Mortgage Observer

$821M in 2005 Loans on Houston Galleria Mall Prepaid

The Galleria in Houston, Texas.

The Galleria, a 2.3 million-square-foot mall that is Houston, Texas’ most visited attraction, has prepaid $821 million in debt at the start of an open prepayment period, Mortgage Observer has exclusively learned.

The CMBS loan that constituted a hefty portion of the debt—$290 million—was conservatively underwritten, with a 47.5 percent loan-to-value ratio and debt service coverage ratio of nearly 2.73, according to data from Trepp.

Indeed, in January, the CMBS data service had warned that “if this loan can’t refinance, the entire CMBS market will be licking its wounds in 2015,” as the “Wall of Maturities,” approached. Read More

Mortgage Observer

Reneging on Retail: Traditional Shopping Centers’ Future Looks Bleak

Last year, Mortgage Observer and others reported that lenders and investors had turned their eye to a new belle of the ball: retail. As the multifamily sector became overly competitive, many looked to the next most stable asset class and in their minds retail was that.

But that was before the bankruptcies of major retailers, such as RadioShack, that anchor a certain strata of shopping center. Following financial troubles for both J.C. Penney and Sears, malls across the nation have been met with foreboding appraisal reductions. Two major shopping centers— Indian River Mall & Commons, in Vero Beach, Fla., and Village at Main Street Shopping Center, near Portland, Ore.—fell into special servicing this week alone, according to data from Trepp. Read More

Mortgage Observer

What the Wall of Maturities Means


With an anticipated $350 billion in real estate loans set to mature each year for the next three years, the so-called Wall of Maturities has finally arrived.

Panelists at CREFC’s High Yield and Distressed Realty Assets Summit, held this week in New York, were mostly celebratory about the impending flood of maturities, which they say will create opportunities for the right (i.e. smart) lenders.  Read More

Mortgage Observer

Q&A: Herbert Kolben, Senior Vice President at Ullico

Herbert Kolben

Herbert Kolben, a 30-year industry veteran, helms real estate investment and lending for Ullico, a Washington, D.C.-based pension and life insurance company. He recently told Mortgage Observer about the provisions borrowers are demanding today, lending on projects that create union jobs and what kind of due diligence is involved in building an animal terminal at JFK airport. Read More

Mortgage Observer

Northern Exposure: A Look at Canadian CMBS


There are a lot of differences between Americans and our gentle neighbors to the north. We’ve chosen different parliamentary systems. We feel differently about gravy on fries. And one of us (hint: not the U.S.) was recognized for having the most stable banking system in the world following the 2008 financial crisis. This was likely for a reason—a totally different ethos surrounds lending for real estate in Canada.

Few things make it more clear how differently the lending communities in the two countries behave than a panel on the Canadian CMBS business at the recent Commercial Real Estate Finance Council conference in Miami Beach did. Read More

Mortgage Observer

Hotel Giraffe Refinanced With CCRE

Hotel Giraffe

Boutique lodge The Hotel Giraffe refinanced with a $39 million CMBS loan from CCRE negotiated by HKS Capital, Mortgage Observer has learned.

The 39-key hotel is owned by self-described “indie hotelier” Henry Kallan, who has been a client of HKS’ Jerry Swartz’s for more than a decade. Read More

Mortgage Observer

Hotel REIT Takes $150M Unsecured Term Loan Facility

Publicly traded REIT RLJ Lodging refinanced outstanding CMBS debt to the tune of $150 million, the firm announced yesterday. The new unsecured term loan facility allows RLJ to resolve any questions about refinancing next year, when interest rates will likely be higher and a slew of loans will be due, potentially stretching lenders’ limits—the anticipated so-called “wall of maturities.” Read More

Mortgage Observer

Q&A: Tim Koltermann, CEO of Walker & Dunlop Commercial Property Funding

Tim Koltermann.

Mortgage Observer recently spoke to Mr. Koltermann, who helped establish Walker & Dunlop’s new CMBS and high-yield lending arm, with Fortress Investment Group, as part of an effort to grow Walker & Dunlop’s lending presence around the country. The companies formed their joint venture in 2013 and launched the specialty finance platform in April 2014, with Mr. Koltermann, a nearly 20-year Wall Street veteran, at the helm.
Read More

Mortgage Observer

CMBS 3.5?

Smaller lenders take a larger piece of the pie.

When Robert Verrone was head of Wachovia Bank’s large loan group, he closed and securitized huge deals—on 650 Madison Avenue, Donald Trump’s office tower at 40 Wall Street and Blackstone’s Boca Raton Resort & Club in Florida, to name a few.

After the government-forced sale of Wachovia to Wells Fargo to avoid the bank’s bankruptcy in 2008, Mr. Verrone started his own advisory company, Iron Hound Management Company LLC. This past January, the firm announced a new partnership with Bank of New York Mellon Corporation to form a conduit operation called IH Capital; BNY Mellon allocated $500 million of its balance sheet to the new venture. Read More

Mortgage Observer

Two Men and a Heyday

Michael Lehrman.

As a kid, Michael Lehrman used to play a game with his grandfather, the late Bronx landlord and developer David Buntzman. They would walk into a restaurant when they knew it would not be that busy—say, between lunch and dinner—and count the chairs and the tables.

“I realized later in life,” Mr. Lehrman said during a recent interview with Mortgage Observer, “that he would slip the guy some money. We’d go into the kitchen, and then we’d talk to the people working there; and find out what works and what doesn’t—how do you make a small business work, how do you make a business that focuses on making its customers happy every day or they won’t come back.” Read More

Mortgage Observer

Risk Retention Rules Approved, Will Increase Cost of CMBS Transactions

Send in the clowns...

Six federal agencies voted this week to approve new risk retention rules that could foul up the finally recovered CMBS issuance pipeline, even though the new rules won’t be enacted until 2016. However, the sentiment from some industry observers was relief—earlier proposed regulations were even more strict.

As part of the Dodd-Frank Act’s implementation, rules were passed last month that require managers of collateralized loan obligations, including CMBS, to hold a larger portion of deals on their books—a move that is expected to increase costs but one that won’t scare away investors, according to industry sources. Read More

Mortgage Observer

Hakim Seals the Deal Sans Mezz in LA Buy

6100 Wilshire Boulevard

Los Angeles-based investor Citi Real Estate, headed by Sam Hakim, took a $57.5 million CMBS loan from UBS to buy a Los Angeles office property at 6100 Wilshire Boulevard last month. But prior to the purchase, the borrower, the scion of an established Los Angeles real estate family, had actually arranged for $65 million in funds for the $76 million buy, with a portion of the financing in a mezzanine loan, a source close to the deal told Mortgage Observer.

Alas, when the rates were set to lock this summer, the mezz turned out far pricier than expected, the source said. The borrower opted instead to fill that portion of the capital stack with equity—a move highlighting the potential effect of a tumultuous CMBS market, the source said. Read More