Commercial Mortgage Alert

MARCH 18, 2016 CMBS Spreads Snap Back in a Sudden Rally In the sector’s first good news in months, commercial MBS spreads tightened 16 HIGH-YIELD-DEBT FUNDS dramatically this week amid a big rally in the broader bond market. The benchmark bonds of the latest conduit deal were being marketed a whop- 2 GGP Lining Up Refi of Regional Malls ping 30 bp tighter than comparable long-term, super-senior paper in the pre- 2 Wells to Finance REIT Acquisition vious transaction, which priced two weeks ago. The asking spreads were also significantly tighter on the subordinate investment-grade classes. As final pricing 2 Blackstone, KKR Demote CMBS neared yesterday, the whole transaction, WFCM 2016-C33, was heavily oversubscribed. 4 New Debate Over Latest ‘Basel’ Plan While the huge price jump suggests that the market has retraced its entire 6 AllianceBernstein Taps Loan Pro decline this year, traders and investors cautioned against drawing such a sweeping conclusion. For one thing, the WFCM’s deal size is relatively small — $712.2 mil- 8 Goldman Syndicating Hotel Debt lion, leaving a limited amount of bonds to sell. What’s more, there was significant pent-up demand after limited recent issuance. The real test, market pros said, will Advisory Firm Identifies New Focus 10 See RALLY on Page 14 12 Agency Lending Is at Record Pace 14 Prime Funds Buyer of Rental Portfolio 3 Banks to Write $1 Billion NY Office Loan 21 Bank, Fund Shop Back NY Office Deal Three lenders will originate a $1 billion mortgage on the office complex at 280 Park Avenue in Midtown Manhattan. 21 INITIAL PRICINGS Deutsche Bank, Bank of China and ING Real Estate Finance have committed to provide the floating-rate loan, which will have a five-year term and two one-year extensions. Deutsche is taking the lead role, but it’s unclear how the three banks are dividing the debt. An unknown portion will be syndicated to other lenders when THE GRAPEVINE the deal closes in the coming weeks. The 1.2 million-square-foot property is owned by a partnership between two of Originator Deepak Peruvemba will join New York’s largest office REITs,SL Green Realty and Vornado Realty, which began Rialto Capital next month as a manag- shopping for the mortgage late last year. The original proposal was for proceeds of ing director in Los Angeles. Peruvemba up to $1.2 billion. Multiple lenders who evaluated the deal said at the time that it was among those laid off this month by was a steep request. The initial speculation was that the property would meet most Morgan Stanley, where he was a senior lenders’ criteria for some $900 million to $1 billion of senior debt, with the rest originations officer. He joined the bank See BANKS on Page 22 three-and-a-half years ago after a stint at Dorado Realty Capital. At Rialto, he Debt Funds Rise as Traditional Lenders Sag reports to originations chief Brett Ersoff. Fund managers are seeking to raise a record $66.7 billion of equity to invest in Buy-side veteran Marc Dolfman was high-yield commercial real estate debt — primarily via the origination of loans. caught in a recent round of layoffs at The managers are aiming to exploit an onrushing avalanche of loans needing BTG Pactual, the troubled Sao Paulo to be refinanced, at a time when traditional investment bank. His last day in BTG’s balance-sheet and commercial MBS lend- Due to the annual break in our New York hedge-fund unit was Feb. ers are being constrained by regulatory spring production schedule, the 26. Dolfman had been running about changes and market turmoil. next issue of Commercial Mortgage $750 million of investments — mostly “The volume of pending maturities, the Alert will be dated April 1. commercial MBS, along with some disruption in CMBS and the continuing REIT stocks and bonds. Those holdings regulatory burdens on banks and other regulated lenders should result in increasing were sold in December and January to opportunity for private lenders,” said Jon Brayshaw, co-founder of Prime Finance, a meet a flood of investor redemptions. In New York investment firm. November, BTG founder Andre Esteves The $66.7 billion equity goal is 28% higher than the $52.1 billion sought by See GRAPEVINE on Back Page See DEBT on Page 19 March 18, 2016 Commercial Mortgage 2 ALERT GGP Lining Up Refi of Regional Malls million on the Algonquin Commons shopping center, a 565,000-square-foot property in Algonquin, Ill. Inland stopped General Growth Properties has tapped U.S. Bank and Wells making payments on two loans against the property in 2012, Fargo to lead a $1.4 billion refinancing package on a portfolio and special servicer C-III Asset Management eventually moved of regional malls. to foreclose. An affiliate of C-III is now operating the property U.S. Bank is acting as administrative agent and Wells as syn- and collecting payments as the case proceeds, but Inland still dication agent on the floating-rate loan, backed by 15 proper- holds title. The debt on the center was written byTIAA-CREF in ties around the country. It will have a three-year term and two 2004 and securitized in 2007, when the insurer issued bonds single-year extension options. backed by $2.1 billion of seasoned mortgages it had originated Many banks are familiar with the loan structure and the col- (TIAAS 2007-C4).  lateral pool from past deals. General Growth, a Chicago REIT, has refinanced roughly the same portfolio more than once in Blackstone, KKR Demote CMBS recent years, and each time a number of banks participated. The new loan will replace one of the same size that’s nearing Two major borrowers — Blackstone and KKR — told maturity, and it will be priced at the same level, 175 bp over attendees at an industry conference last week that they are sig- one-month Libor. The collection of mid-tier malls in second- nificantly scaling back their use of commercial MBS financing ary markets would generally receive wider pricing from lend- after having loans repriced during the recent wave of market ers, but General Growth is sweetening the deal by agreeing to volatility. recourse. The current loan carries a full repayment guarantee Blackstone’s global head of real estate debt, Michael Lascher, by the company. said his shop had previously tapped the CMBS market for about In its yearend filing, the REIT listed 14 malls backing the 55% of its mortgages, but has now lowered that percentage to existing $1.4 billion mortgage. General Growth apparently has about 20%. swapped some assets in and out of the collateral pool, as it has KKR, meanwhile, is totally shunning CMBS lenders after in past refinancings. But sources said the largest property — using them roughly 30% of the time, said Chris Lee, capital- the 1.6 million-square-foot Mayfair Mall in Wauwatosa, Wis. markets chief of the real estate group and co-head of real estate — remains in the package. General Growth’s 621,000 square credit. feet of owned space in the suburban Milwaukee mall accounts The executives spoke on March 9 at a closed session of the for almost $348 million of the proportional balance of the CRE Finance Council’s High Yield and Distressed Realty Assets current mortgage. The anchors are department stores Boston Summit, at the New York Athletic Club. Kroll summarized the Store, Macy’s and Nordstrom.  two lenders’ comments in a report without identifying them. But attendees subsequently confirmed that Lascher and Lee Wells to Finance REIT Acquisition were the speakers. Blackstone didn’t return a call seeking comment, and KKR declined to comment. Wells Fargo will provide about $1 billion of floating-rate Both executives were reacting to the fact that in recent mortgage debt on portions of a retail portfolio being acquired weeks, lenders frequently demanded last-minute increases in by New York fund operator DRA Advisors. loan spreads because of bond-market volatility. CMBS spreads DRA is purchasing Inland Real Estate, an Oak Brook, Ill., started widening out in the second half of last year, raising REIT that it plans to take private. The deal, announced in the cost of capital for securitization shops. The volatility grew December, is valued at $2.3 billion, including assumption of severe this year, forcing lenders to widen spreads on loans existing debt. Inland owns whole or partial stakes in 133 prop- without rate locks by as much as 50 bp above the quoted levels. erties, mostly grocery-anchored shopping centers, totaling 15.4 One attendee said, “The comments I heard were about the million square feet. difficult phone calls that these guys had been having with their The Wells mortgage will take out existing loans on some lenders through all the volatility.” Noting that Blackstone is one properties and place debt on others that are currently unen- of the biggest and most-influential borrowers in the market, cumbered. the attendee added: “If they had to reprice Blackstone, they had Wells is expected to syndicate a large chunk of the package, to reprice everybody.” which will have a three-year term, with two one-year extension Blackstone, one of the country’s biggest real estate investors, options. The acquisition is scheduled to close sometime before has borrowed billions of dollars in the CMBS market in recent midyear. years. KKR has borrowed on a smaller scale, but has also been As of yearend, Inland’s outstanding debt totaled $808 mil- active. lion, consisting of $393 million of secured, non-recourse mort- Borrowers aren’t the only ones unhappy about the recent gages and $415 million of unsecured debt in the form of draws turmoil. CMBS lenders also feel they have been put through on credit facilities and term loans. the wringer. For example, two lenders separately griped that Of the existing debt, $115.2 million of mortgages are due “overly aggressive borrowers” and “greedy bond investors” have to mature by the end of this year. That figure includes $90.2 See CMBS on Page 19 (;3(5,(1&((;(&87,21(;&(//(1&(

A LEADER IN COMMERCIAL LOAN SERVICING

SERVICING OVER $ BILLION IN LOANS AGENCY | CMBS | LIFE INSURANCE

NEW YORK t CHICAGO t ATLANTA t LOS ANGELES t NEWPORT BEACH DALLAS t MIAMI t SEATTLE t WASHINGTON, D.C. t SAN FRANCISCO BOSTON t DETROIT t COLUMBUS t ST. LOUISt NASHVILLE

www.ccre.com 212.915.1700 March 18, 2016 Commercial Mortgage 4 ALERT New Debate Over Latest ‘Basel’ Plan purpose entity.” That was viewed as a major problem in the U.S., where such vehicles are commonly used in commercial Industry groups are urging international bank regulators real estate financings in a way that has no bearing on risk. to further modify a proposed set of risk-based capital rules, to After winning on that point, groups such as theMortgage avoid creating new obstacles to commercial-mortgage lending. Bankers Association and CRE Finance Council are now focusing In recent comments to the Bank for International Settle- on new wrinkles that could also be problematic for lenders. ments, the trade groups praised one major change in the latest “It’s certainly a more manageable regime than was origi- proposal from its Basel Committee on Banking Supervision. nally proposed, but there’s still work that has to be done in Unveiled in December, it eliminated a controversial provision some areas,” said George Green, an associate vice president at that would have assigned higher risk weightings for loans and the MBA. credit facilities when the borrower was structured as a “special- While dropping the special purpose entity provision, the Basel Committee came up with a new leverage-based formula for assigning risk weightings to income-producing properties. The minimum weighting would be 80% for mortgages with a loan-to-value ratio of up to 60%. YOU CAN FINALLY BUY EVERYTHING It would be 100% for ratios of up to 80%, and 130% for loans with ON THE INTERNET higher leverage. U.S. bank regulators currently peg risk-based capital charges to a risk weighting of 100% on most commercial real estate debt and 50% on qualifying multi-family loans. Banks typically hold capital equal to 8% of the risk-weighted balance of their loans. In comments submitted to the Basel Committee ahead of last Friday’s deadline, the MBA said it favors the leverage-based approach, but wants the maxi- mum risk weighting reduced to SUBMIT OFFER 120% — in line with the proposed treatment of loans on income- producing residential properties. CREFC joined two other trade groups in asking the Basel Com- mittee to create another category of “very low risk” loans that would qualify for risk weightings below We’ve closed over $35 billion in real estate transactions. 80%. “It is possible to carry out a Now you can find Auction.com commercial properties on [commercial real estate] lending business on an extremely low-risk basis . . . [and] banks should be positively encouraged to do that,” according to a joint comment letter sent by CREFC, its European affiliate (CREFC Europe) and the www.ten-x.com U.K.-based Association of Prop- erty Lenders. For the leverage-based for- © 2016 Ten-X, LLC. All rights reserved. Ten-X, 1 Mauchly, Irvine, CA 92618 (800) 499-6199. mula to apply, a loan would have See BASEL on Page 20

SOLUTIONS $36,112,000 3-PROPERTY PORTFOLIO FANNIE MAE DUS® GEORGIA ■ $7,900,000 RETAIL CMBS MADI- SON, WI ■ $6,500,000 FHA 223(a)(7) BLOOMINGTON, IN ■ $18,017,719 FANNIE MAE MAH TACOMA, WA ■ $17,800,000 BRIDGE TO FHA YUMA, AZ ■ $37,300,000 FREDDIE MAC PROGRAM PLUS KISSIMMEE, FL ■ $25,000,000 CMBS FAYETTEVILLE, NC ■ $6,480,000 FANNIE MAE DUS® DALLAS, TX ■ $46,000,000 BRIDGE EAGLEVILLE, PA ■ $1,015,000 FREDDIE MAC SMALL BALANCE LOAN AUSTIN, TX ■ $17,737,500 CMBS MT. PLEASANT, SC ■ $9,450,000 FANNIE MAE DUS® MACON, GA ■ $51,597,000 2-PROPERTY PORTFO- LIO FANNIE MAE DUS® TEXAS ■ $1,025,000 FRED- DIE MAC SMALL BALANCE LOAN ROUND ROCK, TX ■ $13,250,000 BRIDGE TO FHA HORN LAKE, MS ■ $41,200,000 FREDDIE MAC PROGRAM PLUS NEWARK, NJ ■ $2,300,000 MIXED-USE FREDDIE MAC SMALL BALANCE LOAN CHICAGO, IL ■ $4,206,000 FANNIE MAE DUS® ROCK HILL, SC ■ $17,350,000 MULTIFAM- ILY – STUDENT HOUSING CMBS SAN MARCOS, TX ■

1.855.527.4381 Where People Matter [email protected] www.greyco.com

©2016 Greystone & Co., Inc. All rights reserved. Loan products are offered through Greystone Funding Corporation, Greystone Servicing Corporation, Inc. and/or Greystone affiliated companies. For more information please visit our website www.greyco.com or contact [email protected]. AA004 0316

March 18, 2016 Commercial Mortgage 6 ALERT AllianceBernstein Taps Loan Pro trial mortgages are also considered. The fund’s equity target is $2.3 billion. The New York invest- Veteran originator Peter Gordon has joined AllianceBern- ment manager is expected to reach that goal and hold a final stein as a managing director to help expand the firm’s bridge- close soon. lending platform. The first fund in the series, which had its final close in 2013, Gordon, who previously worked at Angelo, Gordon & Co., was has fully invested its $850 million of equity. named co-head of originations for AB Credit 2, a debt fund that Roger Cozzi is the chief investment officer of both funds and has raised about $2 billion of equity to date. Managing director heads the firm’s commercial real estate debt group. He is an Bryan Donohoe is the other co-head. alumnus of iStar Financial and Gramercy Capital. AB Credit 2 seeks to write loans of $30 million to $150 mil- Unlike most firms that compete for mid-size to large bridge lion on transitional properties across the country. The focus is loans, AllianceBernstein doesn’t employ leverage. That keeps office, hotel and multi-family properties, but retail and indus- its return target relatively modest — in the range of 400-600 bp over Libor. “There is capital that prefers the risk-return profile on unle- vered returns,” said one source. HUNT MORTGAGE GROUP “They’ve probably tapped into that and also avoided the head- COMMERCIAL LENDING aches that come with using [ware- house] line lenders, who can get FINANCING very restrictive when there’s volatility in the market.” OPTIONS FOR ALL The buzz is that AllianceBern- COMMERCIAL stein later this year could set up a fund that would buy and originate PROPERTIES mezzanine debt, using leverage to juice its return. Borrower demand for high-yield debt is likely to pick ½ FANNIE MAE up as the wave of 10-year loans originated at the 2006-2007 peak ½ FREDDIE MAC of the last cycle come due. ½ FHA Gordon, who started at Alli- ½ CONDUIT anceBernstein several weeks ago, was originations chief at New York- ½ BALANCE SHEET based Angelo Gordon. He previ- - BRIDGE ously worked at Goldman Sachs. Jay Nydick and Brahm Cra- mer launched AllianceBernstein’s commercial real estate group ORIGINATED OVER in 2009. They serve as co-chief $20 BILLION investment officers of the opera- tion, which also invests in proper- IN COMMERCIAL ties via funds.  LOANS

It is a violation of federal For information, contact: copyright law to reproduce any COMMERCIAL REAL ESTATE part of this publication or to William Hyman forward it, or a link to it, without 212.317.5750 first obtaining permission to [email protected] Commercial Mortgage Alert. To request copies for presentations or to expand your CERTAINTY OF EXECUTION. distribution rights, contact JoAnn Tassie at 201-234-3980 CLARITY OF THOUGHT. HUNTMORTGAGEGROUP.COM or [email protected]. We provide unparalleled insight and expertise for better real estate investment performance. CBRE turns scale into strength, square feet into strong returns, and property into prosperity. How can we help you transform your real estate into real advantage?

Build on cbrecapitalmarkets.com Advantage March 18, 2016 Commercial Mortgage 8 ALERT Goldman Syndicating Hotel Debt The lenders were victims of bad timing, because a subsequent spike in spreads has driven down the value of the loans. Shifting gears, aGoldman Sachs lending group is seeking to When the loans were originated late last year, for example, syndicate the $900 million senior portion of a $1.4 billion float- floating-rate bonds with a triple-A rating were trading at about ing-rate mortgage it wrote in December to finance Blackstone’s 150 bp over Libor. But the spread blew out to about 185 bp in takeover of Strategic Hotels & Resorts. the first quarter. The lenders originally planned to securitize the senior debt The buzz is that the Goldman team’s effort to place the $500 via a stand-alone commercial MBS deal. But falling bond prices million of mezzanine debt was complicated early on by rumors have made syndication more economical. that Blackstone planned to flip Strategic Hotels. Some potential Meanwhile, the Goldman group placed the $500 million investors wanted to know the buyer’s identity, but Blackstone subordinate portion of the debt package with multiple mezza- wasn’t ready to disclose it. Finally, this week, news broke that nine investors. A joint venture led by Ohana Real Estate of San China’s Anbang Insurance had agreed to buy the REIT for $6.5 Diego took down the most-junior $265 million piece, which is billion, paving the way for the Goldman group to finalize the pegged to 875 bp over Libor. sale of the last strip of unclaimed mezzanine debt. That piece The debt package was originated by Goldman (50%), was senior to the portion acquired by the joint venture led by Deutsche Bank (30%), Citigroup (10%) and Barclays (10%). Ohana, which is controlled by eBay founder Pierre Omidyar. Blackstone used it to help finance its $6 billion acquisition of Anbang will assume all of the debt arranged by Blackstone. Strategic Hotels, a Chicago REIT. The Goldman-led consortium’s choice to syndicate the $900 All told, Blackstone lined up $2.7 billion of debt on nine of million senior portion of its debt package means one less sin- the REIT’s 17 hotels. The $1.4 billion supplied by the Goldman gle-borrower deal for the already-sluggish pipeline of CMBS team is backed by seven properties. Goldman solely originated transactions. a $700 million balance-sheet loan on the 757-room Hotel del The collateral for that debt includes Four Seasons hotels in Coronado in Coronado, Calif. And Morgan Stanley originated a Austin (291 rooms); Scottsdale, Ariz. (210 rooms); East Palo $600 million balance-sheet loan on the 1,195-room Westin St. Alto, Calif. (200 rooms); and Jackson Hole, Wyo. (124 rooms). Francis in San Francisco. The other hotels are the 687-room Fairmont Chicago, the 649- The three loans have terms of up to five years, including room Fairmont Scottsdale and the 396-room Ritz-Carlton extension options. Laguna Niguel in Dana Point, Calif. 

CONDO PROJECTS ON THE HORIZON? WE’RE READY TO HELP.

As the industry’s leading specialist in condo projects – from the smallest to the tallest – Trimont has administered more than 250,000 residential units for more than 3,300 deals.

We’re experienced in ground-up construction, major conversions, renovations and large-scale mixed-use projects, whether ﬁnanced by debt or equity.

If you’re ready to get in on the condo market, we’re with you all the way. TRIMONTREA.COM Contact us today to see how we can help you make the most of your investment. [email protected] Deep, lasting relationships

Our focus on the client relationship has helped make us the largest commercial real estate lender nationwide. We work together with you, delivering unparalleled service and expertise to help sustain and grow your business. Backed by the strength of Wells Fargo, you’ll have access to our broad platform of capital solutions and banking services designed to meet all of your commercial real estate ﬁnance needs.

Commercial Real Estate Stability • Commitment • Strength • Credibility

wellsfargo.com/realestate

WCS-2002842 CRE-Real Estate platform ad-3.indd 1 3/4/16 4:39 PM March 18, 2016 Commercial Mortgage 10 ALERT Advisory Firm Identifies New Focus Summer Street also seeks a business-development professional, preferably with 5-10 years of commercial real estate Summer Street Advisors plans to add staff as it moves to banking experience. drum up more business from mid-size banks and other lenders While CMBS-related advisory work is still expected to pushing into commercial-mortgage investments. account for about 20% of Summer Street’s business this year, The Westport, Conn., firm provides loan-underwriting and that’s down by roughly half since last year. Meanwhile, the firm advisory services to institutional investors, commercial MBS continues to handle other assignments from portfolio lenders, shops, rating agencies and other clients. With the recent slow- fund shops and the federal mortgage agencies. down in CMBS issuance and lending, it wants to become more “The CMBS business will come back in some form eventu- involved in helping smaller banks, foreign firms and other bal- ally, as issuers figure out how to deal with the regulatory issues ance-sheet lenders that are jumping in to fill the void. and other obstacles facing the market,” Mullen said. “But we “We’re pivoting away from CMBS a little bit, to work with have to adjust in the meantime, and we need to make sure we second-tier banks that need help in thinking about credit, have the right people in the seats to execute our new game monitoring loans and managing their portfolios,” said manag- plan.” ing director Jack Mullen, who runs Summer Street. This isn’t the first time Summer Street has shifted to reflect Plans call for adding four staffers to the firm’s eight-member changing market conditions. Mullen launched the firm in roster in the near future, including a senior loan underwriter 2009, after six years at GE Capital, to provide analytics and risk- with at least 10 years of experience, a mid-level underwriter management services to clients that owned or wanted to buy and a junior mortgage analyst. The hiring of the senior under- stakes in distressed commercial real estate equity and debt. writer, in particular, would free up some of Mullen’s time to After a few years, he started refocusing on other opportunistic focus on the firm’s new direction. investments, as well as CMBS and agency loans. 

$32,000,000 $19,290,000 $17,050,000 Office/Retail Industrial Multifamily 777 East 10th Street 615 Alpha Drive Regalia Mansfield Los Angeles, CA Pittsburgh, PA Mansfield, TX

$20,500,000 $2,587,500 $30,000,000 RV & Mini Storage Retail Office Quality RV & Storage Portfolio Paradise Shoppes at Cocoa 324 South Service Road Houston, TX Cocoa, FL Melville, NY

www.MCFiveMile.com | [email protected] | (212) 485 - 2580 1330 Avenue of the Americas, 6th Floor New York, NY 10019 Starwood Property Trust The Largest Commercial Mortgage REIT

Over $26 Billion of Capital Deployed Since Inception

Seamless One-Stop Execution For Every CRE Borrowing Need

Visit our newly relaunched website www.starwoodpropertytrust.com

New York • Greenwich • Miami • Atlanta • Chicago San Francisco • Los Angeles • London • Paris

© 2016 Starwood Property Trust, Inc. Trade/service marks are the property of Starwood Property Trust, Inc. All rights reserved. Restrictions apply. Some products are not available in allstates. This is not a commitment to lend. March 18, 2016 Commercial Mortgage 12 ALERT Agency Lending Is at Record Pace business is high because other markets are so restricted,” said one lender at a leading agency shop. Fannie Mae and Freddie Mac continued purchasing multi- The torrid pace of purchases could prompt the agencies’ reg- family loans at a blistering pace in February. ulator, the Federal Housing Finance Agency, to increase the loan The agencies acquired $11 billion of mortgages from their caps it has set. The regulator has already said it will review the approved lenders last month, on top of $11.9 billion in Janu- caps quarterly, with the possibility of increasing them if condi- ary. That $22.9 billion total was up 68% from $13.6 billion a tions warrant. The first review is expected in May, market pros year earlier and put the agencies on an astounding $137 billion said. annual pace — far ahead of last year’s $89.6 billion record. Meanwhile, the fast start to the year could force Fannie and To be sure, no one thinks that rate of purchases can be sus- Freddie “to pump the breaks for a couple of months” by rais- tained. For one thing, much of the activity stemmed from a backing loan spreads again to depress originations by agency lend- log of giant purchase commitments from the fourth quarter, and ers, one lender said. The two agencies widened loan spreads the agencies have now whittled much of that down. Also, Fannie in mid-February by 15-20 bp on multi-family mortgages in an and Freddie each have a $31 billion limit this year on purchases effort to slow volume, but activity has begun to climb again of loans on properties that aren’t classified as affordable. because borrowers have limited alternatives, lenders said. But the agencies are clearly on track for another extremely Fannie and Freddie delayed purchasing some loans from active year. And with banks and conduit programs under pres- their lenders late last year to avoid exceeding their 2015 caps. sure because of regulatory changes and market turmoil, bor- Freddie had a larger backlog and still has some $8 billion of rowers are increasingly turning to the agencies. “Incoming delayed purchases pending. 

INNOVATIVE CAPITAL SOLUTIONS

MORRISON STREET CAPITAL Morrison Street Capital is your trusted source for small balance mezzanine debt and preferred equity.

$2 Million to $10 Million funding amounts Up to 10-year terms Full term I.O. available Nationwide footprint All product types considered )DVWÀH[LEOHHI¿FLHQW

Justin Dennett 503 952 0794 Ryan Norwood 718 578 4201 David Tindall 503 952 0790 [email protected] [email protected] [email protected]

PORTLAND NEW YORK www.morrisonstreetcapital.com

CMA half page ad 2.24.16.indd 1 3/14/2016 9:36:51 AM COMMERCIAL REAL ESTATE

$120,000,000 $63,500,000 $34,000,000 $54,300,000 First Mortgage Mezzanine Loan First Mortgage First Mortgage Refinancing Acquisition Acquisition Acquisition Mixed Use National Suburban Multifamily Office Baton Rouge, LA Office Portfolio Chicago Area Baltimore, MD

$79,000,000 $51,480,000 $10,000,000 $43,500,000 First Mortgage First Mortgage B Note First Mortgage Acquisition Acquisition Refinancing Acquisition Office Office Full Service Hotel Multifamily New York City, NY Philadelphia, PA Long Island, NY Dallas, TX

FOR MORE INFORMATION, CONTACT: Jack Taylor: (212) 364-5491, [email protected] Steven Plust: (212) 364-5493, [email protected] Stephen Alpart: (212) 364-5492, [email protected] Peter Morral: (212) 364-5486, [email protected]

590 Madison Avenue, 38th Floor, New York, NY, 10022 | WWW.PRCM.COM INTELLECTUAL HONESTY | COMMON PURPOSE | UNCOMPROMISING IMPROVEMENT | ENDURING VALUE

This is neither an offer to sell nor a solicitation of any offer to buy the securities of any fund managed by Pine River Capita l Management L.P. March 18, 2016 Commercial Mortgage 14 ALERT Prime Funds Buyer of Rental Portfolio two-bedroom units and amenities that include a 24-hour fit- ness facility, a resort-style pool and sand volleyball courts.  Prime Finance has originated a $230 million acquisition loan on 16 apartment complexes, mostly in the Southeast. Rally ... From Page 1 The New York fund operator closed the floating-rate mortgage Wednesday for a joint venture between Providence Man- be whether the new levels can hold on subsequent transactions. agement of Glenview, Ill., and New York-based Stonecutter Still, beaten-down CMBS executives were heartened by the Management. The duo purchased the 3,858-unit portfolio from big move — and by the fact that spreads also tightened in the a partnership among Fortress Investment and Wharton Equities, secondary market. Benchmark bonds floated last year were both of New York, and B.H. Management of Des Moines, Iowa. changing hands yesterday at 127-132 bp, down from 145-150 bp The sale price was undisclosed. a week ago. Seasoned bonds typically command lower spreads The five-year loan includes a $20 million future-funding than new-issue paper because they trade in smaller amounts. component for planned upgrades to the garden-style com- The WFCM transaction is backed by loans supplied by six plexes, which were constructed from the 1970s through the late lenders: Wells Fargo, Ladder Capital, Rialto Capital, Natixis, C-III 1990s. Prime funded the nonrecourse loan via Prime Finance Commercial Mortgage and NCB. Wells, the bookrunner, initially Partners 4, its $800 million closed-end debt fund. shopped the benchmark class at 143 bp over swaps — a level The portfolio contains seven properties in South Carolina, that hasn’t been seen since December. Buyers quickly lined up, three each in Kentucky and North Carolina, two in Kansas and and the class was more than four times oversubscribed at the one in Georgia. asking price. So yesterday, Wells began testing whether there The largest is the 456-unit Views on Longcreek, at 1800 was enough demand to tighten the spread to 138 bp. Longcreek Drive in Columbia, S.C. Built in 1975, the complex The other investment-grade classes also found strong demand, is spread over 24 acres and has one- to four-bedroom units. so Wells was trying to tighten the asking levels on them as well. Amenities include four swimming pools and a lighted tennis It was shooting for a 700-bp spread on the triple-B-minus paper, court. down from initial price talk of 750-bp area and from 825 bp in Another large property is The Club at Cherry Hills, a 348- the corresponding tranche of the previous conduit deal. unit complex at 2200 South Rock Road in Wichita, Kan., that Before the WFCM offering, the benchmark spread had was built in 1978 and renovated in 2000. It has studio, one- and priced in the range of 151-173 bp since the start of this year, up from 136-140 bp in December. The 173-bp spread on the conduit deal that priced two weeks ago — COMM 2016-DC2 — was the highest since September 2011. CMBS spreads have subsequently contracted for a number 1000 participate including 500+ REITs, Funds, Buy and Hold & Fix and Flip Investors and of reasons, including recent rebounds in the stock and cor- Note/NPL & ABS Bond Buyers porate-bond markets and the Federal Reserve’s decision this week to hold interest rates steady. “We went from feeling as bad as it’s felt for years to feeling good pretty quickly,” said one CMBS trader. “The spread move kind of looks shocking, but it’s really not,” another trader said. “CMBS has been seriously lagging behind what’s going on in the rest of the market.” Meanwhile, the WFCM offering was also benefiting from its high-quality collateral, according to traders and investors. The transaction’s weighted average loan-to-value ratio is a relatively low 59%, and the debt yield — net operating income divided by loan size — is a hefty 14%. Limited recent issuance was also a factor. “There hasn’t been a lot of supply, and there’s not much coming soon, so real- Don’t Forget To Mention Discount Code money buyers are stepping up,” said one investor. “HSP” For 10% Savings Elsewhere in the new-issue market this week, Citigroup and Goldman Sachs began marketing a $1.8 billion offering backed by a portion of a $3 billion debt package they originated to help finance Blackstone’s $8 billion acquisition of San Diego-based BioMed Realty, on Jan. 27. The collateral pool of the securitiza- Call: 1-212-901-0542 | Email: [email protected] tion (CGGS 2016-RND) consists of a $1.1 billion fixed-rate loan www.imn.org/sfr16 and a $658 million floating-rate mortgage that aren’t cross-col- lateralized. The loans are backed by 58 lab/office properties and an apartment building.  MBA’s COMMERCIAL�/ MULTIFAMILY SERVICING AND TECHNOLOGY CONFERENCE 2016

MAY 22–25 SHERATON DALLAS DALLAS, TX

Advance MBA’s Commercial�/�Multifamily Servicing and Technology Conference 2016 can help you advance your business and professional performance in the year ahead. Join us for a dynamic conference packed with networking opportunities and much more, including: • State of the Industry Sessions • Peer Roundtable Discussions • Industry Expert Panels • Professional Development Special Events

Make your plans today to network and learn from the most important and inﬂuential commercial�/�multifamily real estate leaders in our industry!

EARLY REGISTRATION SAVINGS END APRIL 18.

16102 MBA.ORG/CREFST16 March 18, 2016 Commercial Mortgage 16 ALERT

HIGH-YIELD-DEBT FUNDS Vehicles Primarily Investing in Loans

Proj. Equity Equity Equity Raised Invest. Target Fund Size 3/16 3/16 Return Asset Target Sponsor Acquisition Contact ($Mil.) ($Mil.) ($Mil.) (%) Type Areas Angelo, Gordon & Commercial Real Estate Debt Opportunities $750 $0 $0 12-14 CMBS U.S. Co. Andrew Solomon, 212-692-2000 BlackRock Carbon Capital Fund 6 750 0 0 10 Mezz. (acq. and U.S. Clint Soose, Mark Kramer, 412-768-2159 origination) Blackstone Blackstone Real Estate Debt Strategies 2 4,184 4,184 2,000 13 Senior loans, sub. U.S. Jonathan Pollack, M. Nash, 646-482-8878 debt, CMBS Blackstone Real Estate Debt Strategies 3 4,000 1,500 0 12-15 Senior loans, sub. U.S., Europe Jonathan Pollack, M. Nash, 646-482-8878 debt, CMBS Bloomfield Capital Bloomfield Capital Income Fund 2 60 60 24 10-13 Bridge loans, debt U.S. Nicholas Coburn, 248-745-1700 acquisition Bloomfield Capital Income Fund 3 75 9 10-12 Bridge loans, debt U.S. Nicholas Coburn, 248-745-1700 acquisition Bridge-IGP ROC Debt Strategies Fund 500 190 118 10-12 Mortgage U.S. Jim Chung, 646-453-7101 origination Brookfield Asset Brookfield Real Estate Finance 4 1,375 1,375 950 13 Mezzanine U.S. Management Andrea Balkan, 212-417-7277 Brookfield Real Estate Finance 5 1,375 Mezzanine U.S. Andrea Balkan, 212-417-7277 Calmwater Capital Calmwater Real Estate Credit Fund 3 750 12-14 Diverse U.S. cities David Cohen, Matt Schwab, 310-806-9770 Cantor Real Estate (Unnamed vehicle) 400 10+ Bridge loans U.S. Jon Vaccaro, Eric Schwartz, 212-938-5000 C-III Capital C-III High Yield Real Estate Debt Fund 4 135 135 29 10-13 CMBS, B-pieces, U.S. Bob Lieber, 212-705-5050 loans Colony Capital Colony Distressed Credit & Sp. Situations 4 2,500 689 344 13-14 Distressed loans, U.S. (30%), Kevin Traenkle, 310-552-7212 mezzanine Europe Contrarian Capital Contrarian Distressed Real Estate Debt 3 450 280 115 17 Mortgages, U.S. Brett Rowland, 203-862-8239 CMBS, fore. prop. Eightfold Real Estate Eightfold Real Estate Capital Fund 4 293 293 CMBS, B-pieces, U.S. Capital Randy Wolpert, 305-503-4054 loans First Capital Real First Capital Real Estate Fund 1 200 50 0 12 Pref. eq., mezz., U.S. Estate Scott Ward, Suneet Singal, 916-526-2885 senior, constr. Fortress Investment Fortress Japan Opportunity Fund 3 1,100 1,100 252 16+ Distressed loans, Japan Thomas Pulley, 212-798-6100 originations G4 Capital G4 Capital Partners 3 250 0 0 8-11 Bridge loans New York, Jason Behfarin, 516-931-0095 California Goldman Sachs Broad Street Real Estate Credit Partners 2 1,800 1,800 13-15 Diverse U.S., Europe Alan Kava, 212-902-1000 H/2 Capital H/2 Special Opportunities 3 1,500 1,500 12+ Diverse U.S. Spencer Haber, 203-569-4000 Heitman Heitman Debt Partners 75 75 38 11-13 Mezzanine U.S. Greg Leadholm, 312-849-4174 Funds denominated in foreign currencies indicated by currency symbol, with amounts shown in U.S. dollars. Continued on Page 17

March 18, 2016 Commercial Mortgage 17 ALERT

HIGH-YIELD-DEBT FUNDS

Continued From Page 16

Proj. Equity Equity Equity Raised Invest. Target Fund Size 3/16 3/16 Return Asset Target Sponsor Acquisition Contact ($Mil.) ($Mil.) ($Mil.) (%) Type Areas JCR Capital JCR Commercial Real Estate Finance Fund 3 $330 $330 $120 16-18 Diverse Western U.S. Investment Jay Rollins, 303-501-8880, ext. 202 Kayne Anderson (Unnamed vehicle) 500 0 0 10+ Mezzanine U.S. Real Estate Albert Rabil, 917-767-3131 Knighthead Funding Knighthead Special Situations Real Estate 2 250 10-11 Originate bridge U.S. Jonathan Daniel, 203-327-3327 loans KSL Capital KSL Capital Partners Credit Opportunities 386 386 154 11-14 First mortgages, U.S., U.K. Craig Henrich, 203-989-3980 mezzanine debt LaSalle Investment LaSalle Real Estate Debt Strategies 2 (£) 926 926 417 Whole loans, U.K., Claus Thomas, 49-892-111-1340 mezzanine Germany Latitude LM Real Estate Capital Fund 4 500 10-11 Bridge loans U.S. Management Glenn Sonnenberg, 310-234-2101 Lone Star Funds Lone Star Real Estate Fund 3 6,600 6,600 3,200 25 Diverse U.S., Japan, Andre Collin, 214-754-8300 Europe Lone Star Real Estate Fund 4 5,900 5,900 0 20+ Diverse Global Andre Collin, 214-754-8300 Lone Star Real Estate Fund 5 5,000 25 Diverse Eur. (80%), Andre Collin, 214-754-8300 U.S.. Japan M&G Investments M&G Real Estate Debt Fund 2 (£) 934 934 46 12-15 Mezzanine debt Western John Barakat, 44-207-548-6600 Europe Madison Realty Madison Realty Capital Debt Fund 3 600 485 92 10+ Dis. debt, mezz., U.S. Capital Adam Tantleff, 646-442-4135 pref. eq., loans Mesa West Capital Mesa West Real Estate Income Fund 4 750 514 0 9-11 Whole loans, U.S. Jeff Friedman, 310-806-6300 mezz., bridge Metacapital Metacapital Commercial RE Finance 250 Originate bridge U.S. Management Deepak Narula, A. Zezzo, 212-300-0500 loans MKP Capital MKP CRE Fund 2 75 10+ CMBS, mortgages U.S. Steven Gordon, 201-303-7100 Morrison Street Morrison Street Debt Opportunities Fund 200 100 17 12 Mezzanine U.S. Capital Rance Gregory, 503-952-0700 Northlight Financial Northlight Real Estate Opportunity Fund 2 200 0 0 14-18 Diverse U.S. Ben Gerig, 646-452-9973 NorthStar Asset NorthStar Real Estate Credit Fund 3,000 0 0 10 Diverse U.S. Management Daniel Gilbert, 212-547-2600 Oaktree Capital Oaktree Real Estate Debt Fund 1,112 1,112 385 11-13 CMBS, first mort., Global John Brady, 213-830-6300 mezz, unsec. Och-Ziff Capital Och-Ziff Real Estate Credit 800 0 0 10-13 Senior, mezz., U.S. Steven Orbuch, 212-790-0105 transitional One William Street OWS Commercial Funding Funds 1/2 500 350 100 15 CMBS, distressed, U.S. Capital Frank Prezioso, B. Gersten, 212-957-2525 mezz,, pref. eq. PCCP PCCP Credit 6 909 909 345 11 Senior loans, U.S. Bill Lindsay, 310-414-7868 mezzanine Pearlmark Real Pearlmark Mezzanine Realty Partners 4 400 65 30 10-12 Mezz., pref. U.S. Estate Douglas Lyons, 312-499-1952 equity, senior Continued on Page 18

March 18, 2016 Commercial Mortgage 18 ALERT

HIGH-YIELD-DEBT FUNDS

Continued From Page 17

Proj. Equity Equity Equity Raised Invest. Target Fund Size 3/16 3/16 Return Asset Target Sponsor Acquisition Contact ($Mil.) ($Mil.) ($Mil.) (%) Type Areas Pembrook Capital PCI Investors Fund 3 $300 $50 $0 12 Senior, mezz., U.S. Paul Mullaney, 212-906-8685 bridge/constr. Pramerica Real Pramerica Real Estate Capital 6 (£) 1,387 693 12 Diverse U.K., Ireland Estate Investors Andrew Macland, 44-207-766-2445 Prime Finance (Unnamed vehicle) 400 0 0 10+ CMBS U.S. Luke Dann, 212-896-0006 Prime Finance Partners 5 800 0 0 10 Loan origination U.S. Jon Brayshaw, 212-231-9071 Quadrant Real Quadrant Enhanced Debt Fund 700 0 0 10+ First mortgages U.S. Estate Tom Mattinson, 770-752-6714 Raith Capital Raith Real Estate Fund 1 208 208 15-17 CMBS, distressed U.S. Nelson Hioe, 212-938-6991 loans RCG Longview RCG Longview Debt Fund 6 400 0 0 12-14 Mezz., pref. U.S. Richard Gorsky, M. Boxer, 212-256-9282 equity, senior Related Cos. (Unnamed vehicle) 2,000 0 0 10+ Mezzanine U.S. Justin Metz, 212-801-3392 Revere Capital Revere High Yield Fund 250 175 165 13-16 Distr. mortgages, East Coast, Clark Briner, 203-424-0888 bridge loans Sunbelt Rialto Capital Rialto Real Estate Fund 3 1,700 700 100 14-17 Diverse U.S. Jeffrey Krasnoff, Jay Mantz, 305-485-2065 RiverRock European RiverRock European Real Estate Fund (€) 220 Mezzanine loans Germany, Capital Nicolaus Harnack, 44-207-842-7650 (origination) other Euro. Seer Capital Seer Capital Commercial Real Estate Debt 1 250 60 15 CMBS, B-pieces U.S. Karen Weaver, R. Parkus, 212-850-9000 Square Mile Capital Square Mile Credit Partners 750 550 175 10 Whole loans, U.S. Jeffrey Fastov, 212-605-1000 bridge, mezz. Square Mile Tactical Partners 350 350 150 12 Diverse U.S. Jeffrey Fastov, 212-605-1000 Stonehill Strategic Stonehill Strategic Hotel Credit Opportunity 53 53 6 Hotel financing U.S. Capital Robert Woomer, 404-953-4953 Talmage Talmage Total Return Partners 250 200 115 10-15 CMBS, B-notes, U.S. Edward Shugrue, 212-209-1388 mezz., senior Terra Capital Terra Income Fund 1,500 350 300 11 Diverse U.S. Dan Cooperman, 212-753-5100 Thorofare Capital Thorofare Asset Based Lending Fund 4 300 200 62 10 Senior mortgage U.S. Kevin Miller, 213-200-2519 orig., diverse Torchlight Investors Torchlight Debt Opportunity Fund 5 1,300 1,300 300 13-15 CMBS, mezz., B- U.S. Daniel Heflin, 212-883-2551 notes, new loans True North True North Real Estate Fund 3 548 548 200 17+ Distressed loans, U.S. Management Paul Turovsky, B. Morris, 914-304-8763 properties Tyndaris Tyndaris European Comm. RE Finance (£) 380 380 141 12-15 Origination, acq., Europe Clark Coffee, 44-203-540-2007 securities

March 18, 2016 Commercial Mortgage 19 ALERT

The 64 active debt funds are sponsored by 57 individual Debt ... From Page 1 operators, up from 53 last year. But big players dominate the funds last year — the previous high, according to an annual sector. Five firms alone account for half of the equity being review of high-yield funds by sister publication Real Estate sought — Blackstone, Brookfield Asset Management, Colony Alert. The review identified 64 active funds that seek a return Capital, Lone Star Funds and NorthStar Asset Management. of at least 10% by investing primarily in commercial mort- The active debt funds have already raised $37.7 billion, or gages, mezzanine loans or other real estate debt. That was up 56.5% of their aggregate target, down from 68.4% a year ago. from 56 last year (see list of funds on Pages 16-18). The capital-raising environment isn’t easy, according to The number of funds remains below the record of 73 set in Briner, whose Revere High Yield Fund invests in distressed 2009, when investment managers were aggressively seeking mortgages, bridge loans and other debt. Debt-fund investors to raise capital to scoop up distressed assets after the mar- “have become more risk-averse given the uncertainty of the ket crash. The current crop of vehicles, by contrast, is largely investment environment,” he said. “As such, we expect pro- focused on loan origination. jected equity raises to be below expectations and a significant Overall, the fund review identified 452 active commingled number of the funds to not reach their goals.” vehicles that invest in commercial properties, debt or both, But debt-fund managers said their efforts to solicit capi- up from 440 last year. The vehicles are seeking to raise $311 tal should benefit from recent market volatility that has billion of total equity. The $66.7 billion being sought by the increased the riskiness of equity plays. “The safe haven of debt-fund component accounts for 21.5%. That’s the highest debt now looks more appealing,” Friedman said. share since the annual review began in 2003, exceeding the He added that established managers have a big leg up on previous record of 18.7% set last year. attracting capital. “The firms that have been able to actively Vehicles are considered active if they are still raising capi- raise capital over a handful of years, and that didn’t get nailed tal or if they have already held final closes but have invested in the financial crisis, can still do it in today’s market,” he said. less than 75% of their equity. So each year, a rotating group “The startups, those that don’t have the track record, are hav- of funds is counted. This year, 32 debt vehicles were added to ing a challenging time raising money.” the list, twice the number that joined the list in 2015. Twenty- Of the 64 debt funds, 52 invest or plan to invest solely in four fell off because they passed the 75% threshold. the U.S., six focus only on non-U.S. plays, and the remaining Debt-fund managers see a potential bonanza: The huge six have a global strategy. amount of 10-year mortgages originated during the 2006- Some property funds can also make debt investments, but 2007 market peak that need to be refinanced, in many cases usually do so sparingly. Among the 452 total equity and debt by borrowers that are overleveraged and need high-yield funds, 126 — or 28% — buy or originate debt to some extent, financing. down from 32% last year. Meanwhile, commercial banks — which would be Real Estate Alert’s review tracks closed-end funds with expected to refinance many of those loans — are pulling back yield targets of at least 10%. Funds are classified as debt from the origination of short-term loans, especially on tran- vehicles if they intend to invest at least half of their equity sitional or other risky properties, because increased capital in the origination of loans or in the acquisition of loans or requirements and other regulatory changes are sapping the debt securities. Funds are included if they raise capital at least profitability of such investments. partly from U.S. investors or invest mostly in U.S. commercial The regulations have “made those banks more risk averse, real estate. Joint ventures, separate accounts and open-end driving marginal borrowers to private funds,” said Clark Bri- funds are excluded.  ner, founder of Revere Capital, a fund operator in Norwalk, Conn. CMBS ... From Page 2 In recent months, another development favoring debt funds has emerged: Bond-market volatility has hammered made things worse. CMBS lenders, prompting them to sharply reduce lending “The borrowers hire brokers to go out and shop the loan overall. Also, those lenders have frequently increased the assignment around to competing lenders, until there is not a loan spreads initially quoted to borrowers and have some- penny of profit left in these loans,” the first lender complained. times declined to proceed with loans at all. That has created “We’ve been seeing situations where the broker actually makes an opening for debt funds. “A bit of market volatility is good more profit than the lender. The broker takes no risk, but he for us, because of our certainty of execution,” said Jeff Fried- makes half a point of profit, while the lender takes all the risk, man, co-founder of Los Angeles fund shop Mesa West. and doesn’t even get half a point.” All isn’t rosy, however. The recent tightening of credit The other lender focused on what he called overly demand- has slowed property sales and early refinancings by owners, ing bond investors. “They want to pay less and less for a prod- depressing lending opportunities. Nevertheless, many expect uct that they’re putting all kinds of new demands on, and we pent-up demand to drive up financing activity in the second can’t create the product at the prices they are willing to pay,” half of this year. he said.  March 18, 2016 Commercial Mortgage 20 ALERT

the rules U.S. regulators have set under the existing “Basel 3” Basel ... From Page 4 standards. The current rules allow a risk weighting of 100% on to meet a new set of “prudent valuation criteria.” If it didn’t, project loans if the leverage is 80% or less and the borrower’s the risk weighting would increase to 150%. The trade groups up-front capital contribution is at least 15% of the project’s “as- asked for several adjustments to those criteria. In particular, completed” value. Otherwise, the debt is considered a “high-vol- the letter signed by CREFC called for removal of a proposed atility commercial real estate” loan and risk-weighted at 150%. prohibition on valuing a property above its current market “One size does not fit all for ‘ADC’ loans and the U.S. value. The groups argued that this would make it harder to approach recognized that,” Green said in an interview this recover after a property-market crash, when market values week. Still, he noted that the MBA continues to work with fed- are depressed. “That is the point in the cycle when regula- eral regulators to resolve lingering uncertainties about loans in tion should be gently encouraging cautious banks to provide the high-volatility category. credit,” they wrote. The latest BIS proposal is a revision of one floated in late The MBA also raised concerns that the provision would con- 2014. Whether the Basel Committee will make any further flict with well-established appraisal practices in the U.S. and changes in response to the latest round of comments is uncer- other countries. tain. But Green said it’s important to put the industry’s concerns Meanwhile, the MBA objects to the Basel Committee’s new on record, because U.S. bank regulators — who participate in plan to assign a flat 150% risk weighting for “acquisition, devel- crafting BIS guidelines — will eventually have to decide on how opment or construction loans.” That would run counter to to implement them at home. 

Tomorrow’s Opportunities

Commercial Mortgage Alert, the weekly newsletter that guarantees your edge in real estate finance and securitization.

Start your free trial at CMAlert.com or call 201-659-1700 March 18, 2016 Commercial Mortgage 21 ALERT Bank, Fund Shop Back NY Office Deal A small portion of the mortgage is set aside as a future- funding component to assist with leasing or tenant improve- Morgan Stanley is teaming up with Blackstone to provide ments. Meanwhile, roughly half the proceeds presumably will $335 million of debt for the purchase of an office building on be used to retire a $170 million floating-rate loan that MetLife Manhattan’s East Side. wrote on the property in 2014. The New York fund giant put together the financing pack- The building was one of two that developerHarry Macklowe age, bringing in the bank to take the senior piece of roughly surrendered to Shorenstein amid the market crash in 2008. The $238 million. Blackstone will retain the junior slice of about other was the 616,000-sf Park Avenue Tower. At the time, 850 $96 million. Morgan Stanley plans to syndicate a portion of the Third Avenue was valued between $300 million and $350 mil- senior mortgage. lion. The debt will be backed by the 614,000-square-foot building The 21-story structure stretches from East 51st to East 52nd at 850 Third Avenue. A partnership betweenMHP Real Estate of Street along the west side of the avenue. It’s virtually fully occu- New York and HNA Group, a China-based aviation and invest- pied, according to CoStar. The largest tenants are Discovery Com- ment conglomerate, is buying the property for $460 million. munications (166,000 sf until 2021), the New York City Police The seller isShorenstein Properties of San Francisco. Department (41,000 sf) and Interactive One (40,000 sf). 

INITIAL INITIAL PRICINGS PRICINGS

GS Mortgage Securities Corporation Trust, 2016-ICE2

Pricing date: March 10 Closing date: March 22 Property types: Industrial (100%). Concentrations: California (22.1%), Washington (19.7%), Illinois (12.8%), Texas Amount: $1 billion (12.7%), Pennsylvania (10.6%) and Georgia (10.2%). Seller/borrower: Lineage Logistics Loan contributors: Goldman (75%) and Morgan Stanley (25%). Notes: Goldman and Morgan Stanley teamed up to securitize a $1 billion floating-rate Goldman Sachs, Lead managers: mortgage they had originated on Feb. 9 for Lineage Logistics on 43 cold-storage Morgan Stanley properties in 14 states. The 11.7 million-sf portfolio was appraised at $1.5 billion. The interest-only loan, pegged to one-month Libor plus 373 bp, has a two-year term, with Master servicer: KeyBank three one-year extension options. Lineage used $655 million of the proceeds to retire Special servicer: KeyBank securitized debt (CSMC 2014-ICE) and $230 million to retire a balance-sheet loan from Goldman. After factoring in expenses and reserves, Lineage had $84.7 million Trustee: Wells Fargo left over. Certificate administrator: Wells Fargo Deal: GSMS 2016-ICE2. CMA code: 20160052. Offering type: Rule 144A

Amount Rating Rating Subord. Coupon Dollar Maturity Avg. Life Spread Class ($Mil.) (Moody’s) (S&P) (%) (%) Price (Date) (Years) (bp) Note Type A 521.100 Aaa AAA 47.89 L+193 100.000 2/15/33 1.90 L+193 Floating B 110.890 Aa3 AA- 36.80 L+325 100.000 2/15/33 1.90 L+325 Floating C 95.340 A3 A- 27.27 L+425 100.000 2/15/33 1.90 L+425 Floating D 107.470 Baa3 BBB- 16.52 L+575 100.000 2/15/33 1.90 L+575 Floating E 165.200 Ba3 BB- 0.00 L+850 100.000 2/15/33 1.90 L+850 Floating X-CP(IO) 900.000* Ba3 BB- 2/15/33 Floating X-NCP(IO) 900.000* NR BB- 2/15/33 Floating *Notional amount

March 18, 2016 Commercial Mortgage 22 ALERT

for $1.3 billion in 2007, at the top of the market. They assumed Banks ... From Page 1 a $1.1 billion debt package that the seller, Dubai-based Istith- likely carved off as a mezzanine piece. In the end, the borrowers mar, had obtained from Credit Suisse when it bought the prop- chose a $1 billion mortgage without a mezzanine component. erty just one year earlier. The new loan would replace $692.9 million of debt due to By 2010, in the wake of the financial crisis, two big ten- mature in June. The senior piece of that package, with a remain- ants — Deutsche and the National Football League — had ing balance of $428.7 million, is securitized in two conduit declined to renew their leases, and cashflow slowed. SL Green offerings (CSMC 2006-C4 and 2006-C5). The rest is mezzanine and Vornado, which had bought $300 million of mezzanine debt. The weighted average interest rate is 6.57%. debt, converted that position to an ownership interest in 2011. The two-tower complex is about six blocks north of Grand Investcorp exited, and Broadway’s stake was reduced to around Central Terminal. The owners recently poured some $125 1%. That sliver was later acquired by the two larger partners, million into improvements, including a gut renovation of the which now own the property on a 50-50 basis. lobby, facade restoration and infrastructure updates. They also The complex is on the west side of Park Avenue, between carved out additional retail space. East 48th and East 49th Streets. It consists of a 31-story build- SL Green and Vornado took control of the property in a debt ing, constructed in 1963 as the headquarters of Bankers Trust, play five years ago. Bahrain-basedInvestcorp and New York and a 43-story building developed in 1971. They’re connected fund operator Broadway Partners had purchased the buildings by a low-rise structure. 

INITIAL INITIAL PRICINGS PRICINGS Taurus Designated Activity Company, 2016-1 DEU

Pricing date: March 14 Closing date: March 21 €317.1 million Property types: Retail (100%). Amount: ($352 million) Concentrations: Germany (100%). Loan contributors: BofA (100%). Seller/borrower: Blackstone Notes: BofA securitized a €317.1 million senior portion of a €370.8 million floating-rate debt package it had originated to finance Blackstone’s purchase of 55 Lead manager: Bank of America retail properties in Germany. Blackstone acquired the 5.3 million-sf portfolio on Master servicer: CBRE Loan Servicing Sept. 30 for €502.5 million. Under risk-retention rules, BofA retained the remaining 5% of senior debt, with a balance of €16.6 million. The five-year debt pack- Special servicer: CBRE Loan Servicing age also includes €37.1 million of mezzanine debt. Trustee: U.S. Bank Deal: TAURS 2016-1 DEU. CMA code: 20160048. Certificate administrator: U.S. Bank Offering type: Non-U.S.

Amount Amount Rating Rating Subord. Coupon Dollar Maturity Avg. Life Spread Class (€Mil.) ($Mil.) (Moody’s) (DBRS) (%) (%) Price (Date) (Years) (bp) Note Type A 141.600 157.2 Aaa AAA 55.34 E+130 100.000 11/17/26 4.57 E+130 Floating B 38.200 42.4 Aa3 AA (high) 43.29 E+240 100.000 11/17/26 4.57 E+240 Floating C 25.500 28.3 A3 AA (low) 35.25 E+320 100.000 11/17/26 4.57 E+320 Floating D 41.800 46.4 Baa3 BBB 22.06 E+400 100.000 11/17/26 4.57 E+400 Floating E 52.600 58.4 Ba3 BB 5.47 E+425 94.975 11/17/26 4.57 E+550 Floating F 17.350 19.3 B2 BB (low) 0.00 E+500 93.165 11/17/26 4.57 E+675 Floating X(IO) NR NR

Marchxxx 18, 2016 Commercial Mortgage 231 Commercial MortgageALERT ALERT

MARKET MONITOR

WORLDWIDE CMBS ISSUANCE ($Bil.) WORLDWIDE CMBS CMBS SPREADS 2015 2016 01/06/00 J 0.0 0.0 110 Year-to-date volume ($Bil.) NEW-ISSUE SPREAD OVER SWAPS 01/13/00 0.0 0.1 100 2016 2015 180 01/20/00 0.2 0.2 US 14.7 23.5 10-Year AAA 90 170 Non-US 0.4 0.8 2015 01/27/00 2.5 0.9 80 160 02/03/00 F 5.5 3.3 70 TOTAL 15.0 24.3 150 02/10/00 11.9 6.1 60 140 130 02/17/00 14.0 7.4 50 120 02/24/00 14.2 10.3 40 110 03/02/00 M 17.7 11.4 30 100 03/09/00 20.8 13.2 20 90 03/16/00 20.8 14.6 10 2016 80 03/23/00 24.3 15.0 0 70 A M J J A S O N D J F M 03/30/00 26.7 J F M A M J J A S O N D

04/06/00 A 30.9 Spread (bp) US CMBS CMBS TOTAL RETURNS New Issue 04/13/00 33.6 Fixed Rate Avg. Week 52-wk 04/20/00 35.9 (Conduit) Life 3/16 Earlier Avg. MONTHLY ISSUANCE ($Bil.) CMBS INDEX 5.0 S+107 S+114 79 AAA 04/27/00 37.8 10.0 S+156 S+165 118 15 Total Return (%) 05/04/00 38.1 AA 10.0 S+300 S+313 195 Avg. Month Year Since 12 05/11/00 M 41.2 As of 3/16 Life to Date to Date 1/1/97 A 10.0 S+439 S+454 266 05/18/00 45.4 9 Inv.-grade 5.7 -0.5 1.7 214.5 BBB- 10.0 S+778 S+802 485 AAA 5.9 -0.5 2.2 200.8 Spread (bp) 05/25/00 45.8 Legacy 6 AA 5.2 -0.2 1.0 90.0 06/01/00 46.6 Fixed Rate Avg. Week 52-wk 3 A 4.4 -0.0 -0.0 73.6 (Conduit) Life 3/16 Earlier Avg. 5.0 S+192 S+195 151 06/08/00 49.2 BBB 5.2 -0.4 -2.1 77.2 AAA 10.0 S+226 S+229 140 06/15/00 J 51.9 0 Source: Barclays J F M A M J J A S O N D J F M AA 10.0 S+1,037 S+1,041 981 06/22/00 54.3 A 10.0 S+1,530 S+1,536 1,456 06/29/00 56.6 BBB 10.0 S+3,236 S+3,246 3,071 LOAN SPREADS 07/06/00 59.0 Dollar Price 07/13/00 J 59.4 Week 52-wk ASKING SPREADS OVER TREASURYS ASKING OFFICE SPREADS Markit CMBX 6 3/16 Earlier Avg. 07/20/00 61.8 AAA 98.1 97.6 97.8 200 07/27/00 65.0 10-year loans with 50-59% LTV AS 97.5 96.5 98.6 Month 190 AA 95.9 94.3 98.8 08/03/00 67.6 3/11 Earlier 180 A 94.0 92.1 98.1 08/10/00 A 71.9 Office 182 175 170 BBB- 93.5 90.9 97.6 08/17/00 74.2 Retail 175 169 160 150 BB 87.9 85.6 96.5 08/24/00 74.9 Multi-family 172 168 Sources: Trepp, Markit 140 08/31/00 74.9 Industrial 175 169 130 09/07/00 75.1 Source: Trepp A M J J A S O N D J F M AGENCY CMBS SPREADS 09/14/00 S 75.4 Spread (bp) FREDDIE K SERIES 09/21/00 79.2 Avg. SpreadWeek (bp) 52-wk REIT BOND ISSUANCE Life 3/17 Earlier Avg. Avg. Week 52-wk 09/28/00 80.8 A1 Life5.5 S+3/1657 EarlierS+70 Avg.50 10/05/00 82.9 UNSECURED NOTES, MTNs ($Bil.) MONTHLY ISSUANCE ($Bil.) AA12 10.05.5 S+S+6583 S+70S+90 5067 10/12/00 85.4 BA 2 10.0 S+S+45083 S+460S+90 26678 35 7 10/19/00 O 86.8 CB 10.0 S+S+450660 S+460S+700 263708 30 6 10/26/00 89.7 X1C 10.09.0 S+T+266605 S+700T+260 317090 25 5 X3X1 10.09.0 T+26T+7550 T+260T+740 149072 11/02/00 91.7 20 4 FreddieX3 K Floater 10.07.0 T+7L+6508 T+740L+67 472 11/09/00 93.6 15 3 Freddie K Floater 7.0 L+68 L+67 2015 2016 11/16/00 93.8 10 2 FANNIE DUS 5 1 11/23/00 N 98.4 0 0 11/30/00 100.7 Week 52-wk J F M A M J J A S O N D J F M A M J J A S O N D J F M 3/17 EarlierWeek 52-Avg.wk 12/07/00 103.7 10/9.5 TBA (60-day settle) S+3/1907 EarlierS+101 Avg.77 10/9.5 TBA (60-day settle) S+90 S+101 77 12/14/00 105.0 Data points for all charts can be found in The Marketplace section of CMAlert.com Fannie SARM L+70 L+71 Fannie SARM L+70 SourceL+71 : J.P. Morgan Source: J.P. Morgan

March 18, 2016 Commercial Mortgage 24 ALERT

directors Mike Kavanau in Chicago and his longtime role at Amerco, a frequent THE GRAPEVINE Dan Peek, who heads the national hotel borrower in the CMBS market. Horton ... From Page 1 team in Tampa. Bucaro was at Aries started at U-Haul in 1969 at the age of Capital of Chicago for the past 10 years, 25 and worked his way up the ladder. was arrested in a corruption investiga- leaving as an executive vice president. tion by Brazilian authorities. Dolfman Before that, he spent eight years at PPM Finance wants to hire a regional worked on the CMBS trading desk at LaSalle Bank. director in Chicago to originate Societe Generale before joining BTG in insurance-company loans through mid-2012. BlackRock wants to add two staffers to its correspondent mortgage-banking its real estate team. It’s seeking a direc- network. Candidates should have at CMBS trader Weston Friedman has tor in New York to originate commer- least 10 years of experience. jumped from RBC Capital to Bay Crest cial mortgages in the U.S. The recruit The contact isMcKenzie Gerber at Partners, where he’ll focus on mez- would report to managing director [email protected]. zanine paper. He starts today in the Daniel Sefcik, the group’s chief invest- broker-dealer’s New York headquarters, ment officer. The other opening is for an Morningstar wants to fill two positions as part of the structured-product sales- associate-level underwriter in London. in New York. It seeks a senior vice and-trading unit led by Alex Fletcher That staffer would conduct due dili- president to help rate CLOs, including and Jesse Kwon. Friedman was a vice gence on originations and acquisitions those backed by commercial real estate president at RBC. He joined the Toronto of senior and mezzanine debt on vari- debt, and securitizations of unusual bank’s New York trading desk in mid- ous property types throughout Europe, cashflows. At least seven years of struc- 2013. He previously spent about four reporting to director Shawn Nelson. tured-finance experience is required. years in the buy-side CMBS group at The recruit would report to manag- Brookfield Investment. Gary Horton, treasurer of Amerco and ing director Violet Diamant. The other vice president of its U-Haul subsidiary, opening is for a regulatory-compliance Jeffrey Bucaro has joined HFF as a direc- died on March 9 of a heart attack after analyst, with two years of experience, tor in Chicago. He started Wednesday, returning to his home in Reno, Nev., who would answer to senior compliance helping clients line up debt and equity from a company board meeting in officerCandace Cheng. Send resumes on hotels and other commercial real Phoenix. The 72-year-old Horton was to [email protected] or estate. He reports to senior managing well-known in lending circles because of [email protected].

TO SUBSCRIBE COMMERCIAL MORTGAGE ALERT www.CMAlert.com YES! Sign me up for a one-year subscription to Commercial Mortgage Telephone: 201-659-1700 Fax: 201-659-4141 Email: [email protected] Alert at a cost of $5,297. I understand I can cancel at any time and receive Donna Knipp Managing Editor 201-234-3967 [email protected] a full refund for the unused portion of my 46-issue license. Bob Mura Senior Writer 201-234-3978 [email protected] DELIVERY (check one): q Email. q Mail. Chad Weihrauch Senior Writer 201-234-3988 [email protected] Alexi Friedman Senior Writer 201-234-3970 [email protected] PAYMENT (check one): q Check enclosed, payable to Commercial Richard Quinn Senior Writer 201-234-3997 [email protected] Mortgage Alert. q Bill me. q American Express. q Mastercard. Andrew Albert Publisher 201-234-3960 [email protected] q Visa. Daniel Cowles General Manager 201-234-3963 [email protected] Thomas J. Ferris Editor 201-234-3972 [email protected] Account #: Signature: Dan Murphy Deputy Editor 201-234-3975 [email protected] Michelle Lebowitz Operations Director 201-234-3977 [email protected] Exp. date: Evan Grauer Database Director 201-234-3987 [email protected] Name: Jim Alexander Database Manager 201-234-3993 [email protected] Mary E. Romano Advertising Director 201-234-3968 [email protected] Company: Kait Hardiman Advertising Manager 201-234-3999 [email protected] Address: Joy Renee Selnick Layout Editor 201-234-3962 [email protected] Barbara Eannace Marketing Director 201-234-3981 [email protected] City/ST/Zip: JoAnn Tassie Customer Service 201-659-1700 [email protected] Phone: Commercial Mortgage Alert (ISSN: 1520-3697), Copyright 2016, is published weekly by E-mail: Harrison Scott Publications, Inc., 5 Marine View Plaza, Suite 400, Hoboken, NJ 07030-5795. It is a violation of federal copyright law to reproduce any part of this publication or to MAIL TO: Commercial Mortgage Alert www.CMAlert.com forward it, or a link to it (either inside or outside your company), without first obtaining permission from Commercial Mortgage Alert. We routinely monitor usage of the publication 5 Marine View Plaza #400 FAX: 201-659-4141 with tracking technology. Subscription rate: $5,297 per year. To expand your distribution Hoboken NJ 07030-5795 CALL: 201-659-1700 rights, contact us at 201-659-1700 or [email protected].