- DC
220,000 s/f office condominium located at 1775 Grand Concourse Houlihan-Parnes Realtors arranges a $30 million first mortgage in Bronx, NY B RONX, NY — Houli- han-Parnes Realtors, LLC , represented by
ISSUE HIGHLIGHTS Volume 28 Issue 11 June 10 - 23, 2016 Financial Digest: Creative Financing
Bryan Houlihan and James J. Houlihan , announce the placement of a $30 million first mortgage on the 220,000 s/f office condominium at 1775 Grand Concourse in the Bronx, New York. The 7-year, non- recourse loan has a fixed rate of 4.00% with interest only for two years. The loan, closed with a local bank, is prepayable throughout the term on a de- clining scale and the borrower has an option to extend the loan for an additional 5 years. The mortgage covers a com- mercial condominium interest in the 300,000 s/f building that shares ownership with Verizon. Verizon owns 2 floors and has the central gear for switch- ing all telephone land lines in the Bronx on those floors. The remaining 6 floors have been converted to an ancillary indoor parking garage, retail and professional office space. Current tenants include Con Edison, Special Citizens Fu- tures Unlimited, Inovalon SME
5-16A
What lawyers should know about “Global Real Estate Sustainability Benchmark”
1775 Grand Concourse
Inc, Safe Horizon, The Bronx Lebanon Hospital Center, Pub- lic Health Solutions and Abbott House. The borrower was rep- resented in the transaction by Sarah Benji and Elizabeth Smith of Goldberg Weprin Finkel Goldstein, LLP . The property is owned by Sam Jemal of JJ Operating, Inc. and members of his family
together with James J. Houli- han and members of Houlihan- Parnes Realtors, LLC. The property was acquired in Feb- ruary 2012 from Verizon, and is the second large successful gut renovation engineered in the Bronx by the Houlihan and Jemal families. Their ini- tial project was the successful conversion of the vacant former
Alexander’s/Caldor’s depart- ment store on the N/W corner of Fordham Road and the Grand Concourse into a multi-tenant retail/office building in 2001- 2004. That project has been fully leased since its inception and has been a great success, re-anchoring the Fordham Road and Grand Concourse business area. n space at the north end of the property. There is approxi- mately 10,000 s/f of additional space available for lease. Clinton Plaza is positioned near the intersection of Mary- land Rte. 5 (Branch Ave.) and Maryland Rte. 223 (Woodyard Rd.). “The new owner has ac- quired a shopping center in an extremely strong loca- tion within the Washington DC metropolitan area that has a well-seasoned anchor and several restaurants that consistently achieve tremen- dous sales,” said Vito Lupo of KLNB Retail. “Additional leasing activity is expected to occur in the near future, and the ownership group intends to upgrade the overall tenancy of the center over time. All of these activities and market fundamentals will translate to a center that will create long- term value.” Lupo added. n
UPCOMING CONFERENCES June 16, 2016 By Tricia J. Sadd, Esq., Montgomery McCracken Walker & Rhoads LLP 8C
KLNB retail brokers $20m sale of 210,000 s/f Clinton Plaza shopping center in Clinton, MD
For speaking and sponsorship information, please contact: Linda Christman at 781-871-3456 or lchristman@marejournal.com Philadelphia Healthcare & Medical Properties Summit June 30, 2016 NJ Mid-Year Commercial Real Estate Forecast Summit July 22, 2016 Delaware Multifamily Summit
CLINTON, MD — KLNB Retail has brokered the sale of Clinton Plaza, a 210,000 s/f shopping center located at 8899 Woodyard Rd. in Clin- ton, MD for approximately $20 million. Consisting of Andy Stape and Vito Lupo ,
Directory
Financial Digest................................................5-16A DelMarVa • DC.................................................17-25A New Jersey................................................. Section B Pennsylvania.............................................. Section C
Clinton Plaza
the KLNB Retail Investment Sales Team represented the seller, Columbia Regency Re- tail Partners, LLC, and also procured the buyer, Clinton Investors, LLC, in this trans- action. The shopping center is pri- marily anchored by Kmart which leases approximately 107,000 s/f of space. In ad- dition, there are ten in-line
tenants and several pad sites including two quick-service restaurants, Checkers and Popeyes Chicken, the latter ranking among the highest performing locations in the mid-Atlantic region. In ad- dition to the existing tenant base, the property offers a tremendous value-add compo- nent in leasing a currently va- cant 43,000 s/f junior anchor
Upcoming Spotlights Mid Year Review Contractors/Subcontractors Retail Profiles/Organizations
www.marejournal.com
Inside Cover A — June 10 - 23, 2016 — M id A tlantic
Real Estate Journal
www.marejournal.com
THE ONLY CERTAINTY IS UNCERTAINTY ITSELF. “ ”
With apologies to Pliny the Elder—who uttered the words above in 67 A.D.—certainty can be a certainty. Our relationships with capital sources, coupled with our unparalleled experience in investment sales, mortgage banking and loan servicing, help us remove doubt from the equation. Perhaps it’s because the real estate market in ancient Rome didn’t amount to much, but we think our sages are way better than their sages.
BERKAD I A .COM / 800. 446 . 2226
Commercial mortgage loan banking and servicing businesses are conducted exclusively by Berkadia Commercial Mortgage LLC and Berkadia Commercial Mortgage Inc. Investment sales/real estate brokerage business is conducted exclusively by Berkadia Real Estate Advisors LLC and Berkadia Real Estate Advisors Inc. In California, Berkadia Commercial Mortgage LLC conducts business under CA Finance Lender & Broker Lic. #988-0701, Berkadia Commercial Mortgage Inc. under CA Real Estate Broker Lic. #01874116, and Berkadia Real Estate Advisors Inc. under CA Real Estate Broker Lic. #01931050. For state licensing details for the above entities, visit: www.berkadia.com/legal/licensing.aspx. © 2016 Berkadia Commercial Mortgage LLC. Berkadia® is a registered trademark of Berkadia Proprietary Holding LLC.
M id A tlantic Real Estate Journal — June 10 - 23, 2016 — 1A Location: Hilton Philadelphia City Avenue Hotel
www.marejournal.com
4200 City Avenue, Philadelphia, PA Register at MAREJournal.com
Speakers Include:
Leslie Kipps, Architect, Ewing Cole Over the past sixteen years, Leslie has dedicated her work to healthcare planning and design. She has filled a variety of roles in all project phases frommaster planning through construction administration. Her responsibilities have in- cluded highly complex specialties requiring detailed coor- dination between structure, equipment and MEP services. Stephen Marzullo, Senior Vice President, CBRE Stephen Marzullo has been working in commercial real estate for over twenty-five years, beginning his career in real estate brokerage as Vice President of the Investment Services Group of Grubb & Ellis Company. As one of the company’s national top producers, Steve received the Circle of Excellence Award within the first two years of his career. Bob Gaines, Sr. Vice President, Colliers International As a senior care community advisor, Bob Gaines special- izes in the Senior Housing Market which offers acquisi- tion and disposition services, asset management, and advisory to assisted independent living communities and skilled nursing facilities in the Mid-Atlantic region. Greg Rogerson Principal, J.G. Petrucci Co. As an attorney, Greg oversees the negotiation of all con- tracts, leases and municipal approvals for each J.G. Pe- trucci Co., Inc. project. As such, he effectively directs and manages all legal and financial transactions pertaining to acquisitions, leasing and commercial development, in- cluding complex zoning and land use approvals. Jeffrey M. Tertel, Executive Managing Director Newmark Grubb Knight Frank Jeff Tertel is an executive managing director in the Global Corporate Services division of Newmark Grubb Knight Frank’s Philadelphia office. He has been acknowledged as a top producer for the firm in 2011 and 2012. His respon- sibilities include tenant representation, agency leasing, and acquisition/disposition of land sites, retail parcels, and office buildings. Bill Van Horn, Director, Project Management Macro Consultants Over the course of his career, Bill has built a reputation as a leader among his peers for his expertise in successfully executing complex building programs for multiple stake- holders. Acting as his clients’ advocate, Bill’s detail-oriented focus allows him to excel at implementing projects both large and small, whether multi-phase renovations or new construction.
Michael App, AIA, NCARB, Director of Architecture, TimHaahs Michael is a Registered Architect with experience in all phases of building design from programming through construction administration. His project expertise includes the design, documentation and administration of parking facilities, corporate offices, residential construction and building renovations,. Todd Bartos, General Counsel, Aspire Ventures A business litigator with a growing practice in risk mitiga- tion and crisis management, Todd has rich experience serv- ing clients across the country on issues spannin governance, employment, and structural issues. At Aspire Ventures he works closely with the managing directors and portfolio companies. Andrew Bush, VP of Real Estate, Cooper University Hospital Andrew is the Vice President of Real Estate and Special Projects at Cooper. He is responsible for oversight of Coo- per’s real estate including all transactions, strategy around suburban expansion, consolidation of existing facilities and all financing related to real estate. Cheri Clarke Doyle, Senior Vice President, Development Management,Trammell Crow Co. Cheri Clarke Doyle serves as Senior Vice President for Trammell Crow Company in the firm’s Philadelphia Business Unit. In this role she is responsible for sourcing and overseeing new Healthcare, Wellness and Science development in the Northeast United States. Amy Novak, Project Executive, Torcon Amy has led many of the company’s landmark projects in the Philadelphia region. She has both civil engineering and architecture degrees from Lehigh, and an MBA from Penn State. Amy’s diverse experience with Torcon includes proj- ects with Villanova and Rutgers, Campbell Soup Co., the University of Pennsylvania, and St. Christopher’s Hospital for Children. Paul Garvey, Senior Director, Cushman & Wakefield Paul Garvey is a Senior Director in the Brokerage Services Group with over 25 years of commercial real estate expe- rience. With a background in management and finance, Garvey’s business strengths include strategy development, acquisitions, dispositions, transaction structuring, problem solving and the creation of value in transactions.
Sponsors:
2A — June 10 - 23, 2016 — M id A tlantic
Real Estate Journal
www.marejournal.com
MAREJ A dvertising D irectory Barry Isett & Associates.................................... IBC-C Benesch...................................................................21A Berger | Harris. .....................................................21A Berkadia.................................................................IC-A Bussel Realty Corp...................................................1B Capstan Tax Strategies..........................................14C CBRE Griffin Industrial...........................................2C CIRC DE. ................................................................22A Concannon Miller............................................... IBC-C Cooch & Taylor.......................................................23A Cooper Horowitz.......................................................7A CORFAC International...................................... IBC-A CREW NJ................................................................16B Cushman & Wakefield. ............................................7B Deerwood Real Estate Capital.................................6A DesignPoint......................................................... IBC-C Earth Engineering, Inc.. ..........................................4C Environmental Systems.........................................27A Eric M. Doroshow...................................................27A EwingCole...............................................................12C Exchange Solutions, Inc.........................................11A Fowler Companies..................................................27A Gebroe-Hammer Associates.....................................6B Harvey Hanna. .......................................................19A Heller Industrial Parks............................................9B Hillcrest Paving & Excavating..............................27A Hinerfeld Commercial.................................. 27A, IC-C Investors Real Estate Agency................................27A Jackson Cross Partners..........................................21A Kaplin Stewart. ................................................. 3A, 9A Kennedy Funding Financial..................................15A Landmark Commercial Realty. .............................10C Lee & Associates.......................................................7C Marcus & Millichap..................................................3A Mericle.....................................................................15C Meridian Capital Group.......................................BC-B Montgomery McCracken Walker & Rhoads.........8-9C Moonstone Environmental................................. IBC-C NAI Summit............................................................27A NAICIR. ..................................................................11C NorthMarq Capital........................................ 18A, 12B PennCap Properties. ....................................... 27A, 3C PHFA........................................................................ BC Poskanzer Skott Architects....................................13B Principal Commercial Capital Group....................10A Provident Bank.....................................................BC-A Real Property Capital, Inc.......................................8A Redwood Realty Advisors.......................................10B Regal Bank..............................................................13A ROCK Commercial...................................................6C SEBCO Laundry Systems........................................3B Singer Financial Corp............................................16A Subway....................................................................27A The Berger Organization. ......................................11B The Henley Group..................................................12A The Kislak Co.. .........................................................2B TimHaahs. ..............................................................13C Torcon........................................................................3B Traiman Real Estate Auction Co.............................4A WSFS Bank.............................................................21A York Funding LLC. ................................................14A Zimmel Associates....................................................8B
Mid Atlantic R eal E state J ournal Publisher ............................................................................ Linda Christman Publisher ............................................................................... Joe Christman Associate Publisher ................................................................ Steve Kelley Associate Publisher .............................................................Alissa Aronson Associate Publisher ..........................................................Barbara Holyoke Associate Publisher ..............................................................Eric Ballenger Senior Editor/Graphic Artist .................................................Karen Vachon Production Assistant/Graphic Artist ...........................................Julie King Office Manager .................................................................... Joanne Gavaza Mid Atlantic R eal E state J ournal — Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockland, MA 02370 USPS #22-358 | Vol. 28 Issue 11 Subscription rates: $99 - one year, $148 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Mid Atlantic Real Estate Journal
Avoiding Market Volatility: Healthcare Innovation Arbitrage Meets Real Estate Barry Didato A Ben Kempenich n interesting opportu- nity is emerging in the midst of the equities market chaos in China, the U.S., and elsewhere. As the healthcare industry evolves, spurred by the Affordable Care Act (ACA) and its em- phasis on making health care more accessible, efficient, and patient-centric, so do the opportunities in health care real estate, especially for those with an inside track to identify investment opportu- nities. Independent private physicians continue to merge and evolve relationships with larger health care providers and to take full advantage of co-location efficiencies that offer benefits for health sys- tems, physician practices and consumers. Underlying all of these shifts is a perpetual and ever-in- creasing need for health care systems to contain cost. One of the best ways that health care systems are seeking to reduce debt and improve operations is to de-lever and untangle their balance sheets by mak- ing better use of their finances that are being earmarked for real estate assets, and the reallocation of some of that capital toward a more strate- gic use of the delivery of care. These trends set the stage for well-positioned groups such as Healthcare Property Advisors (HPA), The Innovation Insti- tute, and their investors to tar- get highly attractive returns on investment in a dynamic and growing asset class: medical office buildings (MOBs). Investor demand for MOBs is soaring. In just the first half of 2015, MOB transaction volumes were $11.7b, more than all of 2014. In its 2015 MOB outlook report, Colliers International predicted that these strong growth trends should continue into the foreseeable future, driven by industry, technol- ogy, and demographic trends that will likely persist for 25+ years. Medical Construction & Design’s most recent Con- struction Report identified a pipeline of $86.7b in medical real estate construction. Inves- tors are attracted to the stable returns offered by this unique asset class. MOB’s embody re- cession-proof tenancy potential
and strong multi-year triple net master leases backed by bond-graded health systems. It’s a win/win for all parties. One avenue that accredited investors can use to capital- ize on the MOB market is the HPA Growth Fund, af- filiated with The Innovation Institute, which is structured exclusively around mission- critical MOBs acquired via their proprietary pipeline of vetted deal flow. The Fund’s action plan addresses defi- ciencies in the market, offer- ing investors an inside track that leverages unique rela- tionships and access within the healthcare industry. The Fund’s investment philosophy is to “optimize risk-adjusted returns by investing in all as- pects of the capital structure and matching investment to strategic value.” To further amplify returns, investors in the Fund can take advantage of the power of IRS 1031 ex- changes that allow the general partner to roll over gains into new acquisitions and defer taxes, thus yielding a very at- tractive and stable return on their investment. The HPA Growth Fund, and its unique ability to source opportunities in the MOB market, is backed by the Inno- vation Institute’s portfolio of healthcare service companies.
The Fund is managed by HPA, a specialty firm uniquely ca- pable of acquiring and man- aging MOBs for the Fund. The Fund, which is capped at USD $1 billion, already invested its initial assets of approximately $140 million (including investments from The Innovation Institute and other institutional investors), in four top-tier MOBs in Mis- sion Viejo, California. HPA, The Institute and their insti- tutional partners are slated to grow this portfolio as the Fund welcomes additional investors, partners, and real estate opportunities. For all the talk of pain being expe- rienced within health care today, HPA’s novel approach shows investors that change can be good! Barry Didato is Chief In- vestment Officer of The In- novation Institute, a compa- ny structured to leverage its 400+ aligned personnel and strategic partners to sup- port healthcare innovators and help health systems be a positive force to meet the needs of a rapidly changing global healthcare industry. Ben Kempenich joined The Innovation Institute in 2016. He is a recent MBA graduate of UC Irvine’s Paul Merage School of Business. n
To advertise, call 1-800-584-1062
Real Estate Journal — June 10 - 23, 2016 — 3A
www.marejournal.com
M id A tlantic
M id A tlantic R eal E state J ournal Levering and Kirshenbaum represent the seller Sale of 30,459 s/f office bldg. brokered by NAI Hanson
Leading the Real Estate Investment Market Contact us today to access the largest inventory of properties.
P ARSIPPANY, NJ — NAI James E. Hanson , a New Jersey-based full-service independent com- mercial real estate firm, an- nounced it has brokered the sale of a 30,459 s/f office build- ing located at 140 Littleton Rd. in Parsippany. NAI Hanson’s Josh Levering, SIOR and Andrew Kirshenbaum rep- resented the seller, Gisella Haidar , in the transaction. The building was purchased by Choice Properties . The three-story office build- ing is located in one of New Jer- sey’s best office markets and is currently 80% leased. It is the closest premier office building to the intersection of Routes 287 and 80 and provides easy access to Routes 280, 24 and 78, the Garden State Parkway, the New Jersey Turnpike and ELMONT, NY — Wings & Things, the brainchild of Paul Madonna has sprouted wings andestablishedasecondlocation. The original unit started 20 years ago in taking over the former Bojangles location on Fulton St. in Hempstead.
J.D. Parker Manhattan
Brian Hosey New Jersey (201) 582-1000 Bryn Merrey Washington, D.C. (202) 536-3700
(212) 430-5100 Brenton Baskin Philadelphia (215) 531-7000
140 Littleton Rd.
Offices Throughout the U.S. and Canada
www.MarcusMillichap.com
Newark Liberty International Airport. New York City can be reached within 45 minutes. “140 Littleton Rd. is a great property in the Parsippany office submarket, which is one of the premier markets in the state,” said Levering. “The buyer was interested in a value-add investment prop- Paul Madonna and his son Michael are proud to announce their second location at 1717 Dutch Broadway in Elmont, at a prime corner location in the Western Beef Shopping Center. Like the original unit, Wings
erty, and at 80% leased and with a fantastic location so close to the highways this was a perfect opportunity for them. The office market in New Jer- sey has been generally stale, but we have been seeing some good activity in this corridor as the assets here are just so well situated.” n & things will feature their pop- ular Southern Fried Chicken, their Famous Ribs and their 99 cent menu along. Wings & Things were r epr esent ed by Paul Fetscher of Great Ameri- can Brokerage. n
Q
“Ask the Professor”
&
A
As my readers are aware, I am a former com- mercial real estate lender and portfolio manager. I have years of experience managing and resolving problem loans. An experienced lender knows that not all loans that he /she closes is going to perform as expected. Some loans may become problem loans during the loan term due to any one of a number of fac- tors. Most problems could be traced to financial, economic or behavioral causes. Examples would include poor management of the property, an underperforming economy, extensive competition causing tenant vacancies, unexpected environ- mental issues, or partnership disputes. Recognizing the early warning signs of when a commercial real estate loan may become a prob- lem loan allows the lender to properly organize, plan and implement an action plan that uniquely targets and solves the problem loan. This month’s question pertains to these early warning signs. QUESTION: Which one of the following choic- es would not be considered an early warning sign to a lender that a borrower may be experiencing difficulty in making his/her monthly mortgage loan payments? a. The bank’s prime rate was lowered. b. The borrower’s property lost a major tenant. c. The borrower has stopped paying his em- ployees. d. The property’s real estate taxes for the past 12 months have not been paid. e. Several creditors of the borrower have initi- ated litigation. ANSWER: “a”
Paul Flethcher of Great American Brokerage represents Wings and Things in opening of second location in Elmont, NY
Firmly Rooted in the Law and in the Community We are well grounded in every facet of real estate law, from acquisition to construction. We are committed to serving the needs of our clients and our communities.
Kaplin Stewart
A t t o r ne y s a t L aw
Ronald M. Shapiro is Assistant Pro- fessor of Professional Practice in the Finance and Economics Department at RutgersBusiness School of Newark andNewBrunswickwherehe teaches real estate finance. Prior to Rutgers Business School, Ron was SVP with Union Center National Bank.
Contact: Mohammad A. Ghiasuddin • mghiasuddin@kaplaw.com 910 Harvest Drive, Blue Bell, PA 19422-0765 • 610-941-2546 • www.kaplaw. com Visit our Construction Blog: www.pennsylvaniaconstructionlawyer.com
Other O ces: Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120
KS Ad 6X5.5 Tree Neil S.indd 1
1/29/15 11:42 AM
4A — June 10 - 23, 2016 — M id A tlantic
Real Estate Journal
www.marejournal.com
M id A tlantic R eal E state J ournal By Caroline Shelly, LEED AP, HF Planners, LLC Unrealistic budgets – or “How to overcome headache # 2”
C orporations held their money very closely these past years and now real-
identify what the end user is hoping to achieve and blend what the Facility Manager needs in order to avoid head- aches along the way: 1. Determine the wish list from the end user, and if there is an order of magnitude on what they want in the space. For example, can the existing lighting be reconfigured or is there an expectation on add- ing soffits and various lighting scenes for presentations? 2. Are specific furniture re- quirements expected, such as table top connectivity? If so, is there a commercial furniture dealership that can provide such equipment?
3. Is an Interiors Group or Architect needed to help de- velop the scope of work and prepare the construction docu- ments to go out to bid? 4. Is an Engineering Group’s expertise neededwhen it comes to the expansion of space sce- nario and how the HVAC and electrical capacity needs to be modified? 5. How do you handle the end users last minute requests to interface TV monitors as op- posed to overhead projection? 6. A contingency factor should be included in the budget for unforeseen site conditions. Successful cost containment
can be achieved, but it’s impor- tant to work with professionals who have a successful track record. They should be knowl- edgeable in office planning and design, contract documents, project management, and they should be capable of selecting construction materials and systems in order to minimize long-term maintenance and operation costs. Cost estimates should be developed during the design development stage as the materials, furniture, equip- ment and systems are being selected. Once approved, con- tract documents are developed for bidding. Construction costs are im- pacted by the design, building location, materials selected, accuracy and completeness of the construction documents. Change orders occur due to revisions to the scope brought about by the end user, errors or omissions in the construc- tion documents, interpretation of the building code, building inspector requirements or un- expected building conditions. By developing the project based on the approved budget and/or developing a budget based on the end user’s wish list is something a successful Interiors Group can help with, and thereby help the Facilities Manager to avoid headaches. Caroline Shelly, LEED AP, is principal of HF Plan- ners, LLC. n Redwood Team completes Mount Vernon sale MOUNT VERNON, NY — Redwood Realty Advi- sors announced the closing of two apartment buildings in Mount Vernon for a price of $7.5 million and a cap rate of 6.9%. The two properties are located on the same block of South Second Ave. The sale included one 34-unit apart- ment building and a second mixed-use apartment with 35 apartments and seven com- mercial spaces. This was a unique situation where the seller had previ- ously retained two other bro- kerage firms, neither of which were able to find a suitable buyer, said Thomas McCon- nell, CCIM , managing part- ner at Redwood Realty. Redwood Realty Investment associates Michael Scrima and Thomas Gorman bro- kered the transaction. n
gets. The FacilityManager will need to educate these end us- ers on how costs have changed. For example; your Market- ing department wants to create a multi-use training room out of two offices. The basic price per square foot is a good place to start and in the NY tristate area, pricing is running $74.23/ SF (Q1 Commercial Brokerage Avison Young average of Class AMidtown/Manhattan Office). However, determining the scope of work prior to a “guess- timate” can help minimize cost overruns along with disap- pointment, frustration, and headaches for the end user. The following list can help
ize that ex- isting office space may no longer meet the end us- er ’ s needs . Departments may discov- er that they have money
to spend by the end of the year on some “pet” projects and reach out to the Facility Man- ager for assistance. The issue then becomes about managing expectations of the end users who may have unrealistic bud- Caroline Shelly
Attention Builders/Investors: Charlestown Township Orders 2 Land Properties to be Sold. Located in Dynamic Great Valley/Malvern area AUCTION REAL ESTATE
Property #1: Valley Hill Rd, just E of Rt. 401
Four-lot approved residential subdivision • Wooded Area of fine homes $35,000 Bank Cashiers Check needed to register to bid on the real estate at time of auction.
Property #2: 6.44± acres Zoned I/O/B- Ind/Office/Business
Auctions held at The Desmond Hotel, 1 Liberty Blvd., Malvern, PA 19355 Monday, June 27, 2016 — 1:30 PM You may walk the lands at your own risk 3017 Phoenixville Pike Corner of Yellow Springs Rd • Across from Great Valley Corp Center • 5 mi. to King of Prussia, 2 mi. to Turnpike entrance • at Route 29 • Includes large historic dwelling required to be rehabbed $25,000 Bank Cashiers Check needed to register to bid on the real estate at time of auction.
For terms & details visit traiman.com or call 215-799-0655
REAL ESTATE AUCTION CO. Broker/Buyer Co-op
PA AY000040-L NJ 7837064
EQUALHOUSING OPPORTUNITY
F inancial D igest F eaturing C reative F inancing
Real Estate Journal — June 10 - 23, 2016 — 5A
www.marejournal.com
M id A tlantic
For a 303,096 s/f grocery-anchored, mixed-use property NorthMarq Capital arranges $50 million refinance in MA
Walker & Dunlop closes a $17.5m acquisition/repositioning loan
opportunity to provide them with information to help them grow their portfolio. Attendees undoubtedly found it very bene- ficial through Margo’s real deal stories and industry expertise.” Other speakers included Marcus &Millichap’s Derrick Dougherty , senior associate, who gave examples of clients who have benefited from 1031 exchanges. “1031 exchanges are a strategy implemented by all types of investors.” said Dougherty. “In most cases, the investor is trading out of an asset with management com- ponent into a net leased deal where the tenant is responsible for the real estate taxes, insur- ance and CAM. We add value to our clients by understand- ing the rules and regulations under section 1031 and con- trolling a significant portion of the inventory in this part of the country. This increases the probability of a successful exchange for our clients to accomplish their goal of defer- ring their tax consequence and preserving their equity.” n Smith said, “The Southern Boulevard transaction shows the abilities of Walker & Dun- lop and its proprietary lending unit, WDCPF, as a creative structured lending opera- tion across both multifamily and commercial real estate classes. Walker & Dunlop will also have the opportunity to provide future permanent financing through a variety of financing products offered across the platform.” n up 66 multifamily units that will be transformed into 105 units of revitalized, market rate multifamily housing, plus 12,330 s/f of ground floor retail space along Southern Boulevard. Due to an expired lease with a local government agency, the subject is being acquired nearly vacant, and building renovations can be- gin immediately. The neigh- borhood has minimal vacan- cies and is primed for rent growth due to a tremendous lack of market rate housing available in the Bronx. The property is located just thirty minutes from midtown Man- hattan.
CONSHOHOCKEN, PA — Marcus & Millichap , in conjunction with the Ma- cLaren | Talone | Townsend team, hosted an informational seminar on “The 1031 Ex- change: Explained” providing an overview of Section 1031 in commercial real estate. The seminar was held on May 11, 2016 in Conshohock- en, PA. The featured speaker, Margo McDonnell , of 1031 Corp. , gave an overview ex- plaining the benefits of 1031 exchanges, the requirements of a successful exchange, as well as the tax consequences. McDonnell has over 22 years of experience in the 1031 in- dustry and was awarded the “The Margo McDonnell Certi- fied Exchange Specialist (CES) Perpetual Award for Outstand- ing Service” in 2010 by the CES Certification Council. “We consider ourselves advi- sors,” said Clarke Talone , senior associate at Marcus & Millichap. “The event was not only to network with our clients but we viewed it as an The team, led by Geoff Smith , managing director and head of originations for WDCPF, and Tom Toland , senior vice president, Multi- family Finance originated the deal with Gold Edge Capital. Toland said, “We were able to execute a unique bridge loan product in order to provide the client with max proceeds for an acquisition that involves a major renovation in a dynamic market. It was a very creative execution to get the client ex- actly what they needed.” Built in 1911, Southern Blvd. features two adjacent pre-war buildings making BRONX, NY — Walker & Dunlop, Inc. announced that Walker &Dunlop Com- mercial Property Funding, LLC (WDCPF) , its high yield and CMBS lending platform, closed a $17.5 million loan for 916-926 Southern Blvd., a multifamily property in Bronx, NY. The short term high yield bridge loan was used to fund the acquisition as well as reserves related to capital improvements and operating shortfalls.
RANKLIN, MA — Greg Nalbandian , managing director of NorthMarq Capital ’s New Jersey-based regional office, and Doug Nickerson , vice president of NorthMarq Capital’s Boston-based re- gional office, collaborated to arrange the $50 million refinance of Franklin Vil- lage, a 303,096 s/f, grocery anchored, mixed-use prop- erty located at 250 Franklin Village Dr. in Franklin, Massachusetts. The trans- action was structured with a 10-year term and 30-year amort i zat i on schedul e . NorthMarq arranged the fi- nancing for their REIT client through its correspondent relationship with Sun Life of Canada. Stop & Shop, Dress Barn and Marshalls repre- sent the property’s major tenants. “Our client took advantage of a very favorable interest F FALLS CHURCH, VA — Greysteel , a national com- mercial real estate investment services firm, has arranged $2.4 million in permanent financing for the refinance of the Goodwin Park Apart- ments, a 25-unit multifam- ily property located in Falls Church, VA on behalf of 2754 Goodwin Court LLC. The seven-year, non-re- course loan, provided by an agency lender as part of the Freddie Mac Small Balance Loan program, features a competitive fixed-rate and one year of interest-only payments followed by a 30-year amorti- zation schedule. Greysteel di- rector, Mark Bittenbender , of the company’s Debt and Structured Finance team, ne- gotiated the terms of this loan. Goodwin Park Apartments, located at 2754 Goodwin Court, was built in 1949 and has been undergoing signifi- cant renovations since Linden Property Group acquired the property in 2014. The im- provements allowed the bor-
Franklin Village
rate environment and rate locked this ten-year refinanc- ing six months prior to matu- rity with no spread premium. Our existing lender, Sun Life of Canada, aggressively pur- sued this early refinance in order to keep this well per-
forming loan on their books,” said Nickerson. “Sun Life provided a very favorable interest rate well below four percent and upsized the loan significantly meeting all the objectives for the borrower,” said Nalbandian. n
Greysteel arranges $2.4m in permanent financing for apartments in Falls Church, VA
Marcus & Millichap hosts 1031 exchange information seminar
Goodwin Park Apartments
states 495 and 66 as well as Routes 7, 50, and 29 allows residents to easily commute throughout Northern Virginia and to Washington, DC. “This transaction generated strong interest among numer- ous lenders. Greysteel was able to leverage the excellent repositioning that the owner- ship completed to obtain com- petitive financing terms in line with the borrower’s business plan,” said Bittenbender. n
rower to bring rents to market and unlock substantial value in the property. Conveniently located off of Lee Highway in the heart of Falls Church, the property is just minutes from numer- ous retailers, employers and entertainment destinations in Tysons Corner, the Mo- saic Town Center, and the Rosslyn-Ballston corridor in Arlington. The property’s prime location near Inter-
6A — June 10 - 23, 2016 — Financial Digest — Creative Financing — M id A tlantic
Real Estate Journal
www.marejournal.com
C reative F inancing
By Mike Saraco and Jim Morris, M&T Bank Creativity is hallmark to financing the higher education of tomorrow
T
he Mid-Atlantic region is a hotbed of higher education. New Jer-
both student and community alike. They are working in tan- dem with private developers
In Central New Jersey, The College of New Jersey has just completed a 12-acre mixed use residential development proj- ect on TCNJ’s Ewing, NJ cam- pus, adjacent to the school’s main entrance. The $120 mil- lion project, developed by the PRC Group of West Long Branch, provides 278,000 s/f of living accommodations for some 612 upperclassmen, and includes 80,170 s/f of ground level retail and office space with a 14,000 s/f Barnes and Noble that serves as the school’s outsourced book store. In South Jersey, Rowan University has embarked on
a similar mixed use project that is the largest municipal redevelopment project in the state. The Rowan Boulevard Project connects Rowan’s cam- pus to the business district in Glassboro, NJ with a 1/3 mile retail corridor featuring a 129-room Courtyard by Mar- riott and a massive, 36,000 s/f Barnes and Noble Superstore. Spread across 26 acres, the project has taken place in sev- eral stages. The first, which was completed in 2011, can accommodate 1,164 students. The second phase includes a 316,000 s/f building developed by Nexus Holdings known as
220 Rowan Boulevard, which consists of 119 student hous- ing units (accommodating 456 students), 12 affordable units and 47 market-rate apart- ments, as well as ground level retail and 27,000 s/f of medical office space. Two other phases are planned for 2017 and 2018. These public/private part- nerships work because they help shift construction and de- velopment costs from tax pay- ers to third parties who have the real estate expertise to fi- nance, build and deliver world- class properties. Moreover, many colleges and universities have discovered that these projects improve town and gown relationships by draw- ing students from off-campus housing where conflicts can arise with the community. And finally, they often serve to reinvent and reimagine the campus atmosphere, providing contemporary study, live and play environments. But all is not easy in the world of public/private edu- cational development. Higher education comes with its own world of expectations, stan- dards, and administrative functions unknown in private development. For lenders and developers looking to tap the university market, here’s what they need to know: Income streams are unlike typical cookie cutter private multi-family development. Understanding the room and board process is critical to sup- porting a deal. As cash-flow lenders on these deals, banks such as M&T, which financed both the TCNJ development and Phase II of the Rowan project, must understand the university’s current capac- ity and future enrollment projections. To some degree, students may seem a captive market, but competition ex- ists everywhere. We carefully evaluated both on campus and comparable off-campus housing, determining current rents and projections for fu- ture increases. Also factored into the equation is the way rent gets paid--by the month or semester, through the aca- demic or calendar year, and whether these residences will be included in the school’s housing lottery. All are keys to understanding potential cash flows and the financial viability of the projects. Bankers need to understand continued on page 26A
sey, the most densely pop- ulated state in the Union, h a s m o r e than 50 col- l e g e s a n d universities. To c on t i n - ue to grow,
to leverage their capital dollars and bui ld cam- puses of the future to bet- ter position themselves in competi- tive markets
Jim Morris
Mike Saraco
many institutions are turning to creative development and financing to build the kinds of accommodations (room and board in the parlance of educa- tion) and amenities that serve
and appeal to the increasing demands of potential students. In New Jersey, two recent projects have set the standard for public/private educational real estate development.
Real Estate Journal — Financial Digest — June 10 - 23, 2016 — 7A
www.marejournal.com
M id A tlantic
$25,000,000
METROPLEX ON THE ATLANTIC 120 BEACH 26TH STREET FAR ROCKAWAY, NY A 125,874 SF apartment building containing 126 units
The undersigned arranged the above financing.
622 Third Avenue New York, NY 10017 (212) 986-8400 Fax: (212) 983-0512 www.cooper-horowitz.com
Real Estate Financing
8A — June 10 - 23, 2016 — Financial Digest — Creative Financing — M id A tlantic
Real Estate Journal
www.marejournal.com
C reative F inancing
By R. Brenner Green, Real Property Capital, Inc. The current commercial mortgage market
t seems to me that one third of 2016 has slipped by very quickly, but not w i t h o u t quite a bit of news in the world of commercial real estate f inance . A few notable observations so far this year, in no particular order, are as follows: 1. Bank consolidation – 2015 saw a flurry of bank acquisitions in the Dela- ware Valley market, and the I R. Brenner Green
pace has only increased in 2016. Off the top of my head Susquehanna Bank, National
means that there are fewer options but it also means it will generally be more diffi-
what is fueling the consolida- tion other than the fact that the regulatory environment has become so onerous that the smaller guys have decided they cannot make money with dozens of compliance officers on the payroll (all of whom produce zero revenue to the bank) so they are throwing in the towel. Branches seem to be worth a fraction of what they were worth pre-recession, and in the current interest rate environment deposits are basi- cally worthless, so what exactly is the acquiring bank buying anyway? I can’t figure it out. 2. Construction financing
has gotten harder – This has something to do with the above, but it also seems like banks are finally figuring out that making construction loans requires a significant allocation of resources to do it right, and now they want to get paid for the effort, and they want to keep the perma- nent loans. Exit fees of the sort that last appeared in 2010-11 are popping up in construction loan term sheets, and leverage is gravitating from 80% to 75% for all but the best deals. Personally I feel that the regulators have something to do with this and that they are encouraging banks to try and hang on to the construction loans that they write, as the recent sea change cannot be a coincidence. 3. The CMBS market has been a roller coaster, but not a train wreck like you might have recently read about – Everybody loves to hate CMBS. Without taking a side politically, you could argue that CMBS is an ex- ample of what’s wrong with our financial system these days. That said, it is a neces- sary part of the commercial real estate financial system and without the outlet of securitization there would not be nearly enough capital to support the demand for loans. And if you want the most dollars possible for the longest term possible on a non-recourse basis, it’s still the way to go for a loan on a commercial property. Yes, spreads did explode by 100 basis points early this year, a few lenders quit the busi- ness, and many borrowers were re-traded on spread and loan proceeds and the market stumbled. However, by his- torical standards, most folks would not complain about a rate in the low 5 percent range, which is where cou- pons peaked as spreads went out, and currently spreads have come all the way back in to a point very close to where they started late last year. So all-in-all CMBS is as viable an option as ever, reports of its demise have been greatly exaggerated. R. Brenner Green is a 18 year veteran in commer- cial real estate finance and president of Real Property Capital, Inc., a full ser- vice commercial mortgage banking firm based in the Philadelphia suburbs. n
“The CMBS market has been a roller coaster, but not a train wreck like you might have recently read about – Everybody loves to hate CMBS. ”
Penn Bank, Penn Liberty Bank, East River Bank, Con- tinental Bank, Valley Green Bank, Alliance Bank, Metro Bank, Fox Chase Bank, First Niagara Bank (and many more that I am forgetting) have all gone by the wayside. As a borrower obviously this
cult to get a loan. Fewer banks equals less competition and larger banks are pickier about deal quality than smaller banks, so with fewer smaller banks in the market you can reasonably expect that it will be more difficult to borrow. As an aside, it is hard to imagine
Recently Closed Loans
$2,147,000
$8,600,000
14-Unit Multifamily Construction Loan
104,000 SF Office Refinance
Philadelphia, PA Fort Washington, PA 70% LTV, 75% LTC, 18 Months, 4.0% 75% LTV, 10/30, 4.98%, Non-Recourse
Real Property Capital is a Philadelphia based full service commercial mortgage banking firm with a regional focus and national capabilities. Our business model emphasizes client satisfaction through a high-touch, analytical approach that distinguishes us from the competition. Learn more about our distinct approach and proven track record of success at www.realpropertycapital.com. FOR MORE INFORMATION: R. Brenner Green, President 75 East Butler Avenue • Ambler, PA 19002 • 610-456-9644 • bgreen@realpropertycapital.com
Real Estate Journal — Creative Financing — Financial Digest — June 10 - 23, 2016 — 9A
www.marejournal.com
M id A tlantic
C reative F inancing By Barry Furman, Kaplin|Stewart Seller financing
R
there are risks, both sellers and buyers can benefit. Prime seller candidates are typically
eal estate is a fairly safe investment that can help diversify an
title to the property for the term of the note. How long the loan is to be repaid, the inter-
to designate a time limit for when the note must be paid in full. This is generally be- tween one and five years. A typical offer to a seller is to pay interest only monthly at the prime rate. If the seller needs cash flow, he may negotiate a higher interest rate. The qualified seller will re- port his income from the sale of qualified property on the in- stallment sale basis unless he timely elects otherwise. This means he will recognize gain from the sale proportionately over time. The buyer gets a full stepped-up basis even though he may have given only an
installment note to the seller. Barry A. Furman, Esq. is a principal of Kaplin Stew- art in Blue Bell, Pennsyl- vania in the Corporate & Business Planning, Trust & Estates and Taxation groups. Mr. Furman has counseled a wide range of business clients regarding healthcare, tax, corporate, employment and real es- tate law in matters such as entity formation, busi- ness structuring, acquisi- tions, financing, licensing, regulatory issues, contract negotiations and estate planning. n
investment portfolio and l e v e r a g e one’s capital. To succeed in real estate i n v e s t i n g , however, in- vestors have t o b e c r e -
“There are various ways seller financed loans are structured. However, a seller financed loan can be as flexible as the parties negotiate.”
those who do not need the cash proceeds from the sale im- mediately and instead prefer having a stream of income. If the buyer defaults, the seller may foreclose just like a bank or mortgage company. If the seller finances the entire purchase price, he will generally continue to hold
est rate, late charge and due date, among other things, are negotiated between buyer and seller or their representatives. There are various ways seller financed loans are struc- tured. However, a seller fi- nanced loan can be as flexible as the parties negotiate. Most of the time the seller will want
Barry Furman
ative. There are many financ- ing options and each has its own risks and benefits. Why use creative financing at all? One reason is that the buyer may not have money. Seller financing is one com- mon option. A seller financed transaction involves the seller conveying real estate to a buyer by warranty deed with the seller taking back a mort- gage note secured by a deed, deed of trust or mortgage. The mortgage or other instrument generally becomes a first lien. Therefore, seller financing al- lows the buyer to use as little of his own money as possible. Seller financing is often used when the seller owns the prop- erty free and clear of all liens and encumbrances. The seller doesn’t want the property and likes the idea of receiving a monthly payment. Seller financing allows the buyer to purchase the property for very little or no money down and lower closing costs. Eliminating the bank or mortgage lender with seller financing certainly has an appeal. Instead of a bank or mortgage company, the seller acts as the bank. Although a section of the MARE Journal P.O. Box 26, Accord, MA 02018 781-871-5298 • 800-584-1062 fax 781-871-5299 www.marejournal.com Section Publisher Barbara Holyoke bholyoke@marejournal.com Section Editor Julie King jking@marejournal.com Financial Digest
Firmly Rooted in the Law and in the Community We are well grounded in every facet of real estate law, from acquisition to construction. We are committed to serving the needs of our clients and our communities.
Contact: Barry A. Furman • bfurman@kaplaw.com 910 Harvest Drive, Blue Bell, PA 19422-0765 • 610-941-2529 • www.kaplaw.com Visit our Real Estate Blog: www.philadelphiarealestatelaw.com Visit our Construction Blog: www.pennsylvaniaconstructionlawyer.com Other Offices: Cherry Hill, NJ 856-675-1550 • Philadelphia, PA 215-567-3120 Kaplin Stewart A t t o r ne y s a t L aw
KS Ad 6X5.5 Tree Neil S.indd 1
1/29/15 11:42 AM
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72Made with FlippingBook - Online Brochure Maker