1 | APRIL 15, 2016

A partnership between multifamily owner Bainbridge Companies and China Orient Asset Management received a $128 million

mortgage from New York Community Bank for the purchase of

a 656-unit apartment complex in Long Island, sources have informed Commercial Observer Finance.

The five-year loan carries a fixed-rate of 3.125 percent and has two years of in-terest-only payment. The financing carries a 75 percent loan-to-cost ratio, making the ac-quisition cost of the property roughly $170.7

million.   The multifamily property, Devonshire

Hills, is located at 1710 Devonshire Road in the Hauppauge area of Suffolk County. It

is comprised of 43, two-story build-ings and has a swimming pool, tennis court, fitness center and communal outdoor space for tenants.

Meridian Capital Group’s Abe Hirsch and Zev Karpel of the com-

pany’s New York City office, and Jacob Katz of the Baltimore office brokered the deal.

Cornerstone Real Estate Advisers originated a $335 million mortgage to fund Blackstone Group’s acquisition of four Club Quarters hotels across the U.S., the lender announced in a press release.

Jamie Henderson, the chief invest-ment officer of alternative investments at Cornerstone, told Commercial Observer Finance through a spokeswoman that the fi-nancing carries a floating rate with an initial three-year term and two one-year extension options.

“These hotels are in impeccable cities,

Blackstone... continued on page 5NYCB... continued on page 5

Blackstone Gets $335M Mortgage From Cornerstonefor National Hotel Buy

The LEAD

In This Issue

3 Hudson Companies, Related Close $75M Refi for Roosevelt Island Rental

3 Lightstone Gets $75M for 10-Story Rental Tower in LIC

5 Astoria Bank Finances Seven-Building NYC Portfolio for $36M

7 CRE Finance Council Hires New Deupty Executive Director

“CMBS is still competitive for the right product. You just

have to know what your asset is and what kind of loan

you're looking for.” —Morris Betesh

From Q&A on page 11

The Insider’s Weekly Guide to the Commercial Mortgage Industry

FINANCE WEEKLY

Long Island Apartment Complex Purchase Funded

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2 | APRIL 15, 2016

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3 | APRIL 15, 2016

Hudson Companies, Related Close $75M Refinancing for Roosevelt Island Rental

Developers Hudson Companies and Related Companies refinanced Riverwalk Point on Roosevelt Island with a $75 mil-lion mortgage from MUFG Union Bank, both developers confirmed to Commercial Observer Finance.

The financing, which closed on March 24, replaces the original $64.3 million construc-tion loan Union Bank and Bank of America Merrill Lynch provided in November 2013 on the 22-story rental tower, according to David Kramer, the president of Hudson Companies. The new loan carries a sev-en-year term.

“We completed construction [and] leased up the building, so it was time to refinance out the construction loan,” Mr. Kramer said. The 195-foot LEED Silver residential rent-al building, which is at 480 Main Street in the heart of Roosevelt Island, opened in mid-2015 at 22 stories, according to a spokeswom-an for Related. It contains 266 units ranging from studios to one- and two-bedroom pads. Building amenities include a sun terrace, a rooftop party lounge, a children’s playroom,

a fitness center and bicycle storage.The Handel Architects-designed build-

ing was erected in 2015. There are two rentals on the market as of last week with an average price of $3,027, StreetEasy indicated.

Representatives for Union Bank and Bank of America weren’t immediately available. —Lauren Elkies Schram with additional reporting provided by Danielle Balbi

480 Main Street on Roosevelt Island, at right.

Canadian Imperial Bank of Commerce lent $75 million to Lightstone Group for the construction of a 10-story rental build-ing in Long Island City, according to docu-ments filed with the city on Monday.

The mortgage is being used to fund the ground-up development at 30-02 39th Avenue, which will be comprised of 428 studios and one- and two-bedroom apart-ments. Amenities will include an outdoor pool and a large sundeck. Monthly asking rents will start in the low-$2,000s, Scott Avram, the senior vice president of devel-opment at Lightstone, told the Observer in January.

Meridian Capital Group’s Tal Bar-Or and Drew Anderman brokered the financ-ing on behalf of Lightstone.

Lightstone purchased the former parking

facility site, which is between 39th and 40th Avenues and 30th and 31st Streets, for $23 million from the garage owner in mid-Jan-uary, city records indicate. The property is immediately adjacent to the 39th Avenue station for the aboveground N and Q sub-way lines.

The Manhattan-based developer broke ground on 30-02 39th Avenue in November 2015, and it is slated to come online in the third quarter of 2017. Gerner Kronick +

Valcarcel Architects is the architect of re-cord, according to filings with the New York City Department of Buildings.

Real estate players have been active in securing financing for new projects the Long Island City neighborhood of Queens. Lightstone’s 428-unit rental is just over half a mile away from Tishman Speyer’s three-tower residential project at 28-02 Jackson Avenue, 28-30 Jackson Avenue and 30-02 Queens Boulevard. The compa-ny landed a $640 million construction loan from Bank of America Merrill Lynch and Wells Fargo for the project this past December.

More recently, Bank Leumi funded two deals for ground-up developments in Queens’ westernmost neighborhood, in-cluding a $36 million construction deal for Lions Group NYC’s 18-story residen-tial tower at 42-10 27th Street. The bank also provided $15.5 million in financing for Hakimian Organization’s 15-story multi-family property at 41-32 27th Street.

A spokesman for Lightstone declined to comment, and a representative for CIBC was not available to comment. —Danielle Balbi

Lightstone Gets $75M for 10-Story Rental Tower in LIC

A view of the site from 30-17 40th Avenue.

4 | APRIL 15, 2016

5 | APRIL 15, 2016

which are ranked among the largest and strongest lodging markets in the U.S.,” Mr. Henderson said in prepared remarks. “We

Blackstone...continued from page 1

Astoria Bank Refinances Seven-Building NYC Portfolio for $36M

Stellar Management took a $35.6 mil-lion loan from Astoria Bank to refinance a portfolio of residential buildings in New York

City, Commercial Observer Finance has learned.

Meridian Capital Group’s Tal Bar-Or and Kyle Kite brokered the financing, which carries a five-year term with a sub-3 percent interest rate. The deal closed last week.

“We saw a prime opportunity to restruc-ture the financing of these properties and felt the timing was just right to do so,” Adam Roman, the chief operating officer of Stellar

Management, said in prepared remarks pro-vided to COF. “An exceptional team helped us pull this deal together, and we’re looking forward to the continued success with these properties.”

The multifamily portfolio is comprised of a six-story, 86-unit building in Brooklyn at 522 Ocean Avenue; four properties in Upper Manhattan at 65 Fort Washington Avenue, 4231 Broadway, 504 West 143rd Street, 510 West 144th Street and 529 West 179th Street; and a five-story, 43-unit residential building in the Bronx at 2558 Grand Concourse.

“We actually financed this portfolio for them a few years ago, with Astoria [Bank] as well,” Mr. Bar-Or said. “We were happy to be able to help refinance and capitalize on the value they’ve added and maintain the rela-tionship with Astoria. We look forward to doing more with [Stellar] in the very near future.”

Last year, Stellar completed $650 million in financing. This transaction was the com-pany’s first capital markets deal of 2016.

A representative for Astoria Bank did not respond to a email request for comment. —Danielle Balbi

EXCLUSIVE

Clockwise from left: 65 Fort Washington Avenue, 529 West 179th Street and 522 Ocean Avenue.

A spokesman for Bainbridge did not re-spond to a request for comment. A represen-tative for China Orient Asset Management could not be reached. —Danielle Balbi

NYCB...continued from page 1

are pleased to provide Blackstone with this important strategic financing and to further expand our relationship.”

The 1,228-key Club Quarters portfolio is comprised of the 346-room hotel in San Francisco at 424 Clay Street, the 178-room hotel in Boston at 161 Devonshire Street, the 429-room hotel in Chicago, Central Loop at 111 West Adams Street and the 275-room hotel in Philadelphia at 1628 Chestnut Street.

Blackstone has been extremely active in the hotel space; it will soon be selling a 16-hotel portfolio to Anbang Insurance Group for $6.5 billion, after scooping it up from Strategic Hotels & Resorts for $6 billion in December 2015, as has been widely reported.

Further details of the financing were not immediately available.  A spokeswoman for Blackstone declined to comment.—Danielle Balbi

6 | APRIL 15, 2016

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Building relationships is important.

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24-7VISIT COMMERCIALOBSERVER.COM

Workforce

On the heels of the sudden departure of the CRE Finance Council's two top execu-tives, the commercial real estate trade asso-ciation announced this week that it would be bringing on Mike Flood as executive deputy director.

Mr. Flood, who held the position of vice president of policy and economic research at CREFC from 2010 to 2013, was most re-cently the director of advocacy for anoth-er trade organization, Structured Finance Industry Group.

“Havng previously established so many positive relationships with CREFC’s mem-bership in my first stint here, I could not be

happier to be returning,” Mr. Flood said in a press release. “I’m fortunate to join at such an impactful time, ahead of June’s annu-al conference, where I look forward to im-mediately engaging with our members on the issues that are most important to them. I’m excited to rejoin [vice presidents] Marty [Schuh] and Christina [Zausner] to contin-ue to make CREFC a strong member-driven organization. In the meantime, I appreciate that SFIG and CREFC are working togeth-er to ensure both organizations’ constituen-cies are served during this transition period and beyond.”

Late last month, Washington, D.C.-based CREFC announced that Stephen Renna, the group’s president and chief executive of-ficer, and Stacy Stathopoulos, the executive vice president, had left abruptly at the same time. The specific reasons for the staffers’

departure were not revealed. At the time, a spokesman for the council said that it was a part of a “new management restructuring of the operation,” and that Tim Gallagher, the immediate past chairman of CREFC, would be taking the lead on those changes as chair of its “transition committee.”

“Mike’s hiring is an excellent step for the organization, and marks the return of someone who is universally respected and well-liked throughout our industry, in Washington and among our membership,” Mr. Gallagher said in the Monday release. “In his previous years with CREFC, Mike proved to be successful in reaching con-sensus among our stakeholders and pro-moting the organization’s strength and viability—and we welcome him back now with every confidence that he will do the same once again.”

CRE Finance Council Hires New Deputy Executive Director

8 | APRIL 15, 2016

COST$30 Members$65 Non-Members$15 Student Members

REGISTERwww.mbany.orgCall: 516.997.3707Email: admin@mbany.org

The buzzword in commercial lending is risk retention. We have seen the impact of the various risk retention rules have had in cooling the CMBS markets. A construction loan is a short-term, high-yield, high-risk, investment. How have the risk retention rules affected the fl ow of monies to construction lending? This panel discussion will endeavor to discuss the What, Where, and How of present day construction lending:

What lenders remain active in the marketplace?Where in the continental United States is construction lending active? How can I as a developer obtain construction lending for my project

Our panel, which consists of an attorney, a developer, and lenders, will be moderated by Peter Millar, Executive Vice President of Construction Consulting Services at AEI Consultants

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9 | APRIL 15, 2016

“Over $169 million across 27 commercial mortgage-backed securities loans was transferred to special servicing in March,” said Sean Barrie, an analyst with Trepp. “Although just two industrial loans were part of that total, one of them was the largest to land in servicing last month. The A-note for the Passaic Street Industrial Park in Wood-Ridge, N.J. was transferred to special servicing due to an imminent monetary default despite strong current financials, so we’ll have to wait and see what the impetus for the move is. Retail loans made up the largest number of loans transferred to special servicing, most notably the Gateway Shopping Center in the Seattle suburb of Mill Creek, Wash. The 96,671-square-foot grocery center backs an $18.5 million loan that is maturing in November. Expect more transfers to special servicing due to impending maturities, though these moves are not always a harbinger of bad news.”

Source:

The Takeaway

Top 10 Special Servicing March 2016

Loan Balance Property Name Deal Name City State Property Type DSCR Maturity Date

$19.8MPassaic Street Industrial Park - A note

LBUBS 2004-C1 Wood-Ridge N.J. Industrial 1.00 Dec. 15, 2018

$18.5M Gateway Shopping Center MLCFC 2006-4 Mill Creek Wash. Retail 1.13 Nov. 12, 2016

$17.8M Granada Apartments CGCMT 2007-C6 Erie Pa. Multifamily 0.76 March 10, 2017

$15.4MResearch Park Office Portfolio

CWCI 2006-C1 Champaign Ill. Office 1.15 Sept. 15, 2016

$13.4M Sojourn & Lakeview Portfolio GECMC 2006-C1 Various Texas Office 0.75 April 10, 2016

$11.4M Courthouse Crossing GECMC 2006-C1 Dayton Ohio Mixed-use 1.18 April 10, 2016

$11M BSG Texas Hotel Portfolio WFRBS 2013-C14 Various Texas Lodging 1.15 June 15, 2023

$8M Parkway Plaza JPMCC 2006-CB15 Clinton Township Mich. Retail 1.80 April 12, 2016

$7.2M EJ Codd Building JPMCC 2006-CB15 Baltimore Md. Retail 0.78 April 12, 2016

$6M Savi Ranch Parkway CSMC 2006-C1 Yorba Linda Calif. Office 1.09 April 15, 2016

10 | APRIL 15, 2016

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Q+A

Commercial Observer: How did the opportunity to join Massey Knakal come about?

Mr. Betesh: I saw a press release that they hired Garrett [Thelander] and that they were looking to expand the division. I thought it was a no-brainer and a great opportunity to help grow the platform and business. So I called human resources, and the rest is history.

What are some of the more interesting deals you’ve worked on lately?

We just closed a loan on a hotel near LaGuardia Airport called Springhill Suites, which is the No. 1-rated hotel in the area. We closed a $40 million loan on it that had a float-ing rate at 3 percent and is prepayable at any time with no penalty. It was a cash-out refi-nance, which repaid the original construction loan. The hotel only has two years of operat-ing history, and the debt per key was very high relative to the cost set. Since the hotel is No. 1 in the market, we were able to have the bank recognize our competitive advantage and the strong cash flow.

How are the different property types performing?

Multifamily is still strong. Office is still very strong. Retail has pulled back and hospitali-ty has definitely pulled back, at least in New York City. Outside New York City, hospitality is still somewhat strong. We’re working on a hotel loan in Cherry Hill, N.J., and are getting a 70 percent loan-to-cost financing, whereas with another hotel loan in Queens, N.Y., we’re only getting 50 percent.

In what neighborhoods are your clients seeing opportunity right now?

We’re seeing a lot in Bushwick [Brooklyn], obviously, and a lot of people are moving into Ridgewood [Queens]. Queens is very strong because of the Asian population that’s in Flushing, Woodside, Elmhurst and Forest Hills. The land market in some of these sec-ondary New York City [neighborhoods] is stagnant, and everyone is just waiting on 421a. If you’re in a neighborhood that doesn’t have condo demand and land is stagnant, you’re waiting to see what the resolution is because even market-rate rentals in some of these areas are somewhat affordable because rents are $30 to $35 per square foot.

Have there been any surprises in the market lately?

Well, I have a lot of clients who have planned developments in the Bronx, but I think they’re on hold because of [the expiration of] 421a. If 421a comes back, you’ll see a lot of projects happening in the South Bronx.

Is the commercial mortgage-backed secu-rities market less attractive right now?

We’re in the market with a few CMBS deals, and for a quality transaction, CMBS is com-petitive in two stages. One is large transactions where banks or insurance companies don’t want to hold the entire loan on their books, so a CMBS loan can take down the whole thing. The other is B-quality assets [seeking] nonrecourse financing in secondary or tertiary markets, [where] CMBS is still the only game in town. It’s just become a lot more expensive. In the earlier part of the year around January, not a lot of liquidity was in the market for CMBS. It just kind of shut down for a few weeks, and people stopped quoting. Pricing has not come down that much. Rates are down about 40 basis points on their high but still sig-nificantly higher than they were over the last six months.

The CMBS market is moving; people are quot-ing loans and closing loans. It’s just a little more expensive than it was historically. If you have that asset in a secondary or tertiary market, it’s still the best game in town. CMBS is still compet-itive for the right product. You just have to know what your asset is and what kind of loan you’re looking for.

Morris BeteshManaging Director at Cushman & Wakefield

Morris Betesh.

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