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Mortgage Observer May 2012

Mortgage Observer May 2012

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may 2012


The M.O. chats with Mission Capital Advisor’s

Jordan Ray

The Insider’s Monthly Guide to New York’s 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 Stein’s Law: Pitfalls to Avoid for Loan Guarantors Michael Stoler Takes an In-Depth Look at Construction Financing Capstone’s Recap of Iconic 14 Wall Street

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Cover Photo by Daniel M. Weiss

May 2012 / Contents

321 West 44th Street, New York, NY 10036 212.755.2400
will o’hare


Carl Gaines Editor Jotham Sederstrom Editorial Director Dan Geiger Daniel Edward Rosen Staff Writers Michael Stoler Contributor

Editor’s 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 Bank’s 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 month’s must-attend events

Stein’s 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

Editor’s Letter / May 2012

But opportunities still abound.
You’ll see a few changes in this month’s 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 area’s commercial mortgage market. This month writer Ian Thomas caught up with Investors Bank’s Kevin Cummings to find out the bank’s plans for increasing its lending in the area. And I delved into the ongoing phenomenon of distressed note sales. Despite last month’s rather rosy editor’s 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 Actovia’s 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 this—most 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 “We’re starting to see more capital to come from Savills show that global cross-border investment emerging countries—those that have natural resourcreached its highest level in three years in 2011—makes,” 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 Savills’s 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. Lyons’s 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 are—New 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 sur“In 2011 D.C. was four—to prised him. John Lyons from Savills me there has been a lot of ac“Considering 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 East—a lot of capital went to Europe and the U.K. than anticipated,” he said, pointing out that the govin particular—I thought that there would be even ernment’s contraction of its space there was not as more capital coming to the United States,” Mr. Lydrastic as had been predicted. “I’m 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. “It’s 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 lion’s sible for $61 billion out of a total of $460 billion in share of medical office activity in 2012. The global transaction activity. firm’s 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 Obama’s Patient Protection and Affordable Care Act, the health care industry is facing many unknowns. Marcus & Millichap’s 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 & Millichap’s report found that private investors are set to take the lion’s share of medical office activity this year—particularly REITs and institutions. With so many unknowns existing in the industry—such as the Supreme Court hearings—rents 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 metrics—such 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 bank’s 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 bank’s 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


permanent multifamily lender in the country in 2010, 2011 and we will be in 2012 as well—so it’s 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 else’s,” 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 10—MetLife 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 Zamir’s 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 million—the 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, we’ve 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 Shorenstein’s mezz also played a role in the recap. Pressure had mounted as the entirety was coming due in May 2012.


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. Ironstate’s loan was negotiated by Meridian


News Exchange / May 2012

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

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 today’s market value.” CG

1401 Husdon Street advisors David Cohen and Russ Drebin, from the firm’s 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 couldn’t disclose the lender’s or borrower’s names, or the addresses of the buildings. Morris Betesh, director at Massey Knakal Capital Services, worked on the deal—a 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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News Exchange / May 2012

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

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 Refis CMBS loan
68 Ferris Street, next to Industry { City, receives new financing. }
76 North 4th Street A building adjacent to Sunset Park’s Industry City—the 6.5-million-square-foot, 17-building business park—has 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 property’s industrial nature.” 68 Ferris Street is 270,000 square feet and two stories tall. It’s 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 apartments—with

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. It’s 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 units—each 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 building’s 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. “It’s 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 it’s an O.K. deal but the structure is going to kill it.” CG

66 Leonard Sells 1 West Street Condo Refis 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


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News Exchange / May 2012

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

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 refinance} 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 today’s 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 financing—a 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 that’s 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 year’s 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 Acquisitions—helmed by CEO and chairman Ben Ashkenazy and president and vice chairman Michael Alpert—bought the spot. Neither could be reached for comment. The firm’s 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 Vongerichten’s Matsugen—the chic Japanese soba shop that closed after its chef’s visa expired. CG


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 hot—in 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 company’s Rent Index charted rising rents in Park Slope—which 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 well—up 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. It’s flowing from both money center banks and regional lenders and hasn’t 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 Minskoff’s 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 Gross’s 70-story, mixed-use tower at Broadway and 54th Street. The tower will include four floors of retail and two hotels—a 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 Bank’s fund is expected to be launched during the fourth quarter of 2012. All of this makes one thing certain—banks 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 month’s 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.


FEB 2012 93 44 44 31 24 24 22 18 17 11


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

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



Total Sales by Borough
In March Brooklyn remained the hottest borough for sales, though theydecreased slightly to 163. Queens saw the biggest jump—43 additional sales during the month.

Six Most Active Zip Codes
Upper Manhattan and the Ridgewood section of Queens jumped onto March’s list of most active zip codes.





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





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The M.O. Columnists / May 2012
terms and obligations that prohibit things” a borrower might do—they are transfers and require the borrower to just the consequences of financial disremain “separate” or a “single-purpose tress. They shouldn’t 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 shouldn’t 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 that’s 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 it’s 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 don’t respond by saying that the guarantor always tie to the property’s financial shouldn’t face liability because of such performance: intertwined defined

Better Luck Next Time
When the refinancing closed, the real estate investor—the principal of the borrower—leaned 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 I’m not signing on for anything I didn’t agree to guarantee?” It was a bedrock proposition that guaranties wouldn’t 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 aren’t “bad

Stein’s 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 markets—constraints 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-


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 doesn’t really suffer any loss. Some sloppiness in this area might marginally increase the lender’s risks in a possible future bankruptcy—but that by itself shouldn’t 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 borrower’s shared telephone number, the lender should first give the guarantor a chance to solve the lender’s 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 can’t. Tomorrow’s 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 wouldn’t 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 don’t 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 industry’s 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 market—including 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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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 & Martin’s corporate and real estate group, specializing in American depositary receipts and CMBS, and serves on the firm’s 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 Meridian’s 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 People’s 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 Meridian’s Carlsbad office.

1980s and retired from in 2010. “We are thrilled to have Rich and Jack join the firm,” Mr. O’Neill 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 O’Neill, 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 firm’s 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. He’s 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 he’ll officially start in his new position—a 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 two—Richard Bartolo and Jack Thompson—will be working on a team led by Ranieri Financial Services CEO Thomas O’Neill. 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. He’s also a former principal at Sandler O’Neill + Partners, the firm Mr. O’Neill 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 firm’s 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.


New York Real Estate Summit NEW YORK R
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

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 & COO’s 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 • 7:30 AM to 8:30 AM:    The State of the residential market—rental & • 8:30 AM to 9:30 AM    condominium in the region  
• 9:40 AM to 10:40 AM  • 10:40 AM to 11:00 AM  • The State 11:00 AM to 12:00 Noon  of the residential

Keynote Panel: CEO & COO’s 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 Keynote Panel:  CEO & COO‐View on the  • James Carpenter, SR. EVP & market  Chief Lending Officer, New York Community Bank   • Alfred Brooks, President, Chase  • Carl Goldberg, Partner, Roseland Property Commercial Term Lending  Company • Jr., CEO, DDG Partners CEO & COO’s   • Joseph McMillan, Joseph Ficalora, President &  CEO,New York Community Bank  • Amy Rose, Co-president, Rose Associates • • Joseph Ficalora, President & CEO,  Brian Harris, CEO, Ladder Capital  • David Von Spreckelsen, President, Toll • New York Community Bank  Michael Pappagallo, EVP & COO  Brothers City• Michael Pappagallo, EVP & COO,  Living Kimco Realty  • Kimco Realty  Neil Shah, President & COO, Hersha  Hospitality Trust  Developments in the region: • Neil Shah, President & COO,  • Larry Silverstein, President & CEO,  New York City, Long Island & Hersha Hospitality Trust  Silverstein Properties  New Jersey Emanuel Stern, President & COO,   • • Larry Silverstein, President & CEO,  • Michael Berfield, SVP, Equity One Hartz Mountain Industries  Silverstein Properties    • Robert J. Coughlan, Principal, TRITEC Real • Brian Harris, Chief Executive  Developments in the region: New York City,  Estate Company Officer, Ladder Capital  Long Island & New Jersey  • Roy Chin, Regional Director, Com Real   • Emanuel Stern, President & COO,  Estate, TD Bank • Hartz Mountain Industries  Michael Berfield, SVP, Equity One  • K. Thomas Elghanayan, Chairman & Co• Robert J. Coughlan, Principal,     TRITEC Real Estate Company  Founder, TF Cornerstone   • Allen Goldman, President, SJP Residential • Developments in the Region  Roy Chin, Regional Director,        New York City, Long Island & New Jersey  Com Real Estate, TD Bank  • Jeffrey Levine, Chairman & CEO, Douglaston K. Thomas Elghanayan, Chairman &  Development/Levine Builders • • Allen Goldman, President, SJP  Co‐Founder, TF Cornerstone  Residential  • Allen Goldman, President, SJP  • K. Thomas Elghanayan, Chairman  Residential  • & Co‐Founder, TF Cornerstone  Jeffrey Levine, Chairman & CEO,  Douglaston Development/Levine  • Jeffrey Levine, 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 • 12:00 PM to 1:15 PM 



Regist Keyno Develo Coffee Privat Where The St



For additional information contact: Michael Stoler (o) 646-442-0717 mstoler@madisonrealtycapital.com


  Registration:  [Web Address] 

Cost of event:  $250   Michael Stoler, New York Real Estate TV,


Power Profile / May 2012

photography by Daniel M. Weiss ©2012

May 2012 / Power


Investors Bank’s 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. Patrick’s 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 bank—it was one of his clients during his time as an audit partner in KPMG’s financial services practice and in the New Jersey community bank practice—he 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 bank’s Short Hills, N.J. headquarters. This year, Mr. Cummings was celebrating again on St. Patrick’s Day—this time as the grand marshal of Newark’s 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 bank’s long-standing role has performed well—it 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 loans—9 percent of its total loan portfolio—with 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 bank’s nonperforming loans were in fact originated during that time period. However, Investors followed those loan originations up with a much better decision—investing heavily in the multifamily market. “That’s our bread and butter,” Mr. Cummings explained. At


Power Profile / May 2012

Our average loan is that space—a lot of people aren’t We’re 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 it’s a hot asset class right now,” he said. “Our timing couldn’t have been better.” Mr. Cummings has installed a set of core principles during his time as president and CEO of the bank. They’re all aimed at providing value to all customers, regardless of size—something that’s 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. “He’s not sexy—he’s just a regular guy.” “Our average loan is in that $3 million to $10 million space—a lot of people aren’t playing in that space,” he said. “We’re 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 bank’s acquisition of Brooklyn Federal last year, an acquisition that allowed it to pick up five new branches, as well as Brooklyn Federal’s commercial real estate loan portfolio. However, Mr. Cummings and Investors didn’t 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 loans—so 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 loans—but 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 it’s 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 Bank’s main office and said that his commute, short as it is, doesn’t 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: “I’d 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. “It’s more important to know what you don’t know than trying to be the smartest guy in the


May 2012 / Power


$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 company’s 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 energy”to 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 didn’t even have to look further than his own home. “My kids—they don’t want to buy a house,” he said. “All they’ve seen since they’ve graduated college in the last 10 years is real estate prices flat or declining, so they don’t 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. “What’s 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. “There’s 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 we’re losing deals with a 4 percent handle? We think that’s 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 didn’t have the glut in overbuilding that we had in the recession of the late 80s/90s on the office side, so the pain hasn’t 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, what’s going to happen? The other shoe hasn’t 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. “We’ll make a great living serving the underserved, we’ll work on the middle to lower end of the market, and we’ll give them service that they won’t get at the large banks,” he vowed. To achieve these goals, he’s 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, that’s 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 don’t want to put your heart and soul into this, I’ll 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.”


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 2011—a 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 year’s full year total of $60.1 billion. So what gives? Why do note sales continue to be the product of the moment—with 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. Schechtman’s 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 transactions—both in plain vanilla real estate but also in the loan and distressed world,” Mr. Schechtman said recently at Eastern Consolidated’s 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


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 completed—since January 1, 2012—16 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 firm’s 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 lengthy—up 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 borrower’s 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 note—let’s say the property is worth $60 million—the investor might say ‘Hey I’m willing to pay the full amount for the note because I’m buying the property for less than it’s 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 that’s owed an I’m 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


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 firm’s practice involves representing lenders in the foreclosure process. He echoed Mr. Knakal’s sentiments about how lengthy it can be. “The foreclosure process unfortunately in the past several years has moved to a stage of being exasperatingly long—several 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 sale—and 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. “That’s where the phrase ‘extend and pretend’ came from—where if a loan was even

matured and the money was due and the borrower said ‘I can’t pay you off’ they extended it for two years and nursed the loan along for two reasons. First, the bank became healthier—perhaps selling the loan at a discount—and 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 team—which includes senior director Lipa Lieberman, director Marion Jones and associate director Abie Kassin—just 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. It’s set to close around May 15, 2012. The borrowers included Neil Rubler from Vantage Properties and


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 wouldn’t 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 it’s an amicable process.” Mr. Schechtman was also just hired several weeks ago to represent General Electric—“It’s 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 here—a cubicle—with 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 ’07—it 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 hadn’t 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


May 2012 / Note


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 assets—Matthew 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. “We’re 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 we’ll 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 you’ve 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 there’s an issue and it’s 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 don’t 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.” It’s a strategy that doesn’t 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.


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: I’ve been in the business since 2001. I started out at Ackman-Ziff and I was there for almost five years. I’ve been a commercial mortgage broker and equity advisor for my entire career—ever 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 school—it was a great place to grow up in this side of the business. In 2009 when the world started to turn and there really wasn’t 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 country—selling 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 wasn’t 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 business—we 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 I’m spending about 85 percent of my time on the deal. Now that we’re hiring more execution folks, I’m planning to spend more time looking for new business. On the execution side when we’re 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 be—not that there’s anything bad. It’s just a little different because we’re a younger firm. The average

Mission Capital Advisors
This month, The Mortgage Observer spoke to Mission Capital Advisor’s 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. What’s the firm’s 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 we’ve all seen the pitfalls of growth. We’ve seen good and bad. We’ve seen smart growth and we’ve seen just adding bodies to add bodies because it makes more money. We’ve 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 they’re going to be there for the long haul because we have a very interesting environment. Regarding the economic climate—is there less uncertainty out there compared with six months or a year ago? We’re adding jobs slowly. We’re adding different kinds of jobs in places like New York. There’s a lot of tech now—a lot less finance, a lot more tech. Rates are probably artificially low, as we all know. Unfortunately I’m not much of an economist. I’m 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. There’s more lending because the cream is rising to the top a little bit but the healthy lenders are starting to lend and ones that aren’t are sort of petering out. And that’s 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. We’ve 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 we’ve 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 bank’s … 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 they’re all the same—gateway markets and all that boring stuff and you can even joke about that, but the reality is that there’s 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. We’ve 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. It’s a deal on 18th street—210 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? It’s certainly picking up. There’s a lot of fixed-rate securitization shops out there—secondary and primary shops. When the securitization market is chugging it’s sort of a commodity. It’s about who can give you the best execution.





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Our picks for the month’s must-attend events

May 2012 / Calendar

The Sked: May
It’s 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 hornet’s nest of unique challenges. But for David Lowenfeld, an executive vice president of World Wide Holdings, alum of Harvard’s 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 Reagan’s “Evil Empire” speech when he untangles the mysteries surrounding his company’s bid to build one of New York’s 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.


The region’s data centers—those anonymous buildings with nary a window and rarely a visitor—may have immigrated to central and north New Jersey following the attacks of Sept. 11, 2001. But their largest tenants—stock and money managers like Goldman Sachs and Credit Suisse, for example—still call lower Manhattan home. As such, it’s 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.




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, it’s 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 Fed’s shifting policy choices will affect business in 2012. Last year’s expo corralled hundreds of mortgage investors, investment bankers, lenders, regulators and chief executives to one of the industry’s premier secondary market events. But with the upcoming presidential elections still lingering, expect seminars like “The Government’s 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 Congress’s 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.


Of Interest / May 2012

An index of all the people, places, addresses and companies mentioned in this issue



Ingber, Jonathan . . . . . .2 Institutional Asset Management . . . . . . . . 12 Investors Savings Bank . . . . . . . 2, 14, 21-23 Iron Hound Management . . . . . . . . .5 Ironstate Development .5


Spengler, Richard . . . .23 St . Patrick’s 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 Barclay’s 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 O’Neill, 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 People’s 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 O’Neill + 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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