Mortgage Observer May 2012

may 2012
Q&A:
The M.O. chats with Mission Capital Advisors
Jordan Ray
The Insiders Monthly Guide to New Yorks Commercial Mortgage Industry
Despite Q4 drop in distress,

Schechtman, Knakal and others rack up note sale deals
Kevin Cummings
Savills USA CEO John Lyons Talks Cross- Border Investment Steins Law: Pitfalls to Avoid for Loan Guarantors Michael Stoler Takes an In-Depth Look at Construction Financing Capstones Recap of Iconic 14 Wall Street
Power Profile:
How Investors Bank Will Grow, Serving Underserved
Relationship Driven. Execution Focused.

Recent Financing Highlights
Columbus Square
New York, NY 500,000 SF Retail Portfolio
Public Square
Cleveland, OH 1,264,000 SF Office Property
1551 Broadway
New York, NY 25,600 SF Retail Property
Hotel Chelsea
New York, NY 175,900 SF Hospitality Property
Balance Sheet Financing
$280,000,000
Conduit Financing
$127,000,000
Conduit Financing
$180,000,000
$85,000,000
West 14th Street

New York, NY
61,000 SF Mixed-Use Property
The Berkshire
Hoboken, NJ
93-Unit Multifamily Property
Steelworks Lofts
Brooklyn, NY 110,000 SF Mixed-Use Property
Route 17 North
Paramus, NJ 125,000 SF Retail Property
$55,000,000
Balance Sheet & Mezz Financing
$33,000,000
Construction Financing
$28,400,000
$23,350,000
In 2011, Meridian proudly advised on nearly 2,800 real estate financing transactions. Over our 20-year history, Meridian has earned the trust and confidence of the market, becoming a leading advisor to many of the worlds most sophisticated real estate investment firms.
www.meridiancapital.com
New York Office 1 Battery Park Plaza 26th Floor New York, NY 10004 Tel: 212-972-3600 Fax: 212-612-0100 New Jersey Office 485 Route 1 South Building F, Suite 110 Iselin, NJ 08830 Tel: 732-301-3200 Fax: 732-301-3299 Florida Office 2385 Executive Center Dr. Suite 400 Boca Raton, FL 33431 Tel: 561-367-0005 Fax: 561-367-0099 Illinois Office 8170 McCormick Blvd Suite 220 Skokie , IL 60076 Tel: 773-439-1200 Fax: 773-439-1299 California Office 2029 Century Park East Suite 1400 Century City, CA 90067 Tel: 310-867-2300 Fax: 310-867-2350 California Office 2173 Salk Ave. Suite 250 Carlsbad, CA 92008 Tel: 858-964-0300 Fax: 212-201-5141 Maryland Office 7600 Wisconsin Avenue Suite 800 Bethesda, MD 20814 Tel: 240-507-1919 Fax: 410-504-5748
Cover Photo by Daniel M. Weiss
May 2012 / Contents
321 West 44th Street, New York, NY 10036 212.755.2400

will ohare
22
Carl Gaines Editor Jotham Sederstrom Editorial Director Dan Geiger Daniel Edward Rosen Staff Writers Michael Stoler Contributor
29
Editors Letter 02 News Exchange 04
Mortgage originations, note sales, investments, industry research Cross-Border Investment Goes Global At Over $60 Billion, Wells Fargo Again on Top Ironstate Development Inks $33M Loan 1 West Street Condo Refis Mission Markets Note Build NYC Program Clears $90M Financing
Sam Chandan Joshua Stein Columnists Barbara Ginsburg Shapiro Associate Publisher Robyn Weiss Director of Real Estate
Power Profile 20
Kevin Cummings: Investors Banks Plan For Growth by Ian Thomas
Peter Lettre Photo Editor Dean Quigley Art Director Mark Stinson Production Manager, Designer Lauren Draper Designer Lisa Medchill Advertising Production
Duly Noted 24
Despite Q4 2011 drop in distress, Schechtman, Knakal and others rack up hundreds of millions of dollars in deals by Carl Gaines
In-Depth Look 12
A comprehensive take on CRE finance trends by Michael Stoler
Q&A 28
Jordan Ray | Mission Capital Advisors by Ian Thomas
OBSERVER MEDIA GROUP Jared Kushner Publisher Christopher Barnes President Barry Lewis Executive Vice President
Scheme of Things 14
Monthly charts of commerical real estate financings in the five boroughs
The Sked: May 31
Our picks for the months must-attend events
Steins Law 16
Better Luck Next Time Joshua Stein
Of Interest 32
Jamie Forrest Associate Publisher, Senior Vice President Ken Newman Classified Advertising Director Sydney Sarachan Audience Development Manager Mark Pasquerella Controller Kratos Vos V.P. circulation Laurence Rabinowitz General Counsel Arthur L. Carter Founder & Editorial Director
An index of all the people, places addresses and companies mentioned in this issue
The Basis Point 16
A Disappointing First Quater for CMBS Sam Chandan
Workforce 18
Hirings, promotions, defections and appointments
Editors Letter / May 2012
Distressed...
But opportunities still abound.
Youll see a few changes in this months issue of The Mortgage Observer. We wanted a simpler, easier-to-read design while still sticking to our mandate to bring readers the most current information about the tristate areas commercial mortgage market. This month writer Ian Thomas caught up with Investors Banks Kevin Cummings to find out the banks plans for increasing its lending in the area. And I delved into the ongoing phenomenon of distressed note sales. Despite last months rather rosy editors letter it turns out that there is still quite a good deal of distress out there, even in the New York area, though it is predictably focused in the boroughs or Upper Manhattan. Keeping with the theme of distress, we also caught up with Jordan Ray, from Mission Capital Advisors, who had his own take on distress and where the New York City market stands in general. One of my personal favorite things to learn about this month was the recap of 14 Wall Street, an iconic building in the Financial District, originally the Bankers Trust Building. The 31st floor was at one time the home of J.P. Morgan himself. The deal was complicated to pull off, with many moving parts and a Ukrainian billionaire thrown in for added intrigue. Also in the News Exchange section is a look at cross-border investment, which we looked at last month. This time around, though, we studied, thanks to Savills, investments between any two countries, not necessarily involving the United States. Savills charted a staggering volume of capital moving between countries, and some surprising investors rising to the front to send their capital to far away places. Lastly, our charts are back, drawn on data taken from Actovia. We worked with Actovias founder, Jonathan Ingber, to find who the biggest lenders were in the area for the month of March, as well as the most active zip codes for commercial real estate financings and the total sales, by borough. The charts should be easier to read, with information easy to glean. Please let us know what you think of the new design and, as always, share your deals or any tips.
Carl Gaines, Editor
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News Exchange / May 2012
Note sales, investments, mortgage originations, mergers and acqusitions.
Cross-Border Investment Goes Global

by Carl Gaines
Industry Research
The firm found that several trends were causing thismost notably an amassing of equity in sovereign wealth funds in the Middle East and Asia, recent political upheavals in these regions, and corporate Made up 22 percent of total 2011 revenues from oil and natural resources. This last cattransaction activity. egory, Mr. Lyons said, has brought new regions into the global cross-border investment landscape. Data from real estate investment and advisory firm Were starting to see more capital to come from Savills show that global cross-border investment emerging countriesthose that have natural resourcreached its highest level in three years in 2011makes, he explained. Those include Brazil, Mexico ing up 22 percent, or $120 billion, of the $550 billion and Canada, which have been in total global transaction activstarting to export their capital ity for the year. and to acquire world-class asFive U.S. markets made sets in world-class cities. it into Savillss top-10 list of The make up of those global property markets, with world-class cities, however, the New York City metro area will remain largely unchanged at $33.8 billion and Washingthroughout 2012, if Mr. Lyonss ton, D.C., Los Angeles, San predictions hold true. He said Francisco and Chicago trailing that he anticipates the rankbehind. In all, they attracted ings of top property markets to $88.7 billion in capital. Noneremain where they areNew theless, Savills USA president York City, London, Tokyo, and CEO John Lyons told Washington, D.C., Paris and so The Mortgage Observer that on, but with one caveat. the U.S. share ultimately surIn 2011 D.C. was fourto prised him. John Lyons from Savills me there has been a lot of acConsidering the mastivity both around and in D.C. sive upheaval in the Middle but the volume of deals in 2011 was a little bit lower Easta lot of capital went to Europe and the U.K. than anticipated, he said, pointing out that the govin particularI thought that there would be even ernments contraction of its space there was not as more capital coming to the United States, Mr. Lydrastic as had been predicted. Im optimistic that it ons said. He added that there has been an increase will increase in 2012. in U.S. activity among Middle Eastern investors and speculated that this was possibly due to rising prices in areas that had previously been attracting them. Its possible that prices have risen fairly dramatically in the U.K., where a lot of the Middle Eastern money had gone, as well as in some of the other cities in Germany, which are the two strongest bastions for investment in Europe, he said. This money wending its way to the U.S. perhaps took a little longer Medical o ce rents declined 1.9 than expected, Mr. Lyons added. percent in 2011. The Savills cross-border investment data show a 50 percent increase in overall activity in 2011 comAccording to data from Marcus & Millicpared with the year previous, when it was responhap, private investors are set to take the lions sible for $61 billion out of a total of $460 billion in share of medical office activity in 2012. The global transaction activity. firms Medical Office Research Report charts the
factors that are causing this, and other, trends. With the U.S. Supreme Court currently weighing arguments about the constitutionality of portions of President Barack Obamas Patient Protection and Affordable Care Act, the health care industry is facing many unknowns. Marcus & Millichaps recent Medical Office Research Report charts the effect of these unknowns on the sector. It also takes a look at who the most active buyers of health care assets will be in 2012. Marcus & Millichaps report found that private investors are set to take the lions share of medical office activity this yearparticularly REITs and institutions. With so many unknowns existing in the industrysuch as the Supreme Court hearingsrents are trending downward, as more medical offices put off making decisions about their space needs. On a nationwide basis, rents declined 1.9 percent in 2011. The report found this particularly true in areas like New York City. Asking rents are projected to continue to decline in 2012. Private investors are anticipated to participate in the most acquisitions in 2012, with REITs and institutions targeting the off-campus buildings affiliated with health systems. CG
At Over $60 Billion, Wells Fargo Again on Top

HFF place in the { MBAearned second takes third. } list, Meridian
The Mortgage Bankers Association last week released its annual ranking of loan originations. The data are broken into several metricssuch as originations for third parties and originations by investor group. However, for several categories, including total originations, W ells Fargo once again came out on top. The banks commercial real estate originations for 2011 hit $60.2 billion, putting it way ahead of the other institutions in the top five. HFF came in at number two on the list, with $20.6 billion, followed by Meridian Capital Group, CBRE Capital Markets and PNC Real Estate with $17.3 billion, $16.5 billion and $15.8 billion, respectively. Alan Wiener, group head at W ells Fargo Multifamily Capital, told The Mortgage Observer that the banks volume of originations in the New York City area for 2012 will continue apace. On the permanent side last year we did about $6.5 billion, Mr. Wiener said. We were the number one
Medical O ce Big Among Private Investors in 2012
May 2012 / News
Exchange
permanent multifamily lender in the country in 2010, 2011 and we will be in 2012 as wellso its a lot of real estate. On tap this year for Wells is the refinancing of 15,000 units at Co-op City. Mr. Wiener pointed out that Wells has a hand in many large-scale deals in the city, as administrative agent on syndicated loans such as the $530 million construction loan provided to the Gotham Organization for its development on the far West Side. Generally our holds are much larger than anyone elses, Mr. Wiener explained. So you will see us on most of the large deals. Life insurance companies remained strong with two showings in the top 10MetLife Real Estate Investments originated $11 billion, which landed it in sixth place, and Prudential Mortgage Capital Co. landed at number eight, with $9.7 billion in originations. For U.S. multihousing agency originations from all sources CBRE Capital Markets came out on top in 2011, with over $8.7 billion in loan originations, $1.1 billion of which was done in conjunction with life insurance companies. In recent years, CBRE has built a strong and comprehensive agency loan production platform, which has enabled us to capitalize on the healthy appetite for multihousing property investment, Brian Stoffers, president of CBRE Debt & Equity Finance said in a prepared statement about the results. This robust platform has given us a distinct competitive advantage in serving the capital needs of investors targeting multihousing opportunities. Part of that platform includes its Fannie Mae DUS program, which accounted for almost $1.6 billion in originations for 2011, the company said. CG
14 Wall Street Recapped

by Carl Gaines
Capstone Equities in, Carlyle Group { values property at $300 million. out in deal that }
Ukrainian billionaire Alex Rovt has recapped 14 Wall Street in a deal that values the 1.1-million-square-foot iconic property at roughly $300 million. Josh Zamirs Capstone Equities, which bought the building in 2007, will remain managing partner and replace the Carlyle Group. Robert Verrone, principal at Iron Hound Management Co., represented Capstone in the recap. The Carlton Group chairman Howard Michaels told The Mortgage Observer that he had repped Capstone as well. A team from law firm Duval & Stachenfeld provided legal representation for Capstone. According to Daniel Ghadamian, principal at Capstone, the first mortgage left on the building amounts to $245 millionthe rest is equity. Leasing activity there, Mr. Ghadamian told The Mortgage Observer, has been bolstered by the security Mr. Rovt has brought. Since buying the building, weve leased about 700,000 square feet there, he said. Yearly leasing there has averaged about 200,000 square feet recently. At this time, the building is gaining considerable inDaniel Ghadamian terest from sizable tenants attracted to a property with stable, long-term hands on ownership. Mr. Michaels, from the Carlton Group, said that Capstone had done a good job leasing up the building after purchasing it in 2007. They leased 650,000 square feet of space, he said of leasing efforts. But at the end of last year, a 200,000-square-foot tenant moved out so the building had about 250,000 square feet vacant. Recent leases there include retailer T.J. Maxx, which occupies space on the ground floor. Those taking a peek now are primarily insurance companies, architects and creative firms. Sources described the building, pre-recap, as having an overlevered capital stack, consisting of a $145 14 Wall Street million securitized first mortgage, a $100 million note from Brookfield and a $75 million mezzanine loan from Shorenstein. A team from Eastdil Secured, which was also involved in the recap, had tried since last year to sell Shorensteins mezz also played a role in the recap. Pressure had mounted as the entirety was coming due in May 2012.
Originations
Ironstate Development Inks $33 Million Loan

Seven-year loan { Berkshire at thetaken for its } Shipyards.
Hoboken, N.J.s Ironstate Development took a $33 million seven-year loan for its newly constructed Berkshire at the Shipyard luxury apartment building. The 13-story property is located at 1401 Hudson Street in Hoboken and is comprised of 93 units. Ironstates loan was negotiated by Meridian
Massey Knakal Closes $14 Million Loan in Williamsburg
We worked closely with our territory sales team members, who have a very good pulse and an up-to-date database on rental rates and market cap rates, to get the lender comfortable with todays market value. CG
1401 Husdon Street advisors David Cohen and Russ Drebin, from the firms New Jersey office. The loan has an interest rate of 4.12 percent and was provided by a local savings bank, which Meridian declined to name. The property was recently completed and is currently in lease-up, Mr. Cohen said about Berkshire at the Shipyard, which is part of a six building Planned Unit Development. We structured the loan with a flexible prepayment penalty to allow the sponsor the comfort of long-term financing with the flexibility to take advantage of projected increased cash flow in the future. CG
{ Loan is secured by multi-family} buildings in Williamsburg.

The Mortgage Observer has learned that Massey Knakal Capital Services has closed a $14 million loan secured by eight multifamily buildings in Williamsburg. The firm couldnt disclose the lenders or borrowers names, or the addresses of the buildings. Morris Betesh, director at Massey Knakal Capital Services, worked on the deala cashout refinance. The challenge in this transaction, which was a cash-out refinance, was getting a lender to recognize the significant value that was created by a sponsor who had been working the asset over the last seven years of ownership, Mr. Betesh explained in a prepared statement.
Valley National Bank Provides Surf Avenue Loan
{ $7.4 million at 1122 and 1113 Surf. }

Thor Equities mortgage is for
Valley National Bank recently originated a mortgage for $7.4 million for some Coney Island buildings at 1122 Surf Avenue and 1114 Surf Avenue, the site of the Eldorado Bumper Cars. The buyer, Thor Equities, already owns nearby 1000 Surf Avenue. A spokesman for Thor Equities said that the company is in the process of re-signing the lease for a year to the Eldorado operators. It
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then plans to redevelop the site, he said. The reported purchase price that Thor paid for the buildings is $4.5 million. CG
on-site parking and 20,000 square feet of space dedicated to retail. The joint venture acquired the property in 2010 for $17.4 million by purchasing the note from the previous lender. That all-cash transaction allowed it to execute a deed-in-lieu-of foreclosure. Meridian managing director Aaron Appel and vice president Michael Diaz worked on this most recent deal. This project is unique in its nature, Mr. Appel said in a prepared statement about the financing. The spectacular location of the building, the borrowers renovation expertise, and their deep market knowledge enabled Meridian to procure highly competitive construction financing with limited guarantees in a challenging construction environment.
New York Community Bank Res CMBS loan

68 Ferris Street, next to Industry { City, receives new nancing. }
76 North 4th Street A building adjacent to Sunset Parks Industry Citythe 6.5-million-square-foot, 17-building business parkhas had its maturing CMBS loan refinanced. A source confirmed to The Mortgage Observer that a $14 million mortgage that was originated on March 23, 2012, was in fact the maturing CMBS on 68 Ferris Street. Ownership refinanced it, dollar for dollar, with New York Community Bank, the source said. Essentially they are committed to preserving the propertys industrial nature. 68 Ferris Street is 270,000 square feet and two stories tall. Its currently being used as warehouse distribution and flex space. CG
Sovereign Bank Provides $28.4 Million Loan for Steelworks Lofts

Meridian deal { Jacob Tollbrokered theJV. for } and Cayuga
Meridian Capital Group brokered a $28.4 million acquisition and construction loan for a partnership between Cayuga Capital Management and Jacob Toll. The loan will be used for the completion of a mixed-use development project located at 76 North 4th Street in the Williamsburg section of Brooklyn. The loan is for a 36 month term and was provided by a regional balance sheet lender, Meridian said. It has a loan to cost ratio of 70 percent and a rate of Libor plus 2.9 percent. A spokesman for Meridian declined to provide the lender, but sources said it is Sovereign Bank. Plans for the 110,000-square-foot spot call for the completion of 83 loft-style rental apartmentswith
Vice president Erik Storz and senior vice president Stewart Campbell worked to originate the loan to refinance the 492-unit property for the Moinian Group. Its a fixed-rate, seven-year loan with three years of interest-only payments, the duo said. Though this may sound pretty straight forward, the deal was complicated due to the interconnected nature of condo units at the building. Basically in 2000 the property was broken into three separate condo unitseach roughly 500,000 square feet and so there are common elements, Mr. Storz said. The issue with Freddie Mac was that they just wanted to be comfortable that their loan was safe and that condo unit number 1 was not in a position where it could be negatively affected by the other condo units and the fact that they are sharing certain common elements. Those shared areas and elements include the roof and parts of the ground floor, such as boilers. Because of this, the Berkadia team had to construct a deal that would satisfy Freddie Mac and also work well for a borrower that, though not necessarily pressed for time, was eager to refinance its existing MetLife loan. They were paying a much higher interest rate, said Mr. Storz, so we were able to lower their interest rate significantly, saving the borrower a tremendous amount. This condo is known as the Ocean and is located at 1 West Street, though the former Whitehall Building has an address of 17 Battery Place. Mr. Stewart pointed to the buildings landmarked status as a factor making the complicated deal satisfying. While it was a complex deal, the real estate here really shone through, he said. Its the type of deal where you go through the structure because the real estate is so good, as opposed to the opposite type scenario where its an O.K. deal but the structure is going to kill it. CG
66 Leonard Sells 1 West Street Condo Res for $6.5 Million

Fixed-rate, seven-year loan { Moinian Group property. in }
Berkadia Commercial Mortgage has closed on a $135 million Freddie Mac loan for the 446,000-square-foot condo unit on floors 14 through 31 of the landmarked Whitehall Building in Battery Park City.
Street retail { for foodies. condo a familiar spot }

The Mortgage Observer has learned that the retail condo at 66 Leonard Street has traded for approximately $6.5 million. Eastern Consolidated principal and executive managing director David Schechtman and senior director Lipa
CL Tower
$13,000,000 | 12-story high-rise
Financing provided by:

Commercial Real Estate Finance
Drew Anderman danderman@walkerdunlop.com Alan Blank ablank@walkerdunlop.com
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was distributed today and the winning bidder is set to be selected on May 10, 2012. Neither the seller nor the address of the hotel was disclosed, though a few clues are available. For instance, the loan has a current unpaid balance of $100 million and is set to mature in June 2016. It has a paid-through date of March 11, 2009. The Midtown building where the hotel is located was built in 1895 and underwent a $50 million renovation in 2004, including upgrades to public spaces and the rooms themselves. At 216 keys, it had a 2011 RevPAR of $205.61. CG
Build NYC Program Clears $90 Million Financing

YMCA will { outstandinguse money to renance} debt.
The YMCA received approval from the city recently to borrow $50 million of funds through a new debt facility being administered by the Economic Development Corporation. Called Build NYC, the funding window allows nonprofit groups to issue bonds to finance real estate development and other construction projects. The vehicle is not paid for by the city but by private buyers of the bonds such as banks or other investors and offers below-market interest rates for the borrower because the proceeds on the debt are triple tax exempt. The YMCA will be using the money to refinance outstanding debt and also to raise about $5 million to finish a stalled pool and aquatic center the organization is building next door to its branch in Park Slope as well as to pay for other capital projects. With todays approval of this important tax-exempt financing, the YMCA will be able to reduce costs while increasing the number of critically important services they provide to communities across the city, Seth Pinsky, the president of the EDC and chairman of Build NYC, said in a statement. Preliminary approval was also granted for another large financinga roughly $40 million debt offering that Montefiore Medical Center wants to issue through Build NYC to help pay for interior work on a 280,000-square-foot ambulatory care center it is planning to build at the Hutchinson Metro Center in the Bronx. Although interest rates are currently at near-historic lows, the Build NYC program allows nonprofit groups, which typically have tighter budgetary restraints than their for-profit counterparts, to reduce their cost of capital even a step further. The facility began operation last month, providing $26 million to Manhattan College to allow it to refinance existing debt it incurred in the early 2000s developing facilities on its Bronx campus. We have kept a tally here at the EDC of projects that were in search of these kinds of funds and it amounts to $700 million, Jonathan Gouveia, a senior vice president at the EDC said several months ago. I have met with a number of institutions and banks and not-for-profit groups and many of them laugh at the $700 million. They say thats the tip of the iceberg.
Daniel Geiger
Starwood Capital Group Said to Head to the Mall

66 Leonard Street
Spokesman declined { about the portfolio ofto comment } malls.

According to published reports, Greenwich, Conn.s Starwood Capital Group is on the cusp of acquiring majority stakes in a portfolio of U.S. shopping malls from Westfield Group, a Sydney-based retail property group. The purchase price is said to be roughly $1 billion and the seven malls have not been identified, though several are thought to be part of a group of malls Westfield put on the market last year. A spokesman for Starwood Capital Group, which is led by Barry Sternlicht, declined to comment to The Mortgage Observer about the speculation surrounding the malls. The Westfield Group announced a sell-off of noncore U.S. assets last month. It could be a tricky Barry Sternlicht time to get into the business of malls. According to the International Council of Shopping Centers most recent U.S. Mall Performance report, which looked mainly at last years holiday period, sales were not spectacular. In fact, even with the holidays in full swing, U.S. mall sales fell slightly by 0.4 percent between November and December 2011. Malls in the western region of the U.S. were off a whopping 2.9 percent and other regions were fairly flat. CG
Lieberman represented the seller and procured the buyer, Mr. Schechtman said. Ashkenazy Acquisitionshelmed by CEO and chairman Ben Ashkenazy and president and vice chairman Michael Alpertbought the spot. Neither could be reached for comment. The firms other New York City holdings include the Knickerbocker Hotel in Times Square and 660 Madison Avenue, home to retailer Barneys New York. The seller was Tessler Developments, which was represented by attorney David Kriss of Kriss & Feurstein. Meanwhile, Joshua Graff of Sukenik Segal & Graff served as counsel for the buyer. Foodies will recognize the spot as the former home of Jean-Georges Vongerichtens Matsugenthe chic Japanese soba shop that closed after its chefs visa expired. CG
Miscellany
Mission Markets Note

Winning bidder { May 10, 2012. to be selected on }
Mission Capital Advisors is acting as the exclusive loan sale adviser for a commercial mortgage secured by a Manhattan hotel, The Mortgage Observer has learned. The offering memorandum
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In-Depth Look/ May 2012
A comprehensive take on CRE finance trends
For Select Few, Construction Financing Available

by Michael Stoler
The residential rental market in Manhattan and the boroughs is hotin fact the biggest news during the month of April involved the reports that residential rents in Manhattan in the first quarter of 2012 had reached their highest level since 2002, when these data were first collected. The average rent went up 6.5 percent over the past year, according to Citi Habitats, while Prudential Douglas Elliman reported that the median rent jumped 9 percent in the first quarter of this year. According to data from RentJuice, rents are also rising in Brooklyn. The companys Rent Index charted rising rents in Park Slopewhich saw a drastic increase in asking rents, up 18 percent since the end of 2011. Park Slope is also leading the city with the largest increase in price per square foot, which rose by 30 percent. In other neighborhoods, rents are on the rise as wellup 12 percent in Williamsburg, 23 percent in Brooklyn Heights and 10 percent in Greenpoint. With rents rising to all-time highs, real estate developers are scrambling to put up rental and condominium apartments. But while demand for new residential apartments is rising, the availability of capital from the lending community continues to be tepid, according to experts. Nevertheless, financing is available for wellestablished real estate developers who invest between 30 percent and 40 percent in equity and have solid experience in the residential apartment business in New York City and nearby New Jersey. Its flowing from both money center banks and regional lenders and hasnt been limited to Manhattan developments, either. Lenders are interested in well-planned projects in Downtown Brooklyn, Williamsburg, Long Island City, Hoboken, Jersey City, Fort Lee and neighboring locations. In many instances the banks are joining together to syndicate the financing. In this environment we are syndicating and clubbing our financing, said Gino Martocci, regional president, New York City and Long Island at M&T Bank, one of the most active lenders. Our partners in construction financing include Capital One, TD Bank, Bank of America, Merrill Lynch and Wells Fargo. Other lenders joining in the financing include PNC, HSBC and JP Morgan Chase. Insurance companies like Prudential Mortgage Capital Co. are also interested in construction financing. Well-established developers, including Glenwood Management, Rose Associates, Related Companies, Durst Fetner, Rockrose and Rudin Management, are benefiting from construction financing at the lowest rates in history, ranging from as low as 250 to 400 basis points over Libor. Regional lenders have 51 Astor Place also joined the ranks of those interested in financing for rental and for sale housing. In the case of certain smaller lenders, pricing is higher and in many instances it requires recourse to the borrowers. Based upon the financial capitalization of the borrower, office buildings have the opportunity to secure construction financing. For example, in Newark, N.J., Panasonic and Prudential are building new towers with financing led by PNC and TD Bank. Bank of America Merrill Lynch has been one of the most active administrative agents in construction financing. It arranged for $165 million in financing for the construction of Edward Minskoffs 400,000-square-foot office tower at 51 Astor Place, which is being developed without any tenants in place. However, Mr. Minskoff, an established developer with a proven track record, has significant capital in the project. With hotel occupancy near 85 percent and room rates rising, a few prudent lenders are interested in providing construction financing for the hospitality industry. The major requirement for financing this asset class is equity of between 40 percent and 50 percent. The
leading players in this market include Wells Fargo, M&T Bank and Natixis. Wells Fargo led a consortium of four banks in providing a $180 million construction loan for Harry Grosss 70-story, mixed-use tower at Broadway and 54th Street. The tower will include four floors of retail and two hotelsa Marriott Courtyard Hotel and a Marriott Residence Inn. Local lenders as well as credit unions were the source of financing for such hospitality assets as the recently completed OUT NYC on West 42nd Street and the Courtyard by Marriott in Newark, N.J., the first new hotel in that city in over 40 years. REITs and private equity firms have provided construction financing for specialty projects, including hospitality and rental and condominium developments that may have been in various stages of development. These lenders as well as local community banks are offering construction financing to less experienced developers at significantly higher rates. A number of local lenders have expressed an interest to enter the construction financing marketplace. James Freel, senior vice president and chief real
estate officer, Institutional Asset Management and Custody at Amalgamated Bank, said that the bank is working on the development of a new construction loan investment fund. We feel there is a need for construction financing, Mr. Freel said. He added that Amalgamated Banks fund is expected to be launched during the fourth quarter of 2012. All of this makes one thing certainbanks are interested in providing permanent financing for low leverage, well-capitalized assets. With rising competition for transactions as well as the possible return of CMBS financing, lenders may reduce their stringent underwriting requirements and offer construction financing before the end of 2012.
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Scheme of Things / May 2012
Monthly charts of commercial real estate financings in the five boroughs
Mortgage Charts
The Mortgage Observer has compiled a months snapshot of top commercial real estate financings in New York City. This month we take a look at refinances versus purchases, top recent lenders, total sales by borough and the six zip codes that saw the most action. Data is drawn from Actovia, which tracks mortgage information and streamlines leads from city records.
Top Ten Lenders

For March, New York Community Bank stayed in the top slot with 145 financings in the New York tristate area, compared to 93 the month previous. NCB bolted onto the list with 25 for March. According to the bank, it generated $72 million in new cooperative financings in the area over the course of the month.
BANK
FEB 2012 93 44 44 31 24 24 22 18 17 11
BANK
MAR 2012
New York Community Bank M&T
New York Community Bank Signature Bank Capital One JP Morgan Chase Astoria Federal Savings Bank Dime Savings Bank of Williamsburgh NCB Investors Savings Bank Flushing Savings Bank Apple Bank
145
73 45 43 41 33 25 21 18 16
Refinances vs. Purchases

The past several months have seen a jump in the velocity of commercial real estate refinances with March topping out at 960, after hitting 559 in February. Purchases increased slightly, to 203 in March. 960
JP Morgan Chase Signature Bank Capital One Astoria Federal Savings Bank Dime Savings Bank of Williamsburgh Investors Savings Bank
559 203
Flushing Savings Bank Bank Leumi

139
FEB MAR REFINANCES
FEB MAR PURCHASES
Total Sales by Borough

In March Brooklyn remained the hottest borough for sales, though theydecreased slightly to 163. Queens saw the biggest jump43 additional sales during the month.
Six Most Active Zip Codes

Upper Manhattan and the Ridgewood section of Queens jumped onto Marchs list of most active zip codes.
404
418
ZIP CODE FEB 2012
ZIP CODE MAR 2012
10003 11211 10024 10019 10458 11222
21 18 14 14 14 13
11237 11221 10033 10025 11211 11385
33 26 23 20 20 20 FEB MAR ALL FEB MAR MANHATTAN 124
166 94 52 56
163 105 62
FEB MAR BRONX
FEB MAR BROOKLYN
FEB MAR QUEENS
14
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The M.O. Columnists / May 2012

terms and obligations that prohibit things a borrower might dothey are transfers and require the borrower to just the consequences of financial disremain separate or a single-purpose tress. They shouldnt trigger liability entity. These concepts have accreted for the guarantor. over time, with the result that they Therefore, parse through events that now impose on a borrower a list of obmight trigger personal liability for the ligations both great and small. Some entire loan. trivial violation of one of If any language in those obligations shouldnt a carveout guaranty make a guarantor liable for could be construed to the entire loan. trigger personal liabilFor example, the loan ity under such circumdocuments might require stances, the guarantor the borrower to remain a and their counsel need single-purpose entity. to get rid of it. OthThe loan documents might erwise, the carveout also say that a single-purguaranty amounts Joshua Stein pose entity must have a to an unintended full separate telephone numguaranty of the loan, ber. If the borrower shares a telephone because thats what it will become at number with a related company, then the only time that matters, i.e. when this might trigger a claim that its not the property gets into trouble and the a single-purpose entity, thus making loan heads toward default. the guarantor liable for the entire loan. Guarantors and their counsel also A guarantor and their counsel might need to focus on two areas that dont respond by saying that the guarantor always tie to the propertys financial shouldnt face liability because of such performance: intertwined defined
Better Luck Next Time

When the refinancing closed, the real estate investorthe principal of the borrowerleaned over to his counsel and asked just two questions. The first related to the interest rate on the loan. The second question, the only other thing the investor really cared about was, Show me the personal guaranty. And can you promise me Im not signing on for anything I didnt agree to guarantee? It was a bedrock proposition that guaranties wouldnt cover the entire loan, just particular deal-specific risks and a typical list of standard nonrecourse carveouts. Recent cases have, however, thrown curve balls to guarantors of standard nonrecourse carveouts. Courts have found them liable for the entire loan under circumstances that never should have triggered such liability. First off, start with the principles that drive nonrecourse guaranties. They are supposed to discourage borrowers from doing bad things. But then ask what might happen if a property starts to get into trouble. What are the ordinary consequences of financial distress for commercial real estate? Those arent bad
Steins Law
A Disappointing First Quarter for CMBS

al financial stresses have The CMBS market eased, spreads have naris struggling to assert rowed and conduit lenditself. Following a surge ing has picked up again. of activity in March, isIn turn, the issuance calsuance volume in the endar has been revivified. first quarter reached just Among the most recent $6 billion, down almost deals, JP Morgan priced a third from a year earthe first post-financial crilier. The disappointing sis pool of nonperforming result reflects volatile Sam Chandan loans in early April. corporate and CMBS The oversubscription of that fastspreads that undercut conduit lending pay liquidation vehicle underscores in the second half of 2011, trimming a more optimistic outlook for CMBS, the pipeline of loans for securitization even as the fits and starts of the recovin the New Year. As domestic and glob-
The Basis Point
ery in securitization underscore its tentative condition. Contrasting sparse deal flow in the CMBS market, agency issuance of multifamily-backed bonds set a new record in the first quarter. Backed by the agencies dominant share of the heady apartment lending market, multifamily deal volume more than doubled the commercial tally. While Fannie Mae and Freddie Mac hold some loans on balance sheets, securitization has allowed the agencies to contain their growth, obliging a key objective of conservatorship. Securitization has also met with strong demand from investors ready to trade yield for agency bonds unique risk profile. On April 9, Freddie Mac announced the latest in a string of deals backed by seven-year term apartment loans. Of the largest 10 loans, four bear mortgage rates less than 4 percent. That exceptionally low cost of financing reflects exceptional demand for agency bonds but also threatens to foment undue risk-taking by investors and competing lenders. Though not to the same degree
as for apartments, core properties in New York, Washington, D.C., and other cardinal markets have been bolstered by a relative surfeit of secured financing through life companies and domestic and foreign banks. Acquisitions by REITs, funded by unsecured debt and by cross-border investors, have hastened the recovery in these privileged locations. For a broader range of assets outside of the most actively traded marketsconstraints on the availability of credit remain a difficult reality. It is in these settings, rather than for the most rarefied assets, that a sustained recovery in conduit lending will mete out the greatest benefits. Projections for 2012 anticipate rising CMBS volume and market share, albeit under an assumption that shocks to financial market functioning will be subdued. Reliant on well-diversified collateral, conduit lenders are necessarily more active outside of cardinal markets, in locations where the lender landscape is more thinly populated. Banks increased in their net lend-
16
issues unless those issues actually result in the problem that they were designed to prevent. Specifically, the guarantor would become liable for the loan only if these issues caused the borrower to become substantively consolidated with another entity in a bankruptcy proceeding. Unless that happens, the lender doesnt really suffer any loss. Some sloppiness in this area might marginally increase the lenders risks in a possible future bankruptcybut that by itself shouldnt trigger personal liability for the entire loan. A guarantor also should insist on having a chance to repair any problem that might otherwise trigger personal liability. For example, if the lender were concerned about the borrowers shared telephone number, the lender should first give the guarantor a chance to solve the lenders concern. Guarantors and their counsel might also note that the whole theory of a nonrecourse loan contemplates that a borrower can walk away from the
collateral and let the lender keep it. But the law generally does not allow a borrower to give the lender the keys unless the lender agrees to accept them. So even if a borrower wants to roll over and let the lender have the collateral and cut off any further potential exposure and issues for the guarantor, they cant. Tomorrows guarantors may say that, no matter what, their liability should stop accruing if the borrower offers the lender a deed to the collateral or functionally equivalent control of the collateral. This wouldnt necessarily terminate any guarantor liability that already existed, but it would give borrower and guarantor an easy exit, consistent with the underlying theory of nonrecourse loans. Without it borrowers dont have a right to walk away, which was the whole point. Joshua Stein is the sole principal of Joshua Stein PLLC. The views expressed here are his own. He can be reached at joshua@joshuastein.com.
Planning, nancing, and building for the future.
ing in the fourth quarter of 2011, supporting an improvement in lending. But constraints on regional and community banks capacity to extend credit in support of smaller markets commercial property sales and refinancing needs are likely to persist for some time. In segments of the market where the management of legacy distress remains unwieldy, regulatory demands may still require a drawdown of banks exposure to the commercial property sector. Given a paucity of alternative credit sources in these locales, an acceleration of conduit lending will support liquidity and pricing. A resurgent CMBS market is not an unqualified improvement over the status quo. The market risks further buffeting if activity rises, only to see momentum slow in a renewal of global financial stress. There are other crosswinds. Market participants have focused their attention on regulatory initiatives such as risk retention, but meaningful self-regulation and offsets of incentive conflicts remain works in progress. The industrys advocates
have been at pains to emphasize the conservatism of underwriting in postcrisis issuance. While laudable, this cyclical focus on risk is not a substitute for structural measures that will ensure the long-term health and sustainability of CMBS. Many of the structural weaknesses of the CMBS marketincluding conflicts in the incentives of the various parties facilitating each issue have yet to be fully addressed. In the interim, the absence of structural corrections of weaknesses ranging from rating agency compensation to the potential for special-servicer conflicts of interest means the current bias in favor of conservative underwriting might still give way to inefficient risk-taking as the level of activity normalizes. Sam Chandan, PhD, is president and chief economist of Chandan Economics and an adjunct professor at the Wharton School. The views expressed here are his own. He can be reached at dsc@chandan.com.
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17 Seiter&Miller 000794 Pub. Mortgage Observer Size 4.5x11 Issue 04/24/12 Art Director: sd/mm Copywriter: ms Account Executive: wt Date 04/16/12
Work Force / May 2012
Hirings, promotions, defections and appointments
Brian Obergfell, a senior partner at Emmet, Marvin & Martin LLP, has been named to the newly formed State Charter Bank Advisory Board by Benjamin Lawsky, the superintendent of financial services Brian Obergfell for New York State. The new board, which represents banks with assets from under $500 million to more than $3 billion, is designed to promote the state banking system. The board is made up of nine members, who serve three-year terms. Mr. Obergfell is a senior partner in Emmet, Marvin & Martins corporate and real estate group, specializing in American depositary receipts and CMBS, and serves on the firms executive and strategic committees.
Meridian Capital Group has made several new hires recently. Sean Mooney, Michael Ottomanelli and Ryan Gandell all joined within the past several months. Mr. Mooney, who was hired as a senior vice president and reports to Meridians senior management team, works on loan origination, debt and equity placement, and client relationship management. Mr. Ottomanelli rejoins managing director Tal BarOr, whom he had previously worked with at Peoples United Bank in the distressed debt and loan workout group. He is working on the underwriting and placement of loans for institutional clients. Mr. Gandell, hired as an associate working on loan origination, will report to Seth Grossman, the head of Meridians Carlsbad office.
1980s and retired from in 2010. We are thrilled to have Rich and Jack join the firm, Mr. ONeill said. Rich brings a strong analytical background, excellent client relationships and broad capital markets transaction experience. Jack has a long history of working on numerous bank transactions from his days at Sandler ONeill, along with his more recent experience in the hedge fund and private equity markets. I look forward to working with him again. Neither was available to comment to The Mortgage Observer about his new role.
Peter Von Der Ahe, the top producing multifamily agent in Marcus & Millichap Real Estate Investment Services Manhattan office, has been promoted to first vice president investments. He is also a direcPeter Von Der Ahe tor of the firms national multi housing group. In 2011, Mr. Von Der Ahe and his team closed 21 transactions with a combined value of $133 million, including the portfolio sale of five Midtown West apartment buildings valued at $25.7 million.
Bruce Whipple, formerly a director at Johnson Capital, has moved to Massey Knakal Realty Services as a director in the capital services division. He will work on financing in the commercial real Bruce Whipple estate debt markets located throughout the New York metropolitan market, focusing on central and northern Westchester County. Mr. Whipple had also previously worked as a vice president at Northmarq Capital in New York and Westchester County, and as an originator in the Merrill Lynch and the Lehman Brothers CMBS lending platforms in New York.
Ethan Penner has left his role as president of CBRE Capital Partners, effective March 31, in order to pursue new entrepreneurial opportunities, according to an emailed statement from company spokesperson Ethan Penner Pam Barnett. The statement went on to call his departure a mutual decision. According to Ms. Barnett, Frank Scavone, who has worked closely with Ethan for many years, is now leading CBRE Capital Partners. He has been named president and COO. She added that Mr. Scavone, Jenna Gerstenlauer, Andy Glanzman and other members of the team will continue to execute its investment strategy. Mr. Penner, often called a CMBS pioneer, will remain an adviser to the funds for the next six months and is retaining a substantial co-investment. Nomura Securities backed Mr. Penner financially in 1993 to start a real estate finance operation, which became Capital America.
Ladder Capital has nabbed commercial real estate veteran Michael Mazzei from Bank of America, where he served as managing director and global head of the CMBS and bank loan syndications groups. Hes been appointed president of the company. Meanwhile, current president and cofounder Greta Guggenheim will become chief investment officer. Mr. Mazzei joined BofA in 2009. No word on when hell officially start in his new positiona spokesperson for Ladder Capital declined to comment to The Mortgage Observer beyond the information provided in a release about the move. My time at BofA Merrill Lynch was a great experience, Mr. Mazzei said in a prepared statement. The team was able to reduce virtually all of its legacy CMBS assets and restart the CMBS 2.0 business. I have also been fortunate to have gained great relationships and friendships at BofA Merrill Lynch that will continue into the future. A capital markets guru, Mr. Mazzei will work to help Ladder develop its securitization platform and expanding asset management business, according to the release. Prior to his stint at BofA, Mr. Mazzei was head of CMBS and commercial real estate debt markets at Barclays Capital. In the late 1980s, he was also a founding head of the CMBS practice at Lehman Brothers.
Financial services firm Ranieri Partners has hired two managing directors. The twoRichard Bartolo and Jack Thompsonwill be working on a team led by Ranieri Financial Services CEO Thomas ONeill. Mr. Bartolo was a managing director in the financial services group at SunTrust Robinson Humphrey, while Mr. Thompson joins from The Mundane Funds USA, where he was a director responsible for a master fund and a global value fund. Hes also a former principal at Sandler ONeill + Partners, the firm Mr. ONeill founded in the late
Glen Kunofsky has been named the topranked single-tenant retail agent at Marcus & Millichap for the fifth year in a row. Mr. Kunofsky also ranked as one of the firms top investment Glen Kunofsky specialists for 2011. He joined the firm in 2001 and was promoted to senior vice president investments in 2008 and is currently a senior director in its national retail group.
18
New York Real Estate Summit NEWYORKR

The State of the New York Real Estate Market
Wednesday May 9, 2012 Proshansky Auditorium Graduate Center of The City University of New York 365 Fifth Avenue, New York, New York 7:30 AM to 1:30 PM

The State
Program
7:30 AM to 8:30 AM 8:30 AM to 9:30 AM 9:40 AM to 10:40 AM 10:40 AM to 11:00 AM
Graduate 36
Registration & breakfast Keynote: CEO & COOs View on the state of the market Developments in the region: New York City, Long Island & New Jersey Coffee Break
11:00 AM to 12:00 PM
12:00 PM to 1:15 PM
Private Equity, Commercial Lenders, Insurance Company & Investment Bankers Where do they want to provide funding in 2012 7:30AMto8:30AM: The State of the residential marketrental & 8:30AMto9:30AM condominium in the region
9:40AMto10:40AM 10:40AMto11:00AM The State 11:00AMto12:00Noon of the residential
Keynote Panel: CEO & COOs View on the market

Alfred Brooks, President, Chase Commercial Term Lending Joseph Ficalora, President & CEO,New York Community Bank Brian Harris, CEO, Ladder Capital Michael Pappagallo, EVP & COO Kimco Realty Neil Shah, President & COO, Hersha Hospitality Trust Larry Silverstein, President & CEO, Silverstein Properties Emanuel Stern, President & COO, Hartz Mountain Industries
Ofer Yardeni, Managing Member & CoFounder, Stonehenge Partners KeynotePanel:CEO&COOViewonthe James Carpenter, SR. EVP & market Chief Lending Ofcer, New York Community Bank AlfredBrooks,President,Chase Carl Goldberg, Partner, Roseland Property CommercialTermLending Company Jr., CEO, DDG Partners CEO&COOs Joseph McMillan, JosephFicalora,President& CEO,NewYorkCommunityBank Amy Rose, Co-president, Rose Associates JosephFicalora,President&CEO, BrianHarris,CEO,LadderCapital David Von Spreckelsen, President, Toll NewYorkCommunityBank MichaelPappagallo,EVP&COO Brothers City MichaelPappagallo,EVP&COO, Living KimcoRealty KimcoRealty NeilShah,President&COO,Hersha HospitalityTrust Developments in the region: NeilShah,President&COO, LarrySilverstein,President&CEO, New York City, Long Island & HershaHospitalityTrust SilversteinProperties New Jersey EmanuelStern,President&COO, LarrySilverstein,President&CEO, Michael Bereld, SVP, Equity One HartzMountainIndustries SilversteinProperties Robert J. Coughlan, Principal, TRITEC Real BrianHarris,ChiefExecutive Developmentsintheregion:NewYorkCity, Estate Company Officer,LadderCapital LongIsland&NewJersey Roy Chin, Regional Director, Com Real EmanuelStern,President&COO, Estate, TD Bank HartzMountainIndustries MichaelBerfield,SVP,EquityOne K. Thomas Elghanayan, Chairman & Co RobertJ.Coughlan,Principal, TRITECRealEstateCompany Founder, TF Cornerstone Allen Goldman, President, SJP Residential DevelopmentsintheRegion RoyChin,RegionalDirector, NewYorkCity,LongIsland&NewJersey ComRealEstate,TDBank Jeffrey Levine, Chairman & CEO, Douglaston K.ThomasElghanayan,Chairman& Development/Levine Builders AllenGoldman,President,SJP CoFounder,TFCornerstone Residential AllenGoldman,President,SJP K.ThomasElghanayan,Chairman Residential &CoFounder,TFCornerstone JeffreyLevine,Chairman&CEO, DouglastonDevelopment/Levine JeffreyLevine,Chairman&CEO, Cost of event: $250 Day of Event: $300 Checks only to: New York Real Estate TV, LLC Builders Michael Stoler, New York Real Estate TV, LLC, 25 Sutton Place South, Suite 7M, New York, NY 10022 Michael Stoler, Moderator & Coordinator Russell Appel, President, The Praedium Group John Connelly, Mgr Director, UBS Realty Investors Richard Mack, North American CEO, AREA Property Partners Gino Martocci, President, NYC & Long Island, M & T Bank Anthony Orso, Exec Mgr Director, Cantor Commercial Real Estate Adam Schwartz, Head, United States & Europe Real Estate Group, Angelo, Gordon Jack Taylor, Mgr Director, Head of Global Real Estate Finance Group, Prudential Real Estate Investors Gregory Walz, Mgr Director, Mortgage Production, Northwestern Investment Management Company, LLC Josh Zegen, Managing Director & CoFounder, Madison Realty Capital
Private Equity, Commercial Lenders, Insurance Company & Investment Bankers-where do we want to provide funding
market for rental & condominium in the region 12:00PMto1:15PM
Regist Keyno Develo Coffee Privat Where TheSt
Registration
For additional information contact: Michael Stoler (o) 646-442-0717 mstoler@madisonrealtycapital.com
www.newyorkrealestatesummit.com
Registration: [WebAddress]
Costofevent: $250 MichaelStoler,NewYorkRealEstateTV,
20
Power Profile / May 2012
photography by Daniel M. Weiss 2012
May 2012 / Power
Profile
Investors Banks Plan For Growth

Kevin Cummings
Mr. Cummings said the bank will focus on serving the underserved.
by Ian Thomas
About nine years ago right around St. Patricks Day, Kevin Cummings did something he always told people he mentored never to do. I changed my career because I took a call from a headhunter, he said. Mr. Cummings, who had spent 26 years at the independent accounting firm KPMG LLP, was asked if he could refer anyone for a chief operating officer position at Investors Savings Bank. Familiar as he was with the bankit was one of his clients during his time as an audit partner in KPMGs financial services practice and in the New Jersey community bank practicehe decided the best candidate he could nominate would be himself. After the events of 9/11 and reflecting on his career, which included 14 years as a partner at KPMG, he had an epiphany. My attitude changed, and I thought going to a smaller organization where you can be more of an impact player and spend more time working in the community would be the right move, he said recently at the banks Short Hills, N.J. headquarters. This year, Mr. Cummings was celebrating again on St. Patricks Daythis time as the grand marshal of Newarks parade, part of his latest step in an effort to transform a small community bank into one of the biggest players in the region. Investors Bank, founded in 1926, has long been a staple in many New Jersey towns and communities. But when Mr. Cummings rose from COO to president and CEO of the bank in 2008, he had hopes for something more. So far, the banks long-standing role has performed wellit has expanded from 46 branches to 87 branches, from more than $1 billion in core deposits to more than $4 billion today. However, the bank was still primarily a residential lender, and following its 2005 IPO and a few personnel changes, Investors entered the commercial real estate market, albeit in an inauspicious debut. Well, I had black hair, Mr. Cummings said with a laugh as he pointed to his hair today, more of a light gray. By the end of 2007, the bank had issued $379 million in commercial real estate loans9 percent of its total loan portfoliowith between $250 and $270 million of that going to construction loans, Mr. Cummings said. It was a large volume for the bank and, unfortunately, an ill-timed one. The good thing is we started in 2006, he explained. And then: The bad thing is, we started in 2006. According to Mr. Cummings, most of the banks nonperforming loans were in fact originated during that time period. However, Investors followed those loan originations up with a much better decisioninvesting heavily in the multifamily market. Thats our bread and butter, Mr. Cummings explained. At
21
Power Profile / May 2012
Our average loan is that spacea lot of people arent Were just trying to be banker to that middle
the end of 2007, the bank had $44 million in loans and today the bank has more than $2 billion. Delinquencies are very low, and its a hot asset class right now, he said. Our timing couldnt have been better. Mr. Cummings has installed a set of core principles during his time as president and CEO of the bank. Theyre all aimed at providing value to all customers, regardless of sizesomething thats led the bank to prosper in the current market. We think we can service that real estate entrepreneur who has maybe eight buildings, Mr. Cummings explained. Hes not sexyhes just a regular guy. Our average loan is in that $3 million to $10 million spacea lot of people arent playing in that space, he said. Were just trying to be more of a relationship banker to that middle market borrower. The bank closed on eight mortgage transactions at the end of 2011, each valued of $10 million or more for a total of $137.5 million. The deals included a $13 million adjustable-rate mortgage to refinance the loan on one multifamily housing property with 80 units in Jamaica, Queens, and an $11.5 million fixed-rate mortgage to refinance multifamily structures on Leonard and Scholes streets in the booming Williamsburg section of Brooklyn. Hoping to further reach clients in the five boroughs was a main impetus for the banks acquisition of Brooklyn Federal last year, an acquisition that allowed it to pick up five new branches, as well as Brooklyn Federals commercial real estate loan portfolio. However, Mr. Cummings and Investors didnt stand still for that long, flipping the majority of the portfolio for $200 million to a real estate investment fund less than six months later. It was close to 25 percent of nonperforming loansso why have any guess work on what other problems they might have in the portfolio? Mr. Cummings said of the deal. Investors kept the cleanest of the bunch$88 million in residential loansbut admittedly might have given up on some other good ones to stick to its principles. We probably gave someone a great opportunity, but at the end of the day it let us put our time where its more important, he said. Growing the bank in a way that continues to provide value to its customers and clients has always been goal number one for Mr. Cummings, who learned many of the lessons he uses today during his studies at Middlebury College and while getting his MBA at Rutgers. Accounting is the liberal arts education for business, he said. It taught me the importance of business development, mentoring and client development. The son of an ironworker, Mr. Cummings was raised in Jersey City, where he played basketball as a child. The sport is still a passion for him today. I play every weekend with a bunch of old guys, he said with a laugh. Ugly basketball. He lives less than a mile away from Investor Banks main office and said that his commute, short as it is, doesnt even allow him to hear a whole Billy Joel song unless he hits a traffic light. His office is on the second floor of the a rather nondescript building in Short Hills, a town best known for the large shopping mall that sits directly across from the entrance to the office. Just outside his office, a green sign hangs with a quote from Mr. Cummings similar to one once spoken by New York Yankee Joe DiMaggio: Id like to thank the Good Lord for making me an Investors Bank employee. It goes without saying that Mr. Cummings believes in the change that has been ongoing at the bank under his watch. Since the new management took over, 37 of the top 40 people are new to the bank, in what Mr. Cummings called evolution, not revolution. His real estate group is currently made up of 14 people, a figure he'd like to increase by 50 percent over the short term. Its more important to know what you dont know than trying to be the smartest guy in the
22
May 2012 / Power
Profile
$3 million to $10 million playing in that space. more of a relationship market borrower.
room, he said. Mr. Cummings praised a number of his employees for the success the company has seen, including Richard Spengler, the companys executive vice president and chief lending officer, who joined from First Savings Bank in 2003, when Mr. Cummings was still COO. That praise goes both ways. Reached by phone, Mr. Spengler used terms like amazing and high energyto describe his boss. He's a unique CEO in the sense that when we talk, he doesn't ask me to do more for him, he asks me what can I do to make your life easier what can I do to help you originate more loans? Mr. Sprengler went on to add that Mr. Cummings is more dialed in than any other CEO he knows, jumping into the trenches with his employees and focusing on better utilizing their talents. Asked about trends in the real estate market, Mr. Cummings didnt even have to look further than his own home. My kidsthey dont want to buy a house, he said. All theyve seen since theyve graduated college in the last 10 years is real estate prices flat or declining, so they dont see it as an investment. They see it just as a place to live. Mr. Cummings sees plenty of growth opportunities even within the multifamily sector, as the density of population and demographics continue to push growth within New Jersey and New York. Whats amazing is the competition coming back into the marketplace right now, he said. However, he did say there has been some semblance of a bubble in certain areas. Theres some irrational pricing out there, even on some construction loans, he said. We went through the worst construction cycle, residential real estate still in the doldrums, and were losing deals with a 4 percent handle? We think thats irrational pricing. Mr. Cummings has been surprised about how well office space has held up in Manhattan though, even with the continuing levels of unemployment. We didnt have the glut in overbuilding that we had in the recession of the late 80s/90s on the office side, so the pain hasnt been as great as people had predicted. Back three to four years ago, there was talk about what we were going to do when all these CMBS come due, whats going to happen? The other shoe hasnt fallen yet, he said. Still, despite tepid thoughts on the future of the economy, Mr. Cummings is sure about one thing: the success of Investors Bank. We want to be the most significant, premier banking organization headquartered in the New York and New Jersey metropolitan area, he said of his future goals. Mr. Cummings hopes to raise another $1 billion in capital over the next two years, develop a middle market business lending team and double
the size of the commercial real estate group. Well make a great living serving the underserved, well work on the middle to lower end of the market, and well give them service that they wont get at the large banks, he vowed. To achieve these goals, hes drawing some lessons from another successful manager in New Jersey: New York Giants head coach Tom Coughlin. You look at their team, and how they lost two games to Washington, Seattle and Philadelphia, but they ended up accomplishing what they did, he said. If we can get people, all in, on the same page, working together, thats a good lesson for business. Mr. Cummings might often sound like a football coach. He described his current position as one of a motivation speaker and instructor and he makes a point to meet every employee within the company at least once a year to hear their thoughts and ways in which Investors Bank might improve to better serve customers. His passion and drive to make the bank a success goes all the way to the training of new employees. During orientation speeches he and the rest of the management staff give to all new hires, he tells them If you dont want to put your heart and soul into this, Ill offer you $1,000 to leave. The last thing we want is people who are just here to suck air out of the room, he said. We want people who want to make a difference.
23
Note Sales / May 2012
Duly Noted
Despite Q4 2011 drop in distress, Schechtman, Knakal and others rack up hundreds of millions of dollars in the deals.
by Carl Gaines
Even as commercial real estate prices have improved and banks have swiftly moved troubled loans from their books, the phenomenon of distressed note sales has continued unabated. According to data from Real Capital Analytics, the volume of newly distressed commercial properties dropped to $12.4 billion for the fourth quarter of 2011a figure that, as the firm pointed out in its February 2012 Troubled Assets Radar report, is the second lowest level seen in two years. The volume over the past few full year periods has also declined markedly$140 billion in 2009 to $92.6 billion in 2010 to last years full year total of $60.1 billion. So what gives? Why do note sales continue to be the product of the momentwith experts predicting an uptick, not a slowdown? David Schechtman, principal and executive managing director at Eastern Consolidated, told The Mortgage Observer that he sees the volume of distressed note sales remaining steady for the immediate future because there remains a lot to move through the pipeline. The accuracy of this prediction may be backed up by Mr. Schechtmans current workload. My belief is that, just based on the volume that needs to transact, we are going to finish out this year with a record amount of transactionsboth in plain vanilla real estate but also in the loan and distressed world, Mr. Schechtman said recently at Eastern Consolidateds offices. There will still be a significant amount of portfolio lenders and special servicers straight through 2013. Then I think how much transacting there will be on the distress side
Peter Haupsburg and David Schechtman

24
WILL OHARE
will be a function of the new administration and some global economic forces. For the time being, though, Mr. Schechtman and others dealing in the space have their hands full. For instance, Mr. Schechtman said that he had completedsince January 1, 201216 deals, totaling over $300 million. Over at Massey Knakal, firm chairman Bob Knakal said that his team had done a steadily increasing volume of the deals recently as well. In 2010 the volume was around $250 million and last year it was about $350 million, Mr. Knakal said. He added that the firms business in this area will probably again increase for 2012. The reason that note sales have been so popular, particularly in New York, is because the foreclosure process is so long and cumbersome that it can take three or four years to foreclose on a property and if a lender forecloses the highest recovery they can possibly hope for is 94 percent of the collateral value of the property, Mr. Knakal said. One of the interesting things about the market is that generally it was perceived that about halfway through last year most of the banks had worked their way through their problems and that most of the note sales were coming out of special servicers. This changed, Mr. Knakal said, toward the end of last year when bank problems again resurfaced. Other experts agreed that the foreclosure process in New York is lengthyup to four years long thereby impacting the volume of distressed note sales that take place in the tristate region. During this time a lot can change, including the borrowers position. The thing to remember with note sales is that the borrower has the ability at any time to pay the note off in full, cautioned Mr. Knakal, whose firm currently has a note on offer secured by the Fordham and Robert Fulton towers in the Bronx. When an investor is looking at a notelets say the property is worth $60 millionthe investor might say Hey Im willing to pay the full amount for the note because Im buying the property for less than its worth. But I have to keep in mind that until my foreclosure is finished I could very easily have the borrower raise the money and pay off the $54 million thats owed an Im out. And my whole objective was probably to get into the ownership position on the property. Howard Wenig, managing partner at Belkin Burden Wenig & Goldman, LLP said that a good
May 2012 / Note
Sales
My belief is that, just based on the volume that needs to transact, we are going to finish out this year with a record amount of transactions.
David Schechtman
deal of the firms practice involves representing lenders in the foreclosure process. He echoed Mr. Knakals sentiments about how lengthy it can be. The foreclosure process unfortunately in the past several years has moved to a stage of being exasperatingly longseveral years, Mr. Wenig said. And depending upon the county it can take longer. Two main factors, he said, have increased the chances of a foreclosure resulting in a note saleand they may actually be signs of an improving economy: healthier banks and improving commercial real estate prices. When the crisis first began I think lenders were in a position where they had an interest in not classifying those loans as being in default, Mr. Wenig said. Thats where the phrase extend and pretend came fromwhere if a loan was even
matured and the money was due and the borrower said I cant pay you off they extended it for two years and nursed the loan along for two reasons. First, the bank became healthierperhaps selling the loan at a discountand secondly the market would improve so that the value of the property would increase and they might be able to get paid off. But also in flux during the foreclosure process may be the face of the parties involved themselves. Mr. Schechtman and his teamwhich includes senior director Lipa Lieberman, director Marion Jones and associate director Abie Kassinjust executed a hard, non-refundable $65.3 million contract for a note secured by an eight building portfolio of buildings on and around Broadway in Upper Manhattan. Its set to close around May 15, 2012. The borrowers included Neil Rubler from Vantage Properties and
25
Note Sales / May 2012
The reason that note sales have been so popular, particularly in New York, is because the foreclosure process is so long and cumbersome that it can take three or four years to foreclose on a property.
Bob Knakal
Area Property Partners Richard Mack. Though he wouldnt disclose the buyer, sources told The Mortgage Observer that it is Sentinel Real Estate, helmed by John Streicker, which made a deal with Onex Capital Corp., which holds the $23 million in mezzanine debt on the portfolio. Onex, sources said, will get a small return relative to the loan it wrote to walk away. Mr. Schechtman pointed out that he was brought in 10 months ago by the special servicer, ING Torchlight. The person who engaged me to market in the secondary market this note, was a special servicer, he said. The divisions of the lenders today who are handling the disposition or otherwise resolution of these loans are not the people who made the loans. And oftentimes its an amicable process. Mr. Schechtman was also just hired several weeks ago to represent General ElectricIts a $25 million to $30 million exclusive, he said, secured by notes on 131 to 133 West 33rd Street. Other deals in the works include a Flushing Bay development site at 39-08 Janet Place in Queens and 85 Flatbush Avenue Extension and 333 Greene Avenue in Brooklyn. With this volume of business, staffing can be an issue and both Mr. Schechtman and Mr. Knakal said that their firms had taken appropriate measures to staff up when they saw distress looming on the horizon. At Eastern, Mr. Schechtman, who said that he emulates mentor and firm president and CEO Peter Hauspurg on and off the field, talked about how staffing needs had changed because of distress. After leaving law firm DLA Piper as a sixth year associate and landing at Eastern to take on a desk herea cubiclewith no salary, no health benefits and no promise of any income other than a phone, the Internet and the Blue Book, the prevalence of distress necessitated additional hands on deck. By the first quarter of 2010 it was steady, he said, and it has increased since January 2010 to the point where we continue to staff around it. We knew the credit crisis was going to be very impactful by the end of 07it was very clear, said Mr. Knakal. And so the beginning of 2008 we started putting together a list of banks, special servicers and starting to contact them. There really was no business to speak of in 2008 because a lot of these banks and special servicers hadnt even set up departments to deal with the distressed loans because things, for a good part of 2008, still looked like they might be okay. But then the second half of the year it really was clear that things were not going to move well. So we started to see that activity start tangibly in 2009. The boom in New York City came in 2010, when, he said, there was probably $6 billion to $7 billion of note sale transactions. Massey Knakal staffed up too. We hired a director
26
May 2012 / Note
Sales
kiki conway
Bob Knakal
of special assets and basically were using our existing sales force in conjunction with the special asset department to focus on these opportunities, Mr. Knakal said. The firm currently has a new director of special assetsMatthew Dillon. At the end of the process, of course, is a buyer oftentimes, experts said, looking to gain ownership of the property itself. Jacob Frydman is chairman and CEO of United Realty Partners, part of whose aim is to identify value-add and opportunistic real estate investments. The firm is currently raising $2 billion across several different funds to buy real estate, much of it distressed, along the east coast. And, he said, getting the note is one way to accomplish this. Were raising a private equity fund in Europe for European investors who want to invest in the United States and that fund is called United Realty America Fund, Mr. Frydman said. The REIT we have in registration is United Realty Trust Incorporated and
we think that well be raising additional funds as well as putting out our own capital to invest in both core assets that are generating current cash flows in areas where we can get higher returns than the trophy markets and then value added opportunities in the trophy markets and in other markets as well. Including, as youve suggested, buying notes. The notes Mr. Frydman and his colleagues might target, he added, are likely to be secured by properties within two hours of New York City. It makes it easier to get to in case theres an issue and its the marketplace we know best, he said. Previously established relationships with bankers, brokers and capital markets people help them identify opportunities. We also have close relationships with various law firms that deal with these issues and we try to identify opportunities that are not yet on the market so that we dont find ourselves necessarily in a bidding war, he said.
Many of these assets eventually go through some sort of a bidding process. We look for opportunities where we can think of the asset in a different way than it was thought of originally. So when we look at a distressed asset we might see an asset that was designed as a particular use and we might want to change that use. It may have been designed as a condominium and we might find that repositioning it as a rental is better. Its a strategy that doesnt surprise brokers. The overwhelming majority of the time, Mr. Knakal said, getting into the ownership position is the objective of the note buyer. He added that the increased demand has led to strong recoveries for clients. The number of people interested in buying notes continues to increase, so the demand is very significant and that has led to strong recoveries for the clients that are selling notes, Mr. Knakal added.
27
Q&A / May 2012
Jordan Ray
by Ian Thomas
The Mortgage Observer: Can you tell me a little about your background and how you got started in real estate? Jordan Ray: Ive been in the business since 2001. I started out at Ackman-Ziff and I was there for almost five years. Ive been a commercial mortgage broker and equity advisor for my entire careerever since graduating from the NYU program. I grew up in Montreal and in Palm Beach County, Florida, and went to school in D.C. at American University. I started working at Ackman-Ziff when I was in grad schoolit was a great place to grow up in this side of the business. In 2009 when the world started to turn and there really wasnt a lot of financing, everybody started thinking about the future. It was an opportunity for me to come here to join Mission with a colleague of mine, Jason Cohen, because he knew the guys over here and Mission has been one of the most active loan sales advisors in the countryselling about a billion dollars of suband nonperforming debt every quarter. And they had no real finance desk. The idea was to come here and sell loans for a year to do something because there wasnt much going on, but always have an eye toward starting the finance business when the market came back. Last year was our first year back in the finance businesswe did about $540 million of debt and equity. Can you give me some idea of what your day-today is like? When a deal comes in Im spending about 85 percent of my time on the deal. Now that were hiring more execution folks, Im planning to spend more time looking for new business. On the execution side when were placing business we spend a lot of time up front on a deal figuring it out. We have a very heavy technology focus here at Mission. That sort of sets us apart from where I used to benot that theres anything bad. Its just a little different because were a younger firm. The average
Mission Capital Advisors

This month, The Mortgage Observer spoke to Mission Capital Advisors Jordan Ray about the climate at Mission Capital Advisors, where he sees capital flowing and the importance of supercharging borrowers.
age here is in the 30s. We all sort of rode the wave of technology boom like everybody else did. One of the things that attracted me to Mission was that when they sell loans, generally investors know it is a very tech-heavy process, so we spend a lot of money on proprietary data rooms and proprietary customer relations management so we know exactly who is doing what at any given time. Whats the firms philosophy regarding growth? We have very little turnover here, which is something that is rare. The guys who make the decisions about this business all come from other brokerage firms. So weve all seen the pitfalls of growth. Weve seen good and bad. Weve seen smart growth and weve seen just adding bodies to add bodies because it makes more money. Weve been very slow to add bodies because when you bring someone in, you want to make a commitment to them and you want to know that theyre going to be there for the long haul because we have a very interesting environment. Regarding the economic climateis there less uncertainty out there compared with six months or a year ago? Were adding jobs slowly. Were adding different kinds of jobs in places like New York. Theres a lot of tech nowa lot less finance, a lot more tech. Rates are probably artificially low, as we all know. Unfortunately Im not much of an economist. Im just an advisor, so all I can do is try to find the best deals for my clients at any given time in the cycle. I do know that when you look at some of the things that are holding our side down, i.e. banks that are stuck with product, too many loans clogging their pipelines, that stuff is filtering out slowly. Theres more lending because the cream is rising to the top a little bit but the healthy lenders are starting to lend and ones that arent are sort of petering out. And thats another point, by the way, just to back up for a second. The loan sale business has helped us find and start relationships with regional and local banks that I probably never would have had before because those are the clients on the loan sale side.
Is lending loosening a little bit? Or is it still for the select borrower in select markets? It always helps to have a high-class, very-top-tier sponsor. Weve done a couple of deals where, especially on the construction side, where you have a great deal but in order to have it financeable in our opinion you need to bring in a partner to add horsepower to the borrowing entity. So weve done a couple of deals where that has been the case and we think that if you are going to do a large construction deal, you sort of need to be a banks you need to be their one or two deals like that that year right now. Where do you see capital flowing today? Is it the usual places? Look, everybody likes to use the sound bytes and theyre all the samegateway markets and all that boring stuff and you can even joke about that, but the reality is that theres a reason we call them gateway markets and capital cities. Lenders and investors want to be in markets where the recovery is happening the fastest. Weve been doing a lot of work in New York, D.C. and Miami. We did a large condominium project here in New York last year where we brought in a very prominent private equity fund to be a partner in the equity. Its a deal on 18th street210 West 18th Street. We represented that venture to close in a $97.5 million construction loan. That was a two bank deal. Where do you see the securitization market going these days? Is it picking back up? Its certainly picking up. Theres a lot of fixed-rate securitization shops out theresecondary and primary shops. When the securitization market is chugging its sort of a commodity. Its about who can give you the best execution.
28
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Our picks for the months must-attend events
May 2012 / Calendar
The Sked: May

2-3
Its arguably one of the busiest streets in the country, and so, without a doubt, the decision to develop a sprawling residential, retail and schools project on East 57th Street raised a hornets nest of unique challenges. But for David Lowenfeld, an executive vice president of World Wide Holdings, alum of Harvards Kennedy School of Government and a onetime student of European intellectual history, the project near Second Avenue posed plenty of philosophical conundrums, to be sure. For that reason alone, be sure to check out the former U.S. State Department advisor and writer of what became Pres. Ronald Reagans Evil Empire speech when he untangles the mysteries surrounding his companys bid to build one of New Yorks most complicated commercial projects of the past decade. World Wide Holdings breakfast panel; Javits Convention Center, 655 West 34th Street, Room 1CO1, 8:30-10 a.m. Email associatedbuilders@ abogny.com to RSVP or receive more information.
23-24
The regions data centersthose anonymous buildings with nary a window and rarely a visitormay have immigrated to central and north New Jersey following the attacks of Sept. 11, 2001. But their largest tenantsstock and money managers like Goldman Sachs and Credit Suisse, for examplestill call lower Manhattan home. As such, its no shock that the Information Management Network is hosting its second annual data center consortium near Wall Street and the New York Stock Exchange, which, true to form, also stores its data across the Hudson. Second Annual Spring Forum on Financing, Investing & Real Estate Development for Data Centers; Marriott New York Downtown, 85 West Street, 8 a.m. to 7 p.m. Contact Andy Melvin at 212-901-0542 or email amelvin@imn.org for more info.
Mortgage Bankers Association National Secondary Market Conference and Expo; New York Marriott Marquis, 1535 Broadway. Call 800-793-6222 for information.
30-31
10
6-9
Fox News pundit Tucker Carlson and CNN political analyst and former advisor to Pres. Bill Clinton Paul Begala will headline a four-day Mortgage Bankers Association conference on debt and the secondary market. That said, its the insiders like Fitch Ratings managing director Roelof Slump and WL Ross & Co. vice chairman James Lockhart who will really illuminate the European debt crises and how the Feds shifting policy choices will affect business in 2012. Last years expo corralled hundreds of mortgage investors, investment bankers, lenders, regulators and chief executives to one of the industrys premier secondary market events. But with the upcoming presidential elections still lingering, expect seminars like The Governments Role in Housing: Secondary Market Executives Update to positively bustle this time around.
The term infrastructure renewal can be used to describe the good works some developers and community activists spearhead on a regular basis in order to spur economic development in underperforming neighborhoods. Or it can be used to describe the strategies utilized by companies like Forest City Ratner, which is now in the process of building a basketball arena and retail-and-housing complex in an arguably vibrant area of Prospect Heights, Brooklyn. Either way, expect opposing ideas, perhaps whispered, when Rose Associates chairman Daniel Rose and Forest City Ratner chief executive officer Bruce Ratner receive honors during the New York Building Congresss 91st annual Leadership Awards luncheon. New York Building Congress 91st anniversary Leadership Awards luncheon; Hilton New York, 1335 Avenue of the Americas, 11:30 a.m. to 2 p.m. Contact Janine Badalamenti at 212-481-9099 or email her at jmb@buildingcongress.com for more information or to RSVP.
More than a thousand real estate and financial services professionals will clamor for seats when the Information Management Network hosts its two-day outlook on private funds in the real estate world. Expect funds across the Eastern Seaboard, as well as a few from across the globe, to attend. U.S. Real Estate Opportunity & Private Fund Investment Forum; Sheraton New York Hotel and Towers, 811 Seventh Avenue, near West 53rd Street, 8 a.m. to 7 p.m. Contact Andy Melvin at 212-901-0542 or email him at amelvin@imn.org for more information.
31
Of Interest / May 2012
An index of all the people, places, addresses and companies mentioned in this issue
31
22
31
Ingber, Jonathan . . . . . .2 Institutional Asset Management . . . . . . . . 12 Investors Savings Bank . . . . . . . 2, 14, 21-23 Iron Hound Management . . . . . . . . .5 Ironstate Development .5
21
22
Spengler, Richard . . . .23 St . Patricks Day . . . . . 21 Starwood Capital . . . . . 10 State Charter Bank Advisory Board . . . . . . 18 Stein, Joshua . . . . . .16, 17 Sternlicht, Barry . . . . . 10 Stoeffers, Brian . . . . . . .5 Storz, Brian . . . . . . . . . .8 Sukenik Segal & Graff . . . . . . . . . . . . 10 Sun Trust Robinson Humphrey . . . . . . . . . . 18
Ackman-Ziff . . . . . . . . .28 Actovia . . . . . . . . . . . . .2 Alpert, Michael . . . . . . 10 Amalgamated Bank . . . 12 American University . .28 Appel, Aaron . . . . . . . . .8 Apple Bank . . . . . . . . . 14 Askenazy Acquisitions 10 Askenazy, Ben . . . . . . . 10 Astoria Federal Savings Bank . . . . . . . . 14
DiMaggio, Joe . . . . . . .22 Dime Savings Bank of Williamsburgh . . . . . . . 14 Drebin, Russ . . . . . . . . .5 Durst Fetner . . . . . . . . 12 Duval & Stachenfeld . . .5
Nataxis . . . . . . . . . . . . 12 New York Community Bank . . . . . . . . . . . . 8, 14 New York Yankees . . . .22 New York Giants . . . . .23 Northmarq Capital . . . . 18 NYU . . . . . . . . . . . . . . .28
Banco Santander S .A . . 12 Bank Leumi . . . . . . . . . 14 Bank of America . . .18, 12 Bar-Or, Tal . . . . . . . . . . 18 Barclays Capital . . . . . 18 Barnett, Pam . . . . . . . . 18 Bartolo, Richard . . . . . 18 Begala, Paul . . . . . . . . . 31 Berkadia Commercial Mortgage . . . . . . . . . . . .8 Betesh, Morris . . . . . . . .6 Brookfield . . . . . . . . . . .5 Brooklyn Federal . . . . .22 Build NYC . . . . . . . . . . 10
Eastdil Secured . . . . . . .5 Eastern Consolidated . . 8, 24-27 Economic Development Corp . . . . . . . . . . . . . . 10 Eldorado Bumper Cars . . . . . . . . . . . . . . . .6 Emmet, Marvin & Martin LLP . . . . . . . 18 Extell Development . . . 12
J .P . Morgan . . . . . 2, 14, 16 Joel, Billy . . . . . . . . . .22 Johnson Capital . . . . . . 18
Fannie Mae . . . . . . . . . .5 Fitch Ratings . . . . . . . . 31 Flushing Savings Bank . . . . . . . . . . . . . . 14 Forest City Ratner . . . . 31 Freddie Mac . . . . . . 8, 16 Freel, James . . . . . . . . 12
Kennedy School of Government . . . . . . 31 Knakal, Bob . . . . . . 24-27 KPMG . . . . . . . . . . . . . 21 Kriss, David . . . . . . . . . 10 Kriss & Feurstein . . . . . 10 Kunofsky, Glen . . . . . . 18
Obama, Barack . . . . . . .4 Oberfell, Brian . . . . . . . 18 One57 . . . . . . . . . . . . . 12 ONeill, Thomas . . . . . . 18 Ottomanelli, Michael . . . . . . . . . . . . 18 OUT NYC . . . . . . . . . . 12
Campbell, Stewart . . . . .8 Capital America . . . . . . 18 Capital One . . . . . . . 2, 14 Capstone Equities . . . . .5 Carlson, Tucker . . . . . . 31 Carlyle Group . . . . . . . .5 Cayuga Capital Management . . . . . . . . .8 CBRE Capital Markets . . . . . . . . . . . 4, 5 CBRE Capital Partners . . . . . . . . . . . . 18 Chandan, Sam . . . . . . . 16 CIT Real Estate Finance . . . . . . . . . . . . 12 Citi Habitats . . . . . . . . 12 Clinton, William . . . . . 31 CNN . . 31 Cohen, David . . . . . . . . .6 Cohen, Jason . . . . . . . .28 Coughlin, Tom . . . . . . .23 Credit Suisse . . . . . . . . 31 Cummings, Kevin . . . . . . . . . .2, 20-23
Gandell, Ryan . . . . . . . 18 Gertenlauer, Jenna . . . 18 Ghadamian, Daniel . . . .5 Glanzman, Andy . . . . . 18 Glenwood Management . . . . . . . . 12 Goldman Sachs . . . . . . 31 Gotham Organization . .5 Graff, Joshua . . . . . . . . 10 Gross, Harry . . . . . . . . 12 Grossman, Seth . . . . . . 18 Guggenheim, Greta . . . 18
Ladder Capital . . . . . . . 18 Lawsky, Benjamin . . . . 18 Lehman Brothers . . . . . 18 Lieberman, Lipa . . . . . .8 Lockhart, James . . . . . 31 Lowenfeld, David . . . . . 31 Lyons, John . . . . . . . . . .4
Penner, Ethan . . . . . . . 18 Peoples United Bank . . 18 Pinsky, Seth . . . . . . . . . 10 PNC . . . . . . . . . . . . . 4, 12 Prudential Douglas Elliman . . . . . . . . . . . . 12 Prudential Mortgage Capital Co . . . . . . . . 5, 12
T .J . Maxx . . . . . . . . . . . .5 TD Bank . . . . . . . . . . . 12 Tessler Developments . 10 Thompson, Jack . . . . . 18 Thor Equities . . . . . . 6, 8 Toll, Jacob . . . . . . . . . . .8
U .S . State Department . . . . . . . . . 31 U .S . Supreme Court . . . .4
Harvard . . . . . . . . . . . . 31 Hauspurg, Peter . . .24, 26 HFF . . . . . . . . . . . . . . . .4 HSBC . . . . . . . . . . . . . 12
ICSC . . . . . . . . . . . . . . 10 Industry City . . . . . . . . .8 Informational Management Network . . . . . . . . . . . 31
M&T Bank . . . . . . . . 2, 14 Marcus & Millichap . 4, 18 Martocci, Gino . . . . . . 12 Massey Knakal . . . . . 6, 18 Mazzei, Michael . . . . . . 18 MetLife . . . . . . . . . . . 5, 8 Meridian Capital Group . . . . . . 4, 5, 6, 8, 18 Merrill Lynch . . . . . .18, 12 Michaels, Howard . . . . .5 Middlebury College . . .22 Minskoff, Edward . . . . 12 Mission Capital Advisors . . . . . . . 2, 10, 28 Moinian Group . . . . . . .8 Mooney, Sean . . . . . . . 18 Mortgage Bankers Association . . . . . . . 4, 31 Mundane Funds, The . . 18
Ranieri Partners . . . . . 18 Ratner, Bruce . . . . . . . 31 Ray, Jordan . . . . . . . 2, 28 Reagan, Ronald . . . . . . 31 Related Companies . . . 12 Rockrose . . . . . . . . . . . 12 Rose Associates . . . .12, 31 Rose, Daniel . . . . . . . . 31 Rovt, Alex . . . . . . . . . . .5 Rudin Management . . . 12 Rutgers . . . . . . . . . . . .22
Valley National Bank . . .6 Verrone, Robert, 5 Von Der Ahe, Peter . . . 18
Wells Fargo . . . . . .4, 5, 12 Westfield Group . . . . . 10 Whipple, Bruce . . . . . . 18 Wiener, Alan . . . . . . . 4, 5 WL Ross & Co . . . . . . . 31 World Wide Holdings . . . . . . . . . . . 31
Sam Chandan Economics . . . . . . . . . . 17 Sandler ONeill + Partners . . . . . . . . . . 18 Savills USA . . . . . . . . 2, 4 Scavone, Frank . . . . . . 18 Schechtman, David . . . . . . . . . 8, 24-27 Shorenstein . . . . . . . . . .5 Signature Bank . . . . . . 14 Slump, Roelof . . . . . . . 31 Sovereign Bank . . . . . . .8
Zamir, Josh . . . . . . . . . .5
1 West Street . . . . . . . . .8 14 Wall Street . . . . . . 2, 5 51 Astor Place . . . . . . . 12 66 Leonard Street . . . . .8 76 North 4th Street 210 West 18th Street . .28 660 Madison Avenue . . 10 1401 Hudson Street . . .5
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Mortgage Observer May 2012

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Mortgage Observer May 2012

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may 2012

The M.O. chats with Mission Capital Advisors

The Insiders Monthly Guide to New Yorks Commercial Mortgage Industry

Despite Q4 drop in distress,

How Investors Bank Will Grow, Serving Underserved

Relationship Driven. Execution Focused.

Balance Sheet Financing

Balance Sheet Financing

West 14th Street

Balance Sheet Financing

Balance Sheet Financing

Cover Photo by Daniel M. Weiss

May 2012 / Contents

321 West 44th Street, New York, NY 10036 212.755.2400

Kevin Cummings: Investors Banks Plan For Growth by Ian Thomas

A comprehensive take on CRE finance trends by Michael Stoler

Jordan Ray | Mission Capital Advisors by Ian Thomas

Monthly charts of commerical real estate financings in the five boroughs

The Sked: May 31

Our picks for the months must-attend events

The Basis Point 16

A Disappointing First Quater for CMBS Sam Chandan

Hirings, promotions, defections and appointments

Editors Letter / May 2012

Carl Gaines, Editor

The nations #1 multifamily lender is lending in your backyard.

Call 866-310-2490 or visit www.chase.com/MFL

News Exchange / May 2012

Note sales, investments, mortgage originations, mergers and acqusitions.

Cross-Border Investment Goes Global

At Over $60 Billion, Wells Fargo Again on Top

Medical O ce Big Among Private Investors in 2012

May 2012 / News

14 Wall Street Recapped

Ironstate Development Inks $33 Million Loan

News Exchange / May 2012

Note sales, investments, mortgage originations, mergers and acqusitions.

Massey Knakal Closes $14 Million Loan in Williamsburg

{ Loan is secured by multi-family} buildings in Williamsburg.

Valley National Bank Provides Surf Avenue Loan

{ $7.4 million at 1122 and 1113 Surf. }

A trusted financial partner.

For a higher level of personal service, connect to www.tdbank.com/commercialbanking or call 1-888-751-9000.

News Exchange / May 2012

Note sales, investments, mortgage originations, mergers and acqusitions.

New York Community Bank Res CMBS loan

Sovereign Bank Provides $28.4 Million Loan for Steelworks Lofts

66 Leonard Sells 1 West Street Condo Res for $6.5 Million

Street retail { for foodies. condo a familiar spot }

Financing provided by:

Drew Anderman danderman@walkerdunlop.com Alan Blank ablank@walkerdunlop.com

News Exchange / May 2012

Note sales, investments, mortgage originations, mergers and acqusitions.

Build NYC Program Clears $90 Million Financing

Starwood Capital Group Said to Head to the Mall

Spokesman declined { about the portfolio ofto comment } malls.

Mission Markets Note

Were Flushing Bank, your lending and banking specialist.

Multi-Family and Mixed-Use Mortgages1

Business Checking Plus Interest

Cash Management Services

On balances of $100,000 or more

In-Depth Look/ May 2012