CO 02 02 2016 by New York

THIS ISSUE

Finance

• Gregg Gerken and Roy Chin have turned TD Bank into a real player

• Talking life insurance lending with FEBRUARY 3, 2016

AXA’s Nicki Lavanos

• A loan modification for Times Square’s TRYP Hotel

P19

CRUISIN’ Life insurance lending moves into the fast lane

SOLID TO THE CORE COM M ERCIAL

RESIDENTIAL

R E TA I L

FI NANCE

N E W YO R K C I T Y ’ S L A R G E S T O W N E R O F C O M M E R C I A L R E A L E S TAT E

SLG-2305 2015 Corporate Ad_new Apple_CO_9.5x2.5.indd 1

9/18/15 4:02 PM

Thank you to the following brokers for Arredondo & Co., LLC John Arredondo The Ashtin Group, Inc. Brett Rovner Atlas Commercial Realty Dani O’Donnell Avison Young David Cohen Thomas Hines

Paul Hoffmann Jared Isaacson Paul Jacobs Kevin Langtry Kevin McCarthy Gerry Miovski Sean Morley Michael Nelson Tom Pajolek Arkady Smolyansky Mary Ann Tighe Gregory Tosko Paul Walker Michael Wellen Sacha Zarba

Crown Retail Services Chris DeCrosta Hank O’Donnell Virginia Pittarelli Cushman & Wakefield, Inc. Whitney Anderson David Berke Andrew Braver Zachary Cilman Joseph Cirone Louis D’Avanzo Michael Flynn Robert Gallucci David Hoffman, Jr. Josh Kuriloff William Lee Remy Liebersohn Jeffrey Lovell Robert Lowe Judd McArthur David Sherman David Stockel Steven Strati Paul Webber Barry Zeller

J R R M J A H A C M M R D C S R S

THANK Capstone Realty Advisors Inc. Joe McLaughlin Jarad Winter Coldwell Banker Commercial Alliance Jason Birk Jonathan Bock Michael Okun Richard Selig Wayne Siegel

CBRE Michael Affronti Bradley Auerbach Brian Carcaterra Bob Caruso Lauren Crowley Corrinet Anthony Dattoma Joseph Fabrizi Evan Fiddle Adam Foster Abe Gross Brian Hay Timothy Hay Christopher Heckman Brendan Herlily Robert Hill

CJ Net, Inc. Jessica Tu

Colliers International Michael Berger Ernest DeLucia Mark Friedman Brian Given David Glassman Mike Gordon Al Gutierrez Steven Jaray Dylan Mattes Tyler Owens Cameron Paktinat Hollis Pugh Peter Simel Paul Stapleton Sven Sykes Cresa Justin Halpern Jane Roundell Robert Shulman Maureen Young

Douglas Elliman Real Estate James Gross Peter Gross EVO Real Estate Group Howard Epstein

K B

K A J

L D

M J

Halstead Property Walter Thompson

M S J

Hudson Real Estate Partners Alexander N. Schwartz Jack M. Senior

M M

Thank you for the opportunity to compete for your business Ryan Kass 212-850-2756 • rkass@empirestaterealtytrust.com Fred C. Posniak 212-850-2618 • fposniak@empirestaterealtytrust.com Keith A. Cody 212-850-2759 • kcody@empirestaterealtytrust.com Julie M. Christiano 212-697-0696 • jchristiano@empirestaterealtytrust.com

J M

Shanae Ursini 212-400-3327 • sursini@empirestaterealtytrust.com Lindsay J. Godard 212-850-2622 • lgodard@empirestaterealtytrust.com Jeffrey H. Newman 203-353-5200 • jnewman@empirestaterealtytrust.com Kimberly A. Zaccagnino 203-353-5241 • kzaccagnino@empirestaterealtytrust.com Tara L. Long 203-353-5201 • tlong@empirestaterealtytrust.com

leasing within our portfolio during 2015. JLL Randy Abend Robert Ageloff Matthew Astrachan Justin Centre Alexander Chudnoff Harley Dalton Aaron Ellison Charles Gerace Mark Jacobs Mitchell Konsker Rob Martin Douglas Neye Christopher O’Callaghan Shawna O’Menifee Rick Rosencrans Scott Vinett

Millenium Realty Group LLC Marc Kritzer

The Shopping Center Group David Firestein Spiegel Real Estate Ted Spiegel

Kassin Sabbagh Realty, LLC Bunny Escava

Newmark Grubb Knight Frank Hunter Berman E.N. Cutler Arthur Draznin Rob Eisenberg Michael Frantz Bill Harvey Elizabeth Houley Paul Ippolito Jamie Jacobs Daniel Katcher Matt Leon Jason Lund James Ritman Andrew Sachs Jim Saunders Brittany Silver Patti Valenti Mark Weiss Bernard Weitzman

Keystone Commercial Realty Abe Bose Jeff Massie

OfficeLeaseCenter.com Jack Petrie Eva Shih

Vidal/Wettenstein, LLC David Fugitt

TheSquareFoot Ken Quinlan SW Realty Capital, LLC Jayson Kaynes

NK YOU JRT Realty, Inc. Monica Denunzio

LSL Advisors Daniel Lolai

Oldfield Realty Group Inc. John Farrell

McCarthy Associates John McCarthy

Redwood Property Group Jeff Berman

MHP Real Estate Services Sebastian Findlay Jesse Rubens

Savills Studley Joseph Genovisi Lance Leighton Zachary Levy Evan Margolin Oliver Petrovic Erik Schmall Marc Shapse

Michael Faillace & Assoc. PC Michael Faillace

Tetra Realty Subi Hamra

The Garibaldi Group Kyle Mahoney Transwestern Lauren Davidson David Stockel Vicus Partners Philip Gardner

Wharton Property Advisors Inc. Ruth Colp-Haber Winick Realty Group Ken Hochhauser

Winslow & Company LLC Greg Bonura Brett Gartner

E MP I RESTATER EALTYTR U ST.C O M • 100% C O MMISSIO N ON L E ASE SIG N IN G

INSURANCE LENDING 1 WHITEHALL STREET, 7TH FLOOR, NEW YORK, NY 10004

Stawski Partners is pleased to welcome Hollis Park Partners LP to 579 Fifth Avenue Tenant was represented by Keith Caggiano & Roshan Shah of CBRE Landlord was represented by Paul Glickman, Diana Biasotti & Ben Bass of JLL Additional floors of 8,705 – 11,655 RSF, with a block of up to 34,400 RSF available

News Briefs

LEASES

Jared C. Kushner PUBLISHER

Max Gross

Lease Deals of the Week Columns Robert Knakal

and Michael Weiser

Benjamin Bass 212-812-6026 Benjamin.Bass@am.jll.com Diana Biasotti 212 812 5751 Diana.Biasotti@am.jll.com Paul Glickman 212 418 2646 Paul.Glickman@am.jll.com

FINANCE

David Jones ACTING FINANCE EDITOR

Robyn Reiss Barbara Ginsburg Shapiro

Debt Deals of the Week Q&A Nicki Lavanos Columns

James Storey SENIOR ACCOUNT EXECUTIVE DESIGN & CONSTRUCTION

Danielle Balbi, Terence Cullen, Liam La Guerre STAFF WRITERS

Joshua Stein and Dan Gorcyzcki

Insurance Lending Moving into the fast lane

Paul Dilakian ART DIRECTOR

Times Square Hotel

Jeff Cuyubamba

TD Bank’s Dynamic Duo

PHOTO DIRECTOR

TRYP’s loan modification

Gregg Gerken and Roy Chin

The Takeaway Chart Finance 48

SENIOR DESIGNER

Emily Assiran Kaitlyn Flannagan PHOTO EDITOR

Cole Hill COPY CHIEF

Lisa Medchill ADVERTISING & PRODUCTION DIRECTOR

Robert Knakal

FEATURES

COLUMNIST

Matthew Talomie

The Sit-Down:

CHIEF REVENUE OFFICER

Suzy Reingold

Ken Kurson

Power Player:

EDITORIAL DIRECTOR

Telling Times

OBSERVER MEDIA

Published by

New laws for Times Square

TO SUBSCRIBE, CONTACT ALEXANDRA ENDERLE AT AENDERLE@OBSERVER.COM, OR CALL 212-407-9331.

L Train Freakout Don’t fret—too much!

FOR REAL ESTATE ADVERTISING, CONTACT ROBYN REISS AT RREISS@OBSERVER.COM, OR CALL 212-407-9382.

END NOTES 58 Party Circuit

60 ChartLease/ ChartSales

FROM TOP: PHOTO ILLUSTRATION BY KAITLYN FLANNAGAN; COURTESY COSTAR GROUP; KAITLYN FLANNAGAN/COMMERCIAL OBSERVER; CELESTE SLOMAN/FOR COMMERCIAL OBSERVER; YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER COVER ILLUSTRATION BY EDWARD MURAWINSKI

| FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

DEPUTY EDITOR

ASSOCIATE PUBLISHER, FINANCE

62 The Plan

Lauren Elkies Schram

ASSOCIATE PUBLISHER

Joseph Klaynberg For further information, please contact:

EDITOR-IN-CHIEF

FOR FINANCIAL ADVERTISING, CONTACT BARBARA GINSBURG SHAPIRO AT BSHAPIRO@OBSERVER.COM, OR CALL 212-407-9383. TO RECEIVE COMMERCIAL OBSERVER FINANCE WEEKLY, COMPANION NEWSLETTER TO THE COMMERCIAL OBSERVER, DELIVERED DIRECTLY TO YOUR INBOX EVERY FRIDAY, CONTACT SHANNON ROONEY AT SROONEY@OBSERVER.COM, OR CALL 212-407-9367. TO RECEIVE THE COMMERCIAL OBSERVER NOW NEWSLETTER, DELIVERING THE LATEST UPDATES IN COMMERCIAL REAL ESTATE DIRECTLY TO YOUR INBOX THREE TIMES A WEEK, CONTACT SHANNON ROONEY AT SROONEY@OBSERVER.COM, OR CALL 212-407-9367.

810 CORPORATE SEVENTH HEAVEN SWEEPING CENTRAL PARK VIEWS TOWER FLOORS OF

17,320 SF

EACH

PRE-BUILT SUITES FROM

4,000 â&#x20AC;&#x201C; 15,000 SF

Justin Royce, Executive Director 212-841-7764 justin.royce@cushwake.com

810seventh.slgreen.com Jeremy Bier, Vice President 212-216-1722 jeremy.bier@slgreen.com

Tara I. Stacom, Executive Vice Chairman 212-841-7843 tara.stacom@cushwake.com

Matthias Li, Director 212-841-7712 matthias.li@cushwake.com

Jennifer Hahn, Leasing Associate 212-356-4105 jennifer.hahn@slgreen.com

Barry J. Zeller, Executive Vice President 212-841-5913 barry.zeller@cushwake.com

Connor B. Daugstrup, Associate 212-841-7964 connor.daugstrup@cushwake.com

BRIEFS

News HERE COMES THE PITCH...

When Major League Baseball Commissioner Rob Manfred took over last year, one of his first priorities was to speed up the game. Going into his second year, the focus seems to have shifted to bringing some of the league’s offices under the same roof. MLB is nearing a deal to relocate the commissioner’s office and some of its Web operations to the 1.9-million-square-foot Time & Life Building at 1271 Avenue of the Americas, sources familiar with the negotiations told Commercial Observer. The league is eyeing about 500,000 square feet in the office building between West 50th and West 51st Streets, one source in the know said. Offices would be on the fourth through 15th floors of the 48-story building, which is owned by The Rockefeller Group. Securing MLB would mark a new anchor tenant for the 57-year-old building. The property will soon be almost fully vacant following the departure of long-time tenant Time Inc. and the planned exit of New York Mets broadcaster SNY, which currently leases 39,000 square feet of office and studio space. Developer Sterling Equities, which owns SNY, announced in November that its offices and the cable station would move to 4 World Trade Center in early 2017. Most existing leases at 1271 Avenue of the Americas expire at the end of 2017 and the start of 2018, according to CoStar Group. A Rockefeller Group spokesman declined to comment on the potential deal with the league, saying, “We wouldn’t comment on tenants in the market.” He did say, however, that Rockefeller is planning a soup-to-nuts renovation of the building starting this year. The work is estimated to cost $300 million, he added. “We’ve had more eyeballs than we can could count looking at the space,” the spokesman said. A CBRE team lead by New York tri-state region Chief Executive Officer Mary Ann Tighe has been marketing the building. A spokesman for the brokerage declined to comment. It wasn’t immediately clear who represents MLB. A league spokesman declined to comment on the pending move. 6 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Should the deal go through, it will bring together two of MLB’s key operations under the same roof, a source said. Mr. Manfred’s offices are currently in about 220,565 square feet at Brookfield Property Partners’ 245 Park Avenue between East 46th and East 47th Streets, in a lease that runs through 2022. MLB has been based there since 2007, according to CoStar. A Brookfield spokeswoman declined to comment. Major League Baseball Advanced Media, an MLB subsidiary that controls website operations for MLB.com and team websites,

PATRICK MCDERMOTT/GETTY IMAGES

MLB Mulling 500K SF at 1271 Avenue of the Americas

GRAND SLAM: Major League Baseball Commissioner Rob Manfred would move from 245 Park Avenue. currently has offices at Chelsea Market at 75 Ninth Avenue. The subsidiary currently has 116,395 square feet on three floors, CoStar shows, and its lease runs through 2022. One source noted that media operations

Stat of the Week

would be moving Uptown, but it wasn’t immediately clear if the entire division would follow. A Jamestown spokeswoman did not respond to a request for comment. —Terence Cullen

28.2 PERCENT TO 20.2 PERCENT

BY RICHARD PERSICHETTI With Super Bowl 50 approaching this weekend, it is time for the third annual Manhattan Stat Bowl. For those dedicated readers, Class B space defeated Class A space in back-to-back years, which clearly makes Class A the underdog in the 2016 edition. Will last year’s increase in leasing activity for the financial services sector be enough for Class A to score an upset? Or will Class B easily dispose of its competition for the third year in a row? Let’s compare 2015 statistics to see which class will come out on top. At the start of the Stat Bowl, a comparison of direct asking rent increases will determine the scoring. Manhattan Class A space increased 6.4 percent to $79.14 per square foot in 2015, while Class B space jumped 11.8 percent to $62.19 per square foot. Class B ends the first quarter with a solid lead, 11.8 to 6.4 percent. The second quarter will be based on leasing activity as a percentage of the total market size. Manhattan Class A leased 7.2 percent of its inventory in 2015, while Class B leased 6.8 percent. At halftime, Class B still leads Class A 18.6 to 13.6. Third-quarter scoring will be based on overall absorption as a percentage of the total market size. Manhattan Class A space absorbed 1.4 percent of its inventory, compared to only 0.5 percent of Class B’s. With Class A gaining on Class B in the last two quarters, Class A has narrowed the score to 19.1 to 15 headed into the final quarter. With this year’s Stat Bowl too close to call, let’s turn to the decline in the available supply to decide the game. Manhattan

Class A space dropped in 2015 by 13.2 percent, while Class B space only declined 1.2 percent. This helped Manhattan Class A upset Class B and come out on top with a cumulative score of 28.2 percent to 20.3 percent. Unfortunately for the underdog Denver Broncos, I do not think they will be as lucky against the Carolina Panthers. Richard Persichetti is vice president of research and marketing at Cushman & Wakefield.

Multifamily | Retail | Mixed Use | Oﬃce

Opportunity doesn’t wait. Neither should you. Don’t be left out of a great real estate opportunity because you aren’t ready to act. Your local Chase Client Manager can help you execute quickly on your next purchase or reﬁnance of a stabilized apartment or commercial property.

Talk to a Client Manager to see how Chase can save you time and money on your next opportunity. (866) 310-2490 or visit chase.com/CTL

Credit is subject to approval. Rates and programs are subject to change; certain restrictions apply. ©2016 JPMorgan Chase & Co. All rights reserved. Chase is a marketing name for certain businesses of JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., Member FDIC. 170440

BRIEFS

COURTESY COSTAR GROUP

Ruben Companies Snags Fee Position at 1700 Broadway for $280M

1700 Broadway

New York-based real estate development and investment company Ruben Companies has become the 100 percent owner of a Midtown site through a $280 million off-market transaction, Commercial Observer has learned. The New York-based development firm built the 42-story, 650,000-square-foot office tower on a plot of land at 1700 Broadway between West 53rd and West 54th Streets in 1968 through a 99-year ground lease with The Shubert Foundation. Sources involved in the deal said that on Jan. 26, Ruben acquired the fee position, or the underlying land, on the property from The Shubert Foundation. “It’s always desirable because a leasehold ownership is a wasting asset in that at the end of the ground lease, the building reverts to the guy that owns the ground,” Brian Corcoran, an executive vice president at Cushman & Wakefield and the

adviser on the transaction, told CO. Total ownership would have reverted back to The Shubert Foundation upon expiration of the ground lease in 2067. A representative for Ruben said that the firm did a similar deal in 2013, when investors affiliated with the firm bought the land under the 26-story commercial 600 Madison Avenue between East 57th and East 58th Streets for $210 million following an investment in a ground lease. “These prime Manhattan acquisitions demonstrate our commitment to long-term ownership, management and investment in our properties, as well as our confidence in Midtown Manhattan,” Ruben Chief Executive Officer Richard Ruben told CO via a company spokesman. A representative for The Shubert Foundation declined to comment.—Danielle Balbi

B+B Capital Sells Planned Chelsea Development Site for $23M

8 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

COURTESY COSTAR GROUP

B+B Capital, the owner of a development site on West 14th Street, has sold the 24,000-buildable-square-foot property to construction services company Pizzarotti IBC for $23 million, Commercial Observer has learned. “With its price of $958 per buildable square foot being notably higher than local average of $720 and with its value nearly tripled from a 2014 acquisition value of $7.5 million [from Church of Our Lady of Guadalupe], the sale of 251 West 14th Street underscores the market’s continued, aggressive demand for Manhattan development opportunities,” Howard Raber of Ariel Property Advisors said. He, along with colleagues Shimon Shkury, Jesse Deutch, Randy Modell and Victor Sozio, represented the seller in the deal, which closed on Jan. 14. Mr. Raber wouldn’t comment on why B+B, headed by Ilan Bracha and Haim Binstock, decided to sell 251 West 14th Street. Pizzarotti IBC plans to continue with B+B’s condominium plans, designed by ODA Architecture, for the site between Seventh and Eighth Avenues. The completed 11-story development is expected to feature full-floor units ranging in size from 1,700 to 2,500 square feet, including a duplex at the top. Thomas Stein of Nest Seekers International, who procured the buyer, said the firm is debating which architect to use on the project. The site is home to a vacant, 8,250-squarefoot, four-story building. B+B bought that site, which included 6,800 square feet of as-of-right air rights, Mr. Raber said, and then it “secured air rights [last year] from next door that allowed them to move forward with this kind of project.” B+B, he

251 West 14 Street.

added, “also gave value here.” Those additional air rights, which amount to just under 9,000 square feet, came from 253-257 West 14th Street, in 2015. Pizzarotti, which merged with IBC construction company about a year ago, is the biggest developer in Italy and the fourth

Queens-Based Property Manager Picks Up Sunnyside Pre-War for $15M

largest in Europe, Mr. Stein noted. This is the second New York City project for Pizzarotti IBC, the broker said. The firm is partnering with Madison Equities to erect a 65-story condominium at 45 Broad Street, as The Real Deal reported in October 2015.—Lauren Elkies Schram

Norcor Management has purchased a residential apartment building in Sunnyside, Queens for $15 million, Commercial Observer has learned. The Woodside, Queens-based multifamily landlord and property manager bought the six-story, 40,000-square-foot building at 41-29 41st Street from J.C. Management Services on Jan. 21, according to a spokesman for GFI Realty Services. Astoria-based J.C. Management Services primarily manages residential properties in Queens. “With the strong market for quality multifamily product, the seller decided to accept the buyer’s aggressive offer and divest of this asset,” Daniel Shragaei of GFl, who handled negotiations for the seller, said in prepared remarks. The property has 46 rent-stabilized units. The building is comprised of 16 studios and 33 one-bedroom units. The average rent is $1,435 per month, a GFI spokesman said. “This was a unique opportunity for the buyer and a very rare find, given the location of the building in Sunnyside and its close proximity to Midtown,” GFI’s Josh Orlander, who represented Norcor in the transaction, said in a statement. “The pre-war apartment building is in pristine condition and promises to be a valuable long-term investment for the buyer.”—L.L.G.

MZR-1138 140 Broadway 2015 EOY Tomb_CO_10.5x12-rev.indd 1

2/1/16 1:34 PM

BRIEFS

Forest City Realty Trust has completed the sale of a vacant development site at 625 Fulton Street to fellow Brooklynbased developer Rabsky Group for $158 million. The sale of the property between Hudson Avenue and Rockwell Place, which offers more than 600,000 square feet of buildable space, closed on Jan. 13, according to city property records published Jan. 26. Commercial Observer first reported news of the transaction in November. A representative for Rabsky Group did not immediately return a request for comment. A Forest City spokeswoman contacted by CO about the closed sale referred a reporter to the company’s statement provided when the parties reached an agreement: “This sale is related to our stated corporate commitment to our shareholders to shore up our balance sheet by enhancing liquidity and deleveraging through strategic dispositions,” as Forest City prepared to become a real estate investment trust at the beginning of this year. Darcy Stacom and William Shanahan of CBRE represented Forest City in the deal. The buyer didn’t have a broker. Ms. Stacom previously told CO. The site sits across from Forest City’s 36-story residential building at 80 DeKalb

COURTESY COSTAR GROUP

Forest City Closes $158M Sale of Downtown Brooklyn Development Site

FILLING THE VOID: The vacant site at 625 Fulton Street could support a development of more than 600,000 square feet. Avenue, formerly known as 10 MetroTech Center. Forest City demolished the seven-story, 359,000-square-foot office building at the site in 2013 and had plans to build a residential tower there, as CO previously reported.

The property was home to the Internal Revenue Service and the New York State Department of Motor Vehicles. It was also the site of Barton’s Candy Company, which closed in 1981. Last year, Forest City was looking for a

partner to develop the site and expressed interest in selling it if it couldn’t find one. The company was asking $185 million for it, according to Crain’s New York Business. —Liam La Guerre, with additional reporting provided by Lauren Elkies Schram

A joint partnership is planning to redevelop a former Inwood Pathmark supermarket, which it picked up following the bankruptcy last year of the Great Atlantic & Pacific Tea Company. Taconic Investment Partners and Cogswell-Lee Development Group acquired the ground lease for the property at 410 West 207th Street between Ninth and 10th Avenues for $341,355 on Dec. 1, according to public records. They plan to transform it into a variety of retail shops. The ground lease was set to expire in September 2018 with options to renew, city records indicate. The companies will replace the onestory, 34,000-square-foot, shuttered Pathmark with another yet-to-be-named supermarket of about 20,000 to 25,000 square feet and then split up the remaining space between a variety of local retailers, including restaurants and convenience stores by the end of the year. Add it ion a l ly, t he site h a s a 46,000-square-foot parking lot with 200 spaces. The property could support a 240,000-square-foot residential development, which was a big reason why Taconic and Cogswell-Lee saw the value in the deal. “There aren’t too many neighborhoods 10 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

COURTESY TACONIC INVESTMENT PARTNERS

Taconic, Cogswell-Lee to Redevelop Shuttered Inwood Pathmark

SHOPPING LIST: The joint partnership plans to add a string of retailers to the site of 410 West 207th Street.

in the city that are transit-oriented locations and that have the potential to have additional development,” Charles Bendit, a co-chief executive officer of Taconic, told Commercial Observer. “In the future, there is the opportunity to add to this site and build some residential, and being in very close proximity to public transportation is critical to us.” The partnership has not finalized plans for the large-scale residential development, Mr. Bendit said. But the team is planning to build a 14,000-square-foot, one-story annex building where the parking lot is for further retail stores. This will reduce the number of parking spaces to about 120 parking spots. And for further transit options, there is a 1 train station is at the end of the block. “This property has everything a retailer could want, including transportation accessibility, an enormous amount of parking—a rarity in Manhattan—and a highly visible location,” James Wacht, principal of Cogswell-Lee, said in prepared remarks. And of course, Lee & Associates NYC, where Mr. Wacht is also the president, will be marketing the retail spaces on the site.—L.L.G.

RECENT SALES

SOLD

$33.5 MILLION $17.75 MILLION Office 123 Lafayette Street New York, New York

Retail Condominium 95 Chambers Street New York, New York

Robert A. Knakal

James P. Nelson

Robert Burton

Will Suarez

Chairman, New York Investment Sales 212 660 7777 robert.knakal@cushwake.com Executive Director 212 660 7770 robert.burton@cushwake.com

Jonathan Hageman

Director 212 660 7773 jonathan.hageman@cushwake.com

nyinvestmentsales.com

Vice Chairman 212 660 7710 j.nelson@cushwake.com Director 212 660 7753 will.suarez@cushwake.com

LEASES

PHOTOGRAPHS COURTESY COSTAR GROUP

Lease Deals of the Week Omnicom Group

Life Time Fitness

167,000 Renewal

70,000 New

Omnicom Group, a marketing communications company, has extended is five-floor lease at 220 East 42nd Street between Second and Third Avenues for another 15 years, landlord SL Green Realty Corp. announced. The company will remain in 167,000 square feet on the 11th through 15th floors of the property, also known as The News Building. Asking rent in the deal was $70 per square foot, according to an SL Green spokeswoman. Omnicom has been at the 1.3-million-square-foot building for 10 years, the spokeswoman added. “Omnicom is one of the world’s great companies and we’re delighted to continue our longterm relationship,” said Steven Durels, the head of leasing for SL Green, in prepared remarks. “Businesses continue to be attracted to The News Building because of its large floor plates, historic architecture and convenient [access] to Grand Central Terminal. The building shares many of the physical characteristics that appeal to tenants in the technology, media and advertising [or TAMI] industries.” Lee Feld of Feld Real Estate represented Omnicom in the deal, while SL Green represented itself in-house. Mr. Feld could not immediately be reached for comment. The News Building was originally constructed as the headquarters for the New York Daily News, is also home to local news station WPIX, Tribune Company and offices for the United Nations.— Terence Cullen

Luxury gym Life Time Fitness will open its first New York City location this spring at The Moinian Group’s 71-story tower Sky at 605 West 42nd Street. The company has leased 70,000 square feet at the 1,175-unit rental building between 11th and 12th Avenues. Called Life Time Athletic at Sky, the gym will open in March, as The Wall Street Journal first reported. A spokeswoman for Life Time declined to provide the terms of the deal for the fitness center, which will be located on three continuous floors at the base of the building. Life Time’s new club will be comprised of three pools (two outdoor and one indoor), a full-sized indoor basketball court, a cafe, yoga and cycling studios as well as a spa. It will be Life Time’s 120th fitness center in the country. SRS Real Estate Partners is marketing 20,000 square feet on the ground floor and 50,000 square feet on the lower level for retail space. The building is nearing completion and many residents have already moved in. There were no brokers involved in the transaction, Life Time’s spokeswoman said. A representative for The Moinian Group did not return a request for comment via a spokeswoman.—Liam La Guerre

12 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Intersection and Sidewalk Labs 67,000

NYU Langone Medical Center 55,000

Relocation

New

Two urban policy companies are taking the final chunk of 10 Hudson Yards, the developers announced in a press release. The deal also means that Related Companies and Oxford Property Group’s under-construction office towers are completely spoken for. Intersection and Sidewalk Labs, both of which are overseen by former Bloomberg LP head and ex-Deputy Mayor Daniel Doctoroff, signed a deal for 67,000 square feet at the 1.8-million-square-foot tower, according to the release. The lease is for 10 years, a Related spokeswoman told Commercial Observer. The companies will occupy the 26th and 27th floors of the 52-story office tower at the corner of West 30th Street and 11th Avenue. The asking rent was not immediately available, but tenants at the building have been paying $70 to $80 per square foot, according to The New York Times, which first reported news of the deal. “Moving here will also mark a milestone for me,” Mr. Doctoroff said in the release. “The effort to turn this neighborhood into an engine of growth for New York City has been a personal mission for me for 20 years and it is very exciting to see that dream becoming a reality.” Michael Laginestra, Rocco Laginestra, Chris Corrinet and Chris Hogan of CBRE represented Intersection and Sidewalk Labs in the new deal, while colleague Robert Alexander represented the developer with Related’s Stephen Winter in-house.—T.C.

NYU Langone Medical Center has finalized a 15-year lease at Essex Crossing on the Lower East Side, a spokesman for Delancey Street Associates told Commercial Observer. While initial reports on the deal first surfaced in August, it finally closed two weeks ago, with NYU Langone’s Joan H. and Preston Robert Tisch Center set to occupy 55,000 square feet across three floors at Site 6 of the mega-project, said S. Andrew Katz, a principal at Prusik Group and a partner on the development team. Prusik, which is an affiliate of Taconic Investment Partners, is working on the office and retail leasing of the nine-building, 1.87-million-square-foot mixeduse development, which is headed by Delancey Street Associates (a partnership between BFC Partners, L+M Development Partners and Taconic). “To us, NYU is one of New York City’s preeminent medical institutions,” Mr. Katz told CO. There were no brokers involved in the deal. The medical center is slated to open in late 2018 and will provide urgent care and multi-specialty physician practices, according to information provided by NYU Langone.—Danielle Balbi

Music Choice 52,959

Renewal

This renewal was like music to landlord SL Green Realty Corp.’s ears. Music Choice has re-signed a lease for its 52,959-square-foot offices at SL Green’s 328 West 34th Street between Eighth and Ninth Avenues. The music programming company will continue to occupy the entire second floor of the 36-story, mixed-use property also known as The Olivia, where Music Choice has been located for a decade. The asking rent in the 10-year deal was $70 per square foot, Steven Durels, an executive vice president at SL Green, told Commercial Observer. “The space benefits from unique features, including a private lobby entrance and exceptional ceiling heights,” Mr. Durels said in a prepared statement. David Amsterdam of SL Green represented the landlord in-house. Jason Gorman of CBRE, who brokered the deal for Music Choice, declined to comment via a spokeswoman. Music Choice is a video and music network that programs media content to digital cable television, mobile phone and cable modem users. SL Green purchased The Olivia in 2013 for $386 million from Stonehenge Partners, as the Commercial Observer reported at the time. The nearly 500,000-square-foot property comprises a 14-screen AMC Theater with 333 residential luxury rental units above. —L.L.G.

Ownership at 5 Penn Plaza is pleased to welcome the following new tenants to

The Doman Group, LLC The tenant was represented by Drew Fabrikant of TDG Real Estate, LLC and Mark Doman of The Doman Group

Browne George Ross, LLP The tenant was represented by Michael Leff and James Lizmi of Avison Young

New Gensler-designed lobby, entrance and new amenities. 14â&#x20AC;&#x2122; Slab heights Excellent natural light Layouts feature large open area and perimeter offices

LEED Gold certified Steps to Penn Station Walk to Madison Square Garden, and 14 subway lines

29,000 SF Full Floors & 10,000 SF Move-in Condition Available

Peter Turchin 212.984.8364 peter.turchin@cbre.com

5pennplaza.com

Stephen Eynon 212.984.6596 stephen.eynon@cbre.com

Jason Pollen 212.984.6675 jason.pollen@cbre.com

CBRE, Inc. | 200 Park Avenue New York, NY 10166 | cbre.com

LEASES

PHOTOGRAPHS COURTESY COSTAR GROUP

Lease Deals of the Week Strategic Financial Solutions 49,731 Relocation Strategic Financial Solutions, a company that provides financial options for debtors, has found new digs in Midtown East, Commercial Observer has learned. The firm, which was founded in 2007, is moving to 49,731 square feet spanning the entire sixth floor at SL Green Realty Corp.’s 20-story, 583,000-square-foot 711 Third Avenue between East 44th and East 45th Streets, according to the subtenant’s broker, MHP Real Estate Services. The space is leased to Condé Nast. Strategic Financial Solutions, currently based at 225 West 39th Street between Seventh and Eighth Avenues, is slated to move into Condé Nast’s quarters in May, according to a spokesman for MHP, who declined to cite the terms of the deal. According to a source with knowledge of the transaction, the asking rent was in the mid-$40s per square foot and the lease is five years. MHP’s Joe Friedman represented Strategic Financial Solutions and Peter Gross of Douglas Elliman represented Condé Nast in the deal. Mr. Gross didn’t immediately respond to a request for comment and nor did a representative for Condé Nast. Strategic Financial Solutions’ outside representative said via email: “Their CEO just got back into town. He confirmed that the company is moving into that new location. Moving into the bigger space, because the company is doing well and growing.” —Lauren Elkies Schram

Nordstrom

Bulgari

The Slate Group

Polo Ralph Lauren

43,000 New

23,167 Relocation

21,000 Relocation

19,105 New

Nordstrom has inked a deal to open a massive men’s store at 3 Columbus Circle in anticipation of its much larger general store nearby on West 57th Street. The Seattle-based department store signed a 43,000-squarefoot retail lease at the full-block building between West 57th and West 58th Streets and Broadway and Eighth Avenue, according to a press release from SL Green Realty Corp., which owns 3 Columbus Circle with The Moinian Group. Retail asking rents at the property have gone as high as $800 per square foot, according to Crain’s New York Business, which first reported news of the deal. “We are thrilled that such a prestigious, world-class retailer will anchor 3 Columbus Circle at the corner of Broadway and 57th Street,” said Brett Herschenfeld, a managing director at SL Green, in prepared remarks. “New Yorkers have waited a long time to welcome Nordstrom, a retailer that flourishes throughout the United States and which will further solidify Midtown Manhattan as the destination for high-end retail shopping.” Derek Trulson of JLL and Stephen Stephanou of Crown Retail Services represented Nordstrom in the deal, while Jeff Winick of Winick Realty Group represented the landlord. A JLL spokesman did not immediately return a request for comment. Part of the deal is to move a Bank of America branch out of the location.—T.C.

Bulgari has signed a 23,167-square-foot lease to relocate its offices to 555 Madison Avenue, also known as The Coates Building. The high-end Italian jeweler will occupy the entire ninth floor of the property between East 56th and East 55th Streets through the 15-year lease, according to a press release from Cushman & Wakefield. Bulgari is moving its offices from three blocks north at 625 Madison Avenue between East 58th and East 59th Streets. The asking rent in the deal was $67 per square foot, according to The New York Post, which first reported news of the lease. Michael Goldman of Savills Studley, who represented Bulgari in the deal, did not immediately return a request for comment via a spokeswoman. C&W’s Robert Baraf, Mark Mandell and Ethan Silverstein handled negotiations for the landlord, the Coates family. “It’s been exciting to see this first-class property steadily reach a point of critical mass in attracting top names in design and fashion,” Mr. Baraf said in a prepared statement. As a new tenant in the 440,000-square-foot building, Bulgari will join fashion designer MaxMara, clothing designer Fendi, jeweler Kwiat Enterprises and French perfume company MANE.—L.L.G.

As more of its staff now lives in Brooklyn, digital magazine publisher The Slate Group is packing up and going to Kings County to be closer to them. The Slate Group, parent company of daily online general-interest publication Slate, signed a five-year sublease for a 21,000-square-foot office in Forest City Realty Trust’s 15 MetroTech Center in Downtown Brooklyn. Spokeswomen for Slate and the landlord declined to provide the asking rent in the deal. Obstacle course competition host Tough Mudder is the sublandlord of the eighth-floor space, which Farmigo, an online farmers’ marketplace startup, moved out of last year, as Commercial Observer previously reported. “We’re following our staff—New York’s creative class no longer lives in Manhattan,” the Slate spokeswoman said via an email to CO. Slate is relocating in April from its offices at 95 Morton Street between Greenwich and Washington Streets. Its new digs will have four new studios for its podcasting arm Panoply (up from two) and a video studio, according to Ad Age, which first reported news of the move. The company has just over 100 employees that will move into the new office, including interns, but it expects to fill the 128-seat digs by the end of the year. Shannon Rzeznikiewicz of JLL represented Slate in the transaction, while Bernard Weitzman of Newmark Grubb Knight Frank handled negotiations for Forest City.—L.L.G.

Another fashion company is opening studio space in the hulking Long Island City building known as The Factory. Polo Ralph Lauren has signed a 19,105-square-foot deal on a lower floor at the 1.1-million-square-foot 30-30 47th Avenue between 31st Street and 30th Place, data from CoStar Group shows. The lease is for nine years, according to a source familiar with the deal. Asking rent in the deal was not immediately available. But in the past, CO has reported asking rents to range from the mid-$30s per square foot to the mid-$40s per square foot. The source said the fashion company will be using the space as a photo studio for the company’s products. Polo is the second clothing retailer to sign a lease at the building, which features 12- to 14-foot high ceilings and floor plates ranging from 20,000 to 80,000 square feet. Macy’s last August signed a massive deal to consolidate its photo studios from several Downtown Brooklyn offices into 150,000 square feet in the building. Brian Waterman, Howard Kesseler, Jordan Gosin and Brett Bedevian of Newmark Grubb Knight Frank represent the landlord, which is a partnership between Atlas Capital Group, Square Mile Capital Management and Invesco Real Estate. David Goldstein and Gabe Marans of Savills Studley represented Polo. A spokesman for the landlord declined to comment. Brokers for the tenant did not immediately return a request for comment via a spokeswoman.—T.C.

14 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Miami, Meet Your City. Opening 2016

Retail Saks Fifth Avenue 100% Capri 120% Lino Acqua Di Parma Addict Adolfo Dominguez Agent Provocateur APM Monaco Armani Collezioni AT&T Audemars Piguet Bally BDBA Bojanini Art Gallery Brickell Nail Bar

Calissons du Roy René Capritouch Caudalie Chopard Cinemex Coach Cole Haan Crocus Designer Eyes Diptyque Font Giuseppe Zanotti Harmont & Blaine Illesteva In-Sight Intermix

IRO Italia Independent Kendra Scott Kiton Koko & Palenki Kreations La Perla Leetal Kalmanson LIVE! Lululemon Michele Lopriore Mirto Musart Nars Nest Casa OndadeMar

Orlebar Brown Pandora Porsche Design REISS Rhythm of Grace Richard Mille Santa Maria Novella Sean Donaldson Hair SportsAction Stuart Weitzman Sundek Ted Baker Valentino Vilebrequin Westime

Food & Beverage American Harvest Big Easy Winebar & Grill David's Teas Dr. Smood Häagen-Dazs Luke's Lobster Pasión del Cielo Pubbelly Sushi Quinto La Huella Santa Fe Sugar Taco Chic More to come...

Residences Reach & Rise Offices Two & Three Hotel EAST, Miami

COLUMNS

 CONCRETE THOUGHTS

FIRPTA Changes Could Be Great for Investment Sales concerned about limiting foreign conFor the past two years, the investment trol over U.S. farmland, FIRPTA was prosales market in New York City has perposed and passed by Congress to limit formed better than during any other twowhat foreigners could do with “our propyear period I have seen in my 32 years erty.” FIRPTA requires foreign persons brokering here. Values have soared due in who dispose of U.S. real property interlarge part to enhanced fundamentals, plenests to pay taxes in the U.S. on tiful financing and an extremely any gain realized on the disposiacute supply/demand dynamic tion over and above the tax burthat has been skewed heavily den they would be faced with if in favor of demand. While this they invested in any other type demand has been broad-based, of asset. foreign capital has been a signif This process imposes considicant component of the tremenerable administrative burdens, dous demand we have witnessed. not only on foreign investors And this foreign demand could disposing of their U.S. real estate be ready to surge to even greater Robert Knakal assets, but also on the purchasheights. ers of such properties who are Until recently, foreign invesresponsible for administering withholdtors in U.S. real estate were disadvaning taxes. Additionally, the law requires taged by a law that should never have foreign investors to file a U.S. income tax been put into the tax code to begin with. return at the end of the year in which they The Foreign Investment in Real Property sell their real property interests. Tax Act of 1980, referred to as FIRPTA, Political support for FIRPTA reached unfairly (relative to other non-real propits peak in the mid-1980s when Japanese erty investments in the U.S.) imposes investors were actively purchasing troexcessive tax barriers on foreign capiphy assets in New York City, most notably tal investment in American real estate. Rockefeller Center. It is hard to imagine FIRPTA has been the central obstacle to that there is any fundamental basis for this greater capital investment by non-U.S. concern. Properties controlled by foreign investors. owners are generally managed by U.S. com Based on the fears of some politipanies, leased by U.S. companies, serviced cians in the Midwest, who were originally

by U.S. companies and produce tax revenue paid to U.S. municipalities. The attorneys representing these investors are likely U.S. firms, as are their title insurers. What is the basis of the fear people have about buildings being owned by overseas investors? By virtue of FIRPTA, real estate is the subject of discrimination relative to other types of investments in the U.S. Thus, FIRPTA unfairly treats U.S. real estate as an asset class. For many years, we have advocated that U.S. policymakers eliminate or modernize FIRPTA. Recently, tremendous progress was made. Since 2008, reform efforts headed by Representatives Kevin Brady and Joe Crowley and Senators Mike Enzi and Robert Menendez have been consistent and recently produced tangible results. Assisted by a critical reform proposal from the administration, on Dec. 18, 2015, President Barack Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which accomplished three significant FIRPTA reforms. First, the PATH Act increased from 5 to 10 percent the ownership stake that a foreign investor can take in a publicly traded REIT without triggering FIRPTA liability. Second, the act removed the tax penalty

that FIRPTA imposes on foreign pension funds that invest in U.S. real estate. Third, the act clarified when a listed REIT can be considered controlled by U.S. persons so that sales of its stock are not subject to FIRPTA. I recently heard an industry expert say that sovereign wealth funds did not benefit from these changes. The fact is that some sovereign wealth funds are pension funds and others are now looking at ways to convert part of the funds’ structures into pension fund structures. We have seen time after time that participants in the commercial real estate investment sales market are highly motivated by and reactive to changes in the tax code. When capital gains taxes were changed in 1986, 1998 and 2012, investors reacted, causing significant spikes in property sales. We expect the reaction from foreign investors to these changes to FIRPTA to produce similar results. With the future of the investment sales market in New York City trending downward, this could be something to either minimize the downward trajectory or even cause the trend to reverse course. Here’s to hoping the latter is the case. Robert Knakal is the chairman of New York investment sales for Cushman & Wakefield.

WEIS CHOICE

Relax. Prices Are Catching Up To Where They Should Be. investors, New York City continues to attract As investor interest in New York City a significant amount of foreign investment. continues to grow unfettered, we often When compared to several other leading hear about the dreaded prospect of a real international cities, New York City is far estate “bubble.” But this perspective fails ahead of the curve in regard to to acknowledge that there are favorable yields. real indicators showing that as Even if we do see an indication the city’s product is retaining its of a reversal of real estate prices, value, there are still opportuniit’s extraordinarily unlikely that ties ahead. they’ll dip to previous lows. In this The reason that the New York respect, commercial real estate City market has remained strong price fluctuation will mirror the is largely due to solid fundamenmovement seen in various other tals. For example, despite the high sectors, from residential real levels of new development, there Michael Weiser estate to consumer goods. is a supply shortage for affordable For example, a decade and a half ago, gas and mid-level multifamily product. In the prices were consistently in the range of $1 next several years, we should also expect to to $1.50 per gallon, and had been in that see an undersupply of quality office properrange for the better part of two decades. ties, as demand for this type of product has Then, prices started climbing to $2, $3, $4 increased. and more per gallon. Now, even when prices In addition to the limited supply and go down, as they certainly have, they surely sustained demand that’s attracting local 16 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

won’t plummet to the previous floor of $1. Ultimately, we just don’t think of the floor for gas prices in the same way as we did just 13 years ago. Residential real estate tells a similar story. Some 30 years ago, many houses in southern Brooklyn were on the market for approximately $50,000. Prices have obviously climbed tremendously and irreversibly since then. While we still have ebbs and flows in the market, it’s clear that the floor price for single-family homes in Brooklyn has risen to a much higher point than where it was in the 1980s. Commercial real estate—at least in New York—is another compelling example of market truism. Just a few years ago, when land in Manhattan was selling for approximately $300 per square foot, many observers thought that those prices were high and were bound to come down. Instead of decreasing, they have continued to rise, in

some cases beyond $1,000 per square foot, completely changing our point of view on what land should cost. At this time, we can certainly say that, even if we do see prices decline somewhat, they will settle at a new floor that is much higher than the previous one. The beauty of the New York market is that it has everything. It attracts local investors who have a deep understanding of the city and its real estate, as well as foreign institutional capital that flocks to New York because of its yield and stability. The price increases that we are seeing are not the result of a false, temporary over-valuation that will reverse itself. Instead, it is actually a correction of years and years of undervaluation. Michael Weiser is the president of GFI Realty Services, a New York City investment sales brokerages for multifamily, mixed-use and developable properties.

Specialization • Expertise • Results

Marcus & Millichap Has a History of Closing and a Track Record of Success Below is a Sampling of Our Recent Closings CLOSED: 1/15/2016

CLOSED: 1/6/2016

CLOSED: 1/20/2015

Mixed-Use Kips Bay (Manhattan), NY $15,000,000 Agents: Peter Von Der Ahe, Joseph Koicim, David Lloyd, Corey Isdaner

Industrial/Office Warehouse Ditmas Park (Brooklyn), NY $9,000,000 Agents: Jakub Nowak, Mark Zarrella, John Brennan

10-Unit Multifamily Upper East Side (Manhattan), NY $4,500,000 Agent: Marco Lala

Mixed-Use Upper East Side (Manhattan), NY $9,750,000 Agents: Peter Von Der Ahe, Joseph Koicim, David Lloyd, Daniel Handweiler

CLOSED: 12/29/2015

CLOSED: 12/30/2016

CLOSED: 1/19/2016

CLOSED: 1/14/2015

11-Unit Multifamily Lower East Side (Manhattan) NY $6,600,000 Agents: John Stewart, Henry Antenen

Mixed-Use Midtown East (Manhattan), NY $7,450,000 Agents: Peter Von Der Ahe, Joseph Koicim, David Lloyd, Daniel Handweiler, Corey Isdaner

14-Unit Multifamily Manhattan, NY $6,450,000 Agent: Marco Lala

Industrial/Office Warehouse New Rochelle, NY $4,808,000 Agents: John Sala, Sean M. Delaney

To access the largest exclusive inventory in the country, contact the market leader.

J.D. Parker

Senior Vice President/District Manager jparker@marcusmillichap.com

New Haven 265 Church Street, Suite 210 New Haven, CT 06510 (203) 672-3300

John Horowitz

Vice President/Regional Manager jhorowitz@marcusmillichap.com

Manhattan

Westchester

260 Madison Avenue, 5th Floor New York, NY 10016 (212) 430-5100

50 Main Street, Suite 925 White Plains, NY 10606 (914) 220-9730

Brian Hosey

Brenton Baskin

Regional Manager bhosey@marcusmillichap.com

Regional Manager bbaskin1@marcusmillichap.com

Brooklyn

New Jersey

Philadelphia

16 Court Street, Floor 2A Brooklyn, NY 11241 (718) 475-4300

611 River Drive, 4th Floor Elmwood Park, NJ 07407 (201) 582-1000

101 West Elm Street, Suite 600 Conshohocken, PA 19428 (215) 531-7000

NJ and NY Broker of Record: J.D. Parker

Offices Throughout the U.S. and Canada

www.MarcusMillichap.com

Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Acquisition · Refinance Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization Healthcare · Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land Acquisition · Refinance · Construction · Bridge · Mezzanine · Equity · Lines of Credit · Recapitalization · Healthcare Student Housing · Hotel · Multifamily · Office · Retail · Industrial · Self-storage · Co-ops · Mixed-Use · Land

$35 BILLION

IN 2015

Thank you to the owners, developers and lenders whose continued confidence and trust allowed Meridian to close more than $35 billion in financing last year and remain America’s most active debt broker.

MeridianCapital.com

Finance

26 36 38

Nicki Lavanos Q&A TRYP gets tripped up TD Bank’s Gregg Gerken and Roy Chin

The

LifeInsurance

LendingIssue With banks falling under the regulatory microscope, the life insurance industry is a powerful force in real estate lending

s the view of the regulatory roadmap becomes clearer, commercial real estate lenders are white-knuckling the steering wheel and buckling up for a bumpy ride. Lenders across the gamut—from banks with the High Volatility Commercial Real Estate rule and commercial mortgage-backed securities folks now subject to Regulation AB II and bracing themselves for risk retention—expect higher costs of doing business and fear that smaller players will be pushed out. However, for life insurance companies, the regulatory hurdles the rest of the CRE universe faces may pose an opportunity. If other

originators face obstacles in getting deals done, those life companies have even more to pick from. That is the subject of the cover story in this month’s finance section of Commercial Observer. And this was also the reason we spoke to AXA Equitable Life Insurance Company’s director of real estate investment, Nicki Lavanos, for our Q&A. But, of course, there are many more comings and goings around the finance world to keep up with. Gregg Gerken and Roy Chin have taken a restrained approach to lending as the respective head of U.S. commercial real estate and the

regional director of commercial real estate in New York for TD Bank. But with restraint or not, they have quadrupled TD’s New York real estate book since 2010, making the Canadian institution a major player in this town. Messrs. Gerken and Chin are the subjects of this month’s profile. And we’ve included our usual roundup of news from around the business world, from TRYP by Wyndam New York Times Square’s request for loan modifications to Colliers International trying to raise $217 million worth of debt for a 474-unit multifamily development in Texas. —Danielle Balbi and Max Gross

COMMERCIALOBSERVER.COM

| FEBRUARY 3, 2016 | 19

FINANCE

Debt Deals of the Week BETTER OFF FED

Fed Spooks Markets, CRE Focused on Fundamentals Real estate analysts breathed a sigh of relief as the U.S. Federal Reserve held the line on interest rates at its monthly meeting on Jan. 27, but markets fell sharply after the central bank issued a tightly worded statement on the future economy. The Dow Jones industrial average fell 222.77 points to 15,944.46 in late trading after the Federal Reserve issued its afternoon statement that day. The Federal Open Market Committee decided to maintain the target range of the federal funds rate at 0.25 to 0.5 percent, based on a cautious outlook about the economy while suggesting continued improvement in labor market conditions and inflation running below the committee’s 2 percent longer run objective. Following the January meeting, the FOMC wrote: “The committee is closely monitoring global economic and financial developments and is assessing their implications for the labor market and inflation and for the balance of risks to the outlook.” Stijn Van Nieuwerburgh, the director of the Center for Real Estate Finance Research at New York University, said he is not worried about the impact of an interest rate move on the real estate market, but has greater concerns about the strength of the overall economy. “The real fear is that we’re over the peak in the GDP cycle,” he told Commercial Observer. Heidi Learner, the chief economist at Savills Studley, said that she believes that the more limited statement shows that the Fed is concerned about the pace of the economy for the rest of the year, but she does not expect to see a rate hike in March. “They would really gain very little by acting in March rather than taking a wait-and-see attitude,” Ms. Learner said.—David Jones

Colliers Seeking $217M Debt and Equity Raise for Texas Multifamily Development Everything really is bigger in Texas—at least for Colliers International’s structured finance team. Legend Communities, an Austin-based development firm, tapped the brokerage’s Executive Director Jeffrey Donnelly and Director Ulrike Ahrens to secure $217 million in debt and equity financing for a 474-unit multifamily project, Commercial Observer has learned. Mr. Donnelly told CO that of the total $217 million financing package, he and Ms. Ahrens are looking to place roughly $180 million in debt and anywhere from $35 to $40 million in preferred equity or mezzanine debt on behalf of the development company. Legend Communities—which is led by Haythem Dawlett and John Scardino—will begin construction in Austin on One Two East, which will comprise two 15-story towers by mid-2016. One tower will be devoted to senior living and the other building will hold purely market-rate rental units, Bill Hayes, chief operating officer at the firm, told CO. “Projected rents for both the multifamily component and for the active senior living component are well within the range of comparable properties in Austin,” Mr. Donnelly said in prepared remarks. He said that the project is “conservatively underwritten” based on expected rents and costs are coming in well within project estimates. The 2.8-acre site, which currently houses a bingo center and a CVS/pharmacy, is located at the intersection of Interstate 35 and 12th Street in the Downtown and East Austin submarkets. Given its proximity to University of Texas and University Medical Center Brackenridge, Mr. Hayes said he expects that many students, doctors and alumni will be drawn to the development. The One Two East development is within half a mile of two

20 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Rendering of One Two East.

under-construction projects: the $295 million, 211-bed Dell Seton Medical Center at The University of Texas and the Dell Medical School at The University of Texas at Austin. The project’s “design is well conceived and will position this asset head and shoulders above the mostly garden-style rental product available in this submarket,” Ms. Ahrens noted. “The project will stand out, and will be an exciting and edgy addition to the East Austin streetscape.” The 195 senior apartments and the remaining 279 market-rate units will each have separate amenity

packages, Mr. Hayes stated. The senior living building will feature a roof garden and a full-time activities director, while the other building will have workout facilities. Each building will have a pool and parking. Additionally, roughly 65,000 square feet of ground-floor space in one of the towers will hold a grocery story and pharmacy. Both the senior housing component and the grocery store are much-needed additions to the community, he said, noting that the nearest supermarket is several miles away. A tenant has yet to be determined. “While we expect to have agency

construction loan options for this project, we are certain that the offering will also be enthusiastically embraced by bank balance sheet lenders and insurance company lenders,” Mr. Donnelly added. “I think the debt falls into place fairly quickly—although due to the size of the construction loan, it may entail a syndication of bank lenders. He said they are equally confident that the project is attractive to large institutional investors eager to deploy capital in Austin. Mr. Donnelly expects the financing to be completed by the second quarter of 2016.—Danielle Balbi

NYCB Refinances East Village MixedUse Portfolio With $76M Loan A group of investors led by Citi-Urban Management Vice President Nathan Halegua and investor Martin Newman has refinanced a 10-building portfolio in Manhattan’s East Village with a $75.6 million debt package from New York Community Bank, records filed with the New York City Department of Finance indicate. The new financing replaces and provides $22 million in additional debt on a mortgage originated by NYCB in June 2012. The previous debt originally carried a balance of $57 million, which was paid down to $53.1 million in July 2012, according to city records. Mr. Halegua, who also serves as a principal at EVO Real Estate Group, confirmed to Commercial Observer that the proceeds of the mortgage are being used to refinance the portfolio. The portfolio comprises of a group of residential structures known in the industry as the Clearwater Portfolio, which includes about 253,000 square feet of space spanning 10 buildings on Second Avenue between East 8th and East 10th Streets. There are a total of 224 residential units in the three elevator buildings and seven walk-up buildings, which also house 20 retail stores spanning 26,000 square feet. The addresses include 141143 Second Avenue, 145 Second Avenue, 147-149 Second Avenue, 151-153 Second Avenue, 156-158 Second Avenue and 157 Second Avenue, according to city records. A representative for NYCB confirmed the refinancing, and said GCP Capital Group brokered the deal. David Jones

Morgan Stanley $147M to Fund Acquisition of N.J. Office Portfolio New York-based JFR Global Investments landed a $147 million acquisition loan from Morgan Stanley to fund the purchase of an eight-building office portfolio in Lawrenceville, N.J., Commercial Observer has learned. Earlier this month, the investment firm bought the 803,593-square-foot office center, Princeton Pike Corporate Center, from a joint venture between Angelo, Gordon & Co. and Bloomfield, N.J.-based developer Prism Capital Partners. The sale price was not immediately available. JLL sales team Managing Director Joe Garibaldi and Executive Vice President Tom Walsh led the sale and the brokerage’s capital markets team Managing Director Dustin Stolly, Senior Vice President Jonathan Schwartz and Vice President Aaron Niedermayer arranged the financing. “This is a stable, multi-tenanted office campus that combines modern office space with value-add buildings,” Mr. Walsh said in prepared remarks provided to CO. “As the new owner, JFR has the considerable opportunity to shape the future of this portfolio through additional capital improvements and amenity development.” The 100-acre property, which is located at 2000-2200 Lenox Drive, contains seven three-story office buildings and one twostory office building. The buildings were originally constructed in 1984 and are just a few minutes away from Princeton, N.J. The office property is currently 90

Palmer Square, Princeton, N.J. percent leased and tenants include Citigroup, MetLife and Wells Fargo, according to Prism’s website. “This is a diverse, credit-worthy tenant roster,” Mr. Stolly said. “It is also an enviable combination of critical mass, flexibility and stability in a submarket that is served by excellent demographics and blue-chip corporate neighbors.” Since the sellers, a joint venture between Angelo, Gordon & Co. and Prism, acquired the office complex in 2013, $2.8 million in

capital improvements have been completed. Upgrades included new exterior finishes, renovations of lobbies and atriums, a conference center, new cafes, a new HVAC system and an expanded parking lot. The partnership paid $121 million for the site at the time, according to a report from Colliers International. A representative for Morgan Stanley did not return calls for comment. A representative for JFR could not immediately be reached.—Danielle Balbi

Prudential Lends $70M on 630 Third Avenue in Midtown East New York-based real estate investment firm ATCO Properties & Management took a $70 million mortgage from Prudential Mortgage Capital Company on a 23-story office building at 630 Third Avenue, records filed with the New York City Department of Finance indicate. The Guardian Life Insurance Company of America originally provided ATCO with a $16 million mortgage on the Midtown East office building in 2002, according to city records. As a part of the new financing, Prudential acquired that mortgage and provided an additional $54 million in debt on the property. It was not immediately clear for what the additional debt would be used.

22 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

The property, which was completed in 1958, is between East 40th and East 41st Streets, a few blocks away from Grand Central Terminal and the United Nations. Digital advertising and media company True North signed a short-term extension of its lease on the 12th and 16th floors of the building in November, as Commercial Observer previously reported. Communications firm Sard Verbinnen & Co. expanded its footprint to 50,415 square feet. There is currently 5,506 square feet of space available to rent on the 12th floor, according to the building’s website. Representatives for Prudential and ATCO did not immediately respond to inquiries for comment.—D.B.

630 Third Avenue.

COURTESY COSTAR GROUP

141-143 Second Avenue.

COURTESY COSTAR GROUP

FINANCE

Portrait by renowned illustrator Joseph Adolphe.

WILMINGTON TRUST RENOWNED INSIGHT

“The greatest threat to your wealth? Risk you don’t see coming.”

Carmen Del Guercio Group Vice President and Head of Private Banking Carmen oversees all of Wilmington Trust’s Private Banking services. He works closely with our Wealth Advisory group to help ensure banking and lending strategies are customized for a client’s unique needs and integrated with the overall financial plan. Carmen is part of a seasoned team of professionals who exemplify Wilmington Trust’s 112-year heritage of successfully advising families. For access to knowledgeable professionals like Carmen and the rest of our team, contact Larry Gore at 212-415-0547.

Entrepreneurs are risk takers by nature, leveraging insight, hard work, and capital to create successful companies. But when your company is your main source of financial security, you need to protect it from risk – like natural disaster, legal liability, and crime. Assessing risk. Unfortunately, many business owners don’t think about specific risks until they’ve experienced a threat firsthand. Which is why planning ahead is so critical to protect you and your business from losses. And while asset concentration, fiduciary risk, and risks unique to the nature of your business are extremely important to consider, there are emerging threats you could face. The new threat. The Center for Strategic and International Studies (CSIS) has estimated that cyber crime costs the U.S. economy at least $445 billion a year – $160 billion lost by individuals and $285 billion by companies. The risk is so great today that one solution many business owners are considering is cyber security insurance. These policies typically cover damage to digital assets, business interruptions, and reputational harm.

They can also defray liability costs, and may pay for forensic investigations, customer notification, credit monitoring, and legal and public relations services.

$445 BILLION IS LOST BY THE U.S. ECONOMY ANNUALLY DUE TO CYBER CRIME Source: Center for Strategic and International Studies, June 2014

Be prepared. Whatever your potential risks, it’s important to plan ahead and develop an integrated, cohesive strategy for minimizing your exposure. Your own risk exposure will depend on many factors – the nature of your business, your personal tax and financial situation, and estate and business succession planning considerations. Wilmington Trust can help. Founded by a family business leader more than a century ago, we have the experience to help you assess the needs of your business and implement a plan specific to you. For more insight on how we’ve successfully advised business owners for more than 112 years, visit wilmingtontrust.com/assetprotection.

FIDUCIARY SERVICES | WEALTH PLANNING | INVESTMENT MANAGEMENT | PRIVATE BANKING

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of your professional advisor should be sought. Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services. Investment and Insurance Products: • Are NOT Deposits • Are NOT FDIC-Insured • Are NOT Insured By Any Federal Government Agency • Have NO Bank Guarantee • May Go Down In Value Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation (M&T). Investment management and fiduciary services are provided by Wilmington Trust Company, operating in Delaware only, and Wilmington Trust, N.A., a national bank. Loans, retail and business deposits, and other personal and business banking services and products are offered by M&T Bank, member FDIC. ©2016 Wilmington Trust Corporation and its affiliates. All rights reserved.

FINANCE

The fourth quarter of 2015 saw strong commercial-backed securities defeasance activity, according to a recent report from Fitch Ratings. The Fitch report found that there was $3.6 billion in newly defeased loans in the fourth quarter, but warned that the current interest rate environment may create a heightened level of uncertainty. “There are variables in the market now that we really didn’t see in the last couple of years,” Chris Bushart, senior director at Fitch, told Commercial Observer. “The market’s been a little choppy by the end of last year.” Mr. Bushart and Melissa Che, a director at Fitch Ratings, agreed that the newly uncertain interest rate environment will combine with the overall health of the U.S. economy and new federal regulatory requirements will cause defeasances to decline compared with prior years. Newly defeased loans reached $14.2 billion in 2015, compared with $20 billion in 2015, the report stated. And the fourth-quarter performance raised the total number of Fitch-rated U.S. CMBS deals to $20 billion, representing 5.2 percent of overall outstanding loans rated by Fitch. The Fitch report stated that 48 percent of the $20 billion in loans that defeased already matured or have an expected final defeasance payment in 2016. Of the

PROPERTY SHARK

Defeasance Remains Strong in U.S. CMBS Universe: Fitch

75 Park Place. remaining total, 31 percent were set to mature in 2017 and 21 percent were slated to expire in 2018. The expectation is for defeasance volume to remain strong, but to decline overall given the rise in interest rates and the fact that incentives for

borrowers to execute defeasance dry up the closer they get to the loan maturing. Defeasance has been a popular option among institutional borrowers, who typically swap out a CMBS loan in favor of U.S. Treasuries in order to lock in low interest

rates. However, the January meeting of the Federal Open Market Committee set off alarms in some sectors as the central bank declined to rule out a rate increase for its next scheduled review in March. “If they’re going to be able to pay off their loan without penalty, they’ll probably do that instead,” Ms. Che told Commercial Observer. Fourth-quarter volume of $3.6 billion was down from $5.3 billion in the yearago quarter in 2014, according to the Fitch report. The New York metropolitan area, including New Jersey and parts of eastern Pennsylvania, led fourth-quarter defeasances, with $1.3 billion, or 35 percent of the fourth-quarter activity. The loan pools include several prominent New York City properties, including 590 Madison Avenue, 75 Park Place and 150 Broadway, the analysts noted. Loans backed by New York office accounted for $828 million of total fourth-quarter volume. The Dallas metro area came in second with $351 million, or 10 percent of total volume. Fitch noted that among the larger loans tracked, only four loans greater than $100 million were defeased in the fourth-quarter 2015, compared with 14 loans of this size in the year-ago quarter.—David Jones

Wonder Works Secures $57M in Financing for UES Residential Condo A development team that includes Joseph Klaynberg’s Wonder Works Construction has secured more than $57 million in financing from commercial lenders CapitalSource and Terra Capital Partners for its 21-story condominium project at 302 East 96th Street, Commercial Observer has learned. The team, which also includes Daniel Minkowitz’s Mink Development and Daniel Figotin’s Fimida Enterprises, plans to develop a 48-unit luxury project on the site of a former garage that they bought less than a year ago for $24 million. Officials at CapitalSource, the commercial lending arm of Pacific Western Bank, said the project fits right in with their philosophy of financing well-priced developments in quality locations. Thomas Whitesell, the managing director of construction real estate at CapitalSource, said that the $1,800 to $2,000-per-square-foot price point is the perfect price for the market, which lacks a number of quality condo products. And it has the advantage of the Second Avenue subway scheduled to begin service in 2017. 24 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

“Wonder Works is a very, very good and reputable contractor and developer and we feel very comfortable with their capabilities to deliver on time and under budget,” he added. The deal between First and Second Avenues was brokered by Sam Spinner, the president of the Battery Park Group, according to Mr. Whitesell. Wonder Works principal Eric Brody told CO that the project will be a ‘’quality built…building with a beautiful look.” CapitalSource is actively doing business in New York City, Mr. Whitesell said, and is currently exploring several residential and hospitality deals in Manhattan, Brooklyn and the Bronx. In May 2015, the commercial lender provided $24.7 million in financing for The Sorting House, a 30-unit condo development at 318 West 52nd Street between Eighth and Ninth Avenues. The lender also financed the $31 million purchase of a commercial loft at 2417 Third Avenue the Mott Haven second of the Bronx in March 2015 by Hornig Capital Partners and Savanna.—David Jones with additional reporting provided by Terence Cullen

302 East 96 Street.

CAPITAL PARTNERS LLC.

H K

Recently Closed Deals

109,000,000

20,000,000

46,000,000

Construction financing for the first SLS hotel in NYC

10 years interest only at 3.36% interest, 3rd (co-terminous) mortgage for a hotel in midtown

10 year permanent financing for a 37 unit retail strip center

• New York, NY •

• Florida •

25,000,000

36,000,000

30,000,000

4 year interest only acquisition loan to acquire 2 mixed use buildings in Midtown

Acquisition and renovation financing for a 166 unit mixed use midtown asset on a 99 year leasehold

10 year floating rate deal at 1.99% interest, 5 year interest only for a 213 unit multifamily refinance

• New York, NY •

• Brooklyn, NY •

30,000,000

9,700,000

10,000,000

5 year, full term interest only refinance for a retail and office building on 5th Ave

12 month refinance for an UWS townhouse, mid-single digit interest rate, nonrecourse

Cash out and renovation financing for a vacant commercial property at 3.125%

• New York, NY •

• Debt • Equity • Mezzanine • Construction • Bridge • Private • Joint Ventures 127 West 24th Street, 2nd Floor, NY 10011 • (212) 254 1600 • www.hks.com

FINANCE

DIRECTOR OF REAL ESTATE INVESTMENTS AT AXA EQUITABLE LIFE INSURANCE COMPANY

Nicki Lavanos By Danielle Balbi

KAITLYN FLANNAGAN/COMMERCIAL OBSERVER

icki Lavanos has been with AXA as a whole for dozens of years. In her current role as director of real estate investments, she is responsible for a portfolio totaling over $8 billion. Ms. Lavanos has seen the firm evolve from Equitable Life Insurance Society to Equitable Life, then into its most recent manifestation, AXA Equitable. Having been around for a cycle or two, she shared a sound piece of advice with Commercial Observer: Always, always maintain your underwriting standards. As we enter a year where commercial real estate is going through some serious changes—with regulations changing the rules of the game and more than $210.5 billion in commercial mortgage-backed securities deals maturing before 2018—Ms. Lavanos’ words resonate. She also discussed why AXA has transitioned from direct ownership of real estate to debt investments on real estate assets and how the firm’s construction lending business indicates how far along the industry is in terms of recovery from the downturn.

What we’ve seen happen over the last several years is a very favorable interest rate environment, but real estate fundamentals have been lagging in recovery.

26 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Why is commercial real estate debt attractive right now? I’ve worked on many different sides of the table with regard to [AXA’s] real estate portfolio, so I’ve seen the evolution of the portfolio, from when it was largely direct equities. Now, it’s largely debt instruments, mortgage loans and structured products. We’ve shifted into primarily debt, as it is a very strong asset liability niche, and that’s really why we’re primarily a real estate lender as opposed to a direct owner. When you look at risk-adjusted returns and efficient use of capital, mortgage loans are a better match toward that. It’s efficient use of capital, and a long-term, fixed-rate instrument that matches our liability. What are some of the most exciting deals the firm has lent on recently? We do about $1 to $1.5 billion in new commercial real estate investments annually. The profile of those investments is a mix of core real estate investments, plus some higher yielding enhanced return type investments such as construction-to-permanent loans, mezzanine loans and transitional loans. As far as markets are concerned, it’s kind of easy to say we target major markets. We do like to be in major markets, but there are also very strong secondary and

suburban markets. I think it’s fair to say we evaluate not only the strength of the market, but also the strength of the deal. We are a balance sheet lender and don’t securitize anything, [so] each investment has to stand on its own merits because we’re going to live with it for 10 years. We are in about 35 states. On the debt side, I think we’ve had a really great year. We closed probably about five construction-to-permanent loans on the multifamily side, which is very exciting to us because they are nonNew York—very infill locations. As everyone knows, construction loans have a lot of complexity to them, and in years past it was hard to accumulate multifamily [product] because Fannie Mae and Freddie Mac basically had that market sewed up. We’ve been very fortunate to have closed on several construction-to-permanent loans and the [deals] we originated about two years ago are now stabilized. During the Great Recession, there was really no new construction lending, so that space was inactive up until about 2012. We started up doing construction-to-perm loans in 2012 and are now seeing the fruits of those labors become stabilized, occupied assets. Are there any locations or asset classes where you see untapped opportunity? We are not only part of the brokerage community,

NYSE: MMI

Providing Comprehensive Financial Solutions Below is a Representative Selection of Our Recent Financing Transactions FINANCED

FINANCED

Multifamily Harrison, NJ $9,333,000 Loan Originator: Steven Rock

28-Unit Multifamily Chelsea (Manhattan), NY $11,000,000 Loan Originators: Christopher Marks, Kyle Young, Stephen Filippo

Net-Leased Altoona, PA $5,275,000 Loan Originators: Christopher Marks, Kyle Young

FINANCED

Multifamily Upper West Side (Manhattan), NY $1,250,000 Loan Originators: Andrew Dansker, Gunnar Wilmot

Mixed-Use Sheepshead Bay (Brooklyn), NY $7,250,000 Loan Originator: Gerald Kray

Multifamily Bronx, NY $4,060,000 Loan Originator: Andrew Dansker

FINANCED

Multifamily Murray Hill (Manhattan), NY $4,620,000 Loan Originators: Andrew Dansker, Gunnar Wilmot

Net-Leased Haddon Heights, NJ $2,140,000 Loan Originator: Christopher Marks

Multifamily Yonkers, NY $3,690,000 Loan Originators: Andrew Dansker, Gunnar Wilmot

For debt and structured finance, please contact: Richard Katzenstein

Rick Lechtman

Vice President/National Director Manhattan (212) 430-5100 | rkatzenstein@marcusmillichap.com

Vice President/Regional Director Manhattan (212) 430-5100 | rlechtman@marcusmillichap.com

J.D. Parker

John Horowitz

Brian Hosey

Senior Vice President/District Manager Manhattan (212) 430-5100 | jparker@marcusmillichap.com

Vice President/Regional Manager Brooklyn (718) 475-4300 | jhorowitz@marcusmillichap.com

Regional Manager New Jersey (201) 582-1000 | bhosey@marcusmillichap.com

Offices Throughout the U.S. and Canada

www.MarcusMillichap.com

FINANCE

but we have a whole origination group down in Atlanta so we see our share of what’s going on. I can’t say there’s anything we’ve seen that’s untapped. Where are we in the real estate cycle? In any particular market you could be in a different inning of the cycle, and since we typically don’t know what inning we’re in when we’re in it, the only conservative thing we can do is stick to our underwriting fundamentals. It’s easy to have 20/20 hindsight. When you’re in it, do you really know what inning you’re in? You don’t. That’s why you have to maintain your underwriting and that’s the only thing that really keeps you on track in the event of another hiccup in the cycle. There’s been a lot of buzz about CRE regulations, like Regulation AB II and risk retention. Are there any challenges or regulations specific to life insurance lenders on the horizon? As far as regulation is concerned, most

of the regulation we have seen has been focused on the banking industry and CMBS. As an insurance company, we were not really impacted negatively during the Great Recession. If you go back and look at any American Council of Life Insurers statistics, we came out very well. There’s a reason we were able to have that kind of result during a severe downturn. The reason is primarily because we focus on credit, underwriting, strength of the borrower and we have always targeted high quality loans. When you stick to your knitting and have certain standards that you won’t go too far afield from what you believe is a reasonable, customary way to lend, you will have that kind of result. How will the maturity wave affect your business? Moving forward to 2016, there are a lot of expected maturities, because 2006 was a very large origination year. But in looking at the profile of what was originated in 2006, a lot of it was refinanced or paid off

in some manner, or has been extended, so we’re not seeing a wave of maturities. We’re seeing something that’s been tempered a bit by actual transaction activity. We still believe 2016 will have plenty of opportunity for us to perhaps increase our allocations. As you come out of the cycle and things are getting progressively better, you have to understand new loan originations not only consist of refinancing existing loans, but also new purchases—that mix has been increasing. What will drive the market in 2016? The interest rate environment, which is the lifeblood of all real estate transactions, has been extremely low in the last several years—historically low. And while the Fed determines what direction those interest rates take, it will have an impact on the level of transactions activity. That being said, as long as the economic environment continues to be positive—we’ve seen positive gross domestic product growth over the last several years—that will work its way into improving fundamentals within

24-7 VISIT COMMERCIALOBSERVER.COM

| FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

the real estate operation. What do we mean by fundamentals? Vacancy rates, rental rates, all of the operating fundamentals. That will probably temper the rise in interest rates. What we’ve seen happen over the last several years is a very favorable interest rate environment, but real estate fundamentals have been lagging in recovery. One leg of the stool moved forward quickly while the other was lagging behind. We expect [those] fundamentals will improve. When you take a look at economic factors like GDP, unemployment and all the wonderful things they use to describe economic activity, the actual real estate fundamentals that they get translated into typically lag behind those indicators. We haven’t felt that because interest rates are so low. When interest rates rise or fall, it has an immediate effect on transaction activity, so I think you’ll see a tempering offset by improvement in fundamentals.

POWERING YOUR PROSPERITY Steve Sisson Vita Residential Avid Canine Enthusiast Walker & Dunlop borrower since 2012

COLUMNS

STEIN’S LAW

Carving Back the Carveouts a guarantor and its counsel care about? When lending against a stabilized projHere’s a quick guide to the high points, or ect, a mortgage lender will typically agree low points. that if the borrower defaults, the lender will Lenders often want guarantors to cover foreclose and not seek further recourse for unpaid real estate taxes, insurance and payment of the loan, hence the term “nonresometimes other expenses. If a property course financing.” But the loan documents gets into trouble, though, those will usually “carve out” certain carrying costs could become burmatters from nonrecourse treatdensome and perpetual—shiftment. For those, the lender will ing risks to the guarantor in a have a claim against the borway inconsistent with the logic of rower’s principals as guarantors, nonrecourse financing. A guarmaking the carveouts the scariest antor should have no responsibilpart of the deal. They can force the ity if the property couldn’t carry guarantor to pay the entire loan, these costs simply because it had even though it was supposed to be insufficient cash flow. That’s the nonrecourse. Joshua Stein lender’s risk. Guarantors should Term sheets often used to say face exposure only if the property the loan documents would concould have covered these costs but the bortain “lender’s standard carveouts.” The borrower misused available funds. rower would fund an expense deposit—pay If any prohibited transfer or indebtedness to see the lender’s documents—then try to occurs, then a lender’s “standard carveouts” negotiate the guarantor’s exposure. Today’s often require the guarantor to pay the entire borrowers and guarantors often won’t take loan. But the intricacies of loan documents that risk. By the time they realize the carmay define prohibited transfers or indebtedveouts are troublesome, it will be too late to ness to capture trivial glitches—sometimes choose another lender. Therefore borrowers the simple result of insufficient cash flow— and guarantors often insist that the precise going far beyond an outright transfer or secwords of the carveouts appear as an exhibit ond mortgage. And a guarantor might not be to the term sheet. In reviewing and potenable to control some prohibited transfers, tially negotiating those words, what should

such as those involving passive investors. A careful guarantor will want to face liability only if the borrower does something egregiously bad, such as selling the property or encumbering it with a second mortgage. Lenders sometimes want to chase guarantors if the borrower does anything to defend a foreclosure or any other exercise of the lender’s remedies. But what if the lender was wrong and the borrower right? It can happen! At a minimum, the guarantor will want no liability unless the borrower’s defenses were frivolous and asserted in bad faith. And even if they were, the guarantor will want to cover only the lender’s extra costs and perhaps interest, not the entire loan. Many mortgage loan documents devote extraordinary attention to the idea that the borrower should always be a “single-purpose entity,” a structure that seeks to minimize the likelihood of a bankruptcy and keep it simple if it does happen. Until the 2008 financial crisis, guarantors often agreed to pay the entire loan if the borrower violated the SPE covenants. But those covenants turned out to be so intricate, and often so excessive, that lenders could claim the borrower tripped the SPE covenants just by suffering financial problems such as not paying ordinary payables or the loan itself. This

disconnect meant, for example, that lenders could try to collect the entire loan from guarantors just because the borrower didn’t pay it—not at all consistent with the logic of a nonrecourse loan. Today’s guarantors know they should watch out for that perversion of nonrecourse financing. If a borrower violates an SPE covenant, guarantors might be willing to be responsible for any direct loss the lender suffers—hard for the lender to prove and hence not too scary. A guarantor will also want to avoid any implied obligation to contribute capital to cover shortfalls to maintain SPE compliance. Guarantors for years accepted liability for things like “fraud” and “waste.” A careful guarantor knows those words can, with some creativity, capture almost any misfortune that befalls a loan. A guarantor can prevent that creativity by trimming the scope of these terms. References to the borrower’s “gross negligence” create similar concerns. Though the carveout traps just described are the most common ones, others lurk. More may creep in over time. 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.

DAN WITH A PLAN

The Holy Grail: A Life Insurance Company Mortgage “You can check out anytime you like, but you can never leave.”—The Eagles Equating lenders to various tranches of a commercial mortgage-backed securities pool, the hard-money lenders are the C, or unrated, slice—and the life insurance companies are the AAA tranche. It is likely hyperbole to discuss the impact of another potential meltdown of the capital markets on life insurance lenders. As one originator recently told me, “Insurance companies are unwilling to sacrifice credit quality, and they will not increase their lending volume simply because there is more demand for their product.” Therefore, any comments about eroding credit quality or lending bubbles do not directly apply to the life companies. But any credit risk officer would quickly agree that we cannot just put our heads in the sand since—as we saw in the last crisis—when the subprime loans default, it affects the entire capital stack. Currently, insurance lenders have a huge competitive advantage on CMBS. During the peak of the securitized commercial real estate debt market in 2006, the interest rate coupon of the two groups was essentially the same. In fact, since the CMBS lenders had essentially the same spreads as the life companies, CMBS briefly became preferable 30 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Insurance lenders now hold $362.7 billion because they would generate higher loan of commercial real estate loans, according proceeds. to Federal Reserve data. This is a 12.7 perToday, a typical life company quote is cent market share for non-multifamily and 160 to 170 basis points over swaps, approxia 5.3 percent market share for multifamily mately 100 to 130 basis points below CMBS (the disparity due to Freddie Mac and Fannie pricing. The latter have no choice as the Mae). The top 30 insurers wrote $59.1 billion AAA tranche has widened out to 150 basis of real estate loans in 2015, accordpoints over swaps and the junior ing to Trepp. The biggest players tranches have widened substanin 2016 are MetLife, Prudential, tially too. The real estate lendNorthwestern Mutual, Pacific ing world has become bifurcated Life, Mass Mutual, New York Life with the top quality deals going to Insurance Company, Principal the insurance companies and the Financial Group and TIAA-CREF. CMBS and other lenders getting MetLife remains the largest of the remainder. them all, having originated more For non-multifamily deals, than $12 billion in each of the last insurance lenders should always Dan Gorcyzcki two years. And with $230 billion be the first call. What are their of maturing CMBS in 2016 and preferences? Class A office build2017—which is more than the ings in gateway markets and grocombined amount from 2010 to 2014—the cery-anchored shopping centers with strong life companies could increase their market sales. The life companies are far less active share substantially if they wanted. when it comes to Class B properties and However, insurance lenders have hismarkets that are susceptible to economic torically shown that they won’t stretch to slumps, such as Houston. Many of them also win deals and they won’t lend on tertiary or cautiously underwrite deals in markets that transitory assets. With Reg AB II now being are experiencing massive development, such imposed on issuers of CMBS, those lenders as Los Angeles and Miami. Hospitality loans have little room to maneuver. Meanwhile, from the life companies are reserved only for banks are feeling the pressure to hold more top-tier hotels.

reserves against their $1.77 trillion of commercial real estate loans and are also burdened by their poor performing commercial and industrial loan portfolios. So if the CMBS lenders can’t digest all of the maturities and the life companies won’t budge on their standards at the same time that banks are already showing limitations due to increased regulation, how can all of the borrowers refinance these loans? Opportunity funds and other alternative lenders will have to fill the void and the resulting effect will be increasing cap rates. The recent stock market sell-off was a long time coming. A few bold souls have stated that it could actually have a positive effect on real estate, as investors will eschew stocks for property. But if the contagion effect overflows into real estate, few will be spared. The ones who will be the beneficiaries will be those with the dry powder to pick up bargains, owners with little or no leverage, and insurance companies who will simply keep doing their thing—writing conservative loans on high quality assets. Dan E. Gorczycki is a senior director with Avison Young, where he specializes in acquisition financing, construction financing and joint venture equity, with strong life insurance company relationships.

$75,600,000 7 YEAR FIXED PERMANENT FINANCING

New York, New York A portfolio of 6 mixed-use apartment buildings containing a total of 111 apartments and approx. 21,900 sf of retail space

Matthew Classi, Managing Member, arranged the financing for this transaction

GCP Capital Group , LLC 60 Cutter Mill Road, 6th Floor • Great Neck, NY 11021 • Phone: 516-487-5900 • Fax: 516-487-5944 • www.gcpcapitalgroup.com

PHOTO ILLUSTRATION BY KAITLYN FLANNAGAN/COMMERCIAL OBSERVER

FINANCE

You’re in Good Hands Life companies skipping ahead as regulatory hurdles become a reality ( for some) in 2016 By Danielle Balbi

32 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

COURTESY DAVID DURNING

PHOTO ILLUSTRATION BY KAITLYN FLANNAGAN/COMMERCIAL OBSERVER

ven though it’s a new year, the countdown has just begun in the commercial real estate world. In less than 11 months, on Dec. 24, 2016, Section 15G of the DoddFrank Wall Street Reform and Consumer Protection Act will sweep the commercial-mortgage backed securities market. Colloquially referred to as risk retention, the new rule will require the issuer of a CMBS pool to maintain 5 percent of a deal on its balance sheet. Simply said, if an issuer were to put a $100 million conduit on the market, it would hold $5 million for the entire life of the loan, therefore keeping some of the risk associated with the deal (hence the “skin in the game” catchphrase). While CMBS industry groups push regulatory bodies for clarifications and amendments to the rule, other commercial real estate folks can sit back and enjoy the ride. Life insurance lending companies in particular could profit if some of their originator counterparts lose their competitive edge once risk retention comes into play at the end of the year. “Regulation, volatility and capital availability will drive the market in 2016,” Gary Otten, head of real estate debt strategies at MetLife Real Estate Investors, told Commercial Observer. “Longtime market participants may be pulling out of certain areas due to regulation, while private debt platforms are ready and willing to pick up the slack. MetLife will continue to be active in the lending space, providing stability and certainty of execution as we often do.” The fears of CMBS lenders are already widely known: risk retention will drive up the cost of doing business for lenders and borrowers, and the market will overall become less lucrative. That being said, 2016 is not the beginning of the CMBS industry’s regulatory woes. On Nov. 24, 2015, the expanded Regulation AB rule—which regulates assetbacked securities and is referred to as Reg AB II in the industry—was enforced, requiring the chief executive officer of any issuer to sign off on each new offering, making that CEO personally liable for any false information on mortgage documents. Banks too are feeling pressure from the regulatory fist, thanks to Basel III’s High Volatility Commercial Real Estate rule, which regulates acquisition, development and construction loans. But that’s not to say that life companies operate in a lawless, Wild West realm of commercial real estate. By 2014, the Financial Stability Oversight Council—a group of 15 regulatory bodies established under Title I of Dodd-Frank— designated life company giants Prudential Financial, MetLife and AIG as nonbank systemically important financial institutions (SIFI). The designation means that if a company were to fail, it could trigger a global crisis. Despite the SIFI tag, life companies seem to have been active in 2015. Last year, MetLife actually increased its global CRE lending

David Durning.

‘We’re trying to lend in a way that the returns on the loans we make match investment grade bonds.’ —David Durning

business to a company record of $14.3 billion, up 18 percent from $12.1 billion the year prior. Prudential Mortgage Capital Company President and CEO David Durning told CO that the firm’s final lending numbers for 2015 were $14.6 billion. Comparatively, J.P. Morgan Chase originated the most in U.S. CMBS debt, with $11.14 billion, followed by Deutsche Bank with $9.62 billion, according to Commercial Mortgage Alert. For broader comparison, in 2013 and 2014, life companies originated $52.5 billion and $52.98 billion respectively, while CMBS lenders originated $83.2 billion and $93.1 billion those same years. The CMBS industry as a whole originated

just about $101 billion in 2015—the year with the highest origination volume that the market has seen since the 2007 peak of $229.51 billion. Of that $101 billion total, 32.3 percent of those CMBS deals were single-asset/single-borrower transactions, up from 25.4 percent in 2014 and 26.7 percent in 2013, according to data firm Trepp. Those single-asset/single-borrower deals actually play a huge role in how risk retention will affect CMBS lenders. “Right now, the way risk retention is set up, it’s virtually impossible for a CMBS lender to do a single-borrower or single-asset securitization,” said Gerard Sansosti, an executive managing director in HFF’s Pittsburgh office.

“Now there’s an appeal in [with regulators] to modify that, and I think all CMBS lenders are optimistic that it will be revised prior to the end of the year when risk retention kicks in, but if that doesn’t happen, that means for all of the large [single-borrower/single-asset] CMBS transactions borrowers are going to have life companies do those.” In fact, in 2014, the CRE Finance Council, a commercial real estate finance trade association, submitted commentary to several regulatory agencies—the Board of Governors of the U.S. Federal Reserve System, the Federal Deposit Insurance Corporation, the FSOC, the U.S. Department of the Treasury, the U.S. Securities and Exchange Commission and the Office of the Comptroller of the Currency—requesting that single-borrower/ single-asset transactions of more than $200 million be exempt from risk retention altogether. In its note, the trade organization detailed both the high-borrower and high-asset profile of these transactions, and furthermore the high performance of those deals. At the time, of the roughly 200 single-asset/single-borrower loans that had been originated since 1997, only one incurred significant losses. Additionally, those loans are structured differently than an average CMBS deal: just because of the mere size of a single-borrower/single-asset deal, it is difficult to split the debt among multiple parcels across several CMBS pools, and even at that, the diced up loans may still exceed the thresholds for conduits, according to the letter. For instance, in early 2015, Deutsche Bank originated a $1.2 billion single-asset loan on 3 Bryant Park. The next two conduits to be securitized, a Morgan Stanley and Bank of America-Merrill Lynch-sponsored deal and Goldman Sachs-sponsored conduit, were smaller, totaling $871.3 million and $913.4 million, respectively. “Life companies could be one of the primary beneficiaries of regulations in the CMBS markets, especially the larger life companies that can team up and lend on larger single-asset trophy transactions in primary markets,” Mr. Otten of MetLife said. “Most market participants expect that increased regulation in the CMBS space will lead to increased pricing on those loans, thereby providing a nice avenue for the life companies to pick up some market share and fulfill the capital needs of their top clients.” Mr. Durning of Prudential echoed the sentiment and added that life companies typically have relationships with the types of strong sponsors with high-quality assets anyway. “Those assets sometimes are going into securitization executions because that has been a more cost effective solution or because of the sheer size of the deals,” he said. For instance, in October of last year, Prudential and MetLife, along with AXA Equitable Life Insurance Company and New York Life Insurance Company, issued a $600

COMMERCIALOBSERVER.COM | FEBRUARY 3, 2016 | 33

COURTESY PRUDENTIAL

FINANCE

ROCKING AROUND THE CLOCK: Prudential Mortgage Capital Company President and CEO David Durning said that his firm lent $14.6 billion last year; the lending company says it has as much as $15 billion in funding available for 2016. million loan to Brookfield Property Partners for 250 Vesey Street, formerly 4 World Financial Center, as CO previously reported. Even without regulatory challenges, the competitive edge of CMBS may have already started to dull, according to some. “I think the advantage of a life company is different than it was in 2006 or 2007,” Mr. Sansosti of HFF said. At the height of the commercial real estate lending market, spreads on CMBS deals tightened so much that those lenders were able to compete with life companies, he explained. “That’s not going to happen anymore,” Mr. Sansosti said. “There’s such a wide gap between CMBS spreads and life company spreads that the life companies are really playing in their own world.” He stated that there is roughly a 100-basis point gap between CMBS and life company spreads. At CRE Finance Council’s 2016 industry leaders conference in Miami last month, Mr. Sansosti said that there was 34 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

talk of life companies raising their spreads because of all the room in between. Mr. Sansosti said the general consensus was that life companies “are going to stay very conservative, continue to compete on pricing and not going to pay attention to what the CMBS world is doing.” Jamie Woodwell, the vice president of research and economics at the Mortgage Bankers Association, another real estate industry group, pointed to a recent outlook survey the firm conducted. “When asking the top origination firms what would happen with life company originations this year, 24 percent said they expected originations for life companies to be up from 0 to 5 percent, 38 percent said they expected between 5 and 10 percent, and 10 percent said they expected more than 10 percent,” he said. That being said, the extent to which life companies will look to fill in the financing gap is not entirely clear, but the bottom line seems to be that they will remain

conservative, or as Mr. Durning put it, “we’re trying to lend in a way that the returns on the loans we make match the performance of investment grade bonds.” “They need to be structured in a way that there’s a high degree of confidence to perform,” he said. “That was true in 2014 and 2015, and it will be true of life companies in 2016.” Part of the strategy may be rooted in how life companies have performed in the past. Regulations have been geared toward the banks and CMBS lenders, while life insurance companies performed well throughout the downturn, said Nicki Lavanos, the director of real estate investments at AXA, which is a result of their focus on credit, underwriting and the strength of the borrower. However, Ms. Lavanos sees a nuance in the idea of life companies reaping the benefits of competitors’ new regulations. “On the one hand, there are a lot of assets getting financed by folks who do have a lot

of regulations. Yes, that is creating some opportunity for us, but the landscape of who lenders are today has actually changed a bit,” she said. “So while on the one hand it’s created opportunity for us, the insurance group, it’s also created opportunities for other folks—what you would call nonbank institutional lenders, people who don’t fall under all of those regulations.” Ms. Lavanos said that looking back, CMBS dominated originations in the CRE world before the Great Recession. Now, insurance companies are taking on more, but so are the nonbank lenders. “Some keep it on balance sheets, some put it in funds, some leverage it up and some put it in CMBS,” she said. “There is the growth of that sector, so it’s opportunity for us and others.” Whether or not life companies will eat up more of the lending pie this year remains to be seen, but it seems like there will be more room at the table soon enough.

RSB_ComLend_(Commercial-Observer)10.5x12_mech.pdf

2/1/16

3:57 PM

ADD AN OPPORTUNITY. SUBTRACT THE RED TAPE. MULTIPLY THE GOOD. C

CMY

COMMERCIAL LENDING SOLUTIONS THAT TRULY ADD UP You see the opportunity. We see the potential. Whether you're looking to acquire or refinance your new multi-family, mixed-use, office, or retail property, Ridgewood Savings Bank can provide the capital (up to 75% financing) to make it happen and the local knowledge to make it succeed. As an integral and respected member of the community for over 95 years, Ridgewood Savings Bank’s commercial lending program can turn your opportunity into reality. You can’t find a better bank to close your deal.

CALL OUR COMMERCIAL LENDING PROFESSIONALS VICTOR PADILLA BRYAN LUTZ (718) 240-4773 (718) 240-4734

NYC • BROOKLYN • QUEENS • BRONX • WESTCHESTER • LONG ISLAND

W W W. R I D G E W O O D B A N K . C O M

COURTESY TRYP HOTEL

FINANCE

SQUARE DEAL: TRYP by Wyndham New York Times Square has been returned to the special servicer with the borrower saying that of the 12 Times Square area hotels backing CMBS loans, TRYP is generating the lowest net operating income and revenue per room.

Times for a Change Times Square Hotel Operating at a Loss, Requests Loan Mod

By Danielle Balbi A $70 million commercial mortgage-backed securities loan on the TRYP by Wyndham New York Times Square—formerly Best Western Plus President Hotel at Times Square—has been returned to the special servicer, with the borrower currently seeking a loan modification. New York-based Dream Hotel Group, which was rebranded from Hampshire Hotel & Resorts, is requesting a second modification on its remaining $70 million in debt, according to data provided exclusively to Commercial Observer by Trepp. The loan, which is dubbed “Best Western President,” was securitized in the Credit Suisse-sponsored CSMC 2006-C5 deal in 2006 with an original balance of $80 million. The note is the fifth largest in the overall pool and accounts for 3.12 percent of remaining collateral, according to Trepp. “The Best Western President in Times Square

36 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

has flip-flopped between a delinquent and non-delinquent status for the past year,” said Sean Barrie, an analyst at Trepp. “Financials have been downhill since 2010, when the firm posted a 1.2 debt service-coverage ratio. Unfortunately, the property has been generating negative cash flow for the past two years.” Since 2007, the DSCR on the 334-room hotel, which sits at 234 West 48th Street between Seventh and Eighth Avenues, has seen a steady decline. The DSCR saw its peak of 1.93 in 2007 and dropped to 0.75 in 2013. At the time, the borrower stated, “The Times Square submarket continues to struggle due to increases in the supply of new hotel rooms.” Shortly thereafter, in May 2013, the borrower faced imminent payment default. In 2014, the DSCR hit a low of -0.92, and by the end of the year servicer LNR Partners modified the deal terms because of low debt service-coverage ratio. As of December 2015, there were 40,520 hotel rooms in the Times Square market, with 2,863 rooms

under construction, according to STR, a firm that tracks hotel data. Under the new terms, the loan was made interest-only, lowering the rate to 5.75 percent from 6.43 percent and the borrower paid off just more than $7.5 million in debt, bringing the balance down to $70 million. Simultaneously, the hotel underwent a rebranding and traded in its Best Western flag for TRYP by Wyndham, according to a November 2014 article by The Wall Street Journal. “Of the 12 Times Square [area] hotels backing CMBS loans, the Best Western President is generating the lowest net operating income and revenue per room,” Mr. Barrie noted. “Competition is tough enough for commercial real estate in Times Square, and the Best Western President loan appears to be behind the eight ball at the moment.” Those hotels include the Residence Inn New York Manhattan/Times Square at 1033 Avenue of the Americas, the Fairfield Inn &

Suites New York Manhattan/Times Square at 330 West 40th Street, the Courtyard New York Manhattan/Times Square at 114 West 40th Street and the Econo Lodge Times Square at 302 West 47th Street. Mr. Barrie noted that there are another five hotels that do not have their financials reported. As of the third quarter of 2015, the revenues for TRYP at Times Square were $17.2 million, with expenses totaling roughly $17.5 million, according to data from Trepp. The DSCR based on the 16-story building’s net cash flow remained below zero at -0.28 and the NOI hit -$291,168. Room rates currently start at $91 per night, according to TRYP’s website. The borrower has the option to extend the loan’s maturity date from Aug. 15, 2016, to Aug. 11, 2017 or Aug. 11, 2018. Calls to Dream Hotel Group were not returned by time of publication. A representative for LNR did not immediately respond to inquiries.—additional reporting provided by Terence Cullen

OUR BEST YEAR IS BEHIND US, AND IN FRONT OF US. $1.4 Billion in 2015! Let us take a New York minute to thank our commercial lending brokers and clients who helped make 2015 Dimeâ&#x20AC;&#x2122;s best year ever. We closed over $1.4 billion in commercial real estate loans last year, thanks to you. We are proud to have been named by the Commercial Observer as the fourth-ranked commercial real estate/multifamily lender in the New York City area. Our deep market knowledge and streamlined local decision making process allow our experts to tailor property loans quickly and competitively. Thanks again to everyone who has put their faith and trust in Dime.

Lending for the way New Yorkers live.

Terence J. Mitchell, Chief Retail Officer Kenneth J. Mahon, President & COO Daniel J. Harris, Chief Lending Officer 718.486.4335 commloan@dime.com

ÂŠ2016 The Dime Savings Bank of Williamsburgh.

FINANCE

Gregg Gerken and Roy Chin.

38 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

ROCK STEADY

TD Bank’s Gregg Gerken and Roy Chin have quadrupled the lender’s NYC presence, but with a uniquely Canadian virtue: restraint!

By Matthew Egan | Photographs by Celeste Sloman

ome bankers chase the sexy deals that grab headlines, but push the envelope of common sense. Gregg Gerken and Roy Chin, backed by the culture of a conservative Canadian lender, play by a different, more cautious set of rules. Quietly, their disciplined approach has turned TD Bank into a major player in New York City real estate. Mr. Gerken, TD’s head of U.S. commercial real estate, and Mr. Chin, regional director for commercial real estate in New York, didn’t quadruple TD’s New York real estate book since 2010 by recklessly leaping headfirst into luxury condo deals with breakeven prices that would make their bosses in Toronto blush. Yet, they also didn’t transform TD’s real estate business by avoiding risk altogether. Back in 2010, as the more established banking giants were still licking their wounds from the financial crisis, Mr. Gerken and Mr. Chin pounced. They had a secret weapon: TD Bank was one of the only major banks in the world that didn’t suffer writedowns in the subprime mortgage market. That means Mr. Gerken and Mr. Chin had the firepower to step into the chasm that had formed in the New York real estate business.

“We were there—and we were a phone call away—at a time when a lot of banks by necessity had to pull out of deals,” Mr. Gerken told the Commercial Observer from the 24th floor of the bank’s temporary Midtown Manhattan office building. TD Bank—one of Canada’s largest lenders by assets—avoided the dramatic losses large U.S. banks experienced because it showed relative restraint before the financial crisis, analysts said. “They were never really aggressive pre2008, so they didn’t really get hurt,” said Michael Stoler, managing director at Madison Realty Capital. “Canadian banks in general and TD in particular were never brought low by housing loans in the crisis,” said Richard Bove, a banking analyst at Rafferty Capital. To be sure, TD did not emerge from the financial crisis completely unscathed. The bank’s stock price plunged from $38 a share in August 2007 to below $14 in February 2009 (on the U.S. stock exchange). And it did suffer some mortgage setbacks, including several high-profile foreclosures in hot Florida markets like Miami and Palm Beach, according to press report. But most big banks that power the commercial real estate market suffered far more

damage. Many needed a federal bailout just to avoid bankruptcy. “Everybody got hurt in Florida,” said Stoler. The lack of financing available at the time allowed TD to be extra selective about which development projects it would support. It grew its book of New York metro commercial real estate loans by nearly $5 billion since 2010 to $6.2 billion. “The strength of our balance sheet enabled us to rise to the occasion. It’s something that differentiated us,” said Mr. Gerken, who grew up in Ohio and now lives in Tarrytown, N.Y. Even today Mr. Gerken and Mr. Chin get to brag about TD’s fortress balance sheet. Moody’s assigns TD Bank “very high” credit ratings (technically it’s “Aa1,” or one notch below AAA) due to the strength of the bank’s “relatively low risk” consumer-facing business in North America that is focused on gathering deposits. Mr. Gerken knows retail banking backwards and forwards. He was an executive at Commerce Bank for a decade, when TD Bank acquired the New Jersey-based community lender in 2008. Just over a year later, Mr. Gerken was promoted to co-director of U.S. commercial real estate at TD Bank and then in October 2010 he became head of commercial real estate in the U.S.

COMMERCIALOBSERVER.COM | FEBRUARY 3, 2016 | 39

Today he’s responsible for a $15 billion investment real estate portfolio. Mr. Gerken, who graduated from Ohio University in 1982 with a bachelor’s degree in international business and political science, credits Mr. Chin’s arrival from Bank of America-Merrill Lynch in 2010 with making TD’s ramp-up in New York real estate possible. “Roy was my first and only call—and fortunately he took my call and accepted the position,” said Mr. Gerken, who met Mr. Chin when they worked together at Fleet’s real estate business. It was an easy decision for Mr. Chin, who was handed the keys to TD’s New York, New Jersey and Long Island commercial real estate teams, as well as its mortgage warehouse division. “It was a great opportunity,” said Mr. Chin, a seasoned banker who had also done stints at Chase and Hypo Real Estate Bank International. “We both saw this as a chance to build a platform the way we always wanted to,” said Mr. Gerken. Mr. Gerken and Mr. Chin have a natural, easygoing rapport built by years of working together. The two men share an obvious mutual admiration for each other’s talents and youthful personalities, despite their status as grandparents. “We’re two forever immature people stuck being very young at heart—which is why I love this business. We’re surrounded by all these young people that constantly have moved onto bigger and better things across the industry. It’s very rewarding watching people’s careers take off like that,” said Mr. Gerken. Asked about his hobbies outside of work, Mr. Chin half-jokingly said he doesn’t have any because he’s always working. Then Mr. Chin settled on his answer: “I have no idea what I’m going to do when I grow up.” It’s already been a long journey for Mr. Chin, who got his bachelor’s degree in engineering at Rensselaer Polytechnic Institute in Troy, N.Y. In the 1970s, he switched gears entirely by going into banking and getting an MBA from New York University. Mr. Gerken, a self-described “big music buff,” sits on the board of the New Jersey Performing Arts Center. “I live vicariously through musicians who can actually play something. I always wished I could but I have to settle for just being able to listen,” he said. Mr. Gerken, 57, is also an avid runner. Three years ago, he was six blocks short of the finish line at the Boston Marathon when terrorists exploded two bombs. Mr. Gerken returned the following year to finish that infamous marathon and then run a complete one two days later. “I had to relive those steps,” he said. Even though the market has bounced back dramatically from those dark days following the recession, Mr. Gerken and Mr. Chin have maintained their same disciplined approach today. That may mean TD has to reject some

40 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

COURTESY COSTAR GROUP

FINANCE

VIA 57West.

‘They are a sophisticated lender that understands the intricacies, vagaries and eccentricities of the New York rental market.’ —Jonathan Durst deals that don’t fit its credit appetite, but they’re fine with that. “We were disciplined then. We’ve been disciplined when the market was getting better and we’re just as disciplined today,” said Mr. Chin. There’s little doubt TD’s prudent approach stems from the bank’s Canadian roots. “In the U.S., you have a regulatory environment that a lot of institutions try to work around—as opposed to work within. In Canada, there’s a cultural acceptance of staying within the lines,” said Mr. Gerken. Mr. Stoler, the Madison Realty Capital executive, has watched and admired TD’s strategy from a distance. “They’re like the snail: slow and steady. They are not risk takers. They don’t run and put money out at ridiculously low pricing for unproven sponsors,” he said. TD ranked seventh among commercial banks in 2014, with $2.92 billion of commercial real estate volume, according to the Mortgage Bankers Association. While TD was ahead of both Citigroup and Goldman Sachs, which did between $880 million and $1.1 billion in 2014, it was well behind other big banks like J.P. Morgan Chase’s $24.4 billion. Final statistics on TD’s 2015 rankings weren’t available yet. In New York City, TD grew its volume of lending to commercial, income-producing properties by 50 percent through the first 11 months of 2015 to $1.3 billion from $874 million, according to data provided by CrediFi,

a research firm that uses big data to analyze commercial real estate. TD made 6 percent fewer loans last year than in 2014, but the average size jumped 59 percent to $1.2 million, CrediFi said. Mr. Stoler said TD is unlikely to gamble on emerging neighborhoods just to make an extra buck. “They’re not going to change their attitude. They are who they are—even if they don’t get the extra business,” he said. Given TD’s conservative approach, it’s no wonder the bank’s Rolodex of real estate borrowers is slanted toward savvy real estate investment trusts like Vornado Realty Trust, SL Green Realty Corp. and ones controlled by private equity giant Blackstone Group. Mr. Gerken likes real estate investment trusts because they’re less leveraged, making them safer to lend to. He said it also helps that REITs are publicly traded, offering creditors real-time visibility into their financial health and enabling them to inject more equity into development projects. “It’s been a great place to play. You’ve got professional management, very deep and diverse portfolios,” Mr. Gerken said, adding that TD’s loan commitments to the REIT industry have grown to nearly $4 billion. At the same time, Mr. Chin has successfully spearheaded an effort to build up TD’s business with the family-run development firms like Gotham, Rockrose and Durst that have been in Manhattan forever. For instance, TD is currently providing

$60 million of construction funding for VIA 57West, a 700-unit multifamily rental development being built by The Durst Organization at 625 West 57th Street. “They are a sophisticated lender that understands the intricacies, vagaries and eccentricities of the New York rental market,” said Jonathan Durst, the firm’s president. TD also recently provided $46 million to help finance Gotham West, a 1,200-unit project developed by Gotham Developers that spans three buildings of mixed-use rental, 2,000 parking spaces and 16,000 square feet of retail space. “TD is right at the top of the banks I like to deal with,” said David Picket, chief executive officer of Gotham Developers. Mr. Picket said he’s enjoyed working with Mr. Chin because he’s “very straightforward, very transparent and very accessible.” Even better, he said Mr. Chin cuts right to the chase. “The best answer is, ‘Yes, we’ll do the deal.’ The second-best answer is ‘no,’ but it’s a quick no. Roy doesn’t drag things out. In my business where predictability is really important, I appreciate that,” said Mr. Picket. Mr. Picket said TD is so quick to weigh in on projects that Gotham will frequently call the bank with details on a preliminary deal just “to get an early lead” on whether the transaction makes sense or not. “They’re very helpful that way,” Mr. Picket said. It’s part of a concerted effort by TD to be responsive to borrowers so they’ll be more likely to come back next time. “Everyone has a memory,” Mr. Chin said. But don’t let Mr. Gerken and Mr. Chin’s reputation for discipline fool you. Even they can get excited about the big financing deals. TD’s mortgage warehouse team committed $1.9 billion last year to help Berkadia finance private equity firm Lone Star’s acquisition of Home Properties, an apartment REIT. TD’s final funding was $1.7 billion and the loan has already been fully repaid. That was “the first transaction I’ve been involved with where I could see the impact on the balance sheet,” said Mr. Chin with a smile. “It was huge.” The Berkadia transaction was led by Dick Hay, who worked with Chin at J.P. Morgan Chase and joined TD six years ago to launch TD’s mortgage warehouse operation. Under Hay, the platform’s loan volume has soared from zero to over $3 billion. Get ready for TD to make a splash in the affordable housing space next, which Mr. Gerken said offers more opportunity at this point in the real estate cycle than the luxury market. “Given the cost to build and the cost of a land, developers can’t afford to build anything but Class A high-rent properties. Yet there’s a huge segment of the market that can’t afford that,” Mr. Gerken said. “There’s a definite need in all of our markets, but in New York in particular, to make housing more affordable. That is going to be a major focus going forward.” TD is aiming to double its volume of loans in the affordable housing space to about $360

TRUST ONE FIRM. NEW YORK

BOSTON

LOS ANGELES

MIAMI

| SAN FRANCISCO

W W W . A C K M A N Z I F F. C O M

FINANCE

million a year over the next two years. To make that possible, TD has sought to create a “one-stop shop” by recently moving its community capital group from the equity side of the bank to the real estate division. The consolidation is aimed at speeding up the approval process and improving the sharing of information about the complex tax credits provided by governments and nonprofits that make these projects economically feasible. TD recently financed a $71.5 million direct bond purchase of a Housing Finance Agency-bond for an 80/20 project, which offers tax-exempt financing to multifamily rental developments that set aside at least 20 percent of the units for low-income residents. The development is a 167-unit residential rental project in Lower Manhattan. TD’s ramped-up efforts in affordable housing come as Mayor Bill de Blasio promises to make affordable housing the focal point of his second year in office. “Politically, it makes sense. From a socioeconomic perspective, it makes sense. If you put those things together, we can make good business sense out of it,” said Mr. Gerken. Of course, the real estate industry continues to carefully monitor the situation surrounding the 421a tax abatement program for developers that provide affordable units in new buildings. The program officially expired in January over a dispute about wages for construction workers at 421a sites. Still, Mr. Gerken’s focus on affordable housing also reflects a sense of sober realism about the state of the high end of the real estate market. “A lot of our clients are saying now is not a very good time to buy. The market has kind of topped out price-wise,” he said, adding that he thinks opportunities are still out there— but they’re harder to find. That’s not to say TD is negative on the real estate market. “The core fundamentals are as good as they get. There’s no negative signs there,” Mr. Gerken said. He pointed to declining vacancies, healthy rents and the recovery in prices. Mr. Gerken and Mr. Chin try to stay ahead of the game by listening carefully to what their clients tell them about shifting dynamics. For instance, Mr. Gerken sounds very cautious about the suburban office market nationally. “Suburban sprawl was a trend. But building roads and endlessly adding lanes has peaked out. Urban renewal is the new trend. Now almost every project we’re involved with is around a transportation hub,” he said. That sense of caution—along with TD’s history of restraint—suggests the lender is unlikely to be the one left without a chair when the music in the booming New York City real estate market inevitably stops. “You need to look down the road and peer around the corner. If you get lulled to sleep by the fundamentals, you’re going to hit by the bus because you stepped off the curb at the wrong time,” Mr. Gerken said.

42 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

DOUBLE VISION: Mr. Gerken and Mr. Chen share a philosophy of caution, but that hasn’t prevented them from quadrupling the bank’s NYC book.

THE 2016 NYC COMMERCIAL REAL ESTATE MARKET: We will plan to explore how to be creative in the current NYC commercial real estate market. We will plan to cover various creative structures such as: commercial condo, tenancy, non-profits, condo and co-op boards, government agencies such as DOB, MTA and their process, zoning air rights and ground leases.

Wednesday, February 24th , 2016 12:00PM â&#x20AC;&#x201C; 2:00PM Union League Club, 38 E. 37th Street, NYC

MODERATOR SONIA BAIN, PARTNER Bryan Cave

JAMES COLGATE Partner Bryan Cave

BOB SHAPIRO Founder & CEO City Center

JAMES NELSON Vice Chairman Cushman & Wakefield

BROOKE CIANFICHI Administrative Vice President M&T Bank Corporation

DAVID DISHY President-Development L+M Development Partners

COUVERT | Members: FREE | Non-Members: $95 | Please RSVP to: YMBA.net Please email Molly Drescher at mdrescher@titlevest.com with questions or concerns.

FINANCE

The Takeaway Data courtesy of

The total amount of commercial mortgages filed with the New York Department of Finance saw a drop in October to 891 from 1,420 in September. The number of loans on multifamily and co-op properties fell to 423 from 693. Similarly the number of office loans dropped to 47 from 74 and the number of mortgages for vacant buildings and land decreased to 66 from 103. The number of loans filed for retail and healthcare properties took a dip, while the number of loans filed for hotels remained flat.

Refinances vs. Purchases Similar to New York City lending as a whole, both refinances and purchases with finance activity fell.

Top Lenders Despite the dip in overall financing activity, J.P. Morgan Chase climbed the ladder in October with 96 deals, followed by Signature Bank and New York Community Bank, according to Actovia. BANK

AUG

170

New York Community Bank

BANK

SEPT

J.P. Morgan Chase

Signature Bank

138

Signature Bank

J.P. Morgan Chase

New York Community Bank

Dime Savings Bank Of Williamsburgh

Flushing Bank

Investors Bank

Bank Of America

Flushing Bank

BBCN Bank

Capital One

Wells Fargo

Maspeth Federal Savings

Dime Savings Bank Of Williamsburgh

Wells Fargo

Maspeth Federal Savings

Valley National Bank

Santander Bank

Bank United

Customers Bank

1071

Most Active ZIP Codes—Financing 580 349

The most active ZIP codes for financing were nearly all in Brooklyn with three in Manhattan and one in Queens.

308

ZIP CODE

SEPT OCT

REFINANCES

PURCHASES

Total Sales by Borough With the exception of Brooklyn and the Bronx, sales took a dive in October (Staten Island is not tracked). 522

471

194

231 142

131 72

55 68

11216

11226

ZIP CODE

OCT

11222

11211

11201

10025

11211

11237

11355

11207

11215

11216

11221

11201

11237

11208

11206

11221

11222

10003

11233

11385

10002

100

SEPT OCT

ALL

MAN.

BRONX

BROOK.

QUEENS

44 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

SEPT

BBCN Bank lent $12.5 million against a supermarket site at 575 Grand Street in Williamsburg, Brooklyn.

14T

HS T

J L

B I D

I F

Community lending expertise with personal service.

New York, NY

Queens, NY

Brooklyn, NY

28 Buildings 1000+ Residential Units

140,000 Sq. Ft. Retail Shopping Center

35-Unit Multifamily 20 Year Fixed Rate Loan

$48,500,000

$44,000,000

$8,000,000

At Flushing Bank we’re comprised of experienced lenders with local market knowledge. Our Real Estate Lending team is ready to help you with your commercial real estate mortgage solution. As a well-established community lender, we’ve enhanced our lending to provide competitive rates including long term fixed rate loan programs. Call us today to discuss a commercial mortgage solution that is right for you. Edward Alarcon Al Bozzolo Jeff Levintov Tim Lynn

718.512.2783 718.512.2784 718.512.8069 718.512.8077

Denis Mangan Ivan Nunez John O’Connor Terrence Winter

718.512.2790 718.512.2908 718.512.2826 718.512.2819

220 RXR Plaza, Uniondale, NY 11556 • www.FlushingBank.com Flushing Bank is a registered trademark

FB Real Estate Commercial OB 2016-2.indd 1

1/4/16 2:40 PM

FINANCE

ChartFinance “In the Washington, D.C. metropolitan statistical area, 51 commercial mortgage-backed securities loans totaling over $1.48 billion are in special servicing,” said Sean Barrie, an analyst at Trepp. “That total balance of loans in special servicing is second to only New York City. Of the top ten D.C. loans in special servicing, seven of them are backed by office buildings. The D.C. office market, primarily in the suburbs, has been ravaged by GSA downsizing over the past few years. The top ten D.C. loans in special servicing posted an average debt service-coverage ratio of 0.96 and loan-to-value ratio of 147.6 percent. Additionally, eight of the loans are maturing in the next seven months. Given that plenty of these loans are mired in lengthy servicing processes, the market’s delinquency rate may not see a vast improvement until those loans are resolved.” Source: Top Washington D.C. MSA Loans in Special Servicing Current Current DSCR Delinquent Code

Issuer

Alexandria, Office Va.

161.08

94,432,743

1.25

Foreclosure

J. P. Morgan Chase 3/15/17

11/26/14

7.59

Fairfax, Va.

Office

131.47

0.00

1.04

Current

Deutsche Bank

8/15/16

6/12/15

GSMS 2006-GG8

4.87

Fairfax, Va.

Office

131.45

0.00

1.04

Current

Goldman Sachs

8/10/16

6/15/15

Avion Business Park Portfolio

JPMCC 2006CB14

19.96

Chantilly, Va.

Office

313.45

40,812,876

1.07

REO

J. P. Morgan Chase 2/12/16

10/8/10

61,076,796

2000 Corporate Ridge Road

BACM 2006-4

3.94

McLean, Va.

Office

80.00

15,405,201

1.26

REO

Bank of America

7/10/16

6/30/14

64,000,000

59,935,273

Westin - Falls WBCMT Church, VA 2006-C28

2.87

Falls Church, Va.

Lodging

120.99

13,265,680

0.76

REO

Wachovia

2/15/16

6/20/14

54,600,000

2 Rockledge Centre

BACM 2006-2

4.48

Bethesda, Md.

Office

114.23

12,344,317

1.80

Non-Performing Bank of America Beyond Maturity

2/10/16

5/29/15

65,188,000

50,648,074

6116 Executive Boulevard

WBCMT 2005-C21

11.75

Rockville, Md.

Office

226.34

29,171,359

0.02

REO

Wachovia

2/15/16

1/8/14

56,835,903

49,425,858

Towers at University Town Center

MLCFC 2007-8

2.90

Hyattsville, Multifamily 85.85 Md.

338,785

0.52

REO

Merrill Lynch

5/12/17

7/23/10

46,400,000

Willowwood I & II

LBUBS 2006-C6

1.98

Fairfax, Va.

9,198,975

0.87

Foreclosure

Lehman Brothers

6/15/16

3/26/15

% of deal

City, State

203,250,000 203,250,000 Lafayette Property Trust

JPMCC 2007-LDPX

7.17

142,450,000

Fair Lakes Office Portfolio

CD 2006CD3

116,550,000

Fair Lakes Office Park

95,000,000

65,654,212

64,000,000

Current Loan Balance

Loan Name

| FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

Property Type

Office

110.94

Model Maturity Date

Special Servicer Transfer Date

Current Current LTV ARA

Deal Name

Securitized Loan Balance

Productions of New York Real Estate TV

“The Stoler Report-Real & Report” Report-NY’s Estate Business ththe tri-state region” Business Trends in Celebrating its 15 anniversary www.thestolerreport.com now in its 12th season is a weekly panel discussion featuring real estate and business leaders. w

Building New York-New York Life Stories with Michael Stoler profiles lives of individuals from the region. The show is celebrating its 11th season The Stoler Report & Building New York: NY Stories

These broadcasts air on more than 18 educational, university, community & public access stations in NY, NJ, Conn & PA. The Stoler Report-New York’s Business Report airs in NYC on CUNY TV. Broadcast debuts on Tuesday 2 AM, & 11 PM, Wednesday, 8:30 AM, 2:30 PM & 10:30 PM, Friday, 5:30 AM, Saturday 12 Midnight & Sunday 10:30 AM. Building New York-NY Life Stories airs 8 in NYC on CUNY TV. Broadcast debuts on Monday 10:30 AM, 4:30 PM & 10:30 PM, Wednesday at 5:30 AM, Thursday at 11:30 PM, Saturday 12 Noon, Sunday at 12:30 AM & 10:30 AM. These programs are hosted by Michael Stoler, President of New York Real Estate TV, LLC, Managing Director of Madison Realty Capital, real estate commentator for 1010 WINS AM.

Now air in New York City on CUNY TV East Hampton & Montauk on WEGTV Drexel University TV, Ocean County Community College TV, Bergen County Com College Torch TV White Plains Community Media, Rye TV, Rye Brook TV, Rochester Community TV TV, PATV Great Neck/Northshore, Larchmont-LMCTV GCTV Greenwich, NHTV in Connecticut Channel 8 Putnam, Panda 23 Dutchess County Oradell TV, Plainfield TV www.thestolerreport.com www.buildingnewyork.nyc www.michaelstolertelevision.com www.itunes.com www.youtube.com www.cuny.tv All past broadcasts can be viewed on “The Stoler Report App”

Suzy Reingold.

What Does the Foxhunter Say?

Suzy Reingold, a former Schulte Roth partner as well as gameswoman extraordinaire, has launched a real estate consulting firm By Lauren Elkies Schram 48 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER

THE SIT-DOWN

PHOTOGRAPHS COURTESY SUZY REINGOLD

YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER

THE FOX AND THE HOUNDS: Ms. Reingold (pictured left in the center and right) counted foxhunting among her hobbies until three years ago. At one point, her pack included 60 English foxhounds.

t 68, Suzy Reingold has a bright future ahead of her. For the last year, she has been running her own real estate consulting business and has bagged some big New York City clients like Colliers International and JRT Realty Group. She has also helped a recruiter find management-level owner’s representatives and was hired as an expert witness in a commission dispute. Armed with a law degree from New York University, Ms. Reingold was the first— and only—female real estate partner at the law firm of Schulte Roth & Zabel. She transitioned from the legal world to real estate, working for Related Companies, the Shorenstein Company, Edward J. Minskoff Equities, Insignia/ESG and most recently as the chief operating officer of the tristate region office at Cushman & Wakefield. Ms. Reingold left the firm in October 2014, one year after filing a $20 million age and gender discrimination lawsuit against the firm for “paying her less than men who performed equal work in jobs requiring equal skill, effort and responsibility, and ultimately by failing to promote her to the position of president of its New York tristate region,” according to the suit. In December 2014, the suit was dismissed with prejudice. (C&W declined to

comment on the suit and Ms. Reingold’s attorney, David Sanford of Sanford Heisler, didn’t respond to a request for comment.) Ms. Reingold, who grew up in Stamford, Conn., works out of her apartment at The Sheffield at 322 West 57th Street between Eighth and Ninth Avenues. Commercial Observer met with Ms. Reingold last week in JRT’s Midtown offices to find out what she’s up to and how she got where she is. Commercial Observer: What was your first job? Ms. Reingold: The very first job I ever had was at Goldfarb & Fleece. They represent the Rudin family. And so I learned a lot about the leasing aspects of law right away. Did you always think you wanted to be in law? I worked as a legal secretary from the time I was 16. My father came home one day and said, “I got you a job.” And I said, “I’m only 16. I don’t want to go to work.” [Laughs.] He said, “No, you gotta do something after school. You’ll get in trouble.” And he was probably right. I went to work for a couple of young attorneys who had just started a practice; I worked every afternoon and I typed and I wrote letters and learned what it was like in a law firm.

Then I worked all through college and law school as a legal secretary. You decided to stick with it? I came home and I said to my parents, “I kind of enjoy this. I think I will be a legal secretary. I’ll go to college for two years. That’s what I’m going to do.” And they said, “Nah, nah, nah, nah. If you’re interested, then you’re going to go to law school.” My parents were very cool. My mom was born in 1912 but she was a college graduate and she went to college during the Depression. For them, education was the most important thing. My mother said, “You have to come out with something you can do, either teach, be a doctor, be a lawyer. Have something specific as a career so you can always take care of yourself.” What did your parents do for work? Actually, my mother had gone back to work when I was fairly young. She was an executive at Bloomingdale’s in Stamford and my father was a traveling salesman and then a retailer in the menswear business. So from the time I was fairly young I knew I was going to law school. It was just one of those things. Was that something you were happy about?

It was fine. Believe it or not, it’s probably the only thing I said “yes” to that my parents suggested. I was not an easy teenager, but for some reason I went along with that without any issue at all. For how many years total did you work in law? I’d say 10 years, because I left in 1981. How did you go from working at Schulte Roth & Zabel to real estate? One of my clients, Bernie Mendik, came to me and asked me to come work for him, not practice law, [but] be in charge of his portfolio, do the leasing, as an owner’s representative. It was Mendik [Company]. It’s now part of Vornado [Realty Trust]. You’ve never practiced law since? You use the knowledge. I’m a member of the bar and I keep my continuing ed active. I’m licensed and everything. In fact, that’s what I do a lot for JRT. What does that entail? [JRT Founder and Chief Executive Officer Jodi Pulice] has commission agreements for me to review or things like that, and business advice.

COMMERCIALOBSERVER.COM

| FEBRUARY 3, 2016 | 49

THE SIT-DOWN

Did you broker deals? I’ve done deals as an owner’s rep and I’ve done tenant deals here and there, but I’ve not been a promotional broker. In effect, since 1998, I’ve been on the management side of the business.

brokerage firm feels they were wrongly excluded from a commission.

What can you tell me about your time at Cushman? It was great. [Joseph Habert, whom Ms. Reingold works with at Colliers today] was great to work with. We had a great team. We instituted a lot of processes and broker management tools that Cushman had never had before, making the brokers more accountable to management [and] at the same time making them more collaborative with each other, so that the working environment was much more amenable to people getting business rather than fighting each other for business.

You’re setting out on a new career. Some people might have thought about retirement. When I first left Cushman, I will admit, the first couple of months I called everybody I knew to find a quote unquote job. I had to go to work. And then after I started the consulting for [Mr. Harbert] and this project [at JRT], I liked the fact that I did it in my time. And so for the last year I’ve been working on my time schedule.

Which side are you on? I’m on the right side. We’re representing the landlord.

But you’re not earning what you did. No. But, if I go back to figuring out what I earned on an hourly basis, I’m not working for less, I’m just working less. I didn’t take a pay cut.

What made you decide to file a lawsuit? Here I have to start being really careful because there are things I can and cannot say.

Are you married? No.

Going back to my question, what gave you the gumption to take legal action? Because it was the right thing to do. I think if I see something that isn’t right, I need to do what in my heart is necessary to rectify it. How do you feel in hindsight? No problem. I would have done the same thing all over again. What do you do for Colliers? For Colliers, what I’ve been doing for [Mr. Harbert] is I helped start a program called Accelerate, which is for entry-level brokers. And so I interviewed, hired, set up a training program—a very intensive training program for them—and I’ve been supervising that program. When did you start working for him? Feb. 1. I’m working on a consulting basis. The first thing for me to do was to start interviewing people. I interviewed about 40 people and hired nine. And actually one of the nine was already there, but wasn’t getting very far and wanted to start over again. So were you just brought in for the hiring push and launching the training? Initially that’s what I was brought in to do. I’ve had other projects I’ve been helping with. What’s been your success rate with the attendees? So far they’ve all stuck. We haven’t lost anybody, which is good. [She knocks wood.] How much of your time do you spend working for Colliers? I tried to come up with some new training because I get ideas of new classes so I’m structuring some new classes, getting 50 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER

It was settled, right? It was resolved.

GOLD STANDARD: Ms. Reingold runs her consulting business from her home.

‘If I go back to figuring out what I earned on an hourly basis, I’m not working for less, I’m just working less. I didn’t take a pay cut.’ that organized. I’ll be doing some work with [Mr. Harbert] and somebody else over there on some senior initiatives, for the more senior brokers. I work 10 to 15 hours a week for Colliers. I sometimes work from home depending on what I’m doing. I go to all of the classes because you have to be there to make sure they go the right way. I try not to teach, but I bring speakers in. So it’s prepping the teachers, making sure when they do teach that they are following what you asked them to and they’re not off doing something different.

necessarily to do that. I might do that and call and [Ms. Pulice will] hear my comments. Sometimes I come in, but not that often.

How often are you at JRT? If JRT needs me to look at a document, they’ll send it to me. I don’t come here

Who and what? It’s a brokerage firm who is litigating against an owner of a property where the

You’re doing some legal-related work, too. There are two other things I’m doing. One is I’m working with a recruiter. The company is Keller Augusta. Kate Keller is the head. I’ve been helping her find real estate candidates. And the other thing I’m doing: I was hired to be an expert witness in a real estate lease commission dispute. I shouldn’t be talking about the details of it.

Divorced? Oh, I was married 40 years ago for a short time. So you’re single. I’m single. I have great nieces and nephews. I have a granddaughter even though I don’t have children because I lived with somebody for 19 and a half years and I broke it off two and a half years ago. His granddaughter is mine because obviously I’m the only grandmother she ever really knew. So she and I are very close. What do you do for fun? That’s another whole thing. [The] building I live in, The Sheffield, has a pool and a gym, so I swim. I take swim lessons, I use the gym, I have a trainer. And I really have just been enjoying the city. Swimming lessons? Not that I can’t swim, but how to do it right, how to breathe better. Just like I have my trainer for the gym. [For] 25, 30 years my hobby was foxhunting and when I moved back to New York [full time] and left my significant other two and a half years ago, I sold my horses and I stopped. Where were you hunting? I would commute every weekend to Virginia. Before that, I had my own pack of foxhounds going way back. How many were in the pack? I’d say about 60 English foxhounds. When was the last time you went hunting? Almost three years ago. You miss it? No, I was ready to move on.

WINTER

SOIREE Mortgage Bankers Association of New York

FEBRUARY 11, 2016 | 6-9 PM Celsius @ Bryant Park (42nd & 6th Avenue, NYC)

Winter Networking and Ice Garden It’s a Leap Year, meaning one extra day in February - but the only date that should matter is February 11th, 2016. Our Winter Soiree is taking over Celsius at Bryant Park for a night of great Networking, Cocktails, Hors D’oeuvres and captivating Ice Sculptures, overlooking the iconic Ice Skating Rink. If you missed out last year, you won’t want to miss it again!”

Join Our Ice Garden Several sponsors have already locked in their ice sculptures to be displayed in our Ice Garden. Have you? Don’t miss out on your opportunity to have your company logo embedded/chiseled in an ice sculpture of an iconic New York Landmark! Call us today and we’ll make it happen!

Cost Early Registration Discount (until January 29th) $115 Members $145 Non-Members $50 Student Members

Mortgage Bankers Association of NY, Inc. PO Box 7361 | Hicksville, NY 11802-7361 Phone: 516 997 3707 | Fax: 516 997 1979 | Email: mbaofny@verizon.net www.mbany.org

Diamond Sponsor

Gold Sponsors

Bronze Sponsor

Joseph Klaynberg.

52 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

SASHA MASLOV/FOR COMMERCIAL OBSERVER

POWER PLAYER

Wonder

Boychik Joseph Klaynberg’s journey from Minsk to Manhattan

SASHA MASLOV/FOR COMMERCIAL OBSERVER

By Terence Cullen

n 1979, Joseph Klaynberg left Minsk, Belarus, and sought refugee status in Italy with the plan to eventually make his way to the United States. Life was difficult if you were Jewish in the Soviet Union, even if you had a degree in engineering from one of the top schools. During his six-month stay near Rome, Mr. Klaynberg—who was then in his mid-20s— worked at a construction site during the day and guarded the same site at night. He found passage to the U.S. through the various Jewish groups that helped Soviets come stateside. The day after he arrived in New York, Mr. Klaynberg went to work. “My first job was my last private job,” he said. “It was very easy.” It’s daunting enough to flee an authoritarian state, come halfway around the world with a couple of bucks in your pocket, start a new life and find employment. Going to work the following day requires something more—an even higher level of determination. But Mr. Klaynberg’s life in the real estate world is sprinkled with instances like these. He worked his way up from laborer to supervisor at that job, and in seven years had the capital and manpower to form Wonder Works Construction. Today, the 29-year-old company toggles between construction and developer hard hats. His focus has been on both ground-up projects and conversions, and building affordable luxury buildings in areas that are in the early stages of becoming hotspots, like Chelsea in the early 2000s or

the Financial District later in the decade. “We’re trying to create the value where there is no value,” he told Commercial Observer last week in the company’s Herald Square offices. “That’s what I like to do.” Last year, the company did $100 million in construction, and has another $200 million in the pipeline. Mr. Klaynberg, 62, said the company has partnered on more than a dozen projects as a developer and has built more than 1,000 units with another 800 units underway. That includes 302 East 96th Street between First and Second Avenues—a 48-unit luxury affordable residential building that’s being completed alongside the site of the future Second Avenue subway— which he is doing as both developer and builder. Construction broke ground in mid-December 2015 after Wonder Works closed on $60 million in financing for the project. A lease has been executed nearby for a sales office, which is going to open in the spring. Mr. Klaynberg said the building should be done next year. Last March, he and his partners paid $24 million for the site, which at the time had a three-story property on it, The Real Deal reported. Building in New York City is difficult to begin with, but factor in an already overdue subway project and things get more difficult. Mr. Klaynberg has weekly meetings with the New York City Department of Transportation and the state Metropolitan Transportation Authority to ensure the concurrent projects run smoothly. Sometimes the MTA will want to deliver supplies in front of his site, which will become even more problematic in the future when cranes arrive to lift supplies

for the 21-story building. At one point, transportation officials asked if Wonder Works could hold off construction for another year, he said. “No, it’s impossible,” he told them. “We have a loan. We have to pay back the loan in 24 months.” He added, “We’re working with them. It’s not easy, but we have a good staff.” It was interesting that Mr. Klaynberg picked that stretch of Second Avenue to make his stand. Sure, the Upper East Side has its hoary appeal, but it isn’t like Chelsea or the Financial District in terms of hotness. However, Mr. Klaynberg is banking on a simple proposition: the Second Avenue subway could start forcing commercial and residential rents back up as mass transit starts to move residents to Midtown and Downtown quicker. “The opportunity is that New York City has finally put a train on that avenue,” said Eric Brody, a principal of Wonder Works who has worked with Mr. Klaynberg on and off since 2008. “We’re hoping to meet the demand that will be created.” Being a developer as well as a construction company at the same time is something of a unique situation, since the former typically hires the latter for jobs. Wonder Works has 120 employees, about half of whom are laborers, with the rest in supervisory roles. “Usually people wear one hat,” said David Amirian of the Amirian Group, who has partnered with Mr. Klaynberg as a developer and hired him as a general contractor. “He’s one of the few guys who does both.” Mr. Amirian added that Mr. Klaynberg has the unique skill of not trying to meddle in a project when he’s strictly doing the construction. In a profession of deadlines,

setbacks and high-pressure situations, Mr. Amirian said his associate remains cool and calm, “where a lot of people in the industry don’t follow that same mantra.” People are drawn to Mr. Klaynberg’s company because he has a high attention to detail, delivers on promises and is transparent throughout projects, according to those who work with him. In the case of being a general contractor, Mr. Klaynberg has been honest when giving cost estimates and is thorough during the construction process, Mr. Amirian said. “The biggest fear is that the contractor is going to make a low bid” to win the project and increase the cost later, he added. “[Mr. Klaynberg] really doesn’t do that. He’s transparent from the beginning.” That kind of reputation drew Mr. Brody to work with Mr. Klaynberg. Originally a developer with his own company, The Brody Group, Mr. Brody partnered with him on a project in 2008 in the Park Slope section of Brooklyn. Then, about four years ago, Mr. Brody decided he wanted to start his own construction company. “The construction and development markets had started to slow down,” he said. “I realized development was fantastic, but I needed a day job.” Mr. Klaynberg told him not to start his own construction firm. Instead, he advised Mr. Brody to come work for him, but the idea of answering to a boss made the developer hesitant. Mr. Klaynberg came up with a solution: Rather than Mr. Brody working for Mr. Klaynberg, he promised Mr. Brody would work with him. After two years at the company, Mr. Brody became a partner in 2014.

COMMERCIALOBSERVER.COM | FEBRUARY 3, 2016 | 53

FROM LEFT: KARL FISCHER; CATHERINE SERREAU-THOMPSON/ELIANART

POWER PLAYER

EAST SIDE STORY: Work is under way at the planned 21-story 302 East 96th Street (left), which will produce 48 luxury affordable condominium units (right) on the Upper East Side.

“Joseph is an extremely fair person to work for,” Mr. Brody said. “Extremely demanding. He gives you a goal that he knows is difficult, that not everyone can achieve. But if you do achieve it, he recognizes the greatness of others.” Mr. Klaynberg studied for six years at Moscow University, which was one of the top schools in the Soviet Union. He returned to his native Minsk in 1977 and spent the next two years working as the chief engineer for a major construction company. His parents told him it would be best to leave the country and build a life in America. You couldn’t simply emigrate to the United States, however, without making a big splash and causing a high-profile defection sure to make the 6 o’clock news. Mr. Klaynberg said his options were to seek refugee status in either Austria or Italy. So in mid-1979, he left Minsk for Rome with $100 in his pocket. There was little to do but work and make some extra income, so he secured the construction job during the day and worked security at night. “You could not just sit and wait,” he said. “I found a part-time job.” By the time he arrived in New York at the end of 1979, he had arranged for a job at a construction company, Universal Ceiling, where he started as a laborer. Within two years, he had saved up, established himself in the United States and was able to bring his parents over before tensions within the Soviet Union flared up and it became more difficult to leave. At the same time, Mr. Klaynberg worked his way up from laborer to carpenter and eventually foreman. In 1983, he married his wife and they 54 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

‘Joseph is an extremely fair person to work for. Extremely demanding. He gives you a goal that he knows is difficult, that not everyone can achieve. But if you do achieve it, he recognizes the greatness of others.’ —Eric Brody, a principal of Wonder Works Construction went on to have three sons, ages 33, 30 and 17. Until recently, one of his sons lived in his project in Chelsea; another lives in his FiDi building; the youngest lives with Mr. Klaynberg and his wife near Union Square and is headed to Columbia University. By 1987, Mr. Klaynberg was able to start Wonder Works as a carpentry company— taking a few of his fellow carpenters, he still worked on the jobs himself. A few are still with the firm nearly 30 years later, he said. By 2000, the company grew to 100 carpenters and requests started to come in to do general contracting. The company focused solely on construction-related work until 2001, when a partner backed out of a conversion in New Rochelle, N.Y. that Wonder Works was building. Mr. Klaynberg stepped in with the vision to give it a Lower Manhattan feel at a lower price point. “Not everybody could afford Tribeca at

the time,” Mr. Klaynberg said. “So our concept was…to create the Tribeca lifestyle at more affordable prices in New Rochelle.” That was followed by the Chelsea Club at 444 West 19th Street between Ninth and 10th Avenues in 2004, which was a 42-unit project he had partnered on, before the area had been rezoned or became development-heavy. Initial prices for the condominium units at the building range from $400,000 to $1.8 million, according to City Realty, an online real estate listing company. In 2009, he developed the District at 111 Fulton Street, which has 163 units. The FiDi building has what Mr. Klaynberg called “the best rooftop in New York City” featuring a pool and cabanas. As a developer, Mr. Klaynberg is known for being hands-on in terms of how a project looks. Following his interview with CO, he gave a quick tour of Wonder Work’s

model kitchen that shows off the Italian finishes, floor tiles and appliances that he puts into projects. There are the closets that are essentially furniture, which can be moved around the apartment and are less expensive and time consuming to build. “We’ve been heavily influenced in interior design, especially coming out of Europe,” Mr. Brody said. “He has a massive attention to detail and structures the teams around him to also have that attention to detail.” Mr. Klaynberg goes to Italy twice a year to trade shows for finishes. In April, it’s kitchen cabinets and in September, it’s ceramic tiles and bathroom fixtures. Last year, he said, Wonder Works shipped 80 containers worth of finishes, cabinets and furniture, mostly from Italy, to his warehouse. Since leaving the Soviet Union about 35 years ago, he said that despite all the work trips to Europe, he’s never returned to Russia. It’s not necessarily any ill will, but his focus has mostly been on his work. “It’s not like I hate [it] or anything,” he said. “I have no hard feelings; I just don’t have time.” Mr. Brody said the fact that his partner came here from the U.S.S.R., worked his way up and now owns a well-respected development and construction company shows Mr. Klaynberg’s unfaltering will and determination to deliver on time with high-quality buildings. “He’s going to work harder than you have in your life,” Mr. Brody said, adding that Mr. Klaynberg’s history sent the message that, “You do whatever it takes to get done.”

FEATURE

DEATH TO SMOOCHY! SPENCER PLATT/GETTY IMAGES

The city’s legislative solution to Times Square’s panhandler problem kicks into high gear By Terence Cullen LOT OF CHARACTER: Legislation to regulate where costumed characters congregate in Times Square is still being crafted.

innie Mouse and Hello Kitty got into a rough-and-tumble that lead to them being slapped with handcuffs. Then SpiderMan duked it out with a civilian on the very streets he swore to protect. All the while, topless women danced around as the police took pictures with them. What might sound like a 4-year-old’s lucid dream during a fever has become a nightmare for landlords, tenants and city officials. The buskers and scantily clad cowpokes who draw in thousands of tourists to Times Square a year have become increasingly eager to get a tip in exchange for a photograph with them—calling to mind a Disney and Sesame Street rendition of the district’s seedier days. The mayor's office formed task force last year, which has been working to come up with a solution. But legislation to enact new regulations on these characters and the public plazas they congregate in would have to be introduced within the next month, according to the area’s business improvement district, in order for the changes to kick in before the tourist-heavy summer when temperatures and tempers in Times Square start to rise. “Nothing has come out yet, but I do think the City Council is working on something,” said Tim Tompkins, the president of the Times Square Alliance, which represents

landlords and tenants in the area. “The mayor is also looking at some [issues].” The city assembled a task force last year to look into regulating the various buskers, characters and performers in Times Square. They sought to address best practices to regulate the public plazas currently in the area, as well as those under construction and slated to open in the spring of 2017. In October, the task force recommended that the New York City Department of Transportation have the authority to regulate such things as plaza congestion, vendors on the streets and how they conduct themselves. Legislation is required to give the DOT the power to do so because the plazas technically aren’t the sidewalk, nor are they the street. “This was a new category of space,” Mr. Tompkins said. “The city agreed, the DOT agreed, the mayor agreed. The next step is to actually to propose specific legislation to do that.” But because the legislative process is a lengthy one, Mr. Tompkins said something would need to come out in the next month to enact a law, as well as go through the rule-making process. A spokesman for Councilman Corey Johnson, who represents part of the area and took a role in the task force, said discussions were ongoing, but a specific bill was not yet

written up. Councilman Daniel Garodnick, whose district also includes parts of Times Square, did not return a request for comment, nor did the mayor’s office. But politicians have been vocal about regulating the performers following a few newsworthy instances last summer. The Minnie Mouse/Hello Kitty scuffle last June sparked from the two fighting over a tip. Two months later, a performer dressed as Spider-Man got into it with a man outside of the now-closed Toys “R” Us at Broadway and West 44th Street, telling reporters the man told tourists not to take pictures with or tip Spidey. The punch-throwing, profanity-spewing characters have naturally made the real estate world nervous. Of course, for most New Yorkers, it hearkens back to a time when the area was home to sex shops (there are still a few remaining) and dirty movie houses. But in the last 20 years, the area has changed and is now home to national retailers and office tenants including Thompson Reuters, Ernst & Young and Morgan Stanley. The problems are important, but nothing as bad as those in the late 1980s and early 1990s. Times Square “has its issues, but these are positive issues compared to where we were 20 or 25 years ago,” William Rudin, the chief executive officer and vice chairman of Rudin

Management Company, said at Commercial Observer’s “Times Square: The Next Act” breakfast panel last week. “We can solve these issues. We’re already solving them and it’s all part of the positive growth and we’re victims to some degree of our own success.” Retail spaces in Times Square have become coveted and expensive. A fall report by the Real Estate Board of New York found that the bowtie—Broadway and Seventh Avenues between West 42nd and West 47th Streets— had the second highest ground-floor asking rents in Manhattan, averaging $2,300 per square foot; that’s about $1,000 below the asking rents of Fifth Avenue between 49th and 59th Streets, but it’s well ahead of the next highest average asking rent, $1,613 per square foot, along Madison Avenue between East 52nd and East 57th Streets. But the unruly actions of a few performers in Times Square could impact those numbers, especially since they congregate and fight for tips outside tourist-heavy retailers such as recently defunct Toys “R” Us at 1517 Broadway. “Those characters have gotten to the point that there [are] so many,” said C. Bradley Mendelson, vice chairman at Cushman & Wakefield, who represents the landlord of 1517 Broadway. “I think that it’s scaring away a lot of the tourists that are in Times Square. I know the retailers don’t like them there.”

COMMERCIALOBSERVER.COM | FEBRUARY 3, 2016 | 55

FEATURE

By Liam LaGuerre

hen the news broke last month that the Metropolitan Transportation Authority was toying with a massive shut down of the L train that could result in service disruption for three years at best (or no service for a full year, at worst) the collective response was fairly uniform: panic and hysteria. For Williamsburg and Bushwick residents (and beyond), the L train and its promised seven-minute ride to Union Square were the reasons they moved to the area in the first place. For Manhattanites, it was their easy ticket to daytripping at hipster favorites like Roberta’s or Delaware and Hudson. And, yes, we cannot deny that the prospective damage to local businesses might be great. “We have gone through some shutdowns for weekends,” said Michael Ayoub, the owner of Fornino, a pizza restaurant just down the block from the Bedford L stop. “It’s pretty devastating. Business is off 40 percent when the train goes down.” But uproar or not, the tunnels were seriously damaged from Superstorm Sandy and something has to be done about that. “The Canarsie Tubes that carry the L between Brooklyn and Manhattan were inundated with millions of gallons of salt water during Sandy, which ate away at signals, rails, conduits and anything else made of metal and concrete,” an MTA spokesman told Commercial Observer via email. “It’s still safe to operate trains through them, but they need extensive repairs.” Nothing has been decided as of yet, but it’s difficult to imagine the MTA letting the damage go unfixed forever. Gothamist was the first to speculate that the MTA could shut down train service in both tunnels for the Canarsie Line for a full year to restore them. Alternatively, it could have limited service in each direction for three years while working on the tunnels. Neither would be pleasant, but here are five reasons why people in Brooklyn should wait before reaching for the Xanax.

Locals will stay in Brooklyn. “If the shutdown happens, I think [Williamsburg residents] are going to seek out what’s really going on around them,” said Shana Sokol, a marketing consultant for Brooklyn Oenology, a Williamsburg-based winery that has a tasting room a couple of 56 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

blocks from the Bedford L. Indeed, it’s not as though there aren’t many more people in Williamsburg and Bushwick than there were a decade ago, with an abundance of retail and nightlife options. So even with temporary access cut off from the L train to skyscraper city, more Brooklynites will probably stay in the borough on Saturday night. (And Manhattan tourists can keep their paws off.) “While the L train was the main trigger and catalyst for these neighborhoods to develop in the last decade, it doesn’t mean that the potential change of the L train will have [a reverse effect],” Ofer Cohen, the president of commercial brokerage TerraCRG, told CO. “Once you reach a certain vibrancy in a marketplace, it’s going to be hard to dial it back.”

Not only will Brooklynites not go to Manhattan at night; they probably won’t go there in the day, either. It’s entirely possible that more companies will allow employees to work from home and the home-office dynamic of Williamsburg will explode. “Those few hundred thousand people that leave Brooklyn every day to Manhattan are looking to stay at home and the daytime populations in Williamsburg are going to swell,” Geoffrey Bailey of SCG Retail said. “And people, when they work, they go out and shop on their lunch break, and they go out and get drinks after work. From that perspective, it could be a very good thing for the area.” Mr. Bailey is marketing 40,000 square feet of retail at The William Vale hotel and said that he is looking for businesses that would cater to the locals living there (er, not people coming from Manhattan). They don’t intend to change their tack because of a potential stoppage of the L train. Williamsburg and Bushwick have many boutique businesses that stand to benefit if more people stay in the local areas instead of going to Manhattan for services. “I think there are enough things in this neighborhood to fill in the gaps for people,” said Tim Chung, a managing partner of the Bushwick bar, restaurant and movie theater Syndicated. “I live in Brooklyn and I don’t venture off to the city unless I have to,” Mr. Chung added. “I think that there is such a wide diversity of things to do here. There is Brooklyn Bowl, the [Brooklyn] Brewery, the Nitehawk Cinema, all different types of restaurants and bars.

DON EMMERT/AFP/GETTY IMAGES

FIVE REASONS TO CHILL OUT ABOUT THE L TRAIN

L IS FOR LOUSY: The mood was panic and despair when it was reported that the L train might be out of service for three years. But, truth be told, the L line wasn't that great to begin with. You could go out and have a different type of experience every weekend.”

The commercial office market might get in on the act, too. More employees working from home will also mean more companies will recognize that their employee base comes from Brooklyn. Why wouldn’t this have a positive effect on the Brooklyn office market, which is already seeing major investments? “From the perspective of an office developer, I would say this is a great, great thing,” Mr. Bailey said. “I think it’s going to hasten the development of the Brooklyn office market. It might even help with some of the rezoning that is going on to convert some of the [manufacturing and industrial zoning] that could be utilized for office developments.”

Real estate prices might (God help us!) actually come down. Fewer transportation options means less demand. And depending on how long the L train outage lasts, there could be a decline in residential rents, experts said. “Certainly there’ll be some rent concession,” said John Horowitz, a vice president and regional manager in Brooklyn for Marcus & Millichap. “From the tenant [perspective] it’s good, from the owner it’s not so good.” And although it’s less likely, people looking to purchase property in those areas might find those numbers could also flatten. “Generally, real estate prices take time to

adjust to outside events,” Mr. Horowitz said. “So I think people will wait and see what kind of an effect it will have. But if I am a buyer, I certainly have to use that. Prices could go down or they’ll stay flat. It will be a reaction to the rental demand.”

The L train always sucked anyway; alternate transit options should be welcomed. We’re issuing a challenge: Try to get on an L train at the Bedford Avenue stop at 8:30 a.m. on a weekday. “You are not going to get on the first train that comes,” Mr. Chung warned. The MTA has to fix issues with crowding, which members of the community find is a real problem, as well as its tunnels, to really revitalize the train. But resourceful Brooklynites have already found alternate routes. “The Marcy Avenue stop [on the M train] is not that much farther” than the L, Ms. Sokol said. “There are other ways to get into Brooklyn.” And the subway isn’t the only game in town. Many already know about a new thing called “a bus.” Or those two things dangling from your chair called “legs.” And there’s a still-untested but promising development called “taxis,” with the (probably untrue) legend of the Uber app. “Everyone’s got Uber,” Mr. Chung said. “Almost every young person I know has a smartphone with a cab app. I hear customers all the time say ‘let’s take an Uber home.’ ” —With additional reporting by Max Gross.

REAL ESTATE CONNECTED Realgraph is a national platform to connect and inform commercial real estate professionals about the deals, transactions, organizations and players driving the industry.

Owners and Investors

Tell industry players about recent acquisitions and share important details about the buildings you own

Leasing & Sales Brokers

Announce a new lease signed or sales transaction, and connect your proole to the activity and building page

Lenders, Bankers & Mortgage Brokers

Share recent loans, mezzanine and equity nancings you have arranged for your clients

Architects, Construction & Engineer Firms

Tell the market about recent and historical buildings projects you have built

Lawyers, Accountants, Technology & Professional Services Firms Share updates on organizations you have worked with Sha

Marketing & PR Firms

Add activities and updates for the clients you represent

Create your proole today to share your news with the Realgraph community

VISIT COMMERCIALOBSERVER.COM/REALGRAPH

ENDNOTES

The Party Circuit TIMES AND TIMES AGAIN

n the New York City tradition of neighborhood rivalry, the players of Times Square have a message for new developments on the Far West Side: We still have more to do than you ever will. Some of the area’s bigwigs took the swings at Commercial Observer’s breakfast panel last week, “Times Square: The Next Act,” which looked at the future of a neighborhood that’s undergone a massive transformation from seedy to successful in the last 20 years. The panel featured William Rudin, the chief executive officer of Rudin Management Company; Albert Behler, the chairman, CEO and president of Paramount Group; Ellen Albert, the executive vice president of CORE Services at Viacom; Tim Tompkins, the president of the Times Square Alliance; and Brian Waterman, a vice chairman of Newmark Grubb Knight Frank. Jonathan Mechanic, the head of the real estate group at Fried, Frank, Harris, Shriver & Jacobson, moderated the panel. Although there are concerns over some hostile costumed characters and massive vacancies from companies headed Downtown and to the Far West Side, these stakeholders said companies want to be in the area because the entertainment, transportation and dining options outpace most other places in the city. And to back up his claim that it was the crossroads of Gotham, Mr. Tompkins threw out an unusual statistic when he said the alliance found that there were 17,000 photos of it posted to Instagram per day. “Compared to Hudson Yards, we blow them away on transit access,” Mr. Tompkins said. “They’re going to spend half a billion dollars to build some giant culture shed. We’ve got more culture here in 20 feet.” Sitting on the 22nd floor of Rudin Management’s 1675 Broadway between West 52nd and West 53rd Streets, the panel also discussed how buildings have become more diversified in Times Square when it comes to tenancies. Mr. Behler pointed to Paramount Group’s 1633 Broadway between West 50th and West 51st Streets, which is home to the likes of Warner Music, Morgan Stanley and law firm Kasowitz, Benson, Torres & Friedman. “That’s a charm of the West Side and Times Square that you

58 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

PHOTOGRAPHS BY PRESLEY ANN/PMC

Jan. 26, 1675 Broadway

Left to right: Brian Waterman of Newmark Grubb Knight Frank, Tim Tompkins of the Times Square Alliance, Albert Behler of Paramount Group, Jonathan Mechanic of Fried, Frank, Harris, Shriver & Jacobson, Ellen Albert of Viacom and William Rudin of Rudin Management Company.

Left to right: Brian Waterman, Albert Behler, Tim Tompkins and William Rudin.

have different people working together in the same buildings in the same community,” Mr. Behler said. “Go to Park Avenue. Everybody looks the same. It’s all financial services [companies]. Nothing against Park Avenue, but it’s a totally different, very sterile kind of environment.” Making Times Square a community of tenants, landlords and public events was crucial to the business district’s continued success, the panelists added. The panel touted such things as a public event for the opening of the Metropolitan Opera, which this year Mr. Tompkins said will be highlighted by food vendors curated by the same team behind City

Observer Media Chief Executive Officer Joseph Meyer introduces CO’s new Realgraph program.

Kitchen—a food hall in Times Square at 700 Eighth Avenue on the corner of West 44th Street. Next up to improve public spaces, they added, were the public plazas being installed by the city, slated for completion in the spring of 2017. “The whole character has changed because people believe on a long-term basis this is a good place to make an investment,” Mr. Rudin said. “And when you have that view of the world…you do the right things because it’s not always about the quick profit—it’s about looking at a long-term perspective. That’s what we’ve done and I think that’s what you’re seeing here in this neighborhood.”—Terence Cullen

P A

PHOTOGRAPHS BY PRESLEY ANN/PMC

Panelist William Rudin of Rudin Management Company, left, moderator Jonathan Mechanic, center, and panelist Albert Behler of Paramount Group.

Albert Behler of Paramount Group discussed how the company’s 1633 Broadway has become diversified when it comes to tenancy.

Brian Waterman of Newmark Grubb Knight Frank, left, and Jill Hayman of Fried, Frank, Harris, Shriver & Jacobson.

Ellen Albert of Viacom, a panelist, gave the tenants perspective on why Times Square still had play.

COMMERCIALOBSERVER.COM | FEBRUARY 3, 2016 | 59

DATA

ChartLease

 Lease charts reflect deals closed or announced from Jan. 25- Jan. 29.



Information on leases, sales and financing deals can be sent to Max Gross at mgross@commercialobserver.com.

Office

SQ. FEET

TENANT

LANDLORD

BROKERS

220 East 42nd Street

167,000

Omnicom Group

SL Green Realty Corp.

Lee Feld of Feld Real Estate represented Omnicom in the deal, while SL Green represented itself in-house.

10 Hudson Yards

67,000

Intersection and Sidewalk Labs

Related Companies and Oxford Property Group

Michael Laginestra, Rocco Laginestra, Chris Corrinet and Chris Hogan of CBRE represented Intersection and Sidewalk Labs in the deal, while colleague Robert Alexander represented the developer with Related’s Stephen Winter in-house.

175 Delancey Street

55,000

NYU Langone Medical Center

Delancey Street Associates

There were no brokers involved in the deal.

328 West 34th Street

52,959

Music Choice

SL Green Realty Corp.

Jason Gorman of CBRE represented the tenant in the deal, while David Amsterdam of SL Green represented the landlord in-house.

711 Third Avenue

49,731

Strategic Financial Solutions

Condé Nast (sublandlord)

MHP’s Joe Friedman represented Strategic Financial Solutions and Peter Gross of Douglas Elliman represented Condé Nast in the deal.

555 Madison Avenue

23,167

Bulgari

The Coates family

Michael Goldman of Savills Studley represented Bulgari, while Cushman & Wakefield’s Robert Baraf, Mark Mandell and Ethan Silverstein represented the landlord.

15 MetroTech Center (Brooklyn)

21,000

The Slate Group

Tough Mudder (sublandlord)

Shannon Rzeznikiewicz of JLL represented Slate in the transaction, while Bernard Weitzman of Newmark Grubb Knight Frank handled negotiations for Tough Mudder.

519 Eighth Avenue

16,000

Workspace Advisory Group

Kaufman Organization

Alan Sinovsky of Sinovsky Realty Services represented the tenant. Steven Kaufman, Barbara Raskob and Yvonne Chang represented the landlord in-house.

90 Fifth Avenue

12,090

AltSchool

RFR Realty

Cushman & Wakefield’s Wayne Van Aken, Michael Hofmann and Robert Yaffa brokered the deal for the tenant. Jordan Claffey of RFR represented the landlord in-house.

386 Park Avenue South

11,600

Karhoo

HSR Corp.

Lee & Associates NYC’s Dennis Someck and Justin Myers represented Karhoo in the transaction. David Falk, Eric Cagner, Alex Leopold and Jon Franzel of Newmark Grubb Knight Frank represented the landlord.

1330 Avenue of the Americas

10,200

Servcorp

RXR Realty

There were no brokers involved in the deal.

579 Fifth Avenue

7,620

Hollis Park Partners

Stawski Partners

CBRE’s Keith Caggiano and Roshan Shah represented the tenant. JLL’s Paul Glickman, Diana Biasotti and Benjamin Bass represented the landlord.

1370 Avenue of the Americas

4,676

IPG Management

Principal Real Estate

Jared Horowitz and Justin Pollner of NGKF represented IPG, and CBRE’s Paul Amrich and Jackie Marshall brokered the deal on behalf of the landlord.

24|7 60 | FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

ChartSales  Lease charts reflect deals closed or announced from Jan. 25- Jan. 29. Information on leases, sales and financing deals can be sent to Max Gross at mgross@commercialobserver.com.

Retail

SQ. FEET

TENANT

LANDLORD

BROKERS

605 West 42nd Street

70,000

Life Time Fitness

The Moinian Group

There were no brokers involved in the transaction.

3 Columbus Circle

43,000

Nordstrom

SL Green Realty Corp. and The Moinian Group

Derek Trulson of JLL and Stephen Stephanou of Crown Retail Services represented Nordstrom in the deal, while Jeff Winick of Winick Realty Group represented the landlord.

30-30 47th Avenue (Queens)

19,105

Polo Ralph Lauren

Atlas Capital Group, David Goldstein and Gabe Marans of Savills Studley represented Polo. Brian Waterman, Howard Square Mile Capital Kesseler, Jordan Gosin and Brett Bedevian of Newmark Grubb Knight Frank represent the landlord. Management and Invesco Real Estate

Empire Outlets (Staten Island)

3,817

Jewelers on Fifth

BFC Partners

The tenant didn’t have a broker in the deal. James Prendamano of Casandra Properties represented Empire Outlets.

16 East 41st Street

3,800

Stone Bridge Farm

Alan Getz of Vanguard Investors

Cory Gahr of Lee & Associates brokered the deal for the tenant. Ben Birnbaum and Jeffrey Roseman of Newmark Grubb Knight Frank represented the landlord.

1273 First Avenue

1,800

Gregorys Coffee

1273 First Ave. LLC

Alexandra Tennenbaum and Benjamin Birnbaum of Newmark Grubb Knight Frank represented the tenant in the direct deal with the landlord.

252 Eighth Avenue

1,500

Popeyes

250 Eighth Avenue Associates, LLC

Jansen Hafen of Newmark Grubb Knight Frank represented the tenant, while Jay Gilbert, also of NGKF, represented the landlord.

Sale

BUYER

SELLER

SQ. FOOTAGE

AMOUNT

BROKERS

1700 Broadway (fee position)

Ruben Companies

The Shubert Foundation

N/A

$280 million

Brian Corcoran of Cushman & Wakefield advised on the transaction.

251 West 14th Street

Pizzarotti IBC

B+B Capital

24,000 (buildable square feet)

$23 million

Thomas Stein of Nest Seekers International procured the buyer. Howard Raber, Shimon Shkury, Jesse Deutch, Randy Modell and Victor Sozioof Ariel Property Advisors represented the landlord.

41-29 41st Street (Queens)

Norcor Management

J.C. Management Services

40,000

$15 million

Josh Orlander of GFI Realty Services represented the buyer, while Daniel Shragaei, also of GFI, represented the seller.

COMMERCIALOBSERVER.COM

COMMERCIALOBSERVER.COM | FEBRUARY 3, 2016 | 61

285 MADISON AVENUE

PHOTOGRAPHS BY KAITLYN FLANNAGAN/COMMERCIAL OBSERVER

The Plan

TAKING SHAPE: Amenities such as a lounge (top right), an outdoor rooftop common area (bottom right) and a recreation room with a PingPong table and kitchen (bottom left) have been added to the 90-yearold building to attract modern office tenants.

By Liam La Guerre When Aby Rosen’s RFR Realty purchased 285 Madison Avenue from advertising firm Young & Rubicam in 2012 for $189.3 million, it effectively bought a blank slate. The marketing company, which occupied the entire 26-story, 530,000-squarefoot office tower between East 40th and East 41st Streets, vacated the following year and RFR began a $65 million gut renovation of the property in 2014, designed by Studios Architecture. Mr. Rosen wanted to modernize the office building and add one thing it desperately needed: a little fun, or in his words, “a bridge between work and leisure,” according to a press release that came out when RFR’s plans were announced. Now, after completing the renovation in December, the building boasts plenty of fun. (There was some fun in the interim— the retail space was used to show off some rare Italian motorcycles last year.) There’s

| FEBRUARY 3, 2016 | COMMERCIAL OBSERVER

a rooftop terrace, a recreation room with a Ping-Pong table, a tenant lounge, a gym with showers and a 50-slot bike storage—amenities that come standard with newer buildings in other areas of the city to help attract today’s office tenants, but don’t appear with every Madison Avenue property pushing 90 years old (as is the case with 285 Madison, which was erected in 1926). “The building has got new energy and for all intents and purposes, it’s a brand new building,” AJ Camhi, a senior vice president at RFR, told Commercial Observer. “It has the same, if not better, amenities than all the buildings in Midtown South. And there are no other buildings near to 285 Madison that offer the same amenities that we do.” The lounge, which is located on the ground floor behind the elevator banks, will be connected through an employee-reserved door to the planned 9,020-square-foot Benjamin’s Steakhouse and a 1,040-squarefoot café—both which were recently signed as retail tenants. Employees of tenants will

be able to use the lounge as a cafeteria or meeting place, and there are flat screens mounted on the wall for teleconferencing. The recreational room of the roof also includes a kitchen for a change of scenery during a meal to reduce the stresses of a workday. In addition to the amenities, the lobby was doubled in width and the ceiling height raised to nearly 25 feet. New elevator cabs were included in the renovation. And artwork, including an awkward, metallic creature called Tin Foil Man, was added throughout the building. The art with be rotated with art in other RFR buildings. (Mr. Rosen’s hunger for art is legendary.) Asking rent for the base of the tower is in the mid-$60s per square foot and the top of the structure will be priced around $80 per square foot. The typical financial tenants that have inhabited Midtown East for decades are showing great interest in 285 Madison. Dirk Ziff’s Ziff Capital Partners already has

the entire 18,242-square-foot 20th floor of the building and GreyLock Capital management has the entire 11,400-square-foot 24th floor for its offices, as Commercial Observer previously reported. And Mr. Camhi said that RFR has about 100,000 square feet of office space in negotiations with various tenants. “As they are trying to change their typical Manhattan boring office structure, they are looking for something a bit different, which we can offer,” Mr. Camhi said. RFR is also pre-building suites of about 6,000 square feet each in the building to cater to smaller technology, advertising, media and information, or TAMI, tenants. In total, there will be about 30,000 square feet of offices in move-in condition. “The idea is to a have a diversified tenant roster where you get the opportunity to bring in a tenant of 6,000 square feet that may grow within the building,” Mr. Camhi said. “It’s like the famous saying, ‘build it and they will come.’ ”

OWNED BY:

LEASING BY:

GOLD CERTIFIED WIREDSCORE.COM

100BROADWAY.COM

The Moinian Group is pleased to appoint Cushman & Wakefield as exclusive leasing agent for

17 Battery Place

North & South

NORTH BUILDING 427,414 SF

SOUTH BUILDING 446,501 SF

200,000 sf available

Spaces ranging from 7,000 to a full floor of 36,000 sf

Potential private entrance available

Spectacular water views and light

Full floors ranging from 13,000â&#x20AC;&#x201C;23,000 sf available

Building upgrades underway

New lobby and elevator upgrades to be completed by 3rd quarter 2016 Spectacular views of the water and Battery Park

CONTACT

moinian.com

Wes Rudes

Frank Cento

Andrew Harrington

Pierce Hance

212.709.0747 Wes.Rudes@cushwake.com

212.709.0745 Frank.Cento@cushwake.com

212.709.0713 Andrew.Harrington@cushwake.com

212.841.7641 Pierce.Hance@cushwake.com

cushmanwakefield.com

RENO

FITNE

GRAB

T H E R E- I M AG I N ED PA R K AV EN U E TO W ER W W W. PA R K AV E TOW E R . CO M

R E N OVAT E D P L A Z A

R E N OVAT E D L O B B Y

A B R I L L I A N T R E- B EG I N N I N G

FITNESS CENTER

Equity Office proudly introduces the re-imagined Park Avenue Tower. Extensive capital improvements include: - New outdoor plaza - Renovated lobby - New destination dispatch elevators - The Club, a 20,000 square foot amenity space which includes a high-end fitness center, curated grab-and-go food concept, and business and recreation lounge

GRAB-AND-GO CAFE

W W W. PA R K AV E TOW E R . CO M

1/20/16 5:33 PM

TOWE R FLOOR - SO UTH - FACI N G VI E W

EquityGatefold.indd 2

B U I LDI N G WITH I N A B U I LDI N G OFFICE S PACE - S ECON D AN D TH I R D FLOORS

TOWER FLOOR - NORTHEAST VIEW

1/20/16 5:33 PM

NEW OPPORTUNITIES - Contiguous block of 300,000 RSF available - Building within a building, private entrance - Three-story penthouse with 360° views - Exceptional 12�9� ceiling heights - Newly discovered transom windows

Brian Waterman 212 372 2299 bwaterman@ngkf.com Jared Horowitz 212 372 2022 jhorowitz@ngkf.com Lance Korman 212 372 2160 lkorman@ngkf.com Brent Ozarowski 212 372 2246 bozarowski@ngkf.com Ben Shapiro 212 372 2421 bshapiro@ngkf.com

Zachary Freeman 212 520 8011 zachary_freeman@equityoffice.com Scott Silverstein 212 520 8016 scott_silverstein@equityoffice.com

W W W. PA R K AV E TOW E R .CO M

EquityGatefold.indd 1