Go to any commercial real estate industry event, and the disproportionate numbers of men versus women in attendance are hard to overlook. That commercial real estate—and the finance end of the business, in particular—can be a lucrative career path begs questions about why women remain so outnumbered.

To get a little insight, Mortgage Observer sought out 10 industry heavy hitters who are at the top of their games to see if there were commonalities in what drew them to the industry and what helped them progress in their careers.  

Right away, there were several themes among those we spoke to for 2014’s women’s issue. These included a prevailing sense of optimism, the flexibility to remain open to the unexpected, a love of the commercial real estate industry and, predictably, hard work. Lots and lots of hard work.

530 Broadway

A joint venture led by Jeff Sutton's Wharton Properties has nabbed a three-building site at 530 Broadway from Joseph Sitt's Thor Equities for $326 million. The sale closed on March 6 and appeared in public records today.

The retail mogul bought the 11-story property to extend his dominance in Soho. It hit the market in February 2013 and Mr. Sitt agreed to sell it to the new owners that September. 

Meridian Capital Group arranged $200 million in acquisition financing from Morgan Stanley for the office and retail property. The New York-based mortgage brokerage firm secured the financing on behalf of the joint venture, which includes SL Green Realty Corp.

The three-year financing features a “competitive Libor-based spread” and two, one-year extension options, a Meridian spokesperson said without naming the lender.

The 40,000-square foot property, located at the corner of Spring Street, is made up of three interconnected buildings. Eastern Mountain Sports occupies the ground-level retail space.

The three buildings sit across the street from 529 Broadway where another partnership consisting of Wharton Properties, Aurora Capital Associates and Thor Equities is constructing a 34,000-square-foot retail building.

Meridian’s Ronnie Levine and Tal Savariego negotiated the acquisition financing.

“530 Broadway not only has an irreplaceable location but its sponsorship is uniquely positioned to execute a value-add strategy over time and capture additional upside from the asset,” Mr. Savariego said.

Eastdil Secured's Douglas Harmon and Adam Spies marketed the property. Messrs. Harmon and Spies weren't immediately reachable for comment, and nor was Mr. Sitt.

Update: This story was edited to include financing information.

During last year’s Mortgage Bankers Association commercial real estate finance conference (CREF), Grace Huebscher, president of leading multifamily lender Beech Street Capital, found clarity on a topic she had been considering for some time—that staying ahead of the competition would require the support of a larger institutional partner. Capital One, Beech Street’s primary bank since 2010, had been on her radar, along with other top players in the finance arena. But prior to the annual event, Ms. Huebscher had felt that time was on her side.

A deeper sense of urgency set in as she listened to her peers speak about the challenges and changes ahead, from agency reductions to the return of the banking industry. That solidified a thought she and her partners had been entertaining for more than a year.

Grace Huebscher (Photo by Susana Raab)

“When I went to CREF, I realized that the market was going to be dramatically different very quickly,” the 54-year-old Fannie Mae veteran said in a recent interview in her Bethesda, Md., office. “Even before that, we had tried to create joint ventures and create our own products like bridge. We were even talking about a J.V. on CMBS. But either the partners weren’t right or the economics weren’t right. We just couldn’t get anything to work that made sense economically and strategically.”

After the conference in San Diego ended, Ms. Huebscher returned to Bethesda with a more concrete plan. “That’s when we started in earnest and hired an adviser and went through this whole process,” she told Mortgage Observer in Beech Street’s agency lending office, previously the company’s headquarters before the Capital One acquisition.

That acquisition, which closed in November 2013, made local and national headlines when it was first announced last August. With Capital One as Beech Street’s parent company, Ms. Huebscher and her nearly 140 employees—42 percent of them women—would have access to new clients, territories and lending products, including bridge loans and longer-term permanent financing.

“I wanted it to be Capital One,” she said. “A lot of it has to do with the fact that we share the same approach to clients and the same philosophy when it comes to hiring people.”

Capital One, in turn, gained access to agency lending with a further national reach due to Beech Street’s nine offices around the country, said Rick Lyon, the bank’s head of commercial real estate.

“We realized if we really wanted to be a significant participant in this marketplace, we needed a Freddie, Fannie and FHA license,” Mr. Lyon said, noting that Beech Street had vetted between 60 and 70 potential buyers before settling on Capital One.

A ‘Bigger Partner’

Within the first 30 days of the acquisition, Beech Street and Capital One closed their first collaborative deal to refinance a 242-unit apartment building near Philadelphia owned by the Galman Group. The companies provided a $34 million, 10-year loan on Valley Forge Towers North in King of Prussia, Pa., in late November 2013.

“The transaction didn’t quite fit with agency guidelines, so working together with Capital One’s balance sheet allowed us to satisfy a very important Beech Street client, a client which Capital One was eager to build a relationship with,” Ms. Huebscher explained.

The plan going forward is to further combine Beech Street’s agency lending capabilities with Capital One’s balance-sheet capabilities to become a more appealing option for new and long-term borrowers, said Mr. Lyon, who has been with the growing financial services company since January 2008. “We love their process and love the way they run their business,” he said of Beech Street. “We’re not doing anything to limit what they do today.”

Capital One, which started in Tysons Corner, Va., as a credit card company in 1994, boasts $297 billion in total assets, following several other acquisitions in recent years. Beech Street, co-founded by Ms. Huebscher in December 2009, manages a total portfolio of more than $11 billion and has grown its multifamily mortgage business from $1 billion in its first year to $4.4 billion in 2013. The acquisition has obvious benefits for both parties, according to several industry insiders.

Beech Street and Capital One declined to comment on the acquisition’s price tag for a second time in March. But two analysts told Mortgage Observer in August 2013 that they believe Capital One paid between $200 million and $250 million for Beech Street. Those analysts, who spoke on the condition of anonymity, said their estimates were based on Beech Street’s volume of business, including the company’s servicing fees and new origination fees, times a multiple of 10 to 15.

“With the GSEs post-crisis, we always knew that we had to be very vigilant,” said Alan Fishman, the chairman of Ladder Capital’s board of directors and the former chairman of Beech Street who was directly involved in the sale to Capital One. “It was that increased competition from the regional banks and the threat of rising interest rates, among other factors,” that spurred the decision to sell, he said. “It became clear that Beech Street needed a bigger partner that could do more things.”

Still, giving up ownership of the company was not an easy decision for him, Ms. Huebscher and the other partners, Mr. Fishman explained. “They were a better buyer than we were a seller,” he said. “We were emotionally conflicted about selling the company, because we really liked the business, and all of us got along so well. But we knew it was the right thing to do.”

Humble Beginnings

Ms. Huebscher, who was raised as one of nine children in North Haven, Conn., graduated from Kenyon College with a double major in economics and Spanish literature. Her first job out of college in 1982 was at Chase Manhattan Bank, where she worked in independent oil and gas lending, providing loans to wildcatters and family-owned oil companies, she said.

“It was a great trial by fire, partly because the oil crisis was starting to hit and a lot of the more seasoned personnel were leaving the bank,” she said of the role. “So I was thrust into a much larger role than I should have been for the age I was.”

From there, Ms. Huebscher moved onto a position at Security Pacific National Bank working in loan production. In 1987, she accepted a job offer at National Cooperative Bank, a former client of hers at Security Pacific that she had brought to the medium-term debt markets. The bank was looking for someone to run its real estate subsidiary, National Cooperative Bank Mortgage Company, and approached Ms. Huebscher to take over as the company’s president.

“I always tell people if you want to know what I’m all about, you just need to know that I grew up the middle child of nine children.” (Photo by Susana Raab)

“I was 27 at the time, and I said, ‘Are you guys crazy? I’ve never done a real estate deal. I don’t know anything about real estate. I’d love to work with you, but I don’t have any experience in this field,’” she remembered. “They said, ‘You know what? We think you’ll do great; you’ll learn.’”

The green executive and her team launched a conduit business at National Cooperative Bank in 1989, when Fannie Mae and Freddie Mac still dominated the space. At the time, she “didn’t even know what a conduit was,” she admitted. “I just started doing private placements to life insurance companies, and the life insurance companies said, ‘You know, if you could get these rated, I could buy more.’”

That conduit has become the flagship operation of National Cooperative Bank, which is a “major competitor of Capital One in New York on co-ops,” Ms. Huebscher pointed out. Her experience running that business taught her more than the nuts and bolts of originating. “It was also a realization that you can’t always meet your clients’ needs with what you have, so we had to create something [that did],” she said.

Working under Thomas Condit, the bank’s president and CEO at the time, also taught Ms. Huebscher how she wanted to lead, she said. “He had an environment where he hired people that he trusted—people who were smart, entrepreneurial, who cared about clients and who would do the right thing,” she explained. “He really let me run with the business.”

Friends on Her Side

In her longest stay at one organization, Ms. Huebscher spent 13 years working for Fannie Mae in nearly every division tied to multifamily between 1996 and 2008.

In the late 1990s, Fannie Mae’s top executives asked Ms. Huebscher to “jump-start” the company’s small loan business. She grew that business from about $400 million per year when she took it over to nearly $3 billion per year in the mid-2000s, she said. Ms. Huebscher achieved that growth through an agency program called MFlex, which services small loans similar to the Delegated Underwriting and Servicing (DUS) program with lower principal balances. Some of the biggest participants at the outset included Brooklyn-based Independence Community Bank, overseen by Mr. Fishman at the time, and Washington Mutual. Ralph Herzka of Meridian Capital Group was the origination source for that program, she said.

Then, the market collapsed in 2008 and changes came quickly. After the first wave of the financial crisis hit and Fannie Mae went into conservatorship, Ms. Huebscher lost most of her retirement savings, due to the company’s plummeting stock, she said. That year, she, Messrs. Fishman and Herzka and Meridian’s J. Jay Lobell began talks about creating an independent multifamily DUS shop. Two other Fannie Mae employees, Jeff Lee and Elie Tannous, came over to help form Beech Street’s management team when the company opened its doors in 2009.

“Grace is someone we always admired,” said Mr. Herzka. “Before we launched Beech Street, myself and Alan sat down with a full list. Grace was at the top of that list, and we recruited her.”

In December 2009, Beech Street received Fannie Mae approval, allowing it to do business with the GSE and opening up a huge segment of the market. That approval came through just 90 days after Ms. Huebscher and Messrs. Lee and Tannous left the organization.

“I think it’s probably a record in terms of the fastest approval Fannie Mae has given to a DUS lender,” Ms. Huebscher said. “Freddie followed very quickly thereafter.” Beech Street went on to become one of the nation’s largest government-insured multifamily lenders in its first few years of business.

Jeffery Hayward, Fannie Mae’s senior vice president and head of multifamily, said that while Ms. Huebscher had been an asset to the organization during her 13 years there, she has remained just as vital as an outside partner. “Grace, in her core DNA, wants double happiness,” he told Mortgage Observer, emphasizing his view of her as an “incredibly decisive” businesswoman. “She wants to know that she is making a difference and at the same time making a profit,” he said.

In December 2010, Beech Street’s first full year, the company won a deal with Starrett Corporation to refinance its 490-unit Two Bridges apartment complex along the F.D.R. Drive in lower Manhattan with a 10-year Fannie Mae DUS loan. That deal, brokered by Meridian, was for $175 million. “It was the largest deal we had ever done at that point,” said Ms. Huebscher, who declined to name the borrower and property. “The capital markets for selling the Fannie Mae MBS were a little bit weak in terms of liquidity when we went to price, so we ended up divvying up the one loan into two MBS, which had never been done before.”

Hilary Provinse, Fannie Mae’s vice president for multifamily customer engagement, who Ms. Huebscher hired into the multifamily business in 2005, said the Two Bridges deal was a huge win for Fannie Mae, Beech Street and those in need of affordable housing in New York City. “It was a very competitive transaction,” she said. “I normally don’t hop on a plane and do a site inspection, but we wanted to be as fast and efficient and aggressive as possible.”

In August 2012, Beech Street topped its Two Bridges deal with $371 million in Freddie Mac Capital Markets Execution loans to recapitalize 10 multifamily properties in Baltimore County and Prince George’s County, Md., totaling 5,517 units. Meridian also brokered that deal, the largest Beech Street has closed to date. Under the recapitalization, Kushner Companies acquired about 25 percent interest in the ownership group from a Rockpoint Group partnership, which held onto the remaining interest. (Kushner Companies’ principal, Jared Kushner, owns Observer Media Group, the parent company of Mortgage Observer.)

Future Plans

Going forward, Ms. Huebscher, her team at Beech Street and Mr. Lyon’s team of more than 400 at Capital One are planning to expand their footprint in various regions across the U.S., with an initial focus on the West Coast. Ms. Huebscher, now Capital One’s president of agency multifamily lending as well as Beech Street’s president, declined to name specific developers and operators of interest there.

California, the largest U.S. multifamily market in terms of property sales, according to global real estate services firm JLL, is at the top of their list. “We think that can be a very significant market for us,” Mr. Lyon said. “Within six months of the acquisition, we will be delivering our balance sheet to California.” He named the Bay Area, Los Angeles County and Orange County, where Beech Street has one of its nine offices, as three attractive regions.

The deeper push into California will require a relationship-focused approach, Ms. Huebscher said. Apart from the company’s business with Meridian and a few other select brokerage firms, Beech Street has worked directly with borrowers and will continue to do so in the years to come, she noted. “Early on, we realized that we couldn’t rely solely on Meridian, which was so New York City metro-based,” she said. “And from the beginning, I wanted to go after people who dealt with their clients directly instead of through brokerage networks. I think the bond is stronger, I think the profitability is stronger, and I actually think the credit quality is better.”

For Ms. Huebscher on a personal level, the biggest challenge that came with the early stages of the acquisition “was needing to grow back my corporate sea legs,” she said with a laugh. But the benefits of open doors at Capital One and the synergies of their partnership have made the transition worthwhile, she added.

Likewise, the wife and mother of two has been able to retain what Mr. Lyon calls her “entrepreneurial spirit.”

“I always tell people, ‘If you want to know what I’m all about, you just need to know that I grew up the middle child of nine children,’” Ms. Huebscher told Mortgage Observer in a conference room overlooking her son’s high school, less than a mile away. “Five of those were brothers, and I had to fight for my food. As a result, I’m a little scrappy and a little competitive.”

Additional reporting by Gus Delaporte

Meridian Capital Group arranged a $33.2 million acquisition loan on behalf of a partnership between Chicago-based multifamily investor and operator Waterton Associates and an Israeli insurance company for a newly built apartment complex in Edgewater, N.J.

The five-year loan on Infinity Apartments at 340-342 Old River Road carries a Libor-based floating rate and interest-only payments for the full term, Mortgage Observer has first learned. The lender is listed as Capital One in property records.

Infinity Apartments

Waterton acquired the 100-unit apartment complex from its developer James Demetrakis for $48 million earlier this week at the same time as the loan closing. Waterton purchased the property “on behalf of its closed end, value-add fund and in conjunction with Clal US, a 49 percent co-investment partner,” according to a Meridian press release.

The partner is a wholly owned subsidiary of Israel-based Clal Insurance Enterprise Holdings, a publicly traded insurance company, pension fund manager and one of Israel's largest financial institutions. The overseas company is building a $1 billion real estate portfolio in the U.S.

Infinity Apartments is the second multifamily property Waterton purchased this year. The apartment community contains a business center, resident meeting room and fitness center with sauna and steam room. The property also contains about 5,500 square feet of on-site retail space, a parking garage and two public parking lots.

Meridian Vice President Jacob Schmuckler, Managing Director Abe Hirsch and Senior Vice President Zev Karpel, all based in the brokerage company’s New York City headquarters, negotiated the transaction. The broker and borrower declined to name the lender.

“Waterton sought to close the acquisition loan commensurate with the completion of Infinity Apartments construction,” Mr. Schmuckler said. “In order to obtain permanent financing prior to lease-up, Meridian leveraged its significant relationship with the lender to tailor a flexible financing structure that accommodates the business plan.”

“Given the outstanding location of the property and the strength and experience of the sponsor, we were able to negotiate and close the loan on an expedited 45-day timeframe,” he added.

Meridian Capital Group arranged a $58.6 million acquisition loan on behalf of San Francisco, Calif.-based Carmel Partners for its purchase of a mixed residential and commercial condominium building at 15 Cliff Street in Manhattan’s Financial District, Mortgage Observer has first learned.

The seven-year mortgage—provided by Santander Bank according to one person familiar with the transaction—features an interest-only component and has a floating-rate that was swapped to a fixed-rate for a portion of the term. The loan closed on March 28.

15 Cliff Street. (StreetEasy)

Executive Vice President Aaron Birnbaum, based in Meridian’s New York City headquarters, and Managing Director Seth K. Grossman, based in the company’s Carlsbad, Calif., office, negotiated the deal. Meridian declined to name the lender.

“The complexities of this transaction were multifaceted as the apartments and retail portions of the building were held in separate condominium interests and Carmel Partners’ business plan includes a significant renovation program to augment income,” Mr. Grossman said. “Closing this financing is a reflection of the lender’s creativity and flexibility for loans to market-leading sponsorship,” he added.

Carmel bought the building from Lake Success, N.Y.-based Lalezarian Properties for $95 million on January 9. Lalezarian had acquired the property from Rockrose Development Corp. for $83 million in 2007, public records show.

The 30-story building at 15 Cliff Street contains 156 apartment units and ground-floor retail space, as well as a fitness center, an on-site cafe and a rooftop garden.

Southfield Town Center

Commercial developer, owner and manager 601 West Companies received a $142 million loan from Deutsche Bank to buy an office complex in Southfield, Mich., Mortgage Observer has first learned. The 10-year loan, which will be securitized, a source familiar with the transaction said, was for the $177.5 million purchase of Southfield Town Center, a 2.15-million square-foot, mixed-use center in the Detroit metropolitan area. Deutsche declined to comment.

Meridian Capital Group’s Managing Director Rael Gervis brokered the deal, which closed last week, according to a representative for Meridian.

“Meridian leveraged its strong position with CMBS lenders to efficiently make a market for financing this unique asset and structure highly accretive long-term financing at 80 percent of the purchase price, despite the property’s 67 percent occupancy rate,” Mr. Gervis said in a statement provided to Mortgage Observer. “Meridian was able to get the lender comfortable with the transaction based on an acquisition price that is substantially below replacement cost, the iconic status of the asset and, most importantly, the strength and experience of the sponsorship,” he added.

The office complex consists of five buildings and includes a “state-of-the-art” gym, as well as retail and an executive dining room.

Last November, previous owner Blackstone Group LP reportedly began shopping offers after loan servicing was transferred to Wells Fargo as special servicer. Blackstone had taken out a $235 million mortgage in 2004; a recent appraisal put the building’s value at $177 million, according to a report from Crain’s Detroit Business last year.

While still one of Michigan’s premiere office properties, Southfield Town Center needs fixing up, sources told the Detroit Free Press at the time of the sale. The whole Detroit area has struggled through the recession and during the bankruptcies of automotive manufacturers upon which the region’s economy was built.

New owner 601West Companies will reportedly spend $30 million rehabbing the towers.

114 West 26th Street (credit: PropertyShark)

New York Community Bank just closed an $18 million mortgage backed by 114 West 26th Street, a source told Mortgage Observer Weekly. The loan will be used to refinance an existing lien, according to representatives for Meridian Capital Group, which brokered the deal.

City records show a $13 million outstanding mortgage on the building, also from New York Community Bank. The building is owned by an entity called Jal Colin Properties LLC. Representatives for the bank did not immediately return requests for comment. Jal Colin was not reachable. 

The 4.25 percent, seven-year loan has a flexible prepayment penalty. Meridian Vice President David Zlotnick handled the transaction.

“Meridian negotiated this cost-effective, long-term refinancing to reduce the borrower’s interest rate by nearly 1 percent, cut the prepayment penalty on the existing financing by 1 percent and obtain $4 million in additional proceeds,” said Mr. Zlotnick.

The 12-story office building, between Avenue of the Americas and Seventh Avenue, sports 88,000 square feet of office space and 7,500 square feet of retail space.

Santander Bank has provided an $11.5 million loan to Delshah Capital to refinance existing debt on the mixed-use property at 1356 First Avenue on the Upper East Side, Mortgage Observer has learned. The seven-year loan carries a rate of 4.05 percent.

The refinancing will allow Delshah to pursue buyouts of rent stabilized tenants in the building and explore the possibility of developing additional floors based on the property’s unused air rights, according to a statement by Michael Shah, the principal of Delshah Capital.

1356 First Avenue. (PropertyShark)

“1356 First Avenue is fully stabilized and remains a valuable asset due to its prime location on the Upper East Side,” Mr. Shah said in a prepared statement.

Delshah Capital acquired the 1356 First Avenue for $9 million in 2011 and since that time has renovated the building’s free market units, nearly doubling the rent roll. A one-bedroom apartment in the 20,000-square-foot building rented for $2,650 last month, according to StreetEasy.

The building’s ground floor is home to Italian restaurant Petaluma, a neighborhood favorite. The eatery, which closed for renovations last year, is set to reopen this fall following a soft open in June. Mr. Shah has hired C.J. Bivona, formerly of Yardbird in Miami, as Petaluma’s new chef.

Simon Rosenfeld of Meridian Capital Group brokered the refinancing of 1356 First Avenue from Santander.

Towers at Wyncote

Meridian Capital Group negotiated a $92.2 million mortgage for the purchase of the Towers at Wyncote, a multifamily property in Wyncote, Pa. on behalf of Lindy Property, a Pennsylvania-based owner and manager of residential properties, Mortgage Observer has first learned. The lender was New York Community Bank, a source close to the deal said. A representative for the bank did not immediately respond to request for comment. 

The eight-year loan, which had an 80 percent LTV, has a fixed rate of 3.625 percent, according to a representative for Meridian. Meridian Senior Vice President David Fisher, who is based in the Iselin, New Jersey office, brokered the transaction.

The Towers at Wyncote are located at 8440 Limekiln Pike and were built in 1968. They were renovated in 2008. Lindy nabbed the towers from Fairfield Residential, a national apartment landlord based in San Diego, for an undisclosed sum closed at the end of April, according to published reports.

The three-tower multifamily community boasts more than 1,000 units and a movie theater, an outdoor swimming pool, a spa, tennis courts and a business center.

A representative for Lindy confirmed the loan amount and lender.

St. Moritz apartments

Meridian Capital Group negotiated a $66 million loan for the purchase of the St. Moritz Apartments, a multifamily property in Edgewater, N.J., Mortgage Observer has first learned.

The borrower was a fund managed by Cornerstone Real Estate Advisers, the Hartford, Conn.-based subsidiary of Massachusetts Mutual Life Insurance Company.

The seven-year loan, provided by the New York State Teachers’ Retirement System, features interest-only payments for the full term at a rate of 3.48 percent, a representative for the retirement fund confirmed.

The St. Moritz Apartments is a 26-story, 224-unit building at 100 Daibes Court in Edgewater. The property, built in 2005, has a pool, a spa with steam rooms and a gym.

A Meridian team of Abe Hirsch, Zev Karpel and Jacob Schmuckler negotiated the deal.

“Meridian generated competition among numerous lenders in order to provide the client with the most competitive financing terms with a low rate and interest-only payments,” Mr. Hirsch said in a statement provided exclusively to Mortgage Observer. “We have had a long-standing history with the borrower … and this deal further solidified the relationship,” he added.

Beverly Connection

Meridian Capital Group secured a $210 million CMBS loan on behalf of New York-based Ashkenazy Acquisition Corporation to help fund its purchase of the Beverly Connection shopping center in Los Angeles, Mortgage Observer has first learned.

Meridian Senior Managing Director Ronnie Levine and Managing Director Jeffrey Berkes, both based in the company’s New York City headquarters, led the negotiations. Messrs. Levine and Berkes declined to name the lender.

But another person familiar with the transaction said Citigroup provided the 10-year loan. The loan carries a fixed interest rate of 4.99 percent and interest-only payments for the full-term, according to Meridian.

The property’s former owner, New York-based Vornado Realty Trust, put the shopping center on the market in the fourth quarter of 2013 as part of a plan to sell multiple retail properties around the country. Vornado agreed to sell Beverly Connection to Ashkenazy for $260 million in March 2013, allowing the REIT to take in a net profit of about $40 million, according to previous news reports. The acquisition and financing closed on July 8.

Retail tenants at the 335,000-square-foot shopping center in Los Angeles’s Beverly Grove neighborhood include CityTarget, Nordstrom Rack, Marshalls, TJ Maxx, Ross and Old Navy. A Saks Fifth Avenue OFF 5TH store is scheduled to open at Beverly Connection in the summer of 2015.

The property, which sits across the street from the similarly named Beverly Center mall, “is a dominant value-oriented retail destination with limited competition in Los Angeles’ most affluent and sought-after trade area,” according to Mr. Levine.

The shopping center was built on a 9.8-acre site in 1948 and has been renovated three times since. Most recently the property’s seller completed a full upgrade and repositioning in 2010.

“Beverly Connection is a trophy retail asset with an unmatched roster of investment grade retailers as tenants,” Mr. Levine said. “Meridian structured the financing for this asset to capture the strength of the tenancy, in terms of both proceeds and the interest-only component.”

Ashkenazy owns more than 100 retail, office and residential properties in the U.S. and Canada valued at about $5 billion, according to the company’s website.

Meridian Capital Group negotiated two new mortgages—totaling $32 million—to refinance mixed-use properties in Manhattan owned by Meyerson Investments, Mortgage Observer has exclusively learned.

The mortgages from Dime Bank of Williamsburg are backed by properties at 325 Third Avenue, in Kips Bay, and 3800 Broadway in Washington Heights. The six-story properties hold 79 units, together, as well as retail.

The 10-year, $18 million loan on 325 Third Avenue has a fixed rate of 3.13 percent and a term of 10 years, according to a source close to the deal who asked not to be identified. The $14 million mortgage on 3800 Broadway, also for 0 years, has a fixed rate of 3.25 percent.

Both loans are structured such that interest rates will be higher in the later years, the source said.

3800 Broadway

Meridian declined to provide the borrower, lender or details on the loan terms. No number was listed for Meyerson Investments.

While Dime has historically been seen as somewhat of a sideline player, the bank has recently amped up its commercial mortgage game, offering larger sums, the source said. The structure offered in these loans, wherein borrowers receive competitive initial rates that grow later in the loan term, has helped attract customers, the source added.

A call to Dime was not immediately returned.

Meridian Senior Vice President David Hayum brokered the deal.

“Meridian competed heavily for this loan and won the deal by structuring highly favorable terms including a low initial interest rate and flexible prepayment penalty,” said Mr. Hayum in a statement to Mortgage Observer. “This allows our client to take advantage of the current short-term interest rate environment and limits their long-term risk.”

150 West End Avenue

Meridian Capital Group negotiated an $18.4 million loan to refinance the residential cooperative portion of a condop on the Upper West Side, Mortgage Observer has exclusively learned.

Life insurance company Principal Real Estate Investors provided the loan for 150 West End Avenue, Principal Director Rob Dirks confirmed to MO.

The 30-year self-liquidating loan has a fixed-rate of 4.44 percent, the broker and lender confirmed.

A condop is a property where the cooperative corporation owns only the residential portion of a building. Usually a commercial component is owned by another entity.

Meridian Managing Director Steve Geller and Vice President Nicoletta Pagnotta brokered the loan, according to a spokesperson for Meridian.

The 29-story property has 444 residential units and 32 parking spots.

“With a loan amount of $18.4 million, this transaction represents one of the more significant underlying cooperative mortgages that will be financed in 2014,” said Mr. Geller.

The deal had a tiny LTV—only 6 percent—Mr. Geller added.

Interest-only loans from non-CMBS lenders have returned

Meridian Capital Group arranged $47.5 million in financing for a nine-property multifamily portfolio located in Manhattan, Yonkers and Mount Vernon—and all nine loans had lengthy interest-only periods.

Manhattan-based residential owner, broker and manager Coutinho Properties received funds from three different lenders for acquisitions and refinancings in and around New York City. Meridian Capital Group Vice President Isaac Filler handled the negotiations.

“As this portfolio illustrates, Meridian has taken a lead role in re-opening the market for full-term interest-only financing outside of CMBS and agency executions,” Mr. Filler said. “The availability of interest-only periods still varies widely based on a variety of factors, especially with balance sheet lenders, but non-amortizing loans remain a valuable tool for our clients,” he added.

Coutinho scored $20.6 million in funds from First Republic Bank, to purchase two properties and refinance two others, all in Manhattan.

All of these loans feature interest-only payments for their full four- and five-year terms and feature interest rates between 2.88 percent and 3.30 percent. The properties are located at 303-307 East 95th Street, 108 West 111th Street, 245-247 West 113th Street and 32 West 86th Street.

The three other multifamily properties—at 257 Valentine Lane in Yonkers, 266 South Fulton Street in Mount Vernon and 160 East 4th Street in Manhattan—received a $7.8 million mortgage, a $6.8 million mort- gage and a $3.3 million mortgage, respectively, all provided by People’s United Bank. These loans feature interest rates of 2.75 percent and interest-only payments for their full four-year terms.

And two final Manhattan assets took loans from Santander Bank. Debt on 302-322 East 104th Street and 69 West 107th Street ticked in at $4.8 million and $4.2 million, respectively, and had five-year terms. The mortgage on the 104th Street property has a rate of 3.47 percent and two years of interest-only; the West 107th Street loan has a rate of 3 percent and an interest-only period for the full term.

New York Community Bank provided a $27.4 million loan to Goldfarb Properties on its recently purchased rental building at 1770 Grand Concourse in the Bronx, sources confirmed to Mortgage Observer.

The 12-year mortgage carries an interest rate of 3.625 percent, according to NYCB. Among the loan’s terms is a 2 percent interest rate hike if the borrower fails to submit required financial information, including income and expense statements, twice a year, according to the loan document. A spokesperson for the bank said that provision is standard among all of NYCB’s commercial real estate deals.

1770 Grand Concourse.

Goldfarb Properties acquired the mixed-use multifamily and office building from the Bronx-Lebanon Hospital Center for $27.8 million in April, city records show. The owners are currently repositioning 1770 Grand Concourse—which one source familiar with the project described as a “shell of a building right now”—and plan to reopen the 13-story property as a more upscale apartment building in the spring of 2015.

The renovated building will contain 171 apartments totaling 134,000 square feet, two elevators and 70 parking spaces. Goldfarb Properties has a management office on site.

The building, which was constructed in 1960 and was last altered in 2003, previously contained 18 office units, some of which housed the Bronx-Lebanon Hospital Center Department of Dentistry, according to property records.

Meridian Capital Group served as an advisor on the transaction. A spokesperson for the mortgage brokerage firm declined to provide additional information about the deal.

Goldfarb Properties did not respond to requests for comment.

Rachel Gardens

Meridian Capital Group brokered a $100 million acquisition loan for New York investor Rubin Schron to purchase the hotly disputed Rachel Gardens Montville luxury apartment community in Pine Brook, N.J., Mortgage Observer Weekly has exclusively learned.

Mr. Schron’s Cammeby’s International Group snagged the complext from the Wilf family and partners, after years of legal wrangling among those owners.

Zygmunt Wilf, owner of the Minnesota Vikings and a pillar of New Jersey real estate, was accused of cheating his partners, Ada Reichmann and her brother Josef Halpern, out of proceeds from the project, which was completed in 1999. An appeals court sided with the Wilf family, before a Superior Court judge last summer revered course and ordered the complex sold at auc- tion and the monies split among the quarreling parties.

Rachel Gardens holds 32 three-story buildings, which have 764 units total.

Cammeby’s paid $136 million, The New York Times reported at the time.

The 12-year Fannie Mae loan for the purchase was provided through Capital One, has a sub-4 percent interest rate and interest-only payments for the first six years, and a 30-year amortization schedule after that, according to a representative for Meridian.

The building’s amenities include patios, washer/dryer and dishwashers in each apartment and common tennis court, swimming pool and barbecue area.

Meridian Senior Managing Director Abe Hirsch, Managing Director Zev Karpel and Vice President Akiva Friend arranged the loan for the complex, located at 67 Chapin Road.

“This was an example of the kind of results that are possible when you bring knowledgeable parties to the table,” Grace Huebscher, president of Capital One Multifamily Finance, said in a statement provided exclusively to MOW. “Our agency financing team, Fannie Mae, Meridian, and the sponsor worked seamlessly together, and I believe all are pleased with the outcome of this transaction.”

Mr. Schron made headlines for his failed $2 billion bid to buy the Empire State Building last year.

No phone number for Cammeby’s was listed.

135 West 52nd Street. (PropertyShark)

Prolific development duo Joseph Chetrit and Clipper Equity received $228.5 million in construction funds to convert a Midtown hotel that was foreclosed on last year to a combination of office and residential condominiums.

The Flatotel, at 135 West 52nd Street, will become a five-floor “boutique” office condominium and 37 floors of luxury residential condos, according to a representative for Meridian Capital Group, which brokered the loan with Deutsche Bank. 

Sales of condos at the $300 million project have commenced, according to StreetEasy. The lone unit to sell so far, #35A, went for $8.5 million, closing on the same day as the construction loan did—Monday—according to city records. The other 108 condo units are listed for an average of $2,120 per square foot according to StreetEasy, with several homes in contract.

The two-year, non-recourse, interest-only construction loan has a floating Libor-based interest rate and a one-year extension option, according to Meridian. Clipper, Deutsche and Mr. Chetrit’s Chetrit Group all failed to immediately respond to request for comment.

Chetrit and Clipper bought the building early last year from a venture among the Rockpoint Group, Atlas Capital Group and Procaccianti Group for $180 million, according to previous reports. That venture bought the debt on the 289-room hotel from Anglo Irish Bank after previous developer the Alexico Group fell in to trouble, reports show.

Chetrit and Clipper financed the acquisition with a $115 million loan from the Variable Annuity Life Insurance Company, according to city records. VALIC is a subsidiary of notorious insurer American International Group.

Meridian’s Aaron Birnbaum and Emanuel Westfried negotiated the most recent loan deal as well as the mortgage for the initial buy, according to the firm’s representative. The proceeds of the construction loan will also be used in part to refinance the acquisition loan.

“The project has enjoyed a significant level of presales and construction [and] is well underway and being funded with equity, making this an attractive opportunity for lenders,” said Mr. Westfried in a statement provided exclusively to Mortgage Observer. “Meridian was able to identify several capital sources interested in financing the transaction on a non-recourse basis.”

Manhattan condominium developer Six Sigma received a $29 million acquisition and construction loan from Knighthead Funding, LLC to finance the conversion of an office building in Chelsea to luxury residential condos, Mortgage Observer has learned.

The site at 435 West 19th Street between Ninth and Tenth avenues, one block from the Highline, is currently occupied by a five-story, 21,800-square-foot office building, which will be converted into a nine-story, 27,500-square-foot residential condo property. The completed asset will contain a private swimming pool in each condominium unit, according to Johnny Wan, managing director of Six Sigma.

Rendering of 435 West 19th Street.

“We are very excited about this new condominium project,” Mr. Wan said in a written statement. “The character of the Highline neighborhood allows us to create a very unique product that offers residents with luxury resort living in the city.”

The lender was attracted to the project due to the sponsor’s successful track record and the area’s potential for growth, said Brian Sullivan, vice president of Greenwich, Conn.-based Knighthead, which specializes in bridge loans and other alternative debt financing. “Manhattan’s residential market fundamentals continue to show tremendous strength,” he said.

Six Sigma acquired 435 West 19th Street for $21 million in late August as The Real Deal first reported. The property's former owner and tenant, the sound stage manufacturer City Stage, recently announced its closing. City Stage acquired the building in 1999, property records show.

“We had a great run,” Brian Coles, director of operations at City Stage for the past 22 years, told MO. “During that time we had the pleasure of being a part of so many amazing Hollywood productions. We will be missed, as we were one of the few survivors, one of the last facilities in the city that cater to film and sound production.

"With the recent spike in residential conversions in addition to the increased cost of doing business in Manhattan, the only manufacturing gig that could come near those returns would be highly illegal and far from our business model," he added with a laugh.

Six Sigma’s other luxury condo projects in Manhattan include 449 Washington Street and 56 Walker Street.

Meridian Capital Group Associate Aggelos Sklavenitis brokered the 30-month interest-only loan from Knighthead. The financing combined with the developer’s equity in the project creates a total capitalization of $41.3 million, or about $1,500 per buildable square foot, according to Meridian.

“Chelsea is one of the most active and desirable luxury condominium development markets in Manhattan,” Mr. Sklavenitis said. “Meridian was able to leverage its long-standing relationship with the principals of Knighthead, effectively communicate the uniqueness of the project and emphasize the sponsor’s ability to execute the business plan in order to obtain higher leverage financing for this development.”

The Sansom

New York-based Pantzer Properties received a $31.5 million loan for the purchase of The Sansom, a multifamily property located in Philadelphia, Mortgage Observer has exclusively learned.

The loan was provided by Investors Bank, a source close to the deal, who asked to remain anonymous, told MO. 

The five-year loan features a fixed-rate of 3.13 percent and two years of interest-only payments, followed by a 30-year amortization schedule, according to a representative for Meridian Capital Group, which brokered the deal.

Meridian Capital Group Senior Managing Director Drew Anderman and Senior Vice President Alan Blank negotiated the loan.

The Sansom is an eight-story, 104-unit multifamily property with 10,900 square feet of retail space occupied by a spa and two restaurants. The property, located at 1605 Sansom Street, in the Center City area feature a fitness center, bicycle parking and an outdoor terrace.

Negotiations were quick, the Meridian brokers told MO.

“We successfully closed this financing within six weeks of signing the term sheet,” Mr. Anderman said.

CCRE is making a push into securitized small-balance floating-rate loans, seizing the opportunity to cater to untapped borrowers and bond buyers, the company’s executive managing director and chief executive Anthony Orso told Mortgage Observer.

The four-year-old New York-based CMBS shop, which is affiliated with the financial services firm Cantor Fitzgerald, has grown its securitization business to more than $5 billion a year, with a growing portion of that committed to floating-rate loans between $5 million and $25 million, he said. The strategy marks a return to small floating-rate CMBS loans—below the usual $50 million mark for loans that are securitized—post-crisis.

Anthony Orso of CCRE.

“We think it makes sense now, especially since the team here did this in our former lives at Credit Suisse,” Mr. Orso said.

Among the incentives, Mr. Orso pointed to commercial property values, which are up 65 percent from their low in January 2010, as well as the 10-year Treasury yield, which is down from 5.1 percent in 2006 to 2.4 percent in 2014, according to data from Real Capital Analytics and the Federal Reserve Bank of New York.

In late July, CCRE closed the first of three floating-rate loans under its newly created program with a $20.3 million refinancing for The Strathallan - A DoubleTree by Hilton Hotel at 550 East Avenue in Rochester, N.Y.'s arts and museum district. The 155-key full-service hotel recently underwent a multimillion-dollar renovation, which was completed at the end of 2012.

New York-based national lender correspondent R3 Funding arranged the two-year interest-only CMBS loan, which features three one-year extension options and a 72 percent loan-to-value, on behalf of a group of local investors.

The deal hit the market in response to growing demand from borrowers for small-balance floating-rate loans, said Ray Potter, managing partner of R3 Funding, which provides origination and workout services for lenders. In the first half of 2014, such loans reached a total of $1.8 billion, surpassing last year’s total of $1.5 billion, according to data provided the firm. R3 Funding projects up to a 300 percent increase in that loan volume by year-end, Mr. Potter noted.

“Some borrowers prefer floating-rate loans to finance transitional assets — for example, a property that is not fully stabilized, or requires a lease-up effort,” he said in a written statement provided to MO. “This new CCRE program offered the best refinancing option for the owners in the short term.”

Mr. Orso said that through the program CCRE is targeting major and secondary markets surrounding the firm’s offices in 15 cities in addition to “private, well-capitalized regional owners.” The firm is also looking at factors beyond the traditional lending criteria.

The Strathallan - A DoubleTree by Hilton Hotel.

“It’s more than just the market and the sponsor,” Mr. Orso said. “We’re very focused on lease-up stories and repositioning stories.”

Ronnie Levine, a senior managing director at Meridian Capital Group, told MO that he has seen the size of floating-rate loans from CMBS lenders come down in the past year, though not within the $5 million to $10 million range.

Even at that size, however, the ability to securitize any loan successfully has everything to do with finding buyers to “buy the paper,” said Mr. Levine, who has brokered several deals with CCRE.

“The risk, as with any securitized product in my mind, is making sure that there are buyers on the other end that will transact and buy the bonds backed by the collateral,” he said. “Obviously, if they’re doing this, my guess is they’ve isolated a pool of buyers and have already pre-screened this product with them.”

CCRE has originated 423 fixed and floating-rate loans under $10 million, for a total of $2.5 billion, since the firm opened its first office in 2010, Mr. Orso noted.

“The time is right for us to grow the floating-rate portion of that,” he said. “We now see a 100 percent correlation between where property values are nationally and this business. That’s been helped tremendously by low interest rates. Two years ago, we didn’t feel the same.”