In a video interview, David Tobin, principal of New York-based advisory Mission Capital Advisors, said the firm’s developer and operator clients have seen a dramatic impact from the recent run up in Treasury yields.
Month: August 2013
The FDIC is marketing a $215.5 million portfolio of mixed quality debt on commercial and residential properties in 20 states. The FDIC is seeking bids for an outright sale, but also is willing to sell a stake in the portfolio via its structured-sales program. Investors can begin conducting due diligence on Aug. 23. Bids are due Oct. 1. Mission Capital is running the auction.
FDIC Floats Pool of Seized Mortgages
The FDIC is marketing a $215.5 million portfolio of mixed- quality debt on commercial and residential properties in 20 states.
The 446 assets, which the agency assumed from 20 failed banks, range from performing loans to foreclosed properties. Commercial buildings account for $166.9 million, or 78%, of the underlying collateral. Another $22.4 million, or 10%, is land suitable for residential development. Acquisition, devel- opment and construction loans and land loans make up the rest of the package.
The FDIC is seeking bids for an outright sale, but also is willing to sell a stake in the portfolio via its “structured-sales” program. Investors can begin conducting due diligence on Aug.
23. Bids are due Oct. 1. Mission Capital is running the auction.
In a structured sale, the winning bidder would work out the
assets and split the proceeds with the FDIC, which may be will-
ing to provide low-cost financing for the purchase. In the 34
structured sales completed since the program began in May
2008, the stakes sold by the FDIC ranged from 20% to 50%.
The average balance on the mix of fixed- and floating-rate
loans in the offered portfolio is just under $500,000. Some 192
mortgages totaling $70.9 million, or 33% of the overall balance,
are current on payments. Another 165 mortgages totaling $92
million (43%) have already matured. The rest are delinquent
by at least a month, including 72 loans totaling $48.5 million
(23%) that are more than 120 days past due.
Some 92 mortgages with balances adding up to $57.7 mil-
lion (27%) mature in the next year, and 63 loans totaling $18.9
million (8.8%) come due in the year after that. The remaining
$46.9 million of notes have maturities ranging up to 25 years
The collateral properties are concentrated in Pennsylvania
(27% of the overall loan balance), Florida (12.7%) and Virginia (12.3%). Loans that the FDIC inherited from Nova Bank of Ber- wyn, Pa., represent the largest share (33%), followed by mort- gages seized from Bank of the Commonwealth in Norfolk, Va. (13.1%).
COMMERCIAL MORTGAGE ALERT: Aug. 16, 2013, 5 Marine View Plaza, Suite 400, Hoboken NJ 07030. 201-659-1700
CNO Financial is shopping the senior portion of a performing $19.8 million fixed-rate loan on a shopping center in Hagerstown, Md. CNO is offering the participation interest via its investment management arm, 40/86 Advisors. Mission Capital is handling the auction.
Insurer Pitches Senior Retail Debt
CNO Financial is shopping the senior portion of a performing
$19.8 million fixed-rate loan on a shopping center in Hager-
The insurer, based in Carmel, Ind., originated the construc-
tion/permanent loan on the 115,000-square-foot Shoppes at
Hagerstown in 2007. The mortgage, with a 6.04% coupon, had
an initial balance of $22.3 million. The maturity date is unclear.
Investors can bid on a senior participation interest of up
to 80%, with CNO retaining the junior portion. Bidders must
specify a yield requirement. Initial offers are due Aug. 28, and
final offers will be taken Sept. 18.
The property is at 18015 Garland Groh Boulevard, near In-
terstate 81 and Route 40, and about 70 miles west of Baltimore.
CNO is offering the participation interest via its investment-
management arm, 40/86 Advisors. Mission Capital is handling
CNO unsuccessfully tried to sell the loan two years ago via
an offering of 17 performing mortgages totaling $125 million
on commercial properties around the country.
Shoppes at Hagerstown was 88% occupied at yearend. Its
tenants include Best Buy, Dollar Tree and Party City. The prop-
erty is next to a separately owned retail center with 220,000 sf.
That complex’s tenants include Wal-Mart Supercenter, Home
Depot, PetSmart and Dick’s Sporting Goods.
COMMERCIAL MORTGAGE ALERT: Aug. 16, 2013, 5 Marine View Plaza, Suite 400, Hoboken NJ 07030. 201-659-1700
Globe St interviews Mission Capital’s Jordan Ray about how the capital markets have changed and what X factors would cause more dramatic change.
JDS Development is seeking $452 million of debt to finance the construction of a 766-unit luxury apartment complex south of the United Nations Building in Manhattan. The New York company is pitching the assignment mainly to U.S. and foreign banks via advisor Mission Capital.
Loan Sought for NY Rental Project
JDS Development is seeking $452 million of debt to finance the construction of a 766-unit luxury apartment complex south of the United Nations Building in Manhattan.
The New York company is pitching the assignment mainly to U.S. and foreign banks via advisor Mission Capital. JDS evi- dently is willing to consider either a standard short-term con- struction loan or a construction/permanent loan.
JDS plans to construct two residential towers facing the East River along the FDR Drive, between East 35th and East 36th Streets. The company acquired the site a few months ago from New York developer Sheldon Solow for $172.5 million. There’s been talk that JDS, headed by Michael Stern, is also making a play for adjacent parcels owned by Solow.
The buildings, with 40 and 49 floors, will encompass 874,000 square feet and will be connected by a “sky bridge.” Construc- tion, which has already begun, is slated to be completed in
2016. The loan-to-cost ratio is about 75%, pegging the total cost of the project at just over $600 million.
The developer is setting aside 20% of the units as affordable housing to qualify for tax breaks. The rest of the apartments will carry market rents. The complex’s amenities will include a pool, a rooftop deck and a fitness center.
Meanwhile, JDS and a partner plan to build a Midtown Man- hattan skyscraper with a hotel and apartments at 105-107 West
57th Street, between Sixth and Seventh Avenues. Last month, the JDS partnership acquired the adjacent Steinway Hall build- ing, at 109-113 West 57th Street, for $46 million. That gave it air rights that can used to expand the skyscraper’s planned height to more than 900 feet from 700 feet. In conjunction with the
purchase and development plans, JDS and its partner, Property Markets Group of New York, lined up a $230 million, one-year loan from Annaly Capital.
COMMERCIAL MORTGAGE ALERT: August 9, 2013, 5 Marine View Plaza, Suite 400, Hoboken NJ 07030. 201-659-1700
Building has begun on two 800-unit high end luxury condos on the east side of Manhattan.
HighRises to Replace an East Side
By JULIE SATOW AUG. 1, 2013
Countless New Yorkers have driven by the construction rubble that lines the Franklin D. Roosevelt Drive from East 35th Street to East 41st. The eyesore has lingered there for more than a dozen years, the target of virulent community opposition, fraught City Council hearings and a lengthy approval process.
Now the first shovels have hit the ground, and the blockfront on First Avenue between 35th and 36th Streets will soon be transformed into two curving, copperclad residential towers, creating some 800 new highend rental units.
“These buildings will really be a gamechanger for the neighborhood, which is one of the most underdeveloped in Manhattan,” said Pamela Liebman, the president and chief executive of the Corcoran Group. A division of the company, Corcoran Sunshine Marketing Group, is working with Citi Habitats to market the project.
The neighborhood, a slice of Midtown East sandwiched between Kips Bay to the south and Turtle Bay to the north, is ripe for development. The Second Avenue subway will eventually make it more accessible by mass transit, and the massive Midtown East rezoning — when and if finally approved — will probably result in new
office buildings. Some builders have already taken notice, with the Zeckendorf brothers, for example, recently topping off an 88unit condominium nearby at 50
United Nations Plaza.
In many ways this strip along First Avenue, which has long been considered a medical corridor with anchors like Bellevue Hospital Center and N.Y.U. Langone Medical Center, is comparable to the Far West Side. That neighborhood, which also hugs the water, has undergone fairly extensive development since the Hudson Yards rezoning and the extension of the No. 7 subway line.
As for the copper towers, at 616 First Avenue, their protracted saga began in
2000. That was when Sheldon H. Solow, the developer best known for his many lawsuits and prickly personality, partnered with the Fisher real estate family to buy
9.2 acres in three parcels from Consolidated Edison for around $600 million. Over the years the partnership dissolved, and Mr. Solow proceeded alone, cajoling politicians and negotiating with various city agencies to rezone the land for residential and commercial use from manufacturing, and spending millions of dollars for design work and environmental cleanups.
In 2008, Mr. Solow won approvals for a $4 billion development comprising seven towers, with designs by Richard Meier and Skidmore Owings & Merrill. But work never proceeded, and earlier this year Mr. Solow sold one of the parcels — just slightly more than one acre — for $172.5 million to JDS Development — which is now in talks to acquire the two remaining parcels, according to sources with knowledge of the deal.
After having fought to get city approval for rezoning, Mr. Solow has a property worth far more than when he acquired it. (Calls to him seeking comment were not returned.) His decision to sell part of it to JDS raises intriguing questions. Mr. Solow, who shuns the spotlight, is well into his 80s, with a storied career in New York real estate as the builder of the tower at 9 West 57th Street and other iconic structures. In many ways he is a foil to Michael Stern, JDS’s managing partner.
A Long Island native who did not graduate from college, Mr. Stern, 34, is often quoted in the press. He is a relative newcomer, having embarked on his New York City real estate career in 2004 after a stint with a developer in Florida.
It wasn’t until 2011, with the start of marketing of Walker Tower, a highend condominium in Chelsea, that he broke into the mainstream. But he has become one of the city’s most prolific developers, racking up highprofile projects including the
1,000foottall condominium he is building with Property Markets Group at the former Steinway Musical Instruments building on West 57th Street.
“I had known about the assemblages on the East Side,” Mr. Stern recalled, “and when the opportunity came up, I saw it as a unique chance to make a large impact on the skyline.” He added that he “pursued it aggressively.”
The First Avenue development, which has not yet been named, broke ground in July and has an expected completion date in early 2016. At 49 and 40 stories, respectively, the towers can be built “as of right,” being the same size as in the plan proposed by Mr. Solow, although their designs differ significantly.
“This area hasn’t seen any great architecture since the development of the United Nations” in 1947, said Vishaan Chakrabarti, a partner at SHoP Architects, which is responsible for both exteriors and interiors in the project. “This could be a harbinger of things to come in terms of getting more innovative design along the East River.”
The two buildings bend and connect via a sky bridge, billed as the showstopper, which will feature an indoor lap pool and a lounge area. The development will also have a rooftop deck with an infinityedge pool, a fitness center, a boxing gym and a squash court. Other amenities include a children’s playroom, a screening room, and a demo kitchen and dining area.
“The buildings are modern and fresh,” Mr. Chakrabarti said. “They dance with each other, not like Ginger Rogers and Fred Astaire, but like Shawn and Beyoncé,” Shawn Carter being better known as Jay Z.
The copper curtain wall that is to cover the northern and southern facades is a nod to the artist Richard Serra, whose torqued metal sculptures provided design inspiration. “It is not just the metal itself,” Mr. Chakrabarti said, “but the feeling of the electrons that move between the metal, the tension between the two forms.” The other sides will be glass.
The site flooded during Hurricane Sandy, so the developer plans to put all
building mechanicals on the second floor; he also envisions eightfoot floodgates, backup generators and a special outlet in each unit that will work in the event of a blackout.
The development includes plans for a privately owned park, still contingent on the approval of the city’s Department of City Planning, and for a public elementary school that will open this fall. Twenty percent of the apartments will be listed below market rate, and in exchange the developer will be eligible for a 20year real estate tax abatement.
“We really wanted an iconic design,” Mr. Stern said. “This is a largescale site,
one of the largest residential developments to hit Midtown East in a very long time, so it is important not to miss the mark and to push the envelope.”
Correction: August 11, 2013
A brief article last Sunday with the Big Deal column about the increasing number of developers who are pursuing luxury rental buildings, using information from the institutional investor Invesco, misidentified the street where one of its developments, Instrata NoMad, will be located. It is East 29th Street, not East 44th.
Luxury Rentals Take the Stage
Increasing numbers of developers are pursuing luxury rental buildings like JDS Development’s new towers under way at 616 First Avenue. The concept is especially popular in upandcoming neighborhoods, where it is often easier to attract rental tenants than condo buyers.
Developers have been encouraged to pursue the trend by the success of buildings like the Related Company’s MiMA on the Far West Side and Forest City Ratner’s 8 Spruce Street in the financial district.
Now joining the party is the institutional investor Invesco, which is rolling out a luxury rental brand in New York. Known as Instrata, it will be applied to several of the company’s rental products here, including Mercedes House on the Far West Side. That building, on West 54th Street, was originally built as a rental with condominiums on the upper floors. Invesco bought the condominium portion earlier this year, and will rebrand
those top 11 floors, or 162 units, as rental units and name them Strata at Mercedes House.
“Instrata is going to be our strictly luxury assets in New York,” said Michael Kirby, a managing director at Invesco Real Estate. To be included in the brand, buildings must
have condominiumlevel finishes and offer plenty of amenities. The landlord will offer free concierge service to all tenants of Instrata buildings, he added.
Other properties being similarly repurposed include the former Madison Belvedere on East 29th Street, to be known as Instrata NoMad; the Elektra on Third Avenue, now called Instrata Gramercy; and 75 Clinton Street, to be renamed Instrata Brooklyn Heights. Some of the buildings were conceived as condos; those built as rentals will be retrofitted with higherend finishes or additional amenities.
“Over the past several years,” said Rob Neiffer, a director at Invesco Real Estate, “there has been an influx in the number of highend rentals. Before that, anyone who wanted to rent in a luxury building had to go to a condominium, so we identified this void in the market and are hoping to fill it.”
A version of this article appears in print on August 4, 2013, on page RE1 of the New York edition with the headline: In Place of an Eyesore.
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