The Insider’s Weekly Guide to the Commercial Mortgage Industry In This Issue 1 Magnum, CIM Take $390M for Verizon Building Condo Conversion 1 HFZ Scores $185M From Mexican Bank to Revamp South Beach Hotel 3 Steiner’s Brooklyn Residential Tower Gets $390M Construction Loan 4 Now Is Not Prime Time on the CMBS Channel 5 FHA and HUD to Undergo Further Revamp, Fannie Mae Unfazed 6 Chetrit Closes on $191.9M Purchase of Hotel Carter With $150M From Athene Annuity 7 Bancorp Provides 80 Percent LTC Acquisition Loan to Blue Rock And Partner “Though underwriting has clearly loosened up since the financial crisis, there is still a floor on how aggressive lenders will be” —Drew Anderman From Q&A on page 12 Magnum, CIM Take $390M HFZ Scores $185M for Verizon Building From Mexican Bank Condo Conversion to Revamp South Beach Hotel HFZ Capital refinanced The Shore Club, A partnership of Ben Shaoul and Los been rebranded as 100 Barclay Street. a luxury hotel in Miami’s South Beach neigh- Angeles-based CIM Group closed on a $390 The units will be built in the top 22 floors of borhood, Mortgage Observer Weekly has ex- million loan they will use to convert a Lower the 31-story building, which sits at the corner clusively learned. With the $185 Manhattan office building into of Vesey Street about a block from 1 World MOW million provided by Banco MOW fancy condominiums, Trade Center. EXCLUSIVE Inbursa, the Mexican bank run EXCLUSIVE Mortgage Observer The three-year loan is Libor-based, by Carlos Slim, the hotel will Weekly has learned. The the source said. be redeveloped to include condominiums, a A source said the pair obtained Mr. Shaoul’s Magnum Real source close to the deal said. capital from New York-based iStar LEAD Estate bought the building for $274 The financing was arranged by Howard Financial and Stamford-based H/2 million in 2013, according to previous Michaels, chairman of The Carlton Group, Capital to facilitate the construc- reports, and later picked up the retail a representative for the brokerage confirmed, tion of 166 residential condos atop re- tail and offices at 140 West Street, which has See Magnum... continued on page 7 See HFZ... continued on page 9 1 | FEBRUARY 6, 2015 EAT. SLEEP. CLOSE. REPEAT. In 2014, Meridian Capital closed over $30 billionPUÄUHUJPUN That’s $120 million every business day. :OV\SKU»[`V\IL^VYRPUN^P[O(TLYPJH»ZTVZ[HJ[P]LKLI[IYVRLY& MeridianCapital.com FEBRUARY 6, 2015 MOW_ESCR_$30B$120M_FEB2015.indd 1 2 | 1/28/15 6:00 PM Steiner’s Brooklyn Residential Tower Gets $390M Construction Loan The tower once slated to be has a Libor-based rate. Brooklyn’s tallest is one step clos- Those funds should enable the er to completion—Douglas Steiner 54-story tower to grow, although nabbed a $390 mil- by the time it’s done it will be beat- MOW lion construction en to the height record by Avalon EXCLUSIVE loan for The Hub at Willoughby and 388 Bridge Street, 333 Schermerhorn according to a report from Curbed. Street, Mortgage Observer Weekly Mr. Steiner, the movie studio mogul has learned. behind Steiner Studios, bought the The residential rental tower was parcel for $30 million in 2011. first announced in 2012, a time when, “BofA has done deals in our sub- somehow, the site at Schermerhorn market, so they really understand and Flatbush Avenue was still de- our location and product, and share scribed as “gritty” by The Wall Street our enthusiasm for what we both ex- Journal, despite its straddling the pect to be one of the best buildings tony Fort Greene and Boerum Hill in New York City,” he told MOW via neighborhoods. email. A Bank of America represen- Nowadays, that locale feels posi- tative did not respond to requests tively luxe, and the cool $390 mil- for comment before press time and a lion Mr. Steiner just sourced ought call to Apollo was not returned. to help it become even more so. The unnamed source said JLL’s Bank of America provided the Aaron Appel, Jonathan Schwartz first mortgage, with private equity and Michael Diaz worked on the firm Apollo Management’s real es- deal. JLL representatives were tate arm, Apollo Global Real Estate, not immediately available for providing subordinate debt, a source comment. close to the deal said. Neither lender The website Yimby projects a responded to a request for comment. completion date in 2017 for The Hub A rendering of The Hub (Dattner Architects) The source said the four-year loan as of last month.—Guelda Voien to test the waters and do a deal over $2 billion,” Now Is Not Prime Time on the CMBS Channel he told Mortgage Observer Weekly. Despite recent growth, now may not be the we need this many conduit programs to create Likewise, the finite number of triple-A bond best time for CMBS lenders. a viable market.” buyers has put a further constraint on CMBS At a panel on the CMBS market at this year’s Total CMBS issuance hit a post-crisis high of growth, the panelists and moderator agreed. MBA CREF conference in San Diego, four sea- $95 billion in 2014, up from $83 billion in 2013, Likewise, the finite number of triple-A bond soned players warned of increased deal con- according to figures from real estate data firm buyers has put a further constraint on CMBS straints, an overly competitive marketplace and Trepp. Many in the industry expect total issu- growth, the panelists and moderator agreed. a decelerated rebound. One panelist even joked ance in 2015 to exceed last year’s numbers. “The market for [non-public] 144A bonds that giving a negative outlook on CMBS helps But limitations on deal size and on the has proven to be much thinner and more vola- stave off competition. Triple-A bond buyer market have put a damp- tile than the market for [public] conduit bonds,” “It’s obviously been a very attractive busi- er on securitized commercial debt deals post- said Mr. Furlong. “The majority of institutional ness over the past few years, which has prompt- financial crisis. CMBS 2.0—or is it CMBS bond buyers only buy conduit bonds, which are ed more people to enter the space,” said J. 3.0?—lacks the big numbers that characterized seen as more liquid, so it’s riskier to bring 144A Theodore Borter, a managing director at the previous boom, the panelists said. CMBS is- bonds to market, particularly in large sizes.” Goldman Sachs. “That being said, it is not the suance peaked at $230 billion in 2007. At the end of the day, perhaps surprising- best of times in the CMBS world. We saw a lot of The market is experiencing slowed growth ly, declining credit quality was a small concern volatility in the end of 2014 in both the floating- due to “operational constraints” on the CMBS among the panelists. rate and fixed space.” shops, Mr. Fastov noted. “Everyone is quite aware that there is an ero- Mr. Borter spoke alongside Jeffrey Fastov, “People know that commercial real es- sion of credit standards right now,” Mr. Furlong senior principal of Square Mile Capital tate carries a certain amount of risk,” he said. said. “That’s entirely normal for real estate cy- Management, and Brian Furlong, a manag- “When you experience it first-hand it refresh- cles. There will continue to be erosions in credit ing director at New York Life Real Estate es that memory and can start to affect people’s standards in all kinds of deals provided we have Investors, in the panel moderated by UBS behavior.” interest rates as low as they are. Real Estate Finance head Chris LaBianca. Mr. LaBianca pointed to the size of individual Panelists still predicted growth in the CMBS “Credit standards are deteriorating, which CMBS deals as an impediment to the market’s space in 2015. “My estimate is $125 billion,” speaks to the fact that we have a lot of compe- growth, noting that most post-crisis deals have Mr. Borter said. “And we’re going to be fighting tition in the market,” the Goldman executive been under $1.5 billion. tooth and nail with the life companies for the said. “I don’t think anyone would tell you that “The big question is whether anyone is going better of those deals.” —Damian Ghigliotty 3 | FEBRUARY 6, 2015 DELIVERING CUTTING EDGE FINANCIAL STRUCTURING $123,000,000 $70,000,000 $67,500,000 Debt Debt Debt & Mezzanine Acquisition Acquisition Acquisition 222 Units 15,565 SF 60,000 SF Multifamily Retail Office Condo New York, NY New York, NY New York, NY $31,175,000 $14,440,000 $11,250,000 Debt Debt Debt Refinance Construction Refinance 258 Key 86 Units 158,000 SF Hotel Student Housing Retail San Diego, CA Knoxville, TN Westminster, CO ONE FIRM. CAPITAL FUELED BY INNOVATION. BOSTON | NEW YORK | MIAMI SAN FRANCISCO & LOS ANGELES OFFICES OPENING SOON ACKMANZIFF.COM 4 | FEBRUARY 6, 2015 FHA and HUD to Undergo Further Revamp, Fannie Mae Unfazed It’s business as usual for Fannie Mae—despite ongoing talks of an agency phase out—while the U.S. Department of Housing and Urban Development and its Federal Housing Administration are in the process of making serious changes, ac- cording to industry sources. At the MBA CREF 2015 confer- ence in San Diego, Fannie announced annual multifamily originations of $28.9 billion in 2014, up slightly from $28.8 billion in 2013. “This is a cyclical business and we’re in the middle of some of the best times this business is going to have,” the GSE’s head of multifamily, Jeffery Hayward, told a group of reporters on Monday morning.