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CMBS TROUBLE?

New York

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CMBS TROUBLE?
Sandy Monaghan, a managing director in Cushman & Wakefield’s capital markets group
While the percentage of delinquent CMBS loans for the entire US appears to have leveled off, the NYC figure continues to increaseand is at about 11%—and Sandy Monaghan, a managing director in Cushman & Wakefield’s capital markets group, anticipates further growth in CMBS distress. To put this in perspective: CMBS delinquency rates have historically been below 2%; life companies, Freddie Mac, and Fannie Mae loan delinquencies are all currentlybelow 1%; and commercial bank and thrift loan delinquencies are currently 4% (below 1991’s historical peak of more than 6%). Part of the reason for the wide variance? CMBS loans are deemed delinquent when they are 30-plus days past due, while the other loan origination types only become delinquent when they are 60 or 90 days past due.
Trepp CMBS chart
NY recently became the second-highest ranked state in CMBS loan delinquencies behind California ($7.2B), and NYC is now the highest-ranked city ($5.7B, 79% of the state total), according toRealpoint. Further, distressed sales (as a percentage of total sales) have equated to about 11% in NYC and 13% in the outer boroughs and Long Island. By comparison, the highest levels of distressed sales have occurred in Las Vegas (45%) and the lowest in DC andBoston (5%). Trends he expects to continue within the region: high levels of maturity defaults, due to the inability to pay off balloon balances and payment defaults as many partial-term IO loans revert to amortizing loans with higher payments; a high percentage of loan workouts, discounted payoffs, and note sales; and a relatively low number of foreclosures given the time, expense, and risk of judicial foreclosures.
BIG DEALS!
Morgan Stanley’s Prime Property Fund purchased a six-building,1M SF industrial portfolio in the NJ Turnpike Exit 8A submarket from BlackRock. Completed between 1985 and 1989 by Matrix Development Group, the 93%-leased portfolio consists of 3 and 6 Fitzgerald Ave; 3 and 17 Middlesex Ave; Engelhard Drive; and 32 Commerce Court. Cushman & Wakefield’s Andrew Merin,David Bernhaut, Gary Gabriel, Frank Caccavo, and Jason Goldman repped the seller and procured the buyer.***Commerzbank signed a 15-year, 173k SF lease at Two World Financial Center. Cushman & Wakefield’s John Cefaly andRobert Lowe repped the tenant, while owner Brookfield Office Properties was repped in-house.

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Metropole Realty Advisors secured a new $150M fixed-rate loan for 681 Fifth Ave. The senior financing was provided by Ladder Capital Finance, and the capital will be used to pay off any outstanding debt and to fund additional pre-built floors. Ladder Capital’s Peter Smith worked with Metropole’s Robert Siegel andKT Bren to complete the transaction, which included a $25Mmezz loan from Malkin Strategic Capital.

Sales Transactions
Prudential Douglas Elliman sold a $48M, 6,000 SF condo at The Plaza, a record for the highest single condo sale in NYC. The firm’sLisa Simonsen repped both sides in the deal.***Ariel Property Advisors sold five affordable housing assets: a six-story, residential elevator building totaling 40 units at 55-57 W 129th St for $3.2M; two buildings consisting of 30 units at 216 and 224 W 141th St for $1.8M; a five-story mixed-use building totaling 20 units at2570 Adam Clayton Powell Blvd for $1.5M; and a six-story residential walk-up building totaling 16 units at 144 W 144th St for$1M.

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Triangle Equities Development Co, through related entity 42-05 Parsons LLC, acquired a $8.3M non-performing construction loan and revolving line of credit from First American International Bank. The notes are collateralized by a nearly completed mixed-use project at 42-05 Parsons Blvd in Flushing, Queens.

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Ascot Properties purchased a non-performing loan for a 16k SFshopping center on Post Rd in Westport, Conn., with a balance of$3.7M. Helios Capital’s Josh Malka repped the buyer, while the lender was a regional bank.

Lease Transactions

Williamsburg Charter High School inked a long-term, 116k SFlease at 198 Varet St in Brooklyn. The eight-story building houses one of three schools operated by the Believe High Schools Network, an NFP charter management organization. Kalmon Dolgin Affiliates’ Jeffrey Unger repped the owner and tenant in the deal.

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270 Madison Ave saw two deals: Belkin Burden Wenig & Goldman’s 34k SF lease renewal (tenant rep: CBRE’s Craig Reicher) and Gottlieb, Rackman & Reisman’s 16k SF lease renewal (tenant rep: Newmark Knight Frank’s Rob Silver). Gregg Schenker, John Gols, and Doug Regal repped owner ABS Partners Real Estate in-house for both deals.

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L&J Produce signed a 40k SF relocation and expansion lease at 211 Lombardy St in Greenpoint, Brooklyn. Kalmon Dolgin Affiliates’ Fred Rufrano and Linda Wong repped the owner and tenant, respectively.

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Doctors Without Borders/Médecins Sans Frontières renewed and expanded its lease at 333 Seventh Ave for a total of 32k SF for a 10-year term. Cushman & Wakefield’s Carri Lyon repped the tenant, and the owner is Samco Properties.

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1001 Avenue of the Americas saw three deals: Venio’s 11k SF relocation, SJI Associates’ 10-year, 7,400 SF renewal; andSchulman Wolfson & Abruzzo’s 6,200 SF lease. ABS Partners’ Jay Caseley is the building’s leasing agent.

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Peppercom inked a 15-year, 20k SF renewal at 470 Park Ave South. JLL’s James Quinn, Gary Youm, and Ryan Masiello repped the tenant, while JRT Realty Group’s Greg Smith repped ownerTIAA-CREF.

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122 W 27th St saw two deals: J Edlin Interiors’ expansion to 10k SF and CoreBrand Communications’ 10k SF lease (tenant rep: Ellman Realty Advisors’ Marc Ellman). Colliers International’s Perry Mesmerrepped owner Northern Start Textile Corp in both transactions.

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505 W 37th St saw two long-term deals: Ark Restaurant’s 10k SF lease for an as-yet-unnamed restaurant concept, which will occupy a ground-floor space stretching across Tenth Avenue; and Pillars 37 and Pillars 38’s 9,600 SF lease for an event venue and catering hall.KGW Associates repped Ark and Newmark Knight Frank repped the catering hall, while Winick Realty Group’s Steven Baker andJosh Singer repped owner TF Cornerstone.

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231 W 39th St saw two deals: 231 Sales’ seven-year, 3,400 SF renewal, and People’s Liberation’s two-year, 1,400 SF lease. Adams & Co’s James Buslik and Jeffrey Buslik repped the landlord and tenants in both deals. And James, along with Adam’s Jeffrey Schwartz, also brokered two deals at 11 E 26th St: The World School’s 12-year, 12k SF lease (tenant reps: CBRE’s Glenn Isaacson, Stephen Siegel, and David Maurer-Hollaender) andExemplis Corp’s three-year, 2,000 SF lease (tenant rep: Winslow & Co).

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The Library of America renewed its 7,500 SF lease at 14 E 60th Stfor seven years. CresaPartners’ Bob Stella and Justin Halpernrepped the tenant, while Cushman & Wakefield’s Bill Fressle repped owner Omabuild NV.

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Sunshine Day Care signed a long-term, 5,000 SF lease at 1330 Fifth Ave. Prudential Douglas Elliman’s Faith Hope Consolo,Joseph Aquino, and Arthur Maglio repped the landlord.

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Fifth Avenue Designer Menswear inked a five-year, 3,200 SF lease at 12 E 52nd St. HRM Commercial Real Estate’s Corey Ricksrepped the tenant, while Heritage Realty Services’ Al Lawrencerepped the owner, Heritage affiliate Dryland 52 LLC.

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Cutter & Buck signed a 3,100 SF lease at 1410 Broadway. CresaPartners’ Justin Halpern repped the tenant, while Murray Hill Properties’ Rick Doolittle repped building owner LH Charney Associates.

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MedRite Urgent Care opened a 3,000 SF facility at 919 Second Ave, its first. Winick Realty Group’s Tatiana Jung-Voevodina andLori Shabtai repped both tenant Samuel Fisch and the owner.

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Potbelly Sandwich Shop assembled a 15-year, 2,800 SF lease (with tomato, lettuce, and cheese) at 2 Gold St, its first NY-based location. Newmark Knight Frank’s Jeffrey Roseman, Marc Frankel, and Ben Birnbaum repped the tenant, while Cushman & Wakefield’s Carl Wunderlich and Mike Stone repped owner TF Cornerstone.

Financing

Beech Street Capital provided $74M in Fannie Mae conventional loans to refinance a portfolio of 13 properties in NYC owned by theHaruvi family. The portfolio contains 615 units in mid-rise buildings located in six Manhattan neighborhoods. The transaction was originated by Meridian Capital Group’s Moshe Majeski and Chaim Tessler. The fixed-rate loan has a 10-year term with 10 years’ IO.

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Cushman & Wakefield Sonnenblick Goldman arranged a $38Msenior loan secured by 1600 Summer St, a 261k SF Class-A office building in Stamford, Conn. The loan, which was provided by an affiliate of a domestic life insurance company, is for a 15-year term.Benenson Capital Partners, the client, developed the building in ’80 and has owned it continuously since then.

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GCP Capital Group arranged $22.8M in mortgage financing, including: $11M for a six-story elevator apartment building totaling 89 units on W 45th St and $5.6M for two four-story walk-up apartment buildings totaling 71 units and two commercial units on 4th Ave in Brooklyn (arranged by Paul Greenbaum); and $6.2M for a two-story apartment building totaling 63 units in Long Beach, Long Island (arranged by Matthew Classi).

Construction & Development

Tomorrow, Tucker Development Corp will break ground on theCourtyard by Marriott at the Prudential Center, the first new hotelin Newark’s downtown in nearly four decades. The mixed-use hotel and retail development will include 14k SF of retail that will be leased and managed by Tucker, while Marriott International will manage the hotel. The development is adjacent to The Rock, which hosts 200 events per year.

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AvolonBay Communities broke ground on Avalon at Westmont Station, its 14th luxury apartment development in NJ and cornerstone of a larger transit-oriented neighborhood planned bySomerset Development. It will consist of four four- and five-story buildings with 406 apartment homes and 27k SF of retail space. The buildings will close to the planned NJ Transit Westmont Station, which Somerset is building and will complete in ’12. Occupancy for the apartments will begin in Q2 ’12.***

Construction is complete on the 65k SF, 105-bed VillageCare Rehabilitation and Nursing Center at 214 W Houston St. The new facility meets LEED standards and has patient rooms, physical rehabilitation room, mediation room, dining and common areas, and a rooftop deck. On the team: project manager Levien & Co, architectPerkins Eastman, structural engineer Goldstein Associates, and MEP engineer AFK.

Executive Moves

Kellogg Gaines joined JLL as managing director, where he will work with co-heads and EMDs Tom Fish, Tom Melody, and Mike Melodyto lead the firm’s debt and equity sourcing and loan origination business in the NY region. He was previously with Glacier Global Partners and held positions at Eurohypo AG, Nomura Securities,PaineWebber/UBS, and Citicorp Securities. He’s a Boston University grad.

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Eric Herlands, Jason Gold, Joseph Sitt, and Stephen Shapirojoined JLL’s capital markets business. Eric, an SVP, is a faculty member at the Schack Institute and held a position at Reckson Associates. Jason, a VP, was formerly with CBRE and GE Real Estate, and is a GWU grad. Joseph was previously with Massey Knakal and is a University of Arizona grad. Stephen held positions at Eastdil and Savills, and is a Yeshiva grad.

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Walter Wolf joined Colliers International as managing director in the firm’s NJ office. He’s held positions with the General Services Administration, Grubb & Ellis, Insignia/ESG, and CBRE. He’s aFairleigh Dickinson grad.

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Greg Brooks joined Sierra Realty Corp as director of retail leasing. He was previously in banking and funneled his profits into real estate investment, buying and renovating several houses upstate. One he turned into the Blue Victorian, a home furnishing retail establishment and art gallery. He also assisted ABC Carpet & Home in leasing. He’s an NYU grad and is pursuing an MS from Columbia.

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Kahn Architecture and Design promoted Heidi Kahn to president and director of design. She took over the new job after husband and partner Michael Kahn traded roles to be the company’s new VP and director of operations. Both have 23 years of professional experience, and practice in NY, NJ, Conn., ad DC. She’s a Southern California Institute of Architecture and Wellesley grad, while he’s a Prattgrad.

Related Topics: Marriott International, Ladder Capital Finance, Meridian Capital Group, JRT Realty Group, TF Cornerstone, Citibank, Prudential Financial, Gregg Schenker, Boston University, Commerce Court, Joseph Sitt, ABS Partners, Ariel Property Advisors, Perkins Eastman, Kalmon Dolgin Affiliates, Matthew Classi, James Buslik, Joseph Aquino, Big Deals, David Bernhaut, Andrew Merin, Gary Gabriel, Winick Realty Group, Sierra Realty Corp, Jeffrey Buslik, Jeffrey Roseman, Jeffrey Schwartz, ABS Partners Real Estate, Heritage Realty Services, Lori Shabtai, Bob Stella, The Library, Justin Halpern, Eurohypo AG, Benenson Capital Partners, Matrix Development Group, Arthur Maglio, Carri Lyon, Ryan Masiello, Marc Frankel, Tucker Development Corp, Greg Smith, John Cefaly, Steven Baker, Samco Properties, Schack Institute, The Rock, Potbelly Sandwich Shop, Ben Birnbaum, Fairleigh Dickinson, Fred Rufrano, Linda Wong, Helios Capital, Jason Goldman, FINANCINGBeech Street Capital, Metropole Realty Advisors, Malkin Strategic Capital, James Quinn, Gary Youm, Robert Siegel, Glenn Isaacson, Schulman Wolfson, Reckson Associates, Marc Ellman, Stephen Siegel, Frank Caccavo, Peter Smith, Josh Malka, David Maurer, Craig Reicher, Two World Financial Center, Jeffrey Unger, Robert Lowe, Josh Singer, Doctors Without Borders, Ellman Realty Advisors, Jason Gold, Tom Melody, Southern California Institute, Michael Kahn, Somerset Development, John Gols, Belkin Burden Wenig, Nursing Center, Rick Doolittle, Carl Wunderlich, Goldstein Associates, Perry Mesmerrepped, Jay Caseley, Ascot Properties, Sandy Monaghan, First American International Bank, Rob Silver, Doug Regal, Mike Stone, GE, Nomura Holdings