CONTENTS Domestic CMBS Vol. Jumps by 1/3 in 1Q, to $26.3Bln

T h e 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

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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. We record- that 40/86 Advisors, a unit of CNO Financial, had offered ed only 12 such transactions totaling $13.2 billion for sale earlier this year. during the quarter, down about 11 percent from The six loans, against office properties in Arizona, Georgia, last year’s first quarter. That total comes in spite Iowa, Minnesota and New Mexico, were offered through of an increase in the number of loan contribu- Mission Capital Advisors. The loans have an average tors. Issuance will have to increase, as most of the coupon of about 6.2 percent and come due between 2016 mortgages coming due are classic middle-market and 2022. The biggest is backed by an office building in loans—just the type conduits were designed to Des Moines, Iowa, leased to Marsh & McLennan through finance. 2022. I hope you enjoy our latest issue. As always, I Deutsche earlier this year sold a 75 percent stake in a $2.5 encourage your feedback. billion portfolio of high-yield commercial real estate loans to TPG Real Estate. But it’s still evidently active in the Best regards, secondary loan-sales market. OrestMandzy

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www.crenews.com -4- April 3, 2015 MORTGAGENEWS

DEBT...From Page 1 MetLife Lends Against NYC’s 685 Third Ave. underwriting policies wouldn’t get any Metropolitan Life Insurance Co. has Seven months later, it sold a 49 percent pushback from issuers and bond inves- provided a $190 million loan against 685 stake to Future Fund. The venture then tors. Before it sold its loans, it had invit- Third Ave., a 644,005-square-foot office converted the single-tenant property ed a number of CMBS B-piece buyers building in the Grand Central submar- into multi-tenant use and leased its space and bond investors into its shop, allowing ket of Manhattan. to tenants that include Navigant, with them to review and get comfortable with The five-year loan values the property 72,060 sf through 2024; the Tribune its underwriting practices, policies and at some $360 million. Co., with 27,453 sf, and the Foundation procedures. The property, between 43rd and 44th for the Global Compact, with 27,235 sf. Its move into small-balance commer- streets, is owned by a venture of TIAA- The property is 80 percent occupied. cial mortgage lending was “a logical and CREF and Future Fund, Australia’s natural progression for a company like sovereign wealth fund. us,” Davenport explained. “We felt the TIAA acquired the building in August $2 million to $10 million sector was 2010 for $190 million from Pfizer Inc., underserved.” which had used it as its headquarters. She said that most conduit lenders avoid writing loans smaller than roughly $5 million because of the costs and time involved. And many borrowers looking for small loans prefer not doing business The 2014 survey results are in. with lenders that specialize in larger-balance lending. Freedom will write loans that represent up to 75 percent of a collateral property’s value, or 70 percent if the collateral is a hotel. And because most of the properties it will lend against will be relatively small and might not have many tenants, it expects its loans to have debt-service coverage ratios of 1.4x or better. In addition, most of the loans it writes will have some sort of cash management, either a springing or hard-lockbox in place. The latter requires that tenant rental payments get deposited directly into a lender-controlled account. The company has a group of originators in house who have developed relation- ships with mortgage brokers and larger borrowers. Already, they’ve seen some $1.9 billion of loan requests, so meeting the company’s $500 million to $750 million target - which on its face would appear ambitious for a nascent conduit lender - should be realistic. Most of the collateral it will be lending against, by nature, will be in secondary Access over 900 reports on shopping center and tertiary markets - areas it’s comfortable with because of its parent, which nancial statement data for more than writes residential loans in just about every market in the country. 9,000 properties nationwide. The company conducts all its loan underwriting using its in-house staff and, www.centerbenchmarks.com in order to better appeal to the borrowers it’s targeting, has adopted a fixed-cost borrowing program. When it quotes a loan, all third-party costs, such as for ap- praisals and legal reviews, are factored in.

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www.crenews.com -6- April 3, 2015 CMBSNEWS Domestic, Private-Label CMBS Top Loan Contributors of Domestic, 1Q2015 1Q2014 Private-Label CMBS - 1Q 2015 Rank Investment #Deals Bal Mkt #Deals Bal Mkt 1Q2015 1Q2014 Bank $mln Shr% $mln Shr% Lender #Loans Amt Mkt- Amt Mkt- 1 Deutsche 6.40 6,635.28 25.25 8.00 6,819.73 34.51 $mln Shr% $Mln Shr % Bank Deutsche Bank 58.90 4,328.22 16.35 3,934.34 20.26 2 JPMorgan 3.25 3,376.00 12.85 3.08 2,077.72 10.52 Securities JPMorgan 26.25 3,647.37 13.78 2,026.07 10.43 Chase 3 Wells Fargo 3.50 2,895.87 11.02 4.28 2,609.85 13.21 Securities Morgan 68.70 2,390.57 9.03 939.88 4.84 Stanley 4 Morgan 3.70 2,647.79 10.08 1.00 1,279.20 6.47 Stanley Bank of 51.25 2,365.72 8.94 1,325.23 6.82 America 5 BofA Merrill 4.25 2,591.09 9.86 1.00 1,279.20 6.47 Lynch Credit Suisse 53.45 1,930.23 7.29 186.80 0.96 6 Goldman 2.35 2,336.62 8.89 2.50 1,961.78 9.93 Goldman 38.10 1,818.51 6.87 1,441.71 7.42 Sachs Sachs 7 Credit Suisse 2.95 2,272.65 8.65 1.00 186.80 0.95 Barclays 14.30 1,473.59 5.57 278.66 1.44 8 Citi 2.70 1,708.62 6.50 1.50 1,655.48 8.38 Citigroup 39.95 1,353.60 5.11 1,050.08 5.41 9 Barclays 2.81 1,685.23 6.41 0.42 400.28 2.03 Wells Fargo 78.00 999.74 3.78 1,344.80 6.93 Bank 10 ScotiaBank 0.10 125.00 0.50 - - - Cantor 59.50 936.56 3.54 1,578.06 8.13 TOTAL 32 26,274.15 24 19,759.59 Commercial Ladder Capital 45.00 634.50 2.40 772.44 3.98 Source: Commercial Real Estate Direct Rialto 51.00 578.86 2.19 322.34 1.67 VOLUME...From Page 1 Mortgage Natixis 24.00 480.39 1.81 694.34 3.58 rates and a healthy property-sales market. Starwood 40.00 464.59 1.76 396.32 2.04 Sales volumes increased in January and February by 38 percent from Property Trust last year, to $88.4 billion, according to Real Capital Analytics. That Silverpeak 28.00 355.23 1.34 - - would put volumes at a blistering annual pace of $530 billion, which Real Estate would be a 23 percent increase from last year and would come close CIBC World 28.00 309.59 1.17 293.27 1.51 to the record-breaking $573.5 billion of sales volume recorded at the Markets market’s peak in 2007. Liberty Island 21.00 285.46 1.08 213.81 1.10 Those increased sales are spurring the production of securitized MC-Five Mile 18.00 239.41 0.90 386.62 1.99 mortgages. Real Capital says CMBS lenders were capturing 27 Jefferies Loan- 16.00 230.98 0.87 141.09 0.73 percent of all commercial property lending during the year’s first two Core months. In contrast, securitized trusts hold 21.4 percent of the $2.6 UBS 18.00 227.75 0.86 378.14 1.95 trillion mortgage universe, according to the Mortgage Bankers Asso- ciation. At the market’s peak, they accounted for roughly a quarter of Bancorp Bank 32.00 217.78 0.82 73.17 0.38 all mortgages. Redwood 16.00 201.86 0.76 167.83 0.86 Deutsche Bank remained atop a ranking of bookrunners of domes- Commercial tic private-label CMBS during the first quarter. It received credit for C-III 41.00 192.29 0.73 97.12 0.50 6.4 deals totaling $6.6 billion, for a 25.3 percent share of the market Commercial during the quarter. Well behind it were JPMorgan Securities, with a Principal 9.00 153.20 0.58 - - Commercial 12.9 percent share of the market, and Wells Fargo Securities, with an 11 percent market share. KeyBank 9.00 143.73 0.54 98.86 0.51 Deutsche held a 26.3 percent share of the market for all of last year, Scotia Bank 0.10 125.00 0.47 - - and JPMorgan and Wells were behind it too, with slightly greater Bank of New 8.00 99.91 0.38 - - shares. York Mellon Deutsche’s continued dominance of the market was driven by its RAIT Funding 11.00 70.35 0.27 72.31 0.37 partnership with Cantor Commercial Real Estate. Cantor typical- Benefit Street 10.00 67.86 0.26 - - ly contributes loans to deals under the COMM conduit shelves, Basis Real 8.00 58.68 0.22 102.64 0.53 but doesn’t take bookrunner credit, leaving that to Deutsche. Even Estate Capital though Cantor Fitzgerald was listed as a bookrunner for two Walker & 3.00 46.69 0.18 - - COMM deals during the quarter, 2015-LC19 and 2015-CCRE22, Dunlop offering material specifically gave all bookrunner credit to Deutsche. NSB FSB 16.00 42.33 0.16 36.42 0.19 Deutsche also was the top loan contributor to the market, while JPMorgan took second honors because of its activity in the large-loan Bank of China - - - 174.83 0.90 market. Its contributions included only $330.4 million of conduit RBS - - - 390.05 2.01

See VOLUME, Page 8 Source: Commercial Real Estate Direct

April 3, 2015 -7- www.crenews.com CMBSNEWS

VOLUME...From Page 7 which was comprised of a $1.8 billion loan, part of which was funded by Deutsche. loans. The remaining $3 billion was comprised of loans, or por- The first quarter saw contributions from a number of new- tions of loans, that it funded and securitized, sometimes with comers, namely Benefit Street Partners, which is a unit of other banks, through single-borrower transactions. That in- Providence Equity Partners, Bank of New York Mellon, Prin- cluded the quarter’s largest deal, Motel 6 Trust, 2015-MTL6, cipal Commercial and Scotia Bank, which had funded a piece of the $1.25 billion loan against 611 Fifth Ave. in Manhattan Domestic, Private-Label CMBS that was securitized through SFAVE Commercial Mortgage Securities Trust, 2015-5AVE. 1Q2015 1Q2014 In total, 32 lenders contributed collateral to the CMBS mar- Deal Type #Deals Vol $mln #Deals Vol $mln % Change ket. That number is growing, however, as Freedom Mortgage Conduit 12 13,138.55 13 14,798.67 -11.2 Corp. and KGS-Alpha Capital Markets contributed loans to Single- 18 12,477.80 8 3,464.30 260.2 more recent deals and are expected to continue originating for borrower securitization. Floater 1 545.10 2 1,154.80 -52.8 Despite the additions to the rolls of securitized lenders, the NPL 1 112.70 1 341.82 -67.0 market remains dominated by a few big hitters. The five most active contributors during the quarter accounted for more than TOTAL 32 26,274.15 24 19,759.59 33 half of all loans that were securitized. Source: Commercial Real Estate Direct

Rialto Continues to Dominate Most-Active CMBS B-Piece Buyer - 1Q 2015 CMBS B-Piece Buyers 1Q2015 1Q2014 Investor #Deals Vol Mkt #Deals Vol Mkt Rialto Capital Management continued its dominance of the $mln Shr% $mln Shr% CMBS conduit B-piece market during the first quarter, buy- Rialto Capital 4.00 4,193.69 31.92 4.00 5,039.39 34.05 ing the subordinate classes of four transactions totaling $4.2 Management billion, for a 32 percent share of the conduit market. Seer Capital 2.70 2,807.50 21.37 - - - Well behind it were Seer Capital Management, with a 21.4 Management percent share of the market, and Eightfold Real Estate Capi- Eightfold Real 2.00 2,385.16 18.15 2.00 2,087.51 14.11 Estate Capital tal, with an 18.2 percent share. Rialto has been atop the rankings of B-piece investors for Ellington 1.25 1,398.98 10.65 2.70 2,817.28 19.04 Management years. The company, a unit of Miami homebuilder Lennar Raith Capital 1.00 1,213.52 9.24 1.55 1,842.74 12.45 Corp., is led by Jeffrey Krasnoff, who previously had founded Management/ LNR Partners, which long dominated the B-piece business. AllianceBern- LNR, which now is a unit of Starwood Property Trust, contin- stein ues to play a major role, but it now typically teams with other LNR Partners 1.10 1,139.70 8.67 2.75 3,011.74 20.35 investors. So while it participated in two transactions totaling TOTALS 12 13,138.55 13 14,798.67 $2.1 billion, it received credit only for 1.1 deals. Seer Capital, a New York investment manager, only started Source: Commercial Real Estate Direct buying B-pieces last May, after it hired Richard Parkus, the it’s gotten credit for 11.5 deals totaling $13.4 billion. That, former head of CMBS strategy at Morgan Stanley. Since then, nonetheless, is a formidable number, topped only by Rialto, it’s invested in 14 transactions with a total balance of $16.2 which since last year has invested in 17 transactions totaling billion. But it often teams with LNR on its investments, so $19.6 billion.

Sale of Ohio Mall Hammers CMBS Loan It noted that the CMBS loan would suffer a loss of about 81 percent, after The Eastland Mall in Columbus, Ohio, foreclosure. $1.1 million of servicer advances are has been sold for $9.25 million, accord- The trust had hired NGKF Capital repaid and $672,000 of appraisal ing to Barclays Capital. Markets to offer the property and it sold subordinate entitlement reductions are A total of 616,181 square feet of the it through the Auction.com platform. recouped. As a result, Barclays estimated 999,049-sf shopping center had backed According to Barclays, the winning the sales price would net out to $7.3 a $38.6 million mortgage that was secu- bid of $9.25 million, which was placed million. It noted that the CMBS deal’s ritized through LB-UBS Commercial by an investor whose identity couldn’t class K, which originally was rated BBB- Mortgage Trust, 2007-C1. The property immediately be learned, appears to have by both S&P and Fitch, would likely be previously had been owned by Glimcher met the reserve, or minimum price set wiped out, as would a big chunk of the Realty Trust, which last year handed by the trust and its special servicer, LNR deal’s class J, originally rated BBB. it over to the trust in a deed-in-lieu of Partners. www.crenews.com -8- April 3, 2015 CMBSNEWS

Update: The 1st Commercial Real Estate Derby

The first quarter saw three 1st Commercial Real Estate Derby - Finishers contestants in the First Resolved Loan Name City ST Deal Status Paid off/ Derby Defeased Odds Commercial Real Estate Derby $mln prepay their debt without penalty, Jan. Wells Fargo Denver CO GCCFC 2005-GG5; Prepaid 276 3-1 and two were defeased. Center GSMS 2005-GG4 Jan. Brookdale Various JPMCC 2005- Defeased 313 3-1 Office LDP5 With interest rates lingering at low levels, it Jan. NGP Rubicon Various WBCMT 2005- Partially 362.7 12-1 has been quite a season for refinancing. GSA C20; WBCMT Defeased CMBS origination shops are competitive 2005-C21 with balance sheet lenders and trophy assets March Houston Houston TX JPMCC 2005- Prepaid 710 1-5 Galleria LDP5; JPMCC are garnering a lot of interest from lenders 2006-CB14 looking to put capital to work. The first quar- March 200 Park Ave. New York City NY LBUBS 2005-C7; Prepaid 900 1-5 ter has seen three of our Derby contestants LBUBS 2005-C3; prepay without penalties, while two of our LBUBS 2005-C5 participants have bowed out through defea- Source: Trepp LLC sance. The NGP Rubicon GSA Pool, a $364.9 Inc. renewed and expanded its lease at the 59-story property, million loan securitized through Wachovia Bank Commer- and when Bank of America and Wells Fargo Bank agreed to cial Mortgage Trust, 2005-C20 and 2005-C21, was partially lend some $1.4 billion of financing against the 59-story build- defeased after four collateral properties were sold. Meanwhile, ing. The existing loan is securitized through LB-UBS Com- the remaining collateral properties are being marketed for sale. mercial Mortgage Trust, 2005-C3, 2005-C5 and 2005-C7. The servicer for the $900 million loan against 200 Park Ave., That leaves 9 of the original 14 still in the race. a 2.8 million-square-foot office building in midtown Manhat- The Columbia Center mortgage is rapidly approaching its tan, got a double dose of good news last month when MetLife maturity. While the property backing the loan was recently marketed for sale, servicer commentary 1st Commercial Real Estate Derby - Still in the Running on the loan indicates that the borrower Maturity Loan Name City ST Deal Bal DSCR Occy Odds will exercise its option to extend the $mln % maturity one year (an extra furlong 15-May Columbia Seattle WA MSC 2007- 380 0.71 78 3-1 you might say). The borrowers at the Center HQ12 Woolworth Building have informed their 15-Jun Woolworth New York City NY BACM 2005-3 250 1.2 98 1-1 servicer that they will be paying off the Bldg loan at its June maturity. 15-Jul Universal Orlando FL COMM 2005- 450 2.96 82 1-3 With talk of Federal Reserve rate hikes Hotel C6; GECMC 2005-C3; coming in June, it would not be surpris- JPMCC 2005- ing to see the rest of the derby contes- CB12; JPMCC tants try to lock in refinancing sooner 2005-LDP3; CD 2005-CD1 rather than later. Although the market seems to be taking a “believe it when we 15-Aug 731 Lexington New York City NY GCCFC 2005- 320 1.68 100 1-3 GG5 see it” approach to rate hikes, the recent 15-Oct One Court Sq. New York City NY CD 2005-CD1 315 1.16 100 3-1 record levels of defeasance show that borrowers would rather lock in low rates 15-Nov Yahoo Center Santa Monica CA CD 2005-CD1 250 2.56 98 1-1 as soon as possible. 15-Dec Hyatt Center Chicago IL WBCMT 305.1 1.52 93 7-1 2005-C22; WBCMT 2006-C23 15-Dec KinderCare Various BACM 2005- 567.8 1.93 100 31-3 6; BACM 2006-1; GEC- MC 2006-C1 15-Dec Oak Park Mall Overland Park KS BSCMS 2005- 275.7 1.41 99 1-5 PW10 Disclaimer: Odds are purely fictional and do not represent true odds of each loan paying off. Not all Source: Trepp LLC top maturing loans qualified for the race.

April 3, 2015 -9- www.crenews.com PROPERTYNEWS

Strategic to Buy $1.5Bln of Apts. Through ‘18 131 Dartmouth St. Strategic Properties of North Ameri- & Millichap. He expects to complete in Boston for Sale ca, which recently paid $53 million, or some $250 million of acquisitions this The New England Teamsters and In- $106,854/unit, for the 496-unit Mead- year. dustry Pension Fund is offering for sale ows Apartment Homes complex in Strategic plans to be the majority 131 Dartmouth St., a 370,000-square- Lakemoor, Ill., is planning to make some partner in its ventures and to manage foot office and retail building in Boston’s $1.5 billion of apartment investments the properties. The company has its Back Bay neighborhood. through 2018. own internal property management and It has tapped JLL to market the The Lakemoor deal is prototypical of development operations. 11-story building, which could sell for the investments planned by Strategic, It’s investing some $125 million of eq- about $300 million, or $810.81/sf. That according to Yitzy Klor, the Lakewood, uity that’s been committed by three high would result in a capitalization rate of N.J., investment company’s chief oper- net-worth investor clients, along with about 5 percent. ating officer and Midwest operations Klor and other principals of the compa- The 13-year-old property is fully leader. ny. Strategic also is open to bringing in leased by tenants that include private The Lakemoor property is on a 49-acre more investors into its multifamily-buy- equity firm Bain & Co., with 150,000 tract that could support the construction ing program. sf; Harvard Medical International, with of 224 additional units. The Strategic While it lined up $38 million of 23,088 sf, and law firm Saul Ewing venture acquired the suburban Chicago Fannie Mae financing from Greystone LLP. Equinox Holdings Inc. operates a property, near state routes 12 and 120, Funding Corp. for the Lakemoor prop- 43,488-sf gym on the second floor and a from GE Capital, which had taken it via erty, it will look to get financing of as 2,513-sf retail store under an agreement a foreclosure in 2003. much as 80 percent of the value of future that runs through 2021. Other retail Like in that deal, Strategic will be investments. tenants include restaurants B. Good and making its investments via ventures Strategic owns $500 million of prop- Duozo Sushi. with funds operated by other investment erties, a mix of garden-style, mid- and The property, near the John Hancock managers, and will exclusively target high-rise properties. It also owns some Tower, serves as collateral for a $100 secondary markets or suburbs in the shopping centers and office buildings. million loan, with a 10-year term, that Midwest, Florida and New Jersey. It The company was co-founded by Saul Northwestern Mutual Life Insurance Co. also is looking for class-A or -B proper- Kuperwasser and Julian Blumenthal provided last year. ties that can be upgraded or expanded. in 2003, when it focused on buying The building was developed by New Those, it says, can be had for lower prices lower-quality apartment properties in England Teamsters in 2002 at a cost of than what it would pay for properties central New Jersey, with the intention of $60 million. in major markets. They also have better upgrading them. The area around the property is poised prospects for yield improvement. Klor joined in 2011, after the compa- to strengthen through 2019, when the Klor is a former multifamily property ny switched its strategy to longer-term occupancy rate is projected to increase to broker in the Chicago office of Marcus investments in higher-quality properties. 95.1 percent from 92 percent this year, according to Reis Inc. Only 684,000 sf will be constructed through 2019, while 1 million sf will be absorbed. Hilton Hotel in Houston Sold for $65.5Mln Reis projects rents to increase by 18 Chinese investor Cai Kui has paid The property includes 13,000 square percent through 2019. $65.5 million, or nearly $220,540/room, feet of meeting space, a fitness center, for the 297-room Hilton Houston outdoor swimming pool, spa, full-service Westchase hotel. restaurant and lounge. Wheelock had ac- REPUBLIC...From Page 1 Cai, co-founder of Longfor Properties quired it in 2012 from Interstate Hotels Co., a prominent Beijing developer, & Resorts, which had purchased it in bought the hotel, at 9999 Westheimer 2007 for $50.5 million. Last year, it op- purchased by the Norges/TIAA venture. Road, from an affiliate of Wheelock erated at an 80.5 percent occupancy level It owns four others: 1101 Pennsylvania Street Capital. To fund its purchase, and generated an average daily room rate Ave. NW, with 227,111 sf; 1300 I St. Cai, who bought the property through of $114, for revenue per available room NW, with 465,365 sf; 400-444 North a number of affiliates, lined up a $45.3 of $116. That compares with a 68.5 per- Capitol St. NW, with 261,803 sf, and million mortgage from Bank of America cent occupancy level and $88 RevPAR 800 17th St. NW, with 364,502 sf. that is being securitized in an upcoming the year Wheelock had purchased it. In 2013, the Norwegian pension system CMBS transaction, Morgan Stanley Cash flow last year totaled $5 million, up launched an effort to investment up Bank of America Merrill Lynch Trust, from $2.9 million in 2012. to $11 billion in U.S. commercial real 2015-C22. The loan has a five-year term During Wheelock’s tenure, the hotel estate. Besides investing with TIAA, it and requires only interest payments for underwent major renovations that in- has ventured with MetLife Inc. and has the first two years. After that, it amortiz- cluded upgrades to individual rooms and bought stakes in properties from Boston es on a 30-year schedule. the property’s common areas. Properties Inc. and Prologis Inc. www.crenews.com -10- April 3, 2015 Find your next opportunity on TreppLoan.

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April 3, 2015 -11- www.crenews.com CMBSNEWS

1Q Sees $5.4Bln of CMBS Defeasance Activity Although 400 loans were defeased during the first quarter, the 10 largest A total of 400 CMBS loans with a properties to the collateral pool - with accounted for nearly one-third of the balance of $5.4 billion were defeased, an interest-only coupon of 3.91 percent. total dollar volume. Exclude those and or replaced by government securities, Despite the defeasance costs, Selig was the average balance of the remaining during the first quarter, according to able to squeeze $27.1 million of cash out defeased loans is less than $10 million data compiled by Trepp LLC. That puts of the collateral portfolio, after setting each. (For a list of the top-10 largest de- the year well on track to top the $18.9 feased loans during the first quarter, please billion of volume recorded last year. Defeasance Activity - 1Q 2015 see the top of the next page.) Volumes are likely to continue climb- The largest loan to be defeased during ing, given that interest rates remain Month # Loans Bal $mln the quarter had a balance of $313.4 extremely low and property values have January 172 2,862.20 million and was backed by a portfolio of climbed, in some cases to more than February 122 1,277.65 office properties, commonly referred to their previous peaks, recorded in 2007. March 106 1,305.60 as the Brookdale Office Portfolio, that Even though defeasing a loan isn’t a was sold to Parkway Properties Inc. That cheap proposition, it’s often worthwhile. TOTAL 400 5,445.44 sales transaction, valued at $475 million, For instance, Martin Selig Real Estate allowed the loan’s sponsor, an investor recently incurred some $11.4 million in represented by Strategic Realty Advisors, costs to defease $242 million of CMBS aside nearly $10 million to cover closing to retire the CMBS loan, securitized financing, with a coupon of 5.77 percent, costs and fund reserve accounts tied to through JPMorgan Chase Commercial against a portfolio of Seattle office the new loan. Mortgage Securities Trust, 2005-LDP5, buildings. It was able to line up $345 It was advised on the transaction by through defeasance. million of fresh financing - it added two Waterstone Defeasance LLC.

Fixed-Income Shop Contributes Loans to CMBS The property was appraised at a value of $10.5 million, giving the mortgage a KGS-Alpha Capital Markets, which fund. loan-to-value ratio of 74.6 percent. The four years ago moved into the CMBS It moved into the CMBS sector when 10-year loan requires only interest pay- arena by hiring a team of professionals it hired a team led by Jeff Lewis, another ments for the first two years, after which who previously were with Citadel Se- Salomon alumnus, who more recently it amortizes on a 30-year schedule. It curities, has started originating conduit was with Barclays Capital and ICP Cap- pays a coupon of 4.2 percent. loans. ital. Others on the team include Andrew The other loans KGS-Alpha wrote are It previously originated loans that were Noonan, formerly of EuroHypo, who secured by a Cleveland office building, a sold off to conduit deals on a one-off structures and prices CMBS loans, and small industrial property in St. Bernard, basis. It’s now originating loans with Greg Porter, who previously was chief Ohio, which is just outside of Cincin- enough speed for it to contribute larger underwriter at EuroHypo. He handles nati, a Scarsdale, N.Y., medical-office volumes to deals. It’s contributing 14 loan originations. property and a retail property in Plaque- loans with a balance of $49.2 million to Its largest contribution to the up- mine, La., which is along the Mississippi the upcoming Citigroup Commercial coming deal is a $7.8 million mort- River, less than 10 miles south of Baton Mortgage Trust, 2015-GC29. It also has gage against Parkwest Crossing, an Rouge, La. lined up a warehouse line, allowing it to 85,602-square-foot retail center at 4834 fund loans. NC Highway 55 in Raleigh, N.C., that While its originations so far have had was acquired by an investor group led relatively small balances, it’s capable of by Israeli investor Buligo Partners for a writing large loans as well. total of $10.3 million. The company isn’t eager to set a target The property, next to the Research Tri- Since March 26, 128 stories were for originations, but has indicated that angle Park, was constructed in 1990 and published on the www.crenews.com its move into the conduit arena is a is 95 percent occupied. It is anchored Web site. long-term commitment. by a Food Lion, which occupies 38,052 Stay on top of the industry’s capital KGS-Alpha, which was founded in sf through 2023. Other tenants include markets by subscribing today. 2010 by Levent Kahraman and Daniel Dollar Tree, which is in 8,450 sf through Goldman, both of whom spent the early 2017, and FedEx Office, in 6,800 sf parts of their careers at Salomon Broth- through 2019. It generated $779,810 of ers, is a fixed-income broker-dealer that net operating income last year, giving focuses on asset- and mortgage-backed KGS-Alpha’s loan a debt yield of 10 securities. It is backed in part by an percent. But it was underwritten to gen- affiliate of the Healthcare of Ontario erate $737,196 as projected expenses are Pension Plan, a large Canadian pension expected to increase from last year’s level.

www.crenews.com -12- April 3, 2015 DATADIGEST Top 10 Defeased Loans - 1Q 2015 Balance Property Name City ST Prop Coupon Maturity YTD YTD NOI Special Servicer Ticker % of ($mln) Type % Date DSCR ($Mln) Deal 313.4 Brookdale Office Portfolio Various VR OF 4.980 Sept. 11, 2015 1.37 14.7 CWCapital JPMCC 2005-LDP5 20.13 213.9 353 North Clark Street Chicago IL OF 5.227 Jan. 6, 2016 1.91 13.9 Midland Loan DBUBS 2011-LC1A 12.45 193.5 222 South Riverside Plaza Chicago IL OF 6.191 June 6, 2016 1.17 13.0 C-III Asset GSMS 2006-GG8 7.57 177.0 535 and 545 Fifth Avenue New York NY OF 5.768 May 11, 2016 1.08 11.2 C-III Asset CSMC 2006-C3 14.57 170.3 Michigan Plaza Chicago IL OF 4.940 Nov. 11, 2015 2.36 19.7 Strategic Asset MSC 2011-C1 19.27 145.0 Ashford Hotel Portfolio Various VR LO 5.218 July 1, 2015 2.00 23.1 C-III Asset MLMT 2005-CKI1 31.39 112.9 300 South Riverside Plaza Chicago IL OF 5.430 Jan. 6, 2016 1.73 10.5 Midland Loan DBUBS 2011-LC1A 18.15 108.5 COPT Office Portfolio - Roll-up Various MD OF 5.560 Jan. 1, 2016 1.37 2.1 LNR Partners MSC 2006-HQ8 17.86 97.9 InTown Suites - Portfolio B Various VR LO 5.336 Nov. 1, 2015 2.98 20.3 LNR Partners BACM 2005-6 26.03 94.2 Station Place II Washington DC OF 6.900 Feb. 11, 2016 NULL NULL C-III Asset LBUBS 2006-C3 14.56

Source: Trepp LLC Top 10 Loans Moved to Special Servicing - 1Q 2015

Balance Property Name City State Prop Coupon Maturity YTD YTD NOI Special Servicer Ticker ($mln) Type % Date DSCR ($mln) 133.0 Galleria at Pittsburgh Mills Tarentum PA RT 4.750 Jan. 8, 2012 1.14 5.5 C-III Asset Management MSC 2007-HQ11 115.8 1818 Market Street Philadelphia PA OF 5.946 Mar. 11, 2016 1.30 8.5 LNR Partners WBCMT 2006-C24 108.9 Greensboro Park McLean VA OF 6.300 June 11, 2012 0.85 4.4 Midland Loan Services LBUBS 2007-C6 68.9 Indian River Mall & Commons Vero Beach FL RT 5.214 Nov. 1, 2014 0.86 3.2 C-III Asset BACM 2005-1 67.8 Vista Ridge Mall Lewisville TX RT 6.870 Apr. 11, 2031 0.84 4.8 LNR Partners LBUBS 2001-C3 61.9 50 Danbury Road Wilton CT OF 5.826 July 11, 2017 1.12 3.8 LNR Partners LBCMT 2007-C3 58.2 Doral Arrowwood Hotel Rye Brook NY LO 6.200 Feb. 1, 2015 1.10 4.9 CWCapital GCCFC 2005-GG3 35.4 Beach Shopping Center Peekskill NY RT 5.250 Dec. 11, 2014 1.53 3.0 CWCapital WBCMT 2005-C16 26.8 Village at Main Street S Wilsonville OR MU 5.485 June 1, 2015 1.15 2.2 Midland Loan Services GECMC 2005-C3 26.5 Kings Village Corp. Brooklyn NY CH 5.550 July 1, 2020 0.55 1.0 NCB CSFB 2005-C5

Source: Trepp LLC

April 3, 2015 -13- www.crenews.com PROPERTYNEWS Conduit Issuance - 1Q 2015

Date Trepp Abbr Amt top AAAJr BBB- Bpce UW/ UW/ UW/ WAC IO% Part PX10 PXJR PX 10% Lvl Lvl LTV DSC DebtYield IO% AAA-Sr AAA BBB Jan. 23 MSBAM 2015-C20 1,147.88 40.5 23 7.75 Seer 66.3 1.77 10.7 4.487 56 60.6 95 130 380 Jan. 28 CGCMT 2015-GC27 1,194.03 41.3 23.5 8.375 Ellington 67.5 1.62 9.8 4.451 22.9 43.8 97 140 385 Jan. 26 COMM 2015-LC19 1,423.09 53.5 24.75 7.625 Eightfold 62.7 2.09 10.8 4.279 40.7 29.3 91 125 360 Feb. 5 WFCM 2015-C26 962.07 34.2 22 7.625 Eightfold 65.2 1.87 12 4.405 0.01 54.6 94 135 370 Feb. 5 JPMBB 2015-C27 836.53 56.4 24.085 8.625 LNR 65.8 1.66 9.9 4.37 23.6 41.5 90 135 360 Feb. 13 MSBAM 2015-C21 871.25 51.5 22.625 7.25 Seer 63.1 2.04 10.4 4.192 28.4 41.8 86 117 345 Feb. 13 GSMS 2015-GC28 913.54 41.2 23.75 7.125 Rialto 67.3 1.89 10.7 4.351 29.8 34.9 92 128 385 Feb. 24 COMM 2015-DC1 1,402.70 48.8 23.25 7.875 Rialto 64.9 1.71 9.9 4.366 33.7 41.4 88 125 345 Mar.3 WFCM 2015-C27 1,047.83 37 22.375 7.25 Rialto 67.3 1.67 10.5 4.321 9.1 59.8 87 125 355 Mar. 6 CSAIL 2015-C1 1,213.52 47.1 23 8 Raith 63.4 1.85 10.5 4.314 27.6 47.4 82 110 305 Mar. 18 COMM 2015-CR22 1,296.49 51.7 23.75 8.25 LNR/Seer 66 1.6 9.3 4.147 30.1 41.2 86 115 340 Mar. 25 WFCM 2015-LC20 829.62 45.9 26.625 8.875 Rialto 66.5 1.63 10 4.396 18.4 56.6 87 115 350

Top 10 Conduit Loans - 1Q 2015 Balance Property Name City ST LTV % Coupon % Rate Maturity DSCR % NOI Ticker ($mln) Index Date ($mln) 120.0 26 Broadway New York NY 59.50 4.384 Fixed Jan. 6, 2022 1.66 16.2 COMM 2015-DC1 100.0 26 Broadway New York NY 59.50 4.384 Fixed Jan. 6, 2022 1.66 16.2 COMM 2015-CR22 110.0 Discovery Business Center Irvine CA 47.49 4.181 Fixed Nov. 10, 2024 2.11 21.0 MSBAM 2015-C20 60.0 Discovery Business Center Irvine CA 47.49 4.181 Fixed Nov. 10, 2024 2.11 21.0 MSBAM 2015-C21 85.0 3 Columbus Circle New York NY 50.00 3.610 Fixed Mar. 6, 2025 2.39 30.6 COMM 2015-CR22 75.0 3 Columbus Circle New York NY 50.00 3.610 Fixed Mar. 6, 2025 2.39 30.6 WFCM 2015-LC20 144.0 One Memorial Cambridge MA 54.50 4.020 Fixed Oct. 6, 2024 2.07 18.9 COMM 2015-LC19 121.6 Pinnacle Hills Promenade Rogers AR 63.80 4.130 Fixed Jan. 1, 2025 1.79 12.7 COMM 2015-DC1 110.0 The Club Row Building New York NY 62.00 4.382 Fixed Jan. 1, 2025 1.73 11.9 JPMBB 2015-C27 110.0 Soho-Tribeca Grand Hotel Portfolio New York NY 57.84 4.021 Fixed Nov. 6, 2024 2.58 23.7 CSAIL 2015-C1

Source: Trepp LLC

Top 10 Loans, Single-Borrower Deals - 1Q 2015 Balance Property Name City ST LTV % Coupon Rating Maturity date DSCR % NOI Ticker ($mln) % Index ($mln) 1,710.0 Motel 6 Portfolio - Owned Portfolio Various VR 66.67 Float Fixed Feb. 1, 2020 3.41 249.3 MOTEL 2015-MTL6 1,250.0 Saks Fifth Avenue Building New York NY 59.50 4.392 Fixed Jan. 30, 2035 NULL NULL SFAVE 2015-5AVE 1,206.7 Griffin American Portfolio - Fixed Various VR 51.50 3.390 Fixed NULL 4.05 208.8 GAHR 2015-NRF 1,125.0 Three Bryant Park New York NY 51.14 3.245 Fixed Feb. 6, 2025 2.61 96.6 COMM 2015-3BP 1,050.0 Houston Galleria Houston TX 47.70 Float Fixed Mar. 1, 2025 2.52 108.9 HGMT 2015-HGLR 875.0 The Cosmopolitan Las Vegas Las Vegas NV 48.21 Float libor1m Jan. 9, 2017 NULL 148.9 JPMCC 2015-CSMO 464.0 Starwood Hotel Portfolio Various VR 61.40 3.285 libor1m Feb. 8, 2018 NULL 81.8 BBCMS 2015-SLP 360.0 Americas Tower New York NY 38.92 3.020 Fixed Dec. 9, 2021 3.80 41.9 AOA 2015-1177 324.5 Griffin American Portfolio - Floating Various VR 51.50 1.483 libor1m NULL 4.05 208.8 GAHR 2015-NRF 308.0 1740 Broadway New York NY 50.91 3.840 Fixed Jan. 6, 2025 2.23 26.7 BWAY 2015-1740

Source: Trepp LLC

www.crenews.com -14- April 3, 2015 DATADIGEST Recently Priced CMBS Conduits

Deal Name Date Size Underwriter 10-yr BBB- B-piece ($mln) AAA Buyer Wells Fargo, Mar. 25 829.62 WF S+87 S+350 Rialto 2015-LC20 COMM, 2015- Mar. 18 1,296.49 DB, Cantor S+86 S+340 LNR CCRE12 CSAIL, 2015-C1 Mar. 6 1,213.52 CS S+82 S+305 Raith Wells Fargo, Mar. 3 1,047.83 WF S+87 S+355 Rialto Source: Morningstar 2015-C27 COMM, 2015- Feb. 24 1,402.70 DB S+88 S+345 Rialto DC1 GSMS 2015- Feb. 13 913.54 GS, Citi S+92 S+345 Rialto GC28 MSBAM 2015- Feb. 13 871.25 MS, BoA S+86 S+345 Seer C21 JPMBB, 2015- Feb. 5 836.53 JPM, Barc S+90 S+360 LNR C27 Wells Fargo, Feb. 4 962.07 WF S+94 S+370 Eightfold 2015-C26 Source: Morningstar Citigroup, 2015- Jan. 28 1,194.03 Citi, GS S+97 S+385 Ellington GC27 COMM, 2015- Jan. 26 1,423.09 DB S+91 S+360 Eightfold LC19 MS-BofA-ML, Jan. 23 1,147.88 MS, BofA S+95 S+380 Seer Capital 2015-C20

For historical data points, please visit the Commercial Real Estate Direct Web site, at www.crenews.com. CMBS Pricing Matrix New Issue Spreads (bps over swaps) Source: Morningstar Loan Sales Calendar Bond 3/27 3/20 3/13 3/6 5-yr AAA 55 54 54.5 56 Size Description Seller Bid Adviser $mln Date 10-yr AAA 84.5 82 82.5 83 33.0 Nonperforming loan portfolio secured by retail, office, multi- Lender April 23 NGKF Loan 10-yr AAA Jr. 116.5 115 115.5 117 family and mixed-use properties in MD, PA and VA. Sales Group AA 143.5 143 141.5 139 24.0 Nonperforming loan secured by a 143-room hotel and spa in Bank April 15 NGKF Loan A 197 195 194.5 195 Long Beach, NY. Group Sales Group BBB- 336.5 327.5 329.5 330 63.0 100 performing, subperforming and nonperforming loans Bank March Gray & against a mix commercial real estate and business assets in 31 Associates Legacy Spreads (bps over swaps) NE and MA. Bond 3/27 3/20 3/13 3/6 27.0 Mixed performing loans against office, retail, medical-office Finance Feb. 20 DebtX and multifamily properties, as well as land, in NM. Company SuperSr AAA 90 90 88 85 21.9 Nonperforming loans secured in part by hotels, commercial Finance Dec. 19 DebtX 20%Sub AAA 150 150 150 150 real estate and residential land developments in TN and AL. Company Junior AAA 503 500 500 506 64.0 65 performing and nonperforming loans against 82 commer- Fund Dec. 17 NGKF Loan cial, residential and C&I assets across the eastern US, along Sales Group Freddie Mac K-Series Spreads (bps over swaps) with 7 REO assets. Bond 3/27 3/20 3/13 3/6 45.0 141 performing and nonperforming commercial real estate 5 banks Dec. 9 First Financial and business loans. 5yr AAA 28.5 28 29 30 20.3 Performing loan against a 70,000-square-foot mixed-use Bank Dec. 4 NGKF Loan 10yr AAA 45.5 43.5 45 47 property in Las Vegas. Sales Group

15.6 Nonperforming loans secured by a first lien on a closed Gov’t Dec. 2 DebtX Note: Medians were compiled using spreads pro- hospital. Agency vided by several investment banks. Reporting banks were quoting 5-year swaps at a median spread of 14bps over Treasurys, while 10-year swaps priced at 9bps more than Treasurys. April 3, 2015 -15- www.crenews.com and is registered with the U.S. Securities Exchange Commiss ion as a nationally recognized statistical rating organization ( © 2014 Morningstar , Inc. All rights reserved. ’s

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