FINANCE COMMERCIAL OBSERVER WEEKLY The Insider’s Weekly Guide to the Commercial Mortgage Industry

In This Issue

1 Sutton and GGP Land $1.25B Loan From Four Banking Giants for Crown Purchase

1 590 Madison Owner Seeks $650M loan

3 SL Green Lends $97M to Ben Shaoul for LES Development

3 Mall Transferred to Servicing

5 Life Finances Bentall Kennedy’s 757 Third Buy

7 Fannie Mae Securitizes First “Green Loan”

“I’ll be raising equity for a fund sponsored by one of New York’s best-known real estate entities ... with a conservative approach similar to mine.” —Ned Cohen Sutton and GGP Land From Q&A on page 10 $1.25B Loan From Four Banking Giants for 590 Madison Owner Seeks $650M Loan Crown Purchase Plaza District office tower 590 Madison Avenue is shopping for a loan of up to $650 million, a source told Commercial Observer Billionaire New York developer Jeff foot, 26-story office tower from Spitzer Finance. A loan of that size and Chicago-based , led by former New York Gov. could be one of the largest Sutton General Enterprises EXCLUSIVE Growth Properties closed on their $1.78 Eliot Spitzer, and New York-based Winter to close so far this year, if the billion acquisition of Properties. landlord can find the funds. the at Mr. Sutton and his joint venture partners The 42-story property’s owner, the EXCLUSIVE Crown Building State 730 Fifth Avenue with additionally completed a $500 million deal Teachers Retirement System of Ohio, has a $1.25 billion mortgage last week to put an Aman Resorts hotel on retained Cushman & Wakefield to source the provided by Deutsche Bank, Morgan the building’s fourth through 24th floors, as funds, a representative for C&W confirmed. Stanley, Goldman Sachs and Citigroup, Commercial Observer reported. The hotel The pension fund put a stake in the pricey Commercial Observer has learned. portion of the property will be sold tower—where top floors reportedly command The loan closed last Friday. Oxford The off as a condominium, according to three-digit rents—on the market last October, Finance and another, unnamed, the person in the know. according to a report at the time from Crain’s mezzanine lender grabbed junior LEAD The Crown Building, which con- New York Business. At that point the build- portions of the enormous debt deal, tains roughly 100,000 square feet of ing, at the corner of 57th Street and Madison a source with intimate knowledge of the space, is located on the corner of West Avenue, was valued at a whopping $1.5 billion. transaction said. 57th Street, where Bergdorf Goodman, Since the amount the owner is seeking A Citi spokesman declined to comment. Louis Vuitton and Tiffany anchor the other amounts to an LTV of only around 45 percent, Representatives for the other lenders did three corners of the intersection. Luxury it seems likely that banks, funds and alterna- not return requests for comment by publi- retail tenants in the newly purchased asset tive lenders alike will be lining up to provide cation time. The sponsors bought the 390,000-square- See Crown Purchase... continued on page 3 See $650M... continued on page 7

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2 | april 24, 2015 196 Orchard Street SL Green Lends $97M to Ben Shaoul for LES Development Ben Shaoul’s Magnum Real Estate Groupjust closed on a $97 million loan from SL Green Realty Corp. to acquire and begin con- struction on a Lower East Side residential proj- ect, a representative for Magnum confirmed to Commercial Observer Finance. The planned building will hold 83 units Hudson Valley Mall and rise at 196 Orchard Street, in be- tween Houston and Stanton streets, accord- ing to previous reports. The total purchase price for the assemblage of three adjacent Hudson Valley Mall properties was $75 million. Mr. Shaoul has not yet decided if the build- Transferred to Servicing ing will hold rental units or condominiums— the project works either way, he said. Loan is Largest CMBS 2.0 Loan Ever Sent to Servicer The Real Deal reports it will be a “mixed-use” building, meaning it will also likely feature re- A $50.1 million CMBS loan backed property’s occupancy rate down to tail, to make use of the high-traffic frontage by Hudson Valley Mall in Kingston, roughly 86 percent, the report from along busy Houston Street. N.Y., was sent to special servicer LNR Trepp states. Magnum has partnered with New York-based Partners this month, according to a In total, more than 639,400 square investment firm Real Estate Equities on the report from Trepp. The transfer marks feet of retail space at the proper- project, according to TRD. the largest ever “CMBS 2.0/3.0 loan” ty serves as collateral for the CCRE Last August, Lower East Side blog The Lo- to go into special servicing. (CMBS 2.0 loan and the mall is still anchored by Down reported that Katz’s Deli, a historic and 3.0 refer to the post-recession wave a Macy’s, Sears, , Jewish deli on Houston next to the Magnum of securitized loan origination that Dick’s Sporting Goods and Best assemblage, had sold air rights related to the began in 2010.) Buy. deli property at 205 East Houston Street, but The Hudson Valley loan originat- The borrower has a replacement assured the public that the tourist-y restaurant ed by CCRE was placed on the ser- tenant lined up for the former J.C. will remain open. vicer’s watchlist in July 2014, after its Penney space, according to commen- JLL‘s Aaron Appel represented the bor- debt service coverage ratio dropped to tary in the loan documents. rower, said a source close to the deal who 1.08x due to the mall’s declining aver- A report from Barclays published wished to remain anonymous. A representa- age rent and an occupancy rate below on Friday indicates that 17 percent of tive for SL Green declined to comment on the 90 percent. the leases at the mall are month-to- transaction.—Guelda Voien The loan, which carries an inter- month, while 18 percent of leases ei- est rate of 6.739 percent, totals 8.62 ther expire in the next 12 months or percent of the CFCRE 2011-C1 have the option to terminate if stores Crown Purchase...continued from page 1 CMBS deal. The borrower is listed continue to underperform. in the loan documents as Syracuse- “It’s rate to see a loan head to spe- include Piaget, Bulgari and Mikimoto. based PCK Development Company. cial servicing within two to three The Warren and Wetmore-designed Representatives for PCK were not im- years of securitization,” Sean Barrie, property was completed in 1921. mediately available for comment. a research analyst with Trepp, told At about $4,490 per square foot, the per- Hudson Valley Mall was completed Commercial Observer. “If it does hap- square-foot-price paid by Mr. Sutton of in 1981. J.C. Penney, one of the proper- pen, lower occupancy or poor finan- Wharton Properties and GGP is a world ty’s anchor tenants, closed its doors in cials are usually the culprit. Having a record for an entire office building, while the early April after more than 32 years of replacement tenant for J.C. Penney is surrounding neighborhood is considered business there, according to recent re- huge, but the borrower is most like- the world’s most expensive retail district, as ports. A mall employee confirmed that ly keeping their eyes on Sears as well, Bloomberg News previously reported. the store is now closed. since they’ve announced several clos- Mr. Sutton and a spokeswoman for GGP The vacated parcel, totaling 67,000 ings in the past year.” declined to comment. square feet, is expected to bring the —Damian Ghigliotty —Damian Ghigliotty with additional re- porting by Max Gross

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4 | april 24, 2015 New York Life Finances Bentall Kennedy’s 757 Third Buy The newly minted owner of 757 Third Avenue apparently financed its buy with a $205 million loan from New York Life Real Estate Investors, the life insurance company announced yesterday. The loan on the mixed-use office tower has a term of 15 years, according to a state- ment from New York Life. Canadian investment manager Bentall Kennedy bought the 503,000-square-foot Class A tower, at 47th Street, from Aby Rosen’s RFR Holding for $360 million last month, as The Wall Street Journal first reported. RFR embarked on a $30 million reposi- tioning of the 27-story building in recent years. Last January the tower signed two new marquee tenants: accounting firm Grant Thornton and Berkley Insurance, accord- ing to published reports. Those replaced the previous , accounting behe- moth KPMG, and brought the property to 95 percent leased. “757 Third Avenue is a premier, well leased office building located in one of the strongest office markets in the nation,” Eric Becher, senior director of New York Life Real Estate Investors’ New York region- al office, said in a statement. “This financ- ing represents an excellent addition to our commercial mortgage portfolio.” —Guelda Voien

757 Third Avenue

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6 | april 24, 2015 Zillow.com Station House Fannie Mae Securitizes First “Green Loan” Fannie Mae closed its first “green certified by the U.S. Green Building $101,000 in interest payments over mortgage-backed security,” a new fi- Council, making it eligible for the the life of the loan, according to Fannie nancial product, available under its new loan program that launched in Mae. While that may not mean much new Multifamily Green Building February. to some borrowers, it could help small- Certification Pricing Break Program, The apartment building was com- er developers cut costs in a competi- the GSE announced. The new initia- pleted in 2013 as an adaptive reuse tive market. tive rewards sponsors of environmen- of a formerly contaminated lot that “This transaction reinforces Fannie tally sound multifamily properties had previously housed the historic Mae’s commitment to quality, afford- with lower interest rates. Maplewood Police Station. able and sustainable rental hous- Wells Fargo originated the $10.2 The green Fannie Mae loans let ing in every market, every day,” Bob million acquisition loan for the fixed-income investors know that the Simpson, vice president of the GSE’s Station House, a 50-unit rental bonds support projects that won’t multifamily affordable, green and small apartment building at 125 Dunnell harm the environment. loans business, said in the release. Road in Maplewood, N.J., acquired by For qualifying assets, the GSE is of- “Fannie Mae is leading the way in Prudential Real Estate Investors fering a 10 basis point interest rate re- providing financing for green proper- on behalf of an institutional client in duction from 4 percent to 3.9 percent ties that are reducing energy and water April. on loans for multifamily refinance, ac- use, lowering utility costs for owners The mid-rise property, which was quisition or supplemental debt. and tenants, and preserving long-term built and sold by the development firm As a result of that reduction, PREI property value,” he added. J. G. Petrucci Company, is LEED and its client will save more than —Damian Ghigliotty

$650M...continued from page 1 some top-shelf financial servic- es firms, such as UBS, Morgan the cash—or to get in on a syndi- Stanley and former presiden- cated loan on the property. tial candidate Mitt Romney’s The tower, previously former employer, private equity called The IBM Building (before firm Bain Capital. In addition to that name was applied to Edward 39 floors of office space, there are Minskoff’s 51 Astor Place) three floors of retail and an un- was last refinanced in 2007, derground parking garage. when Goldman Sachs provided A C&W team of Steve Kohn, the pension fund with $350 mil- Alex Hernandez, Chris Moyer lion, according to city records. Mr. and Alex Lapidus is represent- Minskoff handles rentals at 590 ing the owner, according to a rep- Madison still and developed the resentative for the brokerage. property in 1983, according to A call to STRS of Ohio was not previous reports. immediately returned. 590 Madison Avenue Tenants at 590 Madison include —Guelda Voien

7 | april 24, 2015 Cushman & Wakefield appoint- well more than half of those are in New ed Rebekah Tobias a partner in the Workforce York. That’s more than 40 loans for the London-based cross-border capital product type which I have handled in markets team, the firm announced. see a tremendous amount of CMBS my 10-year career. They have handled Ms. Tobias will join C&W in early transaction opportunity building investment sales throughout the years May from boutique investment firm there,” said Mr. Russell in prepared and have been turning it away to other D2 Private. Previously, Ms. Tobias statements. brokerage firms. There has been a tre- worked for CBRE in both London and mendous amount of pressure on them New York, according to a statement to expand into that field for more than from C&W. David Schechtman, Lipa a decade. I am that expansion.” She will work with the firm’s global Lieberman and Abie Kassin have left Meridian, which has been around capital markets team with a focus on Eastern Consolidated for Meridian for 24 years, declined to comment. the Americas and on securing cross- Capital Group, Commercial Observer border investment in London and Finance has learned, launching a new continental Europe. investment sales division with Mr. Dallas-based Capstead Mortgage “Rebekah is a welcome new addi- Schechtman as a key principal. Corporation appointed Roy Kim as tion to our growing international team The trio’s last day at Eastern senior vice president, asset and liabil- in London and we are excited about Consolidated was yesterday, accord- ity management, the firm announced. the impact she will have in secur- ing to Daun Paris, the co-founder of “We are pleased to have Roy as- ing new business opportunities and Eastern Consolidated, who noted sume responsibility for the manage- in tapping into the extensive capital that while Mr. Schechtman “was an ment of our borrowing relationships flows coming from the Americas at important part of the team,” Eastern as well as other portfolio manage- present,” said James Beckham, head Consolidated still retains “a deep ment functions. Roy has over 10 years’ of London capital markets at C&W, in bench of talent.” experience trading residential ad- prepared remarks. After his 10 years at Eastern justable-rate mortgage securities at Consolidated, Mr. Schechtman said J.P. Morgan Investment Bank in while he would follow Ms. Paris and New York and 10 years’ experience in Steve Cho joined Greystone as a her husband and co-founder Peter various senior financial positions at Managing Director based in Chicago Hauspurg “into fire,” “I was present- Bank of America in Charlotte, North focusing on CMBS, Greystone an- ed with an offer I just couldn’t refuse, Carolina,” said Andrew Jacobs, pres- nounced this week. Mr. Cho will focus notwithstanding repeated queries ident and CEO of Capstead. on building Greystone’s CMBS pres- over the last several years.” ence in the central states through Meridian also brought on Texas. board Yoni Goodman, formerly New York-based private equity Prior to joining Greystone, Mr. Cho of Goldman Sachs, to help lead the firm Savanna announced that they was a managing director at Royal platform. have hired Valeria Kitay as general Bank of Scotland, according to a The team will be based at 1 Battery counsel. statement from Greystone. A gradu- Park Plaza for a week and a half be- “Val brings a wealth of knowledge ate of Harvard University, Mr. Cho fore moving into new 11,000-square- in handling a variety of complex legal has also held positions with Fortress foot Midtown offices, Mr. Schechtman transactions in both the public and pri- Investment Group, the statement said. He received a large signing bonus vate real estate sectors, which makes said. not tied to performance as well as her an excellent choice for her new Mr. Cho will report to Robert other monies, a source with knowl- role as General Counsel at Savanna,” Russell, head of production for edge of the situation told COF. said Savanna Managing Partner Chris Greystone’s CMBS Group. “They did [$30] billion in mortgage Schlank in a statement. “Steve will serve as an incredible loans last year,” said Mr. Schechtman, Most recently, Ms. Kitay was of complement to our growing origina- whose new title is senior managing di- counsel at Hunton & Williams, tion team in the central region, as we rector. “That’s 14 mortgages a day, and LLP.

COMMERCIALOBSERVER.COM

8 | april 24, 2015 The Takeaway “Though the borrower for 1710 Broadway filed for a default this month, it’s not for the reason you would think,” said Sean Barrie, an analyst with Trepp. “April’s special servicer commentary for the 68,285-square-foot mixed-use property states that the loan was transferred ‘as a result of the borrower requesting a 180 day exten- sion to complete a sale of the property as the mortgage loan matures on 05/01/2015.’ Since the borrower owns the property and is looking to sell, this all correlates to a payoff of the loan. However, the loan has been on the watchlist since July 2013 due to Christian Casey’s departure from 75 percent of the space in the building, an- ticipated and executed in May 2014. You can say April’s been an interesting month, since it’s not often you see a building that is three-quarters vacant able to be sold and have its mortgage paid off.” Source:

Spec. Svcr Loan Name Property Type City State Current Balance Transfer Reason Deal Name

REPM Portfolio IN Various VR 82,973,531 7 JPMCC 2006-CB16

50 Danbury Road OF Wilton CT 61,804,677 4 LBCMT 2007-C3

Hudson Valley Mall RT Kingston NY 50,066,968 6 CFCRE 2011-C1

Willowwood I & II OF Fairfax VA 46,400,000 3 LBUBS 2006-C6

Eastland Center RT Harper Woods MI 37,428,728 6 WBCMT 2007-C30

1710 Broadway MU New York NY 32,555,912 7 COMM 2005-C6 Fort Knox Executive Office OF Tallahassee FL 29,309,381 7 JPMCC 2005-LDP2 Center

Village at Main MU Wilsonville OR 26,760,723 5 GECMC 2005-C3 Street Shopping Center

Kings Village Corp. CH Brooklyn NY 26,513,147 6 CSFB 2005-C5

Merrymeeting RT Brunswick ME 24,350,000 3 BACM 2007-1 Plaza

Erskine Village RT South Bend IN 23,802,454 2 GECMC 2007-C1

Glasgow Court MH Newark DE 17,474,339 7 JPMCC 2005-LDP2

Bristol Mall RT Bristol VA 16,969,424 3 BACM 2006-5

900 King Street - OF Rye Brook NY 15,250,000 7 GSMS 2007-GG10 A note

Homewood Suites LO Lansdale PA 15,206,013 1 GSMS 2005-GG4 - Lansdale (Gulph Creek)

Special Servicer Transfer Reason Key 1 - Imminent Balloon/ 3 - Imminent Monetary 4 - Imminent Default (Single 6 - Imminent Non Monetary Maturity Default Default (excluding Balloon/ Tenant Bankruptcy/Vacate) Default 2 - Payment Default (all payments Maturity Default; Single Tenant 5 - Balloon Payment/Maturity 7 - N/A excluding Balloon/Maturity Bankruptcy/Vacate) Default Payment)

9 | april 24, 2015 Q+A FINANCE WEEKLY Ned Cohen 321 West 44th Street, New York, NY 10036 Founder and President of NHCohen Partners 212.755.2400

Commercial Observer Finance: How Guelda Voien did you get your start? Editor Ned Cohen: At Syracuse University I studied urban sociology and economics Damian Ghigliotty and became interested in how our cities Senior Reporter and society evolved from the 1940s post- war period, and the economics relating to Lauren Elkies Schram that evolution. My first job after gradua- Contributing Writer tion was with J.P. Morgan Chase, as it is Cole Hill known today, where I learned about con- Copy Editor struction lending during a very expansive economic period. I worked with a few leg- endary and visionary developers and en- trepreneurs (the names Bill Zeckendorf, Barbara Ginsburg Shapiro Associate Publisher James Rouse and Gerald Hines come to Ned Cohen mind) who enabled me to broaden my per- Miguel Romero spective of real estate investment and fi- Art Director nance, as I set a goal of becoming an astute Feinstein—whose real estate practice ranks real estate professional. among New York’s best and largest—will be Lisa Medchill In subsequent years, I worked for a mid- a source of potential deal sponsors and equi- Advertising and Production Manager size New Jersey-based developer, then ex- ty investors, and my firm will provide qual- panded my horizon with the prominent ity investment services for Herrick clients. real estate investment-banking firm Eastdil The partners and I share a very careful ap- OBSERVER MEDIA GROUP Secured. Later, with Integrated Resources, proach to investment, and already know we I became involved with the underwrit- work well together. Malkin Holdings was a Jared Kushner ing and acquisition of office buildings and Herrick, Feinstein client during my 15 years Publisher shopping centers for limited partner- at Malkin Securities. We both subscribe to Joseph Meyer ship and public fund investors. At Unicorp the principles of disciplined underwriting Chief Executive Officer American Corporation, I led the analysis and thorough due diligence imparted by the and acquisition of Lincoln Savings Bank’s Malkin family when it introduced real es- Matthew Talomie $1.8 billion real estate portfolio when that tate syndication some 80 years ago. Chief Revenue Officer bank failed in the severe real estate reces- Ken Kurson sion of the late 1980s. In the 1990s, I be- You plan to focus on carefully struc- Editorial Director came a partner of Bergman Real Estate tured, conservatively leveraged deals. Group in New Jersey, heading acquisition, Who will you target as a borrower? Robyn Reiss finance and client advisory services. So my I’m looking for deal sponsors with deep ex- Vice President of Sales finance and equity background was very di- perience and successful track records, whose Thomas D’Agostino verse, even before I joined Malkin Holdings projects need supplementary funding in the Controller to head Malkin Securities Corp. approximate range of $5 to $25 million. The deal must be founded on sound real estate Laurence Rabinowitz Can you tell us about your recent- fundamentals and realistic economics, and General Counsel ly announced alliance with law firm provide a viable exit strategy. Most types of in- For editorial comments or to submit a Herrick, Feinstein? come-producing property will be considered. tip, please email Damian Ghigliotty at Primarily, this alliance is in recognition [email protected]. of two facts: that income-producing real What’s the most interesting deal you estate can be an important alternative in- have in the hopper? vestment, with many advantages, for indi- On an individual property basis, there’s an For advertising, contact Barbara Ginsburg Shapiro at viduals and family offices, and that limited apartment project in a suburb of Atlanta that [email protected] partnerships are a vital source of funding requires equity for acquisition and presents a or call 212-407-9383. for real estate entrepreneurs. rather unusual opportunity. SEC regulations My objective is to identify and structure preclude me from being more specific without For general questions and concerns, well conceived opportunities for inves- offering statement, but this is an investment I contact Guelda Voien at tors to diversify their portfolios with direct regard enthusiastically. In addition, I’ll be rais- [email protected] ownership of real estate, while providing ing equity for a fund sponsored by one of New or call 212-407-9313. equity to experienced deal sponsors whose York’s best-known real estate entities, which capital requirements are not fully satisfied has been in business for about a half-century. To receive a trial subscription to by traditional lenders. It’s a solid firm with a conservative approach Commercial Observer Finance, please call 212-407-9371. When appropriate, Herrick, similar to mine.

10 | april 24, 2015