HFF’s New York Office Still in Growth Mode as Michael Tepedino Starts Seventh Year at the Helm
By Damian Ghigliotty January 7, 2014 1:50 pm
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When Mr. Tepedino took over the New York office, such large transactions were a rare occurrence for him and his team. In 2011 and 2012, multihundred-million-dollar deals became more routine, he said. In August 2011, the HFF senior managing director took the lead in closing a 12-year, $315 million loan from Cornerstone Real Estate Advisers to refinance a 22-story office building at 340 Madison Avenue jointly owned by RXR, Broadway Partners and USAA Real Estate Company.
“When we’re hitting bumps in the road, I rely on Mike a lot to get through those points of friction,” said Michael Maturo, president and chief financial officer of RXR. “I think what he does very well is understand the needs of the lender and also understand the needs of the borrower in order to come to fair solutions and get everybody to move off of hardline positions.”
In April 2012, Mr. Tepedino and company secured the largest single-asset loan that HFF’s New York office has closed to date: a $775 million first mortgage refinancing from Bank of China (BACHF) for SL Green (SLG)’s iconic office tower at 1515 Broadway, where Viacom’s headquarters is based. Mr. Tepedino declined to comment on the seven-year loan, citing client confidentiality. SL Green refinanced that debt with a new 12-year, 3.93 percent fixed-rate mortgage from Deutsche Bank (DB) in February 2013, following Viacom’s renewal of its 1.6 million square feet at the office tower through 2031.
“At the end of the day, HFF’s New York office did an excellent job of finding us the appropriate lender at a great term and great cost,” Isaac Zion, SL Green’s co-chief investment officer, told Mortgage Observer. “We push everybody really hard, so the gravitas that Mike and his team brought to the table was truly respected.”
While steadily growing the size its debt deals, HFF’s New York office has also expanded the reach of its investment sales business, which it launched in April 2010 to keep up with competitors already in that market. HFF’s investment sales volume in the New York City and Northern New Jersey region has increased nearly 600 percent since that business got off the ground. The office’s debt and equity businesses combined did $5 billion in deals in 2011 and 2012, up from $2 billion in 2010. In November 2013, Senior Managing Director Andrew Scandalios joined Mr. Tepedino as co-office head to oversee the equity placement team.
Persistence is one of Mr. Tepedino’s strongest suits, several clients and colleagues agreed. In the final weeks of 2013, HFF’s New York office closed a $100 million, three-year construction loan on behalf of RXR for a Ritz-Carlton-flagged condominium project in North Hills, Long Island. The negotiations behind that financing alone took nearly three years, said Mr. Maturo, as RXR went through conversations with three different foreign lenders to meet all of its needs. Construction on the $300 million, 244-unit residential property is slated to begin this month and wrap up in the first quarter of 2016.
“It was a saga getting financing for the project. We went from a Spanish lender to a Chinese lender and finally settled on a German lender,” Mr. Maturo said. “We covered the world trying to find a lender for this deal. One thing about Mike and his whole team is that, wherever we needed to go to find a source, they were able to do that.”
Mr. Tepedino said that, as far as 2013 is concerned, when all comes to a close, expectations will likely be exceeded. “We were aiming to finish 2013 at $5 billion as well, but it looks like we’ll finish at $6.2 billion,” he said. “The hope is to double that business to $12 billion in the next three years. It’s ambitious, but it’s doable. We also plan to continue growing our market share in New York.”
Up to this point, the challenges of doing so have largely come from the highly competitive landscape that New York breeds. That landscape has led to heightened competition for the most capable deal-makers, especially rising young stars. “Our biggest challenge is recruiting people from the outside, finding external talent,” Mr. Tepedino said. “Our success has been through growing people organically. That takes longer, but fortunately, you’ve got a more durable product in the long run.”
