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FEBRUARY 6, 2015 Spreads Blow Out on Saks Deal Four dealers ran into strong headwinds pricing a $1.25 billion offering backed by 14 CMBS TRUST ADVISORS a fixed-rate loan on the land beneath Saks Fifth Avenue’s flagship store in . 16 TOP LENDERS IN AGENCY DEALS The deal’s marketing campaign stretched out to nearly three weeks, about three Bank of America, Goldman Sachs, Morgan Stanley 2 Deka Leads Floater on NY Tower times longer than typical, as and Scotiabank struggled to place the paper. The dealers ended up having to widen 2 Benefit Street Joins Credit Suisse Deal spreads by 16-70 bp from initial price talk (see Initial Pricings on Page 22). The six classes of principal-and-interest bonds priced on Tuesday at a weighted 2 Helaba Backs Ivanhoe Office Deal average spread of 168 bp. That was more than 30 bp wider than the underwriters’ 4 Conduit CMBS Spreads Move Lower initial expectations, sharply cutting into their bottom line. CMBS traders and investors said the dealers clearly misjudged the demand for 5 Karlin Inks 2 Floaters on Resort Hotels the single-asset transaction, given the combination of its large size and unusually long weighted average life of 19.9 years. “The thing that’s really different about the Financing Sought for NY Condo Project 6 See SAKS on Page 21 8 Mortgages Posted 7.39% Gain in 2014 10 CIBC Writes Office Loan CBRE, Berkadia Top Agency-Lender Ranking CBRE Berkadia 10 Ullico Closes 2 Loans for Developers and finished 1-2 again last year in the originator ranking for agency multi-family loans, but Berkadia closed the gap. 10 Rialto, LNR Circle B-Pieces CBRE sold $8.3 billion of loans to Fannie Mae and Freddie Mac, up from $8.1 billion in 2013. Meanwhile, Berkadia had $7.1 billion of volume last year, up from 12 Special-Servicing Tally Keeps Sliding $5.7 billion in 2013, according to data that the agencies disclosed for their largest 13 Sandler Unveils Plan for New Traders lenders. That cut the separation between the two firms in half, to $1.2 billion (see rankings on Pages 16-17). 14 Trust Advisors Eye New Role Walker & Dunlop retained third place, with $6.3 billion of activity, up $1.1 bil- lion. Wells Fargo finished fourth again, at $4.3 billion, down from $4.4 billion. And 18 Beacon Seeks Boston-Area Office Loan moved into the top five, with $3.1 billion of loans sales, following its 19 INITIAL PRICINGS acquisition in late 2013 of Beech Street Capital, which had occupied that slot in the year-ago ranking. All told, the agencies purchased $57.2 billion of loans last year — $28.9 billion THE GRAPEVINE See AGENCY on Page 16 Hunt Mortgage has brought on Jeff JP Morgan to Lead Loan on Houston Galleria Rutishauser as a managing director in its headquarters, as well A J.P. Morgan syndicate has agreed to write a $1.2 billion fixed-rate loan on the as James Neil as a director in Austin. Houston Galleria mall for a Simon Property partnership. Both industry veterans began last week. The mortgage will be funded by J.P. Morgan, which is leading the financing, and Rutishauser focuses on raising capital. three other banks: Barclays, Credit Suisse and Morgan Stanley. Their relative por- He was previously senior managing tions haven’t yet been determined. director at New York private equity shop The banks will securitize the 10-year loan via a stand-alone offering that will Berkshire Capital, where he worked for likely surface next month. five years. At Hunt, he reports to senior The Simon partnership will use most of the loan proceeds to retire an $821 mil- managing director James Flynn. Neil, lion fixed-rate mortgage that matures in December. J.P. Morgan securitized most who reports to senior managing director of that 10-year, interest-only loan through two offerings: JPMCC 2005-LDP5 and Philip Melton, joined Hunt’s FHA team as JPMCC 2006-CIBC14. its first originator dedicated to senior- The 2.4 million-square-foot mall has been expanded several times since being housing and healthcare mortgages. He developed in 1970 by Houston-based Hines. In 1999, Hines sold a two-thirds stake See GRAPEVINE on Back Page See GALLERIA on Page 18 February 6, 2015 Commercial Mortgage 2 ALERT Deka Leads Floater on NY Tower John Porter, who joined as a director, and Darren Gluck, a man- aging director and chief credit officer. Both started in October. A group of lenders has originated a $250 million mortgage Other members of the operation include chief business officer on an office tower at the tip of . Marc Pfeffer, managing director Jerry Wong and director David Deka Bank led the floating-rate loan, which has a five-year Glenn. term. It brought in another German institution, Helaba Bank, The program initially acquired the B-pieces of Freddie Mac at the closing this week. A third bank, identified by a source securitizations. Now it is expanding into CMBS lending and is as HSBC, is expected to buy a piece of the deal in the coming shooting to make a big splash this year, with $2 billion of origi- weeks. The word is the borrower swapped the debt to a fixed nations. Its initial focus will be on “bread-and-butter” conduit rate at closing. loans, rather than giant mortgages.  The collateral is Four New York Plaza, a 1.1 million-square- foot building at Broad and Water Streets that is owned by a Helaba Backs Ivanhoe Office Deal partnership between Edge Fund Advisors of Washington and HSBC Alternative Investments. Helaba Bank has originated a $169 million floating-rate loan The loan-to-value ratio is around 65%, pointing to a value to finance Ivanhoe Cambridge’s purchase this week of two Seat- of about $385 million for the property. The Edge team acquired tle office buildings. the tower in 2012 for $270 million from a partnership between Ivanhoe, the real estate investment arm of Canadian pen- Harbor Group International of Norfolk, Va., and New York-based sion fund advisor Caisse de Depot et Placement du Quebec, Capstone Equities. acquired the properties from fund shop Walton Street Capital Edge and the HSBC unit have made several office invest- for $280 million. Eastdil Secured brokered both the sale and ments together, including the acquisitions of a 907,000-sf the five-year mortgage. building at 1540 in New York and two Washington The buildings, which total 692,000 square feet, are about a buildings: 1625 Eye Street NW (387,000 sf) and 1350 Eye Street block apart in the central business district, at 1111 Third Ave- NW (381,000 sf). nue and 1100 Second Avenue. Deka appears to have an ongoing relationship with the The 34-story tower at 1111 Third Avenue encompasses Edge-HSBC team. In 2013, the bank provided a $165 million, 556,000 sf and was 60-70% leased near the end of last year. The five-year loan to refinance 1625 Eye Street NW, in which Brook- other building, known as Second & Spring, has 136,000 sf over field Office Properties has a small stake. five floors and was about 90% leased. Four New York Plaza was built in 1969. J.P. Morgan leases Montreal-based Ivanhoe is the fifth owner of the buildings about 798,000 sf until 2025, according to CoStar. The invest- in the past eight years. In 2007, fund shop Blackstone gained ment bank owned the 22-story building for many years before control via its $39 billion takeover of Equity Office Properties of selling it to the Harbor-Capstone team in 2009 as part of a larger . Blackstone immediately flipped the two buildings and strategy of shedding dozens of real estate holdings around the nine others to Goldman Sachs affiliate Whitehall Street Real country. Estate Funds for $1.2 billion. The building is 95.5% leased. Other major tenants include Whitehall Street financed the purchase of the 2.6 million-sf American Media (100,000 sf until 2023), the New York Daily portfolio with a $935 million debt package from Credit Suisse. News (50,000 sf) and De Novo Legal (50,000 sf). But the financial crisis took a toll on the portfolio’s tenants. The property is a block from the Whitehall Terminal ferry Most notably, Washington Mutual, which leased 15% of the station at the southernmost tip of Manhattan. It’s across South total space, failed. That drove down the portfolio’s value, leav- Street and the FDR Drive from the East River. Because of its ing Whitehall Street overleveraged. waterfront location, it was among the Manhattan properties Chicago-based Walton Street bought the portfolio’s $230.9 hardest hit by Hurricane Sandy when it struck New York in million of senior mezzanine debt at a discount in 2011 from 2012. The building was closed for about four months. Archon Group of , another Goldman affiliate, and used that position to take control of the properties. Benefit Street Joins Credit Suisse Deal Walton Street has sold at least one of the other properties in the portfolio — the 465,000-sf Bellefield Office Park in Bel- Benefit Street Partners will make its debut as a loan con- levue, Wash. — and is marketing others.  tributor next month in a commercial MBS offering led byCredit Suisse.

The transaction will be the first post-crash conduit issued on Unless your company holds a multi-user license, it is a violation of a Credit Suisse shelf. Other lenders are expected to participate. U.S. copyright law to photocopy or reproduce any part of this Benefit Street is the debt-investment arm of Providence publication, or forward it electronically, without first obtaining Equity, a private-equity shop in Providence, R.I. It set up a com- permission from Commercial Mortgage Alert. For details about mercial real estate program in 2013, recruiting Deutsche Bank licenses, contact JoAnn Tassie at 201-234-3980 or [email protected]. alumnus Scott Waynebern to oversee the effort. He brought in a handful of staffers to build out his team, including originator EXPERIENCE • EXECUTION • EXCELLENCE

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ad-fullpage-8.5x11.indd 1 1/28/15 10:37 AM February 6, 2015 Commercial Mortgage 4 ALERT Conduit CMBS Spreads Move Lower conduit offering led by Wells Fargo priced in line with talk at 94 bp (see Initial Pricings on Pages 19-22). Spreads tightened this week on multi-borrower issues, but The comparable spread was 97 bp in the previous conduit deal, moved in the opposite direction on single-borrower commercial a $1.2 billion offering led by Citigroup and Goldman Sachs that MBS. priced on Jan. 28 (CGCMT 2015-GC27). Dealers floated two relatively small conduit transactions, Spreads also contracted at the other end of the investment- totaling $1.8 billion, and priced or were marketing $5.1 billion of grade capital stack. After the triple-B-minus notes in the CGCMT bonds via six other offerings. deal went for 385 bp, those in the Wells-led deal (WFCM 2015- The long-term, super-senior bonds in an $836.5 million issue C26) were pitched at 360-bp area and priced at 370 bp. The cor- led by J.P. Morgan and Barclays priced yesterday at 90 bp over responding tranche in the J.P. Morgan-Barclays offering (JPMBB swaps, after coming in slightly from initial guidance of 91-93 bp. 2015-C27) beat its 365-bp area guidance and went out the door A day earlier, equivalent benchmark paper in a $962.1 million at 360 bp. Elsewhere in the new-issue mar- ket, spreads widened sharply from guidance on two single-asset trans- actions backed by fixed-rate debt that priced this week. One was a $1.25 billion offering tied to a 20-year loan that Bank of America and three other banks wrote on land beneath the Saks Fifth Avenue store in New TRANSACTIONS York (SFAVE 2015-5AVE; see story on Page 1) The other was a $308 million secu- SPEAK LOUDER ritization of a 10-year acquisition loan that Deutsche Bank originated THAN WORDS for New York-based Blackstone on the 604,000-square-foot office tower at 1740 Broadway in Midtown Man- Over $25 Billion Sold hattan (BWAY 2015-1740). The tri- SEARCH LISTINGS AND SET ALERTS: ple-A bonds wound up going for 100 WWW.AUCTION.COM/CMA-BUY bp, up from price talk of 90-92 bp. Meanwhile, dealers kicked off INTERESTED IN SELLING? marketing for three other single-bor- WWW.AUCTION.COM/CMA-SELL rower transactions and a commercial real estate CLO. The largest is a $1.8 View licensing at www.auction.com/licensing billion securitization of fixed- and floating-rate debt on 215 healthcare FEATURED CLOSINGS • JANUARY 2015 properties in 31 states. The collateral for that deal (GAHR 2015-NRF) is part of a $2.6 billion debt package SOLD SOLD that Citi, J.P. Morgan, Barclays and Credit Suisse originated for North- star Realty Finance on Dec. 3. The debt funded the New York REIT’s $4 billion takeover of Griffin-American Healthcare REIT 2. The CLO is the latest from Renovated, Class A Offi ce Building High-Visibility Hotel near Downtown Resource Capital, a REIT controlled Rockville, MD • 77,534 SF San Diego, CA • 175 Units Resource America Occupancy: 95% • CAs Signed: 75 CAs Signed: 318 by of Philadel- phia. Wells is running the books on the deal (RSO 2015-CRE3), which is backed by $346.2 million of floating- WHERE REAL ESTATE IS MOVING™ rate mortgages that Resource origi- nated on 20 commercial properties in nine states.  February 6, 2015 Commercial Mortgage 5 ALERT Karlin Inks 2 Floaters on Resort Hotels 30 miles south of Flagstaff and 100 miles southeast of the Grand Canyon. IMH acquired them in April 2013 through Karlin Real Estate has originated floating-rate loans, total- foreclosure. Both underwent extensive remodeling in 2011. ing $96 million, to separate borrowers on a landmark hotel in The work included an expansion of L’Auberge, which was Colorado and a two-hotel portfolio in Arizona. developed in 1984. It has 32 new cottages and 55 renovated Both interest-only loans have three-year terms with two guestrooms and cottages on 11 acres. Its average occupancy one-year extension options. Karlin, a Los Angeles investment rate last year was 75%, slightly above the 71% rate reported shop, will keep the loans in its portfolio. by STR for comparable hotels in the area. Orchards Inn, built The larger loan, at $50 million, is backed by adjacent proper- in 1974, includes a restaurant. Its occupancy rate last year was ties in Sedona, Ariz.: L’Auberge de Sedona, an 87-room high- 79%, outperforming the 65% average for comparable proper- end resort, and the 42-room Orchards Inn. The borrower,IMH ties in the region.  Financial of Scottsdale, Ariz., used most of the proceeds to retire existing debt. Cushman & Wakefield brokered the financ- ing, which closed Jan. 23. The other loan, for $46 mil- lion, is on the 140-room Stanley Hotel in Estes Park, Colo. The borrower, Grand Heritage Hotel Group of Annapolis, Md., used part of the proceeds to pay off existing debt on the property, which is on the National Regis- ter of Historic Places. Starwood Property originated an $11 mil- lion loan in 2011. It was securi- tized in a $1.4 billion commercial OWNERS AND DEVELOPERS – MBS deal (GSMS 2011-GC3) and LOOKING FOR NEW FINANCING? has since paid down to $10.6 mil- lion. Hunt Mortgage Group now finances retail properties and shopping centers A portion of the new loan nationwide. As one of the industry’s most respected commercial lenders with a 40- will be drawn down over time year proven track record, Hunt Mortgage Group clients benefit from our established to finance construction of a relationships with property owners and developers, combined with our retail lending 50-room boutique hotel next and underwriting expertise. door. Grand Heritage also will put some proceeds toward the acqui- sition of the 208-room Penasco Fixed Rate Mortgages through our Hunt Proprietary Lending Program Del Sol Resort in Puerto Penasco, Mexico, which the company has Explore your financing alternatives and let Hunt Mortgage Group demonstrate our been managing since 2010. Aries Capital of Chicago lined up the exceptional difference. mortgage, which closed Jan. 12. For all your commercial real estate needs, please contact Hunt Mortgage Group at: The Stanley Hotel is near Rocky Mountain National Park, Dallas Vic Clark | 972.868.5757 | [email protected] 70 miles northwest of . The Colonial Georgian building Cleveland Daniel Eibler | 216.407.3213 | [email protected] was developed in 1909 by Free- Irvine Peter Clasquin | 949.221.6681 | [email protected] lan Oscar Stanley, co-inventor of the Stanley Steamer automobile. New York Dan Wolins | 212.521.6366 | [email protected] It later provided inspiration for Stephen King’s horror thriller “The Shining,” after the author stayed there. CERTAINTY OF EXECUTION. huntmortgagegroup.com The Arizona properties over- CLARITY OF THOUGHT. look Oak Creek Canyon, about February 6, 2015 Commercial Mortgage 6 ALERT Financing Sought for NY Condo Project In the meantime, H/2 Capital of Stamford, Conn., was buy- ing up portions of the debt from members of the syndicate, The owner of a massive mixed-use property in Queens, N.Y., presumably at discounts. It ended up holding most of the loan, is looking for as much as $450 million of debt to help finance with Emigrant Bank and Bank of East Asia remaining as par- the development’s second phase. ticipants. Onex Real Estate is talking to lenders about a floating-rate The project eventually proved successful, and sources said construction loan for the project, which would add 805 resi- the debt was refinanced about a year ago, with H/2 and the dential condominiums in three towers at the Sky View Parc other lenders getting paid off in full. complex in the Flushing neighborhood. The new buildings In January, Onex bought out Muss as it prepared to proceed would join two other residential towers with 448 units that with the second development phase, to be called Grand at Sky stand atop an 800,000-square-foot retail center. View Parc. The price is unknown, butCrain’s New York Busi- Eastdil Secured is advising Onex, a private equity ness reported that Muss had been seeking about $150 million shop which recently bought out its former partner in the proj- for its stake. ect, local firmMuss Development. Some loan pros voiced concerns about the debt request, in The partnership began developing the property in 2007, but part because of the troubled history of the first phase and also construction delays and the recession set back the timetable. because of the project’s size and location. While the economy The first phase was finished in 2011 but the second phase has has improved and many residential projects are under way been on hold until now. in New York, lenders are often more cautious about condo Two banks that no longer exist in their previous forms, developments outside of core downtown areas and wealthy Eurohypo and Wachovia, originated the $585 million construc- neighborhoods. “We looked at it,” said one New York-based tion-debt package that backed the first phase and syndicated originator with a large bank that passed on the deal, “but it will it among a number of other lenders. In 2010, as the project be challenging because of the condo angle.” struggled with delays and cost overruns, Onex took control of The property is at the intersection of Roosevelt Avenue the partnership and began negotiations to restructure the debt. and College Point Boulevard, a short distance from Flushing The word is the lending group agreed to extend the term and Meadows Corona Park and the home stadium of the New York provide more than $100 million of additional financing. Mets. 

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7KHVWUXFWXUHGīQDQFHDQDO\VLV\RXUHO\RQVKRXOGEHEXLOWRQDWKRURXJK Morningstar Credit Ratings, LLC XQGHUVWDQGLQJRIWKHFULWLFDOULVNIDFWRUV$W0RUQLQJVWDU&UHGLW5DWLQJV UDWLQJDJHQF\PRUQLQJVWDUFRP ZHSURYLGHUDWLQJVDQDO\VLVWKDWWDNHVDEURDGDQGGHHSYLHZRIWKHDVVHWVDQG +1 800 2991665 SDUWLHVWKDWPDNHXSVWUXFWXUHGīQDQFHWUDQVDFWLRQV:HLGHQWLI\DQG TXDQWLI\FUHGLWULVNDQGSURYLGHDFRQFLVH0RUQLQJVWDUSHUVSHFWLYHWKDWLQYHVWRUV FDQXVHWRPDNHEHWWHULQIRUPHGLQYHVWPHQWGHFLVLRQV2XULQVLJKWIXOSUHVDOH DQDO\VLVWLPHO\VXUYHLOODQFHUHYLHZVDQGREMHFWLYHRSHUDWLRQDOULVNDVVHVVPHQWV FRPELQHWRSURYLGHDFRPSUHKHQVLYHDQDO\WLFDOSDFNDJHIRULQYHVWRUVLQ &0%650%6VLQJOHIDPLO\UHQWDOVHFXULWLHVDQG$%6 February 6, 2015 Commercial Mortgage 8 ALERT Mortgages Posted 7.39% Gain in 2014 Mortgage-Performance Comparison Commercial mortgages produced a hefty 7.39% return last Return Return 4Q-14 12 mo. Duration year, according to the Giliberto-Levy Commercial Mortgage (%) (%) (years) Performance Index. Mortgages All commercial 1.64 7.39 4.32 That marked the best performance since 2010 and a big Office 1.43 6.67 3.92 jump from the modest 2.87% return in 2013. Multi-family 2.06 9.58 5.11 Chalk up the difference to declining Treasury rates: At year- Retail 1.48 7.03 4.45 end, the yield on the benchmark 10-year T-bill stood at 2.17%, Industrial 1.59 6.15 3.52 compared with 3.04% a year earlier. In general, falling Treasury CMBS Investment-grade 1.49 4.21 4.36 yields translate into lower interest rates on new commercial mortgages, which in turn boost the market value of existing Corporates Barclays Capital Bond Index 1.77 7.46 7.25 loans held by investors. Triple-B (duration adjusted) 0.52 4.68 4.32 The index calculates returns on a blend of fixed-rate loans (5-7 year) 1.83 4.84 5.68 Treasurys across all commercial property types. For the fourth quarter, Sources: Giliberto-Levy and Barclays it posted a 1.64% total return. Loan income for the last three Giliberto-Levy Commercial Mortgage Performance Index months of the year was 1.25% and valuations rose 0.46%, while Annual percent change other factors including credit losses subtracted 7 bp. 14.7 The quarterly return was a slight improvement over the 10.2 1.6% gain for the third quarter and substantially stronger than 2013’s last quarter, which saw a 0.69% return. 6.9 7.4 4.7 5.7 4.7 Multi-family loans were the top performers in 2014’s final 3.5 2.9 quarter, notching a 2.06% return, followed by industrial (1.59%), retail (1.48%) and office mortgages (1.43%). ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 Overall, mortgages outperformed investment-grade com- -4.1 mercial MBS — which logged a 1.49% return for the quarter — but lagged behind Barclays’ corporate sector index (1.77% return) and 5-7 year Treasurys (1.83% return). The last three months of the year saw the 10-year Treasury yield dip by 35 bp, but the effect was somewhat offset by an increase in loan spreads, much of which occurred in December. DUE DILIGENCE The composite spread tracked by the index rose 13 bp. SHOULDN’T FEEL Lenders continued to charge a spread premium on short- term loans — typically 75 bp for a three-year term and 50 bp LIKE THIS. for a five-year term, compared with the rates on 10-year mort- gages. They also generally tacked on a 15-25 bp premium for 0DNHLWHDV\ZLWKWKHULJKW3DUWQHU small-balance loans, meaning those below $10 million in most sectors and $5 million for industrial loans. Loan-to-value ratios, meanwhile, held steady at around 62%. A slight change, however, was noted in debt-service-coverage ratios. They dipped slightly, due to broadly rising asset values, to 2.0 to 1 in 2014, from 2.1 to 1 in 2013 and 2.2 to 1 in 2012. The Giliberto-Levy Index tracks $180.6 billion of fixed-rate commercial mortgages held by insurers and pension funds. The loans had an average coupon of 5.2%, an average maturity of 6.6 years and an average loan-to-value ratio of 47.5%. The index is produced and distributed by New York-based MSCI. 

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Baltimore, MD • Boston, MA • Cleveland, OH • Dallas, TX • Detroit, MI Growing Financial Partnerships Long Island, NY • Los Angeles, CA • New York, NY • San Francisco, CA February 6, 2015 Commercial Mortgage 10 ALERT CIBC Writes Indianapolis Office Loan 311 South Wacker Drive in Chicago by a partnership between Zeller and Chinese investment manager China Cinda Asset Man- CIBC has written a $55 million loan on one of the largest agement. The previous year, CIBC and Investcorp provided $62 office properties in downtown Indianapolis. million of debt to finance Zeller’s acquisition of the 220,000-sf The floating-rate debt package, which closed a few weeks Guaranty Bank Building in Denver.  ago, has a term of up to five years, including extension options. The collateral is the 500,000-square-foot building at 10 West Ullico Closes 2 Loans for Developers Market Street, also known as Market Tower. The borrower is a partnership between Chicago-basedZeller Union Labor Life has made two loans totaling $267 million Realty and a fund operated by Pimco of Newport Beach, Calif. on development sites in Hawaii and New York. The partnership acquired the building last fall after purchasing A $167 million floating-rate loan will fund the construction its defaulted debt at a discount. The property was headed for a of a 1.4 million-square-foot mall on a 67-acre site near Hono- foreclosure auction, but the Zeller team instead negotiated with lulu. The property, called Ka Makana Ali’i, will house more the previous owner — HDG Mansur, a local developer run by than 100 shops, restaurants and entertainment venues and will Harold Garrison — to assume ownership. include a stage for arts events and cultural exhibits. The bor- A portion of the CIBC loan wasn’t funded at closing, and rower is DeBartolo Development of Tampa. The three-year loan will be drawn down for tenant improvements and other capi- includes two one-year extension options. tal outlays aimed at boosting the property’s performance. The Ullico also wrote a $100 million fixed-rate loan that financed 32-story tower, built in 1988, has historically been more than J.D. Carlisle Development’s purchase of a Midtown Manhat- 90% leased, but its occupancy rate had dipped to about 66% by tan parcel. New York-based Carlisle plans to build a 319-unit late last year. Despite that, a source said, the debt yield on the apartment building on the parcel and the adjacent site, which new loan is conservative, in the range of 9%. it already owned, at 160 Madison Avenue, between East 32nd Zeller owns several properties in the Indianapolis market. and East 33rd Streets. Construction is already under way at the It has also worked with CIBC on other deals. About a year ago, adjacent site. The loan has a one-year term, with a 12-month the bank teamed up with Union Bank to write a $222 million extension option.  mortgage backing the purchase of the 1.3 million-sf tower at Rialto, LNR Circle B-Pieces Rialto Capital and LNR Partners have each circled the bottom portion of an upcoming commercial MBS transaction. Rialto has agreed to buy the B-piece of a deal led by Deutsche Bank (COMM 2015-C1). And LNR will take down the below- investment-grade portion of a transaction with loan contribu- tors led by Deutsche and CCRE (COMM 2015-CCRE22). The buzz is that LNR may bring in a minority partner, but terms haven’t been finalized. Both B-pieces were awarded on a negotiated basis, rather than via auctions. 

Correction A Jan. 30 article, “Conduit Tally Flat, but Small Shops Pres- sured,” incorrectly suggested that Arbor Commercial Mortgage was removed from this year’s list of lenders that contribute loans to conduit deals because it had changed its origination strategy. Arbor had been incorrectly included in the previous year’s list. The company securitizes loans via CLOs and also acts as a “table funder” by selling loans to conduit programs. 

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©2015 Greystone & Co., Inc. All rights reserved. References to the term “Greystone”, “we”, “us,” and “our” refer to Greystone & Co., Inc. and/or its affiliated companies, as applicable. Loan products are offered through Greystone Funding Corporation, Greystone Servicing Corporation, Inc. and/or Greystone affiliated companies. For more information please visit our website www.greyco.com or contact [email protected]. AA004 0115 February 6, 2015 Commercial Mortgage 12 ALERT Special-Servicing Tally Keeps Sliding Breakdown of CMBS Servicing As of Jan. 31 The volume of securitized commercial mortgages in the Portion of hands of special servicers declined again last month, to its low- Loan Type Share of Share of In Special Special All CMBS est level in over five years. Balance Servicing Servicing Loans The aggregate balance of loans in that category stood at $37.5 Collateral ($Mil.) (%) (%) (%) billion on Jan. 31, down $1.1 billion from yearend, according to Office $12,699.0 8.35 33.85 28.81 Trepp. With the latest decrease, the percentage of loans in special Retail 10,016.7 6.11 26.70 31.06 servicing dropped to 7.11%, down 23 bp since Dec. 31 and well Multi-family 5,865.4 9.59 15.63 11.59 below the all-time high of 13.65% in February 2012. Hotel 4,839.7 7.29 12.90 12.59 The largest loans Trepp added to its special-servicing list last Industrial 1,851.3 8.20 4.93 4.28 month are current on payments, but in danger of defaulting at Other 2,246.4 3.64 5.99 11.69 maturity. Both are 10-year, fixed-rate loans on office properties. TOTAL 37,518.5 7.11 100.00 100.00 One has a balance of $100 million and comes due Feb. 11. In 2012, it was split into a $72 million A-note and a $28 million 15% CMBS Loans in Special Servicing “hope note” via a workout that included an infusion of capital from Pearlmark Real Estate Partners of Chicago. The loan is col- 12% lateralized by the 490,000-square-foot Park 80 West complex Lehman Brothers 9% in Saddle Brook, N.J. originated the loan for a partnership led by New York-based L&L Holding and securi- 6% tized it in a $1.9 billion conduit transaction (LBUBS 2005-C2). The second-largest loan, with a balance of $98.8 million, is 3% Balance as percentage of all U.S. CMBS loans backed by the 234,000-sf Lever House, at 390 Park Avenue in Midtown Manhattan. Credit Suisse wrote the 2005-vintage mort- 0% 12/07 12/08 12/09 12/10 12/11 12/12 12/13 12/14 gage, with a $110 million initial balance, for a partnership among Source: Trepp Michael Fuchs, Aby Rosen and Harry Lis, and securitized it in a $1.6 billion deal (CSFB 2005-C2). The loan matures next month.

ONE FIRM. DELIVERING CUTTING EDGE FINANCIAL STRUCTURING

$123,000,000 $70,000,000 $67,500,000 $31,175,000 Debt Debt Debt & Mezzanine Debt Acquisition Acquisition Acquisition Refinance

222 Units 15,565 SF 60,000 SF 258 Key Multifamily Retail Office Condo Hotel

New York, NY New York, NY New York, NY San Diego, CA

DEBT y EQUITY y MEZZANINE y INVESTMENT SALES ACKMANZIFF.COM February 6, 2015 Commercial Mortgage 13 ALERT Sandler Unveils Plan for New Traders and new-issue distribution of private-label CMBS issues at Barclays and Flick had a similar role at Jefferies. The long-term goals for a commercial MBS brokerage desk Cook had joined Barclays in 2008, when it acquired cer- that Sandler O’Neill & Partners launched this week include tain operations of Lehman Brothers, where he had been on helping the firm’s regional- and community-bank clients get the trading desk since 2001. He left Barclays about a year ago. more involved in the sector. Flick, who left Jefferies in mid-2013, was among a number For now, however, newly hired traders David Cook and of securitization professionals who had defected to that firm Andrew Flick have been charged with building a traditional from RBS in early 2008. Previously, he spent about two years broker-dealer operation that puts together buyers and sellers at JMP Securities of San Francisco and had an earlier tour at of CMBS in the secondary market. The two managing direc- J.P. Morgan.  tors arrived Monday from broker-dealer Brean Capital, where Cook concentrated on structured-product sales and Flick ran CMBS trading. At Sandler, they report to principal Alan Roth, who man- ages the fixed-income trading desk. The investment-bank- ing firm already traded CMBS on occasion, but the hiring of Cook and Flick reflects its aim of becoming a regular partici- pant in that market. Online Commercial Auction Sandler isn’t planning to $42+ Million in Commercial Properties & Loans for Sale maintain an inventory of February 17 th - 19 th bonds for trading purposes. So Cook and Flick, as they did at Brean, will cross bonds between insurers, hedge funds, asset managers and other investors. Sales by Sales by “We will carry over our existing relationships and Asset Type Starting Bid build on them,” Cook said. “And down the road, we’ll be able to engage our bank cli- ents on how CMBS may fit their investment portfolios.” The banks served by 2IÀFH 18% < $300K Sandler currently tend to ‡ 35% Hotel ‡ 18% $300K-$600K focus on buying agency ‡ 18% Land ‡ 29% $601K-$1 Million CMBS. The new trading unit ‡ ‡ will eventually work on “edu- 12% Retail 35% >$1 Million cating clients on how private- ‡ ‡ label bonds may offer value as well,” Flick said. Cook joined Sandler’s office in Boston, where he had worked for Brean since May. For more information or to register visit Flick jumped to Sandler’s www.RCM1.com/CMA Manhattan headquarters from Brean’s office in Darien, 888-440-7261 Conn. Before joining New ©2015 Real Capital Markets. All Rights Reserved. York-based Brean, Cook ran secondary-market trading February 6, 2015 Commercial Mortgage 14 ALERT

RANKINGS Trust Advisors Eye New Loan-Watchdog Role in CMBS Deals A regulatory change that takes effect at midyear could bene- being protected. But the responsibilities ended up being much fit the select group of firms that serve as trust advisors on com- narrower, with advisors rarely playing a hands-on role until mercial MBS transactions. after the B-piece holder has lost control of the special-servicing Under the SEC’s “Regulation AB 2,” issuers will have to hire a rights because of principal writedowns. third-party firm for each securitization to serve as a watchdog on And those responsibilities have been curtailed further since the lenders that originated the collateral commercial mortgages. the first post-crash deals. Today, the trust advisor primarily If delinquencies in the collateral pool were to reach a prescribed performs a yearly audit of the special servicer to verify its capa- level, the firm would conduct a review of whether the originators bility and serves as a kind of “catastrophic insurance” in case a had provided adequate and accurate loan data to investors, as special servicer violates its duty. The advisor can recommend promised under their “representations and warranties.” that a special servicer be replaced and put the matter to a bond- Trust advisors are natural candidates to win the post, known holder vote, but it can’t unilaterally remove the special servicer. as an “asset-representations reviewer,” because it is comple- Trust advisors are paid an annual fee based on the outstanding mentary to the advisory work they already do. balance of a transaction. Last year, the average annual fee for the Trust advisors themselves are relative newcomers to the five largest conduit deals was $23,375. There is also a “consulting CMBS market. They first began appearing on deals in 2010 to fee” — generally $10,000 — for each “major decision” when an scrutinize the performance of special servicers in working out advisor is called into action after a loan gets into trouble. The troubled loans. base fee varies from deal to deal, according to the exact duties. The universe of trust advisors is tiny. Only four firms won The role of asset-representations reviewer was created assignments last year. Park Bridge Lender Services of New York because of abuses in residential mortgage securitization during and Pentalpha Surveillance of Greenwich, Conn., each captured the boom. “That’s where you saw lenders violating reps and war- slightly more than one-third of the market, by dollar amount. ranties,” said one CMBS veteran. “There were almost no viola- Situs Holdings of Houston and Trimont Real Estate Advisors of tions on the commercial side — no systemic problems, anyway.” Atlanta just about evenly divided the rest (see ranking below). If delinquencies reach a prescribed level and bondhold- Park Bridge has steadily increased its market share, from ers grant their approval, the reviewer will examine loans that 18.5% in 2012 to 30.4% in 2013 and 35.9% last year. “We got are delinquent by at least 60 days to see if they comply with started in this space about a year later than some of the others,” the reps and warranties. The reviewer will present its find- said Dave Rodgers, one of four principals at the advisory and ings to the trustee, which could pursue action against a lender brokerage shop. “But people have gotten to know our firm and if there is a violation. A lender that violates reps and warran- our capabilities better than before, and those marketing efforts ties is required to buy back its loan at the current face amount, have started to pay off.” plus accrued interest and expenses. In the past, a trustee often Pentalpha’s market share also climbed last year, to 35.2% had to go to court to force a buyback if the lender disputed the from 34% in 2013, although Park Bridge inched ahead to take charge. Under the new regulation, the trustee can take a dis- first place in the ranking. pute to arbitration if a loan isn’t repurchased within 180 days. Trust advisors, also known as operating advisors, were cre- The reviewer’s fee will likely be determined on a sliding ated after the crash to help ensure that special servicers don’t scale, said one pro. “It’s going to have to be set up so that you abuse the wide discretion they have to work out distressed get a much bigger fee for looking at a big portfolio loan versus collateral. Investment-grade investors had hoped the advisors a simple vanilla loan on a single building.” would have strong oversight of special servicers, including the A special servicer affiliated with a deal’s B-piece buyer power to fire them. They wanted advisors to be aware of work- would be ineligible to work as the issue’s asset-representations out strategies and ensure that the interests of bondholders were reviewer.  Trust Advisors for US CMBS Issued in 2014 2014 Market 2013 Market Issuance No. of Share Issuance No. of Share ’13-’14 ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 Park Bridge Lender Services $21,530.1 19 35.9 $17,544.0 15 30.4 22.7 2 Pentalpha Surveillance 21,128.3 18 35.2 19,603.8 17 34.0 7.8 3 Situs Holdings 8,751.6 8 14.6 10,993.3 10 19.1 -20.4 4 Trimont Real Estate 8,578.0 9 14.3 9,564.7 9 16.6 -10.3 TOTAL (with trust advisor) 59,988.0 54 100.0 57,705.9 51 100.0 4.0 “THE ONLY CERTAINTY IS UNCERTAINTY ITSELF.”

With apologies to Pliny the Elder—who uttered the words above in 67 A.D.—certainty can be a certainty. Our relationships with capital sources, coupled with our unparalleled experience in investment sales, mortgage banking and loan servicing, help us remove doubt from the equation. Perhaps it’s because the real estate market in ancient Rome didn’t amount to much, but we think our sages are way better than their sages.

BERKADIA.COM / 800.446.2226 a Berkshire Hathaway and Leucadia National company

Commercial mortgage loan banking and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. Investment sales and real estate brokerage businesses are conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. In California, Berkadia Commercial Mortgage LLC conducts business under CA Finance Lender & Broker Lic. #988-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116, and Berkadia Real Estate Advisors Inc. under CA Real Estate Broker Lic. #01931050. For state licensing details for the above entities, visit: www.berkadia.com/licensing. February 6, 2015 Commercial Mortgage 16 ALERT

RANKINGS

Agency ... From Page 1 Top Fannie Mae Lenders Top Freddie Mac Lenders by Fannie and $28.3 billion by 2014 2014 Freddie. That was up from $54.4 Originations Originations billion in 2013, but down from ($Mil.) ($Mil.) the record $62.6 billion in 2012. 1 Walker & Dunlop $3.6 1 CBRE $5.7 Purchases by the agencies got 2 Wells Fargo 2.9 2 Berkadia 4.4 off to an anemic start last year 3 Berkadia 2.7 3 Walker & Dunlop 2.7 as regulatory uncertainty and 4 CBRE 2.6 4 HFF 1.9 increased aggressiveness by pri- 5 PNC 2.2 5 NorthMarq 1.8 vate-sector lenders took a toll. 6 Capital One 1.9 5 KeyBank 1.8 But the sector roared back in the 7 Prudential 1.9 7 Wells Fargo 1.4 second half, when the agencies 8 Berkeley Point Capital 1.7 8 Berkeley Point Capital 1.3 got back in the fight — enabling 9 Arbor Commercial Funding 1.6 9 Capital One 1.2 them to catch up to and exceed 10 Greystone Servicing 1.5 10 JLL 0.7 the previous year’s total. Source: Fannie Mae Source: Freddie Mac Fannie and Freddie “fine- tuned their programs, and underwriting became slightly more aggressive,” said Brian Stoffers, global president of debt better shape than 2014, with a robust pipeline of deals as a wave and structured finance at CBRE. “The overall feeling was that of scheduled maturities begins. And unlike last year, when the regulators were lightening up a little,” encouraging lenders to Federal Housing Finance Agency waited until May to announce write more loans on affordable and relatively small properties. it would maintain production limits at existing levels, the regu- Several agency lenders said they have begun this year in far lator tipped its hand early this year. Last month it set a flat $30 billion purchase cap for each agency for most loans — raising Freddie’s limit by 16% and marginally lowering Fannie’s cap so both figures match. With interest rates remaining low and competition stiff among lenders, “from a borrower perspective it’s fantastic,” said Vince Toye, managing director and head of multi-family production at Wells Fargo. “But I feel comfortable with both agencies. They’re aggressive, but also mindful of not doing stupid things.” Joshua Seiff, vice president of multi-family capital markets Plugged at Fannie, said an increase in floating-rate loans is likely to con- tinue in 2015. “If short-term rates stay this low and investors don’t expect them to rise, more borrowers are going to take that floating-rate option,” he said. Mike McRoberts, a managing director of Prudential Mortgage in? See AGENCY on Page 18 Commercial Mortgage Alert, the weekly newsletter that tips you off to opportunities in Top Agency Lenders in 2014 real estate finance and securitization 2014 2013 Fannie Freddie Total Total you won’t see anywhere else. ($Bil.) ($Bil.) ($Bil.) ($Bil.) 1 CBRE $2.6 $5.7 $8.3 $8.1 2 Berkadia 2.7 4.4 7.1 5.7 3 Walker & Dunlop 3.6 2.7 6.3 5.2 4 Wells Fargo 2.9 1.4 4.3 4.4 Start your free trial at CMAlert.com 5 Capital One 1.9 1.2 3.1 0.0 or call 201-659-1700. OVERALL TOTAL 28.9 28.3 57.2 54.4 February 6, 2015 Commercial Mortgage 17 ALERT

RANKINGS Top Loan Contributors to Structured Agency Securitizations in 2014 Loans collateralizing Fannie Mae and Freddie Mac Remics

2014 2013 Fannie Freddie Total Share No. of Total Share ’13-’14 ($Mil.) ($Mil.) ($Mil.) (%) Loans ($Mil.) (%) % Chg. 1 CBRE $823.4 $4,678.9 $5,502.3 15.8 263 $6,828.3 17.3 -19.4 2 Berkadia 831.0 2,482.1 3,313.1 9.5 246 5,087.1 12.9 -34.9 3 Walker & Dunlop 1,173.0 2,084.3 3,257.3 9.4 297 4,102.0 10.4 -20.6 4 Wells Fargo 1,428.4 991.3 2,419.7 6.9 249 2,642.9 6.7 -8.4 5 Prudential 1,294.4 797.4 2,091.8 6.0 87 1,163.2 2.9 79.8 6 KeyBank 279.5 1,593.8 1,873.3 5.4 132 1,251.2 3.2 49.7 7 NorthMarq 0.0 1,721.9 1,721.9 4.9 112 1,840.2 4.6 -6.4 8 Berkeley Point Capital 687.1 1,002.8 1,689.9 4.9 116 1,720.4 4.3 -1.8 9 PNC 849.5 738.1 1,587.6 4.6 217 1,582.7 4.0 0.3 10 Centerline 728.1 738.0 1,466.1 4.2 179 1,316.5 3.3 11.4 11 HFF 0.0 1,187.6 1,187.6 3.4 72 1,980.5 5.0 -40.0 12 Beech Street Capital 381.8 651.7 1,033.5 3.0 71 2,040.9 5.2 -49.4 13 M&T Realty Capital 599.8 160.6 760.3 2.2 72 677.8 1.7 12.2 14 Arbor Commercial Funding 740.9 4.0 744.9 2.1 153 523.8 1.3 42.2 15 JLL 0.0 720.7 720.7 2.1 39 1,391.1 3.5 -48.2 16 Greystone 591.3 75.2 666.6 1.9 210 757.0 1.9 -11.9 17 Oak Grove Commercial Mortgage 198.8 413.0 611.9 1.8 64 339.6 0.9 80.2 18 Grandbridge Real Estate 166.3 357.3 523.6 1.5 66 1,090.6 2.8 -52.0 19 Amerisphere 491.4 0.0 491.4 1.4 58 419.2 1.1 17.2 20 Capital One 145.7 334.6 480.3 1.4 37 0.0 0.0 21 J.P. Morgan 351.2 0.0 351.2 1.0 206 154.5 0.4 127.3 22 Sovereign Bank 272.5 0.0 272.5 0.8 60 0.0 0.0 23 Impact Community Capital 0.0 215.2 215.2 0.6 124 0.0 0.0 24 Citigroup 18.8 192.4 211.1 0.6 16 97.3 0.2 117.1 25 Red Mortgage Capital 192.7 0.0 192.7 0.6 29 367.4 0.9 -47.6 26 Alliant Capital 182.6 0.0 182.6 0.5 44 293.6 0.7 -37.8 27 Washington Mutual 162.5 0.0 162.5 0.5 20 53.5 0.1 203.5 28 Pillar Multifamily 123.6 20.2 143.9 0.4 21 157.2 0.4 -8.5 29 NCB 128.2 0.0 128.2 0.4 54 223.4 0.6 -42.6 30 HSBC 32.2 68.0 100.2 0.3 14 259.0 0.7 -61.3 31 ACRE Capital 87.6 0.0 87.6 0.3 13 22.7 0.1 285.8 32 Homestreet Capital 83.2 0.0 83.2 0.2 24 126.2 0.3 -34.1 33 CWCapital 76.1 7.0 83.1 0.2 12 360.5 0.9 -77.0 34 BMO Harris Bank 0.0 81.8 81.8 0.2 2 27.1 0.1 202.1 35 Community Preservation Corp. 0.0 70.9 70.9 0.2 11 36.0 0.1 97.0 36 Dougherty Mortgage 55.1 0.0 55.1 0.2 14 41.1 0.1 34.0 37 Bellwether Enterprise Real Estate 0.0 50.0 50.0 0.1 13 265.7 0.7 -81.2 38 Magna Bank 0.0 37.1 37.1 0.1 4 64.4 0.2 -42.5 39 Financial Federal Bank 0.0 34.3 34.3 0.1 2 87.0 0.2 -60.6 40 Columbia National Real Estate 0.0 30.1 30.1 0.1 2 67.7 0.2 -55.5 41 Bank of America 20.4 0.0 20.4 0.1 20 0.0 0.0 OTHERS 97.7 0.0 97.7 0.3 48 132.6 0.3 -26.4 TOTAL 13,294.9 21,540.2 34,835.0 100.0 3,493 39,592.0 100.0 -12.0 February 6, 2015 Commercial Mortgage 18 ALERT

at $5.5 billion, followed by Berkadia Agency ... From Page 16 Agency Securitizations ($3.31 billion), Walker & Dunlop Capital, expects the agencies “to be Structured bond issues ($Bil.) ($3.26 billion), Wells ($2.4 billion) much more aggressive this year for and Prudential ($2.1 billion), accord- pre-stabilization and near-stabiliza- Fannie 39.6 ing to a Commercial Mortgage Alert tion properties.” 34.7 34.8 ranking. Walker & Dunlop was the most- Freddie While comprehensive origination active lender again last year in Fan- 20.4 figures for individual lenders aren’t nie’s “Delegated Underwriting and publicly available, the loan-contrib- Servicing” (DUS) program, with 10.6 utor ranking serves as a rough proxy $3.6 billion of activity, up from $3.3 because it captures a large subset billion in 2013. Wells retained sec- of the agency lending market. The ond place, with $2.9 billion of origi- 2010 2011 2012 2013 2014 $34.8 billion of securitizations last nations, down from $3.2 billion. year equaled almost two-thirds of And Berkadia climbed two spots to the $57.2 billion of loan purchases third place, writing $2.7 billion of by the agencies. Fannie loans, up from $2 billion. The ranking has a larger component of Freddie loans ($21.5 CBRE led the way again in the ranking of Freddie’s “Program billion) than Fannie loans ($13.3 billion), even though Fannie Plus” originators, with $5.7 billion of activity, flat with 2013. funded more multi-family mortgages last year. That reflects the Berkadia finished second again, with $4.4 billion, up from $3.7 fact that Freddie securitizes virtually all of its mortgages via billion, followed by Walker & Dunlop, which maintained third, structured transactions, while Fannie securitizes a substantial with $2.7 billion, up from $2 billion. portion of its loans on a one-off basis. The agencies last year securitized $34.8 billion of multi-fam- Also, because of the lag time between origination and secu- ily mortgages via structured transactions, down from a record ritization, some loans contributed to 2014 transactions were $39.6 billion in 2013. originated in previous years. Likewise, some loans written in CBRE was the top loan contributor to such securitizations, 2014 won’t be securitized until this year. 

Beacon Seeks Boston-Area Office Loan Built in 1984, Ten Canal is at the corner of First and Cam- bridge Streets, overlooking the Charles River and near the Beacon Capital is in the market for up to $61.5 million of Museum of Science. The brick building has terraces on sev- floating-rate debt on a waterfront office building in suburban eral floors and amenities including showers, indoor bicycle Boston. storage and underground parking. The Boston fund operator is seeking an interest-only loan Beacon bought the property a month after acquiring the with a term of five years on the 118,000-square-foot Ten two other buildings in the Canal Park complex. It paid $44.3 Canal Park, one of three neighboring buildings in East Cam- million to Blackstone for One Canal Park and $78.3 million bridge that it acquired in separate transactions last year. JLL to Atlanta-based Invesco for Two Canal Park.  is marketing the lending assignment. Beacon is seeking quotes for two different levels of pro- Galleria ... From Page 1 ceeds: $49.5 million and $61.5 million. The lower quote would have a 60% loan-to-value ratio while the higher in the property to Urban Shopping Centers of Chicago and the amount would represent 75% leverage. Those figures peg the remaining one-third interest to Chicago fund shop Walton value of the property at $82 million. Street Capital for a total of roughly $550 million. In 2001, That’s a big jump from the roughly $46 million Beacon Urban sold its 67% stake to Simon (32%), Calpers (28%) paid to buy the building in April from New York fund shop and Walton Street (7%). That raised Walton’s interest to 40%. Blackstone. At that time, the occupancy rate was just 54%. In 2010, Walton Street sold its stake to Simon and Calpers. Since then, Beacon has filled much of the vacant space, most Simon now has a 50.4% interest, with Calpers owning the notably signing online travel site Kayak to a lease for 42,000 rest. sf. Other tenants include Novell (10,000 sf) and CarGurus The mall is 94% occupied. The anchor tenants are Saks (10,000 sf). Beacon also has a letter of intent from a can- Fifth Avenue, Neiman-Marcus, , Macy’s and the cer research company to take 38,000 sf, which would bring Galleria Tennis and Athletic Club. Some 100,000 sf of in-line the occupancy rate to 96%. The building’s projected annual space is being redeveloped. rental revenue is $6 million, with about 70% of that coming The property is at 5085 Westheimer Road in the Post Oak from investment-grade tenants. There’s no existing debt on section. Its net operating income was $92.6 million in the first the property. nine months of last year, according to a servicer report.  February 6, 2015 Commercial Mortgage 19 ALERT

INITIAL INITIAL PRICINGS PRICINGS

Wells Fargo Commercial Mortgage Trust, 2015-C26

Pricing date: Feb. 4 Closing date: Feb. 13 Property types: Multi-family (29.7%), retail (25.8%), hotel (21.5%), office (7.7%), Amount: $962.1 million self-storage (4.7%), industrial (4.7%), manufactured housing (3.1%) and mixed- use (2.8%). Wells Fargo, Concentrations: California (15.3%) and Texas (14.9%). Liberty Island, Loan contributors: Wells (35.2%), Liberty Island (17.4%), Rialto (13.3%), C-III Rialto Mortgage Finance, (11.2%), Silverpeak (8.8%), Walker & Dunlop (4.9%), Basis (4.8%) and NCB (4.4%). C-III Commercial Mortgage, Seller/borrower: Largest loans: A $45.9 million loan to the Revocable Trust of John Hammons on Silverpeak Real Estate Finance, the 301-room Chateau on the Lake hotel in Branson, Mo.; a $40.8 million loan to Walker & Dunlop, Jeffrey Goldstein and Richard Oller on the 843-unit Trails at Dominion multi- family complex in Houston; a $39.9 million portion of a $89.8 million loan to Sun- Basis Real Estate Capital, stone Hotel Investors on the 496-room JW Marriot New Orleans; a $35.8 million NCB loan to Robert Day and Jerry Carlton on the 200,000-sf Broadcom Building in San Lead manager: Wells Fargo Jose; a $32.7 million loan to Charles Feinbloom and Lawrence, Burt and Adam Levine on the 152-room Aloft Houston by the Galleria in Houston; a $30 million Deutsche Bank, loan to Jonathan and Arnold Marcus and David and Eric Schuss on the 424-unit Co-managers: Morgan Stanley Dorel Apartments in Laredo, Texas; a $28 million loan to Gus Gianulias on the 218,000-sf Roseville Square shopping center in Roseville, Calif.; a $26.4 million Master servicers: Wells Fargo, NCB loan to Mitchell Adelstein, Brad Gillman and Robert Freidberg on the 168,000-sf Midland Loan Services, 44 Plaza shopping center in Poughkeepsie, N.Y.; a $26 million loan to Carol and Ronald Gigliotti on the 140,000-sf Summit Square shopping center in Langhorne, Special servicers: NCB, Pa.; and a $23.5 million loan to Matthew Sharp and David Kelsey on the 444-unit Rialto Capital Creekside Corners apartment complex in Lithonia, Ga. B-piece buyer: Eightfold Real Estate Capital. Pentalpha Surveillance Operating advisor: Notes: Wells, Liberty Island, Rialto, C-III, Silverpeak, Walker & Dunlop, Basis and Trustee: Wilmington Trust NCB teamed up to securitize commercial mortgages that they had originated. CMA code: 20150009. Certificate administrator: Wells Fargo Offering type: SEC-registered

Amount Rating Rating Rating Subord. Coupon Dollar Yield Maturity Avg. Life Spread Class ($Mil.) (Moody's) (Fitch) (Kroll) (%) (%) Price (%) (Date) (Years) (bp) Note Type A-1 69.600 Aaa AAA AAA 30.00 1.454 99.998 1.440 2/15/48 3.02 S+40 Fixed A-2 37.759 Aaa AAA AAA 30.00 2.663 102.998 2.017 2/15/48 4.98 S+60 Fixed A-3 198.000 Aaa AAA AAA 30.00 2.910 101.000 2.797 2/15/48 9.84 S+92 Fixed A-4 279.840 Aaa AAA AAA 30.00 3.166 102.998 2.822 2/15/48 9.92 S+94 Fixed A-SB 88.249 Aaa AAA AAA 30.00 2.991 102.999 2.544 2/15/48 7.45 S+84 Fixed A-S 76.966 Aa1 AAA AAA 22.00 3.580 102.999 3.232 2/15/48 9.92 S+135 Fixed B 42.090 Aa3 AA- AA- 17.63 3.783 102.998 3.435 2/15/48 9.97 S+155 Fixed C 49.306 NR A- A- 12.50 4.071 99.994 4.087 2/15/48 10.01 S+220 Fixed PEX 168.362 NR A- A- 12.50 2/15/48 9.96 Fixed D 46.901 NR BBB- BBB- 7.63 3.586 84.998 5.587 2/15/48 10.01 S+370 Fixed E 19.242 NR BB BB 5.63 2/15/48 10.01 Fixed F 9.620 NR B B 4.63 2/15/48 10.01 Fixed G 44.497 NR NR NR 0.00 2/15/48 10.01 Fixed X-A(IO) 750.414* NR AAA AAA 1.426 9.840 3.519 2/15/48 T+180 Fixed X-B(IO) 138.297* NR NR AAA 0.544 4.722 3.950 2/15/48 T+215 Fixed X-C(IO) 19.242* NR BB BB 2/15/48 Fixed X-D(IO) 9.620* NR B B 2/15/48 Fixed X-E(IO) 44.497* NR NR NR 2/15/48 Fixed *Notional amount

February 6, 2015 Commercial Mortgage 20 ALERT

INITIAL INITIAL PRICINGS PRICINGS

JPMBB Commercial Mortgage Securities Trust, 2015-C27

Pricing date: Feb. 5 Closing date: Feb. 25 Property types: Office (39.7%), hotel (20.7%), mixed-use (12%), retail (10.6%), multi-family (8.2%), self-storage (4.3%), industrial (4.1%) and other Amount: $836.5 million (0.4%). J.P. Morgan, Concentrations: New York (23.4%), Michigan (13.2%) and California (12.4%). Barclays, Loan contributors: J.P. Morgan (39.5%), Barclays (25.2%), Starwood (21.6%), Redwood (10%) and RAIT (3.7%). Seller/borrower: Starwood Mortgage Capital, Largest loans: A $110 million senior portion of a $180 million loan to Ken Redwood Commercial Mortgage, Aschendorf and Berndt Perl on the 366,000-sf Club Row Building, at 28 West RAIT Funding 44th Street in Manhattan; a $75 million portion of a $125 million loan to Bed- rock Real Estate Services and Caidan Enterprises on the 965,000-sf office J.P. Morgan, building at One Campus Martius in Detroit; a $73 million loan to Salim Assa Lead managers: Barclays and Steven and Marilyn Finkelstein on the 59,000-sf Branson at Fifth apart- ment building in Manhattan; a $41.5 million loan to Peter Minshall on the Wells Fargo, 120,000-sf office building at 717 14th Street NW in Washington; a $35 million Co-managers: Drexel Hamilton portion of a $77.1 million loan to Lance Shaner on four hotels, totaling 605 rooms, in four states; a $32.4 million portion of a $77.3 million loan to CBL & Master servicer: Midland Loan Services Associates and Horizon Group Properties on the 375,000-sf Outlet Shoppes of LNR Partners, the Bluegrass in Simpsonville, Ky.; and a $28 million loan to Ashley Capital on Special servicers: the 1.1 million-sf Plymouth Road Tech Center in Livonia, Mich. Midland Loan Services B-piece buyers: LNR Partners (51%), Seer Capital (24.5%) and Ellington Operating advisor: Pentalpha Surveillance Management (24.5%). Notes: J.P. Morgan, Barclays, Starwood, Redwood and RAIT teamed up to Trustee: Wells Fargo securitize commercial mortgages that they had originated. CMA code: Certificate administrator: Wells Fargo 20150004. Offering type: SEC-registered

Amount Rating Rating Rating Subord. Coupon Dollar Yield Maturity Avg. Life Spread Class ($Mil.) (Moody's) (Kroll) (MStar) (%) (%) Price (%) (Date) (Years) (bp) Note Type A-1 38.412 Aaa AAA AAA 30.00 1.414 100.000 1.397 2/15/48 2.77 S+40 Fixed A-2 135.330 Aaa AAA AAA 30.00 2.734 103.000 2.073 2/15/48 4.88 S+63 Fixed A-3A1 75.000 Aaa AAA AAA 30.00 2/15/48 9.77 Fixed A-3A2 50.000 Aaa AAA AAA 30.00 2/15/48 9.77 Fixed A-4 222.831 Aaa AAA AAA 30.00 3.179 103.000 2.833 2/15/48 9.88 S+90 Fixed A-SB 63.997 Aaa AAA AAA 30.00 3.017 103.000 2.567 2/15/48 7.40 S+82 Fixed A-S 49.709 Aa2 AAA AAA 24.06 3.634 102.999 3.284 2/15/48 9.89 S+135 Fixed B 52.766 NR AA- AA- 17.75 3.898 103.000 3.548 2/15/48 9.95 S+161 Fixed C 35.552 NR A- A- 13.50 4.345 101.742 4.190 2/15/48 9.97 S+225 Fixed EC 138.027 NR A- A- 13.50 2/15/48 9.93 Fixed D 40.781 NR BBB- BBB 8.63 3.845 87.669 5.540 2/15/48 9.97 S+360 Fixed E 24.531 NR BB- BB- 5.69 2/15/48 9.97 Fixed F 11.021 NR B B 4.38 2/15/48 9.97 Fixed G 8.366 NR B- NR 3.38 2/15/48 9.97 Fixed NR 28.232 NR NR NR 0.00 2/15/48 11.07 Fixed X-A(IO) 635.279* Aa1 AAA AAA 2/15/48 Fixed X-B(IO) 52.766* NR AAA AAA 2/15/48 Fixed X-C(IO) 35.552* NR AAA AAA 2/15/48 Fixed X-D(IO) 40.781* NR BBB- AAA 2/15/48 Fixed X-E(IO) 24.531* NR BB- AAA 2/15/48 Fixed X-FG(IO) 19.387* NR B- AAA 2/15/48 Fixed X-NR(IO) 28.232* NR NR AAA 2/15/48 Fixed *Notional amount

February 6, 2015 Commercial Mortgage 21 ALERT

buy-side firms to scale back allocations, at least temporarily. Saks ... From Page 1 The result was that many buyers who had expressed an early trade is the size,” said one trader. interest in the transaction scaled back their appetites along the The strong rally in U.S. Treasury bonds was another com- way. “Dealers are optimistic by nature and they expected the plicating factor. That price run-up reflected fears that the market to be able to absorb it better,” said a person familiar economy was weakening, making some investors reluctant to with the deal. “They did not appreciate the impact of every- buy. While opinions varied, some pros said the Treasury rally thing that was going on.” also had an impact on insurers, the main investors in the Saks The lead managers unveiled the transaction (SFAVE 2015- deal. More than most other buyers, insurers focus on absolute 5AVE) on Jan. 15. The offering featured an unusual feature yield, so when the base Treasury yield fell, they pushed for for its triple-A classes. The senior paper was split into two wider spreads to help make up the difference, according to pari-passu classes, each with a subordination level of 25.5%. those pros. The larger Class A-2 was further divided into senior and sub- The marketing campaign also coincided with the news ordinate tranches, the $300 million Class A-2A and the $450 that S&P — which rated the transaction along with Morning- million Class A-2B. That resulted in an unusually high 70.2% star — had reached major settlements with the SEC and U.S. subordination level for the A-2A bonds. Department of Justice and state regulators over charges that it The dealers indicated that pricing would occur around Jan. mishandled ratings on commercial and residential mortgage 21, but that timetable was upended when investors started bonds. Some said that might have prompted risk managers at See SAKS on Page 22

INITIAL INITIAL PRICINGS PRICINGS BWAY Mortgage Trust, 2015-1740

Pricing date: Feb. 4 Closing date: Feb. 12

Amount: $308 million Property types: Office (100%). Seller/borrower: Blackstone Concentrations: New York (100%). Loan contributors: Deutsche (100%). Lead manager: Deutsche Bank Notes: Deutsche securitized a $308 million fixed-rate loan it had originated to

Master servicer: Wells Fargo finance Blackstone’s acquisition of the 604,000-sf office building at 1740 Broad- way in Midtown Manhattan. Blackstone acquired the property from Vornado Special servicer: Wells Fargo Realty for $605 million on Dec. 18. The interest-only loan has a 10-year term and Trustee: Wilmington Trust a 3.84% coupon. CMA code: 20150029. Certificate administrator: Wells Fargo Offering type: Rule 144A

Amount Rating Rating Subord. Coupon Dollar Yield Maturity Avg. Life Spread Class ($Mil.) (S&P) (DBRS) (%) (%) Price (%) (Date) (Years) (bp) Note Type A 157.500 AAA AAA 48.86 2.917 99.749 2.956 1/10/35 9.91 S+100 Fixed B 38.620 AA- NR 36.33 3.144 100.000 3.156 1/10/35 9.91 S+120 Fixed C 26.743 A- NR 27.64 3.342 100.000 3.356 1/10/35 9.91 S+140 Fixed D 32.806 BBB- NR 16.99 3.787 100.000 3.806 1/10/35 9.91 S+185 Fixed E 44.573 BB- NR 2.52 99.500 4.706 1/10/35 9.91 S+275 Fixed F 7.758 B+ NR 0.00 100.000 4.856 1/10/35 9.91 S+290 Fixed X-A(IO) 165.918* AA- AAA 1/10/35 Fixed *Notional amount

February 6, 2015 Commercial Mortgage 22 ALERT

the revised guidance for Classes A-1, A-2B and the guidance Saks ... From Page 21 for Class A-2A. But the spreads widened for the other three pushing back. The initial price guidance, which had been tranches — by another 20 bp on Class B, 25 bp on Class C and released for each tranche except Class A-2A, was revised late 50 bp on Class D. The overall increases from initial guidance last week. The proposed spreads were widened to 140-bp area ranged from 16 bp on Class A-1 to 70 bp on Class D. from 125-bp area on Class A-1; to 165-bp area from 135-bp The transaction also includes two interest-only strips. area on Class A-2B; to 180-bp area from 150-bp area on Class B, The collateral loan was written for Hudson’s Bay Co., which rated AA-/AA+ by S&P and Morningstar; to 200-bp area from owns the Saks retail chain, the building at 611 Fifth Avenue 175-bp area on Class C, rated A-/A+; and to 225-bp area from occupied by the flagship Saks store and the land under the store 205-bp area on Class D, rated BBB/A. Also, price talk of 120-bp that collateralized the securitized mortgage. BofA funded half area was issued for Class A-2A. the debt, while Goldman and Morgan Stanley each kicked in At the final pricing, the spreads were roughly in line with 20%, and Scotia covered the remaining 10%. 

INITIAL INITIAL PRICINGS PRICINGS

SFAVE Commercial Mortgage Securities Trust, 2015-5AVE

Pricing date: Feb. 3 Closing date: Feb. 11 Amount: $1,250 million Property types: Retail (100%). Seller/borrower: Hudson’s Bay Co. Concentrations: New York (100%). Loan contributors: BofA (50%), Goldman (20%), Morgan Stanley (20%) and Bank of America, Scotia (10%). Goldman Sachs, Notes: BofA, Goldman, Morgan Stanley and Scotia teamed up to securitize a Lead managers: Morgan Stanley, $1.25 billion fixed-rate loan they had originated for Hudson’s Bay Co. on the land beneath Saks Fifth Avenue’s flagship store in Manhattan. The interest-only 4.3% Scotiabank loan, originated Dec. 3, has a 20-year term. The 59,000-square-foot parcel, at Co-manager: Drexel Hamilton 611 Fifth Avenue, was appraised at $2.1 billion. Above it sits the 655,000-sf Saks store, also owned by Hudson’s Bay. The store has a 99-year ground lease. The Master servicer: Wells Fargo parcel and the 12-floor building were appraised at a total of $3.7 billion. Hud- Special servicer: Wells Fargo son’s Bay used almost all of the proceeds to retire existing corporate debt. See article on Page 1. CMA code: 20150013. Trustee: Deutsche Bank Certificate administrator: Deutsche Bank Offering type: Rule 144A

Amount Rating Rating Subord. Coupon Dollar Yield Maturity Avg. Life Spread Class ($Mil.) (S&P) (MStar) (%) (%) Price (%) (Date) (Years) (bp) Note Type A-1 181.100 AAA AAA 25.51 3.872 104.000 3.614 1/5/43 19.92 S+141 Fixed A-2A 300.000 AAA AAA 70.21 3.659 103.989 3.404 1/5/43 19.92 S+120 Fixed A-2B 450.000 AAA AAA 25.51 4.144 103.989 3.884 1/5/43 19.92 S+168 Fixed B 107.500 AA- AA+ 16.91 4.388 103.800 4.204 1/5/43 19.92 S+200 Fixed C 135.400 A- A+ 6.08 4.388 100.472 4.454 1/5/43 19.92 S+225 Fixed D 76.000 BBB A 0.00 4.388 94.227 4.954 1/5/43 19.92 S+275 Fixed X-A(IO) 931.100* AAA AAA 1/5/43 Fixed X-B(IO) 242.900* A- AAA 1/5/43 Fixed *Notional amount

xxxFebruary 6, 2015 Commercial Mortgage 231 Commercial MortgageALERT ALERT

MARKET MONITOR

WORLDWIDE CMBS ISSUANCE ($Bil.) WORLDWIDE CMBS CMBS SPREADS 2014 2015 Year-to-date volume ($Bil.) 01/06/00 J 0.0 0.0 100 NEW-ISSUE SPREAD OVER SWAPS 01/13/00 1.6 0.0 2015 2014 90 10-Year AAA 01/20/00 2.1 0.2 US 8.4 7.9 2014 80 110 01/27/00 4.2 2.5 Non-US 0.6 0.0 70 02/03/00 F 6.4 5.5 TOTAL 9.0 7.9 100 02/10/00 7.9 9.0 60 50 02/17/00 8.9 90 02/24/00 10.0 40 30 03/02/00 M 11.5 80 03/09/00 13.2 20 03/16/00 16.1 10 2015 70 03/23/00 17.6 0 03/30/00 20.9 J F M A M J J A S O N D 60 A M J J A S O N D J 04/06/00 A 20.9 US CMBS CMBS TOTAL RETURNS 04/13/00 21.1 Spread (bp) 04/20/00 21.3 MONTHLY ISSUANCE ($Bil.) CMBS INDEX New Issue 04/27/00 21.4 Fixed Rate Avg. Week 52-wk 15 (Conduit) Life 2/4 Earlier Avg. Total Return (%) 05/04/00 25.7 Avg. Month Year Since 5.0 S+63 S+63 57 12 AAA 05/11/00 M 27.0 As of 2/4 Life to Date to Date 1/1/97 10.0 S+91 S+91 83 Inv.-grade 4.9 -0.4 1.5 210.9 05/18/00 27.3 9 AA 10.0 S+147 S+147 136 AAA 5.3 -0.4 1.6 195.6 A 10.0 S+203 S+205 188 6 05/25/00 30.3 AA 3.7 -0.2 1.0 89.6 BBB- 10.0 S+376 S+378 337

06/01/00 30.9 3 A 3.7 -0.2 1.1 75.1 Spread (bp) BBB 3.8 -0.2 1.2 84.3 Legacy 06/08/00 36.0 Fixed Rate Avg. Week 52-wk 0 Source: Barclays (Conduit) Life 2/4 Earlier Avg. 06/15/00 J 37.0 D J F M A M J J A S O N D J F 5.0 S+115 S+115 96 AAA 06/22/00 40.2 10.0 S+109 S+109 105 06/29/00 42.2 LOAN SPREADS AA 10.0 S+947 S+947 1,055 07/06/00 43.5 A 10.0 S+1,416 S+1,419 1,615 BBB 10.0 S+3,028 S+3,031 3,159 07/13/00 J 44.2 ASKING SPREADS OVER TREASURYS ASKING OFFICE SPREADS Dollar Price 07/20/00 48.9 10-year loans with 50-59% LTV 180 Week 52-wk Markit CMBX 6 2/4 Earlier Avg. 07/27/00 50.2 Month 170 1/30 Earlier AAA 95.5 95.4 97.8 08/03/00 52.4 160 Office 162 147 AS 96.8 96.7 99.0 08/10/00 A 55.7 150 AA 98.4 98.3 100.3 Retail 158 139 08/17/00 58.1 140 A 98.0 97.8 100.7 Multi-family 152 139 08/24/00 58.4 130 BBB- 94.6 94.0 99.6 Industrial 157 138 08/31/00 58.4 120 BB 93.5 92.9 99.7 Source: Trepp Sources: Trepp, Markit 09/07/00 58.6 A M J J A S O N D J 09/14/00 S 61.5 REIT BOND ISSUANCE AGENCY CMBS SPREADS 09/21/00 69.4 Spread (bp)

09/28/00 70.8 Avg. Week 52-wk UNSECURED NOTES, MTNs ($Bil.) MONTHLY ISSUANCE ($Bil.) FREDDIE K SERIESLife 2/5 Earlier Avg. 10/05/00 71.9 A1 5.5 39 Spread (bp)40 37

35 Avg. Week 52-wk 10/12/00 76.0 6 A2 10.0 46 46 41 30 Life 2/5 Earlier Avg. 10/19/00 O 76.2 5 BA1 10.05.5 13960 15540 15377 25 4 CA 2 10.0 23546 23546 22241 10/26/00 80.0 20 2014 3 X1B 10.09.0 116060 155160 157 11/02/00 80.7 15 2015 X3C 10.0 235310 235310 222 11/09/00 83.7 10 2 X1 9.0 160 160 5 1 11/16/00 84.2 X3 10.0 310 310 0 0 11/23/00 N 85.7 J F M A M J J A S O N D D J F M A M J J A S O N D J F FANNIE DUS Week 52-wk 11/30/00 90.3 2/5 Earlier Avg. 12/07/00 91.8 10/9.5 TBA (60-day settle) 53 56 50 Data points for all charts can be found in The Marketplace section of CMAlert.com Week 52-wk 12/14/00 97.6 Source: J.P. Morgan 2/5 Earlier Avg. 10/9.5 TBA (60-day settle) 53 56 50 Source: J.P. Morgan

February 6, 2015 Commercial Mortgage 24 ALERT

almost a year as in-house counsel at San Diego, exceeded last year’s post- THE GRAPEVINE Bank of America. She was previously a crash high of 2,809. Attendance peaked ... From Page 1 law-firm associate for two years atBell at 4,858 in 2007. Davis and seven years at Parker Poe. Her was previously senior loan originator at arrival at Winstead boosted the Dallas R3 Funding of New York is looking to New York-based Greystone. firm’s Charlotte roster to 39 attorneys — add several mid-level originators across including 36 in that office’s real estate the country. Markets being targeted Oliver Harris has joined ReadyCap Com- finance practice, led by partnersJeffrey include Atlanta, Chicago, Dallas and mercial, where he will originate loans Lee and Brian Short. Los Angeles, but it will consider adding in the Mid-Atlantic region. He started staff in other cities as well. The contact this week as a vice president based in KeyBank wants to add two senior is company founder Ray Potter at Bethesda, Md. Harris previously worked originators to its multi-family lending [email protected]. at Premier Bank of Washington. He unit. One would be based in Washington reports to Craig Barnes, chief produc- and the other in Miami. Duties include Industrial and Commercial Bank of China tion officer for the Irvine, Calif., lender. originating Fannie Mae, Freddie Mac, FHA is looking to add at least one staffer as Harris’ arrival follows another recent and CMBS loans for the bank’s existing it gears up to expand its U.S. lending addition to Barnes’ origination team. clients and lining up new borrowers. A operation. The bank is in the market Kevin Leonard joined in November as a minimum of five years of experience is for an analyst/underwriter with 1-3 vice president in Charlotte, covering the required. Contact recruiter Morgan Pease years of experience to help assess com- Southeast. at [email protected]. mercial debt deals. The recruit would be based in New York and report to Winstead continues to add commercial- TheMortgage Bankers Association’s Jerome Sanzo, recently hired by ICBC mortgage attorneys in Charlotte. Maria 25th annual convention for commercial to head up its originations and syndica- Minsker, of counsel, came aboard real estate and multi-family finance tion operation. Sanzo previously was Monday from Alston & Bird, where she’d professionals drew just under 3,100 reg- a managing director with the parent held the same title since 2009. Before istrants this week. The turnout for the of the former Eurohypo, German bank joining Alston’s Charlotte office as an industry’s largest gathering of the year, Commerzbank. Applicants may contact associate in mid-2007, Minsker spent held at the Manchester Grand Hyatt in him at [email protected].

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