FINANCE WEEKLY the Insider’S Weekly Guide to the Commercial Mortgage Industry the Insider’S Weekly Guide to the Commercial Mortgage Industry

Home , Severance (land)

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

InIn This This IssueIssue

23 GoldmanBMO lends lends $50M $258M on New towards Haven Dune’s nationalrental development lodging portfolio buy

45 MRCVärde finances provides two$44M Seattle refi onproperties South withFlorida $27M self-storage loan facilities

67 ACOREFinkelstein provides Timberger $60M nabs refi $54M for loan Nashvillefor Bronx boutique multifamily hotel assets

89 CCREMerchants refinances Capital pairleads of $66MSoCal strip mallsfinancing with for$31M UWS loan affordable housing

1011 CREFCLA developers, Miami investors2020 coverage discuss solutions to homeless crisis

MorganHelaba Provides Stanley Lends$81M Refi $50M for East toVillage Refi Mixed-Use Bronx Property MultifamilyBenenson Capital Partners and Mack Real Estate Group have landed a $81 million refinance for EVE NYC, their mixed-use rental prop- Portfolioerty located at 433 East 13th EXCLUSIVE Street in the East Village, Eastchester, N.Y.-based Finkelstein Commercial Observer has One of the portfolio assets. Timberger East Real Estate (FTERE) has secured COURTESY NEWMARK KNIGHT FRANK KNIGHT NEWMARK COURTESY learned. a $50.4 million loan from Helaba provided the 10-year, fixed-rate Morgan Stanley to refinance financing,EXCLUSIVE which replaces construction debt on A rendering of the roof deck at 111 Wall Street. a portfolio of five rental prop- COURTESY NEWMARK KNIGHT FRANK KNIGHT NEWMARK COURTESY the property. Cushman & Wakefield’s Steve CIT, BlackRock Lend $163M for erties located throughout the Bronx, Commercial Kohn, Alex Hernandez, TJ Sullivan and Emily Observer has learned. Johansen negotiated the financing on behalf of Industrial Portfolio Buy The 10-year, interest-only financing pays a Nightingale, Wafra Land $145M the borrower. fixed interest to Morgan Stanley at a rate of 3.78 The eight-story, two-tower 80-20 property inPhiladelphia-based Financing The Arden Group for has 111also repays Wall previous bridge Street debt on two sepa- percent,opened in sources March told2019 CO.and Itcomprises was arranged 113 units on scored $163 million debt package from CIT Bank rate industrial properties in Philadelphia and behalfas well of as thea Trader borrower Joe’s supermarketby Black Bear at its Capital base. and BlackRock to help fund its $96 million Charlotte; The Arden Group bought the latter PartnersDesigned (BBCP), by SLCE the realArchitects estate debt, the and building’s equity Nightingale Propertiespurchase and of Wafra a 2.1-million- Capital reportedtwo properties the acquisition for a combined had closed $83.6 and million that the in advisoryamenity armpackage of Black includes Bear aAsset fitness Management center, a pri-. PartnersEXCLUSIVE have finalizedsquare-foot, their purchase 12-property of 111 Wall purchasethe second price half wasof 2018 $175 and million, will now but fold sources them vateA BBCPdining team room, of a Bryan billiards Manz, lounge, Rob a landscaped Serra and Street along with $145industrial million of acquisitionportfolio financ- close to theinto transaction the portfolio. disputed that amount. Emilcourtyard DePasquale and a pet negotiated station. the refinance. comprising assetsing spread for the throughout deal, sources con-The Newmark“The Knight Arden Frank Group’s Dustinis well-known Stolly, “The“Eve wasquality remarkably of the assets well-received and strength by the of debt the EXCLUSIVEthe country, Commercialfirmed to Observer Commercial has Jordanfor their Roeschlaub expertise, Nick ... and Scribani we are, Chrisagain borrowermarkets given enabled its location [us] to negotiatedirectly on a thefavorable newly learned. Observer. LEADThe Kramerpleased, Seth to support Hall and them John byGallagher leading fixedrenovated rate withL train interest-only and the fact that payments,” the retail Manz com- TheThe deal floating-rate closed Jan. financing 15. package negotiatedthis financing the debt, for theirwhile latestNKF’s Jimmyportfo- saidponent in ais prepared fully leased,” statement, Kohn saidadding in prepared that the includesSL Green a Realty$134.3 Corp.million led senior the financ loan- fromLEAD CIT lio acquisition,”Kuhn, Evan Chris Layne Niederpruem, Brett Siegel and, a man Jean- deal’sremarks. loan-to-value was “conservative.” ing,and providing roughly a$29.2 $110 millionmillion senior in mezzanine loan, debt aging directorCelestian and arranged group the head sale forof the CIT’s asset real on The“Helaba five propertieswas able to — work 2 Minerva with the Place structure; 901 whilefrom an BlackRock. undisclosed lender chipped in $35 mil- behalfestate of finance Zurich practice, Insurance told Group CO in. a statement. Waltonof the existing Avenue debt; 984 and Sheridan provide Avenue an extremely; 1460 lion Thein mezzanine deal takes debt.out existing CMBS debt on the CONewmark reported Knight in October Frank that’s DustinNightingale Stolly and and 10The Avistone acquisition assets price — which couldn’t Avistone immediately had been NIGHTINGALEHELABA...... THIS ISSUE becompiling confirmed. since Crain’s the summer New York of Business2014 — and first it NIGHTINGALE...continued on page 2 continued on page 2 CIT...continued on page 3 continued on page 5 BROUGHT 4 |1 JANUARY | MARCH 17,6, 2020 2020 TO YOU BY OVER $40,000,000 FUNDED IN FEBRUARY

FEATURED TRANSACTIONS:

$15,000,000 $8,250,000

PHILADELPHIA, PA SCARSDALE, NY

$6,000,000 $3,850,000

QUEENS, NY WOODRIDGE, IL

NATIONWIDE LENDING LOANS UP TO $50,000,000 RATES STARTING AT LIBOR + 500 FUNDING IN 1 - 2 WEEKS NO PREPAYMENT PENALTY

www.emeraldcreekcapital.com 1-800-313-2616

2 | MARCH 6, 2020 BMO Harris Bank Lends $50M on New Haven Rental Development Adam America Real Estate has scored a $50 million leasehold construction loan from Chicago-based BMO Harris Bank for its planned mixed-use rental building EXCLUSIVE near the city center of New Haven, Conn., Commercial Observer has learned. The financing will go toward the build-out of a six-story, 299-unit multifamily project at 44 Olive Street in New Haven — just a short walk from Yale University — that will include around 6,100 square feet of retail space at the ground floor. Adam America has partnered with New York-based multifamily developer Epimoni to build the asset, according to the latter’s website. Drew Fletcher and Matthew Hirsch of Greystone Capital Advisors, the mortgage advisory arm of real estate investor and owner Greystone, sourced and arranged the construction debt on behalf of the borrower. “[Adam America] is a top owner-developer in New York City and the tri-state area. The firm’s dynamic approach to development allows it to be a first mover in new markets and deliver high-quality, transformative multifamily projects,” Fletcher, the head of Greystone Capital Advisors, said in a prepared statement. “The financing of 44 Olive Street was a highly struc- 44 Olive Street in New Haven. tured transaction that required creativity, per- GREYSTONE COURTESY severance, and effort from the working group.” As per Epimoni’s website, the asset will have Haven Independent. They picked up the prop- deadline of Feb. 18, 2020, to complete it, accord- 206 parking spaces and will include a “full-floor erty from David Adam Realty and Connecticut ing to a January 2018 report by the New Haven amenity package.” It will have a pool located developer Noel Petra of Petra Development, Independent. Petra eventually came to the con- within an internal courtyard that will be sur- the previous ownership joint venture that clusion that the project was too big for his firm rounded by the building, BBQ stations, a fire pit, was planning to build the asset; the pair had to handle, according to commentary from Petra a theater room and a fitness center. bought the property two years earlier for just published by the New Haven Independent in “This new project leads our firm’s expansion $4.5 million. January 2018. So, in June 2017, Petra engaged into a new market and represents the firm’s first The month that Adam America and Epimoni Adam America in negotiations for the property step in entering the multifamily student-ori- bought the property, New Haven city commis- and the development plans. ented housing space,” Omri Sachs, the founder sioners voted unanimously to grant the duo a The development is expected to feature a of Adam America Real Estate, said in prepared five-year extension to develop the project, giving mix of town homes, studios and one-, two- and remarks. “44 Olive Street provides critical inven- them until Feb. 18, 2025, to wrap it up. Epimoni’s three-bedroom units, according to the New tory to New Haven which has minimal new website indicates that they expect to deliver it to Haven Independent’s report. multifamily product, low vacancy, and extraor- market this year. In March last year, New Haven Epimoni could not be reached. Representatives dinarily strong demand drivers.” city officials held a ceremonial groundbreaking for BMO Harris Bank did not immediately Adam America and Epimoni finalized their for the development. respond to a request for comment. An offi- purchase of the site for $10 million in July 2018, The previous developers had gotten approval cial at Adam America was not available for according to a report at the time from the New from the city in 2015 to build the project, with a comment.—M.B.

CIT...continued from page 1 optimally spread across six industrial mar- according to Roeschlaub, “with staggered roll- kets throughout the country and leased to over providing downside protection.” Jordan Roeschlaub led the arrangement of the a diverse array of more than 300 tenants An official at The Arden Group was not transaction, along with Chris Kramer, Nick across various industries,” Stolly said in a available and representatives for BlackRock Scribani and Shervin Tork. statement. could not be reached by press time. “The recapitalized properties are The portfolio is nearly 90 percent occupied, —Mack Burke

3 | MARCH 6, 2020 THANK YOU We would like to thank our clients and partners who placed their confidence in us in 2019. Thanks to all of you, Pacific Western Bank achieved a record level of new business. We look forward to providing creative financing solutions to all those looking to grow in 2020.

Walker & Dunlop • AKS Capital Partners • AECOM - Canyon Partners • Estreich & Company • JMA Ventures Alchemy Ventures • Steelbridge Capital • Briar Meads Capital • Stockbridge • Wilson Meany • Marriott International Rael Development Corporation • Parse Capital • East End Capital • The Buccini/Pollin Group • Aspen Heights Four Points, LLC • Hill Companies • Valyrian Capital • Elliott Management Corporation • Rescore Property Corp. Saunders Commercial Development Company • AECOM Capital • Pontus Capital • Mactaggart Family & Partners Northstar Commercial Partners • Apollo Global Management • CBRE Capital Markets • JLL Capital Markets Nexus Companies • Ozone Capital Management • Meridian Capital Group • Cascadia Development Partners Cottonwood Group • Benedict Realty Group • Square Mile Capital Management • Post Brothers • M&T Bank Fortress Investment Group • Jackson Square Properties • FCP • Westmont Hospitality Group • Ensemble Investments NIT Industrial • Canyon Partners Real Estate • HKS Real Estate Advisors • Palatine Capital • Silvergate Development LLC Massimino Development • StonePark Capital • CapRidge Partners • Access Point Financial • Landbourn Company Ortega Financial Group • Ares Management Corp. • Hope Street Capital • NKF Capital Markets • NorthMarq Milender White • Iron Point Partners • Nationwide Insurance • Continuum Partners • Spruce Capital Partners Pan Brothers Associates • Prism Partners • Barings Real Estate • George Smith Partners • Pensam Residential Conway Capital • NBP Capital • Sunwater Capital • Prime Finance • Fenway Capital Advisors • Sansone Group Origin Investments • Perseus TDC

4 | MARCH 6, 2020 Värde Lends $44M on Florida Self-Storage Facilities Miami City Self Storage has landed a $44.3 million floating-rate loan for three self-storage facilities in South Florida, Commercial Observer has learned. EXCLUSIVE Värde Partners provided the five-year financing, which refinances previous debt on the assets, in a transaction negotiated by Newmark Knight Frank’s Dustin Stolly, Jordan Roeschlaub, Chris Kramer and Nick Scribani. The facilities — at 490 Northwest 36th Street and 1100 Northeast 79th Street in Miami and 812 Northwest 1st Street in Fort Lauderdale — com- prise 1,836 units and total 237,044 square feet. The trio opened in 2018 and are progressing through the stabilization period. MCSS — a joint venture between Rivergate Companies and SJM Partners that’s headed by Jay Massirman, Steve Garchik & Steve McBride — was formed with the purpose of developing urban infill self-storage facilities nationwide. The JV has 2 million square feet of facilities in South Florida, New York, Boston, L.A. and Northern California. “Given the operating expertise, location and quality of these assets, we are confident that providing accretive sources of capital prior to stabilization will help enhance execution of the sponsor’s business plan,” Stolly said in prepared remarks. “With extensive experience and a profound knowledge in the development of self-storage facilities, we share MCSS’s vision as they cater to the demands of these ever-growing submarkets,” Roeschlaub added. Last June, Värde provided a $31 million loan on one of Brickman’s Downtown Miami office buildings, in a deal also negotiated by the NKF 490 Northwest 36th Street in Miami. team.—C.C. FRANK KNIGHT NEWMARK COURTESY

ACRES...continued from page 1

pricing-efficient execution via a credit enhancement of the existing bonds, ultimately allowing our client a more favorable rate while optimizing proceeds,” Hernandez added. In December, the German lender — also known as Landesbank Hessen- Thüringen — provided $86 million financing for another rental tower with a retail component — Stellar Management’s 70 West 93rd Street on the Upper West Side. Officials at Helaba could not be reached for comment. Officials at Mack and Benenson did not return requests for comment. A rendering of 433 East 13th Street.

—Cathy Cunningham GROUP ESTATE REAL MACK COURTESY

5 | MARCH 6, 2020 $1,790,000 Valley Stream, New York | Multi-Family Building

$2,000,000 Hamilton Heights, New York | Mixed-Use Building

TURNING VISION INTO $2,975,000 OPPORTUNITY Riverdale, New York | Mixed-Use Building

Whether you’re looking to acquire or refinance a multi-family, mixed-use, office or retail property, Ridgewood Savings Bank will provide eligible borrowers up to 75% financing to make your opportunity a reality. $6,000,000 Connect with a local real estate pro at Prospect Heights, New York | Multi-Family Building www.ridgewoodbank.com/team.

6 | MARCH 6, 2020 Finkelstein Timberger Nabs $54M Loan for Bronx Multifamily Assets Morgan Stanley has continued its early-year spree of financing Bronx multifamily properties. The lender just provided a $53.9 million loan to Eastchester, N.Y.-based EXCLUSIVE Finkelstein Timberger East Real Estate (FTERE) to finance a six-property bundle of multifamily assets in the borough, Commercial Observer has learned. The 10-year financing pays interest at a fixed rate of 3.58 percent and includes interest-only payments for the life of the loan, sources said. The properties sport a combined 386 units, four of which are for commercial use. They are located at 75 West 190th Street, 610 Trinity Avenue, 1791 Walton Avenue, 2770-80 Kingsbridge Terrace and 3031 and 3041 Holland Avenue. Five of the Phelps House. COURTESY PHELPS HOUSE PHELPS COURTESY buildings are pre-war assets, except for 1791 Walton Avenue, which was built in 2003. Black Bear Capital Partners (BBCP), the Merchants Capital Leads $66M Risk-Share real estate debt and equity advisory arm of Loan for UWS Affordable Housing Property Black Bear Asset Management, sourced and arranged the portfolio mortgage on behalf of Merchants Capital, working with Freddie Acting as somewhat of an extension to the the borrower. BBCP’s Bryan Manz, Rob Serra, Mac and the New York City Housing community center’s offices and senior cen- Phil Bowman, Emil DePasquale, and Brandon Development Corporation (HDC), has pro- ter at 595 Columbus Avenue — between West Harris led the deal. vided a $66 million per- 88th and West 89th Streets — the 12-story, Since the start of the year, Morgan Stanley has EXCLUSIVE manent, risk-share loan 140,000-square-foot property is set up as originated a series of CMBS loans on FTERE rental on Goddard Riverside independent living residence with a variety assets in the Bronx, including a $77.7 million loan Community Center’s affordable housing of supportive services, and includes one- and last month on eight buildings in the borough as property in the Upper West Side, Commercial two-bedroom apartments. The property’s well as two loans, totaling $94.2 million on 11 Observer can first report. on-site staff provides management, adminis- buildings, in January, as CO previously reported. The financing will support a 20-year trative and supportive work, including refer- A representative for Morgan Stanley was extension and preservation of the Section-8 rals for health and legal services as well as not able to comment or provide additional housing affordability at Phelps House, a 169- for financial management, according to the info prior to publication. FTERE could not be unit multifamily building that provides an property’s website. The building also offers reached.—M.B. affordable option for seniors and people who recreational programs for residents. have mobility impairments and disabilities, “Goddard Riverside’s goal is to invest in according to Goddard’s website. The proceeds people and strengthen the community, and will also go toward capital improvements older adults are a key part of that picture,” such as plumbing renovation and accessibil- Goddard executive director, Roderick Jones ity upgrades. said in prepared remarks. “Goddard will “The Phelps House transaction exempli- be able to continue providing high-qual- fies the type of mission-driven preserva- ity housing at an affordable price for them tion of affordable housing that we love to ... The new resources will allow Goddard to be a part of,” Merchants Capital vice chair- enhance efforts to ensure those most in need man Mathew Wambua said in a prepared are helped.” statement. “We are grateful to Goddard Goddard offers a suite of programs such as for their vision and commitment to com- early childhood education and after-school munity, and we are deeply appreciative to programs and outreach to assist those living HDC, Housing Preservation & Development, with mental illness and homelessness. It pro- Freddie Mac, and Rockabill Consulting for vides more 540 units of housing in the city their partnership.” with on-site supportive services.—M.B. 1791 Walton Avenue. COURTESY: COSTAR COURTESY:

7 | MARCH 6, 2020

For a no obligation loan quote, or valuation of your property, please feel free to call: Paradigm Commercial Real Estate Cedarhurst, New York 11516

T 516.569.3454 • F 516.569.3831 www.paradigmcre.com

8 | MARCH 6, 2020 Investors, Developers Discuss Solutions to LA’s Homeless Crisis The affordability and homelessness crisis in California continues to exacerbate and com- pound resources, as construction costs, regula- tory hurdles, and corresponding rent increases and availability and production decrease. According to the homeless count last year, the city of Los Angeles saw the homeless population jump 16 percent to an estimated 36,165 individuals. Developers, investors and real estate experts con- vened at a ULI conference in Downtown L.A. last week to discuss their roles in addressing the issue. Dora Leong Gallo is president and CEO of the nonprofit developer A Community of Friends, which specifically houses people with mental health issues. She explained that the financing, the people served, and the opposition to supportive housing developments are different from what market-rate developers typically deal with. Most of those issues stem from the very reason Panelists at the conference discuss issues related to the homeless crisis. people are homeless in the first place: They don’t CAPITAL DEKEL COURTESY have a steady income to pay rent. Developers of be more expensive and take longer to complete. reports for any project that requires height or supportive housing then need to find a way to David Waite, a partner at Cox, Castle and zoning variances or includes high density. That make up for that lost revenue to keep a building Nicholson LLP, told Commercial Observer report often takes two years to complete, and operational, especially when it includes on-site how complex it can be addressing the different afterward, any individual is allowed to challenge services. needs of the crisis, and how the unique chal- and appeal the development via CEQA, which can “We need three funding sources — for con- lenges vary between short-term shelters and delay projects by years at a time. struction, the operations and the services,” Leong longer-term supportive housing. Temporary “Many of the people in the communities who Gallo said while speaking on a panel regarding shelters address the immediacy of the issue, and do not support supportive housing development the land use and financing challenges of creat- are typically larger and designed to accommo- are using CEQA as a tool to stop projects,” Leong ing supply. “We have to secure all of that before date more people. Gallo said. we start construction. We can’t start without all “They produce their own land-use challenges Angie Brooks, managing principal for archi- the other parts in place. And all these funding from the standpoint of neighborhood opposi- tecture firm Brooks + Scarpa, discussed other sources have different application cycles.” tion to those kinds of facilities,” he said. “There innate challenges in L.A., including unique zon- Even when developers can corral appropriate is strident opposition to them because the neigh- ing limitations. She pointed to Proposition U, funding for supportive housing projects, they borhood is concerned that they will become a which was approved by voters in 1986 and down- almost always run into neighborhood opposi- magnet for more people coming into their geo- zoned allowable height and size in more than 70 tion. In the past few years, proposed projects for graphic region.” percent of the city, further restricting the ability homeless people in neighborhoods like Venice, More long-term supportive housing develop- to build affordable multifamily projects. Koreatown, Sherman Oaks and throughout the ments create different challenges in regards to “We cannot build multifamily housing city were either stalled or stopped due to rampant available land and available buildings, land use by-right in most places where it needs to go cur- protests from local community members. and entitlements — “the very complicated capi- rently,” she said, on the panel with Leong Gallo. “We get opposition because of who we serve,” tal stack associated with tax credit-driven financ- “So, that means it needs to go through entitle- Leong Gallo said. “Of the three biggest challenges ing,” and on-site services, he said. ments and approvals, which takes years. And we have in developing permanent supportive “They still have the transaction impediment basically, a lot of times, what happens is we housing, community opposition is number one that they are extremely expensive to build,” Waite end up down-zoning and reducing the project — can’t get away from that.” said. “They have a very complicated capital stack, because of community opposition.” After 17 years with A Community of Friends, and those projects typically have a two- to three- Waite said even if the city can produce the Leong Gallo has personally been involved in year timeline to actually bring product to the needed supportive housing units and temporary almost 50 supportive housing projects. market ... It probably is a more certain path on shelters, it won’t stop the flow of people becom- “Of all those sites, only three have I ever not entitlement, but it has a more complicated path ing homeless in the first place, which stems from received community opposition,” she said. in terms of construction cost and capital stack the lack of available affordable housing. “Certainly, I’ve learned strategies and tactics and and financing and all the transaction issues asso- At the ULI conference, Michael Parks, presi- best practices that help get through the commu- ciated with getting everything to line up.” dent and CEO of Flyaway Homes, said the issue nity opposition, but the reality is it never ever Opposition from neighborhood groups fre- is not that they don’t know how to address the goes away.” quently includes the weaponization of the crisis. That opposition translates into more time for California Environmental Quality Act (CEQA), “We do know how to do it,” he said. “The the developer to work with communities and which was enacted 50 years ago. The law requires question will be, do we have the will to do it?” elected officials, which means the project will developers to complete environmental impact —Greg Cornfield

9 | MARCH 6, 2020 FEATURED SPEAKERS

MODERATOR OPENING REMARKS

WARREN DE HAAN MICHAEL FRANCO Managing Partner CEO ACORE Capital SitusAMC

LIMITED TICKETS LEFT AT $349 COMMERCIALOBSERVER.COM/FINANCINGCRENY

RONNIE LEVINE CHRIS NIEDERPRUEM Senior Managing Group Head, Real Estate THURSDAY, APRIL 23, 2020 Director Finance Meridian Capital Group CIT Group Inc. 8:00 AM - 12:20 PM THE METROPOLITAN CLUB NEW YORK, NY

DENNIS SCHUH DUSTIN STOLLY ACCESSING CAPITAL IN A CHANGING WORLD Debt Origination Officer Vice Chairman, Co-Head Starwood Property Capital Markets Debt and Trust Structured Finance As we start a new decade, industry experts must be increasingly adept Newmark Knight Frank at pivoting strategies in a continuously evolving playing field. Consumer behavior, emerging technologies and the growing volatility of the global economy are only a few of the factors impacting investment and financing trends. The ability to identify fleeting moments from long-term shifts is critical in determining which deals make sense today. The Finance MARK EDELSTEIN JAY NEVELOFF Forum Series: Accessing Capital in a Changing World will discuss current Partner, Chair – Partner Global Real Estate Group Kramer Levin Naftalis challenges in commercial real estate finance, opportunities for yield, how Morrison & Foerster LLP & Frankel LLP lenders are finding their edge in a competitive market and the strategies behind the industry’s most complex deals.

Join our expert speakers as they discuss: • If market distress is a cause for concern or a window of opportunity • Whether risky transactions are worth the reward MEGAN VALLERIE ROBYN REISS • Domestic and foreign investor strategies Partner Executive Director Seyfarth Commercial • Key differentiating factors between competing finance sources Observer • The pros and cons of working with owner-lenders in development deals

SPONSORS

LOOKING TO REACH THIS AUDIENCE? For speaking or sponsorship information contact [email protected]

10 | MARCH 6, 2020 The Takeaway

WeWork’s Growing Presence in New Issue Securitizations

“Given the amount of scrutiny surrounding WeWork CMBS Exposure - City/State Concentration WeWork after its highly publicized IPO pull State, City CMBS Note Count Total Exposure ($) and renewed concerns over the Silicon Valley Ariz. 1 61,800,000 cash-burning business mentality, Trepp has Phoenix 1 61,800,000 updated its CMBS exposure overview for the coworking giant,” wrote Catherine Liu, an Calif. 22 1,540,622,490 analyst at Trepp. Burbank 3 195,000,000 “Though we initially believed investor Hollywood 1 21,700,000 pushback would result in loans with WeWork Los Angeles 7 810,565,894 tenant roll exposure being squeezed out from Mill Valley 1 32,750,000 the collateral pools altogether, especially San Francisco 8 400,606,596 following news that it had abandoned leasing West Hollywood 2 80,000,000 talks for several high-profile Manhattan office spaces, servicer data shows that the firm has a Colo. 1 277,100,000 growing presence in new issue securitizations. Denver 1 277,100,000 The total CMBS footprint of loans for which D.C. 7 618,011,822 the firm appears as a top-five tenant has risen Washington 7 618,011,822 to more than $5.58 billion across 73 deals Ga. 3 251,243,015 based on deals that closed in February from a tally of $3.8 billion across 55 deals in October. Atlanta 3 251,243,015 “From a credit perspective, these loans have Ill. 1 32,369,217 a weighted-average loan-to-value and weight- Chicago 1 32,369,217 ed-average debt service coverage ratio of 57.30 Kan. 1 183,657,275 and 2.11x, respectively – while roughly 13 Overland Park 1 183,657,275 percent have been placed on servicer watchlist. Just in 2019 alone, approximately $2.5 billion Mass. 3 230,000,000 across 25 deals were issued with WeWork’s Boston 3 230,000,000 footprint representing a top-five tenant at an Mo. 1 28,389,828 office or mixed-used collateral. If you only look Kansas City 1 28,389,828 at the office component of this total – WeWork’s N.Y. 34 1,837,231,443 CMBS issuance overlap constitutes about 8 percent of the $30 billion in office loans issued Brooklyn 3 180,000,000 for the year. New York 31 1,657,231,443 “For the five month period ending in Feb- Ore. 1 19,500,000 ruary, there was an additional $1.76 billion in Portland 1 19,500,000 CMBS debt spanning 15 deals with WeWork Texas 1 115,620,578 listed as a top-five tenant. The most noteworthy among CMBS new issues include the $408.2 Houston 1 115,620,578 million loan behind the Wilshire Courtyard in Various 1 50,000,000 in Los Angeles, the $525 million backed by the Various 1 50,000,000 Midtown Center in Washington DC, the $150 Wash. 6 251,000,000 million secured by the Sunset North in Bellev- Bellevue 4 150,000,000 ue, Wash. In all three cases, WeWork is a top three tenant occupying more than 10 percent of Seattle 2 101,000,000 the collateral’s space.” Source: Grand Total 83 5,496,545,668

11 | MARCH 6, 2020 Q+A

Jay Rollins FINANCE WEEKLY Co-Founder of JCR Capital

Commercial Observer: Tell us about your equity business. 1 Whitehall Street, Jay Rollins: Our opportunistic fund, right New York, NY 10004 now, is not investing. Its investment period is 212.755.2400 over and it’s focused on harvesting. Our value-add fund has closed and is currently investing; that’s a net 12 [percent return] fund. And Cathy Cunningham then we’re in the market with our income fund. Deputy Editor, Finance It’s a net-10 percent return, and we started it because people were nervous and scared. The Mack Burke Finance Reporters income fund is based around our view that we were at the top of the cycle (or late cycle), people don’t want to take on as much risk. What we’re doing is providing preferred equity. We’re going Robyn Reiss from the detachment point of the senior loan Executive Director to about 85 percent of the capital stack. When you do that unleveraged, we feel like you have less risk than if you were taking on a leveraged Barbara Ginsburg Shapiro line. And as pref equity, it has a tax advantage to Associate Publisher it because it’s long-term capital gain, and then Jay Rollins. Brigitte Baron we’re amortizing it down through the sweep of JRC CAPITAL COURTESY Sales Director the cash flow because we’re doing these light value-add deals. So we may start out at 85 percent, the next six months or so. I wouldn’t want to be Jeffrey Cuyubamba but we end up at 75 percent by the time the deal a hotel lender right now, I’ll put it that way. Art Director is over. We feel that risk profile is appropriate for today’s marketplace. We carve out niches of the How do you see the next several months Stephanie Novak capital structure, and we’ll do either heavy rehab, playing out for the market, given the fear of Graphic Designer medium rehab or light rehab. And then where uncertainty created by factors like the election we put our money in the capital structure is the and the coronavirus? thing that really controls the triggering mecha- It looked like Bernie Sanders was running OBSERVER MEDIA GROUP nism on our return. unchecked and was running away with this, and Joseph Meyer I think that spooked a ton of people. And Biden, Chairman How do you feel the market’s faring, overall? for all his [problems], he’s a rational man who’s Credit standards are holding up very well. You going to surround himself with rational people. Michael Rose have a situation where property values are con- I think the industry — and I certainly don’t want Chief Executive Officer tinuing to increase, but lenders haven’t chased to make this too political — would, as a whole, For editorial comments or to the market up — traditionally, [they’ve] chased prefer a Trump presidency, because of its friend- submit a tip, please email Cathy it up. What’s happened is it has created a wider liness to the business, but I think it would cer- Cunningham at ccunningham@ equity gap. Real estate values are increasing, or tainly accept a Biden presidency. commercialobserver.com. staying high, and first trust lenders are not going My view of this virus is the current reac- For advertising, contact up that high. And so the amount of equity you tion may or may not be overblown. We just Barbara Ginsburg Shapiro need to get a transaction done is much more don’t know. But it has created this panic, and at [email protected] [than usual]. If you look back over time, the last the impact on the economy is going to be real, or call 212-407-9383. two big real estate recessions, both of them were whether the virus is real or not. Certainly what’s led by the first trust lenders. This time around, going on in China is real, and China is sort of the For general questions and concerns, they’re very constrained. I think the probabil- world’s manufacturing plant. And supply chains contact Cathy Cunningham at ity of an economic recession — and I wouldn’t are going to change, and people are trying to get ccunningham@ commercialobserver.com say a real estate recession — now is much, much out of China if they have a manufacturing rela- or call 212-407-9308 higher than [two weeks] ago, but the first trust tionship there. You could certainly see GDP go lenders will not have a big problem, because to zero. That doesn’t mean Armageddon for the To receive a trial subscription to they have underwritten deals conservatively. real estate industry. It just means that things Commercial Observer Everybody had a pretty decent year last year in are going to slow down. We’ve been waiting for Finance Weekly, the debt business, and it has been rocking for a a shoe to drop and this looks like the shoe. We contact Shannon Rooney number of years. We’ll see what happens over certainly could have a recession in front of us. at [email protected], or call 212-407-9367

12 | MARCH 6, 2020