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A Publication of The Warren Group MAKING THE GRADE? COMMERCIAL INTERESTS
Boston Building Owners Wary Of Energy Reporting Law
Patrick’s Superstorm Solution
A DROP IN THE BUCKET? Why New York’s Climate Change Plan Should Be Emulated Here
W
ow, sure is a lot cheaper dealing with climate change here in Massachusetts than down in the Big Apple, where not only real estate is more expensive, but apparently storm barriers as well. In case you missed it, New York City has rolled out a $20 billion plan to erect a veritable Atlantic Wall of coastal defenses against the next superstorm. Talk about flushing those billions right into the Hudson! Well, all I can say is thank the good Lord for Gov. Deval Patrick and our sage legislative leadership on Beacon Hill, who’ve figured it out how to do it all for a little over $50 million. So smart, these guys. Who knew? OK, I am being facetious. Here in the Bay State we are taking on the existential threat of climate change and coastal inundation with the equivalent of Elmer Fudd’s pop gun, while New York, deeply scarred by Sandy, is going at it full blast with a howitzer. And for developers in Boston and up and down the Bay State, who have invested untold billions, this is nothing short of a potential nightmare, with only a matter of time before Boston inevitably gets slammed by one of these monster storms.
Commercial Landlords Scramble To Compile Power, Water Use Data
C
BY STEVE ADAMS BANKER & TRADESMAN STAFF WRITER
ommercial property owners in Boston have a big homework assignment due May 15 but some are praying for an extension and warning that their grades could be misleading. By May 15, owners of an estimated 1,050 commercial buildings that are 50,000 square feet or larger are required to submit data on 2013 power and water usage to the city. The Building Energy Reporting and Disclosure Ordinance (BERDO), approved by the City Council last May, was submitted by former Mayor Thomas Menino with the stated goal of reducing greenhouse gas emissions. While sympathetic to its greenfriendly goals, some real estate and business groups say the law is confusing, burdensome to smaller landlords and could scare away potential tenants when building data is publicly released in coming years. Many property owners were becoming anxious because they hadn’t received any outreach from the city until late January, said Greg Vasil, CEO of the Greater Boston Real Estate Board. “When you try to change someone’s behavior, you really have to reeducate them and unless you have a serious effort, that’s not going to happen here,” Vasil said. For now, there are no penalties for energy-hogging properties, only potential fines for owners who fail to submit the required data on time. The ordinance calls for fines of up to $200 a day and a maximum of $3,000 per year for each building that fails to report. The city began its outreach on Jan. 22, sending a letter to all landlords whose properties are required to report this year, based upon assessors’ Continued on Page 7
Residential ������������������������������������������������������������ 11 Classified Sections ������������������������������������������������� 13 Records Section ������������������������������������������������������ B1
6.6% YEAR: 2100 SEA LEVEL RISE: 3-6 FEET PERCENT OF BOSTON FLOODED:
30.1% Source: Boston Society of Architects
Amazingly, Gov. Deval Patrick has been playing up his $52 million proposal as if it were start of some global warming Manhattan project. Maybe he hasn’t read the headlines out of New York, or simply thinks most of us here – in the Hub of the universe after all – aren’t concerned about goings on in such distant lands. However, given the scale of the threat we face here in our coastal state, Patrick’s proposed $52 million is just large enough to draw ridicule from right-wing blockheads like radio host Michael Graham, but not enough to do much else. It is but a drop in the bucket, if that, spare the pun, with the money to be spread out over the state, instead of concentrated in Boston and a few other key and vulnerable coastal centers. We are talking about $10 million for seawalls in coastal communities – a Band-Aid compared to the billions New York plans to spend on floodwalls and reinforced dunes, bulkheads, surge barriers and levees. The other $40 million in Patrick’s plan will be doled out as grants to communities to build emergency power backup systems, using green energy, of course. Let’s just Continued on Page 3
Bill Shifts Liability After Hack Attacks
By The Numbers ������������������������������������������������������� 6
Banking & Lending �������������������������������������������������� 9
YEAR: 2050 SEA LEVEL RISE: 1-2 FEET PERCENT OF BOSTON FLOODED:
Small Thinking For Big Times
Proposed Law Targets Data Breaches
Points ����������������������������������������������������������������������� 4
In Person ������������������������������������������������������������������ 8
According to a report released last summer by the Boston Society of Architects, 30 percent of Boston will be flooded by the year 2100.
GUARDING THE GATE
CONTENTS
Commercial & Industrial ������������������������������������������ 7
HOW HIGH WILL IT GO?
BY SCOTT VAN VOORHIS BANKER & TRADESMAN COLUMNIST
A
BY LAURA ALIX BANKER & TRADESMAN STAFF WRITER
bill pending before the Massachusetts legislature would more evenly distribute the financial responsibility for dealing with data breaches at retailers, though bankers meanwhile have done what they can to mitigate their own security threats and recoup their customers’ losses. The wave of cyberattacks on retailers has
been seemingly endless. First it was Target. Then, Neiman Marcus. Most recently, the craft supply chain Michael’s announced it, too, was investigating a possible security breach. But the bill currently pending before the state legislature was actually not introduced in response to the Target fiasco. State Sen. Anthony Petruccelli sponsored the legisla-
tion around this time last year for consideration during this year’s session. David Floreen, a senior vice president at the Massachusetts Bankers Association, likens it to the assumption of liability in an automobile accident: The driver who caused the accident is responsible for assuming whatever automotive or medical costs the Continued on Page 9
2
BANKER & TRADESMAN
Timothy M. Warren Jr., CEO and Publisher David B. Lovins, President and COO
Banker & Tradesman ESTABLISHED 1872
Published by The Warren Group EDITORIAL
FEBRUARY 3, 2014
THE WEEK ON THE WEB A ROUNDUP OF OUR MOST POPULAR WEB-ONLY STORIES FROM THE PAST WEEK
If you weren’t reading BankerandTradesman.com last week, here’s a sampling of what you missed: BAY STATE MONTHLY HOME SALES DROP IN DECEMBER
Editorial Director: David L. Harris Editorial Operations Manager: Cassidy Murphy Associate Editor: Steve Adams Web Producer: Anna Sims NEWSPAPERS Reporters: Colleen Sullivan, Laura Alix Contributing Writer: Scott Van Voorhis
• Single-family home sales in Massachusetts dropped slightly in December, to 3,712 from 3,725 in December 2012. The decline was less than 1 percent. This marks the second consecutive month of home sales decreases, and the fewest number of sales recorded in one month since April. • Year-to-date sales in the Bay State increased 4.9 percent with 49,699 home sales recorded, up from 47,401 during the same period last year. Fourth quarter sales were also up, increasing 4.5 percent to 11,948 in 2013 compared with 11,432 in the fourth quarter of 2012. • “Low inventory combined with increasing interest rates have slowed the market at the end of 2013,” said The Warren Group CEO Timothy M. Warren Jr. “Sales and prices set a torrid pace in the third quarter of 2013 and through October. Now the market is taking a breather.”
CUSTOM PUBLICATIONS Editor: Christina P. O’Neill M A R K E T I NG & C R E A T I V E S E R V I C E S Director of Marketing and Creative Services: John Bottini Design Production Manager: Scott Ellison Graphic Designers: Tyler Grazio, Tom Agostino, Amanda Martocchio PUBLISHING GROUP SALES Director of Media Solutions: George Chateauneuf Publishing Group Sales Manager: Richard Ofsthun Advertising and Events Interns: Matt Hart NEWSPAPERS Advertising Account Managers: Erik Mohn, Jonathan Grimm Classified Advertising Sales Manager: Wayne Gregory
• The median price of a single-family home continued to rise in December, reaching $311,125. This represents a 3.7 percent increase from one year ago when it was $300,000. This is the 15th-consecutive month of yearover-year increases in the median price of a single-family home. • Condo sales jumped 15.29 percent in December, up to 1,614 from 1,400 one year ago. Condo sales for 2013 were also up. Sales increased 6.8 percent to 20,332 from 19,034 during the same period last year. Fourth quarter condo sales made a leap as well, increasing 13.62 percent to 4,980 in the final quarter of 2013 compared with 4,383 in that period one year earlier.
HAYES TO RETIRE FROM CEO POST AT SCITUATE FEDERAL • Joseph C. Hayes will retire from his daily duties as chief executive officer of Scituate Federal Savings Bank, the bank’s board of directors announced Monday.
CUSTOM PUBLICATIONS Advertising Account Managers: Jeff Nieves, Claire Merritt, Bob Holzhacker, Mike Lydon
• Richard L. Rowe Jr., previously the president and chief operating officer, will assume the title of CEO upon Hayes’ retirement. Hayes will continue to serve as chairman of the bank’s board of directors.
Advertising Coordinator: Jiayi Fang
• Hayes served as CEO of the bank for 23 years. Under his leadership, the bank has grown from $63 million to more than $270 million in assets.
EVENTS Events Manager: Sarah Warren Events Coordinator: Emily Torres
• Rowe joined the bank in 1992 and previously served as treasurer and chief financial officer before assuming the roles of president and chief operating officer.
DATA PRODUCTS GROUP
RICHARD L. ROWE, JR. AND JOSEPH C. HAYES
Director of Sales, Information Solutions: Mary Suter Data Solutions Account Managers: Patrick O’Keefe, Molly Simpson Data Solutions Account Manager and Fulfillment Services: William Visconti
JAPANESE SUBSIDIARY TO OPEN BMW, MINI DEALERSHIP ON HINGHAM-ROCKLAND LINE
Data Solutions Senior Sales Support Representative: Alice Diggs
• Gallery Automotive Group LLC has signed a long-term lease for a 58,000-square-foot dual automotive dealership on the Hingham-Rockland town line to house BMW and MINI.
Information Solutions Sales & Marketing Associate: Natasha Carter
• Gallery Automotive Group is a wholly owned subsidiary of Marubeni Corp. of Japan. With this lease, it will be relocating and expanding its currently BMW dealership at 98 Accord Park Drive in Norwell and combining it with a new MINI dealership.
INFORMATION TECHNOLOGY
• “Remaining close to its existing customer base in Norwell, expanding its presence and capacity on the south shore and gaining prominent, unparalleled highway visibility were paramount in Gallery’s search,” Peter Cooney, senior vice president at The Conrad Group, which represented Gallery Automotive Group LLC, said in a statement. “Although our search included identifying and evaluating existing and underutilized buildings, it was clear early on that ground up development would be the best course of action.”
Senior Applications Developer: Joe Chan Software Development Manager/ Senior Business Analyst: Alan Pasnik Software Developer: Tatyana Lisyanaya Network Administrator: Mark Craver
BRACKENBURY NAMED ROSE KENNEDY GREENWAY CONSERVANCY EXECUTIVE DIRECTOR
INFORMATION SERVICES
• Jesse Brackenbury, the acting executive director of the Rose Kennedy Greenway Conservancy, was named the organization’s executive director.
Operations Manager: Jim Snyder
• Brackenbury joined the Rose Kennedy Greenway Conservancy as chief operating officer in December 2009 and assumed the role of acting executive director following the January 2013 departure of founding Executive Director Nancy Brennan.
Operations Coordinator: Kathy Ferraro Data Processing Supervisor: Fern Cruickshank Acquisition Manager: Ellen Docherty Acquisitions Coordinator: Linda MacDonald Business Analyst: Samantha Bullock Data Quality Auditor: Kelley Crosby-Ewing FINANCE & ADMINISTRATION Accounting Manager: Mark DiSerio
• “Jesse Brackenbury has proven that he is a very capable leader of the Greenway,” Georgia Murray, chair of the conservancy’s board, said in a statement. “He has embraced the public/private partnership and promoted the Greenway as an economic driver for Massachusetts. He will help fulfill the Greenway vision of a great urban park: a place that welcomes people from all over the commonwealth and beyond, and gives both residents and tourists a beautiful space to play, relax and enjoy.”
MASS. SECOND IN NATION FOR JOB CREATION
Accounting Staff: Cheryl Behl
• Massachusetts added more jobs in December than any other state with the exception of North Carolina, according to new data from the U.S. Bureau of Labor Statistics.
Human Resource Manager: Linnea Blair Accounts Payable: Olga Khalaydovsky
BANKE R & TR AD ESMA N
• Prior to joining the Greenway Conservancy, Brackenbury worked for The Boston Consulting Group where he managed strategy, real estate, organizational development and other projects for Fortune 500 companies and government.
(ISSN 0005-5409)
Volume 194, Number 5 Published each Monday. ©2014 The Warren Group Inc., 280 Summer Street, Boston, MA 02210-1131. All rights reserved. No part of this publication may be reproduced without the written consent of the publisher. Banker & Tradesman™ and The Warren Group™ are trademarks of The Warren Group Inc. Subscriptions to Banker & Tradesman: One year – $308 Two year – $550 Single copies are $10.00 each and are on sale at the offices of the publisher. POSTMASTER: Send address changes to: Banker & Tradesman The Warren Group 280 Summer Street, Boston, MA 02210-1131 Phone: 617-428-5100. Fax: 617-428-5119. www.bankerandtradesman.com Periodicals postage paid at Boston, MA
• According to the bureau, six states had statistically significant month-over -month changes in employment, four of which were increases. The statistically significant job gains occurred in North Carolina, which added 11,100 jobs; Massachusetts, which added 10,300 jobs; Minnesota, which added 9,500 jobs; and Hawaii, which added 3,300 jobs. • The Massachusetts unemployment rate dropped slightly to 7 percent in December, but remained above the national unemployment rate for the second straight month.
HERE’S WHAT YOUR PEERS WERE INTERESTED IN LAST WEEK: MOST VIEWED:
MOST EMAILED:
• Minority Homeownership Elusive In Bay State • Hayes To Retire From CEO Post At Scituate Federal • Japanese Subsidiary To Open BMW, MINI Dealership On Hingham-Rockland Line • Converted Mills Find Second Life As Offices, Housing • Everett’s Batch Yard Development Receives $68M In Financing
• • • •
Everett’s Batch Yard Development Receives $68M In Financing Converted Mills Find Second Life As Offices, Housing Hayes To Retire From CEO Post At Scituate Federal Japanese Subsidiary To Open BMW, MINI Dealership On Hingham-Rockland Line • Marttila Rejoins Nantucket Bank As Senior VP
STORY IDEAS? Email your submissions to our Web team at editorial@thewarrengroup.com
3
BANKER & TRADESMAN
FEBRUARY 3, 2014
More Prep Needed For Next Sandy
Choose a lender with all the right properties.
hope all those windmills and solar panels are up to the task when disaster strikes. Like Patrick, New York Mayor Michael Bloomberg was wrapping up a final term in office last SCOTT VAN VOORHIS year when he rolled out his $20 billion coastal defense plan. But unlike Bloomberg, who chose to go out with a bang when assessing one of the greatest threats facing New York, Patrick chose to go out with a whimper dressed up as a roar, with a superstorm defense proposal long on rhetoric, short on cash. How do the two plans compare? Not so well. Bloomberg’s plan calls for not just protecting New York’s subways and electric grid from being washed away, but also safeguarding hospitals and other key installations. New York officials even plan to offer more than a billion to tower and building owners to harden their properties against storm surges. No one really believes the kind of money being talked about in Massachusetts will be enough to just start cleaning up after a monster hurricane, let alone help absorb the punch. The Boston Harbor Association’s Vivien Li says she is encouraged by the Patrick proposal, but notes it is just a start. Sure, some Boston and state agencies are starting to study the problem, so you can add in a few more million beyond the $52 million the guv has pledged. The head of the state Senate’s panel on climate change and global warming, Sen. Marc Pacheco, last week jumped on the bandwagon. His bill calls for a study on the impact of climate change on Massachusetts, but with no funding attached. Another profile in courage.
Job Too Big For Private Sector
In fact, the private sector has taken the only concrete actions so far here in the Bay State. Spaulding Hospital’s new facility in Charlestown was purposely built a foot higher and with artificial reefs to boot, while over at Fan Pier, the mechanical systems of new high-rises will be installed high up and well above any potential storm surge. Yet the threat of superstorms and rising sea levels ravaging our priceless coastline is a problem that requires thinking big – billions big. In the end, it doesn’t matter what individual developers do if their buildings become isolated islands in a flood zone, with
Courtesy WXY Architecture + Urban Design
Continued from Page 1
A RENDERING OF A SEAWALL IN NEW YORK.
SPAULDING HOSPITAL’S NEW FACILITY IN CHARLESTOWN.
public infrastructure, from the electric grid to the MBTA, having collapsed around them. This is not a problem that can be offloaded onto the private sector – it’s a challenge so large and sweeping, akin to defense, that only government, with its ability to tap the public purse, has the ability to grapple with it. As it stands now, we are living on borrowed time. The only reason that Sandy also didn’t send the ocean crashing into downtown Boston was that it hit during low tide. If it had, the harbor would have flooded across the New England Aquarium and Rowes Wharf and across Faneuil Hall to the base of City Hall. It’s only a matter of time before one of these killer storms hits Boston and the Massachusetts coast full-bore during high tide. Another wonky plan or study just doesn’t cut it. New York took a $19 billion hit when Sandy surged ashore. Sure, Boston is smaller than our archrival, but you can be sure that the Hub and towns and smaller cities would get buried under billions of dollars of damages should a similar storm strike here. And when it does, the million or two spent here and there on studies instead of sea walls and various flood protections will seem like a very bad joke. n
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4
BANKER & TRADESMAN
FEBRUARY 3, 2014
Points EDITORIAL
The Maginot Line of Data Breaches
T
he Target data breach that happened at the utterly worst time for the big retailer is only the highest profile example of the threats lurking within the drive to make Point Of Sale (POS) transactions more convenient. Many consumers burned by data breaches are now far more likely – and justifiably so -- to use a much cruder phrase in connection with that acronym. So we just might be at a tipping point where it becomes more cost-effective to address the problem of vulnerability rather than relying on minimum standards of security and hoping for the best. The take-home lesson from a Jan. 28 conference on data security, held in New York City and sponsored by the Online Trust Alliance (OTA) with support from the metro Better Business Bureau, was that the majority of breaches have been crimes of opportunity, unpreventable by technology alone. Such human errors as emailing sensitive documents to the wrong recipients, putting them on laptops or data-storage devices that circulate outside a company’s intranet, or outsourcing data storage to service providers, are raising the risk profile for both banks and businesses. In the Target case, stolen electronic credentia;s gave hackers a way in. OTA’s analysis of nearly 500 data breaches in the first half of 2013, revealed that fully 89 percent could have been avoided through the implementation of simple controls and security best practices. That’s consistent with past research published by Verizon showing that such practices would have helped prevent up to 97 percent of data breaches in 2011. Adding to the human-error problem is the varying compliance requirements of different states and jurisdictions. So companies that do business in multiple states face a real compliance challenge. And they’ve got to raise the bar to meet customer expectations around timely reporting of data breaches. Then, there are the banks. The last thing they want is to be the bearer of bad news – that they’ve had to cancel and replace customers’ bank-held credit and/or debit card because of a data exposure on the part of a retailer or other third party. Customers in this situation have to deal with declined card transactions until they can provide all the entities with which they do business, with new card information. So, the much-vaunted chip technology widely adopted overseas won’t solve all the transaction problems that are lurking out there in the age of Bring Your Own Device. We’re just at the Maginot Line of convenience meeting vulnerability in the new age of tech. For those who don’t want to Google this, the Maginot Line was a fortification established in the 1930s by the French to provide time for the army to mobilize in the event of an attack by Germany. It did prevent a direct attack, but the German army ran around the line and defeated France in about six weeks. It became the symbol of the adage that generals always fight the last war. So here we are. Good technology and good practices will both be needed to fight the next war. n
Banker & Tradesman Dav i d Ha r r i s
Editorial Director d h a r r i s @th e w a rr e n gr ou p . c om T i m o t h y M . W a r r e n J r . , P u bl i s h e r T i m o t h y M . W a r r e n , P u bl i s h e r 1 9 7 5 - 1 9 8 8 K e i t h F . W a r r e n , P u bl i s h e r 1 9 2 8 - 1 9 7 5 W i l l a r d C . W a r r e n , P u bl i s h e r 1 9 0 1 - 1 9 2 8
THE NATION’S HOUSING
The Long Reach Of Identity Theft
T KENNETH HARNEY
Though victims may not be liable for the unauthorized debts racked up, their credit reports – and in turn their credit scores – can be damaged for weeks or months.
BY KENNETH R. HARNEY WASHINGTON POST COLUMNIST
he numbers of affected consumers are as yet impossible to predict, but mortgage credit experts warn that the recent massive data breaches at Target, Neiman Marcus and other retailers could have significant side impacts on some real estate transactions in the coming months, as damaged credit files depress scores and jeopardize loan applications and home sales. The Target breach alone could touch as many as 70 million credit and debit card customers, according to the company. Neiman Marcus says that data on 1.1 million of its customers may be vulnerable to fraud. Data security researchers report that at least six other merchants have experienced data breaches from point-of-sale malware similar to what was used in the Target thefts. Both Target and Neiman Marcus have sought to reach out to customers and have offered free credit-monitoring services. But credit experts say it’s likely that given the sheer size of the data thefts, large numbers of people either have not taken advantage of these offers or have, for varying reasons, not been aware that their data may have been compromised. So what are the potential blowbacks on home sales and mortgage applications? Start with the basics. Identity theft, if not corrected quickly, can make a mess of anyone’s credit bureau files. Though victims may not be liable for the unauthorized debts racked up, their credit reports – and in turn their credit scores – can be damaged for weeks or months.
The Credit Mess
Listen to Terry Clemans, executive director of the National Consumer Reporting Association, the primary trade group that represents independent credit-reporting companies serving the mortgage industry. Clemans says that mass identity heists such as those at Target and Neiman Marcus have the potential to create “havoc on credit files for as long as it takes for the consumer to document [that] the accounts are due to identity theft and get them removed from the file. The impact on credit scores, although short term, is devastating because they are current defaults and [trigger] a big hit to the score. With the sizes of the breaches, this could be painful for a long time.” Sarah Davies, senior vice president for VantageScore Solutions, one of the two major providers of consumer score models used by banks and other creditors, confirmed that unauthorized debts on credit reports “can have
quite a big impact” and could interfere with certain transactions you want to undertake, such as buying a home or applying for a mortgage. Among the scenarios that could begin surfacing as the stolen information from retailers is sold and used in the coming months: • Home sales could be knocked off track by the sudden appearance of new debts on buyers’ credit reports. Many lenders now monitor national credit bureau files electronically from the date of loan approval to moments before closing. Even if you explain that you were a victim of identity theft, your financing could be put on ice until you and the bureaus clean up your reports. That could cause you to miss contractual deadlines with the home seller and, worst case, cause you to lose the house. • Undetected run-ups of balances on credit cards could seriously affect “utilization ratios” – how much of the available credit maximum a consumer has drawn down – and cause declines in scores. High rates of utilization or “maxing out” are penalized by the major scoring models. Lower credit scores, in turn, may disqualify you for a mortgage, at least until you are able to document to the credit bureaus’ satisfaction that the new debts were the result of identity theft. • Undetected use of your information to create one or more new credit cards could be especially damaging and time consuming to fix. Clemans notes that although merchants and the bureaus may be eager to help resolve identity theft situations, they are also on guard against attempts by consumers to blame everything negative in their files on identity theft. They’ll want proof and documentation before expunging the bad information. In the mortgage context, there’s another complication: Although independent credit reporting agencies, who resell and reformat the national credit bureaus’ data for lenders, can often help advise loan officers on ways to improve their applicants’ scores – a service known as “rapid rescoring” – they can’t help in identity theft repairs. That needs to be done by the consumers themselves – contacting the bureaus, placing fraud alerts or freezes on their accounts, then working to clean out the bad stuff, line by line. n
Ken Harney’s email address is kenharney@earthlink.net.
5
BANKER & TRADESMAN
FEBRUARY 3, 2014
Opinion AT THE MARGINS
With Interest Rates Rising, Banks Should Focus On Risk Management Best Solution Is Good Preparation BY ROBERT B. SEGAL SPECIAL TO BANKER & TRADESMAN
O ROBERT B. SEGAL
It is sometimes challenging to add assets in this kind of environment, because bankers could find these assets to be underwater in the near term.
ver the past five years, financial institutions have operated in a setting of historically low interest rates. These conditions have influenced changes in asset mix while presenting challenges to maintaining profitability. As interest rates declined, the yield curve steepened, prompting many institutions to rely more heavily on longer-term loans and securities to support profitability. According to a recent report by the FDIC, these changes in balance sheet composition appear to have resulted in increased interest rate risk exposure. Asset expansion since 2008 has primarily been the result of growth in bank securities portfolios, according to the FDIC. Securities balances grew by a larger dollar volume and at a considerably faster pace than loans during the five years ending second quarter 2013. During this period, the annual growth rate of securities far exceeded the increase in loans (8.2 percent vs. -0.4 percent). Securities as a percentage of assets increased from 14.7 percent to 20.2 percent for institutions with assets over $1 billion and from 18.5 percent to 23.1 percent for banks under $1 billion. Even as smaller banks increased securities holdings, they’ve also shifted to securities and loans with longer maturities. Since second quarter 2008, longer-term assets (loans and securities with maturities or repricing dates greater than five years) increased from 19.9 percent to 28.8 percent. Long-term securities represent 13.0 percent of assets and more than half of all securities held by smaller banks. Long-term loans represent 15.8 percent of assets. Meanwhile, larger
banks have only slightly increased longer-term assets, from 19.3 percent to 20.7 percent. Although it is difficult to predict when interest rates will increase, the FDIC guidance urges banks to prepare for a period of rising interest rates. The report said the value of longer-maturity securities may decline as interest rates increase, putting banks’ earnings, liquidity and images in jeopardy.
Keeping Risk Down
To reduce risk, the FDIC recommends that banks consider boosting their holdings of shorter-maturity or variable-rate securities and lock in profits by selling longer-term securities. Banks that have extended asset portfolio duration to capture higher yields may find that variable-rate products are more effective in managing sensitivity and mitigating potential depreciation in the portfolio. While a shift to floating-rate assets certainly helps to reduce interest rate sensitivity, this comes at a cost. At the December 2013 FOMC meeting, the Fed reaffirmed its view that highly accommodative monetary policy will remain appropriate for a considerable time after their bond purchase program ends and the recovery strengthens. The Fed anticipates the target range for federal funds will remain at 0 to 25 basis points until “well past the time” that the unemployment rate declines below 6.5 percent. A wide range of indicators implies that the first increase in the target federal funds rate will occur during the latter stages of 2015. Based on trading in short-term interest rate futures, the Fed will raise rates no earlier than the third quarter of 2015. A majority of Fed governors and district presidents see the first hike in 2015. Of this group of 17, only two look for an in-
crease this year, while 12 expect it to happen in 2015 and three in 2016. Most policymakers say the rate will stay below 2 percent through the end of 2016. In this environment, floating-rate assets may provide 2 to 2.50 percent less yield relative to comparable fixed-rate assets for a period of two or three years. Most institutions still need to generate interest income, and a large allocation to floating-rate assets could impact earnings. If the Fed in fact does not raise rates for two years, then fixed-rate assets put on the books today will earn a positive carry relative to the federal funds rate. Four- to five-year average life assets would perform well on a relative basis, because these instruments should have “rolled down” the yield curve by the time the Fed acts. This feature provides some price protection in a rising rate environment, as the assets will be shorter-term when rates start to rise. As the Fed pares back on its bond purchases this year, longer-term interest rates may continue to climb. It is sometimes challenging to add assets in this kind of environment, because bankers could find these assets to be underwater in the near term. With regulator concern over mark-to-market pricing and balance sheet fair value testing, the goal is selecting those instruments that will not exhibit excessive price volatility. This means avoiding extension risk in the investment portfolio and making sure commercial loans are structured appropriately. As always, institutions should maintain robust risk management practices, keeping interest rate risk exposure at reasonable levels. n Robert B. Segal is president of Atlantic Capital Strategies, Inc., an investment advisor located in Bedford. He can be reached at bob@atlanticcapitalstrategies.com.
ROBUST BIOTECH
The Epic Lab Boom Of 2013 Might Be Even Better This Year With More Mass. Life Science IPOs Ready To Bloom, No Shortage Of Demand
R PETER ABAIR
At a time of renewed investment in the life sciences, life science lab users may well find a lab market in 2014 as favorable as it has been in years.
BY PETER ABAIR SPECIAL TO BANKER & TRADESMAN
egardless of what type of glasses you wear, 2013 appears to have been a momentous year for the life sciences in Massachusetts. Science was advanced and new patients served with the approval by the U.S. Food and Drug Administration of three novel drugs of Massachusetts companies: Genzyme’s Kynamro, which treats a rare form of high cholesterol; Biogen Idec’s Tecfidera, a best-in-the-class treatment for relapsing multiple sclerosis; and Sunovion’s Aptiom, which treats seizures associated with epilepsy. It was a resurgent year for investment. Venture capital financing for Massachusetts biotechs rose to nearly $900 million and it appears that medical device companies in Massachusetts may surpass the historic high funding levels of 2012, at over $450 million. An incredible nine Massachusetts biopharma companies – Acceleron, Agios, Bind, Bluebird, Enanta, Epizyme, Foundation, Karyopharm, and Tetraphase - went public with IPOs and raised over $840 million in 2013. On the heels of several recession years in which no IPOs took place in the industry globally, it is a notable feat. On the real estate end, the year was nothing short of epic. In Cambridge, the new 400,000 square foot Novartis complex was topped-off, as was Pfizer’s neighboring 180,000-squarefoot building. Just blocks away, Biogen Idec’s two buildings on Binney Street and at 17 Cambridge Center – over half a million square feet combined – reached final construction stages. The 390,000-square-foot Alexandria Center’s frame rose on Binney Street and the gleaming new Broad Institute lab building on Ames Street
neared its completion. Back on Massachusetts Avenue, Forest City broke ground for a lab building of 250,000 square feet that will house additional space for Millennium – The Takeda Oncology Co. Across the river in Boston, the 1.1 million-square-foot Vertex project at Fan Pier also neared completion and Alexandria Real Estate’s 350,000-square-foot Longwood Center was topped off. Beyond 128, PerkinElmer expanded its life sciences campus in Hopkinton, Synageva added over 50,000 square feet in Lexington and Bristol-Myers Squibb announced its plans to expand its Devens campus with 200,000 additional square feet of new research space.
Expanding From Within
Movement within established space was also robust. Both Boston Scientific and Quest Diagnostics moved headquarters to Marlboro campuses, while, in substantial deals, Foundation Medicine, Sarepta, Epizyme, Boston Biomedical, and Momenta secured spaces totaling over 320,000 square feet in Cambridge and Sanofi cut the ribbon at its new cancer research hub at the venerable 640 Memorial Drive building in September. In the suburbs, IntelligentMDx and uniQure landed in Waltham and Lexington, respectively. At the close of 2013, according to CBRE-New England’s Greater Boston BioView, Massachusetts lab space stood at over 21 million square feet. It’s an impressive situation, coming as it does after years in which global industry consolidation and restructuring was the rule. While the pre-recession swagger of the biopharma industry may never quite fully return, 2013 will at
least be remembered as the year in which the wind filled the industry’s sails once again. How will the new chapter of 2014 read? Perhaps much like 2013. There are certainly no assurances that the Dow Jones will rise by 26 percent as it did in 2013, but investors still appear primed for new life science opportunities. Several Massachusetts drug development companies have entered the queue for IPOs this year. While a successful VC fundraising round or IPO does not necessarily result in a facility expansion or relocation, for the foreseeable future the lab market nonetheless presents more opportunities rather than less for lab users. The Vertex move to Boston will open up much of its current 800,000 square feet spread across Cambridge, from Cambridgeport to Kendall Square, to prospective new users. As construction continues at Alexandria Center and Longwood Center, it is with the knowledge that these grand new spaces have tenant commitments currently for just half of their space. In the suburbs and beyond, additional property owners and developers have entered the life sciences marketplace. Back in Cambridge, the 670,000 square foot One Kendall Square complex, the birthplace of the biotech industry, has just been acquired by DivcoWest, another new player on the lab development scene. At a time of renewed investment in the life sciences, life science lab users may well find a lab market in 2014 as favorable as it has been in years. n Peter Abair is director of economic development and global affairs at the Massachusetts Biotechnology Council (MassBio).
6
BANKER & TRADESMAN
FEBRUARY 3, 2014
By The Numbers
SPOTLIGHT:
a weekly compendium of data and arcana
Nantucket
STATISTICAL SNAPSHOT
COUNTY CLOSE-UP
YEAR SETTLED: 1641 YEAR INCORPORATED AS A TOWN: 1671
MEDIAN SALES PRICE
DUKES/NANTUCKET
Jan - Dec 2013
Community Community
TOTAL AREA:
Change from 2012
SALES VOLUME Jan - Dec Change from 2013 2012
MedPr #Sales
Aquinnah
$1,467,500
95.67%
6 -33.33%
Chilmark
$1,278,750
2.30%
18 -21.74%
105.3 square miles
The island’s first non-native owner, Thomas Mayhew, sold it in 1659 for “the sum of thirty pounds … and also two beaver hats, one for myself and one for my wife.”
POPULATION: 10,172
Edgartown
$801,500 18.15% 98 4.26%
Gosnold
DENSITY:
n/a
n/a n/a n/a
Oak Bluffs
$444,500
14.71%
69
-9.21%
Tisbury
$502,750 14.78% 58 16.00%
West Tisbury
$600,000
-14.77%
35
40.00%
Dukes County
$617,500
10.27%
284
1.79%
213 per square mile TAX RATES:
MEDIAN SALES PRICES
Residential: $3.76 Commercial: $6.68 TOTAL NUMBER OF HOUSING UNITS: 11,618
1650000 $500,000 1320000 $400,000 $300,000 990000 $200,000 660000 Nantucket
$100,000
0
“There are certain queer times and occasions in this strange mixed affair we call life when a man takes this whole universe for a vast practical joke, though the wit thereof he but dimly discerns, and more than suspects that the joke is at nobody’s expense but his own.”
0 ’042005 ‘05 2006 ’06 2007 ’07 2008 ’08 2009 ’09 2010 ’10 2011 ’11 2012 ‘12 ’13 2004 2013
❏ All sales thru Dec YTD sales ❏ Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds ❏ Source: The Warren Group
Massachusetts Dukes Nantucket
TOP 3 MORTGAGE LENDERS DUKES
1000
3,500
2013* Rank
800
2,800
600
2,100
400
1,400
200
on and around Nantucket
0
2012* Rank
1
2
2
n/a
3
Percent of Market Share
Lender Marthas Vineyard Saving Bank
16.38%
Santander Bank NA
13.50%
Edgartown National Bank
8.47%
NANTUCKET
700
Melville, which takes place
-4.73% 160 -11.11%
❏ Statistics based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds ❏ Source: The Warren Group
SALES VOLUME
— “Moby-Dick,” by Herman
$1,057,500
1,629.65 0.00
330000
0 ’04 ‘05 ’06 ’07 ’08 ’09 ’10 ’11 ‘12 ‘13 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
❏ All sales thru Dec YTD sales ❏ Graph based on single-family home sales of $1,000 and above, excluding condominiums and foreclosure deeds ❏ Source: The Warren Group
1
1
2
3
Cape Cod Five Cents Savings Bank Bank of America
21.31% 6.27%
3
4
TD Bank NA
5.76%
*2013 & 2012 Rank / Market share stats include loans filed through December 2013 ❏ Market share percentage based on number of mortgages ❏ Source: The Warren Group
Dukes Nantucket
TOP 10 EXISTING HOME SALES Rank
Street Address Community
Buyer Seller
Date Price
Rank
Street Address Community
Buyer Seller
Date Price
1
37 Hulbert Ave. Nantucket
Ellen Caplan FHS T
11/20/2013 $16,500,000
6
8 Mooers Ave. Nantucket
Charles Goldstuck Kenneth D. Boyer
11/07/2013 $3,250,000
2
68 Pocomo Rd. Nantucket
Timothy J. Connors Jr. RAM Island LLC
10/25/2013 $11,200,000
7
8 Mattapoisett Ave. Nantucket
DLS ACK LLC Tina S. Alster
10/04/2013 $3,150,000
3
12 Wannacomet Rd. Nantucket
12 Wannacomet LLC Gregory Segall
12/20/2013 $4,950,000
8
19 Osprey Way Nantucket
Brian S. Posner Margot Hartmann
10/01/2013 $3,125,000
4
65 Wanoma Way Nantucket
Gretchen M. Cooney ADS Real Estate Assoc LLC
10/11/2013 $4,050,000
9
5 Main Sias St. Nantucket
Fortune Cookie LLC Siasconset Station RT
10/01/2013 $2,740,000
5
155 Wauwinet Rd. Nantucket
Andrew A. Biggio Fishercot NT
10/24/2013 $3,650,000
10
9 Hoicks Hollow Rd. Nantucket
Robert Michler Ridaho FT
12/23/2013 $2,644,525
❏ Statistics from October-December 2013
❏ New Construction Excluded
❏ Source: The Warren Group
7
BANKER & TRADESMAN
FEBRUARY 3, 2014
Commercial & Industrial Boston Ordinance Requires Landlords To Tell All About Utility Use Continued from Page 1 records. The law applies to all commercial buildings that are larger than 50,000 square feet, and multiple commercial buildings on the same lot that total over 100,000 square feet. The law will be phased in through 2017, eventually encompassing all commercial buildings over 35,000 square feet and all multi-family buildings with 35 or more units. It makes landlords largely responsible for gathering the energy data from tenants and utilities and submitting it using an EPA web site. And it requires utilities to make whole-building data available to landlords. NStar will activate a web portal in late February where building owners can look up last year’s data, spokesman Mike Durand said.
Too Burdensome
At least one group, the Newmarket Business Association, is calling on the City Council to delay the ordinance so it can be overhauled. “We’ve embraced green technology and reducing our carbon footprint, but that’s not what this is about,” said Sue Sullivan, the association’s executive director. “This is really just a revenue source for the city.” City officials say most landlords shouldn’t find it especially onerous to comply. They’re required to use Energy Star, an EPA web portal that ranks commercial buildings’ energy efficiency, to enter their data and send it to the city. Nearly half of the total 1,800 buildings subject to the ordinance already use Energy Star, said Brian Swett, the city’s
acting chief of environment, energy and open space. “A significant portion of building owners are already familiar with this,” he said. “If you’re starting from scratch, I would convene a group of folks that have this information at the ready: maybe your onsite building engineer, your leasing agent or your property manager.” In a City Hall interview this week, Nikhil Nadkarni, the city’s climate and buildings program manager, gave a demonstration of how use the Energy Star Portfolio Manager program to create the required spreadsheet and submit it. For each building, the website asks owners to submit data such as squarefootage, hours of operation, number of employees and workspaces, and types of building use. Owners can enter energy data manually or upload it from the utilities’ sites beginning around March 1. Portfolio Manager uses the data to calculate year-to-year energy use trends, energy use per square foot and greenhouse gas emissions. In the first year, the city will not publish any data on individual buildings, Swett said. “All we’ll be reporting is compliance and general trends by sector,” he said. But property owners are already fretting about what types of data will be released in coming years. Some in the industry say the data could stigmatize low efficiency properties. The reporting system doesn’t distinguish between buildings that have a single electric meter versus those that meter individual tenants, for example.
“Owners are afraid they’re going to be put at a disadvantage by that,” said Daniel Ozelius, senior vice president for Jones Lang LaSalle’s property management division. “We’re going to give the city all this data. The question is how they’re going to report it out.” An advisory committee including real estate developers will make recommendations to the city on those details for next year. New York, San Francisco and Wash-
Gossip REPORT
ington, D.C. have passed similar ordinances in recent years. The first year is usually the hardest for building owners, according to an executive for a Bostonbased company that helps building owners analyze energy use. “(In New York) it was tougher to get reliable data in the first year than the second and the third,” said Barun Singh, chief technology officer for WegoWise Inc. n Email: sadams@thewarrengroup.com
This week’s roster of sales starts out with a restoration, with a newly revamped Back Bay Brownstone which nearly doubled its sales prices. Signs of a recovery?
2
NANTUCKET BOSTON
4
1
ADDRESS: 315 Marlborough St., Boston
1
SELLER: Marcia P. Welch and Rhoda H.
BUYER: Andrew Wang and Karen Wang
Weinman
SELLER: 315 Marlborough St LLC
AGENT: Carolyn Durand, Lee Real Estate
AGENT: Michael Harper, Coldwell Banker Residential Brokerage SOLD: 01/07/2014
LINCOLN
SOLD: 01/07/2014
4
ADDRESS: 67 Sandy Pond Rd., Lincoln
BOSTON
3
ADDRESS: 31 Holyoke St., Boston PRICE:
$3,675,000 SIZE: 3,729 sq. ft. BUYER: Patrick A. Kinsel and Jill Ozzie SELLER: 31 Holyoke Street NT and Richard N. Morash AGENT: Jamie Curtis, Sprogis & Neale Real Estate SOLD: 01/08/2014
Compiled by Colleen M. Sullivan, residential real estate reporter.
CHARLESTOWN
5
PRICE: $3,250,000
ADDRESS: 21 Monument Sq., Charlestown
SIZE: 5,950 sq. ft. on 2.04 acres
PRICE:
BUYER: Tara L. Mitchell and Kenneth
SIZE: 5,974 sq. ft.
Mitchell
BUYER: Michael Aronoff and Maria Troulis
SELLER: Lincoln Log RET and Laird C.
SELLER: Marc P. Seidner and Mary L. Seidner
Cleaver AGENT: Stacy Osur, Coldwell Banker Residential Brokerage SOLD: 01/09/2014
2
$5,100,000
BUYER: Short Eared Owl NT
SIZE: 4,594 sq. ft.
3
PRICE:
SIZE: 4,927 sq. ft.
PRICE: $5,445,000
5
ADDRESS: 9 Pleasant St., Nantucket
$2,750,000
Diane Valle, Boston Portfolio Properties, LLC SOLD: 01/06/2014 AGENT:
8
BANKER & TRADESMAN
FEBRUARY 3, 2014
In Person
Banking On A Good Loan BY LAURA ALIX | BANKER & TRADESMAN STAFF WRITER
You could say real estate is in Carroll Lowenstein’s blood. The Arlington native says just about his entire family is in the real estate business. After getting his broker’s license at 18 and doing a stint at U.S. Bank, Lowenstein headed up commercial lending at Cambridgeport Bank for 15 years. When Citizens Bank acquired Cambridgeport in 2003, he stayed on under Robert M. Mahoney’s leadership. Two weeks after Mahoney took the helm at Belmont Savings Bank in 2010, he called up Lowenstein and said, “We need you here.” In the three years since, Lowenstein and his team have booked about $500 million in new business, bringing the bank to a little more than $1 billion in assets.
Carroll Lowenstein
Title: Executive Vice President, Commercial Real Estate Lending,
Belmont Savings Bank Age: 54 Experience: 35 years
Q:
Q:
A:
A:
What’s changed at Belmont Savings since you took over the commercial lending division? The loan amounts were much smaller then because the bank was smaller. You could only lend a certain portion of your capital. They were all good loans. We just brought in a whole different type of borrower. We still bank all the borrowers we used to, and we absolutely have not forgotten about those bread-and-butter customers who have made us successful over our 130 years. But we also now lend to professional commercial real estate owners, operators, developers, people who wake up every day and their job is commercial real estate. Most of them are family-based, they own four, five, six different properties, and that’s what they do every day. They’re very hands on, very involved in their real estate, whether it’s an apartment building, office building, retail shopping center, they know their tenants. We do a lot of construction lending for single-family homes, small condominium projects, larger apartment buildings. We’ve probably tripled the size of the loans we can make now just because the bank is bigger and we have a lot more expertise in what we do.
What kind of challenges are you anticipating in the year
ahead?
I guess one of the biggest challenges that is still faced by mostly younger people is: When will you be able to buy a home? And how long will you have to live in an apartment? How long will the apartment boom continue? It might have changed permanently. You may decide, “I don’t really want to own a home. I want to be more mobile. If I get a job offer in Tennessee, I don’t want to have to sell my home before I go. Pay a few months rent and move.” There is a growing population like that. But the housing market is still exceptionally strong. We live in probably the best part of the country for that. I do think there’s also growing demand for much more maintenancefree housing. As people age, they still want a single-family home, but they don’t want expenses of $30,000 a year to take care of it. I think there will be a trend for more efficient, maintenance-free housing.
Q:
Is CRE lending easier at a community bank?
A:
It’s more the levels of approval at the other places, and you have to do it that way. You couldn’t let the people out in the suburbs make the decisions on approving loans. It has to go through the process. And we have a very similar process here, but it’s much more efficient because all the people are here in the building. We get consensus early on, that way we can deliver exactly what we promised from the beginning. We approved a number of loans yesterday, the commitment letters are already out, the customers have already been notified, we’ll tweak a few things, Bob and I’ll talk about it, and we’ll get it done. It works, the process works. I’ve always told people, we’re the biggest small bank you’ll ever see. Most of us are overqualified for our jobs, but this is what we want to do. We want to actually make things happen and make decisions. The major diff here is, the buck stops with me. I’m the one who makes the final decision ultimately. It’s all on me, which is what I want. Good or bad, I understand it’s my responsibility.
CARROLL LOWENSTEIN’S TOP FIVE GOLF COURSES:
1
The Winchester Country Club (Massachusetts)
2
The Mid-Ocean Club (Bermuda)
3
Yeaman’s Hall Club (Charleston, S.C.)
4
Pine Valley Golf Club (New Jersey)
5
Merion Golf Club (Pennsylvania)
9
BANKER & TRADESMAN
FEBRUARY 3, 2014
Banking & Lending Bill Could Shift Liability Away From Banks, Promote Transparency After Hacking Incidents Continued from Page 1 other driver may have incurred. Likewise, a retailer whose lax data security posed an easy target for hackers would have to reimburse those banks who shell out to reissue their customers’ compromised cards. Secondarily, the bill would also repeal a state statute that prohibits banks from informing customers as to where the breach occurred. Floreen pointed out that the legislation doesn’t single out retailers – or for that matter, any other link in the payment chain. Under the bill, banks, card processors and retailers would be equally responsible for protecting consumers’ sensitive data from opportunistic cyber thieves. But though retailers may have suffered the inevitable PR fallout from these data breaches, banks have actually been footing the bill for replacing their customers’ cards. During a hearing before the Committee on Consumer Protection and Licensure last week, James Gordon, chief technology officer at Needham Bank, noted the irony in capping the interchange fees banks collect on debit and credit card transactions, while retailers are largely free of having to absorb the financial losses resulting from card fraud. “Currently, merchants and other data processors have little legal or financial in-
“We know that from working with our security professionals and our financial institutions, it’s in some respects an arms race. Even the consumer has to be constantly vigilant.”
— John Carlson, executive vice president, technology
risk, the Financial Services Roundtable
centive to ensure compliance with high data security standards and imposing financial liability on those entities to cover the card replacement and fraud losses absorbed by banks that are associated with a breach will provide a greater incentive on those entities to develop, implement and monitor stronger protections for their customers,” Gordon told the committee, on behalf of the Massachusetts Bankers Association. “[The legislation] is important in sort of leveling the playing field,” Floreen said.
The Bright Side
While banks right now have to assume the costs of damage control during a data breach like any of the aforementioned instances, a fiasco like this can also be an opportunity. “Some used their social media presence very well in trying to educate their customers on the situation and giving a heads-up to keeping an eye on their credit reports,” said Matt Putvinski, director of IT assurance and security services at Wolf & Co. “It’s defi-
nitely an opportunity for banks to act as the customers’ ally, and if any of them didn’t take that opportunity, they missed out.” While the safest course might seem to be a wholesale reissuance of every potentially compromised card, that solution could also prove prohibitively expensive, particularly for smaller banks. “If financial institutions start reissuing cards every time one of these breaches happens, it’s just going to become extremely costly. You’re going to start regularly seeing these incidents occur,” Putvinski said. Some banks did reissue those potentially compromised cards, others reissued cards only upon the customer’s request and still others carefully monitored their customers’ accounts for fraud. And while the breach occurred on the merchant side of the payment chain, the Target fiasco still alerted banks and credit unions to the threat of targeted malware – if they weren’t already. Basic antivirus software is important, of course, but financial institutions especially need additional layers
• New tenants The Wounded Warrior Program, Boston Scientific’s Rhythmia and office space provider Regus have signed leases in recent months and BitSight Technologies is expanding by 11,575 square feet. • Intuit’s QuickBase has moved into its new 60,884-square-foot offices. • Located two blocks from the Alewife MBTA station, the buildings are now 93-percent leased, compared with 48 percent when Equity Office acquired them in 2011. • Shared amenities include a new wellness center including a yoga and meditation room, locker room with showers, Xbox gaming center, bocce ball court and fire pit.
THEY SAID IT:
“The goal was to create a work-live-play campus-like environment for employees, especially for those of technology or biotech companies seeking to tap into the Cambridge/ Boston talent pool.” — Vicki Keenan, senior director of leasing, Equity Office
THINK YOUR PROPERTY IS HOT? Drop Steve a line at sadams@thewarrengroup.com
CASEY & HAYES MOVERS
(617) 269-5900
OWNER:
125 and 150 Cambridgepark Drive, Cambridge
Equity Office
Two office buildings totaling 469,566 sq. ft.
WHY IT’S HOT:
Email: lalix@thewarrengroup.com
WHERE: WHAT:
Each week, Banker & Tradesman commercial real estate reporter Steve Adams will spotlight a commercial real estate property in Massachusetts notable for its high deal activity, unique design or one-of-a-kind special features.
of security and monitoring. Meanwhile, John Carlson, executive vice president of Technology Risk at the Financial Services Roundtable (FSR), thinks the onslaught of cyberattacks will galvanize more support for EMV, or chip-enabled cards, which are currently more popular in Europe. They’re not totally fraud-proof, but they’re harder to duplicate than the magnetic stripe cards presently used by most Americans. Carlson said a number of players, including FSR and multiple law enforcement agencies, are working behind the scenes to improve information sharing, crisis management response and legislative advocacy on this front, as well. “The cyber threat environment is such that, whoever’s behind this, they’re getting much more sophisticated,” Carlson said. “We know that from working with our security professionals and our financial institutions, it’s in some respects an arms race. Even the consumer has to be constantly vigilant.” n
BUILT:
1986
430 First Street Boston, MA 02127
10
BANKER & TRADESMAN
FEBRUARY 3, 2014
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11
BANKER & TRADESMAN
FEBRUARY 3, 2014
Residential Real Estate FOGGY TERRITORY
Big Banks Dipping A Toe Into Non-QM Waters? Move Could Pose Challenge To Smaller Lenders
I
BY COLLEEN M. SULLIVAN BANKER & TRADESMAN STAFF WRITER
t was just over three weeks ago that mortgage bankers flipped open their calendars to see the day had finally arrived, and QM was the law of the land. It might be understandable if the arrival of that redletter date brought about more than a few winces and shivers, because many industry observers have long predicted that the new federal regulations which define the terms of a “qualified mortgage” (QM) will end up excluding many borrowers who would otherwise be considered good credit risks. Recently, however, some lenders are evincing a surprising willingness to dip their toes into non-QM waters. Earlier this month, Wells Fargo announced that it was planning to assign 400 underwriters to a newly created portfolio-lending division, much of which would be dedicated to non-QM loans. Bank of America and JPMorgan Chase have also said they plan to originate at least some non-QM loans, including interestonly loans to high net worth borrowers. Large lenders’ willingness to go after non-QM loans may come as a surprise to many. The industry’s voice in Washington, the Mortgage Bankers Association (MBA), has warned the Consumer Financial Protection Bureau (CFPB), which enforces the QM rules, that the changes would cause lenders to pull back. Pete Mills, senior vice president of the MBA, told a gathering of bankers at the New England Mortgage Expo earlier this month, “We’ve had conversations with the Bureau [Director Richard Cordray] wants people to lend within the full extent of the QM boundaries, and we told him it’s not going to happen. Until people understand what the litigation risk is, what the cost of a mistake is, we think people are going to be pretty conservative, and stay well inside, if not the QM
It’s not yet clear how many borrowers who fall outside the government’s guidelines will be able to squeeze themselves into the cautious overlays required by secondary market investors.
safe harbor, at least inside the QM bounds.” But non-QM lending might simply be too big a chunk of the market to ignore. According to a study cited by Mills himself, up to 20 percent of current mortgages might not meet QM standards, either because their fees were too high or borrower’s debt to income ratios were above the 43 percent QM threshold. The study examined a pool of loans issued last September, when newly tightened credit standards and reporting requirements were already in place. That’s a big enough chunk of the market to entice some big players. One senior executive at a national mortgage lender told Banker & Tradesman his firm had recently been approached by a major Wall Street bank looking to do non-QM loans – at considerable mark-up on interest rates. Hedge funds, too, are interested in the market, with some looking to securitize non-QM jumbo mortgages – though with several caveats in place as to the borrower’s required credit score and income.
Challenge For Smaller Lenders
It’s not yet clear how many borrowers who fall
outside the government’s guidelines will be able to squeeze themselves into the cautious overlays required by secondary market investors. But the large banks’ embrace of non-QM lending could present a challenge for smaller, community lenders, who often sell their loans on to bigger banks or investors for securitization. If non-QM loans establish themselves as a big chunk of the market, it will be difficult for smaller lenders to ignore the segment. Yet selling the loans on to a larger lender may not enable them to escape the risks associated with non-QM lending. In an effort to tamp down on some of the lending practices that drove the housing boom, the new rules allow borrowers to sue a lender if they contend that the lender should have known they wouldn’t be able to afford the loan. Even if a loan is underwritten to conform with investors’ requirements, any legal liability still rests with the originator. “If a borrower challenges that at a later date, it goes right back to the originator of the loan when it was closed. If ABC Mortgage does a loan and Wells Fargo underwrites and approves it, and Wells sends it on to Fannie Mae, and then down the road, the borrower challenges it, Fannie Mae gives JERAMI MARSHAL it to Wells, Wells will kick it right back to the originator. I’ve confirmed that [with the regulators],” said Jerami Marshal, immediate past chair of the Massachusetts Mortgage Bankers Association. That’s a much tougher hit to swallow for a small community bank than for the Wells Fargos of the world. n Email: csullivan@thewarrengroup.com
Merrimack Valley Habitat for Humanity – building simple, affordable homes in partnership with hard-working, low-income families who need them. Join us for our signature fundraising event and help a family build their dream.
Gala Dance & Auction Come dine and dance the night away at our
from 6pm to 11pm
at the beautiful DoubleTree by Hilton in Danvers, MA. Highlights of the evening include melodious dinner music by Rayna Merryfield, enticing silent and live auction items presided over by
the dynamic Charles Bailey-Gates and dancing the night away to the fabulous performance of Rick Larrimore, the ultimate Rod Stewart tribute performer!
Tickets are $125 a person.
Supported by The Warren Group
There are so many ways you can help . To buy tickets or for more information on how you can be a dream builder, give Sharon a call at 978-681-8858
12
BANKER & TRADESMAN
PRESENTED BY
PRESENTING SPONSOR
FEBRUARY 3, 2014
REGISTER TODAY!
Make Energy. Make Money.
SM
SILVER SPONOR
Don’t miss the chance to hear from the experts and network with your peers. Visit www.crerenewableenergy.com today!
commercial real estate conference
february 25, 2014
SOLAR ENERGY INVESTMENTS FOR COMMERCIAL REAL ESTATE Few investments in a commercial property will provide returns like those involving solar renewable energy. There are rebates, tax credits, monthly energy savings and a variety of other options to consider. Commercial Real Estate Renewable Energy Conference attendees will hear from industry experts on issues impacting development, technology, appraising, investing, financing, tax implications and federal & state tax incentives. LENDERS FOCUS
Your current clients are interested in the value that solar can add to their properties but are uncertain as to how they can finance a solar project. We’ll be discussing these challenges and providing
When: February 25, 2014 7:30 AM - 11:45 AM
the solutions to overcome these obstacles. Our panel of experts will share their perspectives on the current development process, the latest technology, state and federal incentives, tax implications, the accepted process for appraising a commercial solar array as real estate, the revenue streams and how these will impact the cap rate and NOI of the host facility. In addition,
Where: Omni Parker House 60 School Street Boston, Massachusetts 02108
we’ll highlight how the revenue streams can be collateralized and assigned for added security.
Contact: The Warren Group today
PROPERTY OWNERS & MANAGERS FOCUS
We’ve all heard how solar is a great investment. Unfortunately,
at 617-896-5344 or email events@thewarrengroup.com
questions still remain — How will this impact my property value? How will it improve my cap rate and to what extent? How do I approach my banker? And, how will they perceive the revenue streams and risk with underwriting my solar investment? The Commercial Real Estate Renewable Energy Investing Seminar will provide you with the answers. Don’t miss the chance to network with your peers. The Commercial Real Estate Renewable Energy Conference is designed to fit your demanding schedule. The program runs from 8:30 a.m. to 11:45 a.m. with registration, breakfast and networking from 7:30 a.m. to 8:30 a.m. And best of all, access to the conference is only $35.
Visit www.crerenewableenergy.com today!
Sponsorship Opportunities: Be a part of the Commercial Real Estate Renewable Energy Conference, by showcasing your company’s interest and expertise in the renewable energy scene.
13
BANKER & TRADESMAN
FEBRUARY 3, 2014
CLASSIFIEDS
THE ONE PLACE TO FIND OPPORTUNITIES
Post your classified ad – in print and online. Visit classifieds.bankerandtradesman.com to get started.
RESIDENTIAL REAL ESTATE List building/complexes, condos and single-family homes for sale or for rent.
COMMERCIAL REAL ESTATE Industrial, land, office and mixed-use property opportunities in one place!
AUCTION
EDUCATION
PROFESSIONAL SERVICES
HELP WANTED
Announce upcoming dates for public auctions on commercial and residential properties.
Let professionals know about Realtor training and continuing ed courses here.
Offer your services – anything from landscaping to cleaning services.
Post jobs for the real estate, banking, construction, mortgage industries – and more!
To Place An Ad In This Section, Contact The Advertising Department At (617) 896-5306
WOBURN, MA
LANDMARK OFFICE BUILDING AVAILABLE
(SOUTH END)
7,021 SQ. FT. FOR LEASE MANUFACTURING SPACE
Lynn, Massachusetts FOR LEASE
• Contiguous Floors Available • Available 1,000-25,000 Sq. Ft. • 100 Yards to Train Station & Court House • On Route 129 • Near Lynnway Route 1A
Salem, NH (603)893-9500
Atkinson, NH (603) 362-9910
Www.lindarobertsrealty.com Southern New Hampshire
100% A/C, 3 phase power 7 Room Office Area reception, 3 restrms, kit 10.5’ high under joists gas heat, water, sewer compressed air system ground level loading dr
Available Now Rent = $7.54 psf nnn
BIBBY REAL ESTATE
Call today for a tour
www.CarboneRE.com
781-596-0400
CARBONE
Individual Member
Commercial Real Estate, Inc.
Chris@bibbyrealestate.com
(781) 935-5444
Your professional commercial-investment real estate source.
Discover everything about a property using
Learn everything there is to know about any property in New England, including sales, ownership and financing history, foreclosure filings and property characteristics. Complete your understanding in an instant.
Call 617-896-5392 or visit www.rerecordssearch.com
Free 7 day trial: www.tryrers.com
42 Acre Development Site S W
by Plannned Casino in Taunton, MA E
OUTSTANDING CONTEMP ON 8.5 A PRIVATE LOT 6000 SQ FT++ HOME. GREAT FAM ILY & ENTERTAINMENT SPACE ALLOWS FOR BOTH GATHERING & PRIVACY. DREAM KITCHEN, FAM & DIN ING AREA, FORM DIN RM + DBL FIREPACED LIV RM W/WET BAR. 1ST FL MSTR SUITE, KING SIZE BDRM & GUEST RM 2 SEC. FL BDRMS, MULTI FPS, BDRMS, BATHS + OFFICE, MEDIA RM HOBBY, RM, DANCE FLR, BILLIARDS, & EXERCISE RM. 4 CAR GARAGE, ING POOL, BARN AND YOUR OWN BROOK TO FISH & PLAY IN. CONVENIENT TO I-93 AND ALL OTHER CONVENIENCES! BY APPT! $749,000
N
What’s the low-down on the condo in Cambridge?
FOR SALE Located at the Junction of Routes 24 & 140 Development Site located across Route 24 from Silver City Galleria and Liberty & Union Industrial Park. Asking $6,500,000
Contact Brandon or Scott Kelly R.J. Kelly Company at 781-272-2899 55 Cambridge Street, Burlington, MA 01803 brandon@rjkellycompany.com
AD#: BT020214 14
PREPARED FOR: PESCO
PUBLICATION: Banker & Tradesman
BANKER & TRADESMAN
PREPARED BY: S. SAPERSTEIN AD SIZE: 1/9 pg SECTION: Auctions
HELP WANTED
RUN DATE: 2/3/14
FEBRUARY 3, 2014
DEADLINE: Tuesday
HELP WANTED
AUCTIONS
AUCTION
V I S I T C L A S S I F I E D S. B A N K E R A N D T R A D E S M A N. C O M
BANKING OPPORTUNITIES COMMERCIAL CREDIT ANALYST TO $75,000 PLUS BONUS A full service bank in the immediate Boston area is seeking to hire an experienced commercial credit professional. The ideal candidate will possess a college degree, along with a minimum of two years of relevant credit analysis experience in a commercial loan environment. The bank lends in an array of areas, including both the real estate and c&I arenas. Candidates will need to possess solid analytical, writing and presentation skills. There is a definite career path in this role. BRANCH MANAGER TO $75,000 PLUS BONUS A progressive bank in the Boston suburbs is looking to bring on a top-notch retail banking manager. The candidate will need to possess demonstrated proficiency within the retail banking realm, with demonstrated skills in both branch sales and branch operations. The bank offers a full array of products and services, and operates in an environment where providing full service to its customer as a barometer of success. MORTGAGE PROFESSIONALS $$OPEN$$ We currently have roles with local banks within their residential mortgage departments. Opportunities exist in processing, underwriting , origination, servicing and compliance/risk. Positions are at both the staff and management levels. Compensation levels will be commensurate with experience. SINCE 1948 CONTACT TIM KEEFE BOSTON 617-951-4000 fax 617-951-0904 email: Tim.Keefe@roberthalf.com | 125 High Street, 20th Floor Boston, MA 02110 | www.roberthalf.com
What’s to know about Watertown?
AUCTIONEERS • APPRAISERS
PAUL E. SAPERSTEIN CO., INC.
144 Centre Street, Holbrook, MA 02343 Tel: 617-227-6553 •www.pesco.com MA Lic 295, N.H 2508, R.I 9246, VT 057-0002204 Mortgagee’s Sale of Real Estate at Public Auction
MATTAPAN Two Newer Construction Multi-Unit Apt Bldgs 1317-1331 Blue Hill Ave., MAttApAn, MA tHursdAy, FeB 13, 2014 @ 1pM 12,483+/- sf of land improved by two 3-story multi-unit apt buildings. 1317 Blue Hill Ave: 9,006+/- sf bldg. w/ 5 total units, full basement, & built in 3-car garage on basement level. Two-5 room, 3 bedrm, 2 bath bi-level units on 1st floor & basement. Three-5 room, 3 bedrm, 2 bath bilevel units on 2nd & 3rd floors. 1325 Blue Hill Ave: 11,496+/- sf bldg. w/ 8 total units & full basement. Four- 5 room, 3 bedrm, 1.5 bath bi-level units on 1st floor & basement & Four of the same units on the 2nd & 3rd floors. Each unit has laundry room & central a/c. Terms of sale: A deposit of $25,000 by cash, certified or bank check will be required at the time & place of sale & balance in 30 days. All other terms announced at sale. Neither Auctioneer nor Mortgagee make any representations as to the accuracy of the information contained herein. Robert L. Marder, Esq, Lynn, MA, Attorney for Mortgagee
Is that comp in Chicopee a distressed property?
MORTGAGEE’S FORECLOSURE SALE BY
PUBLIC AUCTION COMMERCIAL RETAIL SHOPPING CENTER IMPROVED WITH MODERN MULTI-TENANT BUILDINGS INCLUDING MAJOR ANCHORS, CONTAINING A COMBINED TOTAL OF 136,420 +/- SQ. FT. OF BUILDING AREA, SITUATED ON APPROXIMATELY 15 ACRES OF LAND WITH LARGE PAVED PARKING AREA, LOCATED IN THE HEART OF THE BALD HILL ROAD REGIONAL RETAIL CORRIDOR, BEING KNOWN AS:
SUMMIT SQUARE TO BE SOLD ON: WEDNESDAY, FEBRUARY 12, 2014 @ 1:00PM ON THE PREMISES: 1276 BALD HILL ROAD, WARWICK, RI MORTGAGE RECORDED IN BOOK 6235 AT PAGE 183, ASSIGNED IN BOOK 6516 AT PAGE 207 AND FURTHER ASSIGNED IN BOOK 8077 AT PAGE 208, OF THE RECORDS OF LAND EVIDENCE IN THE CITY OF WARWICK, STATE OF RHODE ISLAND. TERMS OF SALE: ONE HUNDRED THOUSAND ($100,000.00) DOLLARS DEPOSIT IN CASH, CERTIFIED OR BANK CHECK AT TIME OF SALE. OTHER TERMS AND CONDITIONS TO BE ANNOUNCED AT THE SALE.
ROBERTS, CARROLL, FELDSTEIN & PEIRCE INC. EDWARD G. AVILA, ESQ. ATTORNEYS FOR THE HOLDER OF THE MORTGAGE TEN WEYBOSSET STREET PROVIDENCE, RI 02903
Find out now using
SALE CONDUCTED BY AND FOR FURTHER INFORMATION CONTACT:
You can filter distressed properties from your search for comparable sales. It’s one of our new search features available free of charge to Real Estate Records Search subscribers.
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IRVING SHECHTMAN & CO., INC. PROFESSIONAL AUCTIONEERS & APPRAISERS 141 POWER ROAD, PAWTUCKET, RI 02860 M.C. PONTE, JR. & SONS RI LIC. # 2113 MA LIC. # 658 NH LIC. #2484 TEL: 401-728-9100 FAX: 401-728-9103 Visit Our Web Site www.AuctionsRI.com
MORTGAGEE’S SALE OF REAL ESTATE PUBLIC AUCTION BOURNE, MA COMMERCIAL/RESIDENTIAL TO BE SOLD ON THE PREMISES
FRIDAY, FEBRUARY 14, 2014 AT 11:00 A.M. 34 SHORE ROAD
Find them now using
APPROX. 1.75± ACRES OF LAND WITH APPROXIMATELY 311 FEET OF FRONTAGE ALONG SHORE ROAD IMPROVED BY A THREE STORY CEDAR SHINGLED FACED BUILDING WITH APPROX. 3,157± SQ. FT. OF GROSS BUILDING AREA. THERE ARE 4 RENTAL APARTMENTS CONSISTING OF TWO 2-BEDROOM UNITS AND TWO EFFICIENCY UNITS AND ONE GARAGE SPACE. THERE IS ALSO A METAL AND BLOCK BUILDING WITH APPROX. 1,200± SQ. FT. OF GROSS BUILDING AREA DIVIDED INTO FOUR UNITS USED FOR BOAT STORAGE. MORTGAGE REFERENCE: BOOK 26589, PAGE 343 BARNSTABLE COUNTY REGISTRY OF DEEDS. TERMS OF SALE: A DEPOSIT 0F $25,OOO BY CASH, BANK OR CERTIFIED CHECK WILL BE REQUIRED AT TIME AND PLACE OF SALE. BALANCE DUE WITHIN 30 DAYS. ALL OTHER TERMS TO BE ANNOUNCED AT TIME OF SALE. NEITHER AUCTIONEER, MORTGAGEE OR MORTGAGEE’S ATTORNEY MAKE ANY REPRESENTATIONS AS TO THE ACCURACY OF THE INFORMATION CONTAINED HEREIN.
Examine 20 years of property sales, price trends and foreclosure statistics by type of property, together with the latest Census demographics using Town Stats. Satisfy your quest for market knowledge in minutes.
Call 617-896-5392 or visit www.rerecordssearch.com
Free 7 day trial: www.tryrers.com
373 Boylston St., Newton, Ma 02459 617-731-4455
MA Lic # 120
RI Lic # 0546
NH Lic # 2779
BANKER & TRADESMAN
FEBRUARY 3, 2014
FIRST-TIME HOMEBUYERS | PROVIDED BY THE WARREN GROUP
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PINPOINT POTENTIAL HOMEBUYERS Get more leads and grow your business by pinpointing renters with our marketing lists. Make the most of your marketing campaigns, and identify new potential first-time homebuyers with Marketing Lists from The Warren Group. Reach the right prospects today! A strong selling season and low rates means renters are looking to buy across the region. Broaden your visibility by delivering your offer to renters with Marketing Lists from The Warren Group. Successful businesses consistently rely on The Warren Group to identify new revenue opportunities with the most accurate and detailed information available. We work closely with our clients to understand their goals and select the best prospects.
Contact us today to put your marketing efforts on target! Speak with an account manager about which marketing lists are right for you. (617) 896-5392 | datasolutions@thewarrengroup.com
15
PRESENTED BY
NEW ENGLAND’S LARGEST, MOST EXCITING CREDIT UNION SHOW! Join Hundreds Of Your Peers From Across New England It’s a great opportunity to gain access to leading exhibitors with the right solutions to keep your credit union moving forward. In one action-packed day you will experience thought-provoking sessions, peer networking, and an exciting show floor complete with live podcasting, complimentary food, raffle prizes and
WHEN
April 30, 2014 8:00 AM - 2:30 PM
WHERE
Holiday Inn 242 Adams Place Boxborough, Massachusetts 01719
REGISTER TODAY!
Visit www.greatCUshow.com
more! We have a great show, planned, register to attend today!
Looking to expand your business with credit unions? GNECUS is your opportunity to meet face-to-face with clients, prospects, partners and key decision-makers in the credit union industry. Plus, we cater to top management with an invitation-only Leadership Luncheon. Call today, sponsorships are limited.
Reserve Your Space Today! Reserve your space at New England’s largest, most exciting credit union show! The Great New England Credit Union Show provides an exceptional opportunity to showcase your solutions, while networking with hundreds of attendees from across the region. With most credit unions in the midst of their 2014 budget planning, the timing of your participation could not be better! Exhibit space sells
SPONSORSHIP OPPORTUNITIES AVAILABLE!
Call 617-896-5344 or email greatcushow@thewarrengroup.com
INTERESTED IN EXHIBITING?
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out fast, book your space today! GOLD SPONSORS
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