CONTENTS Domestic CMBS Vol. Jumps by 1/3 in 1Q, to $26.3Bln
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e h T WEEKLY Friday, April 3, 2015 Vol. 10 Issue 14 CMBS News Mortgage News Domestic CMBS Res Lender Enters Commercial Mortgage Biz Vol. Jumps by 1/3 Freedom Mortgage Corp., a heavy- estate unit. She previously was a senior weight in the residential mortgage credit specialist at RBS Securities, and in 1Q, to $26.3Bln business, has moved into the commercial before that had been with Capmark mortgage sector. Investments and Vertical Capital, among A total of $26.3 billion of domestic, It is contributing seven loans with a other CMBS and credit shops. Round- private-label CMBS was issued during balance of $29.8 million to an upcoming ing out the unit’s senior executive team the first quarter, representing a 33 conduit transaction, Citigroup Commer- are Nicole Kim, a 25-year commercial percent increase from the $19.8 billion cial Mortgage Trust, 2015-GC29, and is mortgage veteran who previously was issued during the same period a year ago. aiming to originate $500 million to $750 with Rialto Capital Management, where Volumes were driven by the 18 sin- million of loans this year that it would she handled B-piece investments, and gle-borrower transactions totaling $12.5 sell through securitization. Shawn Townsend, who previously was in billion, more than triple the $3.5 billion It’s pursuing permanent loans in the $2 the capital markets groups of Gramercy of such deals that were issued during the million to $10 million range, a sector of Capital and Velocity Capital, among same time last year. the commercial mortgage industry that’s others. It doesn’t appear that issuance of widely viewed as being underserved. Davenport and her team methodically single-borrower transactions will let up Freedom, which is headquartered in put together a lending platform and anytime soon. Two deals totaling $1.5 Mount Laurel, N.J., in 2013 decided to lined up a warehouse credit line from billion were winding through the market broaden its scope by originating com- Citibank. Freedom soon started writing earlier this week and poised to price mercial mortgages. The privately owned loans, and about $20 million of its orig- soon, while at least another $1.5 billion company services some $53.3 billion of inations went into a previous conduit is in the on-deck circle. Market partic- residential mortgages. deal. But that was done more as a test, ipants are becoming more comfortable It hired a team led by Mary Davenport, to make sure the company’s pricing and that volume for the year will end up on who was named executive vice president the high end of earlier predictions of of its New York-based commercial real See DEBT, Page 5 $105 billion to $130 billion. But conduit deals might end up comprising less than their expected 75 percent of total Property News volume. The sharply improved volumes are a D.C.’s Republic Square I Sells for $307Mln direct result of continued low interest TIAA-CREF has teamed with Norges that was provided in 2013 by a group of See VOLUME, Page 7 Bank Investment Management to pay lenders led by Morgan Stanley. $307 million, or roughly $788.69/sf, for Republic Square is roughly 80 per- Republic Square I, a 389,252-square- cent leased by tenants that include the foot office property in downtown Wash- National Cable & Telecommunications ington, D.C. Association, with 52,944 sf through CONTENTS The venture purchased the property, 2030; Google Inc., with 54,000 sf; the at 25 Massachusetts Ave. NW in the American College of Physicians, with Rialto Continues to Dominate Capitol Hill neighborhood, from the 20,000 sf, and the General Services CMBS B-Piece Buyers...Page 8 Republic Family of Cos. of San Jose, Administration, with 18,936 sf through Calif., which had developed it in 2006. October 2016. The GSA pays annual Update: The 1st Commercial Norges, which manages roughly $865 rent of $837,559, or $44.23/sf. Real Estate Derby...Page 9 billion of assets on behalf of the Norwe- The property includes retail space, a Boston Office Building for Sale; gian Government Pension Fund Global, fitness center and parking garage with $300Mln Price Seen...Page 10 owns 49.9 percent of the property while 200 spaces. TIAA has the remaining 51.1 percent The nine-story Republic Square Fixed-Income Shop Contributes stake. property is the latest in Washington Loans to CMBS...Page 12 As part of the purchase, Norges and TIAA assumed a $185 million loan See REPUBLIC, Page 10 THEINSIDER Kennedy Named President of Ventures, which will pursue invest- Partners III fund, which raised $2 Behringer’s Opportunity REITs ments in the office sector. billion in marketing that was completed The Long Beach, Calif., real estate in 2011, and had generated an internal Thomas P. Kennedy, the former chief investment manager is partnering with rate of return of 12.9 percent as of the financial officer and chief operating Bascom Group to pursue what could end of last September. officer of UrbanAmerica Advisors, be about $250 million of investments The new fund will follow its prede- has been named president of a pair in the office and mixed-use sectors cessors’ strategy of investing in hotel of opportunistic REITs sponsored by in Southern California. Bascom is an properties and related businesses Behringer. Irvine, Calif., investment manager that that include hotel or resort operators, Kennedy replaces Michael D. Cohen, has focused primarily on value-add athletic clubs, golf courses and spas. Its who has served as interim president of investments in the multifamily sector targets include assets with management the two, Behringer Harvard Opportu- since its founding in 1996. problems. nity REIT I Inc. and REIT II Inc. The Choi said Harbor is designed to help The New Jersey Division of Invest- REITs, with a combined $726 mil- expand Bascom further into the office ment is considering committing up to lion of assets under management, are sector. $100 million to the vehicle. non-traded and were launched to invest Harbor’s other co-founder is Paul KSL had $4.7 billion of assets under in properties that could be redeveloped Miszkowicz, who was most recently an management as of the end of last year. or repositioned. associate with AEW Capital Manage- Before joining UrbanAmerica, Ken- ment. Both he and Loiacono at one Blackstone Raises $14.5Bln nedy was with Equitable Real Estate time had worked for Bascom. for Latest Fund Investment Management Inc. and its successor, Lend Lease Corp., where he KSL Seeks $2.25Bln for Blackstone Group has raised $14.5 was a member of the investment and Hotel Investment Fund billion of equity commitments and executive committees. closed marketing for its latest real estate KSL Capital Partners is looking to investment fund. Former BlackRock Execs Launch raise $2.25 billion of equity commit- The New York firm’s Blackstone Real Office Investment Venture ments for its latest hotel investment Estate Partners VIII will acquire all fund. property types and is slated to invest Former BlackRock Inc. real estate The Denver company began market- 60 percent of its equity in the United executives Joon Choi and Justin Loi- ing its KSL Capital Partners IV vehi- States and Canada. acono have formed Harbor Associates cle last year. It is a follow-up to KSL’s See INSIDER, Page 3 The most important news in the market, direct to your inbox. To access Commercial Real Estate Direct online and receive The Weekly, sign up or start a free trial at www.crenews.com or call 212-329-6239. WWW.CRENEWS.COM -2- APRIL 3, 2015 INSIDER...From Page 2 LETTER FROM THE EDITOR The closing was reported by research firm Preqin, which Domestic CMBS issuance during the first quarter said the vehicle is the largest closed-end real estate fund totaled $26.3 billion, the second highest quarterly ever, besting Blackstone’s Partners VII vehicle that raised total since 2007. It looks like the sector finally is $13.3 billion in marketing that closed in 2012. poised to take off. And just in The new fund is targeting a 15 percent investment return, time, as the formidable wall of net of fees. Blackstone’s previous funds generated a net maturities is now here. return of 14.3 percent, according to the Ohio Police & Fire Inside this issue, we break Pension Fund, which is an investor in all the funds. down what happened during the quarter in terms of issuance. CBRE Adds to Structured Finance Team in Atlanta Kudos go out again to Deutsche Bank, which continues to dom- Ann Cone, former director at Prudential Mortgage inate the bookrunner rankings. Capital Co., has joined CBRE’s debt and structured finance It also took top honors among team in Atlanta. loan contributors. Rialto Cap- Cone, a senior vice president at CBRE, will originate fi- Orest Mandzy ital Management continued as Managing Editor nancing, with a focus on Federal Housing Administration the top B-piece buyer. loans, against multifamily properties. We also take a look at some of She joined CBRE after nine years at Prudential. Since the results of our Commercial Real Estate Financ- 2013, she has handled some $133 million of FHA loans. ing Derby, published in January, in which we put odds on the ability of some of the largest maturing Deutsche Seen Buying Loan Portfolio loans to pay off on time. We’re glad to report that from 40/86 Advisors five of the 14 loans we identified three months ago have paid off. The buzz is that Deutsche Bank bought, or is in the pro- So far, conduit deals, the bread-and-butter of the cess of buying, some $66 million of performing mortgages CMBS world, are just plodding along.