Commercial Observer Finance Weekly - November 8, 2019

The Insider’s Weekly Guide to the Commercial Mortgage Industry

FINANCE WEEKLY

In This Issue 3 Mirae Asset refinances Seattle Hyatt Regency with $130M loan 5 MRC provides $168M construction loan on Jersey City multifamily project 7 Deutsche, Square Mile combine for $130M refinance of Philly office property 9 RPW Group gets $35M ULLICO refinance for Westchester office property

COURTESY MERIDIAN CAPITAL GROUP

11 TD Bank provides $24M in construction debt for a new Bronx office building

for $390 million (GreenOak merged with Bentall Kennedy in July this year to form BentallGreenOak), undertaking an extensive upgrade and repositioning of the building’s units, common areas and outdoor space that topped $60 million, according to the Wall Street Journal.

The 38-story luxury property was previously known simply as River Tower and built by Harry Macklowe in 1982. Its construction represented Macklowe’s first foray into large-scale residential development. Macklowe resided in the building’s penthouse before selling the property in 2010 to

Barclays has provided $350 million to Shorenstein Properties to refinance the owner’s leasehold interest in 1407 Broadway, a 1.1-millionsquare-foot Garment District office property, Commercial EXCLUSIVE Observer has learned.

The five-year loan retires roughly $270 million in previous debt provided by Bank of America in May 2015 to fund Shorenstein’s $330 million ground lease purchase. Previous owners The Lightstone Group, Kamber Management and Solil Management controlled the operating sublease, the master lease and the ground lease, respectively, according to a Feb. 2015 report from The Real Deal, which first reported that the sale was in contract.

A JLL Capital Markets team led by Geoff Goldstein, Michael Gigliotti and Christopher Peck arranged the refinance on behalf of Shorenstein, sources said. JLL’s Andrew Scandalios and David Giancola were also involved in the negotiations. The financing was sourced by brokerage HFF prior to its July acquisition by JLL, sources said.

Built in 1950, the 43-story property — between 38th and 39th Streets — is situated near Times Square and Bryant Park, just a block away from

MACK...continued on page 3

BARCLAYS...continued on page 5

Oriana at River Tower.

Mack Lends $390M to Refi Midtown Multifamily Property Slate Property Group and BentallGreenOak have landed a $390 million refinance of Oriana at River Tower, a multifamily property in the Sutton Place enclave of Midtown EXCLUSIVE East, Commercial Observer can first report.

Mack Real Estate Credit Strategies provided the loan in a deal negotiated

by Meridian Capital Group’s Ronnie Levine and Thomas Wayda.

The 412-unit luxury property, at 420 East 54th Street, offers residents unobstructed views of Roosevelt Island, Brooklyn and the Manhattan Skyline.

Slate Property Group and GreenOak Real Estate acquired the asset in January 2016

Barclays Refis Shorenstein’s 1407 Broadway Leasehold Interest With $350M Loan

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COURTESY LOTUS CAPITAL PARTNERS

Hyatt Regency Lake Washington.

Mirae Asset Refis Seattle Lakefront Hotel With $130M SECO Development has landed a $130 million loan to refinance its Hyatt Regency Lake Washington luxury hotel in Renton, Wash., Commercial Observer has learned.

EXCLUSIVE Mirae Asset provided the floating-rate debt in a transaction arranged by Newmark Knight Frank’s Jordan Roeschlaub, Dustin Stolly, Nick Scribani, Chris Kramer and John Gallagher.

The newly completed 347-key hotel, at 1053 Lake Washington Boulevard North, sits on the southern tip of Lake Washington and within Renton-based SECO’s 17-acre Southport on Lake

MACK...continued from page 1 Equity Residential as part of a three-building deal, along with 777 Sixth Avenue and 305 West 50th Street.

Today, its amenities include a new 4,470-square-foot rooftop with a fitness center, an outdoor kitchen, a pet spa and a

Washington master-planned development. The $1 billion project also includes 383 luxury multifamily units, 712,752 square feet of commercial office space, four restaurants and 11,025 square feet of retail space.

“The SECO Development team has created a truly best-in-class hotel to complement the larger Southport on Lake Washington master planned development,” Roeschlaub said in prepared remarks.

The four-star Hyatt’s amenities include 65,000 square feet of indoor and outdoor space, a ballroom, a fitness center, a pool, and several dining options.

1,500-square-foot children’s area with a playroom and game lounge. The property also includes a 182-space parking garage.

“The BentallGreenOak and Slate team added significant value to this property since acquiring it and this was reflected in lender interest as we brought the property to market for financing,” Levine said in prepared

3 | NOVEMBER 8, 2019

The property is centrally located between Seattle and Bellevue and amid some of the largest employers in the area, including Amazon, Microsoft, Google, Boeing and Starbucks. As the only waterfront hotel on the lake to include meeting and event space, it’s well positioned to attract group event bookings.

“The Hyatt Regency Lake Washington stands out among its peers as the premier hotel product in the Seattle market, with 65,000 square feet of indoor and outdoor meeting space, renowned food and beverage outlets and world-class amenities,” Stolly said.

Officials at SECO and Mirae Asset were not available for comment.—Cathy Cunningham

remarks. “Ultimately we were able to achieve an optimal structure for the sponsor to continue executing its business plan.”

Officials at Mack Real Estate weren’t available for comment. Officials at Slate Property Group and a spokesman for BentallGreenOak did not return requests for comment.—C.C..

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BARCLAYS...continued from page 1 the Times Square subway station; it was designed by architect Ely Jacques Kahn.

Lightstone and Kamber reportedly put its control of the property on the market near the end of 2014, with the sale closing several months later on April 30, 2015, at a 4.8 percent cap rate. Upon Shorenstein’s 2015 purchase, the property was 80 percent leased, according to CoStar Group, with 34 years remaining on the lease.

Starting in 2015, the building underwent a three-year renovation, in which roughly $62 million was deployed to further modernize the asset, sources said, building on some work that Lightstone had done the year before. The work included a renovation of the lobby and security, common areas, roof and terrace and elevators. The property has also undergone a

A rendering of Emerson Lofts.

And given that the jurisdiction of New York State’s new developer-vexing rent regulation law ends abruptly in the middle of the Hudson River at the New Jersey state line, cross-state interest in Jersey City development has ignited more ferociously yet, according to Josh Zegen, MRC’s founder.

“If you look at investment sales, there are a lot of people looking at New Jersey because of [rent regulation in New York],” Zegen said. “Since those changes in June, it’s driven money outside the City, and although Jersey’s always been a market of interest, that’s only accelerated.”

The steady pace of commercial development on Manhattan’s West Side — such as at Hudson

large-scale repositioning of its retail space, in which new storefronts were added.

Currently, the asset’s 33,000 square feet of retail space is 95 percent occupied to tenants such as Luke’s Lobster, ‘Wichcraft, Dig Inn, Juice Generation and Gregory’s Coffee.

Wells Fargo and Capital One also have bank branches in the building, according to the property’s website.

In the last year alone, the building has experienced about 160,000 square feet of leasing activity, sources said.

In January, flexible office provider Knotel inked a lease for around 28,405 square feet across the 25th and 26th floors, as CO previously reported.

Other office tenants at the property include Uber, which has almost 34,600 square feet on the 12th floor on a lease dated February 2018, according to CoStar, and women’s clothing 5 | NOVEMBER 8, 2019

Yards and the redevelopment of the World Trade Center — has also spurred along the Jersey City apartment market, he noted.

“Especially with what’s going on in New York, I’m definitely seeing a lot more investor appetite in New Jersey in general,” Zegen said. “If anything, it may be more convenient to get to places on the west side of Manhattan from Jersey City than from places in Brooklyn and Queens.”

The project’s size and scope imply that construction would likely take two and a half to three years, the lender said, emphasizing that the timetable was an estimate.

Manhattan Building Company did not respond to a phone call.—Matt Grossman

1407 Broadway.

brand Alex Apparel Group, which signed a lease in 2014 for nearly 26,500 square feet on the 15th floor.

Asking rents for office space at the building range from $58 to $70 per square foot, according to information from CoStar. CBRE currently handles leasing at the location.—Mack Burke

COURTESY COSTAR GROUIP

Manhattan Building Company has picked up a $168 million construction financing package from Madison Realty Capital to fund the first phase of a massive multifamily project in Jersey City, N.J., EXCLUSIVE Commercial Observer can first report.

The debt will fuel Manhattan’s work on Emerson Lofts, envisioned as an eventual 1,000unit complex at 315-326 15th Street in the growing secondary city, New Jersey’s second largest after Newark. MRC’s loan will back the project’s first phase, a 26-story, 350-apartment tower that would also include 10,000 square feet of commercial space.

Future plans for the site, for which the MRC financing provides pre-development money, also include the conversion of a 600,000-squarefoot industrial building — formerly the Emerson Radio Factory — into loft style apartments.

Blueprints also contemplate two other ground-up residential construction projects.

Developer Jeffrey Gural’s family owns the land under the ambitious apartment project and Manhattan Building controls the leasehold interest through a 99-year deal with the Gurals, according to sources.

The site, just north of the entrance to the Holland Tunnel and approximately level with Manhattan’s West Houston Street, lies amidst a raft of new construction along the Jersey City waterfront. In a running project last updated in 2018, Jersey Digs, a local real estate website, counted nearly 40,000 planned units in the city, with about a quarter of those actively under construction.

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MRC Provides $168M Construction Loan for Jersey City Multifamily Project

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Deutsche Bank and Square Mile Capital Management have teamed up to provide Cohen Equities and Taconic Capital Advisors with a $130 million, five-year refinance of 801 Market Street EXCLUSIVE in Philadelphia, Commercial Observer has learned.

Sources close to the deal said that Deutsche Bank provided a senior loan in the deal, while Square Mile took the mezzanine position. The senior-mezzanine breakdown couldn’t immediately be gleaned.

AKS Capital Partners’ co-founder Adam Schwartz, formerly of JLL, led the refinancing along with fellow AKS co-founders Aaron Appel, Jonathan Schwartz and Keith Kurland, sources said. AKS officials declined to comment on the transaction.

The 13-story, 695,130-square-foot asset is located in one of Philadelphia’s fastest growing submarkets. As previously reported by CO, New York-based Taconic Capital Advisors and Cohen Equities acquired floors three through six of the property’s office component in 2017 — with the

801 Market Street.

help of a $96 million acquisition loan, also from Deutsche Bank and Square Mile — after purchasing floors seven through 13 in 2016.

The property’s retail space — spanning the first two floors as well as the subgrade space — is owned by a joint venture of PREIT and Macerich.

The two redeveloped the retail component as part of Fashion District Philadelphia, a development that spans three city blocks and encompasses

COURTESY JLL

Deutsche Bank, Square Mile Provide $130M Refi for Philly Office Property several retail, dining and entertainment brands.

“Given our ownership of the upper office stack, it made perfect sense to acquire the remaining office floors due to the complementary nature of the rent-roll profiles — stable versus opportunistic — and the added value in cleaning up the condominium structure,” Taconic Director Eric Sitman said at the time of the acquisition in 2017. “The PREIT and Macerich teams were an excellent counterparty and we’re excited to see them succeed with their Gallery redevelopment, which will be a game changer for the Market East submarket.”

Formerly known as the Strawbridge Building, having been built for the Strawbridge department store, the Beaux Arts-style property dates back to 1931 and was also used as Thomas Jefferson’s office when he was Secretary of State. It is in walking distance of Independence Hall and the Liberty Bell.

A spokesman for Deutsche Bank declined to comment, as did officials at Square Mile. Officials at Cohen Equities and Taconic did not respond to requests for comment.—C.C.

MUFG Union Bank has provided $38.5 million in financing to Goco Hospitality on its Glen Ivy Hot Springs spa in Corona, Calif., just east of Orange County, Commercial Observer has EXCLUSIVE learned.

The five-year, fixed-rate loan went toward a refinance of the popular day spa, which is the oldest and one of the highest-grossing and most frequently visited spas in the country.

New York-based brokerage Lotus Capital Partners, which is led by founder and managing partner Faisal Ashraf, advised in the arrangement of the financing. Mike Presser out of Walker & Dunlop’s Orange County office procured the Union Bank financing on behalf of Goco.

Glen Ivy Hot Springs — at 25000 Glen Ivy Road — hosts around 200,000 visitors each year. The 20-acre spa is surrounded by 65 acres of land also owned by Goco, which the firm is eyeing to develop into a wellness hotel, leveraging the established brand of Glen Ivy. “What’s unique is that there’s been tons of hospitality deals where the spa is a big element but there are always [guest] rooms,” Ashraf said. “But the collateral here is swimming pools and restaurants. Some people might [ask], ‘Where is the real estate and the rooms?’ There is a long, durable history of cash flow here.”

An aerial view of a pool area at Glen Ivy Hot Springs.

The expansive spa features 17 mineral pools and hot springs, 70 treatment rooms, 10 manicure and pedicure stations, two recently renovated outdoor saunas, Roman baths, and four food and beverage outlets. It also includes Club Mud, a red clay mud pool and treatment area, and 1,500 square feet of retail space, with a cafe and shops offering items like skin care products, resort wear and bathing suits. “[What Glen Ivy offers], an ordinary hotel might consider amenities, [but] here, these amenities constitute a draw that goes back 100 years,” Ashraf said. “Every day we were in the 7 | NOVEMBER 8, 2019

market, the website said it was sold out for the month ... half of [its] net income is generated via the admissions ticket.”

The award-winning complex, which was founded in the 19th century, is located in the Temescal Valley, just south of Corona, in the middle of a triangle of municipalities in Los Angeles, San Bernardino and San Diego. Its location is within reach of six surrounding airports.

A representative for Union Bank was not available. Goco Hospitality officials could not be reached.—M.B.

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Apartment Developer Grabs $38M Construction Deal in Cincinnati Acres Capital is extending a $38 million construction loan to the developer of a planned Cincinnati multifamily project, Commercial Observer can exclusively report.

EXCLUSIVE T he t wo -a nd-a half-year loan will fund Charles Street Investment Partners’ new residential development in the city, a 155-unit building at 1118 Sycamore Street, about half a mile north of the city’s central business district in its Over-the-Rhine neighborhood. The building, designed by Seattle’s NBBJ, will also have 12,500 square feet of retail space as well as a small, 3,611-square-foot office component.

Mark Fogel, Acres’ CEO, said that the multifamily-heavy balance in the mixed-use property could help the project qualify for a future agency refinancing once construction is complete.

“When we think about multifamily, we don’t want to have too much retail or office, because there’s a constraint from permanent lenders,” Fogel said. “The Fannies and Freddies of the world, they’re constrained by their rules. They can’t take on a building with more than 25 or 30 percent [of other uses].”

Four residential units, styled as “townhomes,” will have their own individual entrances from the street. The seven-story project is also set to include an amenity deck on the third floor with a pool, barbecues and a fire pit, as well as a dedicated two-level garage for residents.

Over-the-Rhine, originally developed as a working-class residential neighborhood during the nineteenth century, is “one of the largest, most intact urban historic districts in

the United States,” according to a neighborhood preservation group, which compares the district’s architecture to historic sections of New Orleans, Charleston, S.C., and Savannah, Ga. In the early 2000s, the area had become one of Cincinnati’s most dangerous and derelict. But over the next decade, a nonprofit called Cincinnati Center City Development Corp., with cooperation from the city, led the neighborhood’s revitalization.

Now, the colorful, walkable district features dozens of restaurants and bars. 1118 Sycamore might bring another yet to the neighborhood: Fogel suggested that an eatery could be a good fit for the building’s retail space.

“We look forward to a successful partnership in such a dynamic, historic market as Over-the-Rhine, an urban revitalization story almost unparalleled in this real estate cycle,” Jason Pollack, a Charles Street executive, said in a statement.

Favored in the 19th century for its prime location on the Ohio River, the city declined significantly during the second half of the 20th century, losing population in every decennial census between 1960 and 2010.

The federal government’s latest population estimate, however, shows a slight uptick in inhabitants in the eight years since then.

Cincinnati still hosts MLB and NFL teams and its soccer team, FC Cincinnati, joined Major League Soccer’s top division last year in an expansion for the league. Procter & Gamble has been based there since its founding in 1837. Other corporate lifers include retailers Macy’s and The Kroger Company.—M.G.

The RPW Group has landed a $34.9 million refinance for its office property at 450 Mamaroneck Avenue in Harrison, N.Y., Commercial Observer learned.

EXCLUSIVE ULLICO provided the seven-year, fixed-rate loan in a deal negotiated by Cooper-Horowitz’s Richard Horowitz and Justin Horowitz. ULLICO was represented by Northeast Regional Manager Kevin Smith.

The financing replaces previous debt on the property, also provided by ULLICO. The property is a four-story, 176,649-squarefoot office building in the heart of Westchester County. RPW purchased the asset in May 2011 and has since upgraded it to a Class A property that is 100 percent occupied. Its amenities include onsite security, a child care center and a cafeteria.

Earlier this month, RPW — headed by Robert and Andrew Weisz — expanded its Westchester portfolio with the acquisition of 100 Manhattanville Road, a Class A office complex in Westchester County, N.Y., as first reported by CO. Cooper-Horowitz also negotiated the acquisition debt for that purchase.

“We own more than 2 million square feet in Westchester,” Robert Weisz told CO at the time of the purchase. “This is a terrific building and a wonderful addition to our portfolio.”

RPW has purchased and repositioned more than 6 million square feet of office and retail space in New Jersey, Fairfield County and Westchester County. Its Manhattan properties include 240 West 35th Street and 275 Madison Avenue; ULLICO provided a $210 million refinance for the latter in July 2018.

Officials at RPW Group and ULLICO weren’t immediately available for comment. CooperHorowitz officials declined to comment.—C.C.

450 Mamaroneck Avenue.

9 | NOVEMBER 8, 2019

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A rendering of 1118 Sycamore Street.

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Canadian commercial real estate investment firm Timbercreek Asset Management has provided $30.3 million in bridge financing to Grubb Properties for the recapiEXCLUSIVE talization and lease-up of a recently renovated office building in Charlotte, N.C., Commercial Observer learned.

The 42-month, floating-rate loan covers the recapitalization of a 10-story suburban office property, called 1515 Montford Park, just south of Charlotte.

“Grubb Properties has completed the heavy lift and with the remaining vacancy concentrated on the upper floors, we look forward to seeing the asset through lease-up and stabilization,” Timbercreek executive director Patrick Maroney said in a prepared statement. “Charlotte continues to show strong signs of growth and investor liquidity and remains a target market for the U.S. debt fund.”

A Greystone Capital Advisors team led by president Drew Fletcher, who served as the exclusive advisor, along with executive managing director Paul Fried, vice president Matthew Hirsch, senior associate Steven Deck and analyst

COURTESY GREYSTONE

Timbercreek Provides $30M Bridge Loan to Recap Charlotte Office Building

1515 Montford Park.

Cassandra Connolly, arranged the transaction on behalf of Grubb.

The roughly 123,000-square-foot office building is located at 1515 Mockingbird Lane in the city’s Montford neighborhood, and it sits within a nearly 11-acre mixed-use campus that Grubb is redeveloping, according to information from Greystone. Grubb recently wrapped up what was a floor-by-floor renovation of the office building, which it undertook in 2017; the work included large-scale upgrades to building systems.

There’s around 29,000 square feet of space available at the property, with asking rents at $28 per square foot, according to Grubb’s website.

The building includes a tenant lounge and a fifthfloor balcony, and there’s also a fitness center located next door.

Brokerage CBRE currently handles leasing at the property, according to property information on Grubb’s website.

In May last year, Bloomberg reported that Toronto-based Timbercreek launched fundraising for its largest ever U.S. debt fund, seeking $1 billion for a closed-ended vehicle that would deploy $10 million to $35 million loans, such as this one, on transitional properties across the country. The firm was aiming for returns in the 8 to 10 percent range, according to a September 2018 report by Commercial Mortgage Alert.

The vehicle will support financings with loanto-value ratios of up to 80 percent for most property types but multifamily, which can reach up to 85 percent, according to Commercial Mortgage Alert’s report; the fund will not target ground-up construction opportunities, instead focusing on “heavy rehabilitation.”

Maroney was brought on by Timbercreek last year — from New York-based lender Annaly Capital Management — to head up the development and operation of the fund.—M.B.

Manatus Development Group has nabbed $24 million from TD Bank to finance construction of a mixed-use office building in the Bronx that will be the new flagship location of human EXCLUSIVE and social services nonprofit Samaritan Daytop Village, Commercial Observer has learned.

The two-year loan includes a six-month extension option and carries a rate of 4.5 percent — 2.75 percent over 30-day Libor, sources said — and a 70 percent loan-to-cost.

Max Ralby of HKS Real Estate Advisors negotiated the debt on behalf of Manatus, which specializes in affordable housing and building projects for nonprofit organizations.

“The highly experienced sponsorship, prime location within the Bronx, and strength of Samaritan made for a very competitive marketing process with interest from national and local banks, debt funds [and] not-forprofit lenders, [among others],” Ralby told CO in a statement. “The brand new, state-of-theart facility will become the centralized location to meet the demand for Samaritan’s treatment to its patients and their administrative needs.”

The six-story mixed-use office development and community center will comprise 84,000

362 East 148th Street.

square feet, according to Manatus’ website and, in addition to being its new “centralized” facility, it will become its primary opioid treatment center, sources said. Samaritan Daytop Village is a nonprofit that provides services such as substance abuse and mental health treatments and counseling.

The ground up project — at 362 East 148th Street in the Bronx’s Mott Haven area — was designed by New York-based architect GF55 Partners. There will be a groundbreaking next week, according to Ralby. About 25 percent of the new building will house Samaritan’s administrative offices; 30 percent will be for “circulation,” or rather, processing new 11 | NOVEMBER 8, 2019

patients and clients; 18 percent of it will be used for support services that the organization provides, and those include primary and dental care as well as individual and group counseling and therapy. The developer is expecting a temporary certificate of occupancy by October 2020.

“Lenders really understood the story and history of Samaritan and the impact they have had since inception in the 1960s and had full confidence that the sponsor to deliver an amazing space,” Ralby said.

A representative for TD Bank did not immediately respond to an inquiry. Manatus could not immediately be reached.—M.B.

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The Takeaway Big Office Loans Lead Seattle’s CMBS Scene “Well known for its thriving technology scene and lush urban greenery, the Seattle-Tacoma-Bellevue metropolitan region continues to rank among the fastest growing in the U.S. for both population and job creation,” wrote Catherine Liu, an analyst at Trepp. “This has helped to support the strong performance of its commercial real estate sector, and its debt market, too: Seattle boasts the lowest distress rate in CMBS among the top 15 most populous MSAs in the U.S. Trepp data indicate that all of the $4.6 billion in privatelabel loans secured by the Seattle properties are current on payment. That compares to a delinquency rate of 1.80

percent and 2.77 percent for other western metros such as Denver and Las Vegas, respectively.”

“There has been roughly $1.07 billion in non-agency CMBS debt issued for the Seattle region so far this year. Office has represented nearly half of this issuance volume at $527 million, while multifamily comprised another 20 percent at $217.5 million. The largest 2019 new issues for the Seattle region include the $164 million Newport Corporate Center and the $95 million secured by Sunset North, both of which are secured by urban office towers in the city of Bellevue, Source: Washington.”

Largest CMBS New Issues for Seattle Area, 2019 Deal Name

Property Name

Securitized Loan Balance

City

Property Subtype

Underwritten Maturity Year

BANK 2019-BN18, GSMS 2019-GC40, BMARK 2019-B11

Newport Corporate Center

$164,000,000

Bellevue, Wash.

Urban Office

2033

BMARK 2019-B13, BMARK 2019-B14

Sunset North

$95,000,000

Bellevue, Wash.

Urban Office

2029

JPMCC 2019-COR4

Renaissance Seattle

$77,000,000

Seattle, Wash.

Full Service Hotel

2027

CSAIL 2019-C17

Selig Office Portfolio

$75,000,000

Seattle, Wash.

Urban Office

2029

GACM 2019-FL1

Advanta Bellevue

$65,000,000

Bellevue, Wash.

Urban Office

2021

Property Type

CMBS Issuance

% of Total

Office

$526,997,063

49.4%

Multifamily

$217,462,867

20.4%

Lodging

$191,685,000

18.0%

Other

$78,257,331

7.3%

Retail

$39,267,770

3.7%

Industrial

$14,150,000

1.3%

Total

$1,067,820,030

100%

13 | NOVEMBER 8, 2019

Q+A

Jonathan Goldstein CEO of Cain International

And you see the Crown Building as a similar play?

If you draw the analogy, at the Crown Building we see prime real estate. Fifth Avenue and 56th Street: You don’t get much more prime in the world. Number two, it’s a great story: Bulgari, GGP, et cetera. Number three, Aman is one of the great growing luxury brands of the world.

We’re believers in the luxury hotel space, and we believe that a signature hotel in the middle of Manhattan will be a resounding success.

On the other hand, the project also has a condominium component, and that’s not a bright spot in Manhattan these days. How did you have to structure the deal to be comfortable with it?

When you look at what we need to have to be covered on our loan, it’s very different from what you might have as an equity investor. Our job is to lend money, get the interest and get repaid. It’s [developer] Vlad [Doronin]’s job — which I’m sure he’ll do very successfully — to make a significant profit out of the trade. So we’re very comfortable.

Look, we all know that the New York residential

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market is not what it was. You don’t have to be a genius to work that one out. But New York is not going anywhere.

Stephanie Novak

Aside from the Crown, your biggest U.S. real estate projects are equity investments in Miami and Los Angeles. So what’s your conviction about gateway cities?

It’s an issue around human capital. As the world develops, people are voting with their feet.

If you look at Los Angeles, Miami — you wake up 300 days a year and it’s sunshine-y. Not too shabby. The tier-one cities in America and in the U.K. and Europe are all rising to the top. That’s why I never believed this narrative around Brexit.

People were not going to leave London. It’s the same with New York. People want the live sports, the theater, the cinema, the cultural experience, the transparency, the legal system.

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As the leader of a young real estate firm, are there any industry companies that you look up to?

You have to look at the giants. If you look at the way Blackstone or Brookfield operate, they’re just unbelievably sophisticated. I don’t ever expect in my lifetime to match that. I’m trying to head in the same direction, but, I mean, I’m not even aiming at their coattails. I’m not trying to play myself up.

14 | NOVEMBER 8, 2019

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Commercial Observer: Your first debt deal in the U.S. was a nearly $300 million investment in the Crown Building renovation in Midtown, followed by an even larger refinancing there this autumn. Why start with something so ambitious?

Jonathan Goldstein: In order to explain the Crown, you need to understand a bit of our history over the last five years. When we started this business in 2014, we saw outsized loans as a significant opportunity. We were prepared by [what] we saw in the debt markets to take positions that the classic funders were not prepared to take. The greatest example I have of that is actually an English one. Post the Brexit referendum, we were asked by Canary Wharf Group [owners of a major financial district in London] to fund a tower on the Wharf, a huge tower that was 30 percent pre-leased to Société Générale.

And it surprised us that with the strength of Canary Wharf, its well-regarded management team — we couldn’t understand why the classic banks wouldn’t do it. So we agreed to write a loan of £450 million [just over $580 million]. It was the biggest loan we’d ever written. Roll forward to 2019. The building is fully leased, rather ironically, to the European Bank of Reconstruction and Development. We’re about to be refinanced

by Canary Wharf and vacate the building having had a three-year period we’re very happy with.

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