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8/5/2011
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$2.00/AUGUST 8 - 14, 2011
Owner of prime sites seeks to amend loan
Mortgage lenders opening new doors Banks hiring despite tepid housing market
Outcome of Gotham King’s debt talks could impact office market
By MICHELLE PARK mpark@crain.com
Joshua Beyl says he’s never seen his rivals in the mortgage business so aggressive. The mortgage loan officer, who has worked in mortgage lending 12 years, said even when he prices a loan as low as he can, he’s still being beaten more often for borrowers’ business. Mr. Beyl, who works for Nations Lending Corp. in Middleburg Heights, noticed a marked change in the mortgage market earlier this year. “Banks are more aggressive because they need to keep that income coming in,” he said. The aggressiveness of the business seems only to be building, as a number of lenders are hiring mortgage staff and offering limited-time interest rate promotions to attract business. First Federal of Lakewood has hired 10 new mortgage originators this year alone and plans to add another seven by year-end, which would bring its residential lenders to a total of 48. “Our HR department is working overtime,” said Ronald R. Webb, First Federal senior vice president and chief lending officer. Banking giant Chase is hiring, too, and hosted a mortgage operations job fair last week. The bank plans to fill about 50 mortgage positions this month in Cleveland. Some are new, and some are existing, though Chase spokeswoman Mary Kay Bean didn’t provide a breakdown. “We want to be there and lend to qualified buyers when they are ready to buy a home and refinance a home,” Ms. Bean said. And Nations Lending has a “gutsy, ambitious” plan to grow by January 2013 to 220 mortgage originators from its current 65, said Michael T. Bardy, vice president of operations. Today’s interest rates have created a “world of opportunity,” Mr. Bardy noted. But there’s more. “We’re under way to what should
By STAN BULLARD sbullard@crain.com
FIRMS FEAR LIFO MAY HIT SHREDDER Local companies face significant tax liabilities if government nixes traditional accounting method By DAN SHINGLER dshingler@crain.com
T
hey’re talking again in Washington, D.C., about doing away with LIFO accounting for business — and that could cost companies in Cleveland and across the nation billions in new tax liabilities. At least one area company, Applied Industrial Technologies Inc.
of Cleveland, says it alone has tens of millions of dollars riding on the issue of eliminating the last-in, firstout method of accounting. Mark Eisele, Applied Industrial’s vice president and chief financial officer, said the recent proposal by President Barack Obama to eliminate LIFO and require companies to pay taxes for its use to date would be expensive. It would mean his See LIFO Page 11
“It’s like a retroactive tax increase.” – Mark Eisele, vice president and chief financial officer, Applied Industrial Technologies Inc.
A partnership that owns nine prime office buildings in Cleveland’s eastern suburbs is in talks with its lender in efforts to modify the $136 million loan the investors used to buy the portfolio from Duke Realty Corp. in 2007. Local real estate investor Donald King, who along with New York investor group Gotham Partners bought the nine buildings, last week confirmed reports in mortgage industry publication TreppINSIDE: A closer look at Wire and by the Morningstar the properties in Gotham investment research firm King’s portfolio. Page 8 that the loan was assigned to “special servicing” by the lender. LNR, a company in Miami Beach that manages distressed mortgages for lenders and also buys distressed loans and properties from lenders, is in the special servicer role. Mr. King confirmed that Gotham King skipped its July payment on the mortgage, but he described the failure to pay as a means to get a special servicer appointed to consider the investors’ efforts to restructure the loan. “We’re simply talking to the lender to restructure the loan,” said Mr. King, who is the managing member of Gotham King Fee LLC, the partnership that owns the buildings. “The real estate market is not what it was when we purchased the properties. It’s pretty typical of what a lot of landlords are doing.” Nonetheless, a local real estate expert, who spoke on grounds of anonymity, said Gotham King risks losing the properties if the lender, identified in mortgage documents as LBUBS 2007-C2, chooses not to restructure the See KING Page 8
INSIDE KeyBank Center sold An unidentified investor group won the bid in an online auction for the 23-story office tower at 800 Superior Ave., which soon will have a vacancy rate of about 60%. The purchase price was far less than the property’s land value. To read more, see Stan Bullard’s story on Page 3.
See MORTGAGES Page 6
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Crain’s profiles the area’s top human resources professionals Page 17
Entire contents © 2011 by Crain Communications Inc. Vol. 32, No. 32