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Chen Foundation plans condo conversion on West 35th Street

The Chen Foundation, a family landlord affiliated with nonprofit group T.F. Chen Cultural Center, is in the for-profit condominium business. The developer, which bought the 95,000-square-foot loft office building at 335 West 35th Street in 2016 for $50 million, plans to convert the property into 71 condo apartments with a total asking price of $99 million, or about $1.4 million on average, an offering plan filed with the New York state Attorney General’s office shows. […]


Source: realdeal

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Northwood scores $237M loan to buy HNA’s 1180 Sixth

To close its purchase of 1180 Sixth Avenue, Northwood Investors obtained a $236.6 million loan from the Royal Bank of Canada, sources told The Real Deal. Northwood, a real estate investment firm led by John Kukral, closed Thursday on the $305 million purchase of an HNA Group subsidiary and MHP Real Estate Services’ 22-story Midtown office property, as TRD first reported. The financing is a floating-rate loan and represents roughly 78 percent of the purchase […]


Source: realdeal

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Danny Meyer’s Union Square Hospitality Moving Within Union Square

Restaurateur Danny Meyer’s Union Square Hospitality Group has signed a 15,000-square-foot lease at Feil Organization’s 853 Broadway.

The company, known for its popular eateries Union Square Café, Gramercy Tavern, Blue Smoke and Shake Shack (which went public in 2015), will occupy the entire 17th and 18th floors of the 21-story building, which is located at the corner of East 14th Street and Broadway, according to The Real Deal. The asking rent in the 10-year deal was $85 per square foot, Brian Feil of Feil Organization told Commercial Observer.

“To get Union Square Hospitality Group, which is a fixture of Union Square, makes me feel that our building is the premier building on the square, especially since the renovation,” Feil said.

During the renovation, which was completed a few years ago, the company upgraded the lobby and common areas of the building and put a glass retail box on the base floors.

Union Square Hospitality will move from its current address at 24 Union Square East between  East 15th and East 16th Streets.

Savills Studley’s Michael Mathias, who represented the tenant, declined to comment via a spokeswoman. Feil Organization was represented by Robert Fisher in-house.

Existing office tenants at the 137,000-square-foot property at 853 Broadway include developer Brack Capital Real Estate, technology company Media iQ Digital and Vistar Media, which creates software to collect data for marketing companies. The building’s retail tenants are Capital One Bank and MAC Cosmetics.

Source: commercial

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Virgo Business Centers expanding presence at Midtown office tower

Virgo Business Centers, a shared office space provider, has inked a sublease deal that will see the firm double its footprint at 1345 Sixth Avenue. The company’s new deal is for just over 42,000 square feet and will encompass the entire 33rd floor at the Fisher Brothers property, according to the Commercial Observer. Virgo should move into the space by June, and the sublease will run through the end of 2024. The asking rent was […]


Source: realdeal

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Lenders who prey on veterans hurt other home buyers as well

Could predatory lending practices affecting veterans also be inflating interest rates paid by thousands of unsuspecting home buyers using FHA loans? The answer appears to be yes — and the underlying abuses in home loans to veterans are prompting action by federal authorities and legislation on Capitol Hill. Here’s what’s happening: According to officials, some lenders active in the Department of Veterans Affairs (VA) home-mortgage program have been inducing borrowers to refinance their loans frequently […]


Source: realdeal

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Virgo Business Centers Doubling Footprint at 1345 Avenue of the Americas

Shared office space provider Virgo Business Centers is doubling its presence at 1345 Avenue of the Americas after inking a sublease for more than 42,000 square feet at the Midtown office tower, Commercial Observer has learned.

Virgo has agreed to take the entire 33rd floor, comprising 42,054 square feet, at the 50-story, 2-million-square-foot building between West 54th and West 55th Streets, according to sources with knowledge of the transaction. The deal runs through the end of 2024, with Virgo expected to begin occupying the space this coming June.

Asking rent in the sublease was $79 per square foot, sources said, with Virgo represented by CBRE’s Anthony Dattoma. A CBRE spokeswoman confirmed the deal but declined to identify the sublandlord; however, CoStar Group data indicates that the 33rd-floor space belongs to investment management firm AllianceBernstein, which anchors 1345 Avenue of the Americas with roughly 1 million square feet under lease.

A spokesman for AllianceBernstein did not immediately return a request for comment.

The transaction takes Virgo’s total footprint at the Fisher Brothers-owned property to nearly 83,000 square feet, with the company having also subleased the entire 40,791-square-foot second floor from AllianceBernstein in 2013.

The shared office provider already has more than 200,000 square feet of space across five New York City locations at 575 Lexington Avenue, the Chanin Building at 380 Lexington Avenue, the Empire State Building, 14 Penn Plaza and 1345 Avenue of the Americas.

In addition to AllianceBernstein, other tenants at 1345 Avenue of the Americas include private equity firm Fortress Investment Group, law firm Linklaters and infrastructure-focused investment firm Global Infrastructure Partners.

Source: commercial

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Brooklyn Charter School Expands to Dumbo

Brooklyn Lab Charter School has leased space for a new campus in Dumbo, not far from its other locations in Downtown Brooklyn.

The school will occupy 81,648 square feet on the second through fifth floors of 77 Sands Street, The New York Post reported. The middle and high school will also have some office space on the 12th floor and a canopied entrance on the first floor. Asking rent was $50 a square foot, and the length of the lease wasn’t immediately clear.

The new campus will open in September to sixth through 10th graders and include a performing arts space, cafeteria, student conference rooms and exhibition space.

Brooklyn Lab currently has space at 240 Jay Street and 40 Flatbush Avenue Extension in Downtown Brooklyn.

77 Sands is just one piece of the five-building, 750,000-square-foot Dumbo Heights complex, which is being developed by RFR Realty, Kushner Companies and LIVWRK. Invesco Mortgage Recovery Fund held a 90 percent stake in the properties when the quartet of firms acquired the former Jehovah’s Witnesses printing warehouses for $375 million in 2013. Then the three other firms bought Invesco out last year in a $600 million deal. Normandy Real Estate also purchased one of the buildings, 175 Pearl Street, for $100 million last March.

The developers have spent $100 million revamping the former industrial properties and creating 50,000 square feet of retail, according to The Post.

Scott Klau of Newmark Knight Frank represented the school, and a Newmark team of Whitten Morris and Joseph Sipala represented Dumbo Heights ownership in the deal.

A spokesman for NKF didn’t return requests for comment. Spokespeople for RFR, Kushner Companies and LIVWRK didn’t immediately respond to requests for comment.

Brooklyn Lab will join a host of creative and tech tenants, including Etsy, WeWork, B-Reel, Prolific Interactive and Frog Design. The ground floors are populated by hip retail tenants like Yoga Vida, Shadowbox, Bluestone Lane, Untamed Sandwiches, Taco Dumbo and Randolph Beer.

Source: commercial

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Watchmaker Accutime Renews HQ at 1001 Avenue of the Americas

Watch manufacturer Accutime Watch Corporation is keeping its headquarters at 1001 Avenue of the Americas after agreeing to renew its 12,107-square-foot offices at the Garment District building, Commercial Observer has learned.

Accutime signed a seven-year lease to remain in its space, comprising the entire sixth floor of the 24-story, 240,000-square-foot property at the northwest corner of West 37th Street and Avenue of the Americas, according to sources with knowledge of the transaction.

Asking rent in the deal was in the mid-$50s per square foot. Landlord ABS Partners Real Estate was represented by an in-house team of James Caseley, Alison Miller, Gregg Schenker, Earle Altman and Steven Hornstock; that team also worked on behalf of tenant Accutime, according to ABS.

“We are proud to have maintained an excellent relationship with Accutime and are happy that 1001 Avenue of the Americas continues to meet their needs,” Caseley said in a statement.

Other tenants at building include accounting firm Schulman Lobel, engineering firm Lilker Associates Consulting Engineers and social media marketing firm The Social Edge.

Source: commercial

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Debt Funds Talk Overcrowding on Their Turf, the End of Quantitative Easing

At the Evolution of Private Debt Funds panel at MBA’s CREF conference this week, moderator Jack Cohen, the CEO of Darkknight Ventures, injected some levity into the discussion in the form of some light-hearted pop quizzes.

Panelists were asked to describe the current alternative lending environment in three words or less. “Very competitive,” said Jimmy Yung, a managing director at Blackstone Real Estate Debt Strategies; “Seeing some cracks,” Greta Guggenheim, the CEO of TPG Real Estate Finance Trust, opined; “Too much capital,” said Tom MacManus, the president of A10 Capital.

Next, panelists were asked to define a debt fund’s role in terms that a even 12-year-old would understand. Yung was given a gold star by Cohen for offering the simple definition: “We give people money to buy properties and ask them to pay us back.”

A debt fund’s purpose was once viewed as bridging a lending gap in the market where traditional lenders couldn’t tread. But today, debt funds aren’t the alternative anymore, Yung said: “We’re building long-lasting mortgage finance businesses.”

In addition to offering more leverage, debt funds play a critical today in financing larger, complex transitional loans because of the flexibility they can offer with regard to future funding commitments, Guggenheim said.

But where there’s opportunity (and yield), there’s competition—and a lot of it. Debt funds aren’t only competing with more traditional capital sources on deals, they’re competing with each other, as an increasing number of new funds pop up in the already crowded space—many borne out of private equity funds unable to deploy capital in their current form.

But before you think of jumping on the bandwagon and starting your own debt fund, Guggenheim cautioned that, as a result of increased competition, “Yields have really gone down—it’s not nearly as attractive [a space] as it was.”

“It’s all about relationships,” Yung said of how Blackstone stays ahead of its competitors. “And we are really thoughtful about the real estate and can underwrite the whole loan. We have scale, speed and efficiency.”

Guggenheim and MacManus agreed that an important differentiator in standing out from the crowd is in having an asset management division. Several of the newer debt funds lack the infrastructure to service clients and handle requests, they said, with no division between a loan’s originator and asset manager.

When the conversation turned to recent unexpected events in the market, Guggenheim said that the Federal Reserve’s call to end quantitative easing at the end of last year was a big surprise.

“[Quantitative easing] has kept asset prices attractive,” Guggenheim said. “Without it, the opposite will occur.” She added that the prospect of a higher interest interest rate is now “pretty high, as we’ve never had quantitative easing like this.”

As for potential future surprises, Guggenheim said it’s tough to predict what’s next in this real estate cycle—her reasoning being that, to make a prediction, you need to rely on historical information, and as the past cycle has been an anomaly, there is no historical data to form that prediction. However, “I do believe we will see interest rates rise with a negative effect on asset values,” she said.

TPG has been stressing its floating-rate loan production with higher interest rates in preparation for this, Guggenheim said.

Borrowers are also concerned about where we are in the economic cycle and being more savvy about leverage and requiring more flexibility around their business plans as a result, Guggenheim said. Whereas a 3-1-1 structure may be typical in bridge loans on transitional assets, borrowers are now requesting that three-year base term to be extended to four or five years.

Other areas of concern for short- to medium-term market dislocations addressed by the panel include geopolitical risk—Yung pointed to growing tensions with North Korea and the continued effects of Brexit as being on Blackstone’s radar—and the Class-A multifamily sector. “There’s just way too much capital coming in,” MacManus said.

Source: commercial

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Traditional Lenders Talk Competition

There’s nothing like a little healthy competition, right?

With an influx of capital into the commercial real estate market, including the ascension of a range of capital sources such as alternative lenders—unshackled and without regulatory constraints—traditional banks are grappling with ways in which they can appeal to borrowers and retain market share.

“We do a forensic analysis of lost deals, and the No. 1 reason we lost deals was because of the leverage, and No. 2 was pricing, and No. 3 was recourse, ” Kathleen Farrell, who heads up SunTrust’s commercial real estate business, said at MBA’s Multifamily Expo in San Diego on Monday. “I expect it’s not dissimilar from other traditional bank lenders out there. That says that if we want to be competitive this year, we’re going to have to stretch on leverage, drop our pricing and rethink recourse, right? That’s a real indicator of how many competitors there are in the market today.”

Farrell spoke along with several other bankers from large institutions with a range of risk profiles—including moderator Gregg Gerken, the head of U.S. commercial real estate lending at TD Bank; Chris Niederpruem, a managing director at CIT; and Doug Faithfull, the chief lending officer at Cambridge Savings Bank out of Boston—to kick off MBA’s annual CREF Multifamily Housing Convention and Expo at the Marriott Marquis in San Diego.

Market conditions and regulations have hampered these institutions, but they’re looking to regulatory reform under the Trump administration to bring some relief. And while they say some multifamily assets such as high-end, luxury spaces have been saturated, they’ve noticed gaps to fill in the mezzanine space.

“We haven’t really had to [use mezzanine debt] through the last couple of years,” Farrell said. “There’s been a gap between the bid and ask on what clients are looking for and what banks are willing to do, and you can feel that gap narrowing. But, it’s tough. I think a lot of us have long memories about the last downturn and how difficult it is to work out a [complex] deal.”

As this current cycle nears its (supposed) end, Niederpruem said bankers are asking themselves what a potential softening might feel like and how the market will react to a reset.

“The flipside of the competition we’re talking about is that all this capital in the market will potentially and hopefully soften the landing, and it may not be as bad a reset or recession as in the past,” Niederpruem said.

Farrell said there’s no indication that a recession is imminent and went so far as to use a sports analogy to indicate the market should expect more than just extra innings: They should expect a doubleheader. Every panelist agreed that while overtime is expected, there are many factors, including the U.S.’ current political environment—and the uncertainty that comes with it—and forthcoming monetary policy that could create some pause. One thing is clear, banks will have to up the ante.

“We do have runoff, and we want to continue the same levels of origination that we’ve had. But, it’s going to require some hard swallowing,” Faithfull said.

Gerken, moderating the panel, delivered one last question: What keeps you up at night?

“Burritos and tequila,” Faithfull joked, sending the audience in the Marriott Grand Ballroom into laughter.

Source: commercial

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