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Volume 24 Issue 7 April 13 - 26, 2012
751 multi-family units in New Jersey Commercial Mortgage Capital arranges $34.7 million in financing
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SPOTLIGHT on Southern New Jersey ISSUE HIGHLIGHTS
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ivingston, NJ — Commercial Mortgage Capital, arrange $34.7 L COMMERCIAL MORTGAGE CAPITAL, arranges $34.7 million in fin ncing fo 751 multi-family units : Livingston, NJ - Mark Scott of Commercial Mortgage Capital has arranged permanent mortgage financing totaling $34,700,000 for three multi- family p operti s located in New Jersey i the first two months of 2012. One of the properties, a two-story garden apartment complex containi g 612 units is located in Mi dlesex County, NJ. The borrowers were seeking a Mark Scott million in fi- nancing for 751 mu l t i - family units. Mark Scott of Commer- c i a l Mo r t - gage Capital handled the p e rman e n t financing for three proper- ties in the first two months of 2012. One of the properties, a two-story garden apartment complex containing 612 units is located in Middlesex County. The borrowers were seeking a self-liquidating loan for $20 million which Scott was able to negotiate through a national
building containing 65 units is located in Berkeley Heights and the second is a 74 unit, three-story luxury apartment building located in Springfield. Both of the Union Cty. proper- ties received 10-year loans, one from a bank and the other from an insurance company. Commercial Mortgage Capital negotiated favorable financing terms for all three properties. Scott is anticipating another stellar year for Commercial Mortgage Capital as a follow up to 2011’s over $410 million in production and looks for- ward to continuing to grow the bonds between borrowers and lenders in the months ahead, noting funds are available for quality properties with strong sponsors. n
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26-27A B`W1]c\bg AObWaTOQbW]\AbcRg b]1VS``g6WZZ<8 2/9/11 4:53:09 PM EXPO 2012 April 18 th Wilshire Grand Hotel West Orange, NJ self-liquidating loan for $20 million which Mr. Scott was able to negotiate through a national insurance company. The other two properties are located in Union County, New Jersey. The first property being a four-story luxury apartment building containing 65 units is located in Berkeley Heights and the second is a 74 unit, three-story luxury apartment building located in Springfield. Both of the Union County properties received 10-year loans, one from a bank and the other from an insurance company. Commercial Mortgage Capital negotiated favorable financing terms for all three properties. Mark Scott is anticipating another stellar year for Commercial Mortgage Capital as a follow up to 2011’s over $410,000,000 in production and looks forward to continuing to grow the bonds between borrowers and lenders in the months ahead. Noting funds are available for quality properties with strong sponsors. insurance company. The other two properties are located in Union Cty. The first property being a four-story apartment Kent and Lawrence of CBRE represented both parties in transaction Katz Properties acquires Westgate Shopping Center for $33.855 million 35-42A Manassas, VA — Katz Properties of New York has acquired the Westgate Shop- ping Center in Manassas for $33.855 million. The 172,000 s/f supermarket anchored shopping center, built in 1964, is situated on 17 acres located at 8139 Sudley Rd. Westgate Shopping Center is currently 97% occupied by twenty tenants including a 52,000 s/f Giant supermarket, NAI Keystone’sWillems& Cole broker 324,000 s/f 6B Financial Digest..................................... 5-15A New Jersey ......................................... 17-34A DelMarVa............................................ 43-47A Pennsylvania........................................ Section B Directory Upcoming Spotlight spring preview April 27th 8139 Sudley Road as well as Barnes and No- ble, CVS, Total Wine, Panera Bread, and three outparcels. Daniel Katz, a principal of Katz Properties said, “We are excited to have acquired this stable asset with some of the best frontage on Rte. 234 in Manassas. This is our first step into Virginia, but we intend to pursue additional acquisition opportunities of this sort in the region.” Joshua Katz, COO of Katz Properties, said they are “pleased to enter the northern Virginia region and are confi- dent Westgate will continue to provide high quality retail services for the community. We are also eager to enhance what is already a vibrant shop- ping center through capital improvements and attentive management.” Katz Properties is a real estate acquisition and develop- ment company with offices in Boston, New York and Phila- delphia that focuses on the acquisition, operation and re- positioning of retail shopping centers and office properties in the Northeast and Mid- Atlantic. Mortgage financing was pro- vided byWebster Bank of Con- necticut and was arranged by Tim Breda of Goedecke& Co. The CBRE team of R. William Kent and Gary S. Lawrence represented both Katz Proper- ties and the seller in the trans- action. Leasing and property management services will be providedby Winslow Property Management, an affiliate of Katz Properties. n www.marejournal.com A Inside Cover April 13 - 26, 2012 — Mid Atlantic Real Estate Journal www.marejournal.com Mid Atlantic Real Estate Journal — April 13 - April 26, 2012 — 1A www.marejournal.com Physical Characteristics •Size: 120 Acres (sub-dividable) •Location: In Lebanon County, PA •Topography: Generally flat with elevation between 450.0-510.0 ft. •Zoning: Industrial and Office Utilities •Water: •Sewage: City of Lebanon Water Authority, 12" line City of Lebanon Water Authority, 18" line •Gas: UGI utilities, 6" line •Electricity: Met-Ed, A FirstEnergy Company, 69KV Transportation •Rail: Norfolk Southern Railway •Highway: I-76, I-78 & I-81 are located 9 miles from site •Air: Harrisburg International, 20 miles Brokers Protected 16 Lebanon Valley Parkway • Lebanon, PA 17042 phone (717).274.3180 • fax (717).274.1367 www.lvedc.org 2A — April 13 - April 26, 2012 — Mid Atlantic Real Estate Journal MAREJ A DVERTISERS D IRECTORY Belfor Property Restoration ........................................... 38A Brahney ........................................................................... 19A Brasler Properties ........................................................... 12B Bruce Coin Consulting...................................................... 8A Business Card Directory................................................. 51A Bussle Realty Corp.......................................................... 33A CBC Bennett Williams............................................. 53A, 2B Columbia Bank..........................................................5A, 42A Estreich & Company....................................................... 12A Commercial Mortgage Capital ......................................... 7A Cooper Roofing ................................................................ 39A Cooper-Horowitz ............................................................... 9A Cronheim Mortgage ........................................................ 12A Crown Castle ................................................................... 41A Deerwood Real Estate Capital ....................................... 10A Dietrick Group ................................................................ 11B Earth Engineering .......................................................... 11B Estreich & Company......................................................... 4A Foster & Mazzie .............................................................. 42A Griffin Land....................................................................... 8B Harvey Hanna & Associates................................. IC-A, 44A Heller Industrial Parks .................................................. 21A Hinerfeld Commercial RE .............................................. 53A Hinerfeld Commercial RE ...........................................IC-1B Jenkintown Building Services.......................................... 9B Joseph P. Gilroy RE ........................................................ 53A Kaplin | Stewart............................................................... 2A Keast & Hood Company ................................................. 13B Lebanon Valley Economic Development Corp. ................ 1A Lehigh Valley Chapter Service Directory ...................... 15B Lundt ............................................................................... 37A M. Miller & Son............................................................... 15A Manko, Gold, Katcher & Fox............................................ 9B Marcus & Millichap RE Investment Services ................. 2B Max Spann RE & Auction............................................... 51A Meridian Capital Group ................................................. 15A Metro NJ Chapter Appraisal Institute .......................... 15A NAI Keystone .................................................................... 8B NE NJ Chapter Appraisal Institute............................... 16A NorthMarq......................................................................... 6A Penn’s NE .......................................................................... 4B PennCap Properties .......................................................... 8B Poskanzer Skott Architects ............................................ 22A RE/MAX of Reading ........................................................ 14A Riker Danzig ................................................................... 18A SEBCO............................................................................. 18A Sheldon Gross Realty...................................................... 18A SNJ Chapter Appraisal Institute ................................... 31A SUBWAY.......................................................................... 53A The Frederick Group....................................................... 11B The Kislak Co.................................................................. 20A The NJ Tri-County Region.............................................. 27A TriState REALTORS Commercial Alliance ................... 49A USDA............................................................................... 14A WCRE .............................................................................. 24A J www.marejournal.com Mid Atlantic Real Estate Journal Mid Atlantic R EAL E STATE J OURNAL Publisher ............................................................................Linda Christman Co-Publisher .........................................................................Joe Christman Section Publisher ..............................................................Michael Campisi Section Publisher ................................................................Elaine Fanning Senior Editor/Graphic Artist ................................................ Karen Vachon Production Assistant ........................................................ Rachel Rugman Office Manager ...................................................................Joanne Gavaza Editorial Consultant ............................................................. Ben Summers Guest Columnist ................................................................Joseph Brecher Mid Atlantic R EAL E STATE J OURNAL ~ Published Semi-Monthly P.O. Box 26 Accord, MA 02018 (Mail) 312 Market Street, Rockland, MA 02370 (Overnight) Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, P.O. Box 26, Accord, MA 02018 USPS #22-358 | Vol. 24 Issue 7 Subscription rates: $99 - one year, $198 - 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 AMESBURG, NJ — Stra- tegic location continues to be the draw for multi- family investors in Middlesex County and central New Jersey, according to Joseph Brecher, executive vice president of Ge- broe-HammerAssociates, based in Livingston, N.J. The market specialist recently arranged the sale of four Jamesburg apart- ment buildings comprised of 39 total units, located just one mile off the New Jersey Turnpike Exit 8A exchange. “Jamesburg has the advan- tage of being nestled between Fortune 500 companies, subur- ban residential neighborhoods and major transportation net- works, all of which strengthen the tenant pool and positively influence long-term property performance,” said Brecher. “The borough also has a lower unemployment rate thanks to its proximity to major em- ployment centers, including Rutgers University, Middlesex County College and Princeton University.” Situated in southern Mid- By Joseph Brecher Central NJ Multi-Family Market Continues to Attract Investors with Prime Location and Favorable Locale dlesex County, Jamesburg is anchored by a downtown shop- ping district, Thompson Park and Lake Manalapan. This thriving live/work/play munici- pality is served by the John F. Kennedy School and Grace M. Breck Wedel Middle School, which is a short walk from the properties. Brecher represented the seller, Jamesburg Apartments LLC, and identified the buyer, Jamesburg Realty Partners LLC, in the trade of 6-8 Vine Street, 16 Lake Street, 8 Cher- ry Street and 123 Stevens Avenue, which sold for $2.66 million. Each of the two-story complexes is within a one-mile radius and has one-bedroom Correction: In ourMarch 16th Best of 2011 issue, in the Honorable Mentions of 2011 section, we erro- neously listed Hartz Mountain as the Best Manager Company for the Monaco at 475 Washington Blvd. The management company for this building is RoselandManagement Company. Legal representation was provided for the seller by Mor- ris Silberberg, Esq., of Silber- berg &Klein in Howell, and the buyer by Scott Herzog, Esq., in Fort Lee. ■ units as well as on-site parking. According to Gebroe-Hammer, average rents for the area are approximately $825 for one- bedroom units. Contact: NEIL A. 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Kaplin Stewart A t t o r n e y s a t L aw 2EAL ESTATE LAW FROM THE GROUND UP Experience Counts. Count On Us. To advertise, call 1-800-584-1062 F INANCIAL D IGEST F EATURING C REATIVE F INANCING Mid Atlantic Real Estate Journal — April 13 - April 26, 2012 — 3A www.marejournal.com ATCHUNG AND NORTH PLA IN - F IELD HFF an - Also secures $22.75 million in financing HFF investment sales team rep the seller in $63 million closing of Windsor at Crystal Ridge W nounced that it has closed the sale of Windsor at Crystal Ridge, a 334-unit, classAmulti- housing complex in Watchung and North Plainfield. HFF represented the seller, GID Investment Advisors, LLC and procured the buyer, AvalonBay Communities, Inc. AvalonBay purchased the prop- erty for $63 million free and clear of existing debt. The HFF investment sales team representing the seller was led by senior managing di- rectors Jose Cruz and Andrew Scandalios, managing director Kevin O’Hearn, director Jeffrey Julien and associate director Steve Simonelli. In Arlington, HFF arranged an $11.75 million refinanc- ing for Greentree Square, a 110,296 s/f, grocery-anchored shopping center. HFF worked on behalf of the borrower, Mainardi Man- HOBOKEN, NJ – Meridian Capital Group negotiated $33 million in permanent financ- ing for a recently constructed luxury apartment building on behalf of Ironstate Holdings. The seven-year loan features a rate of 4.12% and was provid- ed by a local savings bank. Me- ridian finance advisors, David Cohen and Russ Drebin, both based in Meridian’s NJ office, negotiated this transaction. The 13-story multifamily building is located at 1401 Hud- son St. In a separate transaction, Meridian Capital Group nego- tiated a $28.4 million acquisi- tion and construction loan on behalf of a partnership between Cayuga Capital Management and Jacob Toll. The proceeds were used for the acquisition and completion of a mixed-use development project located on North 4th Street in Brooklyn, Greentree Square 2121 State Route 27 agement Company, to secure the 10-year, fixed-rate loan through Allstate Investments, LLC. The loan will be serviced by HFF and is replacing an existing first mortgage loan on the property also arranged by HFF. Greentree Square is situated on a 12.6-acre site at the inter- section of Greentree Road and Route 73, about 10 miles east of Center City Philadelphia. The 99,260 s/f, research and devel- opment facility. HFF arranged the financ- ing on behalf of AG Net Lease Fund II, an affiliate of Angelo, Gordon & Company. Morgan Stanley Mortgage Capital Holdings LLC provided the 10-year, fixed-rate securitized loan, which will also be ser- viced by HFF. 2121 State Route 27 is 100 percent occupied by Revlon 92 percent leased property is anchored by Whole Foods plus two pad sites occupied by TGI Friday’s and Citizen’s Bank. The HFF team representing Mainardi Management Com- pany was led by senior man- aging director Thomas Didio and senior real estate analyst Michael Cerulo. In Edison, HFF secured $11 million in acquisition financ- ing for 2121 State Route 27, a Consumer Products Corpora- tion, which utilizes the facility as its worldwide research and development center for all of its brands. The HFF team representing the borrower was led by man- aging director Evan Pariser and director Michael Klein. Angelo, Gordon & Company is a privately-held registered investment advisor dedicated to alternative investing. ■ Cohen, Drebin, Appel and Diaz orchestrate transactions Meridian Capital Group negotiates $61.4m in permanent financing, acquisition & construction loans Steelworks Lofts 1401 Hudson Street by executing a deed-in-lieu- of-foreclosure. The 36-month loan, arranged by Meridian and provided by a regional balance sheet lender, features favorable floating-rate and interest-only provisions for the full term. Meridian managing director, Aaron Appel, and vice presi- dent, Michael Diaz, both based in Meridian’s New York City headquarters, negotiated this transaction. The 110,000 s/f mixed-use building is located at 76 North 4th St. in the trendy Wil- liamsburg neighborhood of Brooklyn. ■ NY. The partnership purchased the note from the previous con- struction lender in an all-cash transaction and then acquired the deed on Steelworks Lofts 4A — April 13 - April 26, 2012 — Financial Digest — Mid Atlantic Real Estate Journal www.marejournal.com C REATIVE F INANCING The three year floating rate loan was structured into two tranches Estreich & Co. arranges bridge financing for the NYC Wyndham TRYP Times Square South Hotel N EW YORK CITY, NY — Estreich & Company announced travel including bunk beds and multimedia living rooms. “We are thrilled to play a role in quickly securing financ- ing for the debut of Wyndham TRYP brand in NorthAmerica”, said Pehlivanian. Due to a pending loan matu- rity, the bridge financing was quickly closed in two weeks with no operating history. The transaction was underwritten based on future operating pro- jections, the experience of the borrower, and the strength of the Wyndham brand. The three year floating rate loan was structured into two tranches with both a senior and a mez- zanine lender. Due to time con- straints, the mezzanine lender accommodated the borrower, closed the entire loan in 12 business days and subsequently worked with the senior lender to quickly close senior mortgage piece within a very short time frame effectively meeting the borrower’s needs and providing the borrower with a fast and seamless execution. Estreich & Company is a source of competitive debt and equity financing for real estate projects of any deal size. Est- reich & Company’s clients in- clude many of the most sophis- ticated real estate professionals in the country, ranging from high net worth individuals to major publicly traded Real Es- tate Investment Trusts. Their clients rely on their knowledge, diligence and market perspec- tive to secure the best possible financing terms and bring each project to closure efficiently and on schedule. In 2011, Estreich & Company has closed over $3 billion of transactions across 20 states and multiple property types with 45 different lending institutions. “With our integrity and expe- rience in financing every type of real estate for 25 years, we have access to the top capital sources. Our skilled team of profession- als distinguishes us from other firms working closely with our clients and becoming in house financial specialists for our clients to achieve the best pos- sible results,” said Pehlivanian. Estreich & Company strives to make the financing process as easy and seamless as possible so their clients can spend their time doing what they do best. Hiring the right intermedi- ary on financing transactions creates value and allows the owner to focus on what they do best. ■ tha t Aram Pehlivanian a n d O l e g F e l d s h e r h a v e a r - ranged $38 million of fi- nancing for the Wynd - ham TRYP Aram Pehlivanian Times Square South on be- half of Eros Management & Realty. The strategically located 173 key flagship TRYP hotel opened in February 2012 and features Wyndham TRYP Times Square South restaurant and bar, executive meeting space, fitness center the Gastro Bar at 35th a Medi- terranean and Spanish tapas and spacious signature family guest rooms ideal for family - Mortgage and Mezzanine Debt BUILD ON . . . - Equity and Join Venture Our Success - Investment Sales - Structured Finance - Loan Sales - Special Assets and Advisory 7 PENN PLAZA • SUITE 512 • NEWYORK, NY 10001 • (T) 212.736.6770 • (F) 212.736.6363 www.estreich.com The Estreich team of professionals is available to consult and provide debt, equity and structured finance solutions on all asset classes throughout the United States. Over the last 25 years we have continued to build our knowledge base of local markets and strengthen our relationships with the widest range of borrowing sources covering the entire spectrum of the capital markets. To discuss a project or for more information, please call 212–736–6770 or email us at info@estreich.com Let us put our relationships, experience and expertise to work for you Building the Future Together Jonathan Estreich formed Estreich & Company in 1986 and since that time the principles and goals of our organization have remained unchanged. The firm was established upon the commitment to provide the highest level of excellence and service in advising clients on any and all of their Real Estate financing requirements. This founding principle remains true today, with the focus being to completely understand the client’s real estate needs and pursue and deliver optimal solutions. Mid Atlantic Real Estate Journal — Financial Digest — April 13 - April 26, 2012 — 5A www.marejournal.com C REATIVE F INANCING By Tom Graziano, HFF Entering Q2, the debt capital markets continue to show signs of strength A s we enter Q2, the debt capital markets con- tinue to show signs of tizations coming to market in the next couple months. When presented, however, with a more transitional-type deal that requires more flex- ibility, banks, debt funds, and mortgage REITs have the abil- ity to structure deals to suit specific projects. Whether it’s your standard “bridge” deal or repositioning play, these bal- ance sheet lenders can offer competitively-priced, floating rate loans with flexible struc- ture: favorable prepayment terms, partial releases (for portfolios, condos, or pad sites), and the ability to provide fu- ture funding (for TI/LCs, Ca- pEx). Debt funds andmortgage REITs are also setting them- selves apart by offering higher- leverage (up to 85% LTV) first mortgages (with rates of 6.5- 7.5%). Also noteworthy – in this ever-changing landscape, LifeCo’s are now competing more for mezzanine loans in an effort to chase yield. As to how aggressive they’ve been getting, we’ve had success re- cently in placing LifeCo mezz on top of firsts from banks (and other LifeCo’s) – in some cases achieving a last dollar of 85% – for an all-in, blended rate in the mid-single digits. Another area in which we’ve had particular success has been in arranging fixed-rate, construction-to-perm loans with LifeCo’s. At the begin- ning of the year, there were only a couple groups that were even willing to entertain such a structure but we’ve now noticed more and more groups coming into the space. By way of example, we’re cur- rently working on a couple apartment construction deals where we’re implementing this structure. Deal points include term options of up to 15 years (I/O during lease-up, then 30 year am), limited pre- payment guarantees, which burn off upon stabilization, and the ability to increase loan amounts, also upon stabiliza- tion . What makes this struc- ture compelling (vs. opting for a low Libor-based construction loan at, say, L+250), is that it acts as a hedge against a spike in rates. We have found that if you could lock in a rate with a 4-handle today, rather than waiting 2-3 years (the construction loan term) to find long-term, permanent debt – most borrowers would jump at the opportunity. Tom Graziano is a direc- tor in the New Jersey office of HFF. ■ strength, and have demon- strated that there is plen- ty of liquid- ity across the risk spectrum for commer- cial real es- t a t e . L i f e Tom Graziano companies, CMBS/conduit shops, banks, debt funds, mort- gage REITs, and the agencies (Fannie/Freddie) are all open for business and are actively competing to provide the best possible structure/terms for our clients. The financing landscape has certainly changed over the past few years (and continues to change, it seems, on a weekly basis) so it’s imperative, es- pecially as an intermediary, to know where the market is on a real-time basis. For your straight-down-the-middle, “core” deal, a LifeCo, CMBS, or agency execution is most likely going to be your best bet, but for deals that aren’t LifeCo/ CMBS-ready (i.e. those with lease-up risk or repositioning plays), you have to be a little more creative as these deals require more flexibility. LifeCo’s and CMBS groups continue to be the most com- petitive when pricing stabilized assets. LifeCo’s have tradition- ally targeted properties in primary markets while CMBS groups cast a wider net into secondary and (sometimes) ter- tiary markets. However, given the overall lack of transaction supply, LifeCo’s are also going outside their typical comfort zone, which has increased the competition among the two lenders and, ultimately, benefited the borrower. What’s more, we’ve also been seeing LifeCo’s go higher in the capi- tal stack – further increasing the competition between them and CMBS groups since the trade-off between rate and le- verage, which had usually dif- ferentiated the two, is leveling out. The good news is – both have a lot of capital to deploy. LifeCo’s are coming off a record year ($45 billion in 2011; with a mandate to originate even more in 2012) and with CMBS spreads continuing to narrow, as evidenced by the recent is- suances, the demand remains strong, which should bode well for the +/-$6 billion of securi- Who can Your Business count on today? 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columbiabankonline.com Count on Columbia. Member FDIC 6A — April 13 - April 26, 2012 — Financial Digest — Mid Atlantic Real Estate Journal www.marejournal.com C REATIVE F INANCING By Mark Scott, Commercial Mortgage Capital Finance 2012: Improving market conditions & increasing liquidity to real estate capital markets L iquidity has certainly returned. Not to the days past of high loan- staged fundings. But the lending environment is much improved over 2009 and 2010. Borrowers are seeking to lock in today’s low rates as inflation continues to rumble on the horizon. Lenders are eager to put their money to work yet are structuring loan transactions to satisfy bank loan committees and the watchful eyes of bank regulators. Of the $410 million placed by our firm last year, less than 15% were straight, non recourse, 10 year term, 30 year amortizing loans. Over 40% of our closings involved interim 3 to 5 year financ- ings. In one such loan the of- fice property was 53% leased to a strong credit tenant and the building was in lease up (72 % leased overall) after a recent renovation and reposi- tioning, The lender funded to a low 1.02 debt service cover- age based on the strong credit lease and allowed the bor- rower to receive additional loan proceeds based on new leases and also funded the required tenant work letters on the unleased space. An interesting retail/multi- family financing allowed the borrower to payoff his exist- ing construction bank loan by posting additional collateral. The “additional” collateral consisted of several single family homes under construc- tion which would be released when he sold them and used part of the proceeds to pay- down or “balance” the highly leveraged retail/multifamily loan we originated. An example of credit sup- port suspenders was used on a large newly constructed New York City multifam- ily property. The borrower sought to lock in low rate fixed rate 15 year financing. Leasing has just begun. The lender evaluated the strong rental market, the credit wor- thiness of the borrower and accepted a borrower guar- antee until a satisfactory rental achievement level was obtained and maintained for a period of time. Once rental achievement was met, the guarantee was released. Recently we closed a “for sale” condominiumfinancing. We believe it is the first of its type in New Jersey since the housing bust began in 2008. This transaction was structured with the borrower contributing the land and structure to be renovated “free and clear” as well as an additional building on the site. The low loan per square foot ($250) relative to the projected net sales price near $600 psf allowed the lender to be comfortable with the financing. The bor- rower is progressing rapidly to renovate the subject, begin marketing and deliver units to buyers. We are currently closing a permanent loan on a reno- vated multifamily property in southern New Jersey. Here the developer bought a defaulted note with higher rate “opportunity fund” mon- ies, foreclosed on the asset, emptied out the property of non-performing tenants and renovated the subject. Eager to replace the high cost oppor- tunity money we structured an immediate funding based on the completed units and structured an additional two fundings subject to comple- tion and rental achievement. This allows the borrower to achieve his goal of retiring the high cost opportunity money and lock in long term fixed rate money at today’s great rates. Lenders, brokers and de- velopers all need to think creatively to reach necessary proceeds levels while comply- ing with lenders and regula- tors tighter credit standards. 2012 promises to be one of improving market conditions and increasing liquidity to the real estate capital mar- kets. Mark Scott is a manag- ing partner of Commercial Mortgage Capital based in Livingston, NJ. Opened in 1996 CMC has originated and closed over $4 Billion in multifamily, retail, office and industrial financing. ■ to-value in- terest only 10 year bul- l e t l o a n s (circa 2004- 2 0 0 7 ) bu t highly struc- tured loan transactions with bells, Mark Scott whistles and suspenders. The easy money of the past is gone and now loan docu- ments frequently include words like recourse, rental achievement, earn-outs, and Success is a done deal. $1,600,000 Tilton Times Plaza RETAIL - 50,000 SF PERMANENT LOAN EGG HARBOR TOWNSHIP, NJ $6,832,000 Lionville Shopping Center $1,600,000 Lantern Hill OFFICE/BANK PAD - 21,000 SF FIXED RATE LOAN DOYLESTOWN, PA RETAIL - 29,074 SF PERMANENT LOAN EXTON, PA Capital Markets DEBT | EQUITY | INVESTMENT SALES northmarq.com Philadelphia Office 1600 MARKET STREET, SUITE 1300 PHILADELPHIA, PA 19103 215.496.3000 David Henrich VICE PRESIDENT 215.496.3045 dhenrich@northmarq.com Joseph Sweeney MANAGING DIRECTOR 215.496.3067 jsweeney@northmarq.com 33 offices coast-to-coast Mid Atlantic Real Estate Journal — Financial Digest — April 13 - April 26, 2012 — 7A www.marejournal.com C REATIVE F INANCING In the World of Finance, the Trailing 12 is Crucial $416,600,000 Reasons Our Trailing 12 Month Results Look Solid Mark M. Scott Principal FEBRUARY 2011 $18,500,000 859 Multifamily Portfolio Units New Jersey $24,000,000 88 Units Construction Loan New Jersey $28,500,000 159 Multifamily Units New Jersey Broker of Record IN A TURBULENT TIME, CMC DELIVERS FOR ITS CLIENTS. CALL US TO SEE HOW OUR CORRE- SPONDENT AND LONGTIME LENDER RELATIONSHIPS CAN HELP YOU ACHIEVE YOUR FINANCIAL GOALS: MARK M. SCOTT, Principal mscott@newcommercialmortgage.com APRIL 2011 $15,000,000 160 Multifamily Units New Jersey $5,000,000 400 Multifamily Units New Jersey MAY 2011 $4,300,000 Renovation $12,000,000 Construction Loan 376 Total Units New Jersey KATE DOLAN HONISH, A.V.P. khonish@newcommercialmortgage.com AUGUST 2011 $1,100,000 11,200 SF of Retail New Jersey $62,000,000 368,685 SF Office/Retail Connecticut $1,400,000 & $10,000,000 80 Total Units NJ & NY Properties Commercial Mortgage Capital 615 West Mount Pleasant Ave. Livingston, New Jersey 07039 DECEMBER 2011 $14,000,000, 424 units $25,000,000 New Construction Loan 70 Units New Jersey NOVEMBER 2011 $10,800,000 22 Apts, + 15,669 SF Retail New Jersey $185,000,000 338 Apts . + 31k Retail/17k Office Space New York (973)716-0006 Office (973)215-2409 eFax (201)787-7111 Mobile 8A — April 13 - April 26, 2012 — Financial Digest — Mid Atlantic Real Estate Journal www.marejournal.com C REATIVE F INANCING By Bruce J. Coin, Bruce Coin Consulting, Inc. One creative way to refinance a highly leveraged property A major problem con- fronting the commer- cial or income prop- ratios, with little or no amor- tization. The interest rates are about the same or higher than today’s rates but with appraised values that were based on high occupancies and higher rents. During the last three years, va- cancy rates increased and rents declined while loan underwriting became more conservative. In combination with the reduced dollars currently available to finance commer- cial properties and in light of the more conservative under- writing standards currently being applied, prospects for adequate refinancing are often “slim to none” for many commercial owners. Even at a 75% LTV ratio today available market financing is “short” of what is owed and more than a borrower can cover “out of pocket”. Accord- ingly, a time bomb of poten- tial defaults still exists. Drawing on a creative method from earlier times, for the right situation, re- structuring by use of a combi- nation land purchase-lease- back and leasehold mortgage concept can collectively pro- vide up to 90% (and higher if desired) of current value. It will take a positive at- titude by an existing lender and help from its legal staff but an abundant number of similarly structured transac- tions were successfully used in the late 1960s and early 1970s. It’s an alternative to using a less sophisticated “A” mortgage and “B” piece note structure. The concept is simple, the mechanics complex. The borrower conveys the land to the lender (subsidiary or holding company) at ap- praised value (or negotiated value) and leases it back on a long term basis at a fixed rent. Simultaneously, a 10 year balloon, leasehold mort- gage is provided at 75% LTV of created leasehold value. If the lender doesn’t want to hold the land they can sell it to others based on the rent contract in place as it is “prior” to the mortgage. If the lender and borrower believe that over time, vacan- cies will diminish and values will increase (which is highly likely) this is a solution that can allow a deserving bor- rower to retain ownership, and not need to acquire an expensive mezzanine loan or partner. They can earn their way out of their current difficulty by a combination of goodmanagement and an im- proving economy. The lender may ultimately be fully re- paid and the structure will give the lender more control and options in the event of a material default. The ground lease must contain a repurchase option that gives the borrower the right to repurchase at any time during the first 10 years for the same price. The op- tion can contain a provision that the ground may only be repurchased simultaneously with the prepayment of the leasehold mortgage. Lever- age clauses can be incorpo- rated to force the borrower to ultimately repurchase the land and repay the financing within 10 years. These can include; loss of the purchase option; the option price and land rent escalating signifi- cantly no “assumability of the leasehold mortgage, no refinancing of the leasehold mortgage and others. Over 10 years the typical leasehold mortgage will am- ortize by about 23 percent. If the land purchase represents about 20% of the new “fi- nancing”, and the mortgage another 70%, such amortiza- tion will equal about 16% of today’s overall value afford- ing a good opportunity for this to succeed. Unfortunately, space here does not permit discussing all of the possible factors, structures, clauses and as- pects to consider but hope- fully you get the idea. Bruce Coin is director of Bruce Coin Consulting, Inc. ■ erty financ- ing industry is finding a way to ad- e q u a t e l y r e f i n a n c e t h e p r e s - ently highly l e v e r a g e d proper t i es that were fi- nanced 5 to 7 years ago. Of most concern are bank and CMBS mortgages. Many were written at 80% LTV Bruce J. Coin Need commercial real estate help? If you are a lender, attorney, developer or realtor, we can provide it. Education Webinars, classrooms and eLearning Custom and off-the-shelf programs Topics • Analyze, Underwrite and Value Income Property (apartments, office, retail, industrial flex, other) • Income Property Lease Analysis • Direct Capitalization and Yield (DCF) Capitalization • Typical Mortgage Commitment Clauses • Construction Lending Basics • Structuring Joint Ventures and Participating Mortgages • Financing Properties with Prior Ground Leases • Net Leased, Single Tenant Credit Financings • Credit and Non-Credit Tenant Financial Statement Analysis • Commercial Appraisal Review Bruce Coin is the former co-founder and CEO of Pro-gressive Mortgage Corp. He is an acknowledged commercial mortgage financing and property valuation expert with over 40 years of experience. He has lectured to classes of the University of Pennsylvania’s Wharton School, and has written for, taught, and addressed many special interest groups including banks, law firms, appraisal organizations, commercial real estate organizations and private real estate companies. He is an IDECC Certified Distance Education Instructor (CEDI) and has written numerous courses about commercial real estate, finance and appraising. Bruce currently holds Certified General Real Estate Appraiser certificates in PA, NJ and CA. Expert Services • Investigative reports – appraisal reviews • Consultation and case analysis • Deposition and court testimony • Individual property or portfolio analysis brucecoin.com (856) 906-8240 Mid Atlantic Real Estate Journal — Financial Digest — April 13 - April 26, 2012 — 9A www.marejournal.com C REATIVE F INANCING $20,800,000 FORT CAMPBELL INDEPENDENCE PLACE APARTMENTS 3193 FORT CAMPBELL BOULEVARD CLARKSVILLE, TENNESSEE 228 Unit Multifamily Rental Community The undersigned arranged the above financing. 51 East 42nd Street New York, NY 10017 (212) 986-8400 Fax: (212) 983-0512 www.cooper-horowitz.com REAL ESTATE FINANCING 10A — April 13 - April 26, 2012 — Financial Digest — Mid Atlantic Real Estate Journal www.marejournal.com C REATIVE F INANCING Including four apartment properties in Connecticut Cooper-Horowitz organizes financing totaling $212.1 million TAMFORD, CT — Coo- per-Horowitz, Inc. re- cently arranged financ- ing for the following proper- ties: 1. 4 apartment properties: Hoyt Bedford Apts. and Mor- gan Manor Apts., Stamford, CT. Montoya Apts, Branford, CT and SeramonteApts. Ham- den, CT. A total of 1,170 apart- ments for a total loan amount of $163,800,000. AdamHorow- itz and Robert B. Horowitz represented the firm 2. Armonk Square, Armonk, NY: A proposed 50,000 +/- S square foot mixed use re- tail center. The loan was for $13,500,000. JustinM. Schact- er and Jeffrey S. Horowitz represented the firm. 3. Fort Campbell’s Inde- pendence Place Apartments, 3193 Ft. Campbell Blvd. Clarksville,TN. 264 rent- al units. The loan was for $20,800,000. MatthewB. Paul, Justin N. Schacter and Jayson N. Schwartz represented the firm 4. 61-15 Metropolitan Av- enue, Middle Village, NY: Retail space. The loan was for $9,300,000. The firm was rep- resented by E. Robert Vegh. 5. National Highway & Campgrounds Road, La Vale, MD.: Retail space. The loan was for $3,000,000. The firm was represented by E. Robert Vegh. 6. 635 Old Country Road, Plainview, NY: Retail strip containing 6,818 s/f. The loan was for $1,700,000. The firm was represented by E. Robert Vegh. ■ Unity Bank opens Washington Branch Morgan Manor Apts., Stamford, CT WASHINGTON, NJ—Unity Bank has opened a new full- service branch at 5 EastAsbury Anderson Road in Washington Township at the intersection of State Highway 31, its second Warren County branch and 15th overall. “We are excited to official- ly open our doors and offer the public an alternative to the big bank experience in Washington,” said Unity Bank President James Hughes. “As a community bank, we are all about building long term rela- tionships with our customers and today marks that impor- tant first step in Unity Bank becoming an integral part of the Washington community. We have recruited a highly experienced banking team that has extensive experience work- ing with the people of Warren County and they are eager to serve your banking needs.” The Washington branch fea- tures a newly constructed 3,100 s/f, one-story stone and stucco structure located on an approximate three-quarter acre lot. ■ Washington Township Mayor Michael A. Kovacs cuts the ribbon on Unity Bank’s new branch and is joined by (from left) Deputy Mayor Robert Klin- gel, former Mayor and current Township Committee member Samir Elbassiouny and Unity Bank president James Hughes. $3,470,000 Acquisition Monroeville, PA Rite Aid – Retail 13,000 S/F $5,850,000 Refinance Philadelphia, PA Multifamily 100 Units $3,900,000 Acquisition Newark, NJ Garden Apartments 90 Units $2,360,000 Acquisition Newark, NJ Multifamily 45 Units 180 Sylvan Avenue Englewood Cliffs, NJ 07632 | P 201-947-2300 | F 201-947-2323 | Deerwoodcap.com Mid Atlantic Real Estate Journal — Financial Digest — April 13 - April 26, 2012 — 11A www.marejournal.com C REATIVE F INANCING HIPADELPHIA, PA — G.S. Wilcox & Co. an- nounced that David Fry- 280,000 s/f multi-tenanted retail center Fryer of G.S. Wilcox & Co. positions $29 million in financing for Whitman Plaza P Stop &GNC to name a few. The property sits on 23.5 acres, and can accommodate parking for up to 1,500 vehicles. The borrower, Breslin Realty, is a repeat client of G.S. Wilcox & Co., and has developed over thirty retail centers and cur- rently manages over eight mil- lion square feet of commercial real estate in five states. The lender, Continental Ca- sualty Company, provided ag- gressive terms to meet the needs of the borrower, including a 10/25 amortization schedule with the first 12 months being interest only. ■ er, principal of the firm, a r r a n g e d $29 million in financing f o r Wh i t - man Plaza, a 280,000 s/f mu l t i - t e n - anted retail David Fryer center, located in Philadelphia, in the shadows of the Walt Whitman Bridge. This infill retail center is anchored by a Pathmark and is also home to many household name retail- ers including, Burlington Coat Factory, Ross, Party City, Game Procida’s 100 Mile Fund provides $3.5 million financing NORTH BERGEN, NJ — Procida Funding’s 100 Mile Fund has closed a $3.5 million bridge loan to the developer of River Park Estates, a 10- unit townhome development in North Bergen, allowing the developer to stay in the deal and finish the project. Procidaprincipal KyleFunsch negotiated a discount with the previous lender and will pro- vide the funds to complete the remaining construction. The project will convert from con- dominiums to rentals. “This is exactly the type of deal that our fund was meant to finance. We have kept our eye on this project for over a year and a half,” said Funsch. “With the curtailing of lending parameters and the fact that most private equity funds are targeting the $10 million and up market, we’re able to meet the needs of smaller owners and developers who will ulti- mately be the engines that lead a local real estate and economic recovery.” “Procida Funding provided much more than a bridge loan,” said Mario Echevarria, the project’s developer. “They pro- vided the local expertise, which resulted in not only the right loan, but adjustments that made the project work. We met with many different lending groups, but Procida was the only company who could get the deal done.” “We provide our borrowers with the same services offered to our advisory clients, which can be extremely beneficial,” Funsch said. ■ Whitman Plaza Mid Atlantic R EAL E STATE J OURNAL ’ S A NNUAL S POTLIGHT Industrial Real Estate & Distribution Centers This issue will publish as a special pullout section... featuring: • A special LISTING of all the Industrial Space transactions Recorded in MAREJ throughout 2011 • Bi-lined Articles submitted by Expert industrial brokers • Industrial Market Reports compiled by major companies Commercial Brokerage Firms who are actively involved in marketing Industrial space in the Mid Atlantic area are welcome to participate. This exclusive Industrial Space Spotlight is an excellent way to Reach +25,000 Commercial Real Estate Professionals, Including Owners Developers & Tenants *Deadline: May 11, 2012 DON’T MISS IT! Call Elaine Fanning 800-584-1062 x 212 for more information efanning@marejournal.com www.marejournal.com 12A — April 13 - April 26, 2012 — Financial Digest — Mid Atlantic Real Estate Journal www.marejournal.com C REATIVE F INANCING EMPHIS , TN — Cronheim Mortgage has arranged a $9.9 million first mort- Turley and McMahon arrange $8 million financing for Pittsburgh Hampton Inn Cronheim Mortgage structures $9.9 million for 449,900 s/f facility M entire building in 2008. In suburban Pittsburgh, PA, David Turley and Lisa McMa- hon of Cronheim Mortgage arranged an $8 million, 70% LTV, permanent mortgage loan for a 107-key Hampton Inn. After an extensive mar- keting effort, Turley placed the 10-year, non-recourse loan with a commercial bank. The rate was locked at 5.85%. The borrower, a partner- ship between a NYC-based investment company and a large regional third party manager and operator, identi- fied the 61-key Hampton Inn on McKnight Rd. in 2008 as a value-add acquisition target. In spite of a tough operating climate and uncertain future, the sponsor expanded the ho- tel to 107 keys, constructed an indoor pool/fitness annex, and renovated the original rooms, common areas and lobby. “The renovation/expansion dra- matically improved the guest experience and created econo- mies of scale that improved the efficiency of operations,” noted Lisa McMahon. “This was not an easy assign- ment, but we are very pleased with the outcome,” said David Turley. “Our financing took out the sponsor’s construction loan and returned about $750,000 of equity capital while secur- ing a very attractive debt rate for a long term hold. We leveraged a close lender rela- tionship to provide a superior result.” ■ TD Bank names PeterHogan as vice president, portfolio manager PHILADELPHIA PA — TD Bank, America’s Most Con- venient Bank, has promoted Peter Hogan to vice president, portfolio manager in com- mercial real estate lending in Philadelphia. He is responsible for managing a $100+ million portfolio of commercial real estate loans among approxi- mately 75 client facilities in Metro Philadelphia. Hogan has 10 years of experi- ence in commercial real estate. He joined TD Bank in 2007 and most recently served as an as- sistant vice president, senior credit analyst in commercial real estate lending in Philadel- phia. Prior to joining TD Bank, Hogan worked as a senior lease auditor at KBA Lease Services in Woodbridge, NJ. ■ gage on 5025 Tuggle Rd., a facility 100% occupied by FedEx Global Supply Chain Services. The 12 year loan was arranged by Dev Morris and Andrew Stewart and was placed with First SunAmer- ica Life Insurance Company whom Cronheim represents as correspondent and servic- ing agent. The subject, built in 1994, was originally utilized by both Nike and FedEx. FedEx ex- panded from 297,000 s/f to the Andrew Stewart Dev Morris David Turley 5025 Tuggle Rd. Lisa McMahon 973.635.6800 info@cronheimmortgage.com WANTED Correspondent and Servicing Agent for Institutional Investors $1.9 Billion servicing portfolio and growing New Jersey's oldest & largest privately owned Real Estate Banker Feel right at home with a banker who services your loan rather than a firm who originates and ships the servicing 1,000 miles away Commercial Real Estate Loans 10 to 25-year Terms Available $5M & UP Best Pricing and In-House Servicing available for Long-term, Permanent Loans on Stabilized Properties Full-Leverage Financing (Down to 1.05x DSCR, or I/O or a 35-Year amortization) for multifamily and other select assets
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