4A — March 16 - 29, 2018 — Financial Digest — M id A tlantic
Real Estate Journal
www.marejournal.com
F inancial D igest
Progress Capital negotiates $86.25M construction loan
ating agencies have fore- cast their predictions for 2018 CMBS origina- By David Goldfisher, The Henley Group, Inc. 2018 Commercial mortgage- backedsecurities:TrendingNow R business pales in comparison to the wall of maturities from 2015 – 2017. CMBS Lenders have significant capital to lend but may lack the deal flow. locations to fulfillment cen- ters in response to consumers demand for improved on-line selections and increased speed of delivery.
NEW YORK, NY — Brad Domenico and Kathy An- derson of Progress Capital negotiated an $86.25 million construction loan for YYY 62nd Street LLC, a joint venture be- tween Joy Construction and Maddd Equities , to construct and fit out a new seven-story office building at 330 East 62nd St. in Manhattan. The 90,000 s/f office building is slated for a community facility. The build- ing is currently under construc- tion and is a through block site acquired from the Archdiocese of New York between First and Second Ave. “We are very pleased to have worked with Natixis and Prog- ress Capital on this financing. With our diverse development platform of multifamily, hospi- tality, workforce housing and community facility projects, it is crucial we have lenders and advisors who are able to provide creative and value add capitalizations to help us execute on our business plans,” mentioned Eli Weiss, Man- aging Member of YYY 62nd Street LLC. The loan is a 24 month interest-only construction loan with two 1-year exten- sions floating over LIBOR. Loan terms include limited recourse that burns off once the building is occupied. The loan represents a 90% loan to project cost ratio with a flex- ible prepayment option which was a major consideration in choosing a lending partner. Domenico and Anderson ne- gotiated terms of the loan with FALLS CHURCH, VA — Private equity firm Kiddar Capital has acquired 575 Hern- don Pkwy., the landing site for the platform of the WMATA Herndon Silver Line station. The 4.8-acre property is im- proved by a 135,102 s/f office building primarily occupied by Booz Allen Hamilton. The acquisition by Kiddar’s Real Estate Group was financed by Eagle Bank and brokered by C olliers Int’l . “This site is at the center of a vibrant community with local leaders committed to bringing new jobs and investment to their jurisdiction. Herndon’s leadership and larger commu- nity understand that good in- frastructure drives development and economic growth,” said Kid- dar Capital founder and CEO Todd Hitt . “We look to invest on new infrastructure whenever possible, and are thrilled about
tion volumes. The general c o n s e n s u s b y S & P , Fitch, DBRS, Morningstar, Moody’s and Kroll is that 2018 CMBS loan origina-
Roughly 200 of Sam’s Club stores share a parking lot with Walmart, cannibalizing one another’s businesses. Addi- tionally, Sam’s Club struggles to keep financial pace with and match future growth expectations of its chief rival Costco Wholesale. Costco has roughly the same number of stores but with almost twice the revenues. Costco was much quicker adapting its e-commerce plat- form to the demand of its customer base. Costco rolled out two new on-line delivery related offerings and created on-line marketing campaigns geared to its dues paying members. Convenience is the key driv- er for future sales. Retailers who flourish must accelerate its omni-channel sales ap- proach and create distinct in-store experiences that drive both e-commerce and in-store purchases. Real estate has just as much value in serving the online customers as it does the ones - in store. David Goldfisher is co- founder and principal at The Henley Group, Inc. n
The CMBS default rate has dropped over the prior eight consecutive months and is now at 4.51%. With all property types performing well and over 95% of CMBS loans current, the sector that seems to be the most dynamic is the retail market. Volatility in the retail sector will continue to be strongly in- fluenced by a stores executive management team’s vision and execution of marrying and branding its e-commerce sales and marketing platform with its bricks and mortar real estate locations. Last mile delivery locations (locations between distribution centers and customers) are in higher demand as Amazon Prime, Target and Walmart compete to drastically reduce customer delivery times. Walmart recently shuttered 63 of its 660 Sam’s Club loca- tions. According to Sam’s Club CEO John Furner,” Sam’s Club needs a strong fleet of stores fit for the future and we must exit clubs that cannot be successful under our new strategy.” Sam’s Club plans to convert 12 of the 63 closed
Jared Zimmel , of Natixis. Doug Heitner, Isaac Stern and Abe Seaman-Baldaro of Kaskowitz Benson and Torres LLP represented the borrower while Ralph Arpajian, Daniel Lisk and Jeremy Chubak of Haynes Boone LLP represented Natixis throughout the clos- ing process. In a other news, a valued client approached Domenico to refinance the existing debt on their mixed-use asset lo- cated at 115-02 Jamaica Ave. in the Richmond Hill section of Queens. The mixed-use property is a 38,000 s/f fully occupied 3-story brick retail/ office building. Each tenant is currently subject to a lease agreement with 10+ years remaining on initial terms. Domenico negotiated a $7 million non- recourse permanent mortgage loan representing a 60% loan to property value with 1 year of interest-only at 4.25%. The loan is subject to a 7 year term with a 5 year extension option, a fixed rate of 4.25%, 30 year amortization and a 5-5-4-4-3- 1-1 Prepayment Schedule. n 330 East 62nd St. rendering
David Goldfisher
tion volume will flatten to dip relative to the roughly $86 bil- lion securitized in 2017. The agencies generally agree that a significant tailwind propelling CMBS volume into 2018 is the continued strength of the single-asset/single-bor- rower (SASB) market and the current favorable low interest rate environment. Although experts at the February 2018 MBA conference in San Diego predicted that the 10-year Treasury rate will rise from 2.4% at the end of 2017 to 3.7% in 2020, interest rates will remain relatively low on a historic basis and not create a drag on the commercial real estate financing market. The major headwind con- straining 2018 CMBS loan growth is the significant decline in loan maturities going from $80 billion in 2017 to $24 billion in 2018. The 2018 refinancing Philadelphia, PA — For more than 20 years, 1499 S. Christopher Columbus Blvd. in south Philadelphia sat empty. Now, plans to develop this long-vacant property are finally moving forward. Nationwide private lending firm Silver Arch Capital Partners an- nounced the closing of a $15 million land loan for two of the site’s six parcels. The borrower used the loan proceeds to pur- chase the waterfront property, known as 1401 and 1401 R-S Christopher Columbus Blvd. A mixed-use development is planned for the 22.39-acre waterfront area. The proposed site plan includes the con- struction of up to 235 luxury townhomes along the scenic Delaware River, boat slips for owner’s watercraft, outdoor recreational activity and a riverfront cafe. “South Philadelphia is becom- ing a vibrant area where people want to live, work and shop,” said Jeffrey Wolfer , CEO of
Silver Arch Capital Partners announces $15 million loan closing for the acquisition of Former Foxwoods Property
Eagle Bank finances Kiddar Capital acquisition of 575 Herndon Parkway
Development on 22.39 acres in South Philla. along the Delaware River Silver Arch Capital Partners. “Putting this vacant lot to good use will add tremendous value to this growing area of the city.” The property, a 30.39 acre parcel at 1499 S. Christo- pher Columbus Blvd., was purchased by Philadelphia developer Bart Blatstein in 1993, and was later acquired by Bally’s Entertainment. Bally’s eventually traded the property to Foxwoods Resort and Casino, which partnered with several Philadelphia- area investors to finance the construction and operation of a casino on the site. In the face of fierce opposi- tion from the city, Foxwoods abandoned the project and in 2014 Blatstein acquired the property once more. Blatstein divided the 30.39-acre property into multiple parcels, two of which were developed with an Aldi’s grocery store and a Wawa convenience store. According to Wolfer, a new mixed-use development is an exciting new prospect for south Philadelphia, which has under- gone significant revitalization in recent years. n
this opportunity to steward the ownership of a metro-centric site in the town of Herndon.” Herndon includes a down- town Historic District listed on the National Register of Historic Places with shops, restaurants, and plans for a new arts center. Hitt noted that Kiddar Capital is looking forward to contributing to the local economy and commu- nity through ownership of the metro site. n 575 Herndon Parkway
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