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The Mortgage Observer July 2012

The Mortgage Observer July 2012

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The Insider’s Monthly Guide to New York’s Commercial Mortgage Industry

July-August 2012


The M.O. talks shop with Madison Realty Capital’s

Josh Zegen

Specialty Lenders: An In-Depth Look


100 Church Street $230 Million Loan and Lease Renewal Investors Bank Marathon Purchase Deepens Reach

Willy Walker Walker & Dunlop’s CWCapital Buy

Fitch Ratings A CMBS at the Head of the Class

Moinian Group $50 Million Refi on Park Avenue South

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Cover Photo by Michael Nagle

July-August 2012

/ Contents

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

Carl Gaines Editor



Jotham Sederstrom Editorial Director Daniel Geiger Daniel Edward Rosen Staff Writers Sam Chandan Joshua Stein Columnists Michael Stoler Contributor

Editor’s Letter 02 News Exchange 04-10
Mortgage originations, note sales, investments, industry research       100 Church Street secures $230 Million loan HFF: Long Island City hotel refinanced West 30th Street Tower gets financing Investors Bank to buy Marathon Bank No sale for Deutsche Bank’s RREEF Fitch: AAAsf-rated CMBS head of the class


Barbara Ginsburg Shapiro Associate Publisher Robyn Weiss Director of Real Estate Ed Johnson Production and Creative Director Peter Lettre Photo Editor Lauren Draper Designer Lisa Medchill Advertising Production

Workforce 18

Hirings, promotions, defections and appointments

Power Profile 20-23
Capital One Grows, Minus Pains by Carl Gaines

Outside Looking In 24-29

OBSERVER MEDIA GROUP Jared Kushner Publisher Elizabeth Spiers Editorial Director Christopher Barnes President Barry Lewis Executive Vice President Jamie Forrest Associate Publisher, Senior Vice President Michael Woodsmall Editorial Manager

Smaller lenders are zeroing in on the Manhattan market by Daniel Geiger

In-Depth Look 11-12

Specialty Lenders: Where to Look by Michael Stoler

Q&A 28

Josh Zegen of Madison Realty Capital by Carl Gaines

Scheme of Things 14

Monthly charts of commercial real estate financings in the boroughs

The Sked: July/August 31

Our picks for the months’ must-attend events

Stein’s Law 16

Clarity On How Mortgage Recording Tax Applies to Interest Rate Swaps by Joshua Stein

Of Interest 32

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

Zarah Burstein Marketing Manager Mark Pasquerella Controller Tracy Roberts Accounts Payable Manager Accounts Receivable Ian McCormick

The Basis Point 17

European Recession, the American Fiscal Cliff and Commercial Mortgage Lending by Sam Chandan

Editor’s Letter / July-August 2012

Competition Heats Up
For the July/August issue of The Mortgage Observer, I got to know Rick Lyon from Capital One Bank. And, equally important, I learned that those Vikings in their ads—well, they’re not Vikings at all. But, rather, they’re Visigoths. This really brought up an interesting point: How does a bank so well known for the ads promoting its mono-line credit card business maintain that image while growing and diversifying in areas like commercial real estate lending, which Mr. Lyon heads up for the northeast? As it turns out, by just doing it—by gobbling up some other banks that had a presence in commercial real estate and by carving out a niche in the New York tristate area as a lender for a lot of the workforce housing that dots the outer boroughs. Mr. Lyon talked to me about Capital One’s lending philosophy for commercial real estate, as well as his background and how he got his start. With the most recent Greek election now behind us and a pro-bailout, coalition government forming there, columnist Sam Chandan takes a look at how the ongoing financial crisis in Europe is affecting the commercial real estate market here at home. Even in light of the election results there is obviously no short-term solution for the troubles plaguing Europe’s southern countries, and the fallout continues to have ripple effects. Stay tuned. Contributor Michael Stoler for this issue took an in-depth look at financing for specialty assets. With the availability of financing for even construction projects coming back, these assets can still prove tricky to get funded. Think hospitality, health clubs, bars and golf courses. Michael, as always, uses his unparalleled industry expertise and knowledge to delve into how these projects, in the end, are financed. And for our second feature this month, Daniel Geiger looks at the phenomenon of smaller lenders outside the city zeroing in on the Manhattan market—particularly the still-hot multifamily market. Competition is fierce and more and more of them are looking to be players and originate loans in the Big Apple. Have a great summer. We’ll be back in the fall with our September issue and more profiles, deals and analysis.

Carl Gaines, Editor


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News Exchange / July-August 2012
new for the team at CBRE Capital Markets, which has originated more than 1,500 of them—at over $23.8 billion—since 2001. According to sources, the previous Freddie Mac loan on the building was also $19 million, and applied when Elk Investors bought it from BlackRock Realty for $38 million in 2009.


$230 Million Wells Fargo Loan Secured for SL Green’s 100 Church Street
building pre-recession, while at Wachovia Bank. “That loan was originated, if I remember correctly, late 2007 or early 2008, right when we were going into the financial meltdown that we’ve experienced over the last several years,” Mr. Rosenberg recalled. “SL Green also held a mezzanine position on the loan— they held one of the junior positions—and the prior borrower was unable to lease up the property and obviously based on the market meltdown. SL Green was able to foreclose out that interest and has just done a phenomenal job stabilizing the building— taking the building from somewhere in the mid-50s to its current 85 percent occupancy level. “ In addition to the refinancing, the building received another recent boost: the city of New York, which occupies 372,520 square feet of space there for its law division’s offices, renewed its lease for 20 years. That lease was set to expire in October of next year and covered floors two through six, 20 and part of the concourse.

$50 M Refinance for 450-460 Park
The Moinian Group’s 450-460 Park Avenue South has been refinanced. The roughly 167,000-squarefoot building got a $50 million, fixed-rate loan from Guggenheim Commercial Real Estate Finance. According to data from Real Capital Analytics, the loan, which has a loan-to-value ratio of 70 percent, was arranged by Robert Verrone’s team at Iron Hound Management Company. It’s for a period of seven years and was completed with an unidentified insurance company as co-lender.

100 Church Street

Hudson Funds Refinances 164 Elizabeth Street
Hudson Realty Capital has supplied a $5.3 million first mortgage to refinance a 13,707-square-foot mixed-use building in the Nolita neighborhood of Manhattan, The Mortgage Observer has learned. The six-story building at 15-25 Kenmare Street, aka, 164 Elizabeth Street, contains 15 residential units and two ground-floor commercial spaces, including the newly opened industrial brasserie Ken & Cook, which is operating in the former Travertine space. The loan’s proceeds are being used to replace maturing debt and to establish operating reserves. “Hudson was able to provide funding that allowed the borrower to pay off the maturing debt, without a prepayment penalty,” said Hudson managing director Spencer Garfield. He added that this type of middle market funding is typical of the work Hudson is currently doing throughout the country. The owner, David Zahabian, bought it back in 2007 for roughly $10 million.

SL Green Realty Corp. has refinanced 100 Church Street, after looking for several months for a loan to place on the building. Andrew Mathias, the REIT’s president, confirmed to The Mortgage Observer that the loan, from Wells Fargo, had closed June 15. Proceeds from the $230 million, 10-year loan will be used for “general corporate purposes,” the company said. It bears an interest rate of 4.7 percent. SL Green took ownership of 100 Church Street after taking joint venture partner Gramercy Capital’s interest in the building. The two foreclosed on the building in January 2010 when the previous owner, Sapir Organization, defaulted. As previously reported, Sapir had $145 million of senior debt and $85 million of mezzanine debt in the building. “Wells Fargo has a longstanding relationship with SL Green and is thrilled to provide financing for 100 Church in light of the exciting changes in the downtown New York City office market,” Robert Rosenberg, a managing director of real estate capital markets at Wells Fargo, said. Mr. Rosenberg’s team on the transaction included Rick Oberman, a vice president in the same division. Wells Fargo’s longstanding history with 100 Church Street is in addition to Mr. Rosenberg’s own history with the building. He helped to place previous financing on the 1.05-million-square-foot

10 West 74th Street Gets Freddie Mac Loan
CBRE Capital Markets Debt & Equity Finance recently arranged a $19 million Freddie Mac loan for 10 West 74th Street, a 79-unit apartment building owned by Elk Investors. The 10-year loan has a rate of 3.37 percent and a sub-50 percent loan to value. The CBRE team of Mark Fisher, Keith Braddish, Jason Gaccione and Keenan Williams arranged the loan, which has a 30-year amortization schedule. “Our team was intimately Keith Braddish familiar with 10 West 74th Street, having financed the luxury high-rise doorman apartment building a few years ago, and favorable market conditions set the stage for another refinancing—this time for a 10year period,” Mr. Fisher said. “We are experiencing historically low interest rates, and the borrower is taking advantage of this environment by removing interest-rate risk for the next decade.” This Freddie Mac multifamily transaction is nothing

Financing for Related West 30th Street Tower
Wells Fargo has provided a $190 million construction loan for the Related Co.’s multifamily


July-August 2012 / News


development located at 500 West 30th Street, just off the Hudson Yards development site. The 32-story tower will include 385 rental The Holiday Inn Manhattan View, apartments, retail space and parking. a 136-key hotel at 39-05 29th Street in Joanna Rose, a Related spokesperLong Island City, has been refinanced, son, told The Mortgage Observer thanks to a team at HFF. that the project “is expected to go Managing director Robert Delitsky Holiday Inn Manhattan View and director K.C. Patel arranged the vertical by the end of the year.” Alan Wiener, group head of Wells $25 million, five-year, fixed-rate loan on Fargo Multifamily Capital, said that the loan is in behalf of Queens Plaza North, LLC. The hotel was line with the types of projects the bank tends to ficompleted in December 2008 and is situated near nance in the New York area. “It’s going to be an the Queensboro Bridge and Northern Avenue. 80/20 and even though it’s outside the Hudson RivMr. Patel declined to name the lender or the rate, er Yards, it’s right across the street,” Mr. Wiener exciting confidentiality, but said that the $25 million plained. “We’re providing the letter of credit and loan will be partly securitized. it’s being financed by bonds issued by the Housing Finance Agency.” Those bonds are also backed 50 percent by JP Morgan Chase. The Real Estate Finance Group at law firm Morrison & Foerster advised Wells Fargo on the loan. Mark Edelstein, its chair, led, along with Houston-based development company Hines has partner John McCarthy. received an all-equity investment from J.P. Morgan

HFF: Long Island City Hotel Refinanced

All-Equity Financing for 7 Bryant Park

Asset Management for 7 Bryant Park, the 28-story office tower designed by Pei Cobb Freed & Partners that, when completed, will overlook Bryant Park and beyond. J.P. Morgan Asset Management’s investment is believed to be worth upwards of $350 million, industry sources told The Mortgage Observer. With the equity investment intact, both Hines and joint venture partner Pacolet Milliken Enterprises, Inc. will move forward with construction, which is set to begin in the fourth quarter of this year. First occupancy is slated for the fourth quarter of 2014. The bank is offering 100 percent of the financing on an equity basis. The 470,000-square-foot building, to be designed by architect Henry N. Cobb, will offer spaces for major tenants looking to occupy 100,000- to 250,000-square-foot floorplates. The building’s façade will be “punctuated by a concave sculptural detail that cuts into the building in an hourglass shape,” Hines said. The new office space will offer 10-foot finished ceilings and column-free floor plans, and is slated for LEED Gold certification.


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News Exchange / July-August 2012
And even with this recent activity, Mr. Ackerman pointed out that there is more in the pipeline. Tuesday he got two commitments on $21 million and $11 million construction loans. “Those should hopefully be in the hopper in two weeks as well.” other banks construction was a rough patch over the last couple of years,” he said. “Today it’s very different—we’re not really doing for sale, per se. Even though one of these is a townhome community, it’s really more of a pre-sold construction versus just the spec construction. It’s structurally very different, and I think a lot safer for us.” The other loans rounding out the $100 million in financing from Investors were refinances—a $10.9 million, adjustable-rate mortgage for a Bethlehem, Penn., office building, a $14 million adjustable-rate mortgage for a Brooklyn multifamily property and a $19.5 million fixed-rate loan for a 260,714-squarefoot office building in Rockaway, N.J.

Multi-Million Financing Spree at Eastern Union
Eastern Union’s Shaya Ackerman—a managing director in the firm’s Howell, N.J. office—racked up a massive $94 million in financings over the last 60 days for a variety of property types and deals. He shared with The Mortgage Observer details on the deals, which he said are picking up thanks to a shift in the type of players in the market. “From 50,000 feet up, there’s definitely been a tremendous uptick in quality financings,” Mr. Ackerman said. “It’s completely come full circle—you don’t have any more of the syndicators and the wheeler-dealers. You’re dealing more with the real people who don’t have one building but have five, 15, 20 buildings. They’re more sophisticated, so it makes life a little easier for the borrowers, for the banks to get comfortable.” The deals contributing to Mr. Ackerman’s volume of recent financings in the area include a $28.4 million refinancing for two medical office buildings in Newark. He conceded that for several reasons, including the fact that they are medical office with short-term leases, the properties were challenging to get approved. “The tenant in place doesn’t have that long of a term left on the lease and there were different terms in that deal that really protected the bank for that,” he said. This deal was closed by TD Bank and the refinance featured a floating rate of 350 bpi over the 30-day Libor. TD Bank also provided $9.25 million to refinance a 54,200-square-foot commercial building on Queens Boulevard, at a rate normally seen only for multifamily properties. The loan is for a five-year term, with 25-year amortization and limited recourse at a rate of 3.73 percent. In Astoria, Mr. Ackerman secured a $9.6 million loan to refinance a multifamily project it is building there. “Alma Realty put up that project and was the sponsor,” he said. “It was actually a two-story building that they gut renovated and added four stories on top of it.” Investors Bank provided a five-plus, five-year loan with a 30-year amortization at 4.375 percent. Construction has been picking up in the city and this is a trend that Mr. Ackerman pointed to in the work coming his way as well. “A year or two ago you couldn’t call a lender about a construction deal—now you can actually call them and get it done,” he said, adding: “For the right sponsor and the right location they’re getting done.” One such example is a $6.6 million construction loan that Investors Bank provided to the Marcal Group for the acquisition and gut renovation of a multifamily building in Brooklyn. That loan is for a two-year term at 75 percent of all costs and at a rate of prime plus one.

Investors Bank’s Recent Financings
Investors Bank said recently it had closed six real estate transactions in the first quarter of 2012—deals whose combined value hit nearly $100 million. Joseph Orefice, senior vice president and head of commercial real estate lending at the bank, told The Mortgage Observer that some of the deals were for repeat customers with a solid track record, a theme that has echoed throughout the lending community even as the Joseph Orefice market improves. Mr. Orefice added that the bank is “very active heading toward New York— not only in lending, but in our branch network.” In Newark, N.J., Investors Bank provided a $20 million fixed-rate mortgage to refinance the loan on Hallmark House—a 429-unit apartment complex at 10 Hill Street that’s owned by Wilshire Investments Corp. In 2011, Investors had provided a $27 million mortgage to refinance Wilshire’s Colonnade, a 22-story, 560-unit multifamily property at 25 Clifton Avenue. Mr. Orefice said the bank was excited to put the loan together, and added that “it is right within what we consider our wheelhouse.” In Manhattan, Investors originated a $25 million fixed-rate mortgage for an undisclosed 240,089-square-foot Columbus Avenue retail space. This deal, a participation, represents an area that the bank will likely explore further in the future. “The $25 million deal we did on Columbus Avenue was a participation with another lender, and that’s an area that we’re probably going to expand,” he said. “It’s just an area of the bank where we’re kind of growing into more of a commercial bank.” This loan was done in conjunction with New York Community Bank. Among this pool of announced loans was one construction loan, as well—$10.5 million for the construction of a townhome community in Lakewood, N.J. Mr. Orefice pointed out that the type of construction financing the bank is providing these days, though, is different than what was seen pre-crash. “I don’t think it’s any secret that for us and for

Walker & Dunlop Purchases CWCapital
Bethesda, Md.,-based Walker & Dunlop entered into an agreement to buy CWCapital, the company announced last week. The pending deal has implications for lending in the New York tristate region, with Walker & Dunlop CEO Willy Walker telling The Mortgage Observer that the firm will be better positioned now to compete with larger, well-established New York lenders. The deal is expected to close in between 90 and 120 days and is subject to all the usual approvals from stockholders, the government and regulatory agencies. The purchase price comes to $220 million—$80 million in cash and another $140 million in Walker & Dunlop stock. Walker & Dunlop is now poised to become the second-largest multifamily lender and the eighthlargest commercial real estate lender in the country, the company said. CWCapital and Walker & Dunlop had a combined volume of $7.7 billion in CRE loan originations in 2011 and a combined agWilly Walker gregate servicing portfolio of over $33.7 billion. It should allow Walker & Dunlop to throw down the gauntlet and compete in New York as never before. “New York is the largest multifamily market in the U.S. and as such, if you’re going to be a significant player in the multifamily space you better have a good presence in Manhattan,” Mr. Walker told The Mortgage Observer. “What’s kind of interesting is Walker & Dunlop and CW, for being as large lenders as both of us are in the multifamily space, both have a reasonably small footprint or platform in the Manhattan area. So it would be my expectation that this combination


News Exchange / July-August 2012
only adds to our both brand as well as market presence in the major markets such as New York and L.A.” One large advantage will be added feet on the ground in the New York tristate area. Mr. Walker said that CW Capital has some great origination talent focused on the Manhattan market already, which will be further developed and integrated with Walker & Dunlop’s talent once the deal goes through. “The New York market is obviously one that has a huge amount of potential and we’ve had a good amount of originations there, but as it relates to our market standing in New York vis-à-vis some of our competition, some of the larger bank-owned multifamily lenders have a much larger market presence there. So we’ll figure out how we effectively compete and continue to win business.” Asked about plans to staff up in the region, Mr. Walker said that the first order of business will be to ensure that the two companies are seamlessly integrated. “Then we will focus on where we need to expand,” he said. CW Financial Services will become the largest shareholder in Walker & Dunlop when the acquisition is approved and closed. Fortress Investment Services bought CW Financial Services in 2010 for $292 million. In personnel news, Michael Berman, CEO of CWCapital, will take on a senior role at Walker & Dunlop. Mr. Walker said that he and Mr. Berman were in the midst of “detailed discussions about what that role will be.”

Investors Bank to Buy Marathon Bank
support of the city’s Greek community, without exposure to the calamitous events taking place there. “Through our acquisition of Millennium Bank in 2010 we’ve been in Astoria,” he pointed out. “So we’ve been serving that community anyway with our two Astoria branches.” Christine Barry, a research director at Aite Group, an independent research and advisory firm that focuses in part on business’ impact on the financial services industry, said that acquisitions like this one provide a leg up in New York’s competitive lending environment. “We’re seeing a lot of the smaller banks trying to carve out a niche,” Ms. Barry said. “Competition is becoming a lot fiercer throughout all the markets—and in the New York market especially, because there are so many banks. So Investors Bancorp through this acquisition can go after Greek-Americans, of whom there are many in the New York area.” She said that special services and products tailored to particular communities can be part of the mix as well. In Queens alone, there are more than 16,000 Greek households according to the U.S. Census Bureau’s 2006-2010 American Community Survey. Marathon is headquartered in Astoria and has $902 million in assets, $783 million in deposits and more than a dozen full-service branches in the New York tristate area. “They’re much more like a commercial bank than we are because 94 percent of their assets are in commercial assets,” Mr. Cummings said. “And, more importantly, they have a lower cost of funds because they’re a commercial bank of 60 basis points and noninterest-bearing deposits of approximately 28 percent.” He added that Investors would now be able to service Marathon’s customers with “our larger lending capabilities,” making larger loans. “The bottom line is it’s a very clean portfolio from a credit perspective.” Pending regulatory approvals, the deal is expected to close in the fourth quarter of 2012.

Kevin Cummings Investors Bank has entered a definitive agreement to acquire Marathon Banking Corp. for $135 million in cash, it said last week. The deal will deepen Investors’ reach into the New York market while allowing it to carve out a niche in the city’s Greek community. Kevin Cummings, president & CEO of Investors Bank, told The Mortgage Observer that the acquisition is part of the Short Hills, N.J., bank’s strategy to deepen its already significant New York franchise. He estimated that 54 percent of Marathon’s portfolio is in commercial real estate—with a significant focus on multifamily. “This continues our strategic initiative to expand in the boroughs, in the greater New York area,” Mr. Cummings said. “But certainly our New York franchise is very significant already. We kind of went in there in a big way and opened up our loan production office in January 2010, and that office has originated over, I would say through today, over $1.5 billion of loans.” Marathon is the U.S. subsidiary of Piraeus Bank S.A., and so likely familiar to the city’s Greek community—the bulk of which is concentrated in the Astoria neighborhood of Queens. With the ongoing financial crisis in Greece, Mr. Cummings pointed out that the acquisition provided the upside of continued


No Sale for Deutsche Bank’s RREEF
Talks between Deutsche Bank and Guggenheim Partners over a possible sale of the bank’s global alternative asset management business—RREEF—have concluded without the parties reaching an agreement. The bank released a statement that said parties “were unable to agree on terms for the sale of the business and mutually agreed to end exclusive negotiations.” A spokesperson for Deutsche Bank, Mayura Hooper, declined to give additional details. However, according to documents from its May 31 annual general meeting, Deutsche Bank won’t sell assets like RREEF unless the sale would be highly profitable—requiring a committed sales plan by management, an active marketing plan and likelihood of closing within a year. RREEF focuses on real estate investments and had $57.4 billion in assets under management as of Dec. 31, 2011— $30.8 billion of which was in the Americas. The breakdown of negotiations between the bank and Guggenheim Partners over its potential sale follows earlier, similarly abandoned negotiations, around the sale of some other Deutsche Bank businesses. These included DWS Americas, DB Advisors and Deutsche Insurance Asset Management. And it effectively concludes talks that had


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News Exchange / July-August 2012
begun following the bank’s Nov. 22, 2011 announcement that it would be undertaking a strategic review of its asset management businesses. Asked if the bank was actively looking for other buyers for RREEF, Ms. Hooper would say only: “We’re obligated to listen to all proposals from a shareholder perspective.”

Industry Research

Fitch: AAAsf-Rated CMBS Head of the Class
during the global credit crisis. Classes of U.S. CMBS rated AAAsf by Fitch Fitch made the severe scenario somewhat Ratings are pretty sturdy, it turns out. A stress worse than the agency might expect for such a test run by the ratings agency found that they turn of events—marked by an extreme peak-tocould withstand some pretty calamitous ecotrough drop in average property cash flow. “Cap nomic conditions, including deterioration in real rates,” the agency said in this scenario, “rise from estate markets and a hypothetical double-dip the average market and property recession. specific cap rates used in Fitch’s Fitch’s findings come on the surveillance analysis.” Roughly heels of data from Trepp that 85 percent of these bonds would showed that CMBS delinquenredeem in full, and 40 percent cy rates—loans 30-plus days in would retain their AAAsf rating. arrears—had passed 10 percent Despite the persistent uncerfor the first time ever. tainty in Europe’s financial marMary MacNeill, managkets, Ms. MacNeill was reticent ing director and head of U.S. to make a prediction about how it surveillance at Fitch, told The Mary MacNeill might affect U.S. investors. “It is Mortgage Observer that perunclear how the European crisis formance is measured by more will impact the U.S. market,” she said. “Fitch’s than just delinquencies. “Fitch’s Loan Delinmoderate scenario provides investors insight quency Index factors in 60-plus delinquencies, as to further rating migration, should a further which peaked in July 2011 at 9.01 percent,” Ms. stress to the macro economy occur.” MacNeill said. “Fitch has found the 60-plus deBroken down by vintage, the test showed that linquency number to be more reliable than the seasoned transactions, circa 2002-2004, were 30-plus bucket, which is more volatile.” more resilient, even in the severe scenario. Of The stress test that Fitch ran on the AAAsfthese, 93 percent retained their investment grade rated CMBS included both moderate and severe rating. Vintages from 2005 to 2008, however, scenarios. The moderate scenario, it said, was were more susceptible to downgrades. Ms. Macsimilar to pressures seen during a severe doubleNeill explained that the seasoned vintages typidip recession—cash flow decreasing across all cally have built up higher credit enhancement. property types as cap rates stayed close to those “The existing AAA credit enhancement for seen in the agency’s surveillance analysis. these deals typically exceeds Fitch’s AAA tarAll AAAsf-rated bonds in this scenario would gets, which means they can survive higher mulredeem in full following the moderate stress petiples of base case losses,” Ms. MacNeill said. riod. Furthermore, 77 percent would retain their “The seasoned transactions were more conserAAAsf rating, with only 3 percent falling below vatively underwritten and have benefitted from investment grade. This scenario was most simiamortization.” lar to what actually happened to similar tranches

BlackRock Now in Global Real Estate Securities

Investment manager BlackRock has launched a global securities division designed to capitalize on the firm’s real estate investment and fundamental equity investment expertise through investments in real estate securities. Mark Howard-Johnson, formerly of Building & Land Technology, has been appointed to head the division, which is expected to take on about six more investment professionals by the end of the year, the company said. As global head of Real Estate Securities Management, Mr. Howard-Johnson will lead a team whose mandate is to source investible trends in real estate. “BlackRock real estate investments span a wide range of strategies which now, with the addition of the active strategy, will be even more integrated and complementary of each other,” Mr. Howard-Johnson said in a statement. “I’m proud to be part of this superior team and look forward to strengthening the firm’s product offering for the benefit of our clients.” BlackRock’s global head of Real Estate Jack Chandler said that the move was “a natural extension of the firm’s robust real estate capabilities,” adding that it “will further strengthen our ability to offer our institutional and retail clients an unrivaled set of real estate solutions.” Mr. Howard-Johnson was previously chief investment officer at Building & Land Technology, where he launched its real estate securities management division. He was also global head and chief investment officer of REIT management at Goldman Sachs Asset Management.

Industry Research

CRE Loan Values Continue Upward Trend
Data from DebtX show that aggregate commercial real estate values that the loan sale advisor priced and that collateralize CMBS increased over the month of April, continuing a several-month trend. These loan values rose from 87.3 percent as of

March 31, 21012 to 88.1 percent as of April 30, 2012. At the end of this past February, CMBS-collateralized loans were at 86.9 percent. Meanwhile, looking back a full year to the figure as of April 30, 2011, they stood at 80.9 percent. “Commercial real estate loan prices increased for a fourth consecutive month in April and are up strongly from a year ago,” DebtX CEO Kingsley Greenland said. “Improving CRE fundamentals,

along with a decline in Treasuries and a decrease in credit spreads, drove loan prices higher in April.” An investor flight to safety, caused by Spain’s growing banking crisis and concerns about Europe’s general financial health, has helped to push Treasury yields down. For this most recent data, Debt X priced 55,803 commercial real estate loans. They had an aggregate balance of $767.6 billion.


A comprehensive look at CRE finance trends

July-August 2012 / In-Depth


Specialty Lenders: Where to Look
Financing is flowing for construction, but still lags for some unique, more exotic assets.
by Michael Stoler
For summer 2012, financing has returned for many real estate investors. And borrowers are able to secure it at record-low interest rates, especially if the asset is a residential rental property. Pricing for a five-year, fixed-rate loan is as low as 3 percent, with a 25- to 40-year amortization, and in certain instances interest only for the first two to 10 years of the mortgage. Financing for certain asset classes, including construction financing, has also become much more readily available to well-capitalized, experienced borrowers, who are having an easier time securing record loan rates for mixed-use retail, residential, office, urban retail and industrial assets. Yet financing for unique assets, which may include hospitality, golf courses, health clubs, restaurants, bars, student housing and vacant land, is available to only a small group of borrowers. When it is available under these circumstances, the terms and conditions require higher interest rates, shorter amortization and—in nearly all instances—the borrower must personally guarantee the loan. Construction financing for residential rentals and condominium developments has become more readily available to established, well-capitalized developers. Nevertheless, a number of lenders are offering construction financing to lesser experienced and lesser capitalized borrowers at higher rates and conditions. “We are still actively seeking construction and renovation deals in the $1 million-to-$6 million range in the boroughs, with a focus on condos as well as an additional fee of 25 basis points for each three-month increment of extension option. A number of private equity funds and private lenders are serving as a major source of financing for interim and bridge financing. “Over the past decade, we have provided specialized financing for unique asset classes,” said Mark Zurlini, principal at direct lender Palisades Financial. “In the state of New Jersey, Palisades has provided financing for golf courses, substantially completed condominium and rental properties and, in certain instances, land for development. Financing is made available if the borrower meets certain criteria, including reputation and the proven ability to complete the project. While our rates are more expensive than traditional banks’, we offer quick turnaround, guidance to borrowers and, in most instances, the ability to coordinate an exit strategy for Mark Zurlini, Palisades Financial the borrower. Most important in all of our transactions is that the borrower has capital, or the banks,” he added. “We are offering loans of up to proverbial skin in the game.” 70 percent of cost—underwriting a condo to a break If you pass a pub, bar or restaurant near Penn even or requiring full 100 percent recourse on the Station or on Second Avenue in Manhattan, there construction. The borrowers or sponsors of the deal is an excellent chance the mortgage financing need to have a few deals under their belt and good for the property was secured through a banking financials.” relationship with Country Bank. While construction financing by major money New York-based Country Bank, with assets center lenders is now being offered at rates as low of $500 million, has been an active player in as 200 to 250 basis points over Libor, Builders Bank commercial real estate lending for 20 years. is pricing its construction financing at prime plus The bank specializes in originating loans from 100 basis points, with a floor set in the 5 percent $1 million to $6 million, with a further specialty range and rates ranging from 5 percent to 5.5 in owner-occupied and investor real estate. percent. The borrower will also be responsible for Financing is available for mixed-use, hotel, an origination fee of one point for up to 24 months, and apartment buildings,” said Shannon Eidman, a senior vice president in the East Coast regional lending office of Chicago-based Builders Bank. “We will also look at townhouse reposition/construction and fractured condo financing.” “Builders Bank is committed to providing quality service to meet the construction, interim and permanent financing needs of the developerinvestor whose business plan may include small to midsize assets, frequently disregarded by the larger

Most important in all of our transactions is that the borrower has capital, or the proverbial skin in the game.


In-Depth Look / July-August 2012

A comprehensive look at CRE finance trends

owner-occupied commercial, pub/restaurant, self storage, garage, warehouse and brownstone/ townhouses. “Recent transactions that we have provided financing for include acquisitions, cash-out refinancing, partner buyouts, leasehold mortgages, leasehold fee purchases and bridge loans,” said Joseph Murphy Jr., president of Country Bank. “The bank recently provided $3.2 million in financing for an investor-owned, single-tenant restaurant property on the West Side’s Restaurant Row. The loan was fixed-rate for five years, requiring the borrower to provide full recourse. In the Park Slope section of Brooklyn, the bank provided a $1.5 million fixed-rate loan with full recourse for an owner-occupied building.” Mr. Murphy said that other recent deals have included financing for the acquisition of a foreclosure short sale of a non-flagged, 100-key, limitedservice hotel in Queens. That hotel was over-leveraged with a CMBS loan, had lost its flag and was being operated by the special servicer, he said. Progressive Credit Union, also based in Manhattan, provides specialized financing for unique real estate assets. Many of the tristate area’s diners, garages, and auto body and repair shops have secured permanent financing from this $600 million credit union. Over the past three years it has been responsible for the acquisition and construction financing of resort properties on Fire Island and a lifestyle hotel and cabaret on the West Side. Robert Familant, its treasurer & CEO, said Progressive has “a niche in providing financing for unique assets that require going the extra mile in the underwriting process.” Risk, he said, determines many factors as well. “We have provided financing for distressed debt, construction and investor-owned luxury condominiums for rental and are open to any transactions that provide suitable collateral and adequate debt coverage,” Mr. Familant added. If you visit a local lender and request financing for a stand-alone restaurant or a franchise operation typically the response is “no.” A national lender that provides specialized franchise-restaurant financing is United Capital Business Lending,

a BankUnited Company. It offers loans of up to $10 million for a period of up to 10 years, and 100 percent financing. The Small Business Administration continues to be a source of financing for commercial real estate. A number of borrowers who are unable to secure bank financing have turned to local institutions that include CIT Bank-Small Business Lending,

banking partner, Country Bank, from the SBA for a Quality Inn located in Brooklyn. The property securing the loan is a four-story, 81-room, limitedservice hotel. The borrower was able to purchase the fee and recapture equity in the property. New York City is the Mecca of colleges and universities. Nevertheless, the city lacks dormitories and student housing facilities. For

Joseph Murphy Jr., Country Bank

Robert Familant, Progressive Credit Union

ValueXPress, the New York Business Development Corp. and other local financial institutions that originate SBA 504 and 7A mortgage financing. “SBA mortgage loans cater to owner-occupied property with higher loan-to-value than available in the private sector,” Mr. Murphy pointed out. The SBA 504 Loan Program provides small businesses with long-term, fixed-rate financing. The 504 loans are made available through Certified Development Companies, the SBA’s communitybased partners for providing the 504 loans. The 504 loans are typically structured with the SBA providing 40 percent of the total project cost, a participating lender covering up to 50 percent and the borrower contributing 10 percent. Under certain circumstances, a borrower may be required to contribute up to 20 percent of the total project costs. Last year, ValueXpress obtained a $4.5 million mortgage loan commitment with its New York

example, until two years ago Brooklyn College lacked its first dormitory. In the fall of 2009 a local developer of residential properties acquired land located less than two blocks from the entrance to the campus, and filed and secured permits. However, no commercial lenders were offering financing for the developer’s planned dorms. Subsequently, construction and mini-permanent financing was provided by private equity fund Madison Realty Capital. The borrower obtained $12 million in construction financing for a term of two years. Upon completing and renting the rooms, the developer secured permanent financing from New York State’s largest credit union, Bethpage Federal Credit Union. With the commercial real estate market in New York City and the region improving, expect more lenders to welcome the opportunity to finance these previously difficult-to-finance, specialty assets.


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Scheme of Things / July-August 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 are drawn from Actovia, which tracks mortgage information and streamlines leads from city records.

Top 10 Lenders
New York Community Bank maintained May’s top spot among lenders—with 152 transactions reported. New for May are TD Bank, which came in with 21 transactions, and M&T, which saw 18. The Top 10’s total decreased from 497 in April to 435 in May, 35 percent of which was from New York Community Bank. BANK APR 2012 108 80 66 48 41 37 33 31 30 23 BANK MAY 2012

New York Community Bank Signature Bank

New York Community Bank JPMorgan Chase Signature Bank Capital One Flushing Savings Bank Astoria Federal Savings Bank Dime Savings Bank of Williamsburgh TD Bank Wells Fargo M&T

67 55 33 25 24 22 21 18 18

Refinances vs. Purchases
April’s slight dip in commercial real estate financings turned into a precipitous drop for May, which saw them fall off by nearly 200. Purchases were down significantly for May as well. 930 736

JP Morgan Chase Astoria Federal Savings Bank US Bank Capital One Flushing Savings Bank Deutsche Bank Investors Bank


Dime Savings Bank of Williamsburgh



Total Sales by Borough
Total sales were way down for May, falling by 121 compared to the month previous. In fact, in all four boroughs studied, they declined in May. Queens has seen an over 50 percent decrease in sales, in fact, since March, when they were at 105 in the borough. 409

Most Active Zip Codes–Financing
The 11238 zip code—Prospect Heights and parts of Clinton Hill—topped May’s list of most active zip codes, tied with 11226 and 11222. But they trended down. ZIP CODE APR 2012 ZIP CODE MAY 2012


11211 10011 11237 11206 11226 11238

32 32 26 23 20 20

11238 11226 11222 10468 11216 11215

21 21 21 20 19 18 APR MAY ALL APR MAY MANHATTAN 97 63 58 47

181 128 73 50






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The M.O. Columnists / July-August 2012
to the swap termination payments as “additional interest.” That’s a reasonable requirement, because that’s what a termination payment effectively is— an accelerated payment of some of the fixed interest that the borrower agreed to pay by entering into the swap but had to pay earlier because the borrower went into default. Second, the swap termination payment can’t be secured by a separate mortgage with a separate stated principal amount. This would take the payment too close to being principal indebtedness, and it does not seem unreasonable to impose a tax in that case. The same problem would arise if a single mortgage secured both the loan and a stated dollar amount of potential swap termination payment. Instead, one mortgage should secure both the loan and a generic nonquantified swap termination payment. Third, the termination payment needs to arise from a swap issued for the same loan that the mortgage secures. That’s a reasonable requirement too. Without it, the swap termination payment really would be nothing more than a potential obligation to pay a “bad bet”—something that should be treated as taxable principal indebtedness. But parties must still beware of “dragnet” language that might make a mortgage secure not only a loanrelated swap, but also termination payments arising under other swaps for other loans or transactions. Finally, the swap needs to relate to an amount of indebtedness equal to the mortgage loan. This requirement goes a bit too far. It shouldn’t matter if a swap relates to, say, only half the mortgage loan. The borrower and the lender should be free to decide they don’t need to hedge the entire interestrate risk of the loan, just part of it. And in that case there’s no reason to deny tax-free treatment to the swap termination payment. Did the state really intend to do that? Setting aside that last detail, the state’s treatment of swap termination payments seems practical, reasonable and consistent with industry expectations. And with the same exception, the new ruling also conforms to the tax treatment of swap termination payments that I summarized and recommended in my book on New York commercial mortgage transactions. In fact, some of the language in the state’s ruling echoes the language I used in my description of this entire issue and how I thought— and how the industry believed—the taxation of swap termination payments should work. It’s a pleasure and an honor to see my language copied in this way. I’d be even happier if the state adopted some of my language on how the mortgage tax should treat revolving loans. More on that in the next issue. 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.

Stein’s Law

Clarity On How Mortgage Recording Tax Applies To Interest Rate Swaps
a possible swap termination payment. Tax officials ew York prides itself on being the capital had sometimes suggested that if a mortgage of capital. But it imposes on real estate secured a swap termination payment, that was just financing transactions a peculiar tax—the like securing an obligation to pay a principal debt New York mortgage recording tax—that creates in the same potential amount—i.e., an obligation spurious issues and problems for many elements that would attract a mortgage recording tax of up of modern sophisticated financing transactions. to 2.8 percent. To the state’s credit, though, it recently clarified The industry generally ignored that position. how that wretched tax applies to a technique that New York borrowers routinely gave borrowers and lenders often use to their lenders mortgages to secure swap hedge interest rate risk. In doing so, termination payments for swaps the the state passed up an opportunity borrower obtained for the same loan to impose yet a further burden and that the mortgage otherwise secured. gratuitous complexity on commercial Even though tax officials had sometimes real estate finance transactions. made noises to the contrary, the industry The potential problem arises believed that these mortgages could whenever a borrower obtains a floatingsecure swap termination payments rate loan and also enters into an interest without incurring additional mortgage rate swap to convert that floating rate recording tax. into a fixed rate. If rates go down and Joshua Stein In early June, the state’s Department then the borrower goes into default, the of Taxation and Finance issued a swap may terminate and require the ruling basically accepting the industry’s position borrower to pay a termination payment, which can on how to treat swap termination payments for be substantial. The borrower will typically need to mortgage recording tax purposes. In order to avoid have its real property secure the obligation to make incremental tax on those payments, the ruling made that payment. it clear that the transaction just needs to satisfy a Until recently, industry participants sometimes few conditions that are not onerous. feared that the state might impose a mortgage First, the mortgage documents need to refer recording tax to the extent that a mortgage secured



July-August 2012 / The

M.O. Columnists

The Basis Point

European Recession, the American Fiscal Cliff and Commercial Mortgage Lending


can reduce the cost of sovereign finance—such as urope stayed its most immediate might be the case under the terms of a Hamiltonian existential threat when parties committed redemption fund—resolution will remain elusive. to the Hellenic bailout carried Greece’s The next moment of crisis will never be far off, mid-June election, the second election in as many whether it relates to banks in Spain or the threat of months. New Democracy eked out a slim plurality a continent-wide bank run. of votes for the Parliament of the Hellenes and, Balancing political reality with the glaring need with the expected support of the smaller PASOK for a comprehensive plan to address party, will hold to the austerity measures Europe’s problems is a task that falls agreed to in exchange for 240 billion to German Chancellor Angela Merkel. euro (approximately $300 billion) in As the crisis has spiraled, Chancellor financial support since May 2010. Merkel has signaled provisional Investors’ natural response to the support for a bond program that would Greek results conveyed a sense of bring sovereign indebtedness back in relief, echoed on the margins in easing line with Maastricht Treaty levels. But measures of systemic financial stress in exactly what happens next is unclear. Europe and the United States. Leading And therein lies the problem. up to the vote, monetary policymakers Commenting at the Group of 20 around the world had been positioning Sam Chandan summit that followed the Greek vote, to brace financial markets against a French President François Hollande Greek exit from the eurozone. Such a offered that “in this permanent race between move would have disrupted any remaining notions events, speculation and political decisions, political of structural stability and driven borrowing costs in decisions must get ahead of the uncertainty.” It is Spain, Italy and other large economies well beyond obvious to everyone involved that the uncertainty manageable levels. fomented by a glacial decision-making process is Contagion across the eurozone is hardly taking a toll, both on the economic outlook and theoretical. Italy’s short-term financing costs have the costs of resolving the crisis. Bank of England doubled between May and mid-June, rising to four Governor Sir Mervyn King echoed this view, saying times their early 2012 low. The results of the most that the impact of the “euro area crisis has been to recent three-year bond auction suggest no relief as create a large black cloud of uncertainty hanging yields on those bonds increased to 5.30 percent. To over not only the euro area, but our economy, put this in perspective, Americans can finance their too—and the world economy as a whole.” That homes at lower interest rates. characterization of the crisis held water going into While the prospect of financial market seizure may the Greek vote and it remains true after the vote. have receded temporarily, the fundamental issues The costs of exaggerated uncertainty are the that imperil stability across the Continent remain realm of neither the anecdotal nor the ideological. unresolved. Absent consistent bank regulation and For European investors and businesses, the a European program of debt mutualization that

chance that assets may be redenominated in a new currency—or in the euro of a fundamentally altered eurozone—has chilled activity to an extent that Europe has effectively fallen back into recession. The United States may not fare much better if the year-end Fiscal Cliff is left unaddressed until the 11th hour. Businesses and households will delay major expenditures if after-tax incomes are less predictable. Seeking to quantify the intuitive relationship, current research by Scott Baker and Nick Bloom at Stanford University and Steve Davis at the University of Chicago suggests that political uncertainty takes a substantial toll on growth. Their foray into the difficult area of study puts the cost of uncertainty between 2006 and 2011 at 2.3 million American jobs. Conceding a wide confidence interval on the exact number, the results of their work still offer a sense of the magnitude. While the Greek drama and the larger European crisis play out on center stage, the impact is being felt in myriad corners of the financial markets. Capital flows into the United States have pushed yields on the Treasury to new historic lows, below the prevailing rate of inflation. Lower Treasury yields are not a vote of confidence in the American economic outlook per se, but do reflect that Treasuries are still the safest haven for wanderlust global capital. For corporate bonds, spreads are higher and volatility measures have risen. European headwinds represent a significant obstacle for real economic activity in the United States. The lending market is impacted as well. Given the special position of Fannie Mae and Freddie Mac in relation to the market for guaranteed bonds, lower Treasury yields generally mean lower apartment financing costs. That is a benefit and a potential challenge for apartment investors, inasmuch as borrowers are taking on undue interest rate risks. Although I am in the minority, I have argued that apartment investors and lenders are under-assessing these risks. On the other side of the coin, MBS without a guarantee becomes less competitive as global conditions demand higher yields for risk investments. For borrowers outside of the apartment market, volatility in corporate bonds undermines CMBS lending and issuance. Inasmuch as the latter might be more attractive to investors if it was diversified into apartments and not consistently over-weighted to retail and hotel exposures, the strengthening of the Agency’s advantage impedes its progress toward recovery. 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.


Work Force / July-August 2012

Hirings, promotions, defections and appointments

David Eyzenberg, formerly the managing director and head of commercial real estate at financial advisory firm NewOak Capital, has joined Avison David Eyzenberg Young as a principal. He will focus on raising capital and providing the firm’s clients investment banking services, among other responsibilities. At NewOak Mr. Eyzenberg completed numerous assignments related to property financing and CMBS CDO valuation assignments. Arthur Mirante, principal and tristate president at Avison Young—and himself new to the firm—said that Mr. Eyzenberg’s addition would boost its capital markets team. “David’s expert knowledge of the intricacies of commercial real estate financing, coupled with his deep understanding of equity/joint venture structuring, provides us with a competitive advantage in providing the highest level of consulting services to our institutional and private equity clients,” Mr. Mirante said.

investment professionals by the end of the year, the company said. “BlackRock real estate investments span a wide range of strategies that now, with the addition of the active strategy, will be even more integrated and complementary of each other,” Mr. HowardJohnson said. “I’m proud to be part of this superior team and look forward to strengthening the firm’s product offering for the benefit of our clients.” BlackRock’s global head of real estate, Jack Chandler, said the move was “a natural extension of the firm’s robust real estate capabilities.”

joint ventures, as well as Meridian’s leading position in debt capital markets, the company’s expansion into equity services is a natural platform extension at a time Robert Corso Jr. when market demand for these services is historically high,” Mr. Steier said. For his part, Mr. Corso said he was “excited and proud to be a part of Meridian’s best-in-class team of dedicated professionals and to lead” the cooperative and condominium finance group for the firm.

The Mortgage Bankers Association is searching for a new president and CEO after announcing at the end of May that David Stevens would be leaving as of June 30. Chief of staff David Stevens and senior vice president Marcia Davies will fill in until a permanent replacement is found. Mr. Stevens joined the association in May 2011 from the Federal Housing Administration, where he was commissioner and assistant secretary for housing. He will now head up SunTrust Mortgage as president.

Akash Sharma has been hired as an acquisitions associate in the New York office of Clairvue Capital Partners. In his new role, he’ll support the underwriting and execution of the San Akash Sharma Francisco-based firm’s investment opportunities. Mr. Sharma was previously an investments associate at real estate and infrastructure investment firm CIM Group. “Akash joins our team of professionals at an exciting time,” said Brendan MacDonald, a partner at the firm who manages the acquisitions team. “We are seeing a growing need for liquidity within commercial real estate funds and investment vehicles. Debt maturities, slow economic growth and new financial regulations are each contributing to a growing need for recapitalizations and secondary sales of real estate funds and investment vehicles.” Mr. MacDonald went on to say that Mr. Sharma’s past experience would help the firm identify and unlock value in real estate investment vehicles.

Robert Fagin and Philip Cushman have joined Cowen Group as director of research and head of Equity Sales at Cowen and Co., respectively. Both are based in New York. “Robert and Philip bring significant experience and talent to enhance our equity platform from both the content and sales perspectives with a focus on our core industry verticals,” Cowen and Co. CEO Jeff Solomon said. “I look forward to working closely with them and the other members of our team as we continue to expand our product and service offerings to best meet the needs of our clients.” Mr. Fagin was previously co-director of U.S. equity reseach at Jefferies, where he also oversaw global technology, media and telecom research. Mr. Cushman was also most recently at Jefferies, where he was a managing director and head of global equity product management.

Investment manager BlackRock has tapped Mark Howard-Johnson to head up its new global securities division. The division is designed to capitalize on the firm’s real estate investment and fundamental equity investment expertise through investments in real estate securities. Mr. Howard-Johnson most recently served as the chief investment officer at Building & Land Technology. As global head of real estate securities management, Mr. Howard-Johnson will lead a team whose mandate is to source investible trends in real estate. The team is expected to take on about six more

Meridian Capital Group continues to grow, with several recently announced hires. Robert Corso Jr. has joined the company as senior vice president and managing director in charge of its Cooperative and condominium finance group, a newly created position. His past positions include vice president and managing director at Brown Harris Stevens, where he ran its commercial mortgage brokerage group. Peter Steier has also joined Meridian, as managing director and head of equity capital markets. Mr. Steier joins from the Carlton Group, where he was a managing director. In his new role, he’ll work to build a full-service equity capital markets platform to stand alongside Meridian’s debt capital markets work. “With the current trend of recapitalizations and

Garett Stoffels has been appointed senior managing director and head of equity capital markets at BGC Real Estate Capital Markets. He’ll report to Michael Lehrman, Garett Stoffels global head of real estate at BGC. “Having worked with Garett for many years, I’ve long admired his extensive relationships, deep knowledge base and distinguished career in real estate investment banking and capital markets,” Mr. Lehrman said. “Garett’s appointment marks the continued expansion of our real estate equity and debt capital markets capabilities and offers a natural complement to the leasing, management, investment sales and other services already offered by Newmark Grubb Knight Frank.” Mr. Stoffels was previously global head of Cantor Fitzgerald’s Private Capital Group.


Con Edison is offering incentives to owners and managers of multi-family buildings with 5 to 75 units, to help cover the cost of upgrading to energy management systems. The systems are an effective way to retrofit an existing building to be more energy efficient. They pay for themselves over time by offering better control over a building’s temperature and reducing energy costs. And Con Edison offers incentives that will help cover the installation, making it an even smarter investment. Building owners can receive $6,000 to $20,000 in reimbursements for certain upgrades, which typically cost between $15,000 and $25,000 to install. In addition to energy management systems and other heating controls, incentives are available for the following energy-efficiency improvements in common areas: • Upgrades to high-efficiency heating systems • Roof and heating pipe insulation • Upgrades to high-efficiency fluorescent lighting, occupancy sensors, and light-emitting diode (LED) exit signs • Premium efficiency motors for pumps and fans • Upgrades to high-efficiency central air conditioning Incentives are also available for residents of individual apartments.

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Power Profile / July-August 2012

Capital One Grows, Minus Pains
Its capital and questions (What’s in your wallet?) keep bank’s area CRE loans flowing.
by Carl Gaines
Capital One Bank has grown steadily since it was founded by current chairman, CEO and president Richard Fairbank in 1993. Along the way it grew from a mono-line credit card company funded through the capital markets into a more diversified entity with commercial and consumer banking. It managed to make Visigoths funny and capitalize on Alec Baldwin’s Words With Friends meltdown, while simultaneously deepening its reach into lines of business like commercial real estate. The bank as a whole had $294.5 billion in loans outstanding and $216.5 billion in deposits as of March. 31, 2012, according to its first quarter 2012 results. The commercial and multifamily real estate portion of this has increased when comparing yearend results recently as well—rising to $15.4 billion for the period ended Dec. 31, 2011 from $13.4 billion the previous year. For Rick Lyon, executive vice president and head of commercial real estate at the bank, the growth, the Visigoths and the diversification all make sense. Mr. Lyon told The Mortgage Observer that he is focused on continuing to provide the types of financing that the bank has become known for, particularly in the New York area. A big concentration of this is multifamily—specifically workforce housing, he said. Mr. Lyon has been with Capital One since January 2008, having joined after 27 years with Wachovia. “I was running the real estate business for Wachovia—which was one of the largest real estate banks before they became Wells Fargo— for the northeast,” Mr. Lyon said. “Boston to D.C. was the market that I was responsible for.” Then, in 2008, “a fascinating opportunity,” as he described it. The term fascinating is used time and time again by Mr. Lyon to describe the rise of Capital One and the development of its commercial real estate operations—and rightfully so. Significant milestones in its history include its 1995 spinoff, as a credit card company, from Richmond, Va.,’s Signet Bank. When Signet was having trouble, it spun off the credit business into Capital One. Signet had become overly bulky during the last real estate crisis, prompting the move. “Our chairman, who is a very strategic thinker, basically said, ‘There are a couple of things we’re missing. One, we are a mono-line credit card company and we don’t have inherent funding





Power Profile / July-August 2012

One of the hallmarks of Capital One is that we tend to be a very conservative institution.
depository institution in the New York tristate area, with deposits exceeding $84 billion and a managed loan portfolio of more than $143 billion. Then, in 2009, Capital One made another acquisition— Washington, D.C.,’s Chevy Chase Bank, which it picked up for $520 million in cash and stock. As all of the acquisitions were being put together and a commercial banking business built, Mr. Lyon arrived from Wachovia. “One of the hallmarks of Capital One is that we tend to be a very conservative institution,” he said. “While we take credit risks on credit cards, obviously, we have a very good model as to how to do that and manage that risk and the appropriate returns. But as a company we tend to keep more capital than most other banks have historically kept.” Capital One, he said, is not trying to eke out an extra 25 basis points by taking unnecessary risks. When the subprime mortgage crisis and credit crunch hit—those aforementioned “tougher times”—having capital on hand became a real asset. “The first thing that happened in the Great Recession was a liquidity crunch,” Mr. Lyon said.


photos by Michael Nagle

of branches and banking businesses so we fund ourselves in the capital markets. That works very well when it’s all good, but in the tougher times it’s good to have dependable deposits for funding and diversification.” Three other acquisitions that would significantly affect the company’s direction and, subsequently, its commercial real estate lending philosophy, took place a decade later. In a strange twist, Capital One agreed to buy New Orleans-based Hibernia Bank in March 2005 for $5.4 billion. Then, that August, Hurricane Katrina devastated the Gulf Coast area. “We were supposed to close a day or two after Katrina,” Mr. Lyon remembered. “That got delayed a little bit but we still did what we said we were going to do—we still bought the bank a couple of months after Katrina. That was the first foray for Capital One into banking.” In the end, a renegotiated price of $4.9 billion was settled on to reflect the fact that hundreds of Hibernia branches had been damaged during Katrina, and the deal went through. The following year, Capital One acquired North Fork Bank, a New York-area lender, for $13.2 billion, which created the third-largest retail-

“We were able to stay strong through that part of the cycle, and then the next thing was capital requirements. We had good capital and so it allowed us to continue to grow through the recession.” That recession-time growth included some of the bank’s acquisitions—like Chevy Chase. Some recent deals Mr. Lyon and his team have put together include the refinancing of Jeffrey Gural’s 40 Worth Street in Tribeca. The 702,815-square-foot Newmark Holdings building got a $101 million first mortgage from Capital One in May. Reached by phone, Mr. Gural, chairman of Newmark Grubb Knight Frank, said that Mr. Lyon had over the years become a good friend. In addition to business deals, they’re also involved in some of the same charities. Mr. Gural is president of the New York, New Jersey and Connecticut chapter of the Starlight Children’s Foundation, which is dedicated to helping seriously ill children. Mr. Lyon is on the board as well. “When Capital One acquired North Fork, we had a large relationship with North Fork and as a result of them buying North Fork we made a decision to stay with Capital One rather than

July-August 2012

/ Power Profile

photos by Michael Nagle

move the accounts to another bank,” Mr. Gural explained. “It’s been a terrific decision—Capital One has been a great bank to work with.” “There are a lot of folks who are more philanthropic than I am in the real estate business— talk to Jeff Gural,” Mr. Lyon said for his part. “Jeff is the definition of a mensch—if you know what a mensch is—and I just got to know him, like him, and he got me involved in that organization.” He’s also on the board of the Real Estate Councils for both Lincoln Center and the Metropolitan Museum of Art. A Villanova University graduate, where he got his degree in accounting, Mr. Lyon and his wife still live outside Philadelphia, though they have an apartment in New York, as well. It’s a convenient jumping off point, considering his geographic area of responsibility spans Boston to D.C. and down through parts of the Gulf Coast. It makes visiting the couple’s three sons, all in various stages of their 20s, easier as well. “It’s perfect,” Mr. Lyon said. “One lives in New York, one lives in Philly and one lives in D.C. I can go up and down and connect with each one of my kids—my wife sometimes travels with me. So we

are an Acela family.” In the New York area, in addition to 40 Worth Street, Capital One has provided financing for Jamestown Properties’ $81.4 million purchase of 31-00 47th Avenue in Long Island City, known as the Falchi Building, and the $12.2 million sale of 141 apartment units at 3576-3578 Dekalb Avenue in the Bronx. Multifamily units in the outer boroughs like those on Dekalb Avenue are a big focus. “We think of it as workforce housing,” he said. “We’re not doing it and packaging it up and selling it to Fannie or Freddie, we’re doing it on our balance sheet. The multifamily portfolio is about $6 billion in the New York tristate area and it’s predominately in the boroughs of New York—in Brooklyn, the Bronx, Queens—some of it in New Jersey and Long Island, but predominately in the boroughs.” With construction coming back in the city, Mr. Lyon pointed out that Capital One is very picky where these loans are concerned. “We are very selective in our construction loans,” he said, “but we do construction. We did 33 construction loans last year, and that would

be about double what we did the year before, and we will continue to see good construction loans.” Requirements include a good history that demonstrates an ability to get the project done. “Their ability to execute is critically important,” he said of requirements. “So how you can build a building, how you execute and your resources is a critical thing.” He went on to say that Capital One isn’t here to provide high-octane, high-risk loans. There is no mezz group, for instance. “Our culture is really to be more the tortoise than the hare,” he said. “Our clients appreciated that we were still breathing at the other end of the phone in December of 2008 and into 2009. We were doing things—we were talking to clients.” As for what keeps him excited about the industry after more than 30 years, he said the people. “Probably the most exciting thing about real estate is the unique people I meet,” he said. “If you’re a large corporate banker, you tend not to be sitting with the owner of the company all the time. Here I am sitting with folks who are owners, who are making their decisions … They’re fascinating people.”



Feature / July-August 2012

satellite image courtesy og Nasa.

July-August 2012

/ Feature

Outside Looking In
Smaller lenders, from far reaching lands, are zeroing in on the Manhattan market.
by Daniel Geiger
Garrett Thelander, an executive at Massey Knakal who leads the company’s capital services group, was fielding offers for a financing deal he was recently arranging when he noticed many of the banks lining up to compete weren’t ones he was used to working with. “There were a lot of players from out of town that you usually don’t see here that were competing and they were competing hard,” he said, describing it as a roughly $8 million deal for a commercial building that was owned by the building’s occupant. People’s United, a Connecticut-based bank, wound up making the loan. Because it was a low-leverage deal, Mr. Thelander said the bank differentiated itself by pushing hard to lower its rates. Regional and local banks have the flexibility to undercut competitors on interest rates because of a roughly 200 basis point spread between what banks themselves can borrow at and what they charge customers for loans. “They were competing against the bigger banks and they got very aggressive and they stood out because of that, and also because they were willing to close very quickly,” Mr. Thelander said. “I think you can tell from that their interest in pushing into this market in a bigger way.” Given the strength of the Manhattan real estate market, lenders have long vied with one another to place debt, especially in transactions that would appear to have solid fundamentals or conservative leverage levels. But with many real estate markets still sputtering or flat around the rest of the country, more banks, especially regional players who in the past may have done only a sprinkling of deals, are seeking to lend in the city. “I do think that more regional lenders are trying to do deals here,” said Howard Applebaum, an executive vice president and chief lending officer at Sterling National Bank, a longtime local bank in the city. “It’s the strongest market in the country and it was barely wounded over the last three years. The vacancy rate in residential buildings is less than 1 percent. It’s a very strong market and you’re going to get a lot of players coming here,” he said. Kevin Santacroce, an executive vice president


Feature / July-August 2012


Garrett Thelander

There were a lot of players from out of town that you usually don’t see here that were competing and they were competing hard.
according to bankers in the city, are widening their criteria to find deals, including targeting smaller transactions that in the past might have been left to local banks. “You are seeing bigger regional banks go after smaller transactions,” said Dan Harris, an executive vice president and chief lending officer for Dime Savings Bank of Williamsburgh. “The larger guys might prefer to put out $15 million or $20 million but they’ll do much smaller deals to get a foothold here.” Added Mr. Appelbaum: “Part of that is the number of smaller banks has shrunken because they went under during the recession, so the bigger boys are coming in because they see an opening.”

and chief lending officer for the Long Island local bank Bridgehampton National Bank, has himself been trying to position his bank’s entry into the city. “We’re really focused on the East End of Long Island but we have been growing in the city, primarily through the relationships we have with clients,” Mr. Santacroce said. “There is a such a strong tie with the Hamptons and Manhattan that we’ve been able to do a few deals there. It’s just a market that we, like a lot of lenders, want to be in.” Though outside banks have long been interested in entering into city deals, more banks like People’s United, Webster Bank and First Niagra,

Pouring money into a cluster of deals, though time consuming for a bank’s loan officers, has an advantageous flipside. “It’s often better to do more work and diversify,” Mr. Harris said. “It’s the old saying in banking that it’s better to have 20 $1 million loans than one $20 million loan.” But the recent uptick in activity among regional players and hasn’t come without pushing some boundaries of risk. Mr. Harris said he has seen competitors, particularly new entries in the market, adjust the cap rates they will accept on an investment. “You might have a lender who wants to make

July-August 2012

/ Feature

Howard Applebaum

It’s the strongest market in the country and it was barely wounded over the last three years. The vacancy rate in residential buildings is less than 1 percent.
amid the current period of rock-bottom rates. According to Ira Zlotowitz, president of Eastern Union Commercial, a commercial mortgage brokerage, the U.S. Department of Housing and Urban Development has also gotten into the multifamily lending business, offering 35-year fixed rate loans. “Setting up the loans with the government is very tedious, you have to go through tons of paperwork, and where it would take two months with a private lender it takes a year or more with HUD,” Mr. Zlotowitz said. “But borrowers are just starting the process earlier. It’s pushing the competition even more in that area.” Local banks are adapting to the onslaught of regional entrants and government borrowing windows by offering flexibility and accommodating their clients. “What we hope to sell as a community lender is that if there are problems and the borrower needs to take out a little more money, we will have a relationship and be able to work that out, whereas another bank less familiar with this market wouldn’t,” Mr. Harris said. “We recently did a loan. It was a low leverage deal and the borrower wanted a couple of million more, and so we put a second loan behind the first and he used the proceeds to buy another property. I think those are the kinds of situations we excel at.”

sure the deal is a 6 cap and will lend, say, $1.25 million on that, but you’ll have another lender and they’ll use a 5.5 cap and come to a threshold of $1.430 on it, and a lot of borrowers always want the most money they can get,” Mr. Harris said. “You kind of just have to let those deals go. If it’s a deal where I really like this location I might say 'I’ll give you $1.3 million.'” No area of the market is more competitive than the multifamily sector, where lenders are jostling against not only one another but also the large government repositories of credit, Fannie Mae and Freddie Mac. Both offer loans that stretch 10 years, longer than almost any comparable mortgage that a private lending institution would hand out


Q&A / July-August 2012

Josh Zegen

Madison Realty Capital
Madison Realty Capital has done $1 billion in transactions since it began investing in 2005. The Mortgage Observer spoke to co-founder Josh Zegen about the types of deals Madison, which just closed a new fund, is putting together of late.

by Carl Gaines
The Mortgage Observer: Can you tell me your title here and how long you’ve been at Madison Realty Capital? Josh Zegen: I co-founded Madison in 2004 with Brian Shatz. My official title is managing member and co-founder. And Madison Realty Capital started out with a first fund in 2004 that focused on the debt business. That was a $310 million fund and that fund was set up to do bridge lending—to lend to commercial owners of multifamily office retail and industrial properties for time-sensitive transactions. The goal was to focus on the middle market, which we thought was underserved. And how did you get your start in the business? I graduated from Brandeis University and then started a mortgage brokerage company in 2001. When we were brokering a lot of these private, short-term bridge loans, I discovered the niche of the bridge lending market. There was a need for a fund focused on first mortgage bridge lending in the sub-$30 million market. When I saw that need, I got together with Brian Shatz and then went to a family office and met a number of investors that really were the first money for us to start in 2004. The goal was always to create a vertically integrated platform, where we would have lending and other things and really ultimately be owners of real estate. We started to build the organization and service our own loans and really did everything in-house as a normal lender. At the time, generally, lenders didn’t own much in real estate because either they would get paid off by another lender or the properties were liquid and they would sell. But when 2008 came, that started to change as the markets changed and there was less liquidity out there and lenders weren’t lending, so we started to take ownership of real estate. One of the things we discovered was that when you rely on third-party managers to manage real estate, there is a misalignment of interests and you don’t

necessarily have the ability to take ownership and reposition the real estate, and that’s a lot of times where the best benefit is. So in 2009, we brought on Martin Nussbaum to really focus on building our own property management and asset management company—Silverstone Property Group. Which helps you get it back up to market rate rents? That’s exactly right. In 2009, there wasn’t much in terms of transactions out there, but as 2009 turned into 2010, having our own property management, asset management and construction management gave us the ability to buy debt with the goal of owning the underlying real estate. Because we’re now this vertically integrated company, that has the lending side and then the ownership side of the business, that’s given us the ability to buy debt with the goal of owning this real estate and repositioning it. A lot of those debt funds don’t want to own real estate. They want to buy and restructure the deal or flip it back to someone. How are you able to close deals so quickly? It’s the combination of skill sets, all within this organization, that gives us that ability to close quickly. We obviously hire appraisers, third-party engineers—all the stuff you normally would hire. But in addition we have people on staff who came from the development side, who built buildings like that in the past, who have dealt with contractors and issues and zoning. We outsource just for third-party opinions but we have all of that in our organization and that’s given us the speed and the execution ability to be able to do that within a 30-day time frame. Are bridge loans still a big part of finding a way to buy the note on a property? We’re seeing in the bridge lending markets, a lot of recapitalization. Bridge lending is an active part of the business. Buying debt has been the largest part. If you look at the $70 million or so in deals we’ve done, more than $50 million have been note purchases. Josh Zegen Are you growing? I think we have a couple more hires we would like to make. The property management and asset management side continue to grow as we take ownership of more and more real estate, so that’s very scalable. Another position we just hired is a guy named Bryan Rubin who came from TriBeCa Associates—a big owner and developer here in New York. He’s like an acquisition underwriter. David Speiser—he was at Davis Polk, Paul Weiss and then he was at Related for about six years. Did you previously have an internal infrastructure for dealing with legal issues? We have someone who has a legal and business background but got a law degree in Israel, so David Speiser is more of that legal function, crossing over between legal and business. I know when we spoke before, you talked about banks’ increasing willingness to write down their debt. Do you think that’s going to continue? It seems to be, and we’re inundated with product right now in terms of buying debt and I think a lot of it is the increase of values over the last year and the fact that banks have been in a much healthier spot in terms of their own balance sheets. That has given a lot of flexibility to these banks to be able to write down assets and sell loans at prices that are more manageable for buyers like us. From the special servicer side—more of the LNR and C3 and those kinds of special servicers—we’ve started to see a lot more product from those groups as well.


Photo by carl gaines

Week of June 25, 2012

Aaron Jungreis Robert Knakal Rick Lyon David Schectman Rosewood Realty Group Massey Knakal Realty Servces Capital One Bank Eastern Consolidated Bruce Mosler Doug Steiner Jed Walentas Ralph Bumbaca Cushman & Wakefield Steiner Studios Two Trees TD Bank



The Hot, Hot Investment Market

Week of July 2, 2012

Everyone wants to be in Brooklyn

Week of July 9th, 2012

Four Real Estate Executives Under 40, Outlook on the Market
David Speiser Dan Jacobs Danny Rudin Winston Fisher Madison Realty Capital M & T Bank Angelo, Gordon Fisher Brothers

The Stoler Report-Real Estate & Business Trends airs on CUNY TV, Channel 75 in NYC:
Tuesday: 2 AM, 11 PM Wednesday: 8:30 AM, 2:30 PM & 10:30 PM Friday: 5:30 AM Saturday night: 12 Midnight Sunday: 10:30 AM

Week of June 25, 2012 Week of July 2, 2012 Week of July 9, 2012 Week of July 16, 2012 Week of July 23, 2012 Marvin Josephson-Part I Marvin Josephson-Part II Arthur Mirante Dr. Norman Marcus Jake Ehrenreich

Building New York-New York Life Stories airs on CUNY TV, Channel 75 in NYC:
Monday: 10:30 AM, 4:30 PM & 10:30 PM Wednesday: 5:30 AM Thursday: 11:30 PM Saturday 12 Noon & 12:30 AM Sunday: 6 PM

www.stolerreport.com or www.michaelstoler.com

For additional information visit:

Up-to-the-minute news NOW for New York’s real estate market: In New York, real estate is a spectator sport and an obsession. The Commercial Observer on Observer.com is the daily fix for the real estate-obsessed, providing access to the minute-by-minute accounts of the latest deals, the winners and losers, the stats, profiles and more.

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July-August 2012 / The


The Sked: July
For the low, low price of $2,995, you too can develop an in-depth analytic approach to assessing the credit risk and structural aspects of legacy and commercial mortgage-backed securities transactions and assess the impact of current market conditions! Act fast, investors, regulators, credit risk managers and fund management professionals! Fitch Training CMBS: Credit Risk Workshop; Super secret location of course is only available upon registration, 8:30 a.m. to 5:30 p.m. Visit www. fitchtraining.com for more information. Meanwhile, in a bit of counterprogramming, the Mortgage Bankers Association will host its own golf outing, this time at the Knollwood Country Club in Elmsford. Expect tons of shop talk and chest thumping. Improve your lie, indeed! Mortgage Bankers Association of New York 2012 Annual Golf Outing; Knollwood Country Club, Elmsford, NY, 9:30 a.m. to 8:30 p.m. Call 526-9973707 or visit www.mbany.org for more information.

Despite uncertain economic conditions, owners and developers of financially troubled real estate projects are still expected to keep their properties afloat, waning cash flows and weakened property values be damned. Join the Urban Land Institute’s Young Leaders Group in a discussion on the state of distressed assets in New York. The Urban Land Institute “Young Leaders Group” Workouts 3.0 on the state of distressed assets in the New York area; law offices of Clifford Chance, 31 West 52nd Street, 6:30 p.m. to 8:30 p.m. Call 800-321-5011 or visit www.netforum.uli.org for more information.



And, yes, now the construction trades groups, developers and hard hats will get their day on the greens when the New York Building Congress hosts its own golf outing in Westchester. New York Building Congress golf outing, Westchester Country Club, Rye, NY, 9:30 a.m. to 7:30 p.m. Email Dawn Rubino at Drubino@ buildingcongress.com or visit www.buildingcongress. com for more information.

For the commercial mortgage industry, July will always be a big month for golfing, and CoreNet Global is among the first organizations out of the gate this year to hit the links. In other words, expect sub-par golfing. CoreNet Global 2012 Annual Golf Outing; Old Oaks Country Club and Century Country Club, 3100 Purchase Street, Purchase, NY, 8:30 a.m. to 5:30 p.m. Email Jaclyn Sniger at Jsniger@ bermangrp.com for more information.


Of Interest / July-August 2012

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

10 Hill St . . . . . . . . . . . . . . . 6 10 W 74th St . . . . . . . . . . . . 4 100 Church St. . . . . . . . . . . . 4 15-25 Kenmare St . . . . . . . . 4 164 Elizabeth St . . . . . . . . . . 4 25 Clifton Ave . . . . . . . . . . . 6 31 W 52nd Street . . . . . . . . 31 31-00 47th Avenue . . . . . . 23 3100 Purchase Street . . . . . 31 39-05 29th St . . . . . . . . . . . . 5 40 Worth Street . . . . . . 22, 23 450-460 Park Ave South . . . 4 500 W 30th St . . . . . . . . . . . 5 7 Bryant Park . . . . . . . . . . . . 5

Lending . . . . . . . . . . . . . . . . 6 CoreNet Global . . . . . . . . . 31 Corso Jr., Robert . . . . . . . . 18 Country Bank . . . . . . . . 11, 12 Cowen & Co. . . . . . . . . . . . 18 Cowen Group . . . . . . . . . . . 18 Cummings, Kevin . . . . . . . . . 8 Cushman, Philip . . . . . . . . . 18 CWCapital . . . . . . . . . . . . 6, 8 CW Financial Services . . . . . 8



Small Business Administration . . . . . . . . . . Small Business Lending . . . Sniger, Jaclyn . . . . . . . . . . . Solomon, Jeff . . . . . . . . . . . Speiser, David . . . . . . . . . . . Stanford University . . . . . . Starlight Children’s Foundation . . . . . . . . . . . . . Steier, Peter . . . . . . . . . . . . Stein, Joshua . . . . . . . . . . . Sterling National Bank . . . . Stevens, David . . . . . . . . . . Stoffels, Garett . . . . . . . . . . SunTrust Mortgage . . . . . . . 12 12 31 18 28 17 22 18 16 25 18 18 18

Harris, Dan . . . . . . . . . . 26, 27 HFF . . . . . . . . . . . . . . . . . . . 5 Hibernia Bank . . . . . . . . . . 22 Hines . . . . . . . . . . . . . . . . . . 5 Holiday Inn Manhattan View . . . . . . . . . . . . . . . . . . . 5 Hollande, Francois . . . . . . . 17 Hooper, Mayura . . . . . . . . . . 8 Housing Finance Agency . . . 5 Howard-Johnson, Mark . . . . . . . . . . . . . . . 10, 18 Hudson Realty Capital . . . . . 4 Hudson Yards . . . . . . . . . . . . 5 Hudson River Yards . . . . . . . 5


Davies, Marcia . . . . . . . . . . 18 Davis Polk . . . . . . . . . . . . . 28 Davis, Steve . . . . . . . . . . . . 17 DB Advisors . . . . . . . . . . . . . 8 DebtX . . . . . . . . . . . . . . . . . 10 Delitsky, Robert . . . . . . . . . . 5 Department of Taxation and Finance . . . . . . . . . . . . 16 Deutsche Bank . . . . . . . . . . . 8 Deutsche Insurance Asset Management . . . . . . . . . . . . . 8 Dime Savings Bank . . . . . . . 26 DWS Americas . . . . . . . . . . . 8

Ackerman, Shaya . . . . . . . . . 6 Actovia . . . . . . . . . . . . . . . . 14 Aite Group . . . . . . . . . . . . . . 8 Alma Realty . . . . . . . . . . . . . 6 Applebaum, Howard . . 25, 26 Avison Young . . . . . . . . . . . 18

New Democracy . . . . . . . . . 17 New York Building Congress . . . . . . . . . . . . . . 31 New York Business Development Corp. . . . . . . 12 New York Community Bank . . . . . . . . . . . . . . . . 6, 14 Newmark Grubb Knight Frank . . . . . . . . . . . . . .18, 22 Newmark Holdings . . . . . . . 22 NewOak Capital . . . . . . . . . 18 North Fork Bank . . . . . . . . 22 Northern Avenue . . . . . . . . . 5 Nussbaum, Martin . . . . . . . 28

Investors Bank . . . . . . . . . 6 ,8 Investors Bancorp . . . . . . . . 8 Iron Hound Management Co. . . . . . . . . . 4


Oberman, Rick . . . . . . . . . . . 4 Old Oaks Country Club . . . 31 Orefice, Joseph . . . . . . . . . . . 6

TD Bank . . . . . . . . . . . . . 6, 14 The Colonnade . . . . . . . . . . . 6 The Moinian Group . . . . . . . 4 The Mortgage Bankers Association . . . . . . . . . . . . . 18 The United States Department of Housing and Urban Development . . 27 The Wharton School . . . . . 17 Thelander, Garrett . . . . . . . 25 Travertine . . . . . . . . . . . . . . . 4 Trepp . . . . . . . . . . . . . . . . . 10 TriBeCa Associates . . . . . . . 28

Baker, Scott . . . . . . . . . . . . 17 Baldwin, Alec . . . . . . . . . . . 20 BankUnited . . . . . . . . . . . . . 12 Bank of England . . . . . . . . . 17 Barry, Christine . . . . . . . . . . 8 Berman, Michael . . . . . . . . . 8 Bethpage Federal Credit Union . . . . . . . . . . . . 12 BGC Real Estate Capital Markets . . . . . . . . . . . . . . . . 18 BlackRock Realty . . . 4, 10, 18 Bloom, Nick . . . . . . . . . . . . 17 Braddish, Keith . . . . . . . . . . 4 Brandeis University . . . . . . 28 Bridgehampton National Bank . . . . . . . . . . . . . . . . . . 26 Brooklyn College . . . . . . . . 12 Brown Harris Stevens . . . . 18 Builder’s Bank . . . . . . . . . . 11 Building & Land Technology . . . . . . . . . .10, 18

Jamestown Properties . . . . 23 Jefferies . . . . . . . . . . . . . . . 18 Joshua Stein PLLC . . . . . . . 16 J.P. Morgan Asset Management . . . . . . . . . . . . 5 J.P. Morgan Chase . . . . . . . . 5

East Coast Regional Lending Office . . . . . . . . . . 11 Eastern Union . . . . . . . . . . . 6 Eastern Union Commercial . . . . . . . . . . . . 27 Edelstein, Mark . . . . . . . . . . 5 Eidman, Shannon . . . . . . . . 11 Elk Investors . . . . . . . . . . . . 4 Eyzenberg, David . . . . . . . . 18

Ken & Cook . . . . . . . . . . . . . 4 King, Sir Mervyn . . . . . . . . 17 Knollwood Country Club . . . . . . . . . . . . . . . . . . 31

Pacolet Milliken Enterprises, Inc. . . . . . . . . . . 5 Palisades Financial . . . . . . . 11 Parliament of the Hellenes . . . . . . . . . . . . . . 17 Pasok . . . . . . . . . . . . . . . . . 17 Patel, K.C. . . . . . . . . . . . . . . 5 Paul Weiss . . . . . . . . . . . . . 28 Pei Cobb Freed & Partners . . 5 People’s United . . . . . . . 25, 26 Private Capital Group . . . . 18 Progressive Credit Union . . 12

U.S. Census Bureau . . . . . . . 8 United Capital Business Lending . . . . . . . . . . . . . . . 12 University of Chicago . . . . . 17 Urban Land Institute. . . . . 31

Fagin, Robert . . . . . . . . . . . 18 Fairbank, Richard . . . . . . . 20 Falchi Building . . . . . . . . . . 23 Familant, Robert . . . . . . . . 12 Fannie Mae . . . . . . . 17, 23, 27 Federal Housing Administration . . . . . . . . . . 18 First Niagra . . . . . . . . . . . . . 26 Fiscal Cliff . . . . . . . . . . . . . . 17 Fisher, Mark . . . . . . . . . . . . . 4 Fitch Ratings . . . . . . . . . . . 10 Fitch Training . . . . . . . . . . . 31 Fitzgerald, Cantor . . . . . . . 18 Freddie Mac . . . . 4, 17, 23, 27

LEED Gold . . . . . . . . . . . . . . 5 Lehrman, Michael . . . . . . . 18 Lincoln Center . . . . . . . . . . 23 LNR . . . . . . . . . . . . . . . . . . 28 Lyon, Rick . . . . . . . . . . 20, 23


Quality Inn . . . . . . . . . . . . . 12 Queens Plaza North, LLC. . . 5 Queensboro Bridge . . . . . . . 5


ValueXPress . . . . . . . . . . . . 12 Verrone, Robert . . . . . . . . . . 4 Viking . . . . . . . . . . . . . . . 2, 20 Villanova University . . . . . . 23 Visigoths . . . . . . . . . . . . . 2, 20

M&T . . . . . . . . . . . . . . . . . . 14 MacDonald, Brendan . . . . . 18 MacNeill, Mary . . . . . . . . . . 10 Madison Realty Capital . . . . . . . . . . . . . 12, 28 Marathon Banking Corp. . . . 8 Marcal Group . . . . . . . . . . . . 6 Massey Knakal . . . . . . . . . . 25 Mathias, Andrew . . . . . . . . . 4 MBS . . . . . . . . . . . . . . . . . . 17 McCarthy, John . . . . . . . . . . 5 Meridian Capital Group . . . 18 Merkel, Angela . . . . . . . . . . 17 Metropolitan Museum of Art . . . . . . . . . . . . . . . . 23 Millennium Bank . . . . . . . . . 8 Mirante, Arthur . . . . . . . . . 18 Morrison & Foerster . . . . . . 5 Mortgage Bankers Association . . . . . . . . . . . . . 31 Murphy, Jr., Joseph . . . . . . 12

C3 . . . . . . . . . . . . . . . . . . . . 28 Capital One Bank . . 20, 22, 23 Carlton Group . . . . . . . . . . 18 CBRE Capital Markets Debt & Equity Finance . . . . 4 Century Country Club . . . . 31 Chance, Clifford . . . . . . . . . 31 Chandan Economics . . . . . . 17 Chandan, Sam . . . . . . . . . . 17 Chandler, Jack . . . . . . . 10, 18 Chevy Chase Bank . . . . . . . 22 CIM Group . . . . . . . . . . . . . 18 CIT Bank . . . . . . . . . . . . . . 12 Clairvue Capital Partners . . 18 CMBS . . . . . 10, 12, 17, 18, 31 Cobb, Henry N. . . . . . . . . . . 5 Commercial Real Estate

Gaccione, Jason . . . . . . . . . . 4 Garfield, Spencer . . . . . . . . . 4 Goldman Sachs Asset Management . . . . . . . . . . . . 10 Gramercy Capital . . . . . . . . . 4 Greece . . . . . . . . . . . . . . 2, 17 Greenland, Kingsley . . . . . . 10 Guggenheim Commercial Real Estate Finance . . . . . . . 4 Guggenheim Partners . . . . . . 8 Gural, Jeffrey . . . . . . . . 22, 23


Real Capital Analytics . . . . . 4 Real Estate Capital Markets at Wells Fargo . . . . . . . . . . . . 4 Real Estate Finance Group . . . . . . . . . . . . . . . . . . 5 Real Estate Securities Management . . . . . . . . . . . . 10 REIT . . . . . . . . . . . . . . . . 4, 10 Related Co. . . . . . . . . . . . 4, 28 Rose, Joanna . . . . . . . . . . . . 5 Rosenberg, Robert . . . . . . . . 4 RREEF . . . . . . . . . . . . . . . . . 8 Rubin, Bryan . . . . . . . . . . . 28 Rubino, Dawn . . . . . . . . . . 31

Wachovia Bank . . . . . 4, 20, 22 Walker, Willy . . . . . . . . . . . . 6 Wells Fargo . . . . . . . . . . . 4, 20 Walker & Dunlop . . . . . . . 6, 8 Webster Bank . . . . . . . . . . . 26 Wells Fargo Multifamiy Capital . . . . . . . . . . . . . . . . . 5 Westchester Country Club . 31 Wiener, Alan . . . . . . . . . . . . . 5 Williams, Keenan . . . . . . . . . 4 Wilshire Investments Corp . . . 6

Santacroce, Kevin . . . . . 25, 26 Sapir Organization . . . . . . . . 4 SBA 504 Loan Program . . . 12 Sharma, Akash . . . . . . . . . . 18 Signet Bank . . . . . . . . . . . . 20 Silverstone Property Group . . . . . . . . . . . . . . . . . 28 Shatz, Brian . . . . . . . . . . . . 28 SL Green Realty Corp. . . . . . 4

Zahabian, David . . . . . . . . . . 4 Zegen, Josh . . . . . . . . . . . . . 28 Zlotowitz, Ira . . . . . . . . . . . 27 Zurlini, Mark . . . . . . . . . . . 11


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