A hotel under development in Queens’ Jamaica section near Kennedy International Airport has pinned down a $58.5 million refinancing of its construction loan, Commercial Observer can first report.
The debt comes to the developer, United Construction, from ACORE Capital, a heavyweight real estate debt fund, according to sources with knowledge of the deal. The deal, which has a 37-month term, comes with two extension options and its term begins with 18 months of interest-only payments at the head of a 25-year amortization schedule.
The new mortgage refinances a previous debt package worth $35.8 million from Latitude Management Real Estate Capital, a subsidiary of LaSalle Investment Management that was extended to United in 2017, according to city property records. The debt funds development of a dual-branded Marriott Courtyard and Fairfield Inn hotel at 148-22 Archer Avenue. That’s one block east of the Jamaica train station, which is served by the AirTrain JFK airport connector and is also a major hub for the Long Island Rail Road.
Meridian Capital Group‘s Morris Betesh and Omar Ferreira arranged the debt on behalf of United.
“The Marriott Courtyard and Fairfield Inn [will] transform the Jamaica Station submarket, and we’re happy to have been a part of it,” Betesh said in a statement. “Closing a cash-out refinance during construction is not a simple task. However, our client has a strong track-record managing and completing similar hotels and we were able to get him a swift execution.”
The 15-story, 203,000-square-foot hotel will include 224 Marriott Courtyard rooms and 114 Fairfield Inn units for a total of 338. There will also be a café, a fitness center and onsite parking.
The hotel structure, planned for completion in the next five months, abuts the Long Island Rail Road tracks to the south and already towers over many of the low-slung commercial buildings that neighbor it to the north.
Once written off as a crime-riddled zone neglected by developers, Jamaica has rebounded in recent years. Crime has fallen dramatically—down 80.6 percent since 1990, according to New York Police Department statistics—and upward price trajectories have increasingly drawn investors’ eyes.
Following a 2007 rezoning designed to encourage more development, a number of hotel projects have sprung up, including the Archer Avenue endeavor. Three big apartment complexes, Anchor Green Apartments, Crossing at Jamaica Station and another building at 147-07 94th Avenue will combine to bring more than 1,500 new residential units to the neighborhood.
United Construction, led by founder Jiashu “Chris” Xu, also controls branded hotels in Manhattan and near LaGuardia Airport and is at work on a new lodging in Long Island City. It’s also the firm behind Skyline Tower, a planned 67-story skyscraper in Long Island City that United says will be one of Queens’ tallest buildings when its 802 condominium units are completed in 2021.
A spokeswoman for United Construction declined to comment. An ACORE representative did not immediately respond to an inquiry.
The owners of the Box House Hotel in Greenpoint, Brooklyn, have landed $31 million in permanent financing from Ladder Capital, Commercial Observer has learned.
The 10-year fixed-rate debt replaces a $23.5 million bridge loan from March 2018, also provided by Ladder Capital.
Co-founded by owners Joe Torres and Simon Whitley, the boutique hotel is located at 77 Box Street between Manhattan Avenue and McGuinness Boulevard in Greenpoint’s northern part. The converted factory was re-configured in 2017 to include an additional four stories. Today, it contains 128 rooms—including loft suites with high ceilings and many original factory details—plus a 10,000-square-foot rooftop event space with panoramic views of the New York City, Brooklyn and Long Island skylines and a full-service restaurant and bar, The Brooklyn Lantern.
The Box House Hotel is one of four sister Greenpoint properties that combine the assets’ industrial history with modern finishes. The others are the Henry Norman Hotel (which was once a pillow factory), Franklin Guesthouse and Habitat 101.
“We are pleased to have worked with the lender to provide the sponsor with a complete capital solution, taking them through the ramp up on the newly constructed rooms to a 10-year fixed-rate loan,” Pollack said in prepared remarks. “Meridian worked closely with the lender and sponsor to execute on their business plan to redevelop and operate one of Brooklyn’s top hotels.”
Officials at Ladder Capital could not immediately be reached for comment.
The retail event of the year kicked off yesterday in sunny Las Vegas, and Commercial Observer was there to hear about the latest in retail, and more importantly—to party.
Here are the highlights from the first day of the International Conference of Shopping Centers from CO’s Twitter feed:
The hot topic of the day was, of course, experiential retail.
A five-story apartment building with retail across the street from the City College of New York in the Hamilton Heights section of West Harlem has sold for $16.8 million, Commercial Observer can first report.
David Eshagoff of Eshco Realty purchased the 44-unit walk-up at 1588-1600 Amsterdam Avenue from Barberry Rose Management, according to Meridian Capital Group, which brokered the sale. The building on the corner of West 139th Street has 37 rent-stabilized apartments, seven market-rate units and 5,400 square feet of retail. The seven deregulated units have been renovated with new floors, modern bathrooms, granite counters and stainless steel appliances.
Barberry Rose purchased the 38,400-square-foot building from Onex Real Estate Partners for $9.3 million in 2014, according to public records. Over the past five years, the Woodmere, N.Y.-based firm has leased the corner property to a handful of retail tenants, including Grand Great Wall Chinese restaurant, an Indian restaurant named Clove, Fumo pizzeria and Italian restaurant, and Talent Cycles bike shop.
Meridian investment sales brokers Amit Doshi and Shallini Mehra handled both sides of the transaction.
The new buyer plans to renovate the stabilized units and raise the rents when the current tenants move out.
“The purchaser, David Eshaghoff of Eshco Realty, saw this as an exciting opportunity to capture the upside from the remaining 37 non-renovated units. With a strong student population, he understood the ability to double the rents upon vacancy,” Mehra said in a statement.
Eliot Spitzer‘sSpitzer Enterpriseshas scored a $386 million refinance for 420 Kent Avenue—its luxury waterfront multifamily development in Williamsburg, Brooklyn, Commercial Observer has learned.
Meridian Capital Group is said to have negotiated the refinance, having also arranged $330 million in construction financing from Starwood Property Trust in 2016. Officials at the brokerage did not return a request for comment.
Designed by Eran Chen’s ODA New York, the massive South Williamsburg rental complex sits on a 2.8-acre waterfront site between South 8th and South 9th Streets.
The 1.5-million-square-foot property comprises three luxury glass towers housing 857 residences, many of which have private outdoor spaces. The towers comprise mostly studios and one bedrooms that aim to cater to a “younger demographic with a little more hair than me,” Spitzer told CO in a February 2018 interview.
“The potential of living right on the East River and the openness of the views that you get are insane,” Chen told CO in a November 2017 interview.
The development’s unique boxy design means that 80 percent of the apartments are corner units with three-sided sweeping views across the East River.
“We asked ourselves, ‘Can we create a tower where every apartment is a corner unit?’ ” Chen said. “The answer was yes.”
The sprawling development features 20,000 square feet of restaurant and retail space, 25,000 square feet of indoor amenities, and 80,000 square feet of outdoor space—including a 400-foot landscaped riverside esplanade. Those amenities include rooftop pools, a piano room, a fitness center, a spa, a library and a landscaped roof garden.
Greenwich Street in Tribeca. Second Avenue in the East Village. Prince Street in SoHo. These are some of the prominent streets in the neighborhoods that make New York “the city that never sleeps.” Fulton Street in the Financial District? Less so, at least for now. But the scene is in the midst of a change and has been for a while, says Rich Velotta, a managing director at Meridian Investment Sales.
“Fulton Street used to be a ghost town after 6:30 p.m.,” he notes. “Today, it’s attracting full-time residents along with retail and night life that caters to those residents, and has become a 24/7 neighborhood.”
Rich should know. He and his colleague Abie Kassin recently closed the $78 million sale of 106 Fulton Street, a mixed-use property for DSA Property Group. The deal’s conclusion stemmed partially from the team’s collaboration with Meridian’s capital markets platform, which secured $42.9 million in financing for the buyer. The other decisive factor was the growing appeal of the neighborhood beyond the business community.
Recent Developments
It’s hard for investors not to be interested in the neighborhood. From the post Hurricane Sandy reconstruction of the South Street Seaport to Pier A and Stone Street, there’s some serious action in FiDi.
“ESPN is there now and Pier 17 regularly hosts great concerts,” says Rich. At the other end of Fulton Street, you have the World Trade Center and the Oculus, both of which attract more than 2.9 million visitors annually. The two ends border a brand new epicenter of downtown retail and apartment buildings that are catering to a growing, affluent population.
Previously, the area’s residential properties served those who wanted to live close to their workplace but would move out of the neighborhood within a few years. Now, transient occupants are giving way to longer-term residents who appreciate the convenience of the new transportation hubs at the World Trade Center and Fulton Street, and the emergence of higher-end retail and restaurants.
Major retail that is a far cry from delis, cafés, newsstands and shoe repair shops has followed the residents. Examples include the 60th story Manhatta restaurant on nearby Liberty Street, several high-end gyms including an Equinox on Wall Street, Tiffany & Co., Tumi, Gristedes, Thomas Pink, Temple Court and Augustine at the Beekman Hotel, and Blue Ribbon Federal Grill.
“All of these great tenants are popping up, and there’s still a lot of runway,” says Rich.
James Famularo, president of New York retail leasing at Meridian, agrees.
“We’re seeing drastic change on Fulton Street as it continues to evolve. Old dive bars are disappearing and new spots like The Ainsworth at 121 Fulton Street are taking their place. The Fulton Street hub offers great new diverse options. We’re representing a prime corner at 52 Fulton Street, currently a McDonalds, and are only receiving offers from healthy QSR and vegan concepts. We’re also representing 118 Fulton Street, also known as 19 Dutch, a prime retail space at the base of a 63-story tower with 483 luxury apartments that are inundated with activity,” he says.
Insider Perspective
The neighborhood transformation is particularly notable for Rich, who lived in the area on Fulton and Nassau Streets for nearly five years.
“It was so sleepy when I lived there in the early part of this decade,” he recalls. Since leaving, he’s kept close tabs on local trends. “My curiosity stems from three different perspectives: as a former resident, as a sales broker, and, admittedly, as a bit of a nerd.”
Forecast
Rich isn’t the only one paying attention to the neighborhood. Residents, tenants, retailers, brokers and developers are also becoming more aware of its offerings. And recent statistics indicate that its popularity will continue to rise. Consider this:
The Financial District is home to just over 50,000 residents (a 12% increase from five years ago).
There are currently 1,146 new residential units under construction in the neighborhood.
Condos sell for an average price of almost $2,000 per square foot.
Apartments rent for an average of $61 per square foot.
The Fulton Street subway station sees nearly 92,000 daily riders.
Meridian’s investment sales clients have taken notice as well.
“We’re getting a lot of inquiries about opportunities in FiDi—way more than we used to,” says Rich. “Real estate firms want to enter the market now before they are priced out.”
“This isn’t your father’s Fulton Street,” he continues. “It’s a thriving neighborhood with only room to grow. Might be time for me to move back.”
Richard Velotta, managing director at Meridian Investment Sales, can be reached at (212) 468-5924 or richardv@meridiancapital.com.
The Ardor School for Passion-Based Learning has leased 20,000 square feet for a new private school at a former Catholic convent in Greenpoint, Commercial Observer has learned.
Ardor will occupy half of a three-story former Catholic school building at 29 Nassau Avenue, between North 15th and Dobbin Streets, according to information from Meridian Capital Group. The independent day school inked a 35-year sublease for the Nassau Avenue side of the building, which is across the street from McCarren Park and Automotive High School. The private school is subleasing from the Argento family, which operates Broadway Stages in northern Greenpoint and has a long-term lease on the property owned by the Slovak Roman Catholic Church of the Holy Family. The building is a brick, Romanesque Revival structure with elaborately carved religious sculpture above the front door and separate side entrances marked “Boys,” “Girls” and “Convent.”
The school is part of a four-building convent complex between Nassau, Dobbin and North 15th Streets; the Roman Catholic San Damiano Mission occupies the rest of the site. (The mission is run by the Franciscan friars, who are trying to bring younger people back to the cash-strapped Catholic church, The New York Times reported in 2016.) Asking rent for the entire, 40,000-square-foot school was $750,000 a year, according to Meridian. The transaction was structured as a triple-net lease—Ardor will pay taxes, insurance and utilities on its space.
Ardor is building out its space, which will serve kids from preschool through eighth grade, and plans to open in the fall.
Meridian retail brokers James Famularo and Eliot Goldschmidt represented Ardor in the transaction, and Modern Spaces’ Evan Daniel handled the transaction for the Argento family.
The property “offered a tremendous opportunity for Ardor” because of “the dense population of school-aged children” in the neighborhood, Goldschmidt said in a statement.
“Schools are just in tremendous demand,” Daniel told CO. “We’re doing a number of spaces in western Queens and Brooklyn with schools. It’s a recession-proof tenant. And as more and more neighborhoods become gentrified, the need for school spaces has become problematic. Everyone wants restaurants and bars, but everyone needs schools.”
What does the next year hold for commercial real estate lending? Experts from major institutions taking part in the opening panel of Commercial Observer’s Inaugural Spring Financing Commercial Real Estate Forum were a bit divided on the state of the market.
Commercial real estate lenders discussed market opportunities and potential challenges—namely newer, less established players entering the market— earlier this week.
When asked by moderator Bill Fishel, a senior managing director and L.A. office co-head at HFF, about changes in credit standards from the same time last year, several said they were holding strong.
“To the credit of those lenders, the underwriting standards have varied greatly from the last cycle, 2005, 2006, 2007 when everything became more elastic,” Seth Grossman, a senior managing director at Meridian Capital Group, said.
“This time around you’re not seeing a ton of that. You’re still seeing strict underwriting in the fixed-rate business.”
However, where there is some slippage he said was through the entry of new smaller sized players in the space where underwriting is being pushed.
Charlie Rose, a managing director at Invesco Real Estate, said he has seen refinancings being done on appraised values. “Deals are getting done at 70 to 75 percent loan-to-value, but the valuation is inflated so it’s actually 80 percent. Those real LTVs are a concerning trend.”
“We’ve also seen a movement toward more [covenant]- light type deals, so longer untested terms, and just lighter cash management,” Rose continued.
Alan Flatt, a managing director at Wells Fargo Bank, said instead of what they did in cycles past, his organization and banks in general are staying lower risk and providing their A-notes or warehouse lines to other firms, which has become a big part of his organization’s strategy. By doing so in today’s current lower leverage environment he said, “that risk is bifurcated, which is probably healthier for everyone.”
“What we’ve done with other cycles, where we did go off the leverage curve, it ended badly for us, so no thanks,” he said.
Another change from past markets, that has “amazed” Flatt is how the current cycle continues to evolve in what he classified as “mini” or “counter” cycles where investors are jumping into perceived higher-risk sectors, like retail.
“I’ve seen some really good retail opportunities lately. We’ve seen some good hotel opportunities lately which is late cycle. We’re making a bridge loan to a fund that has limited service hotels and the fund has 3 to 5 years left on the fund life and we went in and provided a loan there,” he said. “There are still good opportunities in the market and it’s been interesting which you can say it’s late in the cycle or there’s a trade war, but still individually there are still opportunities.”
Running on Empty: Slower Job Growth May Spell Trouble for CRE
What goes up must come down, and after a sustained economic recovery from the depths of the 2008-2009 credit default swap crisis and recession that is now more than 10 years out, the question is when and what sectors will suffer when the inevitable downturn comes, as pondered by experts at Commercial Observer’s Spring Financing CRE Forum in Los Angeles last week.
Darrell Wheeler, head of strategy at CCRE, opened CO’s forum by providing an overview of the current landscape, examining the amount of construction and how much has been delivered within different property types.
While he said office development has been active in the last five or six years, most developers in the sector anticipated a recession that occurred from 2016 on and, as such, lenders have only been lending when they have tenants.
Multifamily, which he said has been built to the largest level “we’ve ever seen,” and that hasn’t been much of a problem in the United States because population growth—which he said always grows by 1 percent since the 1940s—has made up the difference.
“If we had to highlight an area that might be a problem, this is the one that’s probably O.K. It’s seen the vacancy rate come down by 2 percent from 8 to 6 [percent] nationally,” he said.
The industrial sector is, unsurprisingly, expected to be in “pretty good shape to start any sort of recession.” Demand for the product was brought home by the Blackstone Group’s record-breaking $18.7 billion purchase of 179 million square feet of U.S. warehouse space from Singapore-based GLP last week.
In terms of rent growth in the hotel and multifamily rental market, Wheeler said it was closely tied to employment growth, which is slowing and may be further hindered if there is a crackdown in immigration.
“The big challenge is you’ve got to have this employment growth continue, and if you start and look at the non-farm payroll every month, it’s hard to add 200,000 jobs every month. When your unemployment rate starts to get below 5 percent, you start to run out of people to employ,” he said, predicting a potential 12 to 24 months of economic growth before a potential slowdown.
His prognosis was seconded by the UCLA Anderson Forecast, which was issued the following day. Economists, drilling down into both national and state-level indicators, such as the most recent GDP data, bond market data and slowing job growth, did not see a rosy future.
Citing a record-level of Californians employed (18.7 million) and low unemployment rate in the state, Jerry Nickelsburg, director of the UCLA Anderson Forecast, wrote that the state “is, quite simply, running out of people to be employed.” He anticipates hiring to slow from its current 1.4 percent rate to 0.8 percent in 2020 and a measly 0.6 percent by 2021.
Considering such factors, the report increased the possibilities of a recession from near zero to 15 percent for the next year ad to between 24 to 83 percent for 2021.—A.S.
From left: Nik Chillar, Brendan Miller, Steven Powel, Jimmy Yung and David Sotolov. Credit: Jon Endow
Bridge Lenders on the State of the Market
The commercial real estate collateralized loan obligation market is a much-buzzed-about topic, and with good reason. Issuance soared to $14.3 billion in 2018 from $7.7 billion in 2017, which is bound to grab any market observer’s attention. And while its velocity decreased slightly at the beginning of 2019, total volume is expected to remain pretty flat by year end, topping out around $15 billion.
Bridge lending experts at CO’s forum weighed in on what’s driving the market and also—in a time of fierce competition—how CLO issuers are differentiating themselves from the herd.
But first, some history.
It’s hard to have a panel conversation about CLOs without first quelling any fears that they aren’t direct descendants of that dreaded three-letter acronym heavily associated with the global financial crisis: CDO. Simply put, collateralized debt obligations were an arbitrage tool, panelists said, while CLOs are a financing tool.
“ ‘CDO’ was a very generalized term. It spanned a lot of things, and so it was tough to figure out exactly what you owned,” Nik Chillar, head of banking at Crescit Capital, said. As such, three little letters added to the moniker of today’s instruments to help differentiate them from days gone by: “CRE” shows they include commercial real estate loans only and “CLO” emphasizes these are loans, not securities.
Then there’s the retention of 20 to 25 percent of the risk and today’s extensive underwriting of the issuer—critical, seeing as most CRE CLOs are managed pools, the reinvestment period relies on the strength of the issuer to create a good replacement loan for the CLO’s investors.
The criteria for today’s CRE CLO collateral also remains pretty tight, panelists agreed, with both rating agencies and investors putting a very firm box around what can be contributed.
Now that’s cleared up, how are bridge lenders keeping their competitive edge in what moderator Steven Powel, CEO of industry advisory firm Situs, says feels like a “beauty contest to earn business?”
After all, even the industry’s behemoths are feeling the heat of more players in the space.
“It’s a challenge to differentiate yourself,” Jimmy Yung, a managing director at Blackstone, said. “We try to be fast and efficient, and scale is where we have a competitive advantage.” Its breadth of capital allows the platform to play up and down the capital stack, Yung noted. Although Blackstone didn’t issue a CLO in 2018, it issued the biggest one of 2017—BXMT 2017-FL1.
Annaly Capital Management’s David Sotolov joked he’d also tout Annaly’s big balance sheet as the feather in his cap, but peacocking was tough “sitting next to Jimmy.” Still, $100 billion of assets under management ain’t too shabby.
Annaly issued an $857.3 million managed CRE CLO earlier this year (NYL 2019-FL2, through subsidiary Annaly Credit Opportunities Management).
Thorofare Capital has just started tapping the CLO market, using the vehicle as “one tool in our toolbox,” said Brendan Miller, the lender’s chief investment officer.
The bridge lender has built out its platform with the intention of having access to as many levels of the capital stack as possible, Miller said. This includes a move from being a “heavy lift” transitional lender to forming a strategic partnership with DoubleLine Capital in 2015 to do more core-plus lending and up its loan size. The lender focuses on value-add and transitional multifamily, industrial, office, self-storage, student housing, retail, health care and hospitality assets throughout the United States.
“We’ve put together all parts of the capital stack, so we can take borrowers from point A to point B,” Miller said.
Balance sheet lender Crescit operates in the fixed- and floating-rate lending space and also “dabbles in construction as well.” The $10 million to $45 million lending space is its sweet spot and—bonus—there’s a little less competition there.
In times of increased competition, loan pricing can seduce even the savviest of borrowers. Resist the siren song, said the panelists.
Miller said he’s seen borrowers who selected a lender based on attractive pricing subsequently return to them, “usually because that lender didn’t have asset management capabilities or because their loan was contributed to an unmanaged pool,” he said.
Indeed, the potential risk in the unstable nature of heavy-lift, transitional loans means that asset management capabilities are key, and business plans don’t always (or rarely) go exactly as planned. Blackstone has in-house asset management to service what Yung called its “borrower relationship-driven business.”
Thorofare, too, continues to staff up on the asset management side, Miller said, as well as building lasting relationships with its borrowers. New York-based Annaly, on the other hand, is expanding into other markets to be “closer to borrowers in those markets,” Sotolov said.
When Powel asked which industry weaknesses are being witnessed by the panelists, retail still dominated the conversation.
“There’s a real lack of liquidity in the market,” Sotolov said. “Retail owners may not want to sell [their properties] but if they’re trying to refinance the capital markets aren’t that kind, to say the least.”—C.C.
Foreign markets panel. From left to right: Loryn Dunn Arkow, Paul Vanderslice, Warren Min, Corey Hall, Greg Murphy. Photo: Jon Endow
Lenders Talk Foreign Debt and Equity Flows
Despite ongoing trade disputes between the U.S. and some of its largest trade partners, as well as a pullback in Chinese involvement, major foreign investment in the commercial real estate sector hasn’t slowed, panelists said.
Experts on a panel moderated by Loryn Dunn Arkow, a partner at Stroock & Stroock & Lavan, discussed prominent players and what markets, property types and financing were drawing the most suitors.
When polled about whether foreign investment in the U.S. real estate sector would increase, decrease, or stay the same over the next six to nine months, the forecast ranged from “relatively stable” to an expected increase. (The panelists are far from the only ones saying this; according to Real Capital Analytics, cross-border acquisitions of U.S. commercial real estate surged to $94.9 billion last year, increasing 73 percent over the $55.3 billion reported in 2017 and nearly matching the $100 billion recorded in 2015, as reported in National Real Estate Investor.)
“As long as foreign banks keep their rates low and the U.S. isn’t so low, we should see increased capital flow,” Greg Murphy, managing director and head of real estate and hospitality, Americas at Natixis, said.
Paul Vanderslice, CEO of CCRE, concurred, saying foreign investment would increase for several reasons.
“One, foreigners diversify their asset base. Two, given that the dollar is so strong, a lot of their own currencies are actually eroding in value, which is what is bringing more dollars in over here,” he said. “Also, I think relative to other places you could go, I think Europe is weaker with Brexit, which is driving more investment over here.”
Despite the assumption that China was the biggest investor in U.S. real estate, Vanderslice said our neighbors up north are the true OGs. Citing data from Real Capital Analytics, Vanderslice said that in 2018 Canada invested around $19.6 billion compared to China—which was only $5.8 billion.
In Los Angeles, Singapore has become a major player in the L.A. market, which Vanderslice said is “just on fire.” Interest is particularly strong for industrial in Gateway markets like El Segundo, which is in the South Bay of L.A. county.
Despite entreaties and interest rates that are flat, Japan is a nation that is largely sitting out investing in commercial real estate, which Vanderslice said was a byproduct of getting burned in the past.
“They were big, say, from 2002 to 2006, and then certainly when the CMBS market hit the skids in 2008, 2009, prices were 65, 70 cents on the dollar and there were no bids even at that level, so they had a really bad experience,” he said. Japan is one of the biggest players in the CLO sector—accounting for around 40 percent of the market—Vanderslice said, but in terms of the CMBS market, they continue to sit it out.
But Murphy said that the Japanese are investing in other asset classes in the U.S., namely in aviation, energy and renewables and while it remains rare to see them in real estate, he said there has been “a little toe-dipping that’s happening.”
Gateway markets in general continue to be preferred by foreign investors though each country and type of lenders have their own predilections.
“The German banks tend to go toward gateway markets, oddly penalizing San Francisco and Boston in their models,” Murphy said.
Corey Hall, a senior vice president at Brookfield Asset Management, said with so much debt compression he has been seeing a growing diversification into other markets and asset types as foreign investors are chasing yield in order to find deals that make sense.
“Seattle, Portland, Oakland, those are markets where some will play, and some won’t play, and I think you’re seeing less efficiencies in those markets because not everybody is there, but it’s not like a decade ago where it’s like New York, San Francisco or Chicago and that’s it,” Hall said. “I think you’re definitely seeing more people having more experience in the U.S. locales and markets. You’re definitely seeing new markets open up.”
Vanderslice noted that Austin, Texas, has become a major market for foreign investors as the definition of gateway markets expand. In terms of product types, he said multifamily and industrial have been attracting foreign capital, with office and hospitality holding less appeal.
“Multifamily investment by foreigners has gotten big, [accounting for] 30 percent over the last couple of years, definitely industrial,” he said. “From what we’ve seen, multifamily have been bid up by foreign bids and industrial and even though some people have stretched the definition of industrial to include cold storage.”—A.S.
Siobhan O’Donell, Casey Klein, Chris Allman and Jeff Fastov. Credit: Jon Endow
The Ins and Outs of Construction Debt
“The road to success is always under construction,” Lily Tomlin once quipped. And the trio of development experts that were quizzed by Ballard Spahr’s Siobhan O’Donnell have seen quite a few bricks in their time.
The lively panel included some gentle—but seemingly necessary—cautioning.
“Every time the market gets peaky it seems that every borrower is a great borrower and every deal is a great deal,” Chris Allman, a managing director at CIM Group, said, adding that developers should choose their construction lender very carefully. But, “a lot of borrowers aren’t doing that.” And he should know, being both a lender and a borrower (CIM borrows between $5 billion and $7 billion per year).
Casey Klein, a principal of Crescent Heights, is an active borrower who’s busy closing significant debt deals—recent refinances include $734 million in CMBS financing for two of its luxury residential properties in L.A. and San Francisco, namely Ten Thousand and NEMA San Francisco—but said that when it comes to picking a construction lender, the post-close relationship is actually key.
Jeff Fastov, senior managing director at Square Mile Capital Management,concurred, saying that it’s all about “life after you close, and doing the admin stuff as early as possible.” Echoing sentiments from earlier in the conference, Fastov warned against being lured by attractive pricing offered by inexperienced lenders.
“It’s in the nooks and crannies—if a deal isn’t put together well, all the basis points in the world won’t make up for a lender who can’t keep up with the [draw down] schedule,” he said.
Indeed, these tricks ain’t for kids, and borrowers should be wary of those who aren’t necessarily fully versed in the nuances of the complex world construction, Allman said.
“Be careful what you wish for. There are a lot of lenders doing these deals who don’t understand how construction works,” he said. “And when things go wrong and they’re faced with the proposition of assuming that project, they freak out.”
Strengthening its foothold in the debt space, CIM only lends where it builds, Allman said, which gives it a major leg-up in the understanding of those markets. Additionally, having CIM in the capital stack often sweetens the deal for potential borrowers, he said (and Klein agreed).
As for those lenders dabbling in value-add deals that include quasi-construction? Once again, proceed with caution, borrowers.
“Those deals can be even more difficult than ground-up construction,” Allman said, using the example of an 80-year-old building that needs significant rehab as something that needs expert attention.
It’s not just the lenders who are under scrutiny. When asked what makes a good borrower, the panelists also had plenty of boxes to check.
“They should have a strong balance sheet and reputation, a good track record and haven’t given any assets back,” Allman opined. Construction lending is also a relationship business and so Fastov asks himself, “can we add value to their business, and can we do 10 more deals with them?”
But, there is no doubt that “it’s a great time to be a borrower,” Klein said, adding that even when doing big, heavy-lift loans, capital continues to flow to top-tier sponsors with well-located assets.
Indeed, well-located properties decrease leasing risk, which is a key consideration in development lending. Or, more simply put, “We like it when a building fills quickly,” Fastov said.
But, it also comes down to supply and demand. And one interesting market from a case-study perspective is San Francisco.
“The demand there is of the chart, but because of that values are pushed way above trend,” Fastov said.
When the conversation swung around to co-living and co-working properties, panelists agreed that the property use reflects a broader theme: increased importance being placed on a sense of community at properties.
“Mixed-use is a great blend for us,” Fastov said. As an example, Square Mile provided a $30 million preferred equity investment for the construction of Property Markets Group’s X Miami Project—a 462-unit rental tower in Downtown Miami that includes co-working space and The Guild hotel.
As a final word, if things do start to go sideways, speak up, panelists advised the audience. “It’s got to be an immediate conversation [with your lender],” Allman said. Fastov concurred, saying that this sometimes-difficult chat has to come early so there can be a rebalancing.
“Be forthright, and provide real-time info,” Klein said. “In particular, what are you doing to rectify your situation?”—C.C.
In the Tranches. From left to right: Bill Fishel, Steve Fried, Alan Flatt, Warren De Haan, Charlie Rose and Seth Grossman. Photo: Jon Endow
In the Tranches: Credit Standards, New Entrants and Opportunities
What does the next year hold for commercial real estate lending? Experts from major institutions taking part in CO’s panel were divided.
When asked by moderator Bill Fishel, a senior managing director and L.A. office co-head at HFF, about changes in credit standards from the same time last year, several said they were holding strong.
“To the credit of those lenders, the underwriting standards have varied greatly from the last cycle, 2005, 2006, 2007, when everything became more elastic,” Seth Grossman, a senior managing director at Meridian Capital Group, said.
“This time around, you’re not seeing a ton of that. You’re still seeing strict underwriting in the fixed-rate business.”
However, where there is some slippage, he said, was through the entry of new smaller sized players in the space where underwriting is being pushed.
Charlie Rose, a managing director at Invesco Real Estate, said he has seen refinancings being done on appraised values.
“Deals are getting done at 70 to 75 percent loan-to-value, but the valuation is inflated so it’s actually 80 percent. Those real LTVs are a concerning trend,” Rose said. “We’ve also seen a movement toward more [covenant]-light type deals, so longer untested terms, and just lighter cash management.”
Alan Flatt, a managing director at Wells Fargo Bank, said instead of what they did in cycles past, his organization and banks in general are staying lower risk and providing their A-notes or warehouse lines to other firms, which has become a big part of his organization’s strategy. By doing so in today’s current lower leverage environment, he said, “that risk is bifurcated, which is probably healthier for everyone.”
“What we’ve done with other cycles, where we did go off the leverage curve, it ended badly for us, so no thanks,” he said.
Another change from past markets, that has “amazed” Flatt is how the current cycle continues to evolve in what he classified as “mini” or “counter” cycles where investors are jumping into perceived higher-risk sectors, like retail.
“I’ve seen some really good retail opportunities lately. We’ve seen some good hotel opportunities lately which is late cycle. We’re making a bridge loan to a fund that has limited service hotels and the fund has three to five years left on the fund life and we went in and provided a loan there,” he said. “There are still good opportunities in the market and it’s been interesting…You can say it’s late in the cycle or there’s a trade war, but still, individually, there are opportunities.”—A.S.
Meridian Capital Group announced today that its Institutional Investment Sales Group, led by Helen Hwang, has been hired to market an outstanding Upper East Side development site at 1299 Third Avenue, located between East 74th and East 75th Streets. The shovel-ready site is being offered with completed plans that contemplate a 31-story, mixed-use tower totaling 143,000 square feet.
Designed by an internationally-acclaimed architect, 1299 Third Avenue will be a timeless residential tower with 47 classic residences that will uniquely cater to families, which account for over half of the Upper East Side’s condo demand. Modern, well-apportioned homes at the development will be fully amenitized and feature picturesque views of Central Park, the East River and Midtown Manhattan.
“The East 70s market has a high barrier to entry that has seen virtually no new condo supply in recent years,” said Ms. Hwang. “1299 Third Avenue offers the rare opportunity for a developer to quickly enter into this exclusive market.”
Unlike areas of Manhattan that have experienced a significant run-up in supply since 2010, the exclusive East 70s neighborhood on the Upper East Side has added just over 130 units—only 2% of inventory—during this time. Barriers to entry that contribute to the area’s supply constraints include several expansive landmark districts and limited availability of developable land parcels.
1299 Third Avenue is located in the neighborhood of choice for families—the Lenox Hill neighborhood of the Upper East Side. Regarded as a bucolic, friendly community, Lenox Hill is home to some of the City’s top parks, schools and cultural institutions. The highly amenitized neighborhood is also replete with shopping and dining destinations and offers numerous transportation conveniences.
Helen Hwang, Senior Executive Managing Director of Meridian’s Institutional Investment Sales group can be reached at (212) 468-5930 or hhwang@meridiancapital.com.
Park Slope eatery Grand Canyon Diner is opening an outpost at 300 Schermerhorn Street in Downtown Brooklyn, Commercial Observer has learned.
Grand Canyon owner Gonazalo Carreto signed a 15-year lease for a 4,000-square-foot ground floor retail space in the new Holiday Inn hotel between Bond and Nevin Streets, according to Meridian Capital Group. The asking rent was $300,000 a year.
The restaurant, dubbed Grand Canyon Bistro, is expected to open in July. This will be Carreto’s fifth restaurant in Brooklyn, along with locations in Park Slope, Brooklyn Heights, Windsor Terrace and the Columbia Street waterfront. The American and Mexican diner opened at 143 Montague Street in Brooklyn Heights last year, as CO reported at the time.
The hotel’s previous retail tenant was Korean bbq spot Seoul Brasserie. Developer Krishna Mehta completed the 14-story, 245-room Holiday Inn in 2016.
Meridian retail leasing brokers James Famularo, Ben Biberaj and Logan Ryan represented both sides of the deal.
“We are very bullish on Downtown Brooklyn,” Famularo said in prepared remarks. “When we took this assignment, we knew we’d have activity from the onset but didn’t anticipate five offers in the first week. Needless to say, the landlord is extremely happy with the result of our efforts.”
Decron Properties has picked up a $125 million mortgage to refinance a multifamily-and-retail property in Los Angeles, Commercial Observer can first report.
The ten-year financing knocks out previous debt from the same lender on Playa del Oro, a 405-unit complex at 8601 Lincoln Boulevard in Playa del Rey, just north of Los Angeles International Airport. Decron will pay a fixed interest and won’t owe principal payments until the loan matures in 2029, according to Meridian Capital Group, whose Seth Grossman and Jackie Tran advised Decron on the financing. Meridian identified the lender only as “a life insurance company,” but a source close to the transaction pointed to Barings, a subsidiary of MassMutual headquartered in Charlotte, N.C.
Built in 2009, the five-story property also has almost 28,000 square feet of ground-floor retail space, which is shared by eight tenants. The largest is an LA Fitness gym, but others include The UPS Store and a handful of food-and-beverage shops.
“Due to the asset’s tremendous sponsorship, coupled with such strong lender demand for class-A Southern California multifamily and mixed-use products, bids for the debt were extremely competitive,” Grossman said in a statement. “During negotiations, the existing lender agreed to waive the remaining yield maintenance on the loan that was to be paid off if they were given the opportunity to refinance the loan, creating an edge to win the refinance that other lenders couldn’t match. This was a testament to what can unfold with a great sponsor-lender relationship and such a successful project.”
The project owes part of its appeal to a new western center of gravity in the Los Angeles megalopolis’ economy. In the last decade, the Silicon Beach area, centered just nort of Playa del Rey, has attracted companies including Google, Facebook and Salesforce, and developers have responded with a slew of high-amenity projects aimed at attracting their workers.
“That’s absolutely one of our prime demographics,” Eric Diamond, a Decron executive, told the Los Angeles Times in 2013, describing the rationale for the project. “The expectations they have for their landlords are no less stringent than the ones they have for themselves.”
To that end, the asset features a sauna, a spa, a swimming pool, a gym and a business center. Three miles from Pacific Ocean beaches, the property is the first phase of the Playa del Oro Master Planned Community, which will eventually expand to 14.5 acres.
Representatives for Barings and Decron didn’t immediately respond to inquiries.
Florida developer Grant Cardone has sealed $93.5 million in financing to fund the acquisition of an apartment complex near Fort Lauderdale, Fla., Commercial Observer can first report.
The loan funds Cardone’s purchase of Nexus Sawgrass, a 500-plus unit development in Sunrise, Fla.—a city about ten miles inland from Fort Lauderdale—according to Meridian Capital Group, whose brokers negotiated the debt. Meridian declined to name the debt’s balance-sheet lender, but sources with knowledge of the deal named New York Community Bank.
With a 12-year term, the loan has a fixed interest rate of 3.69 percent for the first seven years, and Cardone won’t be on the hook for paying down principal until 2024. Israel Schubert and Mark Krupenia worked on the deal for Meridian’s team.
Cardone “identified a great property and executed the deal flawlessly,” Schubert said in a statement.
Cardone will rebrand the property 10X Living at Sawgrass. An announcement from Cardone’s company, Cardone Capital, did not state the price of its acquisition from the previous owner, Equity Apartments. The firm did say it had now completed transactions worth more than $350 million since December 2018.
Standing at 2903 Northwest 130th Avenue, the complex, built in 2014, features a mix of one-, two- and three-bedroom apartments on a campus that also features a swimming pool, tennis courts and a children’s playground.
One-bedroom apartments of roughly 800 square feet start at $1,540 per month, according to the property’s website. Three-bedroom units sized up to 1,269 square feet cost as much as $2,180 per month.
Cardone’s business model entails raising equity from casual and accredited investors alike, who—unlike real estate investment trust investors—become full partners in the real estate he buys, according to his marketing materials.
“I would never invest in an REIT. A REIT is a piece of paper…and it’s not backed by anything, except the promises in that piece of paper,” Cardone says as he rips a piece of paper in half, in a video posted to his company’s website.
His company has raised close to $200 million in the last year and a half, it said in its announcement of the acquisition.
Cardone and New York Community Bank did not immediately respond to inquiries.
“Baja” was the name of Drew Anderman’s high-end take on a Tex-Mex eatery.
It was the late 1980s.
Anderman, 53, now a senior managing director at Meridian Capital Group, was in his early 20s and on his way to earning a Bachelor of Science in industrial management at Carnegie Mellon University in Pittsburgh, Pa.
Like many college students, he was eager and aspirational.
He grew up in New York’s Upper West Side and returned home routinely while studying. During his trips back, he noticed an appetite among his fellow New Yorkers for high-end Tex-Mex-style food, mixed with an energetic and lively bar and nightlife scene. He also knew young people in Pittsburgh were looking for alternatives to the Steel City’s nightlife offerings.
Anderman set out with two Norwegian partners—one a Carnegie classmate, the other a close friend of said classmate but a student at West Virginia University—to deploy the concept in Pittsburgh. (No, the menu wasn’t Scandi-Mex, or anything that married Northern European to Central American cuisines. Just a diverse trio of owners.)
“Maybe it was us being crazy and young, but we had this idea and we decided to roll the dice,” he said.
He and his two partners arranged a few hundred thousand dollars for their endeavor; it was a harbinger to his current role at one of the country’s most dominant mortgage brokerage houses.
The restaurant opened in the spring and enjoyed success early on, but it didn’t make it through the first year.
“We had absolutely no idea what we were doing, so for a while it was great, and then, like a lot of restaurateurs who don’t know what they’re doing, we hit a wall,” he said with a laugh.
Sure, it was one of those youthful learning experiences. But it also set the stage for Anderman’s approach to risk-taking in the coming decades. When he found something intriguing and exciting, he’d seize on the opportunity and tally the payoff in terms of knowledge gained. All this would lead to his ascendance to one of Meridian’s debt and equity heavyweights.
Anderman, who joined Meridian in 2014, shares an office with a few senior members of his team of seven debt and equity professionals. He sits facing a pane of glass, looking out over a bullpen where a couple of junior members sit, working hurriedly.
His general demeanor is that he appears rushed, that is, until he sits down with you on dedicated, reserved time. To him, time is money, and it’s the most valuable commodity.
“He tells you the good, the bad and the ugly and he doesn’t want to waste your time,” said LoanCore Capital’s head of originations, Brett Kaplan. “[Working with him], you know that there’s a high probability you’ll get the deal closed, and he’s good at getting a client to the table, bringing both sides together to negotiate.”
While you may not find Anderman’s name trumpeted on Meridian’s website—and he may not even be the first brokerage name that comes to mind when you think of the most flamboyant and extravagant personalities in New York—the “charming but aggressive” Anderman and his team quietly surpassed $3.5 billion in deal volume last year.
Where you will find Anderman is in his element: his work, and everything that comes with it—from client lunches and dinners to celebratory team outings. No surprise, one of his favorite activities is eating out, finding the next best venue to enjoy with his wife and two kids or to share with a client.
He’s the son of two Austrian-born parents; his dad owned and operated a pharmacy in Manhattan and his mom worked at the Metropolitan Opera. Anderman grew up skiing in Austria and across the U.S. and remains an avid skier today. He also tries to get in a few matches of tennis in his free time.
RAL Development Managing Director Stuart Taft met Anderman about six or seven years ago and said he was “introduced to me as one of the more talented debt brokers [in the city] by mutual friends,” Taft said. In April, Anderman and his team lined up about $120 million in construction debt from Bank OZK for RAL’s planned 22-story Union Square Tech Training Development Center at 124 East 14th Street.
Anderman and his team are known for being versatile, for having experience working in several lending disciplines, and operating across “many different food groups,” Taft said.
“He’s surrounded himself with very capable people and that allows him to focus on what he needs to do; [Meridian has] a strong platform and he’s able to leverage that,” Kaplan said. In March, LoanCore, teaming with KSL Capital, worked with Drew and his team in arranging $155 million to refinance Lightstone Group’s newly-built Moxy Chelsea hotel at 105 West 28th Street.
Anderman’s senior team includes senior vice presidents Ben Nevid, who brings development experience from Muss Development; Alan Blank, who’s worked alongside Anderman since around 2005, Blank said; and Josh Berman, who said Anderman has a “memory that is unparalleled in my 13 years of working…He can recall details at the drop of a hat, and he’s hands off. But, when in the life cycle of a deal, when it’s important that he asserts himself, he brings a reassuring and calming voice.”
Fairstead Capital’s Jeff Goldberg said, “Drew looks beyond [the typical playbook], bringing in insurance companies or lenders you might not have heard of, like regional savings banks that for one reason or another want exposure…They really customize the terms well for deals.”
Goldberg raved about the execution Fairstead, with partner Blackstone, received in 2015 from Anderman’s team on its $690 million acquisition of a 24-property multifamily portfolio in Manhattan. The joint venture locked in a five-year $592 million loan from Annaly Capital Management for its purchase.
“We view them as part of our team,” Goldberg said, adding that he now calls on Anderman for things like FHA executions, where he normally wouldn’t use a broker. “Drew’s background gives his team a different level of credibility compared to other brokers. We rely on them heavily. He was recommended to us for [FHA executions], so even there he’s able to add value. Debt is such an important part of your execution that their ability to source and negotiate really sets [Fairstead] apart as a company,” he said.
Anderman is “a no bullshit guy,” said Square Mile Capital Management CEO Craig Solomon. “He doesn’t “delegate to others…he’s right in the mix.”
Anderman and his team recently brought in Square Mile as an equity capital partner on an over-$200 million position for the bidder in the auction sale of 2.5 million square feet of vacant industrial fulfillment centers coming out of the Toys ‘R’ Us bankruptcy.
“It was a bankruptcy auction and a complicated deal, transpiring over a two-day period,” Solomon said. “[Drew] did what he does, putting two parties together. This time it was the recapping of the equity. [We] could handle the twists and turns and can be reliable [in a deal like that one]. Drew has a tendency to identify the best fit under the circumstances.”
De Baja a Alta
It took some time for Anderman to become an ace.
Humbled by the experience with his failed restaurant venture, Anderman returned to New York. It was the early 1990s, and he said he had to “settle back into reality.”
“I didn’t know what to do at the time,” he said. The economy was unstable, twisting in the throes of the savings and loan crisis that dominated the late 80s and early 1990s, and he said New York City was “upside down…and the political climate, overall, was rocky.”
He turned to Wall Street, thinking that “something” there would prove interesting. He interviewed with a handful of companies and ended up working on the floor of the American Stock Exchange for a short time.
“I quickly realized it wasn’t for me, working in the trading environment or in the stock brokerage environment,” he said. He made his way into commercial real estate finance by happenstance after meeting “someone who knew someone who was starting something.”
In his late 20s, he landed a junior position at Transatlantic Capital where he analyzed CMBS deals, learned the fundamentals of real estate finance and every step along the line in turning a mortgage request into an actual loan.
Transatlantic, at the time, was the evolution of the small loan conduit business of Nomura Direct and became the in-house conduit operation of Deutsche Bank.
After a couple years there, a former Transatlantic Capital coworker introduced Anderman to the founder of a startup, Capital Thinking, and he seized on the opportunity to start their lending group. This was just about a year and a half before the dotcom crash. “The internet was riding high and there were a lot of big ideas and it seemed worthwhile and interesting to try, so I did,” he said.
The startup aimed to streamline the loan origination process for commercial business. “In hindsight, [it] was never going to happen because the commercial business is very different from the residential online mortgage business,” he said.
After the tech bubble bust, Anderman returned to familiar ground. “I went back to what I knew, which was being a lender,” he said.
That brought him to CIBC in the beginning of 2001, where he spent just under four years, before moving on to Credit Suisse. At the latter, where he said he “knew a variety of the senior people from previous lives,” the bank was “on the verge of becoming the most dominant force in commercial real estate finance.”
His tenure there was during a peak for the bank, just before the financial crisis, and before “the end, when the market shut down and the group was disbanded, and then over time, we all got weeded out.”
One deal he was involved with at Credit Suisse helped propel him to his next stop: The bank financed the acquisition of an almost billion-dollar portfolio of mid-Atlantic multifamily assets for Larry Gluck’s Stellar Management.
“The CMBS market dried up literally as we were closing the loan, but we still got it done,” Anderman recalled. “And to be able to exit the loan, we had arranged the sale of a very senior piece of the loan to Fannie Mae.”
That deal was Anderman’s first exposure to agency lending.
As Credit Suisse’s commercial real estate business was being unwound, one of its investments, Column Guaranteed, merged with lenders Green Park Financial and Walker & Dunlop (W&D), forming what is now, together, the renowned multifamily behemoth, W&D.
With the industry still reeling from the early blows of the crisis, Anderman helped open W&D’s New York office in the first few months of 2009.
“I went from the CMBS market, which had dried up, to the agency market, which I knew nothing about…but I made a calculated bet that the agencies would keep lending and the multifamily market would remain liquid,” Anderman said. He learned the business and its nuances, but after a few years at W&D, he grew tired of the agency world.
“I felt that, where I was in my career, I wanted to expand and continue to grow and be more creative,” he said. “I thought I did as much as I could do in that role.”
Anderman wanted to be part of a dominant entity in New York City, where he felt his range of experience would prosper. He was exploring a move back to Wall Street via a position at Cantor Fitzgerald, he said, driven by notions from his previous connections at Credit Suisse.
But he suddenly woke up one night and was checking emails when he came across a routine message from Meridian. He got an urge to reach out to the firm’s co-founder, Aaron Birnbaum, who he’d known for around 15 years but hadn’t seen in several months.
“It sounds like something out of make believe,” Anderman said. “So, I sent him a quick [message]: ‘How’s it going, do you want to meet for coffee and catch up?’ ”
Birnbaum wrote back almost immediately and agreed to meet for a coffee the next day.
They met at the Four Seasons Hotel and it was “like we had seen each other an hour ago,” Anderman said. To his surprise, Birnbaum already knew that he was considering a change and recommended a place at Meridian.
“I asked him what he thought about it,” Anderman said. “He said something along the lines of, ‘You’re making a big mistake, going back to being a lender.’ ”
Just a few minutes after his declaration, Birnbaum ended the 20-minute chat to head off for another meeting. “I just couldn’t get that thought out of my head,” Drew said. “So, a day or so later, I emailed him to get together. He emailed me an hour later, saying, ‘I want you to come down and have lunch with Ralph [Herzka] and me.’”
It was just a few days before Thanksgiving 2013. Herzka, Meridian’s chairman and CEO, gave Anderman his take on the brokerage and its growth, and reiterated Birnbaum’s earlier assertion that Drew would be making a mistake by not joining.
“Ralph is a convincing individual…he said a number of things that resonated with me,” Anderman said.
Anderman was pondering the move as he boarded a flight at JFK on his way to Los Angeles for Thanksgiving. He said he was being hounded with messages from both Meridian and Cantor and decided to shut down his phone.
“When we landed at LAX,” Drew said. “I turned my phone back on and decided at that moment that I was going to join Meridian; we hadn’t even worked out any terms.”
“I was petrified,” he said, with a laugh. “I thought I was crazy to become a mortgage broker and I was going to piss away my entire life.” He resigned from his previous post and started at Meridian in early January 2014, he said.
Anderman’s first recruit at Meridian was none other than Alan Blank, who he had worked with in his early days at Credit Suisse and who worked alongside him in establishing W&D’s New York presence.
Since joining, Drew and his team have arranged over $14 billion in debt and equity.
One of Greenpoint’s most notable new residential projects has landed a $175 million refinancing from HSBC, city property records show.
The project, at 21 India Street and 23 India Street on North Brooklyn’s East River waterfront, consists of a 40-story tower split between condominium units and rental apartments, as well as a broad adjacent five-story building filled entirely with rentals. The project is backed by developers Mack Real Estate, Palin Enterprises and Urban Development Partners.
Palin bought the property for $84.6 million in 2006, and the development partners, who convened in 2014, grabbed a $290 million construction financing package from the New York State Housing Finance Agency in 2016, The Real Deal reported at the time. That debt was transferred to J.P. Morgan Chase in April. The balance was reduced this week before the HSBC refi when Palin and Mack paid down a $90 million portion of the balance, according to a satisfaction-of-mortgage document.
Drew Anderman and Josh Berman of Meridian Capital Group arranged the debt on behalf of the sponsors, according to a Meridian spokesman, who added that the transaction is a floating-rate balance-sheet deal.
As part of the initial deal with the HFA in 2016, Mack and Palin agreed to set aside about 125 of the complex’s 640 apartments for low-income renters. Last January, 6sqft, a real estate website, reported that the property, known as The Greenpoint, had begun accepting lottery applicants for the affordable units, which are set to go for between $613 for a studio and $1,230 for a two-bedroom unit.
Market-rate renters have much higher prices to contend with: $3,000 for a studio and nearly $5,380 for a two-bedroom apartment in the Ismael Leyva-designed project, according to the building’s website.
Amenities include a gym, an on-site garage, a basketball court and a lounge.
Although the skyscraper isn’t even one of Brooklyn’s 20 tallest, it’s a striking addition to the skyline above Greenpoint, a formerly industrial area that’s quickly following the path trodden by neighborhoods like Williamsburg and Long Island City to become a well-heeled residential mecca east of the East River.
Average monthly rent for a two-bedroom apartment there has shot up nearly 15 percent over the last twelve months to $3,700, according to residential brokerage MNS.
Representatives for Mack Real Estate, Palin and HSBC did not immediately respond to inquiries.
A 25,000-square-foot cast iron building at 457 Broome Street in Soho has traded hands for $21.3 million, Commercial Observer has learned.
The six-story building, between Mercer and Greene Streets, was acquired by Alfred Sabet’s Sabet Group, the investor confirmed to CO.
The property includes two retail units, nine residential units, and one office unit, according to information from Meridian Capital Group, which brokered the deal for the seller. Meridian’s team included David Schechtman, Lipa Lieberman and Abie Kassin.
Lazaro SoHo and Blank Studio NYC occupy the retail space at an average rent of $117 per square foot, which is well below current market rates, according to Meridian.
The property has been owned by BEAM-RICH INC. since 1983, according to property records.
The building, constructed in 1923, is still zoned for industrial use. At least one of its units was converted to a live-work loft for artists in the 1980s, at a time when the city legalized select residential uses of industrial buildings in Soho. At the time, a legal dispute arose between the landlord and tenant over whether the tenant had the correct artist certification that allowed for the conversion.
The family-owned Sabet Group has purchased a handful of mixed-use properties in Lower Manhattan over the last few years, including the $23 million purchase of a 30-unit building at 236 East 5th Street in the East Village earlier this year, according to property records.
A Hell’s Kitchen apartment building has pulled in a $43 million mortgage from AIG, according to property records.
The seven-story building, known as The Cameo, went up in 2001 at 311 West 50th Street, between Eighth and Ninth Avenues. The debt deal replaces the outstanding portion of a $42 million financing from BankUnited that closed in 2015, and also adds $2.2 million in debt in the form of a new mortgage.
Representatives for AIG and for the building’s owner, TheTorkianGroup, did not immediately respond to inquiries. Aaron Birnbaum and Carol Shelby of Meridian Capital Group were responsible for arranging the debt, a spokesman for the company said.
It’s no skyscraper, but the building is broad for a mid-sized New York apartment building: It takes up about a quarter of the long block between the avenues and has 14 apartments per floor. An underground garage for residents has 50 parking spots, and there’s also a gym and private garden for building denizens. Built by Douglaston Development, the building sold to Torkian for $72 million in 2015, a deal Torkian financed with the BankUnited debt that the AIG loan replaces.
Last week, someone finalized a deal to rent a one-bedroom apartment in the building for $4,150 per month, according to StreetEasy. Also in July, a studio came off the market for $3,125 per month, and in June, a three-bedroom unit went for $5,795.
Torkian also turned to AIG for a loan in January, when the multinational insurer gave the developer a $135 million debt package for a building Torkian recently developed on West 33rd Street, TheSolari. The loan in that case replaced financing from Bank Leumi that had funded the new luxury tower’s construction.
Since January, Torkian has been the target of a City of New York lawsuit alleging that the landlord illegally offered units in some of its buildings, including The Cameo, as short-term lodgings. A hearing about a possible preliminary injunction against Torkian is scheduled for October. In a New York State Supreme Court filing in early July, lawyers for both sides agreed that a judge’s temporary restraining order, issued in January to prevent Torkian from listing short-term rentals in its buildings, remains in effect until the case is decided.
A lodging company, HotelPlanner.com, still lists 10 suites available at nightly rates in a building at 311 West 50th Street, which it calls Midtown Suites, but a phone representative at the company’s reservations line said that rooms in the building were no longer available.
Apple Bank for Savings has found a new chance to lend in its home city, originating a $42.5 million refinancing on a residential rental building near Union Square, according to city property records.
In a deal that closed this week, the landlord at 30 West 18th Street, The Hakimian Organization, turned to Apple for a refinance of the outstanding balance of a $45 million loan from New York Community Bank dated March 2015. The new deal consists almost entirely of existing debt transferred to Apple, but it does include about $750,000 in new financing to bring the loan amount to a round $42.5 million.
Jeff Weinberg and Rael Gervis of Meridian Capital Group brokered the deal, a spokesman for the company said.
The building, with an entrance between Fifth Avenue and Avenue of the Americas, pushes straight through its block, with additional frontage on West 17th Street. Built in 2005, the 13-story property hosts 100 apartments, as well as a gym for residents and a rooftop deck. Retail space at street level is split by Scampi, an Italian restaurant, and Swerve Fitness, a spinning studio.
Planned by architect Richard Cook, the property’s design — understated by the showy standards of new-construction rental buildings in the city — blends well with the early-20th-century beaux-arts architecture on display elsewhere in the surrounding Flatiron District. Through his firm, Cookfox, the Chicago-based architect is also responsible for Midtown’s One Bryant Park — which too was the subject of a major refinancing this week, as Commercial Observer reported.
From offices in Midtown, Hakimian owns about a dozen Manhattan residential properties, all but one of which stands below 42nd Street. One of its largest is the 37-story tower at 75 Wall Street: Others include The Chelsea Grande on West 20th Street and 184 Lexington Avenue near Gramercy Park.
Six Manhattan office towers round out the landlord’s portfolio. It also controls a hotel, the Andaz, co-located with its rental units at 75 Wall Street.
Representatives for Hakimian did not immediately respond to inquiries. An Apple Bank spokeswoman declined to comment.
Blue Roc Premier has scored $67.3 million in financing for two multifamily assets in Lakeland and DeLand, Fla., Commercial Observer can first report.
New York Community Bank provided the debt, sources close to the deal said.
Meridian Capital Group’s Seth Grossmanand Sarah Kuebler — both based out of the brokerage’s Solana Beach, Calif., office — negotiated the refinancing. Meridian officials declined to comment on the lender’s identity but said the loans include flexible step-down prepayment penalties and feature interest-only payments for part of the loans’ terms.
The Park at Portofino is a 444-unit property located at 1801 Princeton Lakes Drive in Lakeland, Fla., roughly 10 miles from Tampa. It includes one- to three-bedroom units with balconies and fireplaces. Amenities include a 24-hour gym, a basketball court, a playground and a swimming pool.
The Park at Capri, located at 129 East Villa Capri Circle in DeLand, Fla., comprises 224 one- and two-bedroom units. Property amenities include a swimming pool as well as tennis, volleyball and basketball courts.
This time last year, Blue Roc refinanced three of its other multifamily properties — two of which were in Florida and one in Alabama — with an $80 million Capital One loan, as reported by CO. Grossman and Kuebler arranged the financing in that instance, also.
“Blue Roc Premier has proven their capabilities, as we have seen time and again,” Grossman said at the time of the previous financing last August. “While none of the properties are in the same market, each has experienced dramatic improvement in performance attributable to management.
Officials at NYCB did not immediately return a request for comment. Officials at Blue Roc could not be reached for comment.
The debt recapitalizes two Hudson Yards area hotels and the site of what will soon be one of Queens’ tallest buildings. Meridian Capital Group’s Shaya Ackerman negotiated the debt, sources said.
First up, Mack Real Estate provided a $201.5 million loan for the Courtyard by Marriott Hudson Yards at 461 West 34th Street, a 399-key hotel set to open next month. The 29-story asset will include a restaurant, meeting space, a fitness center and ground-floor retail space which will be occupied by a Chase bank branch. Loan proceeds will take out a construction loan and other financing on the property that was provided by Moinian Group.
The tech-forward hotel is geared towards sophisticated travelers, and will be managed by Endeavor Hospitality Group. Its rooms will be larger than your average New York digs and its fitness center will be “top of the line,” one source said. When completed, the hotel will have a direct connection to the 34th Street-Hudson Yards subway station.
A couple of blocks away, the lender upsized its $88 million loan—from June 2018—to $100 million for a soon-to-be-built, 42-story Marriott Tribute hotel at 450 11th Avenue. The 216,000-square-foot-property sits just across from the Javits Center between West 36th and West 37th Streets. The additional proceeds this time around fund predevelopment costs and also the hiring of Tel Aviv-based Moshe Tzur Architects, sources said. Marx is also “well along in the process of raising $66 million in EB-5 financing for the project and hopes to complete the raise shortly,” one source added.
Both hotels are in prime position to benefit from the wave of development in the neighborhood as well as the influx of tech and financial firms to the area, including Amazon, as first reported by the New York Post.
Lastly, Marx scored a $67 million loan for 71-05 Parsons Boulevard in Flushing, Queens, which will soon be a 1-million-square-foot residential rental project. As reported by The Real Deal yesterday, Marx prefiled plans with the city’s Department of Buildings yesterday for two 37-story residential towers comprising 488 units at the site, with four floors of underground parking. As TRD also reported, Marx Development Group’s Israeli bondholders approved the sale of two vacant land parcels from its bond-issuing holding company back to Marx himself for $54 million in May.
Sources told CO that the $67 million loan will be used to pay down Israeli bond debt.
A spokesman for Mack Real Estate Credit Strategies declined to comment. A Meridian spokesman confirmed the firm brokered the deals but declined to comment further. David Marx did not immediately return requests for comment.
