Co 07-13-2016

Want a lender you can
count on through all cycles?

Chase continues unwavering commitment
to the New York multifamily market
CHASE MULTIFAMILY LENDING

Low Fees | Great Rates | Streamlined Process
6/28/16 11:37 AM
Meet your dedicated

team of local experts.
Its our mission to keep earning your business

every day.
How? By being dependable, passionate advocates of your business needs and goals
through this loan and beyond. By sharing invaluable local expertise and industry
knowledge to help guide your multifamily investment decisions. And by consistently
delivering value-wise, straightforward nancing solutions with unbeatable speed,
ease and certainty.
Call us today
(888) 808-3792 www.chase.com/MFL-newyork
Credit is subject to approval. Rates and programs are subject to change; certain restrictions apply. 2016 JPMorgan Chase & Co. All rights reserved. Chase is a marketing name for certain businesses of
JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., Member FDIC. 238121
CHaseJuly2016.indd 2
THIS ISSUE
Finance
JULY 13, 2016
Talking private equity and Detroit

with Pembrooks Stuart Boesky
Redistributing risk (retention, that is)
Why the new HVCRE rules are pushing
banks out of construction lending
and alternative lenders in
ALTERNATIVE FINANCING ISSUE
P15
Six Years of Dodd-Frank

A look at the most sweeping financial reform since the Great Depression
SOLID TO THE CORE

COM M ERCIAL
RESIDENTIAL
R E TA I L
FINANCE
N E W YO R K C I T Y S L A R G E S T O W N E R O F C O M M E R C I A L R E A L E S TAT E
DEVELOPERS & CONSTRUCTION FINANCE
JOIN SMPS NEW YORK

AT
1 WHITEHALL STREET, 7TH FLOOR

NEW YORK, NY 10004
46
4 NEWS BRIEFS
Max Gross
Editor-in-Chief
Lauren Elkies Schram, Deputy Editor

Cathy Cunningham, Finance Editor
Harry Macklowes $411 million

purchase on Park Avenue.
10 LEASES
Leases of the Week
15 FINANCE
For more information, please visit

www.smpsbuildbusiness.org
Debt Deals
of the Week
Dodd-Franks
Report Card
Columns
Rick Lazio and

Joshua Stein
Hows it doing?
Q&A
with Stuart Boesky

of Pembrook
Risky Business
CMBS shops play with

alternative capital stacks.
15
Looking for Alternatives
Joseph Meyer
Chairman and CEO
Banks are increasingly wary of HVCRE rules.

So private lenders are stepping in.
Ken Kurson
Editorial Director
46 FEATURES
Thomas DAgostino
VP of Operations and Controller
Wonder When?
TO SUBSCRIBE,
CONTACT ALEXANDRA ENDERLE
AT AENDERLE@OBSERVER.COM,
OR CALL 212-407-9331.
Coney Islands endless

remaking
Three Cheers for

Co-Living
FOR REAL ESTATE ADVERTISING,

CONTACT ROBYN REISS AT
RREISS@OBSERVER.COM,
OR CALL 212-407-9382.
Experiencing it firsthand
FOR FINANCIAL ADVERTISING,

CONTACT BARBARA GINSBURG SHAPIRO
AT BSHAPIRO@OBSERVER.COM,
OR CALL 212-407-9383.
Power Player
Gene Kaufman
Sit-Down
Amira Yunis
54
END NOTES
62 ChartLease / Sale 66 Under
Construction
64 Party Circuit
FROM TOP: KAITLYN FLANNAGAN/COMMERCIAL OBSERVER; KAITLYN FLANNAGANI/
COMMERCIAL OBSERVER; YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER
COVER ILLUSTRATION: FRED HARPER
| JULY 13, 2016 | COMMERCIAL OBSERVER
WRITERS
Danielle Balbi, Finance Reporter
Terence Cullen, Reporter
Liam La Guerre, Reporter
Robyn Reiss
Executive Director
SALES
Barbara Shapiro, Associate Publisher, Finance
James Storey, Senior Account Executive
Shannon Rooney, Account Executive
MARKETING
Lauren Russell, Marketing Director
Genevieve Rupp, Marketing & Events Manager
DESIGN, PHOTO & PRODUCTION

Paul Dilakian, Art Director
Lisa Medchill,
Advertising & Production Director
Jeff Cuyubamba, Senior Designer
Emily Assiran, Photo Director
Kaitlyn Flannagan, Photo Editor
OBSERVER MEDIA
Jared C. Kushner
Publisher
TO RECEIVE COMMERCIAL OBSERVER

FINANCE WEEKLY,
COMPANION NEWSLETTER
TO THE COMMERCIAL OBSERVER,
DELIVERED DIRECTLY TO YOUR INBOX
EVERY FRIDAY, CONTACT SHANNON ROONEY AT
SROONEY@OBSERVER.COM,
OR CALL 212-407-9367.
TO RECEIVE THE COMMERCIAL OBSERVER
EMAIL NEWSLETTER,
DELIVERING THE LATEST UPDATES
IN COMMERCIAL REAL ESTATE
DIRECTLY TO YOUR INBOX ,
TUESDAY FRIDAY
CONTACT SHANNON ROONEY AT
SROONEY@OBSERVER.COM, OR
CALL 212-407-9367.
100ParkAvenue
10,889 RSF
Entire 25th Floor
Great Light & Views
6,765 RSF
Part 20th Floor
High-End Pre-Built
Steps to Grand Central

Flexible, Adaptable Layouts
Tenant-Controlled HVAC
BOMA Award Winner
LEED Certified
Jeremy Bier, Vice President

212-216-1722, jeremy.bier@slgreen.com
Larry Swiger, Senior Vice President
212-216-1628, larry.swiger@slgreen.com
Krystyn Gatto, Leasing Associate
212-356-4106, krystyn.gatto@slgreen.com
Tara I. Stacom, Executive Vice Chairman

212-841-7843, tara.stacom@cushwake.com
Barry J. Zeller, Executive Vice President
212-841-5913, barry.zeller@cushwake.com
Justin Royce, Executive Director
212-841-7764, justin.royce@cushwake.com
Matthias Li, Director
212-841-7712, matthias.li@cushwake.com
Connor B. Daugstrup, Associate
212-841-7964, connor.daugstrup@cushwake.com
100park.slgreen.com
BRIEFS
News
MACK DADDY
Macklowe Properties, led by developerHarry Macklowe, has closed on a $411.1

million purchase of the commercial condominium unit at432 Park Avenue, from Los
Angeles-based CIM Group, the projects
co-developer.
The sale of the commercial condo
between East 56th and East 57th Streets,
which is a mixture of space in the 1,400-foot
high luxury residential condo tower and a
separate six-story building adjacent to the
tower, closed June 20, according to city property records published last week.
In May, Macklowe Properties revealed
plans for the 130,000-square-foot commercial space, comprised of office and retail
areas. Part of that is the illuminated Park
Avenue Cube, the six-story glass structure on
East 56th Street and Park Avenue, which features 13,200 square feet of retail on the first
two floors and 70,400 square feet of office
space on the remaining four floors above.
There is also an underground concourse
of more than 30,000 square feet connecting
the Park Avenue Cube with 432 Park Avenue.
The tower itself has 20,000 square feet of
retail space across two floors and uses an
address of40 East 57th Street.
At a quarter-of-a-mile tall, 432 Park
Avenue changed the New York City skyline, Macklowe said in a prepared statement when renderings of the commercial
space were unveiled in May. Now, with the
57th Street retail and boutique commercial
space and the landmark Park Avenue Cube,
were changing the streetscape.
The 432 Park Avenue residential tower,
which has been in the works for about a
decade, received its certificate of occupancy
last November. The building is on the site of
the former Drake Hotel at440 Park Avenue.
Its 104 homes are already 75 percent spoken for, according toThe Real Deal, which
reported in May that a five-bedroom, seven-bathroom penthouse with an asking
price of $76.5 millionwas in contract.
The tower is the tallest residential building in the Western Hemisphere at 96 stories and is primarily owned by CIM Group,
which purchased the debt on the property
4|JULY 13, 2016|COMMERCIAL OBSERVER
after Macklowe Properties defaulted during

the recession. Macklowe remained on as a
minority developing partner of the project.
Macklowes stakes in the tower and the sixstory commercial condo (prior to the sale)
werent immediately clear.
Macklowe Properties was reportedly going
to buy the retail condo unit for $450 millionin
2014, asTRDreported at the time.
CIM Group did not return a request
for comment via a spokesman, nor
d id
M ac k lowe s
s p ok e s wom a n .
Liam La Guerre
DBOX FOR CIM GROUP AND MACKLOWE PROPERTIES
Macklowe Buys 432 Park Ave.

Retail Condo for $411M
CIM CITY: Macklowe shelled out $411M to CIM Group for the retail condo at 432 Park Avenue.
STAT OF THE WEEK
6.6 Runs
BY RICHARD PERSICHETTI
For only the third time in my life, a New York Mets manager is
coaching the National League All-Star team. So, in honor of this epic
Mets eventyes, I know Yankee fans take this for grantedits time
for a Major League Baseball All-Star game-themed Stat of the Week.
Rather than pitting the American League against the National
League, this All-Star game will be Class A versus Class B statistics
throughout the market and based on how things have fared through
the first half of the year.
The first two innings will be based off of the percent change in
Midtown direct average asking rents. Midtown Class A direct asking rents ended 2015 at $85.25 per square foot and increased 2.8 percent to $87.63 through mid-year 2016. Midtown Class B direct asking
rents increased as well, but only 0.8 percent to $61.98 per square foot.
The next two innings are based off of Midtown Souths vacancy
rate percentage point change. Class A vacancy increased 0.5 percentage points to 4.5 percent, while Class B vacancy decreased 0.2
percentage points to 6.2 percent. So, for those of you keeping score
through the first four innings, the Class A All-Star team has scored
2.3 runs to the Class B team, which only scored 1 run.
Downtown is up next, and this inning is based off of the percent
change in overall average asking rents. Class A overall average asking rents declined 1.5 percent since 2015 to $62.24 per square foot,
thereby knocking some runs off of the scoreboard for the Class A
team. Class B had a strong inning, with an increase of 2.4 percent
through mid-year 2016 to $50.55 per square foot.
Headed into the last inning, these runs will be based on new leasing activity through mid-year 2016 as a percentage for Manhattan
Class A and Class B total inventory. More than 8.8 million square
feet of new leases were completed for Manhattan Class A, which
accounts for 3.5 percent of the Class A inventory. Class B had 3.1 million square feet of new leases signed this year, which accounts for
3.2 percent of the Class B inventory.
So, the final score tallies to 4.3 runs for Class A versus 6.6 for Class
B, making Class B this years mid-year All-Star winner!
Richard Persichetti is the vice president of research and marketing
at Cushman and Wakefield.
60 EAST 42ND STREET
with 7,200 sq.ft. of Terraces
COLLABORATION
OFFICE
OPEN WORK AREA
OPEN WORK AREA
Entire 26 Floor 17,573 sq.ft.

Three Private Terraces Totaling 7,200 sq.ft.
th
COLLABORATION
OPEN WORK AREA
FREIGHT
ELEVATOR
OFFICE
OFFICE
COPY
ELEC.
MEETING
ROOM
COLLABORATION
IT
MEN'S
MEETING
ROOM
OPEN WORK AREA

MEETING
ROOM
METER
CLOSET
WOMEN'S
DN
UP
STORAGE
COAT
COPY
MEETING
ROOM
MEETING
ROOM
CONFERENCE
ROOM
OFFICE
CONFERENCE
ROOM
COAT
COAT
MEETING
ROOM
COLLABORATION
PANTRY
TERRACE
ELEVATOR
LOBBY
RECEPTION
LOUNGE
TERRACE
TERRACE
In-building access to Grand Central Terminal and 5 subway lines 4
Tenants include Allianz, GLG, JP Morgan Chase, ServiceNow, Robertson Foundation and 3i Debt Management
In-building dining, visitor center and coming soon, new tenant-only conference center
Thank you for the opportunity to compete for your business.
ONEGCP.COM 100% COMMISSION ON LEASE SIGNING
Julie M. Christiano 212-697-0696 jchristiano@empirestaterealtytrust.com

Lindsay J. Godard 212-850-2622 lgodard@empirestaterealtytrust.com
William G. Cohen 212-372-2233 wcohen@ngkf.com

Andrew S. Weisz 212-372-2056 aweisz@ngkf.com
Artists Rendering
Tower Full Floor
BRIEFS
SASHA MASLOV/FOR COMMERCIAL OBSERVER
Tishman Speyer Gearing Up for 1.1M-SF LIC Office Project
Rob Speyer.
Tishman Speyer has checked off the necessary boxes

to kick off a massive Queens development.
The company and its development partner Qatari Diar
have secured financing and closed on a Long Island City
plot to build two adjoined office buildings totaling 1.1
million square feet. Construction of the 27-story towers is slated to begin next year with work finishing up
in 2019, according to a press release from the developer.
The plot sits along Jackson Avenue between Queens Plaza
South and 42nd Road.
The buildings, which past reports have dubbed One
and Three Gotham Center, are already 75 percent preleased, coming out to about 800,000 square feet thats
spoken for. Coworking giant WeWork accounts for more
than 250,000 square feet of that space. The company
declined via a spokesman to disclose any other tenants
that have signed on.
Bank of Ozarks provided financing for the acquisition of the site, which is being sold by the New York
City Economic Development Corporation. How much
debt Tishman Speyer acquired was not clear. The Real
Deal reported in February that the global developer is
also seeking to raise $145 million in EB-5 funding for
the development.
Thanks to the City of New Yorks investment in the
areas infrastructure, enlightened policy decisions and the
active support of the New York City Economic Development
Corporation, the local community and its elected officials,
Long Island City has become a model for 21st century urban
development, Rob Speyer, the companys chief executive
officer, said in prepared remarks. Tishman Speyer is proud
to continue our role in unlocking the areas full potential as
one of the most dynamic, live-work-play neighborhoods,
not just in Queens but in all of New York City.
The project is estimated to cost $706.7 million, as

Commercial Observer reported in April. Acquisition of
the 71,692-square-foot site was expected to cost $10.8
million, construction slated to run $388.4 million and
soft costs were to total $72.7 million.
The developer will also receive $65 million in tax
breaks and deferrals from the New York City Industrial
Development Agency and the New York City
Department of Finance. An affiliate of Tishman Speyer
applied for the abatements in April, as CO reported at
the time. NYCIDA, a subsidiary of the NYCEDC, is providing $8.3 million in tax benefits to the project. The
remaining $56.3 million is coming from the DOFs
Industrial and Commercial Abatement Program, otherwise known as ICAP.
The towers include retail space, which will be situated in a four-story podium linking the two buildings, according to the Tishman Speyer release. It will
also have parking spaces, a food hall and a restaurant.
The square footage will be split evenly between the two
buildings, the developers spokesman confirmed.
Tishman Speyer is pretty familiar with the western
Queens neighborhood these days. In 2011, it wrapped up
construction of an adjacent site known as Two Gotham
Center, a 700,000-square-foot office building that is
entirely leased to New York City Department of Health
& Mental Hygiene. At that same time, it sold the building to Toronto-based H&R Real Estate Investment Trust
for $415.5 million.
H&R is now working with Tishman Speyer across the
street on a three-building residential project that will
lead to 1,789 rental units. The 1.2-million-square-foot
development will include 15,500 square feet of retail,
as CO reported in December.Terence Cullen
A crossfit gym whose director of programing is the fittest woman on Earth

has inked a deal to open its second location,
Commercial Observer has learned.
ICE NYChas signed a 7,000-square-foot
deal at330 East 59th Streetbetween First
and Second Avenues, according to brokers
in the deal. The fitness center will occupy
3,500 square feet on the ground floor with
the remaining 3,500 square feet on the lower
level. ICE NYC will open this fall.
The Upper East Side was a natural fit
for ICE NYC,Izzy Levy, the founder of ICE
NYC, told CO via email. With 7,000 square
feet of additional space, we now have the
ability to increase the luxurious amenities
offered to our community to include a juice
bar, members lounge, dedicated personal
training area and more spacious and posh
locker rooms.
The gym signed a 15-year lease at
theBrause Realty-owned building, according to Albert ManoplaofKassin Sabbagh
Realty, who represented ICE NYC. He
declined to provide the asking rent.
330 East 59th Street.
COURTESY COSTAR GROUP
ICE Hot: Gym Home to Fittest Woman on Earth Opening Second NYC Location
ICE NYC first opened in Tribeca earlier this year at 93 Worth Street between
Broadway and Church Street. The gym
signed a lease for 4,400 square feet, most
of which is below grade, as CO reported in
August 2015.
The company brought onCamilleLeBlancBazinet, the 2014CrossFit Games winner, to
become director of programing. She told fitness website Well and Good last December she
planned to bring a three-tier systemcatering training for the first timers, middle experience and advanced prosto the luxury gym.
Tony Andreoli of MHP Real Estate
Services, who represented Brause Realty in
the 330 East 59th Street deal along with colleagueChristine Emery, said crossfit and
luxury gyms were particularly coveted tenants in the city right now, particularly on the
Upper East Side.
Its a great fit for the area because obviously theres a proliferation of gyms out
there and crossfit is hot, Andreoli said.
Everybody wants to look good in New
York.T.C.
Kenneth Woods
PRESIDENT AND CEO
SYLVIAS RESTAURANT
Adding flavor to
the community.
Understanding
whats important.
Sylvias Restaurant is a true Harlem institution. If youve ever had their special brand of soul food, you know exactly why. Owner
Kenneth Woods also prides himself on treating customers like family. And Kenneth sees that same quality in M&T Bank. He began
his M&T relationship with a personal loan, but quickly became aware of what we could do for his business and family. The relationship
has grown stronger, with Sylvias and M&T teaming up as active members of the neighborhood and community at large. To learn
how M&T can help your business, visit mtb.com/commercial.
DEPOSITORY AND LENDING SOLUTIONS | TREASURY MANAGEMENT | MERCHANT SERVICES | COMMERCIAL CARD
Equal Housing Lender. 2016 M&T Bank. Member FDIC.
13009 Hudson City Success Stories Sylvias / Live: 9.5w x 11h Trim: 10.5w x 12h Bleed: 11w x 12.5h
Commercial Observer
BRIEFS
Steven Cohens Asset Firm Headed to 55 Hudson Yards

Point72 Asset Management, an investment fund
founded by billionaire Steven A. Cohen, is moving
toRelated Companies Hudson Yardscomplex, the landlord announced in a news release.
The firm has signed a letter of intent for 175,000 square
feet on six floors in the planned 51-story 55 Hudson Yards,
which is being built by a partnership of Related, Mitsui
Fudosan and Oxford Properties Group. Point72 is hoping
to finalize the terms of the lease by the end of the year for
the entire fifth, seventh, eighth and 10th through 12th floors.
The asking rent and length of the lease at the property at the
corner of West 33rd Street and 11th Avenue wer not disclosed.
The 1,000-employee asset management company,
which is based in Connecticut, will be relocating its two
New York City offices from 510 Madison Avenuebetween
East 52nd and East 53rd Streets and330 Madison Avenue

East 42nd and East 43rd Streets.
With large, open, collaborative space, similar to our
Stamford trading floor, we can foster better interaction
among teams and create the kind of environment that
employees and candidates would expect from the industrys premier asset management firm,Douglas Haynes,
the president of Point72, said in a prepared statement.
The modern, progressive space with premier retail, cultural events and urban green spaces will help us to continue to attract and keep the top talent that is our most
valuable asset.
Neil Goldmacher of Newmark Grubb Knight Frank
represented Point72 in the deal. Relateds Stephen Winter
along with CBREs Robert Alexander and Howard Fiddle
represented the landlord. Reutersfirst reported news of

the deal.
We are proud to welcome Point72 to Hudson Yards,
Jay Cross, who heads development for Related at Hudson
Yards, said in the release. Their new park-front headquarters will be steps away from a diverse collection of
shopping, dining, fitness and cultural amenities with
direct access to the best transportation system in the
New York region.
Milbank, Tweed, Hadley & McCloy signed a letter of intent to occupy 250,000 square feet across
nine floors of the 1.3-million-square-foot office tower
and Boies, Schiller & Flexner inked an 83,000-squarefoot deal, as Commercial Observer previously reported.
Liam La Guerre
Expansion at 1 WTC Gets OK From Port Authority
SPENCER PLATT/GETTY IMAGES
The Durst Organizationcan move forward with expansion of its pre-built and
built-to-suit program at 1 World Trade
Centerby three more floors.
Port Authority of New York & New
Jersey commissioners approved giving
$31.5 million to grow the project at the
bi-state agencys monthly board meeting in
Jersey City, N.J., two weeks ago. The 3-million-square-foot tower will now have eight
floors of pre-built space following the vote
by the bi-state agency, which owns 1 WTC
with Durst. The three-year-old program has
been expanded upon several times and is
currently just under 70 percent leased,
which is about the same occupancy percentage for the entire building.
The plan calls for $30 million to be allocated to construction of the pre-built and
built-to-suit spaces, which are finished
before a tenant is even signed, and fees
associated with the work. The remaining
$1.5 million will be spent on upgrades to
the ground-floor entrance and lobbies on
some of the buildings floors.
Port Authority Executive DirectorPatrick
Foye said the program has been successfulinfilling the massive building over the
last three years.The pre-builts have been
a home run, frankly, Foye said during a
post-meeting press conference.
Durst currently has pre-built and built-tosuit spacesdesigned by the tenant and paid
for by the landlordon the 45th through
47th, 83rd and 84th floors.
A spokesman for the landlord said the
48th, 49th and 76th levels will be added
to the roster of floors. Design work for
those spaces has already begun, with
construction beginning in August, he
added. The pre-built offices will likely
be done by the end of the year.
There are 25 tenants signed on to
those levels since the Port Authority
Architecture
Firm Leaving
ESB After Three
Decades
1 World Trade Center.

first approved the program in 2013. That
amounts to about 166,000 square feet of
the total program, or 67 percent, according
to an agenda for the June meeting.
Durst has championed the program
for smaller tenants who might not take 1
WTCs full floors, which run from 32,000 to
48,000 square feet. The pre-built floor plates
typically run no smaller than 2,000 square
feetand no larger than 20,000 square feet,
as Commercial Observer reported in June.
Asking rents for these pre-built truncated
offices have been in thehigh-$70s to $80s

per square foot, as CO reported in October
2015.
The Manhattan market is diverse and
is largely fueled by smaller deals, Karen
Kuznick, Dursts leasing manager at the
tower, said in a statement to CO for an earlier story. The sub 20,000-square-foot
market compliments the larger deals at [1
WTC] and gives smaller tenants access to
the best views and exposures in New York
City.T.C.
Ronnette Riley Architect has signed a

5,500-square-foot lease to relocate to 494
Eighth Avenuefrom its current home at the
Empire State Building, where it has been for
nearly three decades.
Commercial Observer has learned that
the architecture firm will be moving onto
the entire 15th floor of the 24-story building
between West 34th and West 35th Streets,
according to Joe Friedman of MHP Real
Estate Services, who represented the tenant.
The asking rent in the 10-year deal was in the
low-$40s per square foot.
The firm was looking for lots of light and
lots of windows at a good price and this building fit the requirement, Mr. Friedman told CO.
Ronnette Riley is leaving the Empire State
Building at 350 Fifth Avenuebecause the
firms lease expired and landlord Empire
State Realty Trustwanted to raise the rent,
Friedman said, declining to say by how
much. A spokeswoman for ESRT did not
respond to a request for comment.
The architecture firm will move into its
new digs next month following a buildout.
The space comes with windows on two sides.
The floor plates are really efficient.
Effectively it is column-free space,
said David Menaged of Intrepid Real
Estate, who represented landlord Elijah
Equities.
Ronnette Riley designs commercial, hospitality and residential spaces
among others. It was behind the design of
ApplesSoho store at103 Prince Streetand
Coca-Colas retail store at 711 Fifth
Avenue.L.L.G.
W 19TH ST
CONTIGUOUS
AVAILABILITY
VIBRANT
LOCATION
26,000 RSF EACH

TWO FULL FLOORS
LOCATED IN THE HEART OF

THE FLATIRON DISTRICT
12-6 ceilings with north

and south exposures
Central to the N, Q, R, F, M, L,
1, 2, 3, 4, 5, 6 and PATH
Recently restored elegant

lobby and new elevators
Tenants include Tory Burch

and Publicis Groupe
100% COMMISSION PAID ON SIGNING
Brian Neugeboren | 212.452.6046

bneugeboren@savittpartners.com
Bob Savitt | 212.944.8006

rsavitt@savittpartners.com
SAVITTPARTNERS.COM
SVT-1013 11 West 19th Street Ad 5.indd 1
6/6/16 1:09 PM
LEASES
FROM LEFT: PROPERTY SHARK; COURTESY

COSTAR GROUP
Lease Deals of the Week

Times Square
Attractions Live
Weill Cornell
Medical College
Lovell Safety
Management
Ameriprise
Financial
Medicrea
59,137
New
55,000
Expansion
25,398
Renewal
21,000
Relocation
14,600
Expansion
The ocean is about to flood the

Crossroads of the World, with the
first-ever National Geographicbranded immersive entertainment.
A joint venture called Times
Square Attractions Live has
signed a 59,137-square-foot lease
at 226 West 44th Street between
Seventh and Eighth Avenues,
according to a release from the
group. The tenant plans on opening National Geographic Times
Square: Ocean Giants at the multilevel location next summer.
The deal is for 15 years, the release
indicates, with no indication of the
rent. A source familiar with the
deal said that the asking rent on the
ground floor is in the $300-range.
Times Square Attractions
Live is a partnership between
Washington, D.C.-based real estate
firm Peterson Companies and
SPE Partners, an entertainment
company. The New York Post, first
reported the deal.
Kushner Companies closed
on the 250,000-square-foot retail
condominium in The New York
Times Building at 229 West 43rd
Street last October for $295 million from Africa-Israel USA. (The
companys chief executive officer,
Jared Kushner, is the publisher of
Commercial Observer.)
Eric Gelber of CBRE represented
the tenant in the deal, while Morris
Harary, Larry Rabinowitz and
Ira Bloom of Kushner Companies
represented the landlord. Lon
Rubacking of CBRE said he and colleage Gary Trock also represented
the landlord.Terence Cullen and
Lauren Elkies Schram
Cornell Universitys medical

school has inked a 55,000-squarefoot deal at 156 William Street,
Downtowns first medical office.
Weill Cornell Medical College
signed a 20-year lease for 24,000
square feet on the sixth floor and
17,000 on the seventh floor of the
12-story building between Ann
and Beekman Streets. It also took
14,000 square feet for its medical
imaging center. The asking rent
was $150 per square foot for the
ground floor and the high-$50s
for the rest of the space.
The New York-Presbyterian
Hospital-affiliated school has
leased 29,000 square feet of part of
the buildings 11th and 12th floors,
since November 2013, according to
CoStar Group. All told, the medical center now has more than
80,000 square feet within the
250,000-square-foot building.
William Macklowe Company
and L aSa l le Invest ment
Management acquired the building for $62.5 million in 2013 from
Capstone Equities, according to
CoStar. The developers committed
to repurposing the office building
into New York Citys first medical
office in Downtown Manhattan,
as Commercial Observer reported
in 2014.
John Cefaly, Michael Burgio
and David Berke of Cushman &
Wakefield represented the tenant
while Paul Wexler and Josef
Yadgarov of Wexler Healthcare
Properties, part of The Corcoran
Group, represented the owners.
The New York Post first reported
news of the deal.Rheaa Rao
Lovell Safety Management,

a third-party administrator of
insurance and pension funds
has re-upped for its 25,398 square
feet in the Financial District,
The 12th-floor space is in
Savanna and Newport Beach,
Calif.-based KBS Realty Advisors
32-story, 928,000-square-foot
building at 110 William Street
between Fulton and John Streets.
The renewal is for 10 years,
Savanna confirmed. The asking
rent wasnt immediately clear.
This lease renewal positions
Lovell Safety Management in a
superior and prominent location for continued success, said
Peter Sabesan of CBC Alliance,
who has represented Lovell Safety
Management for the last 30 years
along with Richard Selig, in prepared remarks.
We are very pleased that Lovell
Safety Management, a longtime
existing tenant, has renewed their
lease at 110 William, said Brian
Reiver, the director of leasing at
Savanna, in a news release. Their
commitment ... is a reflection of
the work that Savanna and KBS
completed to enhance the tenant
experience at 110 William.
Savanna acquired the 32-story
110 William Street in a joint venture with KBS Capital Advisors for
$261.1 million in April 2014, as CO
previously reported, from Swig
Equities and Dubai Investment
Group.
Other tenants include Smarsh
and EP Engineering.L.E.S.
Ameriprise Financial has

renewed and expanded its foothold at RXR Realtys 530 Fifth
Avenue, the landlord announced.
The financial firm will now
occupy approximately 21,000
square feet of the 536,000-squarefoot building between West 44th
and West 45th Streets, according to a press release from RXR.
Ameriprise has been based in
nearly 15,000 square feet on the
16th floor of the property since
2007, according to CoStar Group.
The renewal is for 10 years, the
release indicates. Ameriprise will
take part of the 10th floor in the
expansion, according to an RXR
spokeswoman. Asking rent in the
deal was $68 per square foot.
Josh Kuriloff and Andrew
Braver of Cushman & Wakefield
represented the tenant and
declined to comment via a spokesman. Dan Birney and Alexandra
Budd of RXR represented the landlord in-house.
RXR scooped up the building in
a partnership with Thor Equities
and General Growth Properties
two years ago for $595 million, as
Commercial Observer reported.
Under the joint venture, RXR manages the office portion, while Thor
and GGP handle the buildings
50,000 square feet of retail.
Ameriprises expansion is the
second leasing move the company
has recently made. In early June,
the company announced it was
moving to 1 World Trade Center
from across the street at 7 World
Trade Center.T.C.
A Paris-based medical company specializing in spinal surgery technology has doubled and
renewed its New York City office
space in Soho, taking another full
floor at 46-50 Greene Street.
Medicrea will now occupy
14,600 square feet on the upper
two levels of the Zar Propertyowned building between Grand
and Broome Streets, according to
The New York Post. The firm has
been based in 7,300 square feet,
or the whole fifth floor, and will
tack on the same amount on the
fourth floor.
Asking rent in the deal was $85
per square foot, the Post noted.
Medicrea, a publicly traded company, signed a 10-year renewal, a
source familiar with the deal told
Commercial Observer.
Medicrea first moved into
the building in November 2014,
according to CoStar Group. David
Zar represented the landlord
in-house and declined to comment. The tenant did not have a
broker in the deal.
Heroes Model Management
also recently signed a seven-year
lease at the 47,621-square-foot
building, the source added. The
fashion model agency has taken
3,450 square feet on the second
floor. Asking rent for that space
is $75 per square foot, CoStar
indicates.
The firm, which also did not
have a broker, is tripling its size
and moving two blocks from 110
Greene Street between Spring and
Prince Streets.T.C.
S:9.5
S:11
WE HAVE SMART PHONES. WHY NOT SMART BOILERS?

Upgrading to a modular boiler lets you manage heating in real time based on demand. And the more control you have over
your heating system, the more control you have over your energy costs. To learn about the upside of upgrading through our
cutting-edge interactive experience, visit our website. And call 1-877-797-6347 to see if you qualify for financial incentives.
ManageEnergy.conEd.com #ManageEnergy
LEASES
FROM LEFT: COURTESY COSTAR GROUP; PROPERTY SHARK;

COURTESY COSTAR GROUP; PROPERTY SHARK
Lease Deals of the Week

Offit Capital
Advisors
451 Research
InVision
Communications
Weill Cornell
Medicine
Juniors
14,206
Renewal
13,000
Renewal
12,015
Relocation
10,547
New
10,287
New
Offit Capital Advisors, an

employee-owned finance firm,
has inked a 10-year renewal at 485
Lexington Avenue, Commercial
Observer has learned.
The firm will remain in its
14,206 square feet on the whole
24th floor of the SL Green Realty
Corp.-owned building between
East 46th and East 47th Streets,
according to a press release from
the landlord. Offit Capital has been
based at the 921,370-square-foot
property since September 2010,
CoStar Group indicates.
Asking rent in the deal was $78
per square foot, according to an SL
Green spokeswoman.
We are delighted that Offit
Capital has elected to extend
its occupancy with us, Steven
Durels, the head of leasing for SL
Green, said in prepared remarks.
Leasing momentum in Midtown
East and particularly in the Grand
Central [Terminal] submarket has
remained very strong this year.
Larry Zuckerman of Newmark
Grubb Knight Frank represented
Offit Capital, while Natasha
Brown represented SL Green
in-house.
Earlier this month, Tailwind
Capital signed an early renewal for
its full-floor space one level below
on the 23rd floor, as CO previously
reported. The firm is staying in its
14,206-square-foot office for an
additional five years. Memorial
Sloan Kettering Cancer Center
signed a 54,200-square-foot sublease for seven years on the second
floor of the building in February
2014.T.C.
451 Research, an information

technology research and advisory
company founded in 2000, has
renewed its lease for 13,000 square
feet at 20 West 37th Street, Jordan
S. Mandel of Vanguard Global
Realty told Commercial Observer.
The deal is for six years with an
asking rent of $50 per square foot,
said Mandel, who exclusively represents 451 Research. The landlord
had no outside broker, he said.
The tenant, which is a division
of The 451 Group, occupies the
third and sixth floors, each 6,500
square feet.
After an extensive search the
current space was most effective
for continuous business operation and a reconfiguration of space
helped provide room for growth,
Mandel said in an email to CO.
Neuss Real Estate acquired the
12-story, 91,000-square-foot building between Fifth Avenue and
Avenue of the Americas for $25.5
million in February 2006.
451 Research is the largest
tenant in the building. Other
tenants include NedGraphics,
a software developer for the
fashion industry, on the entire
6,500-square-foot fourth floor,
and Gorton & Partners, a construction project management
firm, on the entire 6,500-squarefoot 11th floor.L.E.S.
InVision Communications has

inked a 12,015-square-foot deal at
550 Seventh Avenue between
West 39th and West 40th Streets,
according to a press release from
the landlords broker.
The agency will occupy the
entire 17th floor of the Adler
Group-owned 25-story office
building. Asking rent in the eightyear deal was $60 per square foot.
The firm is currently at 535
Eighth Avenue between West
36th and West 37th Streets, where
it occupies the 19th floor of the
building. It will be moving to its
new location this fall.
Michael Heaner and Sam Stein
of Kaufman Organization represented the landlord, while Robin
Fisher and Christie Bennett of
Newmark Grubb Knight Frank
represented the tenant.
InVision is relocating from
a building where they were on
non-contiguous floors, Bennett
said in an email to CO. [The building] presented the perfect opportunity to stay in the immediate
area and create a collaborative
environment on one full floor. The
landlord developed a space plan
that enhances InVisions company
culture and allows room for future
growth.
The Wall Street Journal first
reported news of the deal.R.R.
The Ronald O. Perelman

and Claudia Cohen Center for
Reproductive Medicine of Weill
Cornell Medicine has finalized
a 15-year lease at 255 Greenwich
Street in Tribeca, Commercial
Observer has learned.
The fertility center will be in
10,547 square feet on part of the
buildings fifth floor, according to
a press release from landlord Jack
Resnick & Sons. It should begin
operating at the 600,000-squarefoot property between Park Place
and Murray Street in January 2017.
Asking rent in the deal was in the
$60s per square foot, according to
a source familiar with the deal.
Were delighted to add Weill
Cornell Medicine to our prestigious tenant roster at 255
Greenwich Street, Jonathan
Resnick, the president of Jack
Resnick & Sons, said in prepared
remarks. We are confident that
they will benefit from the buildings strategic location adjacent to
Downtowns major transportation
hubs and the distinctive neighborhoods of [the Financial District],
Tribeca and Battery Park City.
This will be an extension of the
centers existing facility roughly
half a mile away at 40 Worth
Street between Church Street and
West Broadway.
Dennis Brady and Brett
Greenberg of Jack Resnick & Sons
represented the landlord in-house,
while John Cefaly and Michael
Burgio of Cushman & Wakefield
represented the tenant. The brokers did not return a request for
comment.T.C.
Juniors Restaurant, the

Brooklyn-born eatery known for
its legendary cheesecakes, has
swiped the former space of PanAsian-styled Ruby Foos at 1626
Broadway for its second Times
Square location.
The diner has signed a
10,287-square-foot lease for the spot
between West 49th and West 50th
Streets, according to CBRE, which
represented the tenant and the
landlorda division of the Kuwaiti
Investment Authority. Ruby Foos
was located there for 15 years until
October 2015.
CBRE declined to release the asking rent in the 15-year deal. At the
newest locale, slated to open next
year, the restaurant expects to seat
300 with a separate bakery takeout counter, as The New York Times
first reported. It will occupy 5,285
square feet on the ground floor,
3,237 square feet on the lower level,
1,017 square feet on the mezzanine
level and 775 square feet on the lower-level mezzanine.
Ownership was seeking an
established restaurateur to take the
well-known space formerly occupied by Ruby Foos, CBREs Gary
Trock, who brokered the deal with
colleagues David LaPierre, Sean
Moran and Zachary Parisi, said in
a prepared statement.
Juniors other Times Square location is at 1515 Broadway between
West 44th and West 45th Streets,
and the company also has a spot in
Grand Central Terminal. Of course,
the original eatery is in Brooklyn,
downtown, at 386 Flatbush Avenue
Extension.L.L.G.
Specialization Expertise Results
Marcus & Millichap Has a History of Closing

and a Track Record of Success
Below is a Sampling of Our Recent Closings
CLOSED: 6/29/2016
CLOSED: 6/24/2016
CLOSED: 6/23/2016
CLOSED: 6/15/2016
23-Unit Multifamily
Upper West Side (Manhattan), NY
$17,750,000
Agents: John J. Stewart,
Michael Sadowsky
Mixed-Use
Lower East Side (Manhattan), NY
$8,800,000
Agents: Peter Von Der Ahe,
Joseph Koicim, David Lloyd,
Corey Isdaner
55-Unit Multifamily
West Harlem (Manhattan), NY
$16,500,000
Joseph Koicim, Seth Glasser,
Jacob Kahn
Shopping Center
New City, NY
$10,750,000
Agents: Alan Cafiero,
Ben Sgambati
CLOSED: 6/16/2016
CLOSED: 6/23/2016
CLOSED: 6/20/2016
CLOSED: 6/22/2016
35-Unit Multifamily
$13,000,000
Corey Isdaner
Retail
Downtown Brooklyn, NY
$4,875,000
Agents: Jakub Nowak,
Matthew Rosenzweig, Michael Cimino
10-Unit Multifamily
$11,400,000
Cory Isdaner, Shaun James
Industrial
Long Island City, NY
$4,100,000
Agents: Wook Chung,
Galit Mizrahi
To access the largest exclusive inventory in the country, contact the market leader.
J.D. Parker
Senior Vice President/District Manager

jparker@marcusmillichap.com
New Haven
265 Church Street, Suite 210
New Haven, CT 06510
(203) 672-3300
John Horowitz
Vice President/Regional Manager

jhorowitz@marcusmillichap.com
Manhattan
Westchester
260 Madison Avenue, 5th Floor

New York, NY 10016
(212) 430-5100
50 Main Street, Suite 925

White Plains, NY 10606
(914) 220-9730
Brian Hosey
Brenton Baskin
Regional Manager
bhosey@marcusmillichap.com
Regional Manager
bbaskin1@marcusmillichap.com
Brooklyn
New Jersey
Philadelphia
16 Court Street, Floor 2A

Brooklyn, NY 11241
(718) 475-4300
611 River Drive, 4th Floor

Elmwood Park, NJ 07407
(201) 582-1000
2005 Market Street, Suite 1510

Philadelphia, PA 19103
(215) 531-7000
Offices Throughout the U.S. and Canada
www.MarcusMillichap.com
CAN
YOUR
BROKER
CAN YOUR
BROKER
DO THIS?
DO THIS?
Hawthorne Court
Central Islip, NY
Multifamily Property
434 Apartment Units
$65,
2
00,
0
00
7
$65,200,000
ACQUISITION FINANCING
-YEAR LOAN
FIXED RATEFINANCING
OF 3.70%
ACQUISITION
81% LOAN -TO - COST
-YEAR LOAN
AGENCY LENDER
FIXED RATE OF 3.70%
81% LOAN -TO-COST
AGENCY LENDER
Hawthorne Court
Central Islip, NY
Multifamily Property
434 Apartment Units
Abe Hirsch | Senior Managing Director

212.612.0151 | ahirsch@meridiancapital.com
Zev Karpel | Managing Director
212.612.0114 | zkarpel@meridiancapital.com
MeridianCapital.com
CO - CYBDT - $65.2MM Hawthorne Court - A. Hirsch 7-13-16.indd 1
AMERICAS MOST ACTIVE DEBT BROKER
7/6/16 9:44 AM
Finance
22
28
34
Dodd-Frank Starts First Grade

Q&A With Pembrooks Stuart Boesky
Lenders Labyrinth
The
Alternative
Financing
Issue
With regulations constraining banks

capital, new lenders and structures
are coming out of the woodwork
ILLUSTRATION BY KAITLYN FLANNAGAN
or Commercial Observers Alternative

Finance issue we took a look at the impact
of current and pending regulations on commercial real estate financing and how it has changed
who the key players are. As heavily regulated institutions, banks are finding their hands tied when
it comes to playing with risk in the deals they pursue, should their fingers get burned, while non-bank
entities are capitalizing on their unregulated status.
Although that may change with the next round of
regulation, according to Barney Frank, who spoke
with Cathy Cunningham in advance of the DoddFrank Wall Street Reform and Consumer Protection
Acts sixth birthday next week.
We spoke with a plethora of industry experts, from
Republican Congressman Robert Pittenger to the
Commercial Real Estate Finance Council Deputy
Executive Director Mike Flood, to get their take on
what Dodd-Frank has achieved so far, and whats
proving to be nightmare-inducing in bills future
implementation. Frank also talked us through his
personal perspective on where the wasnt executed
exactly as planned as well as its successes.
With the legislations risk retention requirements
due to arrive, although perhaps not tied with a bow,
on Christmas Eve, Danielle Balbi delves into risk
retention structuresvertical, horizontal, L-shaped
(and a partridge in a pear tree).
We also took a close look at the High Volatility
Commercial Real Estate rule from Basel III, which
many CRE participants think will push construction
lending into the private market as banks, yet again,
are faced with constrained capital.Danielle Balbi
and Cathy Cunningham
COMMERCIALOBSERVER.COM
| JULY 13, 2016 | 15
FINANCE
Debt Deals of the Week

Local
Developer
Gets $67M
Loan for UWS
Condo Project
Meridian Arranges $70M for

Acquisition of East Harlem Rental
Capital One has provided $70
million in acquisition financing for Clipper Realtys purchase
of The Aspen in East Harlem,
Commercial Observer can first
report.
The debt was arranged by
Meridian Capital Group.
Transaction parties declined to
name the borrower, but according to an article in the The Real
Deal, Clipper Realty, a real estate
investment trust and an affiliate of
David Bistricers Clipper Equity,
was in contract to buy the East
Harlem rental building for approximately $103 million in January
from 100 Street Tri Venture LLC,
a joint venture between L&M
Development Partners, BFC
Partners and River Equities. Ariel
Property Advisors represented
the seller in the transaction, with
Shimon Shkury, Victor Sozio and
Michael A. Tortorici leading the
negotiations.
The 12-year Fannie Mae loan
features a fixed rate of 3.68 percent and one year of interest-only
payments.
Understanding the clients
long-term plan for the asset, we
approached banks, life insurance
Bank of the Ozarks has provided $66.6 million in debt

for New York-based Anbaus
71,000-square-foot condominium
project at 207 West 79th Street,
This is going to be a great project for the Upper West Side, and we
are excited to establish a relationship with Bank of the Ozarks, said
Arvind Bajaj, Anbaus chief investment officer. It was a real pleasure
working with the Ozarks team.
Eastern Consolidated negotiated the construction loan on
behalf of the borrower. The brokerages Adam Hakim, James Murad
and Andrew Iadeluca worked on
the transaction.
Anbau acquired the site
between Amsterdam Avenue and
Broadway in April 2015 for $39 million, city records indicate.
The residential developer
plans on constructing 19 two- to
five-bedroom units. Amenities will
include a 24-hour doorman, a fitness center, a storage room, a bicycle room and a childrens play area.
There will also be 5,000 square feet
of retail space on the ground floor.
Morris Adjmi Architects has
undertaken the design. The residential units are slated to sell at an
A joint venture between The
average of $2,729 per square foot.
Scion Group, Singapore-based
This is a rare opportunity for a
sovereign wealth fund GIC and
developer to build in an area where
Canada Pension Plan Investment
condominium inventory has sigBoard received $672 million
nificantly declined over the last
in debt for the acquisition of
seven years, Hakim said. It is
the University House portfolio,
very unusual to be able to find
according to a press release.
attractive ground-up construcMaryland-based Walker &
tion in a prime landmark historic
Dunlop secured the Fannie
district. There are major barriers
Mae financing, which was used
to entry in this submarket.
toward the $1.4 billion buy of the
A representative for Bank of the
massive student-housing portOzarks did not respond to a call for
folio, which is spread across 21
comment. campuses in Alabama, Arizona,
Danielle Balbi
Arkansas, California, Colorado,
SYLVESTER ZAWADZKI
BANK OF THE O-SNAP!
The Aspen at 1955 First Avenue in East Harlem.

companies and agency lenders,
ultimately pursuing a Fannie Mae
loan with Capital One Multifamily
Finance in order to achieve the
12-year term and required proceeds, said Shaya Ackerman of
Meridian in prepared remarks.
Ackerman negotiated the deal
along with colleague Shaya
Sonnenschein.
The seven-story multifamily
property is located at 1955 First
Avenue and spans the entire

block along First Avenue from
East 100th to East 101st Streets.
Designed by Costas Kondylis
and Partners and Magnusson
Architecture and Planning, The
Aspen has 232 residential units
and four commercial spaces.
Building features include a fitness center and an on-site 109space parking garage.
This deal was incredibly
complex and required significant out of the box thinking to

get to a close and meet the borrowers unique needs, said
Grace Huebscher, the president of Capital One Multifamily
Finance. It was truly a great team
effort that required us to leverage
our relationship with Meridian.
Officials at Clipper Realty
declined to comment.
Cathy Cunningham
Walker & Dunlop Secures $672M for Massive Student-Housing Portfolio
Florida, Georgia, Louisiana,

Nor t h C a rol i n a, Ore gon,
Pennsylvania and Texas. The
joint venture partners signed an
agreement for the acquisition
from InvenTrust Properties
in January, as has been widely
reported.
The acquisition of University
Housing Communities is strategic for Scion and the first
investment by the joint venture, Scions Chief Investment
Officer Avi Lewittes said in
prepared remarks. We were
impressed by the commitment
and professionalism of the

broader Walker & Dunlop and
Fannie Mae teams in delivering
highly attractive financing terms
for this important transaction.
Walker & Dunlops Brendan
Coleman and Will Baker worked
on the transaction.
We were honored to work
with Scion, one of the most
experienced and respected student-housing owners and operators in the United States, GIC and
CPPIB on this financing, Baker
stated in the release. Our experienced student-housing team was
successful in meeting the joint

ventures needs on this complex
transaction by negotiating a flexible solution with Fannie Mae.
Scion currently owns and operates more than 38,175 beds across
42 universities. The recently
acquired InvenTrust portfolio is
comprised of 18 stabilized student-housing complexes and four
properties under development.
There are a total of roughly 13,000
beds, and the hefty price tag of the
sale values each spot at roughly
$107,692, according to CoStar
News.D.B.
Delivering results, project after project

$250,000,000
$32,000,000
$20,000,000
$13,000,000
Fannie Mae
CMBS execution
Freddie Mac
Balance sheet
Preservation
multifamily
Retail
Cooperative
multifamily
Refinance
Refinance
Refinance
Refinance
New York, NY
New York, NY
East Elmhurst, NY
New York, NY
Retail
We focus on building deep and lasting relationships, using the breadth of our commercial real estate platform to deliver
capital solutions in every market cycle. Working together with our clients, project by project, has helped make Wells Fargo
the largest commercial real estate lender nationwide. Find out why the right relationship matters over time.
Contact us today to learn more.
Vince Toye 212-214-7322 vince.toye@wellsfargo.com
Jon Albertell 212-214-7584 jon.albertell@wellsfargo.com
Fannie Mae Freddie Mac FHA CMBS lending
Portfolio loans Warehouse lines
NOT FDIC-INSURED NO BANK GUARANTEE MAY LOSE VALUE
Wells Fargo Securities is the trade name for the capital markets and investment banking services of Wells Fargo & Company and its subsidiaries, including but not limited to WellsFargo Securities, LLC, a
member of NYSE, FINRA, NFA and SIPC, Wells Fargo Prime Services, LLC, a member of FINRA, NFA and SIPC, and Wells Fargo Bank, N.A. Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC are
distinct entities from affiliated banks and thrifts. 2016 Wells Fargo Bank, N.A. All rights reserved. WCS-2862407
Fairway Group Holdings $140

million reorganization plan has
been consummated and officially
took effect on July 3, according to
a court filing by the supermarket
chain.
As previously reported by
Commercial Observer, Fairway
announced that its reorganization plan had received a green
light from lenders on June 8,
which would allow the grocer to
reduce its debt and emerge from
bankruptcy with $50 million in
cash. The plan was unanimously
accepted by 100 percent of voting-secured lenders.
The supermarket filed for
Chapter 11 bankruptcy protection
on May 2, just three years after
filing its initial public offering.
Fairways senior lenders voted in
favor of the plan to exchange their
loans for common equity plus $84
million of debt of the restructured
company. Additionally, the grocer
secured $55 million in financing
from some of its creditors to assist
with its reorganization plan, as
well as the post-bankruptcy filing
daily operation of its business.
A new board of directors has
been instituted as part of the
reorganized company, including Kenneth Martindale, the
chief executive officer of Rite
Aid, Eugene Davis, the chairman and chief executive officer
of PIRINATE, a consulting firm
specializing in turnaround management, and James Demme, a
senior adviser at Angelo, Gordon
Acquisition Corp.C.C.
New York-based Ashkenazy

Acquisition landed $92.3 million in
financing from Bank of the Ozarks
for the purchase of the 291-key NYLO
Hotel on the Upper West Side, according to filings from the city.
A trust affiliated with the now-defunct Lehman Brothers has been
marketing the 16-story hotel at 2178
Broadway for sale since 2014 and closed
on the sale for $140 million last week,
as The Real Deal first reported. The purchase price makes the deals loan-tocost ratio approximately 66 percent.
The former investment bank
previously completed $20 million in

renovations at the property, as has been
reported, and the nightly rate at NYLO
starts at $139, according to its website.
NYLO, which sits at the corner of
West 77th Street, houses Italian eatery
Serafina, Chinese dim sum restaurant RedFarm and bar and lounge
LOCL Bar. It is located near Central
Park, Lincoln Center, the American
Museum of Natural History and the
Beacon Theater.
Representatives for Bank of the
Ozarks and Ashkenazy did not respond
to requests for comment. D.B.
PROPERTY SHARK
Fairways $140M
Reorganization
Plan Takes
Effect, New
Board Steps In
Bank of the Ozarks Funds

Ashkenazys NYLO Hotel
Buy With $92M Loan
2178 Broadway.
$65M Hercules Plaza Note Requests Second Mod

A $65.1 million note on
McConnell Johnson Real Estates
Delaware office complex Hercules
Plaza has been transferred to special servicer CWCapital Asset
Management for a second time,
and faces imminent monetary
default, according to an alert from
Fitch Ratings. The loan is current
but has a watchlist status.
The Delaware-based borrower
is seeking a second loan modification, according to a source close
to the transaction who pinned
the return to special servicing
on office market conditions in
Wilmington. The collateral is
beautiful, everything is in great
shapethey just need the market
to cooperate, the individual said.
Hercules Plaza is the largest
loan in the WBCMT 2006-C25
commercial mortgage-backed
security, comprising 33.5 percent
of the deal, according to Trepp.
The underlying property is a
518,409 square-foot, 12-story office
building located at 1313 North
Market Street.
The office plazas largest tenant,
chemical company Ashland Inc.,
moved out earlier this year and the
borrower has been unable to fill
the 125,588 square feet left behind.
The building currently has 287,000
(C) HERCULES
MERIEL JANE WAISSMAN/GETTY IMAGES
FINANCE
Hercules Plaza at 1313 North Market Street in Wilmington, Del.

square feet of active leases, including Cond Nast, Pepper Hamilton
and TD Bank. Delaware Board of
Trade also joined the rent roll earlier this year with a 15-year lease for
approximately 10,000 square feet.
The loans first visit to the
servicer in May 2014 resulted in

a two-year maturity extension,
which pushed the debts expiration out to April 2018, and changed
the asset from principal and interest to interest-only payments for
the duration of the loan, according
to servicing commentary.
Ashland moved out and
caused the flip. Thats the issue.
The building is doing everything
it is supposed to do, it just cant
hit the target for interest-only
payments at this point, the market source said.
The first modification was
executed in order to create some
breathing room, in hopes that the
market would come back in the
propertys favor, the indvidual told
Commercial Observer. However
the Wilmington office market has
had no new absorption for the past
six years, they said.
McConnell Johnson also owns
1201 North Market Street, a
450,000 -square-foot off ice
building across from Hercules
Plaza. Servicer commentary
shows that the borrower is committed to the property and has
continually put money back into
Hercules Plaza, having paid off
the $20 million B note in May
2014 and later buying the ground
lease for $5 million.
Representatives for McConnell
Johnson could not immediately be reached for comment.
Officials at CWCapital did not
respond to requests for comment.
C.C.
A LEADER
IN COMMERCIAL
REAL ESTATE FINANCE
$
BILLION ORIGINATED
BILLION SERVICED
FIXED I FLOATING I AGENCY

ATLANTA BETHESDA BOSTON CHICAGO COLUMBUS DALLAS
IRVINE NEWPORT BEACH NEW YORK RALEIGH SAN FRANCISCO
SANTA MONICA SEATTLE TAMPA
WWW.CCRE.COM | 212.915.1700
FINANCE
Hudson Companies Gets $30M Investors Bank

Construction Refi for 22 Caton Place
Investors Bank has provided Hudson
Companies with a $30 million permanent loan
to refinance its construction loan at 22 Caton
Place in the Kensington/Windsor Terrace area of
Brooklyn, Commercial Observer has learned.
The loan, which replaces a $19 million construction loan from Wells Fargo, closed on June
28, Hudson Principal Alison Novak said. Eastern
Union Fundings David Metzger and Nate Hyman
negotiated the deal. Metzger said that the deal
includes only a year of interest and was done in the
knick of time, as the Wells Fargo loan was due to
mature the following day.
It was an existing relationship with Investors
Bank, Metzger said. Investors Bank loves Hudson
Companies. And the bank loves 22 Caton Place in
particular because of its LEED Gold status and its
plethora of amenities, which include vegetable gardens on the roof and an urban farmer who provides
advice and support as well as a concierge, a pet
grooming room, a gym and a yoga studio, a lounge,

a childrens playroom, a boule court, a landscaped
courtyard and a roof terrace with barbecue.
The building at 22 Caton Place, which is two blocks
from Prospect Park, is a 73-unit market-rate rental
with below-grade parking. It was completed last June.
Leasing commenced last summer and one-bedroom apartments range from $2,500 to $3,000 per
month, Novak said. The property is fully leased,
Novak said, but for a couple of relets on the market.
David Kramer, the president of Hudson, previously told CO, We took a huge risk building an
apartment building there hoping to get one-bedroom rents of $2,200 and worrying that that was a
leap of faith. The good news is its worked out well.
The bad news is it shows how expensive Brooklyn is
getting if one-bedrooms at Caton Placeare $2,600
to $2,700. That means for Hudson that our next
projects are going to be that much more challenging to find the right location.Lauren Elkies Schram
22 Caton Place.
new york community bank

The Premiere Bank for New York City Multi-Family Finance
$56,000,000
$180,000,000
$70,000,000
$115,000,000
Blanket Mortgage
Office Refinance
Midtown South
Administrative Agent
Direct Purchase Bond 80/20
Multifamily Development
Williamsburg, Brooklyn
Flatiron
Office Redevelopment
Administrative Agent
Office Repositioning
Financial District
Building relationships
is important.
Understanding whats important. At M&T, we know that growing and maintaining strong relationships with
our customers truly matters. This is how our experienced origination, underwriting and asset management
teams provide financing solutions that meet each borrowers unique needs. And our customers like the way we
do business. Were proud that 75% of our new business comes from repeat borrowers. Find out how you can
become one of them.
Matthew Petrula
Brooke Cianfichi
Karl Seus
212-350-2024
212-350-2472
212-350-2474
Equal Housing Lender. Based on internal customer data. All loans and all terms referenced herein are subject to receipt of a complete application, credit approval and other conditions. 2016 M&T Bank. Member FDIC. mtb.com CS13180 (6/16)
SAUL LOEB/AFP/GETTY IMAGES
The Dodd-Frank bill was signed into

federal law by President Barack
Obama on July 21, 2010.
FEATURE
HAPPY
BIRTHDAY!
Six years after it was passed, many of the

reforms enacted by the Dodd-Frank bill are
in place. So, how does it look? What does it
mean for real estate? And whats in store?
By Cathy Cunningham
he DoddFrank Wall Street Reform and Consumer Protection Act was signed
into federal law by President Barack Obama on July 21, 2010. With that stroke
of the pen came the most significant changes to financial regulation since the
Great Depression, in the form of legislation that impacted almost every corner
of the United States financial services industry.
Many measures mandated by Dodd-Frank have yet to be implemented, but the cumulative effect of the pending regulatory initiatives in concert with Basel III requirements
will soon be felt by the commercial real estate industry.
Two of the most burdensome parts of the Dodd-Frank bill for CRE are risk retention of securitization and the Volcker rulewhich limits banks proprietary trading
activitiesbut more simply put, the bill has significantly increased the cost of doing
business.
Basel III (the third iteration of the Basel Accords, the framework for international
banking put in place by the Basel Committee on Banking Supervision) set regulatory
capital rules that went into effect in January 2015 and intended to strengthen bank
capital requirements by increasing liquidity and decreasing leverage. The regulation
also introduced rules around High-Volatility Commercial Real Estate, or HVCRE (see
story on page 34), which requires all loans that meet its definition to be assigned a risk
weighting of 150 percent for capital purposes.
Between Basel III and Dodd-Frank, the industry has its hands full in trying to keep up.
As the sixth-year anniversary of Dodd-Frank approaches, Commercial Observer
spoke with industry participants to gain their perspectives on Dodd-Franks successes
and failures to date, as well as one half of the legislations namesakes, U.S. Rep. Barney
Frank, D-Mass., who gave us his take on why the U.S. financial system is in much better shape than it was eight years ago. Just dont ask him which event triggered the legislation in the first place.
Is there one event in your life that explains anything? Frank countered. [Reporters]
are always asking me that, but its like asking which of your six children is your favorite
or whats the best meal you ever ate. No human being has any answer. The first issue was
Bear Stearns. And that is when [Ben] Bernanke and [Henry] Paulson started telling us that
we had to find an alternative way to resolve these situations. We were starting to work
on it, and then along came Lehman Brothers and AIG [American International Group].
The one-two punch of Lehman and AIG was the thing that triggered the panic for sure.
The panic, a mild way of putting it, had been brewing in the credit markets for 18
months. The subprime crisis was in full swing by the summer of 2007 with banks and
hedge funds left holding worthless assets and residential originators New Century and
COMMERCIALOBSERVER.COM|JULY 13, 2016|23
CHIP SOMODEVILLA/GETTY IMAGES
FEATURE
WHERE IT ALL BEGAN: Former United States Senator Chris Dodd, who drafted the legislation alongside Barney Frank.
American Home filing for bankruptcy protection. Bear Stearns demise began with the
liquidation of two hedge funds that invested
in collateralized debt obligations and ended
with $30 billion of its assets being guaranteed by the Federal Reserve.By 2008, the U.S.
was in a recession. September of that year
saw the failure of Lehman Brothers, the conservatorship of Fannie Mae and Freddie Mac,
a $85 billion government bailout of AIG and
the closure of Washington Mutual Bank.
Convulsions in the U.S. financial system
sent markets across the globe into a tailspin. The Dodd-Frank legislation, drawn
up by Sen. Christopher Dodd, D-Conn., and
Frank, sought to ensure that a financial crisis of that magnitude never happened again,
and met the economys downward spiral

with what Obama termed a sweeping overhaul of the financial regulatory system.
Their bill aimed to increase transparency,
cease financial markets excessive risk-taking and use of opaque investment vehicles,
protect American homeowners and consumers, and build a safer financial system that
would provide a robust foundation to boost
economic growth.
Today, six years in, the legislation draws
either glowing praise or scathing criticism,
depending on who you ask. CO thought it
only right to begin with Frank himself, who
took us back to its inception.
I think [Dodd-Frank] has been very successful,Frank said. The biggest problem
initially was that the Republicans took over

the House and substantially underfunded
the two agencies that [had been given] a lot
of new power to deal with derivatives. One
of the biggest changes that Paul [Volcker]
made was to regulate financial derivatives,
which had previously been unregulated.
And of course there were a lot of problems
with AIG, for example, and others. They were
regulated by the [Securities and Exchange
Commission] and the U.S. Commodity
Futures Trading Commissionthey should
have been consolidated but they reflect such
deep divisions in American society between
agriculture and finance that there was no
political way to get it through.
The arguments that [the bill] was going to
be a job-killer have been refuted by the fact

that the U.S. economy has performed better
than any other economy in the world. I think
the [Consumer Financial Protection Bureau]
is working well; you have seen a move on the
part of banks away from some of the financial activity that benefited the banks more
than the economy, more towards lending
and wealth management, and there has been
a clear move to de-emphasize trading. That
to me is a healthy thing.
But not every part of the legislation has
played out as intended. There was one
unintended consequence that I am for
changing, he said. I think that some of the
smaller banks that arent covered by some
of the rules, in particular the Volcker rule,
have spent too much money proving that
they are not out-of-compliance with the
rules that were never aimed at them in the
first place. I supported, a couple of years
ago, Federal Reserve Gov. Dan Tarullos proposal, that will exempt banks under $10 billion [in total assets] from the Volcker rule. I
agree with Tarullo that the $50 billion [asset
threshold for stress tests] was too low and
it should go to $150 billion and be indexed.
The requirements of the bill have not yet
been fully implemented, however, and so
calling it a success or a failure may be a little premature, noted Oliver Ireland, a partner at law firm Morrison Foerster. As we sit
here in 2016 approaching the sixth anniversary, we do not know what the banking market will look like in the United States when
we are done. We know it will have a lot of
new rules, but we dont know how liquid it
will be. We dont know how it will function
because there are a lot of changes. But, these
changes arent coordinated or integrated,
and they werent a planned whole. The interaction between them is still to be learned.
Ireland believes that overall the economy
and financial system are in much better shape
than they were in 2008, but there was room
for improvement along the way. Could DoddFrank have done a better job in improving the
financial system and improving the economy?
I think the answer is yes. Would we be better
off if we had done nothing? Probably not. I
think to the extent that too big to fail is perceived as an issue that we needed to address
going forward, a lot of progress has been made
in addressing that issue. I guess I look at this
[legislation] and I see a mixed bag.
Too Big to Fail
Indeed, one key goal of Dodd-Frank was to
prevent another mammoth taxpayer bailout
of a too big to fail institution. The [larger
banks] are no longer seen as immune to
failure, Frank said. We see that with GE
[Capital] divesting [its financial arm] and
the way that they are becoming less complex
in lending. Some people say, Well, if a bank
fails, it will still be bailed out, and Im astonished that people say that. It would be illegal
for any federal official, specifically the federal director of the Treasury, to step in and
pay the debts of a failing institution without
k
]
e
-
g
n
t
s
e
e
e
,
t
e
t
o
-
I
-
e
s
r
o
l
-
abolishing it. It would be a crime. And people say, Well, if a major financial institution
was failing there would be political pressure
to save it. Absolutely the opposite. The country is furious, there would be political pressure to shoot them.
Frank also pointed to the perceived success of the annual stress tests that were
implemented. He described the bills threelevel approach to failure in firstly making
sure that banks are less likely to fail a stress
test, secondly disallowing banks to reach the
level of indebtedness that others reached in
the pastfor example, when AIG failed it had
approximately $150 billion in credit default
swapsand finally, if the first and second
approach fail and unlike in 2008, the options
today arent simply all or nothing in terms
of paying the failing institutions debts.
Risk Retention
One of the most anxiety-inducing aspects
of Dodd-Frank for the CRE industry and issuers of CMBS in particular is the risk retention requirement, colloquially referred to as
keeping skin in the game. The rule requires
that CMBS securitizers retain a 5 percent
economic interest in the credit risk of the
assets they securitize as incentive to ensure
quality assets and underwriting.
Beyond affecting CMBS issuance and
pricing for borrowers, issuers will have to
take down higher costs because of lengthier underwriting times. Additionally, retaining a percentage of deals on their books will
mean less free capital for banks to leverage.
Compliance with the rules for CMBS shops is
required by Dec. 24. Merry Christmas?
People say, You wont get mortgages
made if you have to retain the risk, Frank
said. Well, apparently there were no mortgages made in America before 1975, because
before 1975 there was no securitization.
Everybody retained the risk.
Industry group CRE Finance Council is
one organization closely watching the risk
retention implementation unfold. There is
some concern as to how far policy-makers
have pushed the button on controls versus
liquidity, explained Michael Flood, the deputy executive director at CREFC. Will regulations drive CMBS issuance out of highly
regulated banks and into the nonbanks and
still be a viable product? I think the jury is
still out.
In CREFCs severe impact scenario,
cumulative regulation costs could place as
much as $15.4 billion of CMBS capital at risk
this year, prior to the point of implementation in December.
When it comes to trying to cure the ills
of the past, which is the intention of the bill
and a laudable goal, I think that the next two
years will determine soon how successful it
is, Flood said. Issuers and investors alike
are trying to figure out whether there are
structures that will align interests and be
profitable. With risk retention specifically,
I think next year we will know whether the
regulators have struck a balance between the
alignment of interest and issuer profitability
ANDREW H. WALKER/GETTY IMAGES
LETS BE FRANK: Barney Frank believes that financial markets are in a better shape today as a result of the Dodd-Frank legislation.
or whether adjustments still need to be made

to the regulations.
David Wright, a managing director in
Deloitte & Touche, who also worked on the
Federal Reserve Board during the crisis and
was part of the team behind the stress test
framework, said the success of risk retention has yet to be determined. There was
a lot of debate on whether forcing people to
have skin in the game actually results in better balance, he said. Its certainly going to
make folks more careful than they otherwise would have been, but it also has eliminated some players who have no interest in
being financial intermediaries for the balance sheet.
CRE is pretty resilient, however, Flood
said. If CMBS falls in issuance, then whole
loans, and to some extent agencies, will

likely pick up the slack. I imagine that life
insurance lending, bank direct lending, private capital and mezzanine lenders would
pick up the demand. But maybe the better
question is will CMBS remain a viable part
of the commercial real estate debt lending portfolio? The entire industry believes
in CMBS and sees it as a necessary portion
of CRE lending, especially for small and
medium sized metropolitan areas. I think
we will find out in 2017, when the rubber hits
the road, as that is when a lot of the capital
rules outside of Dodd-Frank will be implemented along with risk retention.
One CMBS bondholder spoke strongly
on the subject. I think the market is
screwed, he said. Retaining the risk is a
very expensive cost for the issuing banks

and could remove all profitability from the
trade. The interesting part here is that everyone is trying to figure out a way around it. If
everyone adhered to the rulesjust say $1
billion of bonds were issued, retaining 5 percent would kill the CMBS industry.
The bondholder said that not only will
the selection process for securitized loans
change, but there is an increased likelihood
of execution risk. This affects the issuer and
the originator, if they differ, he said. An originator may not be able to securitize certain
loans that have too low of a coupon. If a buyer
is looking for more yield, that means a higher
coupon and origination at a higher rate.
Credit rating agencies are also more
accountable than ever for their CMBS rating
FEATURE
actions as a direct result of Dodd-Frank. The

regulations called for increased analysis of
securities and full disclosure and transparency of their due diligence methods. Frank
blames securitization itself for taking the
responsibility off the lender and the absolute wackiness of the rating agencies, who
were just making stuff up so that people
would buy these mortgage packages without having any idea of what was in them, and
being reassured by the rating agencies who
had no idea what they were doing. They were
making money by giving inflated ratings to
people selling the securities.
Volcker Rule
Another of Dodd-Franks focuses was on
ensuring that financial institutions were
restricted from engaging in any risky activities that may threaten the stability of the
financial system. The Volcker Rule limits
banks proprietary trading activitiestrading with its own money, for its own profit,
rather than investors moneyas well as
investments in private equity funds and
hedge funds. Banks have until 2019 to fully
implement some of the requirements of the
Volcker Rule, but there are fears that the limitation could affect the liquidity of commercial real estate markets.
The rule has also invoked something of a
power shift away from the regulated investment banks and trading firms, whose hands
are now tied in making risky bets, to largely
unregulated asset management and private
equity firms.
My personal vote for the biggest waste of
effort coming out of this [legislation] is the
Volcker rule, Ireland said. It takes a huge
effort to implement it, and what are we getting in terms of public policy benefit? Thats
not clear to me. Paul Volcker never liked proprietary trading. It was bad unless you were
doing it in the government securities market, in which case its good? I dont get that.
One of the biggest exceptions to the
Volcker Rule is the exception that allows
market-making trading based on reasonably expected near-term demand (RENTD).
Trading desks must file estimated allocations for the future demand of a deal in order
to prove that the firms positions are tied to
client demand, and they arent engaged in
proprietary trading. Regulators have the
ability to penalize any disparities in the
filings.
Its forcing the market to be very transparentyou cant say a deal is oversubscribed if it isnt true, which is good, but
at the same time, its stifling activity, the
bondholder said.
Unsurprisingly, some of Dodd-Franks
harshest criticism comes from the
Republican Party, although the protests
havent been overly loud, Frank said. There
are two major things that the Democrats
did in Obamas first yearshealthcare and
financial reform. Republicans have repeatedly voted to repeal healthcare, but they
have never voted to repeal financial reform.
Theyve worked at the edges, because
they dont want it to be popular. Even Jeb

[Hensarling, R-Texas]: Three-and-a-half
years into his chairmanship [of the House
Committee on Financial Services] he comes
out with an outline of a bill that nobody
believes can even be considered. So in fact
[the Republican Party has] no alternative. If
Hillary [Clinton] is elected, as I believe she
will be, it will then be clear that this law is
here to stay, and at that point we can begin
to make some of changes to it.
Changes he foresees include increasing the $50 billion Volcker exemption for
smaller banks and appointing the right
regulators.
But for now, Hensarling is pushing ahead
with The Financial CHOICE Act as an
alternative to Dodd-Frank. The bill, backed
by conservatives, aims to curb regulations
implemented by Dodd-Frank to create
opportunity and choice for investors, consumers, and entrepreneurs nationwide,
according to a Financial Services Committee
release.
Congressman Robert Pittenger, R-N.C.,
backs the bill and said that the finan-
the rules too much, the median 10-year

impact on the real economy from all of
the pending regulation headed our way is
estimated to be $209 billion, according to a
CREFCs report, The Impact of Regulation on
Commercial Real Estate Finance. The analysis also suggests that smaller borrowers,
lenders and markets bear a disproportionate percentage of the costs. Looking at the
impact from the bottom up, the addition
of a single data point into the reporting
framework of a small- to medium-sized
firm can exceed $1 million.
Additionally, CREFC estimates that future
regulation will add additional costs of 10
basis points, at a minimum, for high-quality loan and debt product platforms at lightly
regulated institutions to 100 bps for lower-quality loans made in smaller metropolitan areas and debt at more highly regulated
institutions.
Preparing for new regulations has
brought post-crisis stresses for lenders
and borrowers alike, but some of it may
be necessary, Wright said. Its safe to say
that there has never been a more challeng-
Anyone who walks into their boss office and

says We have to implement these 10 things,
but cant answer how that will affect business
will probably be asked to leave.
Michael Flood, CREFC
cial markets should have been allowed to

self-correct back in 2008.
We need to have a market-driven financial system, he said. Markets correct themselvesthats the dynamic. There are bad
actors, but we have laws to come after bad
actors. What [Dodd-Frank has] done is create
so much restriction in the market that there
is no movement in the economy. Thats why
your economic growth and job creation is so
dismally low.
Key among Pittengers critique of the legislation is access to capital. There is lack of
capital and credit in the market, and that
small entrepreneur who has been the lifeblood of our economy, cant get capital. [The
American economy] grew because we had
a great government and it grew because of
opportunity and freedom. Today that capital is not to be found, because the banks are
too restricted, especially small- and medium-sized banks, he said.
The Price of Lending and Borrowing
Its true, the costs of implementing DoddFrank have been substantial.
Assuming the regulators do not change
ing period of regulatory work in terms of

meeting regulators expectations, the billions of dollars being spent to upgrade all
of the systems and just changing the way
firms are governed, said Wright. The regulatory agenda has become the agenda for
the majority of the largest firms. So its
been very challenging from the data side,
the infrastructure side and really in recalibrating and improving the risk management systems. Some say its overkill, and
others say its deferred maintenance from
before the crisis.
Congressman Pittenger used Regions
Bank as an example of the regulatory cost
burden. Today [Regions has] more compliance officers than loan officers, directly
because of Dodd-Frank. So, the compliance costs have gone up significantly for
all banks, and the smaller banks cant support that, and they cant afford it. So they
either merge or go out of business. They
certainly dont start up, he said.
As we enter into a new presidential election cycle, the market should go through a
period of examining the financial regulatory
system, and any tweaks should be done on
a case-by-case basis, Ireland said.

In the meantime, industry participants
are still working their way through the layers of overlapping regulation.
Why we are really scratching our heads
is [because] we dont see the regulators
giving any value to Dodd-Frank controls
as they finalize Basel rules for capital
and liquidity, said Flood. Why do DoddFrank controls have value in terms of the
alignment of interest between issuers and
investors, but they have no value when it
comes to capital and liquidity rules? In
fact, capital and liquidity requirements are
increasing in the face of increased DoddFrank controls.
Flood pointed to the European Union,
whose regulators have publicly recognized
that they have overcorrected the securitization market and are currently revisiting
their own regulations for securitization in
order to be able to fund small and medium-sized enterprisesthe core target for
CMBS lending. E.U. regulators are contemplating implementation of a high-quality
securitization concept that would allow for
a lowering of capital and liquidity requirements if certain structural controls are
implemented.
While I cant say CREFC would endorse
the HQS program itself here in the U.S., we
would certainly endorse the concept that
adding controlssuch as those mandated by
Dodd-Frankshould have some value when
considering capital and liquidity requirements, Flood said.
No regulatory body that I am aware
of is looking at how these rules align to
understand the entirety of the effect on
CMBS issuance and liquidity, Flood said.
Anyone who walks into their boss office
and says, We have to implement these 10
things, but cant answer how that [implementation] will affect business will probably be asked to leave. Yet we struggle to get
this type of analysis from the regulators.
As time passes and the final requirements are implemented, the law has its
share of advocates and critics, but Frank
takes comfort in the increased supervision
of the market going forward, and believes
that the regulation has immunized the U.S.
economy to systemic threats, including
the United Kingdoms recent vote to leave
the E.U. and the subsequent aftershocks.
Unlike in the past, the Financial
Supervisory Oversight Council has the
ability to look into things so nothing is
totally unregulated, he said. Nonbanks,
like peer-to-peer lenders and hedge funds,
are next on their list, Frank said.
Its safe to say that some parts of the regulation wont be missed by Frank, however.
On the day I left office in January 2015, I
modified an old song in my head and sang
it to myself, but the lyric was, Aint going
to study derivatives no more. Thats true of
capital levels as well. I would have sung it
to you in the old days, but with the advent
of YouTube, you have to be much more discreet, he said.
FINANCE
CHIEF EXECUTIVE OFFICER OF PEMBROOK CAPITAL MANAGEMENT
Stuart Boesky
By Danielle Balbi
Commercial Observer: What are you working on at

Pembrook right now?
Boesky: Pembrook really is in many respects picking
up on a lot of what we did at Related. The format is private
equity and we raise money, at this point, just from institutional investors. We hope to migrate into raising money from
high net worth individuals, maybe someday a public fund
or a public entity. Over time weve gotten closer and closer
to what we did in our past lives because the market is sort
of pushing us that way. [For] the first several funds we did a
fair mix of all the property types. We did some apartments,
some office, some retail. We did a few lodging deals. The second fund was similar. The third fund, were starting to focus
more and more on affordable housing.
After the crisis, there was a tremendous demand for any
capital, any product type. At this point, the pressing need is
really affordable housing. I think that supply and demandwise it is an extraordinary opportunity. There are 3 million-plus families looking for affordable housing. Every year,
theres probably somewhere between 200,000 and 300,000
units total being built in the country. Thats a 10-year supply-demand imbalance, assuming that no one else gets added
to the marketplace. The other thing is that out of the 200,000
to 300,000 units, probably 50,000 units are replacing apartments that are coming out of the market, so theyre being
converted or are functionally obsolete. There really is for
affordable housing, an insatiable demand. Its never going
to be satisfied, and in fact, in my 30-year career, its never
been satisfied.
What is it that you like about financing multifamily?
When we do an apartment loan, were pretty certain that,
as long as the business plan is carried out, theres going to
be a take out at the end of the day, even if were in a financial crisis. And weve seen that. Even though Fannie Mae,
Freddie Mac and the Federal Housing Administration had
extraordinary problems because of their single-family homeowner woes, they put their foot to the floor when it came to
financing apartments during the crisis because, number one,
Fannie Mae, Freddie Mac and Federal Housing Authority have
never lost money on apartments. From a credit standpoint,
they knew it was a prudent thing to do, and number two, it
was the easiest way to keep construction employees working, and by the way, people needed it more than ever after
the mortgage crisis. For all those reasons, weve been focusing a lot more of our attention on affordable housing. Going
forward, while apartments may have been 30 or 40 percent
of our business, certainly in Fund 3, its probably going to be
70 percent of our business. To get a little more granular, we
tend to like the primary markets to the extent that we can
find a primary market deal, which is the New York, L.A., San
Francisco, Chicago, Miami.
Have you had any luck doing affordable deals in New
York at all?
It depends on how you define affordable. We did a package
of deals in the Bronx. We did a dealI would call it affordable because of the way it was configuredon the Lower East
Side. The rents on a per square foot basis were probably market but given the size of the units, it made it more affordable. We also did a deal in Brooklyn. Were working on a deal
in Flushing right now that is affordable, and we hope to be
doing more. Clearly, theres no lack of demand in and around
New York City.
It is hard to build rentals though, because of the cost
COURTESY STUART BOSKY
tuart Boesky, who founded Pembrook Capital Management

in 2007, got his start in the New York commercial real estate
world as a lawyer for Related Companies head Stephen Ross.
After two years of working as Ross lawyer, Boesky became a partner
at Related and, in 1997, launched its financial services affiliate
CharterMac. He sat with Commercial Observer in Pembrooks
Midtown East office and spoke about the fund management firms
push into financing affordable housing and a little bit about the
multifamily development in his beloved hometown of Detroit.
of land and the lack of 421a. How does that make you feel
as a lender when you want to finance projects that have
some affordable component?
Its very hard to create high-quality affordable housing in
major urban areas without some kind of subsidy. Whereas
421a is obviously a big deal in New Yorkand its really fostered a lot of market-rate housing with an affordable componenttrue affordable housing requires more than a 421a
subsidy. Looking back at the Chicago deal we did, it had
low-income housing tax credits, it had historic tax credits,
and it had local grants. When you look at new construction
or call it substantial rehabs in urban areas, youre going to
need those kinds of subsidies to produce true affordable
housing421a alone is not going to fit the bill.
One of the interesting things that weve seen as of late
is when we financed a land acquisition in Brooklyn, near
the Barclays Center. It was zoned primarily for commercial community facility use, so it could have been student
housing with some office or retail. The developer felt that
if they could get it upzoned into residential that it would be
much more valuable, and we also did. Theyve been going
through the uniform land use review procedure, and their
business plan is to get some of the developable space zoned
into residential from what it currently is. They went to the
city and asked for that kind of change. The city came back
to them and said, Hey, if we give you more residential, will
you do some affordable? The interesting thing is that the
city has decided theyre willing to give developers the benefit of greater density in exchange for setting aside units
for affordable tenants, which is a great thing for developers, and its also a great thing for affordable tenants. Thats
a situation where, even though the 421a [tax incentive] has
gone away, the city is endeavoring to find ways to encourage
POWERING
YOUR
PROSPERITY
Eric Draeger
Berkshire Group
Avid Golfer and Northwestern Fan
Walker & Dunlop borrower since 2006
Commercial Real Estate Finance

Commercial Real Estate Finance
www.walkerdunlop.com
www.walkerdunlop.com
California loans will be made pursuant to a Finance Lenders Law License from the Department of Business Oversight.
California loans will be made pursuant to a Finance Lenders Law License from the Department of Business Oversight.
FINANCE
more affordable housing.

Are you changing your loan offerings since youre shifting more towards financing multifamily?
We certainly are talking to maybe a different and broader
investor base, and perhaps some of the investors that were
going to be attracting in the future have more of a socially
responsible viewpoint. But the reality is that the risk-reward
ratio is as good or better as everything else weve done. When
you look at the benefit stream that were able to produce for
investors, its every bit as good. Were not compromising
return, and were not taking more credit risk, and were producing the same or better returns than we have in the past.
So you traditionally look for mid-teen returns?
We target teens returns, yes.
Detroit today, its very, very spread out and has a low density of residential properties, which is a problem given the
way people live and work today.
Right now, the apartments dont exist, so what youre
starting to see is retrofitting of beautiful old buildings.
Detroit had its fair share of remarkable architecture. Some
of those are being retrofitted into residential buildings, and
there are some attempts to do some ground-up construction, but again, thats with a tremendous amount of subsi-
Weve been closing pretty

consistently, call it, somewhere
Having grown up in Detroit, have you gone back and

done any business there?
Everyone loves Detroit! I have a lot of interest in Detroit,
both from personal and professional standpoints. About a
year ago or so I spent a fair amount of time exploring opportunities in Detroit. I think there are some good opportunities
in Detroit, and while Im not sure that there are necessarily
going to be deals that our fund gets involved in, from a personal standpoint, Im working on a transaction. To me, its
a reasonable risk-reward returnbut also for me, its a personal give back to Detroit as a place that I have fond memories
of. Ive been working with the city and the community to do
something. Its not clear whether its going to come to fruition
yet, but I hope it does. Its basically converting an existing
building to rental apartments with an affordable component.
Theres a lot of apartment-conversion going on there.
Ill give you a few nuggets about Detroit: It was a very
wealthy city in relative terms in the early 1900s up until the
late 1960s and 1970s, when it started a reasonable decline
for a whole host of reasons but certainly the auto industrys
changes, which came about when Japan figured out how
to make better cars. Because of the relatively high income
of middle class there, almost everyone owned a house, so
Detroit didnt have a lot of multifamily. It was quite unusual
for a Detroiter to live in an apartment. When you look at
between $200 million and

$300 million a year in deals,
and we certainly have the
appetite to do more.
Stuart Boesky
dies. The rents are finally getting to a point where it makes
sense to provide quality multifamily. People in Detroit say
the magic number is about $2 per month per square foot,
so the market is hitting that now. Those are all good things.
The other issue with Detroit is that, while its a very edgy
place right nowsome would say its cool because of that
edginessits still very industrial. Theres a lot of vacant
land, which has sort of a cool urban landscape for some
people, but thats attractive to younger people who dont
have to worry about raising children in that environment.
The next question becomes: Can Detroit rebuild an infrastructure that will make it a community for families? And
certainly right now its not.

Whats in the pipeline for the rest of the year?
On an annual basis we put on to our pipeline somewhere
around $3 billion worth of deals. Basically, those represent
deals that have gone through the first cut and sort of pass
the smell test. We filter out two or three times that. Were
seeing a tremendous amount of deal flow and that basically
is a testament to the fact that the banks have really left a big
hole in the marketplace for funding commercial real estate. If
a firm like Pembrook can see, call it, $6 billion worth of deals
a year, then that just tells you how much product out there
thats looking to be financed.
The pipeline is enormously robustfar more business
than we could ever close. Out of thecall it $3 billion or so a
yearthat were logging in, we maintain roughly $250 million to $400 million on our weekly pipeline. Those are deals
that are actively being worked. The net result of that is that
weve been closing pretty consistently, call it, somewhere
between $200 million to $300 million a year in deals, and
we certainly have the appetite to do more. Wed like to see
that volume double over the next 24 months.
Are there any types of deals youre doing more of now
because of regulatory issues banks are facing?
Where the advantage is, there are a couple of places.
Clearly on acquisition loans. Were a short-term lender. The
developers who borrow from us are expecting to borrow from
us for about three years. During the three years the expectation is to improve the property. Most deals are opportunistic.
Over those three years, hes not all that concerned about pricing, which is a benefit to us. What hes very concerned about
is certainty of execution. That goes back to why our best customer is someone who is buying something, needs to close
by a specific date and has hard money up at risk. The reason
he comes to us is because were a fairly flat organization, hes
speaking to the decision makers, and we have demonstrated
to the world that we have a track record for doing what we say.
You wont see Pembrook even giving somebody an application until were highly confident that if what the developer
is telling us about the transaction is true that were going to
close it. It allows us to price our money favorably for investors, and its a great source of deal flow for us.
24-7
VISIT COMMERCIALOBSERVER.COM
30
Delivering on
the Assignment
CAPITAL PARTNERS LLC.
H
K
S
Since the formation of HKS Capital Partners LLC on April 11th, 2011,
we have closed North of $15 Billion in transactions, and we would like to
thank all of our clients and lending relationships.
Let us put our financing expertise to work for you.
Debt Equity Mezzanine

Construction Bridge Private Joint Ventures
127 West 24th Street, 2nd Floor, NY 10011
(212) 254 1600 www.hks.com
FINANCE
Grab a
Slice!
ILLUSTRATIONS BY KAITLYN FLANNAGAN
CMBS shops are playing with alternative capital stack

structures to prep for the new risk retention regs
BY DANIELLE BALBI
hen the credit risk retention

rule of the Dodd-Frank Wall
Street Reform and Consumer
Protection Act was finalized at the end of 2014, commercial mortgage backed securities players knew they
had a little while to prepare, and regulators
were still ironing out some kinks. Now, the
Dec. 24 implementation date is nearly here,
and CMBS shops are coming up with different ways to retain the required 5 percent of
credit risk in their deals.
The idea behind the rule is for market
players to eat their own cooking, or rather
take responsibility for a pool of loans by
ensuring that the underlying collateral is
presented accurately.
At first, the industry assumed that either
the sponsor (the party that originates 20 percent or more of the conduit) or B-piece buyers would hold on to the bottom 5 percent as
those lower tranches or B pieces, are the
riskiest part of a deal to buy into.
CMBS players have also presented two
alternatives: taking a 5 percent vertical

slice of a deal or taking a 5 percent L-shaped
portion. To date, no CMBS deals have been
closed using the latter model, but it has
been reported that Wells Fargo and Bank of
America Merrill Lynch are testing out the
vertical structure this summer.
Given that the rule has yet to be implemented, issuers and regulators alike are
unsure of what will work best, but one thing
is certain: The cost of closing is going up. In
November of last year, the U.S. Securities
and Exchange Commissions revisions
to Regulation AB came into play, which
requires the chief executive officer of the
depositor to sign a certification for each
CMBS offeringthe regulation makes the
signer personally liable for any false information. Together, these regulations are estimated to add anywhere from 10 to 50 basis
points of cost to an average loan or roughly
0.5 percent to 3.5 percent of the mortgages
coupon, according to a report from the
Commercial Real Estate Finance Council.
Horizontal Slice
This was the original game plan: Issuers or B-piece buyers can hold an
eligible horizontal residual interest in a single class or multiple classes
of the conduit. One of the assumptions was that those parties could
hold the most subordinated debt in the securitization. Historically, those
B-piece buyers invest in that unrated, subordinated debt, sell part of it
and earn a mid-teens return. But because of the retention requirement,
those B-piece buyers would be unable to sell off any of that investment
and make the same profit. In fact, concerns arose that many B-piece
players would have to drop out of the market because of the increased
capital requirements. In direct response, the industry granted B-piece
buyers veto power, so essentially, they have the right to kick loans out
of a conduit if they are uncomfortable with the underlying collateral.
ILLUSTRATIONS BY KAITLYN FLANNAGAN
L-Shaped Slice
Vertical Slice
And this is the opposite: Sponsors could hold an eligible vertical interest on their
books, either constituting a single vertical security or an interest in each class of
asset-backed securities interests constituting the same proportion of each class of
ABS interests, according to a report from Morrison Foerster.
This one is exactly what it sounds like: A sponsor can take on both a vertical and
horizontal interest in a deal. According to a report from Orrick, Herrington &
Sutcliffe, the vertical component must be at least 2.5 percent of each class in the
deal, while the horizontal slice must equal at least 2.564 percent of the value of the
securities (other than what the vertical holds on to). The horizontal component
is meant to avoid double counting the 2.5 percent subordinate interest that the
sponsor requires in the vertical component.
FINANCE
Maze Runners
The new HVCRE rule
is pushing construction
lending away from banks
to alternative lenders
but at a cost
BY DANIELLE BALBI
FANATIC STUDIO
ince the 2008 recession, the commercial real estate debt origination market
has made a tremendous rebound, but
regulations that have incrementally
set in (and will continue to do so) are changing not only how deals get done but also who
is doing them in the first place.
Banks in particular are feeling the regulatory brunt with the Dodd-Frank Wall Street
Reform and Consumer Protection Act (see
story on page 22) and Basel III requiring banks
to hold more capital on their books as a means
of managing risk. Alternative lenders, including private equity funds and mortgage real
estate investment trusts, are poised to pick up
some of the slack, especially when it comes to
acquisition, development and construction
loans (ADC) classified under High Volatility
Commercial Real Estate. The rulewhich was
implemented on Jan. 1, 2015 as a part of Basel
IIIforces banks to retain 150 percent of risk
weight on a loan that falls under HVCRE, compared to the 100 percent required previously.
In short, greater capital requirements on part
of banks limit their ability to lend as much and
to provide higher-leverage debt.
Across the board, alternative lenders,
who are not subject to the rule, have seen
increasing activity, in 2015 originating 68
percent more than the year prior, according to Mortgage Bankers Associations
Commercial/Multifamily Annual Volume
Origination Summation for 2015. That number is nearly double the 35 percent increase
that commercial banks and savings institutions saw over the same time period.
And when it comes to construction, activity has increased every year since 2009 and
last year totaled $1.113 trillion, according to
the U.S. Census Bureau.
[Non-banks] dont have the same kind of
constraints as the banks, Christina Zausner,
the vice president of industry and policy
analysis at Commercial Real Estate Finance
RECENT LOAN CLOSINGS
CLOSED
CLOSED
$77.5 MILLION
$38.0 MILLION
CLOSED
CLOSED
$17.1 MILLION
$12.0 MILLION
SENIOR & MEZZANINE

ACQUISITION
Residential
Northern Manhattan
New York, New York
REFINANCING
Retail
163-05 Archer Avenue
Queens, New York
To learn more, please contact:

Christina Mancini
212 713 6767
christina.mancini@cushwake.com
cushmanwakefield.com
RECAPITALIZATION
Development
33 Lincoln Road
Brooklyn, New York
REFINANCING
Multifamily
111-113 East 12th Street
New York, New York
FINANCE
Christina Zausner.
Council, told Commercial Observer. Its

not just that the banks are becoming costlier than they have been in the past, but its
that they have a lot of constraints in how they
structure a construction loan. And borrowers
dont necessarily like that, with good reason.
Industry players that CO spoke to over the
last month pointed to the facet of the rule
which does not allow for a borrower to use
the appreciated value of land towards the
required 15 percent in cash equity needed
before the bank can advance its funds.
A lot of the provisions are fairly nonsensical and counter decades and decades of
practice, Zausner said.
Stuart Boesky, the chief executive officer of private fund Pembrook Capital
Management, recounted a story of a client
who had purchased a plot in Williamsburg,
Brooklyn, for $2 million about 25 years ago.
Recently, the client went to a local bank
seeking a $25 million loan. Given that the
value of the property is now nearly $25 million, the total value of the development
project would be $50 million, which would
equate roughly a 50 percent loan-to-value
ratio given (and banks tend to lend around
50 percent LTV when it comes to construction financing). The bank informed Boeskys
client that he would need to come up with
It not only constrains the amount of dollars

coming in, but it also makes every delinquency
more painful [because] each deal represents a
greater percentage of the portfolio.
Christina Zausner, CREFC
COMMERCIAL
REAL ESTATE
AND MULTI-FAMILY
LOANS, WITH A
PERSONAL TOUCH.
718.486.4335
commloan@dime.com
more equity because they were unable to use

the new value of the land towards the capital requirement.
Although he had all that value, it wasnt
liquid, Boesky said. Thats the guy that
shows up on our doorstep quite often.
While his firm does not typically take on
whole construction loans because there are
still lower-cost capital providers than private
equity firms, Pembrook may provide mezzanine debt or preferred equity to complement a senior mortgage. For instance, a bank
could originate a mortgage accounting for
50 percent of the cost of construction, and
Pembrook could fill the gap between 50 and
70 percent of the total development cost, giving the borrower more cash to work with.
Redistributing the capital stack in a deal
is not always ideal from a debtors perspective though, Zausner said. Borrowers naturally dont want a mezz loan, she said. Now,
because of the fact that there is less and less
bank capital that can be put into construction lending, borrowers are being forced into
a more subordinated structure where their
financing is lower quality and higher cost.
Another issue for borrowers stems from
what funds they pay the bank back with. For
instance, if a developer needed debt to retrofit a shopping center and would still generate revenue from rents, it would not be able
$16,400,000
Brooklyn
47 Units
Residential
$3,500,000
Manhattan
3 Commercial Units
$1,500,000
Queens
10 Units
1 Commercial Unit
Mixed-use
e
-
t
t
n
e
e
k
r
d
l
,
o
r
m
r
e
to use that cash-flow to pay back the bank,

explained Matt Galligan, the president of real
estate finance at New York-based bank CIT.
Theres an absurd component to
[HVCRE], he said. Its not well thought out.
Beyond the cost of capital for a borrower,
the HVCRE rule costs banks as well. Under
the guidelines, banks have an increased
regulatory capital requirement. Prior to the
regulation, banks held on to 8 percent in regulatory capital, meaning that for a $100 million loan, a bank would hold $8 million on
its books. That requirement has shot up to 12
percent, which could potentially cut down
the yield of a banks portfolio by one-third,
Galligan said. Its the increase in the regulatory capital which is far more penal, he said.
Zausner agreed that the rule is compressing
banks profitability and inhibits their ability to
utilize their balance sheets in a dynamic way.
Banks will be unable to originate as much
debt and, in turn, will de-leverage their portfolios. That has a lot of problems for lenders, she said. It not only constrains the
amount of dollars coming in, but it also
makes every delinquency more painful
[because] each deal represents a greater percentage of the portfolio.
And delinquencies drive up costs for the
banks from a risk management perspective,
which is especially troublesome given how
mature the real estate cycle is, she said.

In that respect, Galligan noted that CIT
has backed off the construction market
a bit but that HVCRE has certainly made it
more difficult to do any construction deals.
The regulatory wave has clearly not gone
unfelt and has certainly not gone ignored by
banks competitors. New, private lending platforms popped up in the last two years, including ACORE Capitalheaded by Starwood
Property Trust alums Warren de Haan, Boyd
Fellows, Stew Ward and Chris Tokarksiand
Mack Real Estate Credit Strategies, the debt
arm of Mack Real Estate Group, which is led
by Richard Mack and former Blackstone Group
executive Peter Sotoloff.
We saw the regulatory environment two
to three years ago. We had had a pretty successful track record in the debt business in
our prior lives and thought we wanted to

build a better business to take advantage of
what the regulatory environment was going
to do to banks capacity to make transitional
loans, Mack told CO. I think we have been
pleasantly surprised by the accuracy of our
prediction. The regulatory environment
is having its intended effect, reducing the
capacity of banks to take risk and that retreat
of bank balance sheets is really creating that
opportunity.
Executives at ACORE shared the sentiment, noting that increased banking regulations opens the door for them. Additionally,
increased regulation and having three compliance officers to one banker makes execution much slower, said de Haan, a managing
partner at the firm.
He referred to a borrower of his that was
Matt Galligan.
Theres an absurd component to [HVCRE].

Its not well thought out.
Matt Galligan, CIT
LENDING FOR THE WAY NEW YORKERS LIVE.

Were New Yorkers toowe know you need everything done yesterday. Our commercial real estate and
multi-family lending experts have the deep market knowledge, fast local decision-making, and competitive
rates you want. And theyll work one-on-one with you to design custom-tailored loans for properties in
the New York metropolitan area. Do your deal, then get on with your life.
Kirk Lloyd, Commercial Lending
Alla Koumoullos, Business Banking
2016 The Dime Savings Bank of Williamsburgh.
| JULY 13, 2016 | 37
FINANCE
negotiating with both ACORE and a bank

and had wanted to close a deal with the bank
because of the lower cost of capital. However,
the borrower needed the funds and could
no longer wait for the banks bid. Instead,
ACORE provided an $80 million mortgage at
a 70 percent LTV, 15 percent higher than what
the bank was offering, and with de Haans
firm, the deal had closed 30 days after the
term sheet was issued.
Despite the advantages of using a nonbank lender and the readiness of their capital, banks will still remain one of the lower
cost providers, Zausner said. Its going to
be really hard for non-banks to compete
with banks on pricing, even if the pricing
for bank product is getting more rigid, she
said. What its really doing more than anything is leveling the playing field.
And its a two-way street: Non-banks,
whether private equity firms or REITs, rely
on banking products, Zausner said.
Indeed, that is true, but one REIT executive explained to CO that for banks, providing a warehouse line to an alternative
lending firm is essentially a regulatory
loophole. Basically, the bank will provide
that firm with a warehouse line to finance
transactions, so the bank is indirectly lending on an asset. This is referred to as a loanon-loan, and while it provides those private
firms with more capital to do with what they
wish, it may be more beneficial for the bank
than for the borrower.
Warehouse lines are constrained by the
amount a bank is willing to have in a warehouse line with a borrower, but if [the borrower] wants to double the size of their
business, there is no guarantee they will
double the size [of the warehouse line, the
individual said. [Banks] like this warehouse
line business. For the right partners, they
will continue to increase the line because
it makes economic sense due to regulatory
capital constraints which are smaller on
warehouse lines than direct lending.
The source noted that the loan-on-loan
structure could be harmful to the alternative lender, because if the bank provides a
$75 million warehouse line for the borrowers $75 million loan to a client, the non-bank
is responsible for that whole loan no matter
what. If the bank shuts down or decides to stop
advancing funds from that line of credit, the
alternative lender will still be liable to their
client for that money. The preference is always
to originate a $75 million A note, meaning that
the non-bank will keep that debt on its balance sheet, the executive said. The other draw
for originating that senior piece is that it can
be sold off for a profit, he added.
Roger Arnold, a bank analyst and the chief
economist at money management firm ALM
Advisors, said that anecdotally, banks seem
to be doing more in the warehouse lending
space. Internally, they have limitations as to
how much debt can be supplied to an individual borrower, he said.
It is difficult to draw a hard conclusion,
he explained, because banks report their
originations in three categories: commercial real estate mortgages, commercial and
Richard Mack.
The private lending market is going to

continue to take a larger and larger amount of
market share and is going to be able to reduce
their own cost of capital.
Richard Mack, Mack Real Estate Credit Strategies
Stuart Boesky.
Roger Arnold.
Warren de Haan.
industrial mortgages and other. These

lines of credit, since not directly collateralized by CRE, would fall under commercial
and industrial. But historically, C&I loans
are used as working capital or to fund capital expenditures (for the growth of a company, infrastructure, etc.).
Commercial and industrial loans are supposed to be just that, Arnold said. They are
not supposed to be for carry trades, re: lending to alternative lenders. Its not what those
loans were ever intended to be used for.
For economic reasons and because of bank
regulation reasons, theres an awful lot of stuff
from all parts of the bank, including commercial real estate, that are finding their ways into
these categories, he continued. Because of
this growth, at some point the regulators are
going to have to take action on it. The reason
they have it is because if it aint broke, dont fix
it. We are in a post-Lehman [Brothers] era crisis still, and the banks are trying to figure out
how to make a living. And as a result theres
been political pressure placed on the regulators to just back off.
Even beyond further regulation banks,
regulators are eventually expected to tackle
the shadow banks, either by applying a systemically important financial institute status
(SIFI), similar to some life companies, or by
creating a whole new set of regulations specifically targeting the non-banks. But regardless, as clients of banks, non-banks will be
accidental receivers of regulations: Because
they borrow from banks, they will feel the
increased cost of capital, Zausner said.
Regardless of when guidelines come in
for the non-banks, many industry experts
still maintain that non-banks will be able
to take advantage of construction and transitional lending.
The private lending market is going to
continue to take a larger and larger amount
of market share and is going to be able to
reduce their own cost of capital, Mack said.
While we are more expensive than the
banks, we are going to become more and
more competitive over time. I think the private market is responding with capital to
the regulatory environment, and I actually
believe that many private lenders are better
situated than the banks to make transitional
loans because they have a lot more infrastructure to underwrite and asset manage
those loans, he said, pointing to the firms
in-house development and property management teams. Having those components
of the business is crucial, especially in construction lending, just in case a development
does not go as planned.
Mack added that traditional lenders like
banks and insurance companies will still
play in the permanent lending space and
will likely be the takeout for any transitional
loans that MCRES originates.
I think commercial real estate is still a
great investment for banks, the REIT executive said. Banks are fairly healthy despite
that theyre all selling off. Were excited
about the volatility and what thatll lead
tothis is a really long game, and nothing
is going to change overnight.
$27,425,000
Acquisition Financing
Inwood, NY
Three five-story multifamily apartment buildings
containing a total of 197 units
Adam Brostovski, Principal, arranged the financing for these transactions
GCP Capital Group , LLC

60 Cutter Mill Road, 6th Floor Great Neck, NY 11021 Phone: 516-487-5900 Fax: 516-487-5944 www.gcpcapitalgroup.com
FINANCE
ChartFinance
Retail Loans Top Loss Severity Ranks for June
Commercial mortgage-backed securities liquidation volume for the month of
June came in below the 12-month average of $902.9 million, said Sean Barrie,
an analyst with Trepp. Disposition activity reached $809.3 million in June,
compared with $854.5 million in May. The average loan size also dropped,
to $10.1 million across 80 loans, below the average loan size of $13.4 million
reported for the past 12 months. June loss severity spiked to 53.9 percent,
which is a 20-basis-point increase from the previous two months. Office and
retail loans once again made up over 80 percent of total disposition volume
for the month. Retail loans continued to rank on top for highest loss severity
at close to 60 percent while loans backed by office properties comprised the
bulk of overall liquidation activity.
Source:
Month
Loan Count
Loan Balance
Realized Losses
Loss Severity
June 2015
75
$950 million
$384 million
40.39
July 2015
72
$680 million
$231 million
33.94
August 2015
73
$838 million
$382 million
45.56
September 2015
70
$1,018 million
$443 million
43.48
October 2015
54
$869 million
$354 million
40.73
November 2015
72
$942 million
$415 million
44.06
December 2015
60
$888 million
$541 million
60.90
January 2016
125
$2,431 million
$1.5 billion
61.61
February 2016
43
$567 million
$191 million
33.71
March 2016
36
$436 million
$304 million
69.86
April 2016
52
$501 million
$174 million
34.67
May 2016
72
$854 million
$284 million
33.27
June 2016
80
$809 million
$436 million
53.90
Property Type Breakdown for June 2016 Loss Severity
40
Property Type
Loan Count
Loan Balance
Realized Losses
Loss Severity
Retail
30
$295 million
$175 million
59.28
Office
34
$377 million
$200 million
53.24
Multifamily
$15 million
$1 million
9.39
Lodging
$12 million
$6 million
54.72
Industrial
$35 million
$9 million
25.61
Mixed-Use
$73 million
$43 million
59.17
Total
79
$807 million
$434 million
43.56
Specialization Expertise Results
Providing Comprehensive Financial Solutions

Below is a Representative Selection of Our Recent Financing Transactions
REFINANCED
REFINANCED
Retail
$20,000,000
Loan Originator: Daniel Lisser
Mixed-Use
New York, NY
$3,500,000
Loan Originators: Andrew Dansker,
Gunnar Wilmot
Multifamily
Northvale, NJ
$10,750,000
Loan Originator: Steven Rock
Industrial Warehouse
$6,300,000
Loan Originators: Christopher Marks,
Kyle Young, Stephen Filippo
REFINANCED
Multifamily
Brooklyn, NY
$2,150,000
Loan Originator: Andrew Dansker
Multifamily
Brooklyn, NY
$5,650,000
Loan Originator: Gerald Kray
Net-Leased School
New York, NY
$2,412,000
Loan Originator: Andrew Dansker
Hotel
Paramus, NJ
$7,650,000
Loan Originator: Gerald Kray
For debt and structured finance, please contact:

Richard Katzenstein
Rick Lechtman
Senior Vice President/National Director

Manhattan
(212) 430-5100 | rkatzenstein@marcusmillichap.com
Vice President/Regional Director

Manhattan
(212) 430-5100 | rlechtman@marcusmillichap.com
J.D. Parker
John Horowitz
Brian Hosey
Senior Vice President/District Manager

Manhattan
(212) 430-5100 | jparker@marcusmillichap.com
Vice President/Regional Manager

Brooklyn
(718) 475-4300 | jhorowitz@marcusmillichap.com
Regional Manager
New Jersey
(201) 582-1000 | bhosey@marcusmillichap.com
Offices Throughout the U.S. and Canada
www.MarcusMillichap.com
FINANCE
The Takeaway
Data courtesy of
The total amount of commercial mortgages filed

with the New York City Department of Finance saw a
roughly 24 percent increase in March to 1,401 from
1,068 the month prior. The number of originations
on multifamily and co-op properties increased
significantly, to 696 from 503. Similarly, the
number of financings on vacant land, retail, office,
industrial and healthcare properties jumped. On
the other hand, mortgages on hotels fell to 6 from
8, while total of commerical condominium loans
soared to 100 from 16.
Refinances vs. Purchases

Both refinances and purchases increased in March.
1054
Top Lenders
Again, J.P. Morgan Chase and Signature Bank were the most active lenders in the boroughs in March. Signature Bank took the lead,
with a total of 93 loans, two more than Chase. New York Community Bank came in third place again, with 73 financings.
BANK
FEB
BANK
MAR
J.P. Morgan Chase
102
Signature Bank
93
Signature Bank
83
J.P. Morgan Chase
91
New York Community Bank
60
New York Community Bank
73
Flushing Bank
30
Wells Fargo
68
Bank United
28
Dime Savings Bank of Williamsburgh
42
Dime Savings Bank of Williamsburgh
24
Investors Bank
41
Investors Bank
22
Capital One
39
Astoria Bank
21
Flushing Bank
36
Capital One
21
TD Bank
26
Wells Fargo
20
Astoria Bank
26
Ridgewood Savings Bank
15
Santander Bank
25
824
Most Active ZIP CodesFinancing

K
244
ZIP CODE
FEB MAR
FEB MAR
REFINANCES
PURCHASES
Total Sales by Borough

Sales went up in almost every borough with the exception
of Queens (Staten Island is not tracked). The number nearly
tripled in the Bronx and almost doubled in Brooklyn.
668
432
308
154
50
85
178
147
JAN
11237
38
11215
ZIP CODE
FEB
10004
51
29
11206
38
11385
26
10458
36
11206
24
11211
35
11226
20
11233
32
11238
20
11221
31
10016
18
11101
27
10468
18
11237
26
11222
17
11201
24
11372
17
10128
22
11221
17
10468
22
11207
22
121
57
FEB MAR
FEB MAR
FEB MAR
FEB MAR
FEB MAR
ALL
MHTN
BRONX
BKLYN
QUEENS
The most active ZIP codes for financing were nearly all in Brooklyn, with
two in Manhattan, two in the Bronx and one in Queens.
347
14T
HS
T
H
D
Astoria Bank provided a $35.6 million mortgage

on a portfolio of multifamily properties across the
boroughs, including 2558 Grand Concourse in the
Belmont neighborhood of the Bronx.
Make the Right Commercial Mortgage Choice.

Suffolk County, NY
Passaic County, NJ
86,000 Sq. Ft.

Retail Shopping Center
Commercial Mixed-Use
10 Year Fixed Rate Loan
$18,250,000
$5,400,000
Queens, NY
140,000 Sq. Ft.

Retail Shopping Center
$44,000,000
Brooklyn, NY
New York, NY
28 Buildings
1000+ Residential Units
35-Unit Multifamily
20 Year Fixed Rate Loan
$48,500,000
$8,000,000
At Flushing Bank we are comprised of experienced lenders with local market knowledge. Our Real Estate Lending team is ready
to help you with your commercial real estate mortgage solution. As a leader in community lending, we provide competitive rates
including long term fixed rate loan programs. Call us today to discuss a commercial mortgage solution that is right for you.
Edward Alarcon
Al Bozzolo
Jeff Levintov
Tim Lynn
718.512.2783
718.512.2784
718.512.8069
718.512.8077
Denis Mangan
Ivan Nunez
John OConnor
Terrence Winter
718.512.2790
718.512.2908
718.512.2826
718.512.2819
220 RXR Plaza, Uniondale, NY 11556 www.FlushingBank.com
Flushing Bank is a registered trademark
Commercial Observer JM-1 Rev.4.indd 1
2/10/16 5:11 PM
COLUMNS
RICK ROARING
A RAD Idea
programs were making it impossible to fulfill
The history of public housing in America
their mandate. They argued against federal
dates back to President Franklin D. Roosevelt
regulation and pressed for income-targeting
and the New Deal. Even then, the primary
flexibility and funding fungibility in exchange
driver behind the construction of public housfor tougher compliance standards.
ing units was job creation. Since that time,
In response, I wrote the Quality Housing
developers and investors had very little interand Work Responsibility Act which,
est in the success or failure of these
among other reforms, collapsed
properties, as long as such properdozens of programs into a more
ties were located far enough away
efficient and flexible two: a Capital
as to have little or no impact on
Fund and an Operating Fund. The
their own market-rate units.
bill was signed into law by President
Until now, that is. Many develClinton in 1999, and shortly thereafopers now believe that a proter, Congress authorized $3 billion
gram rolled out in 2013, the
for the Capital Fund.
Rental Assistance Demonstration
Unfortunately, by 2013, fundProgram, is the most dynamic
Rick Lazio
ing for the program had declined
opportunity available in the affordto $1.875 billion. Most observable-housing arena.
ers concluded that such a shortfall was
The RAD program was a response to the
unsustainable.
growing gap between the amount of federal
Accepting this reality, U.S. Secretary of
capital subsidy grants available and the proHousing and Urban Development and Shaun
jected costs of maintaining an aging stock of
Donavan guided the creation of RAD, which
public housing. Many of these building are
allows for the voluntary conversion of pubmore than 50 years old and are falling victim
lic housing units to income-restricted units
literallyto long-deferred maintenance.
with project-based Section 8 subsidies. The
The challenges associated with maintainamount of the subsidy is equivalent to the
ing quality public housing are not new. When
previously existing subsidies for the particuI chaired the U.S. House of Representatives
lar building in which the units that are being
Subcommittee for Housing and Community
converted.
Opportunity in the 1990s, public housing
The conversion also generally results in a
authorities (PHAs) around the country were
15- or 20-year Section 8 contract that includes
warning that the dozens of boutique grant
an Operating Cost Adjustment Factor rent

increase each year. The property is transferred
into a new entity, usually a limited partnership, and a private not-for-profit or a for-profit
entity becomes a partner. With the collateral
of a long-term subsidy contract, the new entity
is able to take on debt and attract new equity,
usually in the form of either 9 percent or 4 percent equity from the Low Income Tax Credit
program.
Clearly, the RAD program is of benefit to
private investors. While converting public
housing to Section 8 subsidy, RAD ensures
long-term affordability and other protections
to existing residents.
Today, there are approximately 1.1 million
households living in public housing units in
the U.S. HUD provides federal aid to the 3,300
PHAs that manage these units. The largest of
these, the New York City Housing Authority,
officially houses 620,000 people and has historically been skeptical of efforts to attract private capital.
Now, however, NYCHA chair Shola Olatoye
is changing the way the authority is funding, operating and rehabilitating its housing
stock. This effort includes a RAD application
for 24 buildings comprising 1,400 units in Far
Rockaway, Queens. The housing authority
estimates that this community alone needs
about $174 million in major improvements
and upgrades over the next two decades.
Facing $17 billion in total unmet capital repair

needs, RAD has become a key component of
NextGeneration NYCHA, NYCHAs 10-year
strategic plan to modernize public housing
in the city.
The response by PHAs across the nation
has likewise been encouraging. The original
law authorizing RAD envisioned it as a pilot,
and conversions were limited to 60,000 units.
This cap was quickly eclipsed and last year
advocates were successful in raising the cap
to 185,000 units.
The current Senate Appropriations bill
increases the authorization to 250,000 units
and further authorizes RAD conversions for
Section 202 properties, which provide housing for the elderly.
There are several important issues that
must be taken into consideration before a
conversion to the RAD program. (Flexibility
in ownership, property-management questions and more.) But ultimately, PHAs are
driving an exciting transformation toward a
modern asset management and development
model that benefits investors, owners, managers and residents alike. We are still learning
during the early stages of this evolution, but
the path is promising.
Rick Lazio is a former U.S. congressman, partner of Jones Walker LLP. He can be reached at
rlazio@joneswalker.com.
STEINS LAW
The Next Next Big Thing In Real Estate Finance Really

Real estate funds invest in all kinds of
things. Some of those investments do well.
Some dont. Lately, the returns from funds
havent looked so great. As funds have grown
in size and number and the real estate market
has grown ever more competitive, funds have
had trouble finding their holy grail of off market deals. As a result, it has become increasingly difficult for funds to meet their investors
expectations for high returns. Also, as we all
know and recall with pain, if anyone wants to
invest directly in or finance commercial real
estate, the potential dead-deal costs are substantial and the process of finding, vetting and
negotiating a transaction is often arduous.
In the meantime, in other parts of the economy, transactions of all kinds have become
easier to find, structure, understand and
close. AirBnB, Uber, Amazon and eBay are just
a few disruptive examples at the low end. At
the high end, if anyone wants to buy shares
of Apple or GE, they can do it from anywhere
through any device and at minimal cost.
Real estate investment too has certainly
started to move online in the form of crowdfunding websites, primarily for long-dated
equity.
The landscape now offers a range of
for borrowers or lenders, these two clients

crowdfunding options, with varying levels of
are creating more efficient capital structures
real estate expertise, disclosure and complibased on disintermediation and transparency.
ance culture. Some say they are the alternative
The initial results: broader access to real estate
lenders of the future. For the most part, longinvestment opportunities and more favorable
time industry professionals have barely raised
financing for real estate investors.
an eyebrow. They argue that these crowdfundOur clients in this project, Aristone Capital
ing sites have so far just financed a combinaand Propellr LLC (both of whom
tion of non-institutional fix and
approved this article), have teamed
flips or adversely selected assets
up with Centennial Property
that could not obtain traditional
Finance to offer real estate borrowfinancing and turned to crowders a complete debt stack through
funding in desperation. These old
a combination of bank debt and
hands view the talk of disrupting
securities sold to investors through
and revolutionizing the industry
an online syndication platform.
with a high degree of skepticism.
Under this partnership, Aristone
And traditionally, the real estate
and Centennial underwrite, negoworld has resisted any form of
Joshua Stein
tiate and close a single bank loan
change whatsoever, let alone disto a real estate borrower that they
ruption or revolution.
would not have been able to lend to individOthers in the industry, a minority, have a
ually. The borrower sees only a single loan
different view. We are working with two clion familiar terms, without having to deal
ents who believe the key to success in real
with multiple layers of debt. The bank keeps
estate will depend on collaborations and
a senior participation that falls within the
partnerships between fin-tech companies
leverage it will accept. An Aristone affiliate
and existing institutions, rather than brashly
provides the remaining proceeds and syntrying to speed past and ignore a huge indusdicates most of that participation through
try that has been in place, and done busiPropellr to small institutional investors and
ness in certain ways, for decades. Whether
high net worth investors. Those investors are

more than happy to sit in the junior seat in a
senior secured commercial real estate loan,
while earning a double-digit yield. The entire
syndication and selling process takes place
online and is documented through a streamlined, comprehensible and user-friendly participation agreement, which we wrote.
Propellr isnt focused only on commercial real estate. Its designed to support similar offerings of debt or equity securities in a
range of alternative asset classes (e.g., credit
card debt, real estate equities, business loans,
car rental financing, or any other type of loan
or securities previously available only to select
institutions). In any of these areas, sophisticated sponsors can use Propellr to achieve
more efficient financing. Financial institutions can use it to recapture some of the business theyve lost through regulatory changes.
With our help, the system that Aristone,
Centennial and Propellr have developed
demonstrates how technology can and will
change commercial real estate finance. Pay
attention!
Joshua Stein is the principal of Joshua Stein PLLC.
He can be reached at joshua@joshuastein.com.
SU PERIOR
AC C ESS
COAST
TO COAST
$164,250,000
$91,235,000
REFINANCING
SENIOR & SUBORDINATE

CONSTRUCTION FINANCING
1,000,000 SF
TRUST
ONE FI RM
MIXED USE
LOS ANGELES, CA
CONDOMINIUM
NEW YORK, NY
$82,700,000
$48,000,000
ACQUISITION & RENOVATION

FINANCING
SALE & ACQUISITION

FINANCING
HOTEL
SEATTLE, WA
MIXED USE
REDEVELOPMENT SITE
MIAMI BEACH, FL
NE W YORK . BOS TON . LOS ANGELES . MIAMI . SAN FR ANCISCO
W W W. A C K M A N Z I F F.C O M
Coney Island is a developers Dreamland, and many have

snatched up land. But, will they ever use it?
By Liam La Guerre
n Monday, July 4, some 35,000

people poured into Coney
Island to watch Joey Jaws
Chestnut make historyhe
downed 70 frankfurters in
10 minutes at Nathans Famous annual hot
dog eating contest (its Nathans 100th consecutive one).
The sun was shining, and the atmosphere was festive. All-in-all, it was a great
afternoon for Coney Island on its most popular day of its busy season (minus the animal rights activists who rushed the stage at
the contest and sprayed fake blood on a few

unlucky contestants).
What a change from the Coney Island of
yesteryearright?
Some, like former Borough President
Marty Markowitz, will tell you the neighborhoods revitalization is already in full swing,
starting when the Brooklyn Cyclones began
playing there in 2001 at the new KeySpan
Park (now MCU Park).
In my opinion, it was the spark,
Markowitz told Commercial Observer. It
certainly proved that you could attract people from the region to Coney Island again
with the right attraction and if they felt
comfortable.
Others will say that the revitalization happened later, when the area was
rezoned in 2009 for an amusement district and further development, which led
to Luna Parks reopening in 2010 when
officials like Markowitz, former Mayor
Michael Bloomberg and former Councilman
Domenic Recchia were spotted on rides
together as a big media spectacle.
Still others hope it really gets off the
ground as a result of developer iStars
unveiled 5,000-seat Ford Amphitheater on
June 29, as it brings a possible year-round
venue on the beach in addition to the
aquarium.
All these theories have merit, but the big
projectsthe ones intended to make Coney
Island a 365-day entertainment zone, such as
a luxury hotel, an indoor waterpark, a movie
theater, a conference center and shiny highrise condominiumshave been stuck in an
endless holding pattern for years and probably wont break out any time soon.
Billionaire developer John Catsimatidis,
for example, a former New York City mayoral candidate who grew up in Brooklyn, has
decided to play the waiting game with his
three blocks of Coney Island properties.
We have got great plans, but I havent
CLOCKWISE FROM TOP LEFT: MARTHA COOPER; COURTESY RED APPLE GROUP;
KAITLYN FLANNAGAN/COMMERCIAL OBSERVER
Coney Baloney
KAITLYN FLANNIGAN/COMMERCIAL OBSERVER
CONEY ISLAND
W
M
KAITLYN FLANNIGAN/COMMERCIAL OBSERVER
CLOCKWISE FROM TOP LEFT: MARTHA COOPER; COURTESY RED APPLE GROUP;
WONDER WHEN: Clockwise from top left: Thor Equities hopes to build a hotel and venue in Coney Island, but is currently using the lot for an annual art exhibition; John Catsimatidis is hoping to erect
Miami Beach-like residential buildings in Coney Island someday. The boardwalk still features the landmarked Parachute Jump and Nathans Famous, staples of the neighborhood for a century.
decided to start yet, unless we get some reasonable treatment by the city, Catsimatidis,
the founder and chief executive officer of
Red Apple Group, told CO. We could spend a
$100 million in New York, or we could spend
$100 million in Florida. And right now we
are looking in Florida.
He continued, We would love to have
taller buildings that people can be proud
of, but if we ask the city for more, then they
are going to hit us with affordable housing.
I want to make it look like Miami Beach, and
whats wrong with that?
Catsimatidis plans for the site had
included the erection of 500 residential
units in a three-building complex. He told
The New York Times in February 2014 that the
tallest building, a 22-story property, would
commence construction that September.
Its now July 2016, and Catsimatidis projects have not broken ground. (Catsimatidis
declined to explain further how much taller
he actually requires he can build before he
commences construction.)
However, his waffling on commencing
construction has not stopped Red Apple

Group from expanding its holdings in the
area. Catsimatidis is in contract to purchase
the Federation Employment and Guidance
Service building at 3312-30 Surf Avenue for
$7.7 million and will (someday) incorporate
it into a three-building project. When will
he decide to move forward? Or what could
change his mind? Catsimatidis wouldnt
clarify but repeatedly said hes going to
Florida.
(A day following the interview on July
1, Catsimatidis sent this reporter an email
with a link to a Tampa Bay Times article featuring himself buying a 2.3 acre site at 400
Central Avenue in downtown St. Petersburg,
Fla., for a future development. It allows for
an 800,000-square-foot as-of-right mixeduse development, which Red Apple Group is
planning.)
Catsimatidis is not alone. Developer
Joseph Sitt, the chief executive officer of
Thor Equities, has owned large swaths of
undeveloped beachfront property near Luna
Park and Nathans Famous for more than a
dozen years.
Sitt once had plans for a Disneyland-esque
development featuring a four-star hotel, an
indoor waterpark and retail and entertainment spacesambitious ideas met with
ridicule from many local residents and community leaders.
Thor eventually sold about seven acres
of land to the city for $95.7 million in 2009,
according to various reports at the time,
which were used for the redevelopment of
Luna Park. (The original Luna Park, one of
the worlds great amusement parks when it
opened more than 100 years ago, shuttered
in 1946.)
However, he still does have plans for a
roughly 55,000-square-foot lot he owns at
3050 Stillwell Avenue. For the second year
in a row, Sitt co-hosted an art exhibition,
involving the scrawling of street art on the
faade of the site, which will remain there
for the entire year. He has stated publicly
that those are temporary plans, and he will
eventually do more with the spaces.
I would like to be able to build a really
great stadium theater, a movie theater here

[and] wed like to build a great big hotel, Sitt
told New York 1 in May. He explained to the
news station that he required some zoning
changes. (Sitt declined via a spokesman to
comment for this article.)
Thor also owns a lot across from the art
walls project at 3012 Stillwell Avenue, where
he has a one-story retail development that
features a Brooklyn Nets retail store in tandem with Adidas and a Wahlburgers restaurant by Hollywood brothers Mark and
Donnie Wahlberg.
But while the big projects by Sitt and
Catsimatidis are still in limbo, its undeniable that others have decided to quit wasting time.
Luna Park was reopened by Central
Amusement International through a public-private partnership in 2010, bringing
a full amusement park back to the area, a
void made when Astroland closed in 2008.
Scream Zone was added in 2011.
The Coney Island Parachute Jump, a landmarked 270-foot tall ride, was given new
JAMES DEVANEY/GETTY IMAGES
8,000-colored LED lights (valued at $2 million) in 2013, which illuminates the area,
almost like an Eiffel Tower (if it had been
erected in Brooklyn). The following year
the new version of the Thunderbolt Roller
Coaster opened (the original closed in 1982
and was demolished in 2000).
The latest development is the Ford
Amphitheater opening in the old Childs
Building, which received about $60 million in funding from Markowitzs office
and the City Council. The amphitheater will
host major concerts throughout the summer, including Sting and Ziggy Marley, and
events in the colder months in the indoor
restaurant portion, which can hold 500
people. Also the New York Aquarium is
completing a $157 million renovation for
next year.
These entertainment projects have added
to the cachet of the classics, such as the
nearly 90-year-old Cyclone roller coaster
and the 96-year-old, 15-story Denos Wonder
Wheel, which are independently owned and
landmarked. And this has also brought back
a large number of visitors to Coney Island,
which suffered from a mix of urban deserting, the fiscal crisis of New York City in the
1970s and a failed promise to bring gambling
to the area (see sidebar).
A 2014 study (the latest available) from
the Alliance for Coney Island said that more
than 5 million visitors annually come to
Coney Island amusement park between
Memorial Day and Labor Day. Additionally,
the study found that 22 percent of those visitors hailed from other states or contries.
Overall, I do believe that there is a sense
of excitement. Coney Island is seeing its
best days for some time now, said Johanna
Zaki, the executive director of the Alliance
for Coney Island. Every year we have been
able to announce some new developments to
the area. Thats all great for the local economy, great for jobs and spurring economic
activity, so that is what people are excited
about here.
She added, The fact that we generate
enough buzz to make that group of [foreign
visitors] decide that there will take one day
out of their limited stay, and make it a Coney
Island day, was significant for us.
The study found that the overwhelmingly majority of visitors38 percentcame
from Brooklyn and just a combined 5 percent
trekked from the Bronx and Staten Island.
That low Bronx and Staten Island number is pushing calls by the alliance for new
transportation services, such as a ferry stop
in Mayor Bill de Blasios citywide ferry service plan and an express train to Coney
Island.
A Coney Island ferry stop connecting to Staten Island was proposed in the
citywide ferry initiative but still has not
been approved by the city. The states
Metropolitan Transportation Authority has
plans for an express F train in 2017, but there
has been no word on a direct express train
between Manhattan and Coney Island.
This activity has coaxed some Brooklyn
developers to build morealthough its
MARTHA COOPER
CONEY ISLAND
THE SHOW MUST GO ON: The new 5,000-seat Ford Ampitheater opened in June attached to the Childs Building, which will be a 500-seat restaurant
and venue. The combination creates a year-round venue for concerts and other events.
more of the same.
Even developers who used to focus on
Sheepshead Bay and Brighton [Beach], now
they are looking at Coney Island, and they
are seriously considering buying parcels
to build, said Alex Svetlakou, a director at
Cushman & Wakefield. It wasnt like that a
few years ago. Its becoming more and more
real.
Mo s t not able i s C a m me by s
Internationals projects at 532 Neptune
Avenue and 626 Sheepshead Bay Road.
Cammebys already owns or manages more
than 2,000 rental units in Coney Island and
surrounding neighborhoods. The planned
residential tower at 532 Neptune Avenue
will rise 42 stories, becoming the tallest in
Coney Island, and will have 576 market-rate
rental apartments, according to a spokeswoman for the company. (The tower is an
as-of-right project and therefore wouldnt
be mandated to include affordable housing, like Catsimatidis properties may for
extra height.)
Cammebys hopes to start constructing
the tower, which will also include about
90,000 square feet of retail at its base, by the
end of this year. The second building at 626
Sheepshead Bay Road will be an office and
retail structure featuring 161,000 square feet
of space across seven stories. Cammebys is
targeting medical offices and law firms for
the office section and has already started
building the property. Winick Realty Group
will be handling leasing for retail and office

at both buildings. The project also includes
800 parking spaces.
While many other areas of Brooklyn have
experienced a construction boom over the
past several years, there has been little new
development activity in Coney Island, the
spokeswoman for Cammebys said in an
email. With an increase in recent investment
along the boardwalk meant to make Coney
Island a year-round destinationincluding
the new amphitheaterCammebys sees an
opportunity to deliver a new high-quality
mixed-use development that will complement the unique culture and character of
Coney Island and address the demand for new
commercial and housing options.
Coney Island-based PYE Properties filed
plans in May to build a two-story building
at 825 Surf Avenue, according to city records.
The planned 14,517-square-foot commercial
building will house an arcade.
PYE also purchased the shuttered Shore
Theater at 1301 Surf Avenue, which was a
Loews movie theater, in December 2015 for
$14 million, and is considering renovating it
for use it as an entertainment venue, according to local newspapers and blogs. Plans
have yet to be filed with the New York City
Department of Buildings for the future use of
the 115,000-square-foot landmarked theater
and a representative for PYE Properties did
not return requests for comment.
The group behind Ford Amphitheater,
iStar, also owns additional plots of land

near the theater and is planning to build
residential units there. So far, plans have
been filed for a nine-story, 135-unit development at 2002 Surf Avenue, which will
include nearly 8,000 square feet of commercial space, as The Real Deal reported
in April. But the group ultimately wants to
create about 700 units of housing, according to Martin Cottingham, a principal at
Avison Young, who served as an adviser to
the group for the amphitheater project.
The developer built the amphitheater, a
90,000-square-foot space it leases from the
city, after a suggestion from Markowitz since
its executives werent sure what to do with
the property.
Early on there was some apprehension,
Cottingham said. They have realized that it
is an anchor. It is creating retail buzz already.
They have drawn many people to that end
of Coney Island that dont usually go there.
While these projects are starting a great
discussion, just about everyone agrees more
needs to be done to make Coney Island a
year-round neighborhood.
We would love to see a major anchor
hotel with conference and meeting space,
recreation spacesomething that Coney
Island could really be proud of, Brooklyn
Chamber of Commerce President Carlo
Scissura said. Then it becomes a destination location.
By the way, Scissura added, I think
w
t
r
T
(
b
a
t
B
n
m
l
c
s
B
m
c
T
v
t
s
e
o
f
a
p
a
h
C
I
LIFES A BEACH: In its heyday Coney Island was a world-class destination visited by an
estimated 100,000 people a day.
JAMES DEVANEY/GETTY IMAGES
LIBRARY OF CONGRESS
MARTHA COOPER
Coney Islands Roller Coaster
SITT AND STAY: For the second year in a row, Joe Sitt and Jeffrey Deitch, former head of LAs Museum of Contemporary Art put on Coney Art Walls. If you visit, take in the Thundebolt.
when that happens, the Jersey Shore and
the Hamptons will see a definite drop. Were
ready for it; give us a few years.
Hotels are a thorny issue for Coney Island.
There currently arent any hotels in the area
(and none are planned) with the closest
being Sleep Inn Coney Island in Gravesend
at 2586 Stillwell Avenue. And while some see
the area as a place that could rival Miami
Beach, others see it as a regular residenialneighborhoodfirst and foremost, one that
more than 50,000 people (many of whom are
low-income families) call home.
When the mayor talks about a tale of two
cities, Coney Island is a tale of two places,
said Timothy King, a managing partner at
Brooklyn-based CPEX Real Estate. When
most people think about Coney Island, they
conjure up an image of the amusement park.
The neighborhood has been neglected for a
very long, long time.
Community residents are fighting to protect it as such, and fighting for more infrastructure improvements like sewers and
electrical systems. (The citys Department
of Design and Construction is working on a
five-year sewer infrastructure plan.) There
are also concerns about security, with more
people coming for the additional attractions,
and a dearth of parking spaces.
Councilman Mark Treyger, for example,
has placed getting new boilers for New York
City Housing Authority buildings in Coney
Island at the top of his wish list after finding
more senior housing. (Coney Islands public housing is expected to get the necessary boilers as part of a $3 billion Federal
Emergency Management Agency grant.) And
even if a hotel were planned, he is pressing
for some sort of partnership to get locals
hired and maybe even operating it.
My concern is what are the needs of
the community today, Treyger said. That
has to be factored into the conversation. I
understand that developers have their plans
and their dreams. Does our infrastructure
have the capacity to support it?
He added, Im just not sure there is a market for a hotel there. If planned appropriately
and planned right, I believe there are opportunities for the community for a win-win as
well. If local residents can be employed and
operate the hotel and be welcomed into the
unions, that could be a pathway toward the
middle class.
Markowitz, who is now a vice president
of tourism at NYC & Companythe official
marketing and tourism partnership organization for the cityis certainly amongst
those rooting for Coney Island to get in on
the hotel game.
We will have indoor amusements and
a hotel and convention center, Markowitz
said. There are so many things that are yet
to come, and people will invest there if they
know there is a market for it. Not everyone
has a home in the Hamptons.
The only question the remains: When?
Yes, you could call a future Coney

Island a comebacka particularly astonishing one.
There was a time (from the late 1800s
to early 1900s) when almost 100,000 people a day visited the island for rides, races,
fights, shows and the beach, of course,
according to A Coney Island Reader:
Through Dizzy Gates of Illusion, edited
by Louis and John Parascandola. It was
one of the worlds most popular resorts
during its Golden Era, attracting hoards
of people from New York City, the country
and around the world.
Coney Island has had a lot of nicknames over the years and one of those
is the Peoples Playground, said Tom
Corsillo, a vice president at Marino
Organization, who worked in an advisory role with Central Amusement
International, which rebuilt Luna Park
in 2010. It was kind of the place anyone
can enjoy.
There were horseracing tracks, various bathhouses, circus shows and rides
galore. From 1897 through 1904, Luna
Park, Steeplechase Park and Dreamland
amusement parks were all built and competed heavily for customers. The area
also featured the Coney Island Athletic
Club, a 10,000-seat boxing arena, and the
boardwalk opened in 1923. Landmarked
Denos Wonder Wheel opened in 1920
and the Cyclone roller coaster in 1927. In
1941, the famous Parachute Jump, also
known as the Eiffel Tower of Brooklyn,
was relocated from Queens to its current
site behind MCU Park baseball stadium.
While today many associations,
like the Coney Island Alliance and the
Brooklyn Chamber of Commerce, are
advocating for a hotel in Coney Island,
hotels were prevalent in the resort dating back to the mid-1800s. There was
Greens Hotel, Manhattan Beach Hotel,

the Vanderveers Hotel, Hotel Brighton
and the gaudy Elephant Hotel, which was
shaped as a giantyou guessed itelephant and operated a concert hall as well.
The decline of Coney Island started
with the closure and sale of the major
Steeplechase Park in 1964 from the Tilyou
family to developer Fred Trump (father
of Donald Trump, and grandfather-in-law
of Commercial Observer Publisher Jared
Kushner) for $2.2 million. But Coney
Island hit rock-bottom around 1975,
native Charles Denson wrote in his book,
Coney Island Lost and Found. Around that
time, New York City was nearly bankrupt. Competition from other amusement parks and casinos in neighboring
states and counties increased. Traveling
by plane became more commonplace
as well, making it easier to reach other
places.
The ease of ability of travel cut in on
the necessity of just staying local, former Brooklyn Borough President Marty
Markowitz told Commercial Observer.
Of course, urban blight certainly had its
impact [as well].
There were various ideas of going the
Atlantic City route, and bringing gambling in the 1970s, but that never materialized. And a still recessed New York City
didnt have the funds to pump money
into causes to bring Coney Island back to
its days of glory.
Declining revenue led to closed storefronts and deserted areas. However, a
new era of Coney Island is beginning, and
not everyone thinks it will be exactly like
it was.
It cant go back to what it was
you can only develop what will be,
Markowitz said. Different era, different
time, different expectations.L.L.G.
FEATURE
n
w
g
el
n
o
r
FINDING
DORMY
r
r
A firsthand account of the co-living phenomenon

By Rheaa Rao
felt like a freshman, as I got ready to go

to Ollie, a co-living space in New York.
It was a crush of introductions from different departmentsthe butler, the event
manager and the doorkeeperall promising
to make my stay smooth so I could enjoy the
community.
It is this sense of community that co-living uses to set itself apart from the way the
rest of us live (with a random roommate
found on Craigslist in a crumbling apartment with bugs and plumbing problems).
Of course, co-living is a pretty vague
term that is open to interpretation. In a city
like New York, where rent is exorbitant and
most 20-somethings have roommates, were
already co-living in a sense. This experience promised to be more curated. So, in the
spirit of experimentation and good-sportsmanship, I offered myself as a test subject; I
would submit to co-living for a day and see
how this experience would be different.
Co-living spaceslike Ollie, Common,
WeLive, Krashattempt to bring back that
full life we once had in college, minus the
shared rooms and the cheap furniture. The
concept is to build community where you
live, by helping people getting to know each
other rather than awkwardly avoiding eye
contact when they meet in an elevator.
The concept largely caters to older young
adults, 25 and above, who have long recovered
from the hangover of college life but miss certain aspects of it. Christopher Bledsoe, the
co-founder of Ollie, a Manhattan co-living
space provider with a third location coming
soon, called his target audience emerging adults. This is a relatively recent demographic that the housing market seems to
have priced out, according to him.
Thats because people are staying single
longer. In the 1970s, the median age people got married was 21 for women and 23
for men, according to the United States
Census Bureau. In 2015, the median age at
first marriage was 27 for women and 29 for
men, according to the same survey. About 50
percent of all adults live with a spouse now,
compared to 70 percent in 1970, according
to a census study on living arrangements.
People sought the suburban sprawl as they
settled into an early marriage four decades
ago. But now theyre increasingly postponing marriage, moving into cities and seeking
roommates instead of families.
Developers have done nothing for this
way of living, Bledsoe said. So we look at
housing not as an asset class, but as a consumer product category.
So how can co-living provider expect to
make a profit when their big sell is a sense
of community? Well, Ollie and Common do
not own or lease the buildings they operate.
They operate as a management company
responsible for filling a building and providing an extended set of services to foster
community. Residents are on direct leases
with the owner.
WeLive, the co-living arm of WeWork,
does things differently. Instead of operating as a managing agent, WeLive has leased
the New York property it operates at 110 Wall
Street from Rudin Management Company for
its facility. The building has both WeWork
(coworking) and WeLive spaces.
Also, to be fair, a few developers have
certainly begun dipping their toes in these
waters. Michael Rudin, the vice president of
Rudin Management, said that co-living fills
an important void in the marketbut it is
too time consuming for a traditional landlord to oversee and manage operations that
NOW THIS IS CO-LIVING!: Rheaa Rao

at Ollies Carmel Place in Kips Bay.
JEMMA DILAG/COMMERCIAL OBSERVER
come with co-living.

Developers are seeing the value of co-living, Rudin said. With the cost of construction, condos are the highest value in the
sales market. So there is more of an opportunity for co-living in existing buildings that
are repositioning.
Last month, Common, a co-living provider founded by Brad Hargreaves in October
2015, announced that it raised $16 million in
a Series B round led by 8VC. The new investors included Circle Ventures, the technology arm of the Milstein Family, LeFrak,
Solon Mack Capital, Inevitable Ventures and
Wolfswood Partners.
Developers really understand this, Drew
Oetting, the founding partner at 8VC, told
CO. They see the way their properties are
being used, and this has created a new category. Co-living is not a crazy, hippie commune. People love communitythey want
to live with other people.
But while Bledsoe and Hargreaves believe
it caters to the middle class, Oetting admits
that its not a product of the mass market because the price point is just not for
everyone.
Everything inclusive, Ollie costs between
$2,446 to $2,910 a month. It is competitively
priced with Common, whose monthly rent
ranges from $1,340 to $2,650 a month, and
WeLive, which costs $1,700 to $2,745 a month
plus a flat fee for utilities. (Which, it should
be noted, is more expensive than the average price of a studio in Manhattan that was
$2,371, according to Citi Habitats June market report. But these are cheaper than the
average of a one-bedroom, which was $3,131
last month.) The costs are justified by the
additional services provided depending on
what your priorities are, but leases are still a
few months to a year long with background
and credit checks. Pets are not welcome.
Ollie has two properties, one on the
Upper West Side (its beta site) that is 99
percent occupied and one in Kips Bay that
is 70 percent occupied (the latter being the
one where I stayed). Locations Long Island
City and Jersey City are still in the works.
It recently announced an expansion to Los
Angeles and will soon announce its venture
into Pittsburg, Pa. Bledsoe started Ollie in
2011 with his younger brother Andrew. Their
vision for co-living is to eliminate wasted
square feet by cutting down space and incorporating space saving furniture.
We spend 90 percent of our time in 40
percent of our apartment, Bledsoe said. We
dont need full kitchens or dining rooms.
Ollie offers micro-suites with units
between 260 and 360 square feet. Its target
audience is not only emerging adults but
also divorcees and empty nesters. They then
attempt to build a community around their
residents with common spaces and personalized amenities.
I was going to be experiencing this all-inclusive concept for an evening during my
stay at Ollies Carmel Place at 335 East 27th
Street.
The building, developed by Monadnock
Development and nARCHITECTS has 55

units32 market rate, 22 affordable and
one for the superintendent. Eight of the
affordable housing units are exclusively for
veterans.
The nine-story building is between First
and Second Avenues, across the street from
the Bellevue South Park. Among the introductory emails and all the apps I had to
download was ButterflyXM that monitored each residents visitors who came to
the building with photographs and time of
arrival, with you can track on your phone.
I was given a fully furnished, fully operational 305-square-foot studio for my overnight stay. The unita typical studio at
Ollieswas going to be occupied by its new
tenant the following week.
The first thing I noticed was that despite
being a small apartment, I wasnt rotating
on my heels for lack of space. What made
the studio seem spacious was that there
was a queen-sized wall bed that folded up
over the plush sofa facing a wide television
equipped with over 200 channels. There
were giant, double-glass windows on the
right, overlooking a busy promenade. The
apartment had plenty of storage space
covert nooks above the bathroom and cabinets and closets.
The kitchen had a mini-fridge, a twoburner electric stove, a marble countertop,
a sink, a full-sized dishwasher and cabinets
to store food. (Ah, so you do get a kitchen!)
It came with some rudimentary cutlery
wooden tablespoons and mixing bowls. As
someone who has a lot of random ingredients for Indian, Thai and Italian food (I cook
daily), this downsized kitchen was still bigger than the one Im used to in my apartment
in Brooklyn.
A representative from Hello Alfred
was with me, digitally speaking, as I was
inspecting my new abode. Hello Alfred
is a concierge service (the name is a reference to Batmans butler, Alfred.) This
is an online service that is included in
the monthly rent that Ollie residents pay.
Residents download an app, as I was asked
to do, where they can upload their weekly
errandsbuying groceries, doing laundry,
washing disheswhich their Alfred does
for them. (Alfred offers a real person hired
by the concierge service with whom clients
interact online.)
You can even set personal goals on the
app, said Zachary Rosenblum, the account
manager at Hello Alfred. Like, I never want to
run out of blueberries or toilet paper. So every
time we come in, we check how well stocked
you are and replenish it so you never actually
run out of something you really like.
I had a brief daydream of never running
out of chocolate. Then I was told that you
have to pay out of pocket for the cost of your
groceries and laundry through the app, but
the cost of actually doing the errands is
something picked up by Ollie.
In addition to their own butler, members
have access to a benefits platform called
Magnises, a service that vows to get them
PHOTOGRAPHS BY DAVID KHORASSANI/COMMERCIAL OBSERVER
FEATURE
WHERE THERES A WILL: One of the communal spaces at Commons Havemeyer location in
Williamsburg, Brooklyn.
the best deals for happy hours as well as reservations at exclusive restaurants, concert
tickets or anything that the members want
to do individually or in a group. Like Hello
Alfred, they choose what they want through
a downloaded app.
I was then whisked away to meet Nicole
Kelner, the house leader of Ollies Carmel
Place. Kelner, 23, is a part-time employee
at Ollie. As a house manager, she is the
liaison between the residents and the
administration.
The city can be intimidating and lonely,
she said, as she walked me through a
PowerPoint presentation that welcomed
me into the community. Ive lived in apartments and hotels, but with Ollie it feels like
youre coming back home to a community.
Kelner and I were in the lounge area in

the basement, a room with a couple of round
tables, high bar stools and Ping-Pong tables.
It was nearly 7 p.m., but no residents were in
sight. Kelner explained that they may be working late or still on their way back from work.
We made our way up to the eighth floor
to an Ollie-sponsored rooftop party with the
whole Ollie team, brokers looking to lease
Ollie units and a few residents. Among
everyone dressed in blazers or summer
dresses, I spotted an older man in a bright
shirt, impatiently waiting to be served by a
mixologist.
Doug Cranfield, 47, is a resident of Ollie, a
self-proclaimed extrovert and a spirits and
wine educator. He said he lived on the Upper
West and Upper East Sides and in Crown
S
a
n
d
s.
n
k-
r
e
e
g
r
ht
a
a
d
r
n
PHOTOGRAPHS BY DAVID KHORASSANI/COMMERCIAL OBSERVER
SHARING IS CARING: A typical bedroom at Commons Havemeyer location (left), a cluster of four separate three-story buildings; the movie room at the Brooklyn co-living project (top right); the lounge is available for all residents of the four buildings (bottom right).
Heights before he decided to move here after

reading about the concept.
I try not to form judgments about people,
he said. People have different views politically, and I enjoy that. This is a good way to
meet people and get them to talk to you.
But when I asked him whether he felt a
sense of community here, he said that it had
only been three weeks, and it takes time to
build that up.
He was right. Ollie does everything it can
to stimulate the community vibeit provides common spaces outside your apartment which you dont have to maintain and
organizes activities that you dont have to
personally plan. It frees up tenants from
chores so they actually do what they want
to do (while making them lazier).
But despite 70 percent occupancy at

Carmel Place, the sense of community was
lacking. As I moved through the party, I met
members of several teams that helped put
Ollie together, but I didnt meet another person who lived in Ollie. I woke up early the
next morning to check out a community
space, hoping to find a resident enjoying a
cup of coffee or getting the last stretch of
work done. I was the only one.
The same case can be made for Common.
It has three residences in Brooklyntwo in
Crown Heights and one in Williamsburg
and announced its expansion into San
Francisco and Washington, D.C., by the end
of 2016.
I visited Commons Havemeyer location
in Williamsburg. I intended to stay over, but
Common had phased out month-to-month

leasing and would not accept residents for a
term of less than 90 days, a reason it used to
decline my visit.
Havemeyer was a cluster of four separate
three-story buildings with three suites
each. The idea is to create different levels
of shared spaces by not providing everything on one floor or in one suite. It also
had a common space for the residents of
all four buildings consisting of a lounge
area with sofas, desks and longer tables,
an exercise studio and a movie room with
fluffy floor cushions. Each building also
had connecting rooftops for events and
parties.
The building I visited wasnt ready for
occupation yet, but I was told that two of
the buildingsthe ones that I wasnt allowed

intowere fully occupied with 19 residents
living there already. But an evening boot
camp class that I stayed for, organized by
Common with Hosh Yoga, was attended
only by two residents, one of them the house
manager.
So, what is the verdict you ask? It feels
pretty royal to have people organize your
life and to not have passive-aggressive conversations regarding taking out trash. But
co-living is not revolutionary. Commons
Hargreaves admitted as much, himself.
This is the way people have already been
living, he said. Were not creating something totally different. We are just acknowledging how people are living and creating
products and services for it.
POWER PLAYER
Gene Whiz
Talking shop with Gene Kaufman,
one of the citys most active architects
budget-hotel maverick, making Chang

Kaufmans biggest client.
I have to give Sam a lot of credit,
Kaufman said. It has been an enormous
opportunity for me to work on his projects.
I would say of the great and successful developers in New York, there is something about
him that is different. He has made a mark
for himself by showing that mid-market
hotels for ordinary people were in desperate need in the city. With him, we were able
to build thousands of hotel rooms which
means thousands and thousands of people
have been able to come and stay here and
enjoy the city and contribute to the citys
economy.
Perhaps its because Kaufman has been
so closely tied to low- and middle-market
hotels (and therefore has had to work within
serious financial constraints) that his style
has come under scrutiny.
Hes able to design spaces at a very low
cost, which is a more developer-type architect, Spector Group Architects Scott Spector
told CO. These are not your starchitect-type
hotels. To me its banal, background
architecture.
Another arrow at Kaufman, courtesy of
Spector: Its almost pre-fabricated architecture, he said, comparing Kaufmans
designs for the low-end hotel market to creating big-box retail.
This is the kind of criticism that has
dogged Kaufman for a long time. Crains
New York Business called him the Baron of
Bland Buildings in a headline. Curbed also
used the b word in a header: Midtown to
Grow Even Blander With New Gene Kaufman
Hotel in talking about a Chang-developed
Holiday Inn at 585 Eighth Avenue between
West 38th and West 39th Streets. Architectural
Record called his hotels cheesy.
Kaufmans response to such criticism: I
think it is a little nave to expect that every

building is going to be a great monument. I
think that a lot of the fabric of New York City
are good but ordinary buildings, and they
need to be afforded by the people that live
in them or that stay in them if they are hotel
rooms. The number one complaint in this
city is that its too expensive. So to expect a
building to be a palace and then hoping that
people can afford it is nave.
But does he think any of his buildings are
bland?
I think that we are proud of the buildings that weve done, Kaufman said. Even
if theyre not monumental, I dont consider them bland. A hotel has many, many,
many identicalor similarrooms. I think
a building like that should not strive to be
acrobatic, should not strive to be something
that its not.
One project that Kaufman said is not
shy or bland is the Four Points by Sheraton
at 326 West 40th Street and Fairfield Inn &
Suites, a Marriott hotel, at 330 West 40th
Street, a two-pack hotel between Eighth
and Ninth Avenues that he designed for
Lam Group (headed by John Lam, a former
partner of Chang and also a champion of the
citys budget hotels).
These hotels are by Times Square and
respond to the vibrancy of that area,
Kaufman said. The Marriott lights up at
night and becomes part of Times Squares
night light show. They are not shy or bland
buildings. The building needs to suit the
site.
Kaufman and his team of 35 (25 of whom
are architects) work on GKA as well as
Gwathmey Siegel Kaufman & Associates
Architects projects.
Kaufman distinguishes Gwathmey
Siegel Kaufman & Associates Architectsa
renowned firm formerly called Gwathmey
YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER
n 1990-something, architect Gene

Kaufman was working on a design
for a residential building at 320 Pearl
Street when the job came to a halt.
The developer on the project
pulled the rug out from under me and sold
the site, Kaufman told Commercial Observer
last week from his Soho offices. He said to
me, I sold the site, maybe you can work for
the new guy and I bet hell become your biggest client.
The buyer of that site? Sam Chang.
I was introduced to Sam and I think at
that point he had done one hotel, Kaufman
said. We got to talking. I laid out a building
for him, and it seemed to make sense, and
we started working together.
That Pearl Street location became the
nine-story Hampton Inn ManhattanSeaport-Financial District Hotel.
And very shortly after, he came with
another project and two more projects,
said Kaufman, the head of Gene Kaufman
Architect, aka GKA, as well as Gwathmey
Siegel Kaufman & Associates Architects (the
latter since 2011).
So began a long and prosperous relationship between one of the citys most prolific hotel developers (Chang, the president
and chief executive officer of McSam Hotel
Group, previously told CO that he has completed at least 60 hotels in New York City)
and one of the citys most active architects
(Kaufman said he currently has 20 buildings
under construction in New York City).
He always does a good job for me,
Chang said. Hes not like most architects.
They have an ego. I have to have this, this
and that. Thats the problem with most of
the famous architects. They want their own
style. They dont care about me.
Kaufman, 58, estimates that he
has designed at least 30 hotels for the
By Lauren Elkies Schram
Gene Kaufman.
Siegel & Associates Architects and founded

in 1967 by architects Charles Gwathmey and
Robert Siegelas maintaining a modernist design aesthetic. At GKA, Kaufman said,
Were flexible on style. Weve done some
more traditional-looking buildings; weve
done some modern buildings. Its more a
practical kind of approach than an aesthetic
approach. I mean, we care about the look of
the building but thats not the thing that
comes first for us. Were doing a mid-range
hotel. We want, at the end of the day, that
people can afford to stay there. Mid-range
hotels are not considered to be as consequential as museums or churches. We still
want to make a building that looks good and
fits well.
As an architecture student at Cornell
University in the 1970s, Kaufman said as he
flipped through a book of Gwathmey Siegels
designs with CO, this is the kind of architecture work that students looked at as being
what was the important work of our time.
While it wasnt a dream to buy that company, it was like a dream, in a way, to be able
to do that, he said.
In his first two years out of college,
Kaufman worked for Rafael Violy, the
starchitect behind the tallest residential
building in the Western Hemisphere, 432
Park Avenue.
Starchitect is a term that Kaufman considers a media phenomenon that is a little
exaggerated. I think that an architect cares a
lot about the ideas and the building, but its
really not about the person.
That outlook makes sense, considering
he said he is always trying to maximize the
economic value of a GKA project.
Will Obeid, a principal of Gemini, has
tapped Kaufman for a number of projects
including Crowne Plaza JFK Airport Hotel
New York City.
Gene is not bland, Obeid said. He is
a very innovative, creative architect that
knows how to work with a developer, work
within a development team. Ive always
found Gene willing to listen to my ideas
and integrate his thoughts and concepts into
what I want to have done in a project.
That innovative approach, Obeid said, can
be seen in how Kaufman designed Crowne
Plaza JFK.
Kaufman reskinned the faade of that
hotel, Obeid said. That wasnt something
ownership was thinking of prior. Basically
we took an old 1950s Hilton box that was
essentially obsolete and with Genes help we
transformed it into what looks like a brand
new hotel. He came up with an innovative
faade design and gave the lobby and the
[food and beverage] a really fresh look and
the guest roomsthey are fantastic. They
are creative and well within the brand standards that Crowne was looking for.
Stellar Management tapped GKA to design
the architecture firms first Greenpoint,
Brooklyn project, a residential rental building at 211 McGuinness Boulevard between
Greenpoint Avenue and Calyer Street.
Stellar liked that GKA did the entire
CLOCKWISE FROM LEFT: YVONNE ALBINOWSKI/FOR COMMERCIAL OBSERVER; XXX;

COURTESY GENE KAUFMAN
POWER PLAYER
GOOD GENES: Kaufman, in his offices, reskinned the faade of the Crowne Plaza JFK, top, and designed 211 McGuinness Boulevard in Greenpoint, Brooklyn.
project in-house, according to Adam Roman,

the chief operating officer and a principal at
Stellar Management.
He holds several consultant trades
in-house [for example] MEP [or mechanical, electrical and plumbing], structural,
expediting, etc., which speeds up the planning and design process, and he has extensive experience with inclusionary housing
projects.
He further noted about Kaufman and his
team, They are consummate professionals,
responsive and think outside of the box.
Lest people think Kaufman only does
low-end projects, he worked on hotels
including The Jade Hotel, now called Walker
Hotel Greenwich Village, the Viceroy on
West 57th Street, Hyatt Union Square and
(the redevelopment of) 1 Hotel Central
Park, as well as residential projects like
Sohos 11 Greene Street (breaking ground
this month), and Williamsburgs 56 North
9th Street and Schaefer Landing at 440-446
Kent Avenue.
Gene caters to what his clients want him
to do, Obeid said. I really think of Gene
as the developers architect. He happens
to have a lot of developers that cater to the
select-service market. But he also has a lot
of clients looking for the upscale projects.
As with many players in the real estate
industry, hes been hit with a lawsuit here

or there.
In September 2015, Great Neck, N.Y.-based
SMA Equities sued Kaufman and GKA for
$9.5 million over the sale of 152 Elizabeth
Street between Broome and Kenmare
Streets. The developer, who in 2014 sold the
plot to Sumaida + Khurana for $21 million,
alleged Kaufman advised the company that
the site was only zoned for a 14,000-squarefoot building. But Sumaida + Khurana ended
up building a structure that was 6,000
square feet larger. SMA argued in New York
State Supreme Court that Kaufman negligently misrepresented the square footage,
thus leading to a lower sales value for the
property.
Kaufmans lawyer filed for a motion to
dismiss the charges last October, according
to court documents. The case will be heard
again this week. Kaufman didnt remark on
the suit, his attorney did not return a call for
comment and SMAs lawyers did not comment on the litigation.
In two other active New York State
Supreme Court cases, different plaintiffs
have alleged Kaufman tried to play up his
role as an architect or consultant on a project, hitting him with allegations of fraud and
breach of contract. Kaufman called the cases
absurd.
Meanwhile, business is booming, and

while the performance of budget hotels
has slowed down, Kaufman thinks there
is room for more growth in New York City.
Outside of work, Kaufman is an avid collector of Colombian art. He and his wife,
Terry Elder-Kaufman, a professional pianist
under the name Terry Elder, frequent the
opera, other concerts and museums.
Kaufman led a bid in 2015 to revive the
bankrupt New York City Opera, but then
dropped it at the beginning of this year.
I had thought that because the company
was in bankruptcy, there would be complete freedom to reimagine how it would be
done, he said. But there were a lot of contrasting agreements, financial constraints.
It was something beyond my ability, coming
as an outsider, to do it. I didnt want to take
on something that I thought I couldnt do
well and do the way I felt it should be done.
It wasnt apparent at first, but that was the
case.
The Kaufmans live in an 1861 five-story
landmark brownstone in the West Village,
which Kaufman renovated (they have a
tenant downstairs). The couple has a 21-yearold daughter, Maya, a senior at Kenyon
College in Gambier, Ohio.
With additional reporting provided by
Terence Cullen.
The Takeaway
Founder, chairman and CEO of RKF
Francis Greenburger
Chairman and CEO of Time Equities

His base: Quogue
Where he hangs: Stone Creek Inn in
East Quogue and Dockers Waterside
Marina & Restaurant, Wholistic Tennis
Academy in Westhampton, Books &
Books in Westhampton and Hampton
Arts Cinema in Westhampton
His base: Bridgehampton

Where he hangs: The Bridge golf
club in Bridgehampton, The Palm in
East Hampton, Nick & Tonis in East
Hampton and Sunset Beach restaurant on Shelter Island
Mary Ann Tighe
CEO of the New York Tri-State Region

at CBRE
Her base: Southampton
Where she hangs: Southampton Bath
& Tennis Club
orget the Jersey Shore. Maine or

Connecticut might be nice, but as far
as summer spots go, the Hamptons
in Long Island still reigns supreme as
the place for real estate bigwigs during the
warmest months of the year.
Basically we hang out on our property,
Peter Turchin
Vice chairman at CBRE

His base: Sagaponack
Where he hangs: Atlantic Golf Club in
Bridgehampton
Stephen Siegel
Brian Waterman
Chairman of global brokerage at CBRE
Vice chairman of Newmark Grubb

Knight Frank
His base: Wainscott
Where he hangs: Sunset Beach restaurant on Shelter Island, Nick & Tonis in
East Hampton, Tutto Il Giorno restaurant in Sag Harbor, Truth Training in
East Hampton and Flywheel Sports in
East Hampton
His base: Sag Harbor

Where he hangs: Noyac Golf Club, East
Hampton Golf Club, Dockside Bar & Grill
in Sag Harbor, Page at 63 Main in Sag
Harbor, American Hotel in Sag Harbor
and BuddhaBerry in Sag Harbor for
dessert
HULTON ARCHIVE/GETTY IMAGES
Robert Futterman
Bruce Mosler
Chairman of global brokerage at

Cushman & Wakefield
Jerry Swartz
His base: East Hampton

Where he hangs: Dopo La Spiaggia in
Sag Harbor, Star Island Yacht Club and
Marina in Montauk, American Hotel in
Sag Harbor and c/o The Maidstone in
East Hampton

Where he hangs: Harbor Marina of
East Hampton (where he has his boat,
Jerrito), Osteria Salina restaurant in
Wainscott and Tutto Il Giorno restaurant in Sag Harbor
Founder of HKS Capital Partners
which, by my definition, qualifies as heaven

on earth, CBREs Mary Ann Tighe said in an
email. On those occasions when we leave
Hollyhock (the name of our property), we visit
my son and his family or my brother and his
family, both of whom are about a mile away
from our place.
Bruce Mosler of Cushman & Wakefield said
he spends a lot of his time fishing in Montauk
Jonathan Mechanic
Richard Hodos
His base:: East Hampton

Where he hangs: The East Hampton
Golf Club, Sportime Amagansett and
Duryeas Lobster Deck in Montauk

Where he hangs: Wiborg Beach in East
Hampton, Fresno Restaurant in East
Hampton, Beacon in Sag Harbor and
the East Hampton Grill
Partner at Fried, Frank, Harris, Shriver

& Jacobson
and in his backyard barbecuing. Tighes colleague, Stephen Siegel, is also a homebody,
enjoying his beach house and the accompanying house parties.
Sure, there has been some backlash
against the Hamptons (We are anti-Hamptons over here at [the] Durst [Organization],
said Dursts spokesman. Ferrari-driving
douches, was how Hamptons-vacationers
Vice chairman of retail at CBRE
were described by another broker, who chose

to remain nameless), but the houses are still
roomy, the food is still gourmet and the celebrity gazing remains unparalleled.
And we dont mean just catching a glimpse
of Alec Baldwin at Babettes in East Hampton
or Billy Joel at Topping Rose in Bridgehampton.
Above are some of the places where the celebs
of real estate stay and venture.
| JULY 13, 2016 | 57
Amira Yunis.
THE SIT-DOWN
IT HAD TO BE YUNIS
CBREs Amira Yunis is tough enough to vanquish cancer,
nab 10K-plus square feet for Urbanspace and embrace retails techno future
AARON ADLER/FOR COMERCIAL OBSERVER
CO: Prior to joining CBRE, you were a partner at

what is now Newmark Grubb Knight Frank. How
many partners were there?
Yunis: I think there were 12. Maybe nine or 10 originally, and then myself and Jeffrey [Roseman] were the
only retail partners. I was the only woman that ever
made it into partnership. They changed the structure
of the whole company, so I dont think there are any
partners any more.
How long were you there?

I was there for about 12 years, and I came here five
years ago, this December.
What percentage of your clients are tenants versus landlords?
It depends on the year. Id say its pretty even.
Is Urbanspace looking for other opportunities in
New York City?
Yes, were surveying what the options are. Finding
the right space for them [is not easy because] itll be a
large location.
What areas are they interested in?
Mostly Midtown.
Which clients do you spend the most time working with?
Aldo, Joe & the Juice, but remember were only talking
about tenants right now because Im evenly split.
What tenant types are doing the most deals?
Food is very active, restaurants are very active. Were
leasing quite a few restaurant spaces for landlords.
Are these landlords seeking restaurant tenants
because retail is slowing or were they planning for
restaurants all along?
On the tenant rep side we are seeing landlords that
are considering restaurants that were not considering food earlier. When you have a million-square-foot
office building, the people in the building want to have
a good experience; they want to have somewhere to go
where they can eat.
How does one do a successful food hall when
there are so many?
Location, authenticity, putting your heart and soul
into something.
Do you think there is room for more of them?
There are different types. Urbanspace has different
actual restaurants, so each has a different feeling and
taste. Some of these other concepts have one chef overseeing everything. So even if there are different types
of food, it all tastes kind of similar. I think more of the
question is, What happens to operators around these
concepts?
Whats going to happen?

Well, if you look at traditional smaller delis, if they
dont offer different types of optionshealthy and different types of food[they might close] because [people] want choices. Were used to getting on our phones
and clicking on an app and getting what we want.
I think we live in a world now where were just used
to having satisfaction. And its the same thing with
retailers. They have to be creative in the way they give
their customers an experiencea pleasant experience. And make things really easy for them by shipping their goods right to their door so they dont have
to carry them home. This is the way theyre going to
have to evolve.
Have you seen anyone doing that yet?
Retailers are absolutely looking at many different
ways to ship immediately. We hear from several different retailers that theyve opened up shops around
the city where they can deliver from many different
locations, so theyve got [delivery] down to the same
day if not the next day. [Another thing retailers can
do now is] change the color of the shoes or the clothes
that youre trying on so you dont have to actually
change the clothes. You put on one top, and then you
click a button. A lot of them are working with their
cellphone app so you can walk around the store. In
the future, youre going to be able to see which store
has your size.
Has anyone implemented this technology?
I believe that some of the first places that these will
be implementedand you can speak to these landlordsis the World Trade Center and the [American]
Dream [Meadowlands] mall in New Jersey.
They need to create an app so you dont even have
to go into the store to try anything on.
But thats not good for anyone in the room. (Laughs)
Are your landlords dropping rents?
I work for very intelligent landlords that are about
making deals.
So that means yes, theyre willing to cut prices?
I try to work with landlords that are realistic because
its not just about signing a dealits about having the
retailers stay in business. It costs landlords a lot if they
lease a space to somebody and then their concept fails.
MICHAEL NAGLE/FOR COMMERCIAL OBSERVER
our years ago, Amira Yunis was fighting a deadly

type of cancer. Today, her battle skills are dispatched on behalf of clients like Aldo, Fossil,
Joseph Peday, APF Properties and Callahan
Capital Properties.
Toughness seems like one of the words that
would best apply to Yunis. (Her two favorite TV shows:
Vikings and Game of Thrones. The limp in her walk: a
battle scar from the struggle with cancer.) But other
words like creativity, speed and beauty come to
mind.
Yunis and her four-person team at CBRE (three
holding a brokers license) repositioned Steinberg &
Pokoiks 575 Madison Avenue two times in the last 15
years, including buying out tenants and combining
retail units to lease a 7,000-square-foot space with a
double-height ceiling to luxury Swiss watchmaker
Breitling for its new flagship store.
On behalf of Urbanspace, Yunis secured 10,600
square feet at Monday Properties and Invescos 230
Park Avenue for the tenants first storefront following the success of the companys pop-up markets like
Madison Square Eats. And she is working on increasing the U.S. presence of T2, a high-end Australian tea
company, as well as for Joe & the Juice, a Denmarkbased juice bar.
Yunis, a former Ford model, is married to Dudley
Hancox, a financial adviser at Morgan Stanley, who
picked her up on a subway (no joke). They live on the
Upper West Side and have a second home in Ocean
Grove, N.J. She has a son in his 20s and stepchildren
ages 16, 19 and 21.
The 39-year-old executive vice president with the
firms retail services group sat down with Commercial
Observer in her office at the MetLife Building, at 200
Park Avenue. She talked about how she recovered from
the illness (despite being given a 20 percent survival
rate), the type of food halls that will cut the mustard
and how retailers are evolving to survive.
THE SIT-DOWN
Where were you before Newmark?

I started office leasing at Cogswell Realty.
How did you go from modeling to real
estate?
When I moved to New York, 21-ish years
ago, I started to rent apartments. I had always
kind of been interested in real estate, but it
wasnt a big focus in Minnesota. So I started
to work for a very nice family that had a [residential] real estate company in Queens. They
were called LTD Real Estate.
PHOTOGRAPHS BY DAVID KHORASSANI/COMMERCUAL OBSERVER
Did you like it?

Yeah. I was quite successful at it, and I was
pretty young making quite a bit of money.
Why did you quit modeling?
I started doing really well in real estate, and
I had taken a class, and they talked about how
much you make when youre an office leasing broker. So I went back to my office and
announced that I want to be an office broker.
They said we dont know how to do that, and I
said you just find a tenant and a space. Within
a few months I made a $40,000 commission,
and that was a lot of money.
You were sick with cancer for a while.
Tell us about that.
In July 2012, I woke up with incredible pain
in my lower back and leg. After a period of
time I was diagnosed with sarcoma, which is
a bone tumor. It has a very long nameundifferentiated spindle-cell sarcoma.
TEA FOR TWO:

Yunis is currently
looking to expand the
number of stateside
locations for T2, the
high-end Australian
tea company (top).
In Manhattan, one
eye-catching deal of
hers included securing
a flagship store for
luxury watchmaker
Breitling at 575
Madison Avenue (left).
So you just woke up one day in pain?

I hadnt been feeling well. But I went to
stand up, and I couldnt walk, and that was it.
There was no walking after that. I injured my
femur.
What was the recovery like?
I went through tremendous amounts of
chemotherapy. And you become immobilizedyou cannot walk.
For how long?
Two years. Basically they have to take it
out, theres no other way. Its not like a type
of blood cancer that they can cure with leukemia. It is a very aggressive type of cancer. I did more than 12 rounds over a few
months, which is a tremendous amount of
chemo; most people do two to three rounds.
And then I had to go through another 12
rounds of chemo, so 24 rounds of chemo
because it is a very resilient cancer. So they
bring you to the brink of death. And then
I did a 22-hour surgery on my leg [for] the
mechanics and transplants and everything. It was a revolutionary surgery that
they were not sure how well it would work
because it mixed transplants and mechanics. In the past it [was] always amputation.
Its a very fast, deadly cancer and usually
you only live for a few months. Soafter
two years they consider you cured because
its extremely aggressive.
Youre lucky to be walking.
Yes, very lucky. I can walk, do all my tours,
do everything I always believed that I would

be okay and that I would be better. I didnt
Google anything on the internet about itI
did it once, and it was absolutely terrifying. I
tried to stay very positive, and I have amazing
friends and family. Chemo is brutal and sarcoma chemo is extremely brutal. Everybody
reacts differently. Someone else who had the
surgery might not have been able to walk
again. Chemo really affects your balance. Im
lucky; I go to physical therapy three or four
times a week.
Today youre walking, which is a miracle,
but do you have hindrances?
Yeah, Im not going to go jogging. Im not
going to run down the street. I lift weights,
but Im not going to be dragging 20-pound
bags. Humans beings are amazing, and you

can learn to adjust to anything. I work for
the Sarcoma Foundation [of America]. There
are a lot of people I help that have had amputation or serious side effects from the sarcoma. When you look at how people change
and adapt to their circumstances, I consider
myself very blessed, very lucky that I can
walk because I talk and deal with a lot of people from the Sarcoma Foundation that cannot walk.
what is important.
What do you do for the foundation?

Im a part of the board and I also put
together the gala. Its a lot of work. I didnt
know what sarcoma was before I got it. Its
been interesting. It teaches you a lot about
life, who you are, what you can overcome and
You can weed out the distractions.

That is what you learn when youve been
very ill, and with chemo you get tired though
Im not tired anymore. You think, If I can do
five things today, what are those five things I
have the energy to do?
How did it change your perspective on

work?
I learned to focus on positive things and to
focus more on what was extremely important
and that goes for negotiations. What is your
endgame? Your goal is to do xyz and how do
you accomplish that without focusing on
things that arent as important to get you to
where you want to go?
BEHIND THE SCENES WITH THE INDUSTRYS MOST IMPORTANT PLAYERS
NOW LIVE: Midtown and Beyond
With Winston Fisher, Partner, Fisher Brothers
WATCH NOW @ commercialobserver/OBSERVATIONS

Follow the series
@commobserver
IN PARTNERSHIP WITH
DATA
ChartLease/Sale
Lease charts reflect deals closed or announced from July 4 to July 8.
Information on leases, sales and financing deals can be sent to Max Gross at mgross@commercialobserver.com.
Office
SQ. FEET
TENANT
LANDLORD
BROKERS
William Macklowe
Company and
LaSalle Investment
Management
John Cefaly, Michael Burgio and David Berke of Cushman & Wakefield represented the
tenant; Paul Wexler and Josef Yadgarov of Wexler Healthcare Properties, part of The
Corcoran Group, represented the landlord.
156 William Street
55,000
Cornell University
110 William Street
25,398
Lovell Safety
Management
Savanna and KBS

Realty Advisors
N/A
530 Fifth Avenue
21,000
Ameriprise Financial
RXR Realty
Josh Kuriloff and Andrew Braver of Cushman & Wakefield represented the tenant; Dan
Birney and Alexandra Budd of RXR represented the landlord in-house.
46-50 Greene Street
14,600
Medicrea
Zar Property
David Zar represented the landlord in-house.
485 Lexington Avenue
14,206
Offit Capital Advisors
SL Green Realty Corp.
Larry Zuckerman of Newmark Grubb Knight Frank represented the tenant; Natasha Brown
represented SL Green in-house.
20 West 37th Street
13,000
451 Research
Neuss Real Estate
Jordan Mandel of Vanguard Global Realty represented the tenant.
550 Seventh Avenue
12,015
InVision
Communications
Adler Group
Robin Fisher and Christie Bennett of Newmark Grubb Knight Frank represented the
tenant; Michael Heaner and Sam Stein of Kaufman Organization represented the landlord.
255 Greenwich Street
10,547
330 East 59th Street
7,000
ICE NYC
Brause Realty
Albert Manopla of Kassin Sabbagh Realty represented the tenant; Tony Andreoli and
Christine Emery of MHP Real Estate Services represented the landlord.
3848 Nostrand Avenue

(Brooklyn)
5,700
Aurora Energy Advisors
Acadia Realty Trust
David West of Integrity Real Estate Partners represented Aurora; Richard Novak and
Rosanna Tapang of CPEX Real Estate represented the landlord.
494 Eighth Avenue
5,500
Ronnette Riley
Architects
Elijah Equities
Joe Friedman of MHP Real Estate Services represented the tenant; David Menaged of
Intrepid Real Estate Group represented the landlord.
168 7th Street

(Brooklyn)
1,500
Houses in Motion
N/A
Richard Novak and Rosanna Tapang of CPEX Real Estate represented the landlord.
375-377 Third Avenue
7,150
East Drogheda
Culinary Associates
Rob Frischman of EVO Real Estate Group represented the tenant; William Abramson and
Matthew Olden of Buchbinder & Warren represented the landlord.
Ronald O. Perelman and

Claudia Cohen Center for Jack Resnick & Sons
Reproductive Medicine
of Weill Cornell Medicine
John Cefaly and Michael Burgio of Cushman & Wakefield represented the tenant; Dennis
Brady and Brett Greenberg of Jack Resnick & Sons represented the landlord in-house.
24|7
ChartLease/Sale
Lease charts reflect deals closed or announced from July 4 to July 8.
Information on leases, sales and financing deals can be sent to Max Gross at mgross@commercialobserver.com.
Retail
SQ. FEET
TENANT
LANDLORD
BROKERS
266 West 44th Street
59,137
Times Square Attractions

Live
Kushner Companies
Eric Gelber of CBRE represented the tenant; Morris Harary, Larry Rabinowitz and Ira
Bloom represented the landlord in-house, as well as Lon Rubackin and Gary Trock of
CBRE.
1626 Broadway
10,287
Juniors Restaurant
Kuwaiti Investment
Authority
Gary Trock, David LaPierre, Sean Moran, Zachary Parisi of CBRE represented both parties.
230 Vesey Street
7,566
Del Friscos Grille
Brookfield Property
Partners
N/A
The Giovanni
2,600
Wine Legend
N/A
Winick Realty was the broker.
117 North 6th Street
2,020
Rituals Cosmetics
JP Corban
Hank ODonnell of Crown Retail Services represented the tenant; Peter Levitan and
Brendan Reichenbacher of Lee & Associates NYC represented the landlord.
1600 Broadway
1,600
Kelloggs Cafe
Sherwood Equities
Mark Tergesen and Jennifer Bernstein of ABS Partners Real Estate represented the tenant;
Fred Rosenberg of Sherwood Equities represented the landlord in house.
60 West Eighth Street
950
Sees Candies
N/A
Joshua J. Roth of Donald Zucker Company represented the tenant; William Abramson and
Matthew Olden of Buchbinder & Warren Realty Group represented the landlord.
Sale
BUYER
SELLER
SQ. FOOTAGE
AMOUNT
BROKERS
432 Park Avenue
Macklowe Properties
CIM Group
130,000
$411.1 million
N/A
2178 Broadway
Ashkenazy Acquisition
Corp.
Lehman Brothers
N/A
$140 million+
Douglas Harmon of Eastdil Secured represented the seller.
61 West 23rd Street
Zegna family
Drachman family
50,000
$65 million
Arthur Draznin and Hunter Berman of Newmark Grubb Knight

Frank represented the sellers; Jeremy Nazarian and Vickram Jambu
of Venture Capital Properties represented the buyers.
346-350 West 71st Street
Cydonia RE W71 Inc.
346 West 71 Realty

LLC and 350 West 71
Realty LLC
65,772
$55.25 million
Cushman & Wakefield.
100 West 93rd Street
ABC Properties
Starrett Corp.
35,000+
$47.6 million
N/A
10 West 48th Street
Cydonia W48 LLC
Extell Development
75,310
$37.2 million
N/A
116 Seventh Avenue and

204 West 17th Street
A&H Aquisitions
Extell Development
31,478
$29 million
N/A

Eat LLC, signed by Jeff
Fishman
Time Equities and

Hamlin Ventures
22,500
$27.3 million
N/A
Slate Property Group

and Adam America
Real Estate
Anshel Friedman and

Aaron Karpen
N/A
$25 million
N/A

541-555 Fourth Avenue
(Brooklyn)
ENDNOTES
The Party Circuit
Mary Ann Tighe, the chief executive officer of CBREs New York tri-state region.
TIGHE-ING
THINGS UP
Left to right, top: Justin Royce, Cushman & Wakefield; Lenny Lazzarino, Edison Properties; Jason Vacker, Himmel + Meringoff Properties; Edward Riguardi, Vornado Realty Trust; Camille McGratty, Silverstein Properties; and Jason Greenstone,
C&W. Left to right, bottom: Robert Shapiro, Cushman & Wakefield; Mary Ann Tighe, CBRE; and Ryan Silverman, RFR.
June 14, University Club
one are the back offices of yesteryear. New York

City offices of the 21st century are trending to
the university style with openness to attract
the countrys top talent. That was the key message that Mary Ann Tighe, the chief executive officer of CBREs New York tri-state region, delivered during the
Young Men/Womens Real Estate Associations monthly luncheon at the University Club. Tighe added that rooftop decks
and terraces were another big draw for todays office workers.
The former Real Estate Board of New York chair also noted
that the industry is a major driver for the Big Apple. About 49
percent of New York Citys tax revenue comes from levies on
real estate, she said. Additionally, Tighe touched on issues
surrounding landmarked properties and improvement rights.
About 27 percent of Gothams buildings are covered by landmark status.Terence Cullen
Lindsay Ornstein of
Transwestern.
Left to right: Alan Bernstein of Waterman Interests, Madeline Roy of Edward J.

Minskoff Equities, Jason Greenstone of C&W, Peter Hanson of Boston Properties,
Kaitlyn Phelps of Boston Properties, Daniel Birney of RXR Realty.
Jordan Weiss of Savills Studley, left, and David Green of C&W.
Shawn Rosenthal of CBRE and Robin Fisher of

Newmark Grubb Knight Frank.
INDIVIDUAL GAME SUITES
MAKE YOUR SPECIAL

OCCASION LEGENDARY
Where unforgettable memories are born.
FOR MORE INFORMATION
718.508.3955 suites@yankees.com yankees.com/suites
45 WEST 45TH STREET
Under Construction
WHOS WHO FOR 45
WEST 45TH STREET
PHOTOGRAPHS BY JEMMA DILAG/COMMERCIAL OBSERVER;

RENDERING COURTESY SPIVAK ARCHITECTS
ARCHITECT: SPIVAK
ARCHITECTS
PROJECT MANAGER:
SPIVAK ARCHITECTS
GENERAL CONTRACTOR:
VANGUARD
CONSTRUCTION &
DEVELOPMENT CO.
MEP ENGINEER: EP
ENGINEERING
NEW LIFE: Clockwise from top right: The 16th floor was pre-built for a TAMI tenant, a roof deck lounge will be added and the lobby was transformed at 45 West 45th Street. Renovation of the 14th and the second
floors are being completed in the second phase of the project.
By Liam LaGuerre
Dark, gloomy, cave-likesounds
like the setting of a short story by Edgar
Allan Poe. But thats how executives from
landlord Vanbarton Group described 45
West 45th Street after it acquired the property last year.
The landlord is undertaking a $12 million interior and exterior makeover, since
the dingy building, between Fifth Avenue
and Avenue of the Americas, that hadnt
seen an update in at least two (probably
three) decades wouldnt attract new tenants
at premium rents. Vanbarton purchased
the 16-story office building from Samson
Management for $81 million in January
2015, city records show.
The dimness problems were primarily
in the lobby, which featured little natural
light and had unpolished, pinkish granite
wallsa style that appears quite frequently
in renovated 1980s buildings. After uncovering the dropped ceilings on upper floors,
66
general contractor Vanguard Construction

& Development Co. also found ceilings that
were crumbling.
In designing various vacant floors
throughout the building, Vanbarton decided
to take down dividing walls to make fullfloor spaces.
Tenants today are trying to control their
brands and culture more so than ever, and
having a full floor really enables them to
do that, Ethan Silverstein of Cushman
& Wakefield, who is marketing the office
portion of the building, told Commercial
Observer during a recent tour of the site.
They are not sharing it with anyone else.
They can put up any signs they want on their
floor.
The revitalization of the 135,533-squarefoot building is being done in three phases,
completing by spring 2017. The first phase,
which was finished in February, included
the revitalization of the faade and bringing the lobby into the light, so to speak. The
pinkish granite walls were ripped out and
replaced with wood and creamy, white, marble-like porcelain panels.

Glass doors and windows now grace the
entrance of the building to allow for more
natural light and a canopy was added for
branding. Vanbarton also installed three
new elevators and a card-reader system
supervised by an attending doorman for
enhanced security.
Workers demolished the entire fourth
and 16th floors in the initial phase, and prebuilt the 16th floor for a move-in ready technology, advertising, media and information
or TAMI tenant. It features a kitchen with all
new appliances, four glass offices and a conference room. It has a loft feel with nearly
11-foot high ceilings and polished concrete
floors. Other floors in the building will be
redone in a similar fashion.
We didnt want it to look like any other
Sixth Avenue office building where youve
got a drop ceiling and carpet, said Spivak
Architects Founder Howard Spivak, who is
the architect of record. We kept the natural
feel of the loft building.

During the second phase, which has a
completion date in August, workers will tear
down the second, fifth, 11th and 14th floors
for renovation. And in the third phase, the
landlord will replace the freight elevator
with a new one and extend it to a planned
roof deck lounge.
Asking rent for buildings office space is
in the $60s per square foot.
Another part of the plan is to bring in a
restaurant on the ground floor when the
current tenant Jacks Worlds lease expires
in early 2017.
Jacks World has a total of 16,346 square
feet, divided between the ground, mezzanine and lower level. David Abrams of RKF
is marketing the space.
We think it will fit in with the tenants
and serve as a tenant amenity, said William
Bond, a managing director at Vanbarton
Group. We want to create an experience for
our tenants from the moment that they are
outside the building.
530 SEVENTH AVENUE
Brian Neugeboren
212.452.6046
bneugeboren@savittpartners.com
savittpartners.com
GOLD CERTIFIED
WIREDSCORE.COM
Nicole Goetz
212.452.6053
ngoetz@savittpartners.com
Peter Fontanetta
212.452.6063
pfontanetta@savittpartners.com
Cushman & Wakefield is NYCs
#1 Building Sales Firm
for the 15th Consecutive Year

# Transactions 01-15
CUSHMAN & WAKEFIELD, INC.
4,002
Marcus & Millichap
1,323
The Besen Group
886
Eastern Consolidated
784
GFI Capital Resources Group, Inc.
783
Rosewood Realty Group
587
Capin & Associates
396
Douglas Elliman
384
CBRE
351
Newmark Grubb Knight Frank
341
Eastdil Secured, LLC
280
The Corcoran Group
232
Itzhaki Properties
218
Ariel Property Advisors
213
TerraCRG
202
Greiner-Maltz Company, Inc.
198
Kalmon Dolgin Affiliates, Inc.
194
Lee Odell Real Estate, Inc.
150
Friedman-Roth Realty Services, LLC
124
JLL
116
Pinnacle Realty of New York, LLC
100
Sholom & Zuckerbrot Realty, LLC
99
Swig Equities, LLC
98
CPEX Real Estate
96
Weissman Realty Group, LLC
90
Total Transaction Volume (Companies on Chart)

Based on # of Transactions (All Sales $500,000 and Over)
cushmanwakefield.com
12,247
Were committed to growing with

our clients over the long-term.
Chad Tredway
MANAGING DIRECTOR,
CHASE COMMERCIAL TERM LENDING
Have a multifamily deal that needs nancing? Call me.

(212) 270-3540
www.chase.com/MFL-newyork

6/28/16 11:38 AM
A lender providing certainty of

execution deal after deal.
8 UNIT APARTMENT
79 UNIT MIXED USE
25 UNIT APARTMENT
6 UNIT APARTMENT
Brooklyn
Manhattan
Bronx
Brooklyn
$2,600,000
$16,000,000
$1,780,000
$1,255,000
5-year Hybrid
7-year Hybrid
5-year Hybrid
3-year Hybrid
Purchase
Renance
Renance
Renance
44 UNIT PORTFOLIO
81 UNIT APARTMENT
8 UNIT APARTMENT
50 UNIT APARTMENT
Manhattan
Bronx
Brooklyn
Bronx
$8,450,000
$4,000,000
$2,000,000
$5,000,000
5-year Hybrid
5-year Hybrid
7-year Hybrid
5-year Hybrid
Renance
Renance
Renance
Purchase
82 UNIT APARTMENT
6 UNIT APARTMENT
62 UNIT PORTFOLIO
42 UNIT APARTMENT
Queens
Brooklyn
Queens
Manhattan
$6,000,000
$1,400,000
$4,150,000
$5,500,000
7-year Hybrid
5-year Hybrid
7-year Hybrid
5-year Hybrid
Renance
Purchase
Renance
Renance
Multifamily property owners come to Chase for best-in-class service

and a loan process with no surprises. Coupled with our great rates,
low fees and certainty of execution from start to nish, we deliver more
to borrowers than any other multifamily lender, again and again.
Call today to get started.

(888) 808-3792 www.chase.com/MFL-newyork
CHaseJuly2016.indd 1

Co 07-13-2016

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Co 07-13-2016

Enviado por

Direitos autorais:

Formatos disponíveis

Want a lender you can

count on through all cycles?

CHASE MULTIFAMILY LENDING

Meet your dedicated

Its our mission to keep earning your business

JULY 13, 2016

Talking private equity and Detroit

ALTERNATIVE FINANCING ISSUE

Six Years of Dodd-Frank

SOLID TO THE CORE

DEVELOPERS & CONSTRUCTION FINANCE

JOIN SMPS NEW YORK

1 WHITEHALL STREET, 7TH FLOOR

Lauren Elkies Schram, Deputy Editor

Harry Macklowes $411 million

For more information, please visit

Rick Lazio and

with Stuart Boesky

CMBS shops play with

Looking for Alternatives

Banks are increasingly wary of HVCRE rules.

Coney Islands endless

Three Cheers for

FOR REAL ESTATE ADVERTISING,

FOR FINANCIAL ADVERTISING,

| JULY 13, 2016 | COMMERCIAL OBSERVER

DESIGN, PHOTO & PRODUCTION

TO RECEIVE COMMERCIAL OBSERVER

Steps to Grand Central

Jeremy Bier, Vice President

Tara I. Stacom, Executive Vice Chairman

Macklowe Properties, led by developerHarry Macklowe, has closed on a $411.1

after Macklowe Properties defaulted during

DBOX FOR CIM GROUP AND MACKLOWE PROPERTIES

Macklowe Buys 432 Park Ave.

STAT OF THE WEEK

60 EAST 42ND STREET

with 7,200 sq.ft. of Terraces

OPEN WORK AREA

Entire 26 Floor 17,573 sq.ft.

OPEN WORK AREA

OPEN WORK AREA

In-building access to Grand Central Terminal and 5 subway lines 4

Julie M. Christiano 212-697-0696 jchristiano@empirestaterealtytrust.com

William G. Cohen 212-372-2233 wcohen@ngkf.com

Tower Full Floor

SASHA MASLOV/FOR COMMERCIAL OBSERVER

Tishman Speyer Gearing Up for 1.1M-SF LIC Office Project

Tishman Speyer has checked off the necessary boxes

The project is estimated to cost $706.7 million, as

A crossfit gym whose director of programing is the fittest woman on Earth

330 East 59th Street.

COURTESY COSTAR GROUP

Equal Housing Lender. 2016 M&T Bank. Member FDIC.

Steven Cohens Asset Firm Headed to 55 Hudson Yards

East 52nd and East 53rd Streets and330 Madison Avenue

represented the landlord. Reutersfirst reported news of

Expansion at 1 WTC Gets OK From Port Authority

8|JULY 13, 2016|COMMERCIAL OBSERVER

SPENCER PLATT/GETTY IMAGES

1 World Trade Center.

offices have been in thehigh-$70s to $80s

Ronnette Riley Architect has signed a