FINANCE COMMERCIAL OBSERVER WEEKLY The Insider’s Weekly Guide to the Commercial Mortgage Industry In This Issue 1 Sutton and GGP Land $1.25B Loan From Four Banking Giants for Crown Purchase 1 590 Madison Owner Seeks $650M Loan 3 SL Green Lends $97M to Ben Shaoul for LES Development 3 Hudson Valley Mall Transferred to Servicing 5 New York Life Finances Bentall Kennedy’s 757 Third Buy 7 Fannie Mae Securitizes First “Green Loan” “I’ll be raising equity for a fund sponsored by one of New York’s best-known real estate entities ... with a conservative approach similar to mine.” —Ned Cohen Sutton and GGP Land From Q&A on page 10 $1.25B Loan From Four Banking Giants for 590 Madison Owner Seeks $650M Loan Crown Purchase Plaza District office tower 590 Madison Avenue is shopping for a loan of up to $650 million, a source told Commercial Observer Billionaire New York developer Jeff foot, 26-story office tower from Spitzer Finance. A loan of that size and Chicago-based , led by former New York Gov. could be one of the largest Sutton General Enterprises EXCLUSIVE Growth Properties closed on their $1.78 Eliot Spitzer, and New York-based Winter to close so far this year, if the billion acquisition of Properties. landlord can find the funds. the at Mr. Sutton and his joint venture partners The 42-story property’s owner, the EXCLUSIVE Crown Building State 730 Fifth Avenue with additionally completed a $500 million deal Teachers Retirement System of Ohio, has a $1.25 billion mortgage last week to put an Aman Resorts hotel on retained Cushman & Wakefield to source the provided by Deutsche Bank, Morgan the building’s fourth through 24th floors, as funds, a representative for C&W confirmed. Stanley, Goldman Sachs and Citigroup, Commercial Observer reported. The hotel The pension fund put a stake in the pricey Commercial Observer has learned. portion of the property will be sold tower—where top floors reportedly command The loan closed last Friday. Oxford The off as a condominium, according to three-digit rents—on the market last October, Finance and another, unnamed, the person in the know. according to a report at the time from Crain’s mezzanine lender grabbed junior LEAD The Crown Building, which con- New York Business. At that point the build- portions of the enormous debt deal, tains roughly 100,000 square feet of ing, at the corner of 57th Street and Madison a source with intimate knowledge of the retail space, is located on the corner of West Avenue, was valued at a whopping $1.5 billion. transaction said. 57th Street, where Bergdorf Goodman, Since the amount the owner is seeking A Citi spokesman declined to comment. Louis Vuitton and Tiffany anchor the other amounts to an LTV of only around 45 percent, Representatives for the other lenders did three corners of the intersection. Luxury it seems likely that banks, funds and alterna- not return requests for comment by publi- retail tenants in the newly purchased asset tive lenders alike will be lining up to provide cation time. The sponsors bought the 390,000-square- See Crown Purchase... continued on page 3 See $650M... continued on page 7 1 | APRIL 24, 2015 Delivering on the Assignment CAPITAL PARTNERS LLC T H . K S The ability to execute in this business depends on reliable access to capital. HKS Capital Partners has closed more than $13 Billion in transactions since April 2011. Let us put our expertise to work for you. • Debt • Equity • Mezzanine • Construction • Bridge • Private • Joint Ventures 127 West 24th Street, 2nd Floor, NY 10011 • (212) 254 1600 • www.hks.com 2 | APRIL 24, 2015 196 Orchard Street SL Green Lends $97M to Ben Shaoul for LES Development Ben Shaoul’s Magnum Real Estate Groupjust closed on a $97 million loan from SL Green Realty Corp. to acquire and begin con- struction on a Lower East Side residential proj- ect, a representative for Magnum confirmed to Commercial Observer Finance. The planned building will hold 83 units Hudson Valley Mall and rise at 196 Orchard Street, in be- tween Houston and Stanton streets, accord- ing to previous reports. The total purchase price for the assemblage of three adjacent Hudson Valley Mall properties was $75 million. Mr. Shaoul has not yet decided if the build- Transferred to Servicing ing will hold rental units or condominiums— the project works either way, he said. Loan is Largest CMBS 2.0 Loan Ever Sent to Servicer The Real Deal reports it will be a “mixed-use” building, meaning it will also likely feature re- A $50.1 million CMBS loan backed property’s occupancy rate down to tail, to make use of the high-traffic frontage by Hudson Valley Mall in Kingston, roughly 86 percent, the report from along busy Houston Street. N.Y., was sent to special servicer LNR Trepp states. Magnum has partnered with New York-based Partners this month, according to a In total, more than 639,400 square investment firm Real Estate Equities on the report from Trepp. The transfer marks feet of retail space at the proper- project, according to TRD. the largest ever “CMBS 2.0/3.0 loan” ty serves as collateral for the CCRE Last August, Lower East Side blog The Lo- to go into special servicing. (CMBS 2.0 loan and the mall is still anchored by Down reported that Katz’s Deli, a historic and 3.0 refer to the post-recession wave a Macy’s, Sears, Regal Cinemas, Jewish deli on Houston next to the Magnum of securitized loan origination that Dick’s Sporting Goods and Best assemblage, had sold air rights related to the began in 2010.) Buy. deli property at 205 East Houston Street, but The Hudson Valley loan originat- The borrower has a replacement assured the public that the tourist-y restaurant ed by CCRE was placed on the ser- tenant lined up for the former J.C. will remain open. vicer’s watchlist in July 2014, after its Penney space, according to commen- JLL‘s Aaron Appel represented the bor- debt service coverage ratio dropped to tary in the loan documents. rower, said a source close to the deal who 1.08x due to the mall’s declining aver- A report from Barclays published wished to remain anonymous. A representa- age rent and an occupancy rate below on Friday indicates that 17 percent of tive for SL Green declined to comment on the 90 percent. the leases at the mall are month-to- transaction.—Guelda Voien The loan, which carries an inter- month, while 18 percent of leases ei- est rate of 6.739 percent, totals 8.62 ther expire in the next 12 months or percent of the CFCRE 2011-C1 have the option to terminate if stores Crown Purchase...continued from page 1 CMBS deal. The borrower is listed continue to underperform. in the loan documents as Syracuse- “It’s rate to see a loan head to spe- include Piaget, Bulgari and Mikimoto. based PCK Development Company. cial servicing within two to three The Warren and Wetmore-designed Representatives for PCK were not im- years of securitization,” Sean Barrie, property was completed in 1921. mediately available for comment. a research analyst with Trepp, told At about $4,490 per square foot, the per- Hudson Valley Mall was completed Commercial Observer. “If it does hap- square-foot-price paid by Mr. Sutton of in 1981. J.C. Penney, one of the proper- pen, lower occupancy or poor finan- Wharton Properties and GGP is a world ty’s anchor tenants, closed its doors in cials are usually the culprit. Having a record for an entire office building, while the early April after more than 32 years of replacement tenant for J.C. Penney is surrounding neighborhood is considered business there, according to recent re- huge, but the borrower is most like- the world’s most expensive retail district, as ports. A mall employee confirmed that ly keeping their eyes on Sears as well, Bloomberg News previously reported. the store is now closed. since they’ve announced several clos- Mr. Sutton and a spokeswoman for GGP The vacated parcel, totaling 67,000 ings in the past year.” declined to comment. square feet, is expected to bring the —Damian Ghigliotty —Damian Ghigliotty with additional re- porting by Max Gross 3 | APRIL 24, 2015 CRE FINANCE COUNCIL ANNUAL CONFERENCE 2015 JUNE 8-10, 2015 NEW YORK MARRIOTT MARQUIS TIMES SQUARE, NEW YORK CITY PARTNER SPONSOR 4 | APRIL 24, 2015 New York Life Finances Bentall Kennedy’s 757 Third Buy The newly minted owner of 757 Third Avenue apparently financed its buy with a $205 million loan from New York Life Real Estate Investors, the life insurance company announced yesterday. The loan on the mixed-use office tower has a term of 15 years, according to a state- ment from New York Life. Canadian investment manager Bentall Kennedy bought the 503,000-square-foot Class A tower, at 47th Street, from Aby Rosen’s RFR Holding for $360 million last month, as The Wall Street Journal first reported. RFR embarked on a $30 million reposi- tioning of the 27-story building in recent years. Last January the tower signed two new marquee tenants: accounting firm Grant Thornton and Berkley Insurance, accord- ing to published reports. Those replaced the previous anchor tenant, accounting behe- moth KPMG, and brought the property to 95 percent leased. “757 Third Avenue is a premier, well leased office building located in one of the strongest office markets in the nation,” Eric Becher, senior director of New York Life Real Estate Investors’ New York region- al office, said in a statement.