SUBSCRIBE TODAY! VISIT WWW.TRYRERS.COM Est ab li s h e d 1 8 7 2
the
financial
www.bankerandtradesman.com
WEEK OF MONDAY, NOVEMBER 6, 2017
services
and
real
estate
weekly
for
massachusetts
A Publication of The Warren Group FAITH-BASED INVESTMENTS
Reconciling Religion And ROI
PRESSURE MOUNTS
Deposit Pressure Rises Across The State
CODE CORRECTION
Islamic Financing Paves Way For Amazon Robotics Deal
Money Market, Savings Accounts Seeing 150 To 200 Basis Point Promotions
BY STEVE ADAMS BANKER & TRADESMAN STAFF
L
ike many overseas sources of capital, Middle Eastern investors are seeking to buy Greater Boston commercial real estate because of the region’s thriving tech cluster and growth prospects. That made the Amazon Robotics headquarters in North Reading a prized acquisition for Ibdar Bank of Bahrain and its U.S.-based partners, Ritz Banc Group and Lincoln Property Co. They paid $48 million in October for the 229,000-squarefoot office and R&D building at 300 Riverpark Drive, which is 100 percent leased to the e-commerce leader for research on its 100,000-strong army of warehouse robots. The deal was notable because it was structured to be Shariah-compliant under Islamic banking rules, which forbid the payment or collection of interest and prohibit speculative investments. None of the three investors makes direct payments on the $27 million mortgage issued by Blue Hills Bank. That falls to a holding company, 300 Riverpark Property Corp., which was formed to collect the investors’ payments and pass them on to the bank.
Shariah-compliant banks each rely on their own Shariah supervisory board – comprising at least three Muslim scholars – to determine which properties qualify for acquisition. Such lease-type arrangements, sometimes referred to in the financial industry as a “Shariah wrapper,” provide a layer of separation between the property owners and interest payments. They enable Middle Eastern syndicators to broaden the pool of prospective investors in real estate funds, said Sula Fiszman, a partner at Morgan, Lewis & Bockius LLP in Boston. “They need to be able to say that the investments are Shariah-compliant so they can cast as wide a net as possible when they drum up investors, just like
BY BRAM BERKOWITZ BANKER & TRADESMAN STAFF
LANDLORDS CLAIM EXCLUSION FROM CODE CONVERSATION Proposed Changes To Sanitary Code Are ‘Unclear And Unfair’ “It’s been said that the state wants Cadillac homes for Chevrolet people. It’s a really hard conversation to have.” — Douglas Quattrochi
Executive Director, MassLandlords
BY JIM MORRISON | BANKER & TRADESMAN STAFF
P
roposed changes to the Massachusetts Sanitary Code have local landlords running hot. They claim they were not consulted prior to the announcement of those changes, and that the changes are unclear and an unfair burden on rental property owners. Few people are familiar with the significance or contents of the state sanitary code, but a single violation of this code entitles tenants to withhold rent from landlords until the violation has been remedied. The older the property, the more likely a violation exists, and landlords fear tenants will use some of the proposed changes to unfairly avoid paying rent. Proposed changes would muddled the language of the regulations and make it more difficult to comply, said Douglas Quattrochi, executive director of MassLandlords. “We found out about the proposed changes late in the process and submitted our 11-page testimony at 8 p.m. [on Oct. 6], three hours after the 5 p.m. cutoff,” he said. “I would not be surprised if they completely ignored our input because we were late. I don’t think they’re interested in our input, though I hope I’m wrong. We’d like to be their go-to organization in the industry. There’s a lot of conversation that goes on behind the scenes; we want to be a resource for public officials.” MassLandlords’ testimony is not among the public testimonies posted on the Department of Public Health’s website, and they are Continued on Page 8
Continued on Page 9
CONTENTS
Residential ��������������������������������������������������������������� 8
Points ����������������������������������������������������������������������� 4
Commercial & Industrial ������������������������������������������ 9
By The Numbers ������������������������������������������������������� 6
Banking & Lending ������������������������������������������������� 10
SPECIAL SECTION
In Person ������������������������������������������������������������������ 7
Classified Sections ������������������������������������������������� 11
2017 Prism Awards ����������������������������������������������� B1
Records Section ������������������������������������������������������ C1
W
ith another rate hike slated for December, banks in Massachusetts and New England appear to be experiencing more deposit pressure as customers seek higher returns in an economy currently on the upswing. Many banks reported higher cost of funds and lower margins in the third quarter, leaving investors with questions about competition in certificate of deposit accounts, as well as money market and savings accounts. While outflows and competition seemed to derive mostly from the municipal arena, banks also said they were facing pressure on commercial deposits, and even some on the consumer side. “Banking in Massachusetts puts you on the leading edge of these deposit pricing pressures,” Jeff Reynolds, managing director of Newburyport-based Darling Consulting Group, told Banker & Tradesman. “The Boston area has seen strong loan demand. There are also a number of mutual banks that recently converted to stock and have been working diligently at deploying the new capital in the form of loans. They need the traditional deposit-based liquidity and have been working just about every avenue to find it.”
“Municipalities are an extremely attractive source of deposits. They come in large amounts, are very predictable and don’t require a lot of servicing.” — Bob Mahoney President and CEO, Belmont Savings Bank
The national average on savings accounts returns was .09 percent, with the best rates at about 1.5 percent as of Nov. 1, according to Bankrate. The national average for money market accounts was .13 percent, with the best rates at 1.41 percent. Eric Newall, executive vice president and CFO of United Bank, which has branches in Connecticut and Western Massachusetts, told a group of investors on an earnings call he was seeing promotional Continued on Page 10