• 1-800-123-789
  • info@webriti.com

Category ArchiveNew York Community Bank

RXR Scores $285M Mortgage for Midtown Office Skyscraper

DekaBank has provided a $285 million loan to RXR Realty for 1330 Avenue of the Americas, property records show. The loan replaces and consolidates previous debt on the property with a new $97 million mortgage.

In 2011, New York Community Bank provided a $200 million loan on the 40-story building, located between West 53rd and West 54th Streets. That debt supported RXR’s $400 million acquisition of the tower, which was built in 1965 and renovated ten years ago.

Tenants at the 534,000-square-foot tower include Silvercrest Asset Management, CKR Law, and the Robert Wood Johnson Foundation, a public-health philanthropy. Furniture company Knoll leases a substantial 50,000-square-foot space on the building’s first few floors for its flagship New York City showroom.

RXR’s 2010 acquisition of the property, designed by Emory Roth & Sons, culminated longstanding interest in the building from Rechler. The RXR CEO had long pestered 1330’s previous owner, Harry Macklowe, about its availability, and was finally able to put the deal together on short notice while preparing to attend his niece’s bat mitzvah, The Real Deal reported.

When Macklow owned the trophy asset, its $187 million mortgage was securitized in the Deutsche Bank-sponsored COMM-FL14 CMBS transaction. That loan was paid off when RXR purchased the building.

Representatives from RXR and DekaBank were not immediately available for comment.

Source: commercial

NYCB Provides $89M Refi for Two NoMad Office Properties

Kew Management has received an $89 million refinancing package from New York Community Bank for the Townsend and The St. James—two office properties located in NoMad, property records show.

Meridian Capital Group’s Allan Lieberman negotiated the financing, which consists of a seven-year, $33 million loan with a fixed-rate of 3.875 percent and a five-year, $56 million mortgage with a fixed-rate of 3.265 percent.

“With low interest rates available near the same levels as their soon-to-be-maturing loans on the buildings, Meridian advised Kew to structure a recapitalization,” Lieberman said in prepared remarks. “We were successful in providing Kew’s management with a strategy that accomplished their short- and long-term goals.”

The Townsend is a 12-story, 97,300-square-foot office property located at 1123 Broadway and The St. James is a 16-story, 156,000-square-foot office property located at 1133 Broadway. Both buildings were erected in 1896 and are located on the same block between West 25th and West 26th Streets.

Following a previous refinance in July 2013—also provided by NYCB—the properties underwent a capital improvement program, signing new tenants including restaurant La Pecora Bianca and a Rizzoli bookstore.  

“Allan and Meridian have provided invaluable counsel to Kew as we have enhanced our own portfolio and helped make NoMad a vital part of New York’s economy,” Leslie Spira Lopez, the president and CEO of Kew Management said. “They have both the expertise and vision to make Kew’s properties and New York ever greater places in which to do business.”

A spokesman for NYCB declined to comment.

Source: commercial

Regulators To Clarify Which Real Estate Loans Are Considered Dangerous

A proposed rule on how banks should calculate the amount of equity they need to hold to compensate for construction loans and other precarious debt could bring transparency to a years-old regulatory tangle, according to a report by EY.

The rule, known as high volatility acquisition, development and construction, or HVADC, “clearly achieves its purpose of clarifying the definition” of volatile construction loans, wrote the author of the report, Joseph Rubin, a principal at EY. Even so, Rubin warned the clarification might force banks to treat a yet wider swath of loans as risky, raising their costs of compensating for the potential downside.

Though it will be implemented by the Federal Reserve, the Federal Deposit Insurance Corporation and the Treasury Department’s Office of the Comptroller of the Currency, the regulation’s logic stems from an international review of banking practices that played out in Europe after the financial crisis.

In 2013, concerned about how quickly construction and development loans had rotted on banks’ balance sheets during the financial crisis, the Basel Committee on Banking Supervision updated its model regulatory guidelines with the Basel III standard, nudging banks to account for their debt assets more conservatively.

Among stacks of other measures, the watchdog suggested requiring that banks overweight construction and development loans on their balance sheets. In counting these loans at 150 percent of face value, banks would need to compensate by holding a correspondingly higher level of equity to achieve the required ratio of equity to assets, reducing the risks they’d face if a large group of their borrowers defaulted. The Federal Reserve implemented the construction-loan rule for U.S. banks, along with most of the rest of the recommendations.

But the U.S. rules for construction and development lending that emerged from the agreement, called high volatility commercial real estate, or HVCRE, were difficult to interpret, according to EY.

“There were many questions that came out of the original rules,” Rubin said in an interview. “The problem is that since real estate lending is so specialized, how to apply to the rules to any particular structure often gets complicated.”

Such was the confusion that U.S. bank regulators saw fit in 2015 to offer a clarifying document answering banks’ frequently asked questions about the regulation—nearly four dozen of them.

Finally, in September, the trio of regulators responsible for the rules announced that a rewrite could be in order. Under their proposal, the definition of risky loans that should be overweighted in banks’ accounting would expand to include any loan that primarily finances or refinances acquisition, construction or development with a handful of exceptions for small residential properties and agricultural and community development.

If just over 50 percent of a loan finances these activities, it should be included, the proposed rule states. The current regime leaves that question ambiguous.

To compensate for the broader scope of debt that would qualify, the loans would be counted at 130 percent of their value, instead of 150.

In its report, EY remains agnostic on what the effects would be, noting that much depends on whether banks would pass on any higher capital costs they face to borrowers, or simply accept the changes as an increase in “the cost of doing business.”

Rubin said he would be watching closely to see how the changes propagate through the real estate industry.

“Many banks today are very well capitalized. [The proposed rule] may or may not impact them,” he said. “As always, [borrowers] will shop around, trying to find the lowest price. If prices rise across the board, that will impact profitability.”

Other analysts wondered whether the new rule would also stir regulators to take a harder line against granting exceptions.

Christopher Whalen, a bank analyst and the chairman of Whalen Global Advisors, explained that though the capital regulations appear binding, banks that maintain a genial relationship with regulators can often angle for a hall pass, winning approval to maintain a mathematically riskier balance sheet that the letter of the law permits.

New York Community Bank, for example, a lender that originates commercial real estate and multifamily housing debt, is “way over guidance” on the quantity of multifamily debt on the ledger, Whalen said. Under the existing framework, the analyst explained, the bank has worked with the FDIC to clear its positions, but it remains uncertain whether that flexibility will remain available under the new set of rules.

“There are a lot of banks out there who are way out of limits,” Whalen said. “It will be interesting to see if banks like that have to change their business model.”

New York Community Bank did not respond to a request for comment.

Bankers hoping for regulatory generosity have until Christmas to submit their comments on the proposal to the rulemakers, who analysts expect will announce their next move early in 2018.

In the meantime, taking a broader view, Whalen was optimistic about the underlying risk profile of banks’ construction and development activity—especially when it comes to multifamily housing.
“In major urban areas, these multifamily projects, they’re well constructed and maintained,” Whalen said. “There’s always an investor base for that.”

Source: commercial