamily loans were up $417.1 million from March 31 and $753.5 million from December 31. And it had approximately $1.8 billion in the pipeline.

James Carpenter, senior executive vice president and chief lending o� cer at New York Community Bank, said that the bank has been a leading multifamily lender in the area for decades. “While there have been many market participants over the years, no one has remained as consistently committed to multifamily fi nance,” he said.

“Multifamily properties are a preferred asset class for Mercantil Commercebank because of their low risk profi le and acceptable risk-adjusted returns,” said Paulo Garcia, vice president of commercial real estate at the bank. “This is particularly true for New York City, where the multifamily market held up and, in fact, continues to climb to new record highs.”

Loans on commercial real estate, especially for multifamily residential properties, helped Signature Bank log a record $45.3 million in net income for the second quarter of 2012. Loans at the bank increased $664.9 million, or 9 percent, to $8.03 billion for the second quarter. Over the fi rst half of the year, they grew $1.8 billion, or 17.2 percent. Not surprisingly, the increase in loans was primarily driven by growth in commercial real estate and multifamily loans, as well as by the launch of the bank’s specialty fi nance business.

The banks are also in constant competition with the GSEs.

One of the most active players in the GSE arena is Beech Street Capital. “It’s interesting how strong it is, despite persisting unemployment and fl at income growth,” said Mike Edelman, senior vice president, production management at the fi rm. “A lot has to do with demographics. You also have the disruption associated with the housing crisis, so there’s a lot more renters by choice.”

Also a factor is the resurgence of fi nancing from Wall Street CMBS and conduit lenders. Competition is keen from Deutsche Bank, Cantor Commercial Real Estate, JPMorgan and Ladder Capital, as

well as Goldman Sachs.Record-low fi nancing is fueling the investment

sales market, too. “This is the best investment sales market we have seen in fi ve years,” said Robert Knakal, chairman of Massey Knakal Realty Services.

Nonetheless, while rates fell to record lows—even below 3 percent in July—there are clouds on the horizon. During the fi rst 15 days of August, pricing of the 10-year Treasury note rose 30 basis points. And higher yields on these notes will result in higher costs for long-term fi nancing and impact investment sales.

But for now, as rates continue to be at all-time record lows, prudent borrowers should, and will, lock in long-term permanent fi nancing for all asset classes.

Record-low rates are keeping area lenders busy.

Competition Hot in Multifamily

by Michael Stoler

ILLU

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TMO.0912.CS3.InDepthLook.indd 11 8/30/12 12:25:49 PM

12

Q&A / September 2012

by Carl Gaines

Jerry SwartzHKS Capital PartnersThe Mortgage Observer recently spoke to Jerry Swartz, who last year struck out on his own to found HKS Capital Partners after almost 40 years at Pergolis Swartz Associates. He shared what motivated him to wind something up, at an age when most might be focused on winding down.

The Mortgage Observer: You were a founding partner at Pergolis Swartz. How did you get your start in the business before that?

I was in the manufacturing business and in 1970, I think it was, there was a credit crunch and the entire industry did not do well and we closed that business up and I was looking for something. At the time I was in contract on a house. I had my first wife and two young kids and when I closed that business up, I had no means of closing on the house, I had no means of income and I needed something that was going to generate income for me quickly. A friend of mine was in the real estate business and I spoke to him about it and he told me that I should get into brokerage because, once you learn the business, you’re generating fee income and as soon as you can close it’s faster. I was naïve enough to go with that and I went to Sonnenblick Goldman and I got a job there on straight commission. It was very enlightening because I really didn’t know—other than the mortgage I was going to get on the house I was in contract on—I didn’t know what a mortgage was. But it was a great shop. I listened. I learned. I remember in the beginning when I would make a cold phone call and someone would ask me a question, I remember specifically someone asking me what the current prepayment penalty is on a mortgage. And I said, ‘“You know what, I’ve got another call coming in. Let me call you right back.” And I went and asked one of the other brokers what a prepayment penalty was. That’s how basic. I really did not know anything. But anyhow I learned, and within six months I had some closings and made some nice money, and the next year I doubled that income and so on and so on and so on and it was great. I was there for four or five years and then I met Richard Pergolis there. In ’74 or ’75 we formed Pergolis Swartz, and 40 years later, or whatever it was, in 2011, we started this company, on April 1 of 2011.

What was it about the market that made you think it was a good time to start something new in 2011, and how long had you been thinking about doing that?

The market was beginning to get a little better. I wouldn’t say it was good enough to launch a new business. However, what happened at the other firm was a philosophical difference between my partner and me—just in the way that the business was done and in the approach that each of us took. Even geographically within the office. We had 5,000 square feet of space; I was literally in the back, he was all the way in the front. And a lot of the young brokers—we didn’t have a lot of brokers, but the ones we had, Ayush [Kapahi], for example, and John [Harrington], the two who came with me—were in the back. And I kind of morphed into deals with them because they were there and they were in my office a lot and we talked about deals.

How competitive is the environment now? Has it gotten more competitive over the years?

It has. What happens is that the direction of the market dictates the competitiveness. When the market heats up and more and more transactions are getting done, like any other business, excess profits breed ruinous competition. I don’t know. I didn’t make up the statement. I don’t know whether it was Baruch or somebody, but that’s what happens. And as the market heats up and more and more deals get done, well, attorneys who may not be too busy in their legal business say, “Hey, I’m a broker. I can do deals.” So in that respect, yeah, it does get busier and we’ll all of a sudden be competing against somebody who I’ll say, “Geez, I’ve been in business a long time and I’ve never heard of them.” It might be a startup business or not even a brokerage business per se. But someone like Massey Knakal—I know they have opened up a finance business. And Eastern Consolidated, I believe they have their own. It’s obviously an additional source of income, a new profit center, so, yes, as the market gets better I think the competition heats up. Of course.

Are you seeing more construction deals? Are they picking up?

A lot. The construction loans, not as many ground-up construction loans. A number of conversions, renovations, a number of bridge loans, obviously, where there may be a value-added scenario or a structured-finance scenario to the transaction. You know, someone might be adding a new tenant or renovating existing apartments or enlarging certain apartments. A lot of those. We have not seen as many note sales as we did two years ago, which doesn’t necessarily mean that that particular segment of the market has evaporated. I’m sure that there are still plenty of toxic loans that need to be worked out. Certainly CMBS is going to have a lot of loans coming up very soon, but in terms of the number of loans that we saw to finance acquisition of loans, we haven’t seen that many of those lately.

Do you see doing this for the immediate future? Any plans to slow down?

I see doing it until I fall down on the desk and they carry me out, feet first. As I said before, it’s something I can do from anywhere with emails and the computer and the iPad.

You just need to stay busy?I do. I get bored quickly. I guess I’m a Type-A.

Interestingly enough, pretty much all the brokers are the same way. You kind of have to be in this business—have that kind of personality. Well, it works if you do have. That’s what it is. At times I will sit on the deck overlooking the ocean and it’s just incredible. But I can’t do it for a long time—I’ll get bored. Or I’ll be planning in my mind what I’m going to do next.

Jerry Swartz

TMO.0912.CS3.Q+A.indd 12 8/30/12 12:32:03 PM

has acquired

Fannie Mae | Freddie Mac | FHA | Life Co | CMBS | Bridge

We are pleased to announce that Walker & Dunlop has closed

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Untitled-5 1 8/28/12 11:37:51 AM

1095

224

344

192

351

228

1115

14

Scheme of Things / September 2012 Monthly charts of commercial real estate financings in the boroughs

The Mortgage Observer has compiled a monthly snapshot of top commercial real es-tate 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, though several tied in July. Data are drawn from Actovia, which tracks mortgage informa-tion and streamlines leads from city records.

Mortgage Charts

310

85

Refinances were up in June from May’s 736 to a high of 1,095. They then dropped sharply in July, down to just 310. Purchases were down in July as well.

JUNE JULYREFINANCES

JUNE JULYPURCHASES

10003 36 11211 13

10009 32 11215 12

10002 30 11218 9

11201 29 10457 8

11211 29 11219 8

10458 26 10031 8

11101 8

ZIP CODE JUNE 2012 ZIP CODE JULY 2012

The 11211 ZIP code, comprising much of Williamsburg, regained the top spot for financing activity in July. According to Actovia’s data, however, financings were down across all the top ZIP codes for the month..

JUNE JULYBRONX

JUNE JULYALL

JUNE JULYMANHATTAN

JUNE JULYBROOKLYN

JUNE JULYQUEENS

Total sales dropped precipitously in July in all the boroughs. June saw 1,115 sales in Manhattan, the Bronx, Brooklyn and Queens, yet this figure dropped all the way to 394 for July. The Bronx registered the fewest sales in the month of July, with just 52.

394

11652

15472

New York Community Bank maintained the top spot for lenders in the New York area for both June and July. See this month’s In-Depth Look (page 11) for insight into how lenders are vying for chunks of the region’s multifamily financing. It details how several of the lenders on this list are making inroads.

New York Community Bank 93 New York Community Bank 45

Astoria Federal Savings Bank 84 JPMorgan Chase 39

JPMorgan Chase 73 M&T 35

Signature Bank 60 Capital One 24

Capital One 55 Signature Bank 21

Dime Savings Bank of Williamsburgh 46 Astoria Federal Savings Bank 13

M&T 28 Dime Savings Bank of Williamsburgh 12

Investors Bank 26 Wells Fargo 10

Flushing Savings Bank 24 Sovereign Bank 7

Apple Bank 20 Flushing Savings Bank 6

BANK JUNE 2012 BANK JULY 2012

Refinances vs. Purchases

Most Active ZIP Codes–Financing

Top 10 Lenders

Total Sales by Borough

TMO.0912.CS3.SchemeOfThings.indd 14 8/30/12 3:06:07 PM

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Untitled-32 1 8/30/12 12:12:10 PM

16

The M.O. Columnists / September 2012

Stein’s Law

Joshua Stein

A multistate developer wanted to set up a credit line secured by mortgages on a few available properties, one in New York City.

Knowing from experience that New York State had a mortgage recording tax, the developer resigned itself to paying that tax as the price of using New York property as collateral. The developer reluctantly prepared to write a five-digit check to support New York’s various governments.

Then the developer started to move toward a closing. Someone saw the word “revolving” in the developer’s credit line agreement. The loan documents allowed the developer to borrow on the credit line, repay and then borrow again to meet the developer’s cash needs. The developer soon learned that this meant it would, in theory, owe a mortgage recording tax both for the initial closing and borrowing of the loan, and then again every time it repaid and borrowed. The state tax officials take the position that once any mortgage loan has been repaid, even temporarily, any additional borrowing of that loan incurs another tax.

How New York State Shoots Itself in the Foot on Revolving Mortgage Loans

Unfortunately, the developer contemplated using its secured credit line just like any other revolving credit line. The developer would borrow and repay multiple times over the course of a year. If this required the developer to pay a tax every time,

then payment of the tax would dwarf all other borrowing costs. The tax amounts to 2.8 percent of each borrowing. The tax would simply make it impossible for the developer to use the credit line.

Given the business deal with the developer’s lender, someone suggested that the developer could limit the New York piece of the revolving loan so it falls within a $3 million “safe harbor” in the New York tax law. That’s a special provision that says revolving loans below $3 million don’t incur multiple

taxes with each repayment followed by another borrowing.

If a revolving loan as a whole amounts to $3 million or more, though, then the safe harbor won’t apply even if the New York mortgage secures only some smaller piece of the loan. The New York collateral needs to secure the entire loan, which

must be less than $3 million. Moreover, as a price of qualifying for the safe harbor, the borrower must, in practice, pay off and release the mortgage when the borrower sells the property, losing the opportunity to deliver to the buyer a tax-paid mortgage, for which the buyer may pay a little extra at closing. Other technical restrictions on availability of the safe harbor also made it difficult for the developer to use.

Before long, the developer threw up its hands, and decided not to record a New York mortgage at all. It just cost too much and created too many problems to have New York real property secure a revolving loan. So, instead of writing a five-digit check to pay mortgage recording tax, the developer saved some money. And the New York taxing authorities received zero instead of the check for mortgage recording tax the developer would have reluctantly paid if New York accommodated revolving mortgage loans.

This all happened because New York law and tax officials cling to a hyper-technical interpretation of the mortgage recording tax. They insist that any repayment and additional borrowing of a mortgage loan incurs a new tax. In practice, that means New York real property can’t secure revolving loans, because no sane borrower will pay another 2.8 percent tax every time it borrows again. And, as a result, New York effectively turns down whatever mortgage recording tax payments the state could collect if the mortgage recording tax accommodated revolving loans.

As the easiest way to accommodate revolving loans—i.e., to make it practical to use New York real estate to secure them—the state could expand the safe harbor so it applies to all revolving loans. Ideally the state could also cut away some of the technical issues that limit the practical usefulness of the safe harbor. The state could, in effect, say that if a loan is in fact a revolving loan, then it only incurs mortgage recording tax once, not multiple times.

New York State must think that today’s interpretations of the mortgage recording tax will somehow allow the state to collect multiple iterations of mortgage recording tax on any revolving loan. In practice, what really happens is New York real property doesn’t secure revolving loans, so no one pays any mortgage recording tax at all on them.

If the state fixed its treatment of revolving loans, this would not only raise a bit of money, it would also encourage at least one type of commercial real estate financing that is commonplace outside New York.

What does New York have against revolving mortgage loans?

Joshua Stein is the sole principal of Joshua Stein PLLC. The views expressed here are his own. He can be reached at joshua@joshuastein.com.

TMO.0912.CS3.Columnists.indd 16 8/30/12 12:21:51 PM

17

September 2012 / The M.O. Columnists

The Basis Point

Sam Chandan

Lenders Press Forward, but Outlook for CMBS Remains Reserved

C ommercial real estate lenders are growing more confident, or at least more inclined to resume risk-taking. Bucking head

winds from the weaker economy and job market, underwriting standards for loans on well-positioned assets eased in the second quarter and through the summer. Competition to fund high-quality borrowers showed increasing spillovers from the febrile apartment sector, with a small but growing number of development projects and cash-out refinancings registering alongside new office, retail and hotel mortgages.

From the vantage points of operating, investment and lending, apartments continue to set the high bar. Long-term fixed-rate financing for stabilized apartments fell to a national average of 4 percent in the second quarter, the lowest on record. For larger and higher-quality assets, rates are lower. In New York and Washington, D.C., in particular, the prevailing notion that lending spreads are in line with historically supportable levels is being tested. As risk-free rates skirt bottom, we should expect a far-sighted market to offset with wider cushions. For some lenders, competitive pressures from peers and from the sector-dominant agencies are clouding the long view and limiting risk-based pricing power.

Short-term risk metrics reflect the apartment sector’s strong cash flow momentum. Even as debt yields inched lower, the combination of cash flow gains and lower rates allowed debt service coverage to improve slightly in the second quarter. But more comfortable measures of term risk belie the elevated maturity risk embedded in the most aggressively priced loans. Too many loans in the second quarter assumed a “new normal” in the interest rate environment while also affording a healthy uptick in cash flow growth.

Baseline projections for interest rates anticipate 10-year Treasury yields in the vicinity of 4.5 to 5

percent when today’s new permanent financings mature. In a moderate economic growth scenario in which the economy expands below its potential rate, that is a reasonable working assumption. Even though Treasury yields have generally been falling for more than three decades, they were fairly steady at just below 5 percent in the years leading up to the financial crisis. However difficult to imagine today, higher rates will be even more difficult to digest at refinancing, in particular for the rising count of apartment loans with up-front interest-only periods.

The lender landscape is not as sparsely populated as it was a few years ago. Banks with healthy balance sheets and even healthier regulatory relationships are continuing to support their legacy borrowers’ needs and are slowly engaging new business. Underwriting standards suggest that banks are betting the economy will strengthen, though bets are being hedged on the rising tide lifting value-add assets. Life companies are dominating opportunities to fund large loans for public REITs and other liquid borrowers. The agencies are

ceding some share of apartment lending but have seen the absolute volume of their apartment lending programs hold steady or increase.

The CMBS outlook is less sanguine, principally as a result of bond investors’ shifting tastes and tolerances. Securitization volume inched up just 6 percent in the first half of 2012, though the pace has improved, with third-quarter deals through mid-August pushing volume closer to $25 billion. There are currently eight deals on track to price in September and October, with a projected average pool balance in the range of $1.2 billion. On its current trajectory, issuance will fall short of $40 billion in 2012, up from last year but still just a fraction of the market’s potential.

Even as some master servicers struggled with excess capacity, limited CMBS volume is supporting

a rally in bond prices. After widening unremittingly over the course of the second quarter, spreads have narrowed in the weeks following the most fretful moments of the sovereign bond crisis, when corporate spreads opened up. For the time being, the more recent improvement in CMBS trends is being read as a signal of the market’s appetite for more.

It remains unclear how much spreads will widen if volume picks up or the European dilemma reasserts itself in force, requiring higher yields from all risky investments. Europe’s current détente has come too late to stave off recession in the United Kingdom and on the Continent. The semblance of a return to order will give way yet again if German ordoliberalism and demands for austerity do not bend for its restive and increasingly unemployed neighbors.

Current assumptions could also be upset if conditions in Europe improve substantially. Rock-bottom treasury yields reflect global risks and are not a vote of confidence in American fiscal policy under either presidential-election scenario. The Fed’s readiness to accommodate is not in question, but monetary policy will strain to hold long-term rates anywhere near current levels if investors’ perceptions of global risk improve.

The vagaries of the bond market and the ever-present potential for disruptive reforms are not the only qualifiers to the CMBS outlook. For investors in search of diversification, the overweighting of pools to anchored and unanchored retail properties is also a consideration. If conduit lenders had perfect foresight into the long-term performance of their originations and if the ratings models were equally prescient, the underwriting standards would adjust in kind to reflect the risks of each retail loan.

In practice, investors that have been active in buying recent CMBS may become wary of the idiosyncratic risks associated with overexposure to the retail sector. By dollar volume, almost 40 percent of second- and third-quarter CMBS was in the retail sector. Diversification into apartment loans might enhance the investment attractiveness of new deals, but conduit lenders are not typically positioned to compete with agency lending and the advantage conferred by the guarantee.

Pricing in early August, a $1.3 billion Deutsche Bank and Cantor Fitzgerald deal offered investors an opportunity to diversify their new issuance holdings toward office exposures. Less than one in four dollars was backed by retail property income, one of the smallest shares of any deal this year. If the conduit is to reassert itself in force, it will have to follow that lead and stave off its recent niche persona.

Sam Chandan, Ph.D., 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.

TMO.0912.CS3.Columnists.indd 17 8/30/12 12:22:11 PM

Prior to his new position, Mr. Gluck was a free-lance consultant for high-net-worth real estate investors.

Eastern Union Commercial, the privately owned commercial mortgage company, has hired Avi Pilchick as the firm’s chief operating officer, a new position within the firm.

Mr. Pilchick, who most recently served as a se-nior executive at a Pennsylvania real estate ven-dor, will be assuming a corporate role within the company, allowing company president Ira Zlo-towitz, managing partner Abe Bergman and other brokers to focus on deal-making.

“As COO, Avi Pilchick will strengthen our cor-porate infrastructure, policies and procedures to ensure that brokers have the information, tools and staff support they need to fulfill our core mis-sion: providing clients with the best customized loans and terms on every transaction,” said Mr. Zlotowitz.

“With Avi concentrating on Eastern Union’s internal mechanisms, our brokers can focus with even greater efficiency on every detail of every loan and arrange creative financing solutions ideally structured to address the many nuances of each individual loan.”

Studley has hired Heidi Learner as chief economist, it was announced last week.

Ms. Learner, an 18-year Wall Street veter-an who most recently served as a vice presi-dent of State Street Corp., will now be re-sponsible for develop-

ing real-time measures of supply and demand for commercial space to assist Studley’s clients in un-derstanding the continually evolving economics of the real estate markets.

“Heidi’s arrival elevates our service capabili-ties,” said Studley president Michael Colacino. “Her proven ability to measure real-time eco-nomic variables and assess their impact on mar-kets will help our clients make better real estate decisions. She will enhance Studley’s reputation for having the best analytics in our industry.”

Before her position at State Street, where she created quantitatively based global fixed-in-come trading strategies, Ms. Learner worked as a bond portfolio manager at MEAG New York Corp., where she directed interest rate trading for Munich Re’s $38 billion portfolio of assets. Prior to those positions, she worked at both Barclays Bank and Salomon Brothers.

Heidi Learner

United Realty Part-ners has named Dov Shimanowitz as exec-utive vice president of operations for its advi-sory division, United Realty Advisors LP.

“[Mr. Shimaowitz] not only brings an ex-tensive real estate background to United Realty, but he also has a unique combination of strate-gic business planning and execution experience as well as expertise in sales and marketing,” said Jacob Frydman, chief executive officer. “He is a valuable addition to our team as we look to make strategic real estate investments on behalf of our clients.”

Mr. Shimanowitz will oversee United Realty’s strategic plan, business development, compli-ance and client relations. His responsibilities also include coordinating investment-offering docu-ments and filings across all of the firm’s affiliates.

Walker & Dunlop announced Michael Vaughn as the senior vice president of the com-pany’s FHA finance health care division. Mr. Vaughn will serve as the head of the department and manage origination, underwriting and qual-ity control of health care loans.

“We are excited to welcome Michael to our FHA finance team, which has grown significant-ly over the past year. Michael is a seasoned and highly respected professional in the health care finance sector and bringing him onboard is a sig-nificant opportunity due to the knowledge and experience he developed as director of the LEAN health care division at HUD,” said Michelle Warner, senior vice president of FHA finance at Walker & Dunlop.

Prior to his new position, Mr. Vaughn was worked as a director of the Office of Residen-tial Care Facilities for the U.S. Department of Housing and Urban Development.

One of America’s largest privately owned mortgage companies, Eastern Union Commer-cial, has welcomed Jake Gluck to assume the role of director of lender relations.

“Jake Gluck will devote his time and attention to understanding how each lender operates, the details and nuance of how they structure their loans and how their policies, decisions and per-sonnel change, no matter how small,” said Ira Zlotowitz, president of Eastern Union Com-mercial. “All of these factors can impact the final loan.”

Jonathan Horn has joined the Besen Group as executive managing director of the special assets group. Mr. Horn, who previously founded Helios Capital Advi-sors and was directly re-sponsible for over $500 million UPB of small-

balance residential and commercial mortgage loans, will now oversee day-to-day operations in the Besen Group’s new office in Red Bank, N.J.

“We are pleased to have such an experienced industry leader at Besen heading this specialized segment of the market and to further expand our team,” stated Michael Besen, chief executive offi-cer of the Besen Group. “Jonathan has a noteworthy track record and is well-regarded in the mortgage loan and investment community.”

The Besen Group specializes in the disposition of small-balance residential and commercial loans in the secondary market and will operate a full-service advisory and brokerage office in the new location.

The nonprofit affordable housing advocacy group National Housing Conference has named a new president and CEO, Chris Estes.

“I am honored with this extraordinary opportu-nity to lead NHC during this critical period,” Mr. Estes said. “There is a new urgency around hous-ing issues—a level focus we have not seen for many years. I aim to make NHC a stronger leader on housing issues, bringing my own experience to ex-pand on a strong tradition.”

Before NHC, Mr. Estes worked for nine years as an executive director at the North Carolina Hous-ing Coalition.

Marcus & Millichap Real Estate Investment Services has promoted Glen Kunofsky to execu-tive vice president, investments. The position is the highest level for investment professionals at Mar-cus & Millichap.

Mr. Kunofsky joined the firm in the summer of 2001 and was promoted to senior vice president in the summer of 2008.

“Glen’s promotion to executive vice president investments is a testament to his extensive knowl-edge of the net-lease market, his superior transac-tion expertise and his unwavering commitment to client service,” said president and CEO John Ker-in. “His thorough understanding of sale-leaseback transactions and the depth of his net-leased asset disposition experience make him a tremendous re-source for our retail investment clients.”

18

Work Force / September 2012 Hirings, promotions, defections and appointments

Dov ShimanowitzJonathan Horn

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20

Power Profile / September 2012

STEVE KENNY

Bank of America:Off to the Races

Training for a marathon while working a full-time job would be a challenge for anyone. But working up to that 26.2-mile mark while simultaneously doing your part to contribute to a nationwide book of transactions that over the last 18 to 20 months included the origination of more than $20 billion in commercial real estate loans might pose its own set of challenges.

Steve Kenny, Bank of America’s commercial real estate banking executive for New York and New Jersey, is doing just that, though. And when he takes to the starting line for the ING New York City Marathon on November 4 to set out on a course that will take him through all five boroughs, the challenges he’ll face will in many ways be business as usual.

Mr. Kenny joined Bank of America in June 2000 from a legacy company, FleetBoston Financial, as a client manager, and held this position for a decade. Fleet was acquired by Bank of America on April 1, 2004, for approximately $47 billion in stock.

“Then in May of 2010, there were some changes within the commercial real estate banking group here in New York,” Mr. Kenny remembered over

breakfast recently. “And there was an opportunity for me to take over the leadership role and be the market executive for real estate here in New York and New Jersey.”

At the time, the country had just experienced three straight quarters of growth. Harvard professor Jeff Frankel had declared the end of the recession on his blog following a March uptick in employment reported by the Bureau of Labor Statistics. Still, lending in commercial real estate was on shaky ground, even in New York City.

In the reluctance of other lenders, Mr. Kenny saw opportunity.

“We were in a very deep recession in ’08 and ’09, and there was clear indication of an emergence from that and an opportunity to have the business grow again,” Mr. Kenny remembered, adding that of upmost importance in orienting himself to his new role was making sure the right employees, mindset, clients and strategy were in place. “That’s taken time for us to align all of that, but I think we had great success in 2011 because of having the right people, having the right philosophy, having the right clients. We have a lot of fantastic clients.”

Growing the business has meant endeavoring to augment the success of the bank’s construction lending platform with more bridge and term debt

financing, thereby achieving a more balanced portfolio. Mr. Kenny emphasized the importance of this several times over the course of multiple conversations, in fact. This is meant to happen while the bank forges ahead with lending on deals like Extell Development’s 90-story, mixed-use One57 project, for which Bank of America led the syndicate on the $700 million construction loan.

“It allows you to advance dollars more quickly because construction money goes out incrementally,” Mr. Kenny explained. “And obviously we’re a for-profit-driven business and enterprise, and we want to put our money to work sooner rather than later.”

Augmenting the construction lending platform, however, means first and foremost getting the word out. Mr. Kenny said this is one of the top priorities—and also one of the easiest to achieve, since he’s in part dealing with a captive audience.

“Our existing clients think of us the way that we’ve projected and portrayed ourselves for a period of time, and we need to make sure that they understand what it is that we’re pursuing these days,” he said. “Number two, we need to find new clients. This is the largest real estate market in the United States, and we have a significant number of high-quality clients today, but there are other

by Carl Gaines

On the heels of highly publicized deals in the New York City area, exec works to bring balance to the bank’s portfolio.

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names out there or other clients—what I’ll call prospects for us—that we can, should and will be doing business with in the future.”

Of all of the bank’s loans in the New York area, Extell Development’s One57 project has gotten by far the most attention, initially because on paper it didn’t necessarily look so alluring. “The headline was ‘Condo, Hotel, Construction’ and that was not an easy headline to be selling into,” Mr. Kenny remembered. “As we sit here today, the world’s a little bit different. We did that transaction. There have been a handful of other condominium transactions that have completed, so the bank market has warmed to condo construction, though it's still somewhat restrictive.”

Mr. Kenny said that One57 has been particularly successful as a marquee transaction. For one thing, it demonstrated Bank of America’s willingness at the time to think outside of the box. He credits Brad Dubeck and Dale Blumenthal—client manager and underwriter, respectively—with structuring the deal. “When the deal originally came in, it didn’t look like, and it wasn’t being talked about in the same light as, what we ultimately ended up structuring and being able to sell into the marketplace,” he said.

And then he gave credit as well to David Friedman on the syndications team for explaining the intricacies to the banks that would ultimately end up participating in the syndicate.

Despite challenging headlines, though, Mr. Kenny said, One57 was ultimately handled the way that any transaction would have been. Asked why it made sense, he didn’t hesitate. “First and foremost—and this is philosophically the way that we always try to manage our business: sponsorship,” he said. “We had existing relationships with both the development and equity partner here in New York and the equity partner overseas. Number two, the amount of cash, equity, in the transaction was extremely significant and, again, that’s something we look for as a pillar of how we want to do business. The third is the business plan. Did the business plan make sense? And so Hyatt’s involvement with a new brand that they were bringing to New York, their capital was committed to it and there was a contractual obligation for them to purchase the hotel upon completion.”

An additional bonus to the One57 deal has been the influx of other business, though Mr. Kenny wouldn’t be specific about exactly what

deals have come to the bank as a direct result of the project. Among these might be the funding of a construction loan for a freestanding hotel that Extell is reported to be putting up on 45th Street.

“That transaction led to a very significant increase in our relationship with the partners involved,” he said, “and identifiable, profitable transactions that we were able to complete for those clients. Then, I think it also positioned us in the marketplace as, ‘Wow, Bank of America is willing to be creative, to be thoughtful and to try to help clients achieve their goals.’”

Other recent deals include $90 million in construction financing provided to TF Cornerstone for a multifamily project at 45-60 Center Boulevard in Long Island City, Queens, and a bevy of term loans that show positive results for Bank of America’s efforts at better balancing its portfolio—though many are for properties and projects located outside the New York tristate area. For example, there was a $79 million, five-year term loan on residential properties at 9045, 9090, 9110 and 9120 Judicial Drive in San Diego, a $70 million term loan to Building & Land Technology for its residential property at 101 Park Place in Stamford, Conn., and

Power Profile / September 2012

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If you’re not prepared, you’re not going to be

successful—whether it’s running a marathon or

running a business.

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September 2012 / Power Profile

a $125 million term loan for a Monday Properties office portfolio in the D.C. metro area.

The bank also recently provided an acquisition loan for a Gramercy Park office and retail project for Angelo Gordon & Co., Mr. Kenny said. Angelo Gordon is also working with Bank of America to potentially refinance the construction of its condominium conversion at Carlton House at 680 Madison Avenue, along with Extell Development.

Adam Schwartz, managing director and head of real estate at Angelo Gordon, said that the amount of the refinancing hasn’t yet been determined but talks with Bank of America are underway.

“I enjoy dealing with him,” Mr. Schwartz said. “He’s a real straight-shooter and does what he says he’s going to do for you. He doesn’t play games and is just a good guy.”

Another client, Jeff Blau, president of the Related Companies, applauded what Mr. Kenny did as the market first started to improve.

“Bank of America has really been on the forefront of real estate lending to the best customers since the aftermath of the downturn,” Mr. Blau said, “which I think was a very smart strategy to pick up market share.” He added that the bank has looked

at top-tier only for construction financing and has been shrewd in picking and choosing whom to do business with.

“They are right now involved in virtually every single construction financing that we’re doing,” Mr. Blau pointed out. He added that Bank of America has been aggressive in booking new business with Related since other banks pulled out of the marketplace.

It’s a volume of business that requires a great deal of focus, not to mention the patience required to effect some change in the makeup of the bank’s lending platform.

The fact that he is shrewd, with an eye on the bottom line, is perhaps a function of Mr. Kenny’s background. He grew up in working-class housing in Stuyvesant Town and said that he often runs loops there as part of his marathon training. Later, his parents’ dream of home ownership prompted a move to Long Island. After his grandfather retired, his grandparents made the move from Stuyvesant Town to Long Island as well.

He has an accounting degree from the State University of New York at Plattsburgh, but said that he never “applied the craft directly in an

accounting firm.” Currently, he splits his time between the family home in Vestal, N.Y., and a Tudor City apartment.

Asked about role models in the business—mentors who had a particularly positive influence— he instead credited his parents.

“They had incredible work ethic and instilled that in me, and I think that is the number one thing that separates successful people from less successful people,” he said. “What we do is relatively straightforward. We make judgments on people and their financial profiles.”

His parents also instilled in him the importance of being prepared—something likely to come in handy November 4. “If you’re not prepared, you’re not going to be successful—whether it’s running a marathon or running a business,” Mr. Kenny cautioned. “They always say, ‘Enjoy the journey.’ The journey is in large part about the preparation to get to the point where you can be successful, so I take a lot of pride in working hard and trying to be enthusiastic about what I do. I have my days just like anyone else where it seems harder than it should be. But that’s O.K., because the next day I’m back and I’m energized and I’m eager to go.”

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CMBS / September 2012

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September 2012 / CMBS

CMBS: Keep Calm and Carry On

Maturities loom, but experts say not to panic

by Carl Gaines

A nyone who follows the CMBS market, especially in relation to its contribution toward funding the massive amount of commercial real estate loans coming

due during the rest of 2012, knows that it can be a topsy-turvy ride. But experts tell The Mortgage Observer that despite the load of coming-due loans and a CMBS market that’s a fraction of where it was pre-crash, there’s no reason to panic. This, even as delinquency rates for CMBS climb higher and higher.

According to data from Trepp, initially there was roughly $70 billion in CMBS set to mature in 2012. As of the end of August, $38.6 billion of that was still outstanding, though this figure “is somewhat skewed by loans past their maturity dates but not modified,” one analyst said. These loans will likely meet differing ends, through extensions, modifications or liquidations. Just counting loans

that are current, $13.5 billion is due to mature in the rest of the 2012.

Of note is the fact that several firms re-entered the CMBS market in 2011—among them Prudential, through a joint venture with Perella Weinberg, and KeyBank Real Estate Capital, which initially had a table-funding arrangement with JPMorgan. Prudential Mortgage Capital Company said in a release at the time that the venture would “provide its borrowers with access to the commercial mortgage-backed securities market without creating a new CMBS warehouse.”

Clay Sublett, a senior vice president at KeyBank who is in charge of CMBS as well as life insurance company placement and the FHA group, said his firm’s initial table-funding arrangement allowed for a degree of protection too.

“That was to allow us to protect ourselves from warehousing risk,” Mr. Sublett explained. “In hindsight, it was a good move, because in July and August of 2011, for a combination of factors, the CMBS market went through a hiccup.”

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CMBS / September 2012

He referenced three factors during this period—the debt-ceiling debate, Standard & Poor’s downgrade of the U.S. credit rating and the agency’s withdrawal of its rating on a $1.5 billion Goldman Sachs and Citigroup pool of CMBS—as particularly pernicious. This all created a perfect storm, keeping the CMBS market tamped down at a time when it was crucially needed.

“What resulted from that,” Mr. Sublett continued, “was that CMBS spreads widened roughly 100 basis points.” He cited the lack of hedging products designed to protect warehoused loans as one reason the market isn’t more improved.

Christopher Bushart, a senior director at Fitch Ratings in the structured finance and commercial mortgage division, echoes this sentiment. “A big difference with the way that loans are originated now compared to how it was prior to the bubble bursting is that banks—in just the assessment of risk—they were much more comfortable warehousing, so you would always have a supply of loans,” Mr. Bushart said. “This was just a machine.”

Fitch Ratings, for its part, predicted in early August that the next 12 months would prove “challenging” as far as CMBS maturities were concerned. Fitch at the time saw $24 billion in deals it rated set to come due during that time frame, 41 percent of which, under the rating agency’s

defined stressed refinance parameters, will not be refinanced. The problem child is that 2007 vintage of loan, underwritten to some pro forma income.

“What could be interesting is a loan on a property that was 70 percent occupied, and they were saying that it was going to get to 90 within 12 months, and all of the numbers were based off of that, and it didn’t happen,” said Jonathan Teichmann, a director at Fitch Ratings in the structured finance and commercial mortgage division. “That’s probably not going to get refinanced, certainly not

without some new partner or infusion of cash to pay down the existing debt.”

Melissa Farrell, a managing director at Prudential Mortgage Capital Company, said that Prudential has looked at the issue of looming maturities in the CMBS market and loans coming up for refinancing. “It’s somewhere around $350 billion a year, give or take,” she said. “If you look at that $350 billion, where is the capital going to come from to refinance that?” Ms. Farrell estimated that about $50 billion would come from life companies, $50 billion from the agencies, $100 billion from banks and about $50 billion from CMBS.

“It leaves you about a $100 billion gap,” she said. Options left include deleveraging through recapitalizations, mezzanine financing and equity write-downs. In New York, a market unlike any other, this is not so dire. “You see that in New York—people coming in and putting fresh equity into deals,” Ms. Farrell said. “And so we feel it’s manageable. There’s money to fill

that gap, and it’s already being filled. I think overall it will be fine. It’s not so insurmountable.”

The variety among markets is one reason industry experts say that it’s best when considering the outcome of loans coming due to take it on a case-by-case basis.

“You need to be careful not to oversimplify,” said Mr. Sublett, when asked about a potential gap in capital available to refinance these loans. “It’s very property-by-property, loan-by-loan specific. Some borrowers are well-capitalized, other borrowers are

‘ ’In the CMBS industry, far

too often, the industry tends to have a herd mentality.

Clay Sublett, senior vice president at KeyBank Real Estate Capital

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September 2012 / CMBS

not well-capitalized, so it just depends on the individual circumstances of the loan in question.”

Ms. Farrell said that loans that aren’t secured by high-profile New York office buildings might face pressure in the future. “I think it’s more those tertiary, smaller conduit deals that either are going to have to just deleverage or write off the equity on,” she said. “Those are the tougher ones to refinance—when you start getting into those tertiary markets.”

In addition to the market, the asset type comes to bear as well, as evidenced in investment research firm Morningstar’s August 2012 Monthly CMBS Delinquency Report. Morningstar added 445 loans in 203 CMBS transactions to its Watchlist, a measure of loan and property level credit risk, during the month of July. Of these, about 36 percent—or $1.9 billion across 116 loans—represented additions by unpaid balance in the retail sector. Office accounted for roughly 28 percent—or $1.5 billion across 87 loans. These new additions to Morningstar’s Watchlist, however, didn’t necessarily reflect the property types that experts told The Mortgage Observer are most troubled.

“Compared to historical numbers, we’re still at pretty high delinquency rates across all the property sectors,” said Mr. Bushart. “But retail, I guess you could argue that’s performing most strongly.”

As we close out the rest of 2012, predictions for CMBS issuance for the year vary. Following its table-funding arrangement, KeyBank has contributed collateral to one securitization as an originator already, Mr. Sublett said. He predicted that over the next 60 days, two more securitizations would follow—with its UBS 2012-C3 scheduled to price in mid-September and a contribution toward a Deutsche securitization in the wings as well.

Mr. Sublett agreed with the generally accepted prediction of a $35 billion to $40 billion year-

end result. “Most of my colleagues in the

industry would certainly like to see CMBS larger than—let’s just pick a number—$40 billion,” he said. “But my argument is that it is still significant.”

Mr. Teichmann at Fitch Ratings agreed, saying that the number he’s hearing is $35 billion as well. “In terms of the deal flow that we’re seeing, there hasn’t been any pause or slowdown,” he said. “And you’re seeing not only a steady volume of transactions, but the balances on the transactions are increasing as well. Those two elements should lead to surpassing where it was that we were last year.”

Asked about headwinds facing CMBS, Mr. Sublett again referenced the importance of protecting the value of loans held in the warehouse

and compressing the time that they are held. Another headwind mentioned, though, came from within.

“In the CMBS industry, far too often, the industry tends to have a herd mentality,” he said. “One of the things that we struggle with is, ‘Do we repeat the sins of the last cycle, and do we damage the credibility that we are rebuilding with investors, including B-piece buyers and investment-grade buyers?’ What you want to do is make sure that you are rebuilding the credibility slowly and carefully.”

‘ ’There’s money to fill that gap, and it’s already

being filled. I think overall it will be fine. It’s not so insurmountable.

Melissa Farrell, managing director at Prudential Mortgage Capital

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Culture / September 2012

Work WearWe got to thinking about the differences between the characters that we cover. First of all, a word of apology. Not everyone who works in commercial real estate finance is a man, with a generous amount of stubble on his legs. But we’re curious about the differences between the creatures that inhabit this world, and so this month: our sartorial musings for bankers, brokers and borrowers. And a few suggestions for where you might shop for looks. Dressing is just one way to tell the difference between the three, but it's where we’ll start.

The Bankers: Michael Andrews Bespoke. 2 Great Jones Alley or www.michaelandrewsbespoke.com.The Brokers: J.Crew. Multiple locations throughout the city, including 10

Columbus Circle, 30 Rockefeller Center, 347 Madison Avenue and 91 Fifth Avenue. Shop online at jcrew.com.

The Borrowers: Men’s Warehouse. Numerous locations in the New York City area, including 350 Fifth Avenue, 380 Madison Avenue, 650 Sixth Avenue and 115 Broadway. Shop online at menswarehouse.com.

Summer Read Retrospective

» Joseph Orefice, senior vice president, Investors Bank: Adam Smith’s The Wealth of Nations. “I’m not sure how I picked it (maybe some deep-seated guilt from skipping it in college). Anyway, I liked the historical perspective of the times. I was amazed at how the economic and psycho-logical views from the American Revolution are so relevant today.”

» Matt Galligan, executive vice president and group head, CIT Real Estate Finance: Hank Haney’s The Big Miss: My Years Coaching Tiger Woods. “Kind of a tell-all on the great-ness and decline of Tiger Woods, by his coach and nationally recognized teacher. Also, I will read next Anglo Republic: Inside the Bank That Broke Ireland. A couple of us were inter-viewed, but I was not quoted.”

» Spencer Garfield, managing director at Hudson Realty Capital: Marcus Luttrell and Patrick Robinson’s Lone Survivor. “This was a quick read, but a very compelling story about Marcus Luttrell and, specifically, Operation Redwing, which took place in Afghanistan.”

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The Sked / September 2012

The Sked: September

5Fit the gym into your busy schedule by visiting the

New York Athletic Club for an after-work seminar hosted by the CRE Finance Council.

CMBS Special Servicer Workouts – Legacy Vs. New Issue; New York Athletic Club, 180 Central Park South, New York, N.Y., 5:30pm to 8pm on September 5. Call or email Alex Ong at (202) 448-0850 or aong@crefc.org, or visit www.crefc.org/events.aspx?id=20666 for more information.

9-11If your summer ended too soon, take an extended

weekend trip to Dallas for the Mortgage Bankers Association’s Risk Management and Quality Assurance Forum. Though you might need to chat about new demands on your QC process, risk analytics and underwriting: tickets are about $1,000 apiece.

The Mortgage Bankers Association’s Risk Management and Quality Assurance Forum; Omni Dallas Hotel, Dallas, Texas, September 9-11. Call (800) 793-6222, option 3 or visit www.mortgagebankers.org/RMQA12.htm for more information.

11-14If you don’t like shopping on

Fifth Avenue or in Soho, brush up on your Mandarin and head over

to Shanghai for some retail therapy at the Retail Real Estate World Summit.

ICSC Retail Real Estate World Summit:

The Globalization of Retail; Shanghai International Convention Center,

2727 Riverside Avenue, Shanghai, China; September 11-14. Call or email Jorge Lizan at (646)

728-3927 or jlizan@icsc.org for more information.

12Don’t let the all-day seminars turn you o� to this

event. Just be sure to pop in for the three networking breaks at 11:15am, 1:10pm and 4:15pm.

The Real Estate CFO Forum; The Union League Club, 38 East 37th Street, New York, N.Y.; 7:15am to 7:45pm on September 12. Visit www.imn.org for more information, or call (212) 224-3428 to register.

17Sometimes it isn’t common sense that the best

retail places are the most accessible. NYC Transit Oriented Retail Development; CBRE,

200 Park Avenue, Town Hall, 21st fl oor, New York, N.Y.; 6:30pm to 8:30pm on September 17. Visit uli.org for more information.

19-21Discounts are given for group registrations, so

grab a few real estate fi nance friends and jet o� to Miami for a few days.

Crittenden Real Estate Finance Conference; Miami, Fla. September 19-21. Call (800) 211-1697 or visit www.crittendenrealestatefi nance.com for more information.

24For those who like under-the-table transactions,

be sure to check out the privately funded lenders seminar to ensure that you are fully taking advantage of all benefi ts and possible strategies.

Privately Funded Lenders: Strategies and Benefi ts; O� ces of Paul Hastings LLP, 75 East 55th Street, New York, N.Y.; 5:30pm to 7:00pm on September 24. Call or email Alex Ong at (202) 448-0850 or aong@crefc.org for more information.

24-25Thankfully the Canadian-American Commercial

Real Estate Conference is on the American side of the border, so you don’t have to stress about whether you renewed your passport or remembered your driver’s license.

Canadian-American Commercial Real Estate Conference Marketing and Education; Quality Hotel & Suites at the Falls, 240 First Street, Niagara Falls; September 24-25. Email Sherry at sherry@nycap.rr.com for more information.

30Be sure to listen to all of the chatter about the

year-old Consumer Financial Protection Bureau to decide whether or not it is time for a career change!

MBA’s Regulatory Compliance Conference 2012; Grand Hyatt Washington, Washington, D.C.; September 30 to October 2. Visit events.mortgagebankers.com for more information.

Fit the gym into your busy schedule by visiting the New York Athletic Club for an after-work seminar

Conference Marketing and Education; Quality Hotel & Suites at the Falls, 240 First Street, September 24-25. Email Sherry at sherry@nycap.

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Of Interest / September 2012

1 Times Square . . . . . . . . . . . . . . . . . .5101 Park Place (Stamford) . . . . . 221100 Lincoln Road (Miami Beach) . . .8142 North 6th Street . . . . . . . . . . 6-8202 Scott Road (Willimantic) . 10325 Hudson Street . . . . . . . . . . . . . .54 World Financial Center . . . . . . .6444 Park Avenue South . . . . . . . . .645-60 Center Boulevard (Long Island City) . . . . . . . . . . . . . . . . . . . . 22525 Washington Boulevard (Jersey City) . . . . . . . . . . . . . . . . . . . . .4530 Fifth Avenue . . . . . . . . . . . . . . . .5590 Fifth Avenue . . . . . . . . . . . . . . . .6601 Lexington Avenue . . . . . . . . . . .4680 Madison Avenue . . . . . . . . 8, 239045 Judicial Drive (San Diego) 229090 Judicial Drive (San Diego) 229110 Judicial Drive (San Diego) . 229120 Judicial Drive (San Diego) . 22

AAbod, Cary . . . . . . . . . . . . . . . . . . . . . . .4Actovia . . . . . . . . . . . . . . . . . . . . . . . . . .14Angelo, Gordon & Co . . . . . . . . 8, 23Anglo Irish Bank . . . . . . . . . . . . . . . . .8Anthropologie . . . . . . . . . . . . . . . . . . .8Appel, Aaron . . . . . . . . . . . . . . . . . . 6-8Apple Bank . . . . . . . . . . . . . . . . . . . . .14Astoria Federal Savings Bank . .14Astoria Federal Savings and Loan Association . . . . . . . . . . . . . . . . . . . . . 11Astoria Financial . . . . . . . . . . . . . . . 11AT&T . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Aurora Capital Associates . . . . . . .8AXA Equitable . . . . . . . . . . . . . . . . . . .4

BBank of America . . . . . . . . 6, 8, 20-3Barclays Bank . . . . . . . . . . . . . . . . . .18Bath (Great Britain) . . . . . . . . . . . 10Beech Street Capital . . . . . . . . . . . . 11Bentall Kennedy . . . . . . . . . . . . . . . . .4Bergman, Abe . . . . . . . . . . . . . . . . . . .18Berman, Michael . . . . . . . . . . . . . . . .5Besen, Michael . . . . . . . . . . . . . . . . .18Besen Group . . . . . . . . . . . . . . . . . . . .18Betesh, Morris . . . . . . . . . . . . . . . . . . .8Bethesda, MD . . . . . . . . . . . . . . . . . . . .5The Big Miss: My Years Coaching Tiger Woods . . . . . . . . 28Blackstone . . . . . . . . . . . . . . . . . . . . . . .4Blackstone Real Estate Partners VII . . . . . . . . . . . . . . . . . . . . .4Blau, Jeff . . . . . . . . . . . . . . . . . . . . . . . 23Blumenthal, Dave . . . . . . . . . . . . . 22BNP Paribas . . . . . . . . . . . . . . . . . . . . .4Bristol Group . . . . . . . . . . . . . . . . . . . .5Brookfield Office Properties . 4, 6Building & Land Technology . . 22Bureau of Labor Statistics . . . . . 20Burger, Alec . . . . . . . . . . . . . . . . . . . . . .4Bushart, Christopher . . . . . . . . 26-7

CCalifornia Public Employees’ Retirement System (CalPERS) .4Cama, Domenick . . . . . . . . . . . . . . . 11Canadian-American Commercial Real Estate Conference . . . . . . . 30Cantor Commercial Real Estate 11Cantor Fitzgerald . . . . . . . . . . . . . .17Capital One . . . . . . . . . . . . . . . . . . 5, 14Carlton House . . . . . . . . . . . . . . . 8, 23Carpenter, James . . . . . . . . . . . . . . . 11Chandan, Sam . . . . . . . . . . . . . . . . . .17Chelsea Market . . . . . . . . . . . . . . . . . .5China . . . . . . . . . . . . . . . . . . . . . . . . . . . .6CIT Real Estate Finance . . . . . . 28Citigroup . . . . . . . . . . . . . . . . . . . . . . 26Citadel Group . . . . . . . . . . . . . . . . . . .4Clancy, Manus . . . . . . . . . . . . . . . . . 10CMBS . . . . . . . . . . . 10, 11, 12, 17, 25-7Cohen, Frank . . . . . . . . . . . . . . . . . . . .4Colacino, Michael . . . . . . . . . . . . . .18Costa, John . . . . . . . . . . . . . . . . . . . . . 11CRE Finance Council . . . . . . . . . 30Crittenden Real Estate Finance Conference . . . . . . . . . . . . . . . . . . . . 30Cushman & Wakefield . . . . . . . . . . .6CWCapital . . . . . . . . . . . . . . . . . . . . 4-5CW Financial Services . . . . . . . . . .5

DDallas, TX . . . . . . . . . . . . . . . . . . . . . . 30Deutsche Bank . . . . . . . . . . . 6, 11, 17Dexus Property Group . . . . . . . . . .4Didio, Tom . . . . . . . . . . . . . . . . . . . . . . .4Dime Savings Bank of Williamsburgh . . . . . . . . . . . . . . . . . .14Dobrowsky, Andre . . . . . . . . . . . . . . .5Dubeck, Brad . . . . . . . . . . . . . . . . . . 22

EEastern Consolidated . . . . . . . . . .12Eastern Union Commercial . . . .18EB-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6Edelman, Mike . . . . . . . . . . . . . . . . . 11Empire State College . . . . . . . . . . . .5Englund, Jeff . . . . . . . . . . . . . . . . . . 10Estes, Chris . . . . . . . . . . . . . . . . . . . . .18Extell Development . . .8, 20-2, 23

FFarrell, Melissa . . . . . . . . . . . . . . 26-7Feil Organization . . . . . . . . . . . . . . . .6Fitch Ratings . . . . . . . . . . . . . . . . 26-7FleetBoston Financial . . . . . . . . . 20Flushing Savings Bank . . . . . . . . .14Frankel, Jeff . . . . . . . . . . . . . . . . . . . 20Freddie Mac . . . . . . . . . . . . . . . . .10, 11Freddie Mac Targeted Affordable Housing Mortgage Program . . 10Friedman, David . . . . . . . . . . . . . . . 22Frydman, Jacob . . . . . . . . . . . . . . . .18

GGalligan, Matt . . . . . . . . . . . . . . . . . 28

Garcia, Paulo . . . . . . . . . . . . . . . . . . . 11Garfield, Spencer . . . . . . . . . . . . . . 28GE Capital Real Estate (GECRE) 4Gluck, Jake . . . . . . . . . . . . . . . . . . . . .18Goldman Sachs . . . . . . . . . . . . . 11, 25Gramercy Park . . . . . . . . . . . . . . 8, 23Greystone Servicing Corp . . . . . 10

HHaney, Hank . . . . . . . . . . . . . . . . . . . 28Harrington, John . . . . . . . . . . . . . . .12Harvard University . . . . . . . . . . . . 20Helios Capital Advisors . . . . . . . .18Helmsley, Leona . . . . . . . . . . . . . . . . .8Hermance, Ronald, Jr . . . . . . . . . . 10Hernandez, Alex . . . . . . . . . . . . . . . . .6HFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4HKS Capital Partners . . . . . . . 6, 12Horn, Jonathan . . . . . . . . . . . . . . . . .18Hudson City Bancorp . . . . . . . . . 10Hudson Realty Capital . . . . . . . . 28Hyatt . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

IING New York City Marathon 20Investors Bank . . . . . . . . . .11, 14, 28

JJamestown Properties . . . . . . . . . .5Jardin . . . . . . . . . . . . . . . . . . . . . . . . . 6-8Jersey City, NJ . . . . . . . . . . . . . . . . . . .4JPMorgan Chase . . . . . . . .11, 14, 25

KKapahi, Ayush . . . . . . . . . . . . . . . 6, 12Karson, Dave . . . . . . . . . . . . . . . . . . . .6Kenny, Steve . . . . . . . . . . . . . . . . .20-3Kerin, John . . . . . . . . . . . . . . . . . . . . .18Keybank Real Estate Capital 25-7Knakal, Robert . . . . . . . . . . . . . . . . . 11Kohn, Steve . . . . . . . . . . . . . . . . . . . . . .6Kunofsky, Glen . . . . . . . . . . . . . . . . .18

LLadder Capital . . . . . . . . . . . . . . . . . . 11Learner, Heidi . . . . . . . . . . . . . . . . . .18Level 3 Communications . . . . . . . .5Lincoln Road (Miami Beach) . . . .8London (Great Britain) . . . . . . . . 10Lone Survivor . . . . . . . . . . . . . . . . . 28Luttrell, Marcus . . . . . . . . . . . . . . . 28

MManhattan West . . . . . . . . . . . . . . . . .6Marcus & Millichap Real Estate Investment Services . . . . . . . . . . . .18Massey Knakal Capital Services 8, 11, 12MEAG New York Corp . . . . . . . . . .18Mercantil Commercebank . . . . . 11Meridian Capital Group . . . . . . 6-8Merrill Lynch . . . . . . . . . . . . . . . . . . . .6Miami, FL . . . . . . . . . . . . . . . . . . . . . 30Miami Beach, FL . . . . . . . . . . . . . . . .8Moin Development Group . . . . . .6

Monday Properties . . . . . . . . . . . . 23Morningstart . . . . . . . . . . . . . . . . . . 27Mortgage Bankers Assocation . . . . . . . . . . . . . . . . . . 11, 30M&T Bank . . . . . . . . . . . . . . . . . . 10, 14Multi-Employer Property Trust 4Munich Re . . . . . . . . . . . . . . . . . . . . . .18

NNational Housing Conference .18Nazarian, Sam . . . . . . . . . . . . . . . . . . .6NBA Store . . . . . . . . . . . . . . . . . . . . . . .6Newport Tower . . . . . . . . . . . . . . . . . .4New York Athletic Club . . . . . . . 30New York Community Bank 11, 14Niagara Falls, NY . . . . . . . . . . . . . . 30North Carolina Housing Coalition . . . . . . . . . . . . . .18NYC Transit Oriented Retail Development . . . . . . . . . . . . . . . . . . 30

OOne57 . . . . . . . . . . . . . . . . . . . . . . . .20-2Orefice, Joseph . . . . . . . . . . . . . . . . 28Orndahl, Thor . . . . . . . . . . . . . . . . . 10

PPelet, Kate . . . . . . . . . . . . . . . . . . . . . . .6Pendergist, Jason . . . . . . . . . . . . . . . 11Penn Station . . . . . . . . . . . . . . . . . . . . .6People’s United Bank . . . . . . . . . . . 11Perella Weinberg . . . . . . . . . . . . . . 25Pergolis, Richard . . . . . . . . . . . . . . .12Pergolis Swartz Associates . . . . .12Pilchick, Avi . . . . . . . . . . . . . . . . . . . .18Principal Real Estate Investors . . . . . . . . . . . . . . . . . . . . . . 4-5Provident Bank . . . . . . . . . . . . . . . . . 11Prudential Mortgage Capital Co . 4, 10, 25-6

RRead Properties Inc . . . . . . . . . . . . . .6Real Capital Analytics . . . . . . . . . . .6Regal Cinemas . . . . . . . . . . . . . . . . . . .8REIT . . . . . . . . . . . . . . . . . . . . . . . . . 8, 17Real Estate CFO Forum . . . . . . . 30Related Companies . . . . . . . . . . . . 23Retail Real Estate World Summit . . . . . . . . . . . . . . . . . 30Robinson, Patrick . . . . . . . . . . . . . 28Rockefeller Center . . . . . . . . . . . . . .6Rockwood Real Estate Advisors 5

SSaks Fifth Avenue . . . . . . . . . . . . . . .6Salomon Brothers . . . . . . . . . . . . . .18San Diego, CA . . . . . . . . . . . . . . . . . . 22Schwartz, Adam . . . . . . . . . . . . . 8, 23Schwartz, Jonathan . . . . . . . . . . . . .6Shanghai, China . . . . . . . . . . . . . . . 30Shenfeld, David . . . . . . . . . . . . . . . . . .6Shimanowitz, Dov . . . . . . . . . . . . . .18Signature Bank . . . . . . . . . . . . . .11, 14Sitt, Joseph . . . . . . . . . . . . . . . . . . . . . .6

Smith, Adam . . . . . . . . . . . . . . . . . . . 28Sonnenblick Goldman . . . . . . . . .12Sovereign Bank . . . . . . . . . . . . . . 6, 14Spreitzer, John . . . . . . . . . . . . . . . . . .6Stacks, Ben . . . . . . . . . . . . . . . . . . . . . . .5Stamford, CT . . . . . . . . . . . . . . . . . . 22Standard & Poor . . . . . . . . . . . . . . . 26Standiford, Marty . . . . . . . . . . . . . . .4State Street Corp . . . . . . . . . . . . . . . .18State University of New York at Plattsburgh . . . . . . 23Stein, Joshua . . . . . . . . . . . . . . . . . . .16Steiner Equities . . . . . . . . . . . . . . . . .6Stoler, Michael . . . . . . . . . . . . . . . . . . 11Studley . . . . . . . . . . . . . . . . . . . . . . . . . .18Stuyvesant Town . . . . . . . . . . . . . . 23Sublett, Clay . . . . . . . . . . . . . . . . . 25-7Swartz, Jerry . . . . . . . . . . . . . . . . . . .12

TTeichmann, Jonathan . . . . . . . 26-7Tepedino, Mike . . . . . . . . . . . . . . . . . .4TF Cornerstone . . . . . . . . . . . . . . . 22Thelander, Garrett . . . . . . . . . . . . . .8Thor Equities . . . . . . . . . . . . . . . . . . . .6Trehubenko, Todd . . . . . . . . . . . . 4-5Trepp . . . . . . . . . . . . . . . . . . . . . . . 10, 25Tudor City (Manhattan) . . . . . . 23Tufariello, Joseph . . . . . . . . . . . . . . .8

UUnited Realty Advisors LP . . . . .18United Realty Partners . . . . . . . . .18U .S . Department of Housing and Urban Development . . . . . . . . . . . .18

VVaughn, Michael . . . . . . . . . . . . . . . .18Verizon . . . . . . . . . . . . . . . . . . . . . . . . . .5Vesta Corporation . . . . . . . . . . . . . 10Vestal, NY . . . . . . . . . . . . . . . . . . . . . . 23Vornado Capital Partners . . . . . . .8Vornado Realty Trust . . . . . . . . . . .8

WWalker & Dunlop . . . . . . . . . . . . 5, 18Wall Street Journal . . . . . . . . . . . . . .6Warner, Michelle . . . . . . . . . . . . . . .18Washington, D .C . . . . . . . . . . . 23, 30The Wealth of Nations . . . . . . . . 28Wells Fargo . . . . . . . . . . . . . . . . . . 8, 14Wilcox, Whit . . . . . . . . . . . . . . . . . . . . .4Williamsburg, Brooklyn . . . . . 6, 14Willimantic, CT . . . . . . . . . . . . . . . 10Wilmers, Robert . . . . . . . . . . . . . . . 10Wilmington Trust . . . . . . . . . . . . . 10Windham Heights . . . . . . . . . . . . . 10Woods, Tiger . . . . . . . . . . . . . . . . . . . 28Woodwell, Jamie . . . . . . . . . . . . . . . 11

YYoung Woo & Associates . . . . . . . .5

ZZlotowitz, Ira . . . . . . . . . . . . . . . . . . .18

An index of all the people, places, addresses and companies mentioned in this issue

06 08 06 06 06

TMO.0912.OfInterest.indd 32 8/30/12 3:26:14 PM

The Mortgage Observer

For advertising information please contact

Barbara Ginsburg Shapiro, Associate Publisher

at 212–407–9383 or bshapiro@observer.com

ISSUE DATES:

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10/17

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The Mortgage Observer is a glossy magazine inserted into the last issue, each month of The Commercial Observer

The Insider’s Guide to New York’s Commercial Real Estate IndustryIt is the defi nitive resource for the Commercial Real Estate Industry

2013

2012

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