MARCH 6, 2015 Investors Scrutinize CMBS Loan Contributors Investors are pressuring the major banks that arrange conduit deals to limit the 2 Hines Aims to Refi Conn. Offices percentage of loans contributed by nonbanks, especially small shops. Much of the pushback is being directed at Deutsche Bank and Wells Fargo, two 2 Loan Sought for Queens Condo Project of the biggest conduit issuers. And there are signs that the bond buyers are being 2 GE to Finance RXR Purchase in NY heard. Deutsche is telling investors that going forward, it will shoot to contribute at least 4 Giliberto, Levy Plan Mezz-Loan Index half of the collateral in conduit offerings floated via its COMM shelf entity. That would be up from an average of 37.1% last year — the lowest percentage among 5 Cassin Hires 2 Attorneys, Seeks More issuers. 5 Eightfold Wins Auction for B-Piece Meanwhile, Wells in the past couple of months has found itself in a similar posi- tion, after losing RBS as a conduit partner when that bank pulled out of the market. 6 Refinancing Sought for Hotel Portfolio Wells and RBS contributed a total of 63.4% of the collateral to their joint deals last year. But on the three deals Wells has since floated as a solo issuer, it supplied only Special-Servicing Rate Dips Under 7% 7 See INVESTORS on Page 8 10 Guggenheim Backs Buyer of Offices 10 Mesa West Lends on Dallas Complex Debt Sought to Buy, Refit Manhattan Trophy General Growth Properties 12 Kroll Seeks Researcher, Analysts A partnership is seeking $1.25 billion of debt to finance its acquisition of a trophy retail/office property in Midtown Manhattan. 13 INITIAL PRICINGS The Chicago REIT is teaming up with New York investor Jeff Sutton to pur- chase the Crown Building, at 730 Fifth Avenue, for about $1.8 billion. The 400,000-square-foot property is predominantly used as offices, but the greater part of its value is in the 35,000 sf of retail space, which the joint venture plans to expand. General Growth and Sutton are looking for a mortgage with a term of 5-7 years. THE GRAPEVINE They’ll consider floating-rate quotes but would likely swap to a fixed rate. Eastdil Secured is marketing the lending assignment and brokering the trade for the seller, Portfolio manager Toby Maitland Hudson a local group including the Spitzer and Winter families. recently left New York hedge fund Saba Various banks and other debt shops are expected to compete for the assignment. Capital, where his duties included han- But some may find the deal daunting because it’s largely a bet on the planned retail dling B-piece investments and credit- See TROPHY on Page 12 default swaps tied to commercial MBS. There’s no word on his plans. Hudson Colony Sets $2 Billion Target for Debt Fund joined Saba as a managing director in 2011 after six years at J.P. Morgan in Colony Capital is soliciting $2 billion of equity for what would be its largest high- New York and two years at Credit Suisse yield debt fund yet. in London. He exited J.P. Morgan as the Like the three predecessor vehicles in the series, Colony Distressed Credit & Spe- executive director in charge of propri- cial Situations Fund 4 will shoot for a 13-14% return by investing in subperforming etary trading of CMBS derivatives. or defaulted senior mortgages and mezzanine debt, and by originating loans for distressed property owners. But in a switch, it would seek to invest roughly 60% of Longtime trader Dylan Korpita resurfaced its capital in Europe. The other funds primarily targeted the U.S. two weeks ago at Bay Crest Partners, The vehicle follows up the $1.2 billion Fund 3, which Colony began marketing two years after leaving the CMBS desk at in 2013 and closed five months ago. That is the largest vehicle to date in the fund Morgan Stanley in Manhattan. Korpita, series, which Colony launched in 2008. All told, the three funds raised close to $3 now based in Deerfield, Mass., has billion. joined the New York broker-dealer’s Investors in those funds include Louisiana Teachers, National Pension Service of ongoing effort to raise its profile in the South Korea, Koch Industries Employees, insurer ACE Group and California Endowment, See GRAPEVINE on Back Page See COLONY on Page 6 March 6, 2015 Commercial Mortgage 2 ALERT Hines Aims to Refi Conn. Offices make them bigger, shave the number of parking spaces to 252, increase the building’s height by 15 feet and alter the facade. The owner of an office building in Greenwich, Conn., is in Construction can’t begin without the board’s approval, but the market for an $85 million mortgage. “the wheels are in motion,” said a person close to the process. A partnership among Houston-based Hines, Warren Private The goal is to begin construction by June and finish by early of Dublin and Willet Cos. of Rye, N.Y., wants to refinance the 2018. 128,000-square-foot property at 33 Benedict Place. The prefer- Mission Capital, the partnership’s advisor, is pitching the ence is for floating-rate debt with a term of five years. Eastdil loan assignment to debt funds, banks, mortgage REITs and Secured is pitching the assignment to lenders. insurance companies. The request marks a change of course for the Hines team, The 3,000-seat theater opened in 1928 and booked vaude- which put the property up for sale in October. At the time it ville acts and showed movies for decades. Its ornate “Mexican was expected to fetch about $140 million, or $1,094/sf, which baroque” lobby was designated a New York City landmark and would eclipse the local record for per-foot pricing. But no deal put on the National Register of Historic Places in 1984. But two was struck. The partners will likely launch a fresh sales effort in years later, the theater closed for good, a victim of its immense a year or two, sources said. size. Most of the proposed loan would go to retire $70 million Since then, multiple developers came up with various plans of existing debt, which was originated by Greenwich Capital in to redevelop the site, only to be stymied. The JK Equities part- 2005 and securitized in a $4.3 billion commercial MBS deal nership acquired the theater from developer Patrick Thompson, (GCCFC 2005-GG5). The interest-only loan has a 5.22% cou- who had purchased it in 2010. The previous owner, New York pon and is set to mature in July. It can be prepaid without pen- developer Shaya Boymelgreen, had arranged the permits for the alty beginning next month. condo plan, but defaulted on a $20 million loan from Doral Bank. That loan helped finance the acquisition of the building The site is along Flushing’s primary retail corridor, one mile for $87.5 million. The seller,Unilever, leased it back as its U.S. east of Citi Field, home of the New York Mets baseball team. It headquarters until 2007, then relocated. is a few blocks from Sky View Parc, a much larger condo com- The property is 95% occupied, with a weighted average plex set to begin its second phase of construction. The com- remaining lease term of about seven years. The largest tenant, pleted first phase encompasses two towers with 448 units atop hedge fund manager AQR Capital, accounts for about 50% of the an 800,000-sf retail center. The developer,Onex Real Estate of building — but never moved in and subleases its space. Other Toronto, is seeking a $450 million loan to finance the construc- tenants include investment advisor Axiom International (21,000 tion of three more towers with 805 units. sf until 2019). Net operating income was $8.3 million in 2013, There is strong demand for condos in Flushing amid meager the latest full-year figure available, and was on track for a slight supply. Over one especially busy weekend in January, 150 units increase in 2014. in Sky View Parc were presold. The four-story building is at the corner of U.S. Route 1 North, near downtown Greenwich. It was developed in the 1970s for GE to Finance RXR Purchase in NY Chesebrough-Pond’s, which Unilever bought in 1998. After holding talks with two other lenders, RXR Realty has Loan Sought for Queens Condo Project gotten a commitment for about $325 million of debt from GE Capital to finance the purchase of the leasehold interest in the A JK Equities partnership is looking for up to $200 million of office building at 32 Old Slip in Lower Manhattan. floating-rate debt to finance the construction of a long-stalled RXR is buying both the leasehold interest and the under- residential tower in Queens, N.Y. lying land from Boston fund shop Beacon Capital for $675 The property would be built on the site of the shuttered million. In a side deal, it will sell the land to a David Werner RKO Keith’s Theater, on Northern Boulevard and Main Street partnership for roughly $225 million. in Flushing. That structure will be demolished, except for its RXR initially was in talks with HSBC and Helaba Bank for a landmarked lobby, which will be incorporated into the tower. $275 million floating-rate loan on the leasehold interest in the Previous developers had planned the project for several 1.1 million-square-foot building. But RXR changed course and years, only to run into financial problems, and red tape related gave the assignment to GE Capital, which offered more pro- to the theater’s landmark status.