The Real Deal New York

Local players rank with big banks in NYC lending

TRD’s first commercial mortgage ranking shows New York Community keeps pace with larger institutions like Deutsche Bank
By Adam Pincus | February 01, 2014 07:00AM
From left:

From left: 1095 Sixth Avenue, Brookfield Place and 1335 Sixth Avenue

Local lenders New York Community Bank and Signature Bank finished near the head of the pack in the New York City commercial mortgage market last year by keeping pace with the loan production of much larger rivals like Deutsche Bank and Bank of America.

According to The Real Deal’s first-ever ranking of commercial mortgages, topping the list were Deutsche Bank, with its headquarters in Frankfurt, Germany, and New York Community Bank, based in Westbury, L.I., which each originated about $5 billion in commercial loans in New York City last year. But the local Long Island bank reached that figure by writing more than 12 times the number of loans as the Germany-based global investment firm.

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The commercial lending world remains far more opaque than the commercial sales market. Commercial loans are more difficult to compile and compare, because of the variety of mechanisms used to record them, and because multiple lenders often participate in larger originations. In addition, second mortgages and preferred equity are typically not recorded at all. There are national tables of commercial lending, for example the Mortgage Bankers Association compiles a national ranking annually, but none are publicly available detailing only New York City lending.

TRD conducted its inaugural ranking of the city’s lenders by analyzing more than 3,500 first-mortgage loans of $5 million or more — a total value of $59 billion — in the five boroughs, provided by financial tracking firm Actovia and data firm PropertyShark, to come up with the top 20 lenders and top 10 borrowers.

Deutsche Bank was a co-originator on two of the three largest loans issued in 2013, for $900 million at SL Green Realty’s 1515 Broadway and for $820 million at Hilton Worldwide’s New York Hilton Midtown at 1335 Sixth Avenue. In all, it wrote 28 commercial mortgages.

New York Community Bank’s largest loan, meanwhile, was done in conjunction with investment bank Morgan Stanley. It was a refinancing of a $525 million loan on RXR Realty’s Starrett-Lehigh Building at 601 West 26th Street. But high-ticket deals are not New York Community’s bread and butter. Its second-place ranking came mainly from volume, with a total of 338 loans written, far outstripping its rivals. (Loans made to one borrower across multiple properties were counted as one loan in this survey.)

The third-highest lender was Charlotte, N.C.–based Bank of America, which originated $3.3 billion in 32 loans citywide, including a portion of the New York Hilton Midtown and part of the Worldwide Plaza’s $710 million loan, co-written with Deutsche Bank.

Next was San Francisco–based Wells Fargo, which originated about $3 billion in 47 deals, including participating in a $266 million first mortgage on the Witkoff Group’s acquisition and redevelopment of the former Helmsley Park Lane Hotel at 36 Central Park South.

Rounding out the top five was Signature Bank, based in Midtown, which like New York Community relied on volume over dollar value. Signature did $1.88 billion in mostly multi-family portfolios and other smaller deals, for a total of 188 loans. Its largest was for $52 million at the Crescent Club at 41-17 Crescent Street in Long Island City.

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TRD’s review found the largest borrowers last year were the Related Companies, with $2.25 billion borrowed in eight loans in Manhattan and Brooklyn, and Vornado Realty Trust, with four loans totaling $1.95 billion.

Notable as the recovery picks up steam are the absence of a handful of formerly active European lenders. Foreign lenders no longer in the market include Anglo Irish Bank and Germany’s Hypo Real Estate Holdings which, like Lehman Brothers, another big lender in the past, collapsed during the financial crisis.

“We still don’t have as many foreign banks. For example, many of the German banks are no longer lending,” said Steven Kohn, president of equity, debt & structured finance in Cushman & Wakefield’s capital markets group. However, Asian banks are stepping in, Kohn said.

The Bank of China, which issued $1.4 billion in loans, did two of the 10 largest loans in the city last year. It originated $600 million for the Chetrit Group’s acquisition and repositioning of the Sony Building at 550 Madison Avenue. It also did a $498 million loan for Milstein Properties’ refinancing of 335 Madison Avenue, which just missed making the top 10.

In addition, several local lenders were taken over by larger institutions that remain active, including Brooklyn Federal Savings, which was bought out by the New Jersey–based Investors Savings Bank, and the Bank of Smithtown, which was purchased by People’s United Bank, based in Connecticut. Neither Investors nor People’s made the top 20 list, but both wrote more than $500 million in loans last year.

Private commercial lenders like Midtown-based Ladder Capital, which originated nearly $534 million in loans, are also emerging as major players in the city. The firm, founded in October 2008, filed with the U.S. Securities and Exchange Commission in December to raise $200 million in an initial public offering. Its filings say it plans to originate more loans and increase the average size of its loans.

Howard Michaels, CEO of the investment banking firm the Carlton Group, said he saw aggressive activity last year from Starwood Capital Group, Deutsche Bank, the Blackstone Group and Cantor Fitzgerald, as well as traditional banks. Blackstone joined Deutsche Bank in the top 20, with $982 million in loans.

“Commercial banks are still relatively conservative, but for borrowers they like, they can get very aggressive,” said Michaels, who completed deals last year to finance a redevelopment of 101 Murray Street for a joint venture of the Witkoff Group, Howard Lorber and Fisher Brothers, among others.

In addition to the overall ranking, TRD also analyzed more than 120 first mortgage loans worth more than $100 million each by borough. The vast majority of those loans, some $28 billion, were for Manhattan properties exclusively.

Several loan packages were spread over multiple boroughs, including to Rubin Schron’s Cammeby’s International and to New York Presbyterian Hospital, which borrowed $500 million from Prudential. These were not included in each borough’s loan totals.

Brooklyn had the second-highest total dollar volume for mega-loans, with $1.4 billion, including a $465 million loan provided by Bank of America to Lend Lease and InterContinental Hotels Group, for a rehabilitation of hotels at the U.S. Army’s Fort Hamilton. Queens saw $518 million provided in three loans for $100 million or more. Bank of America’s $225 million loan to casino owner Genting Group for the Resorts World Casino New York in South Ozone Park’s Aqueduct Racetrack, was the biggest.

Of the citywide loans valued at $100 million or more, $14.4 billion went to finance office buildings, $8.4 billion went to residential and residential-hotel combinations, $4.1 billion went to retail and retail-office properties, $3.3 billion was issued to hotels and $680 million went to hospitals. Sources said capital remains plentiful. “We are very optimistic for this year,” Kohn said.

  • $$$$$

    New York Community bank with $46.7 Billion in assets lent more than 10% of its asset base to real estate borrowers in 2013? What is wrong with this picture? Where are the regulators? If I read the article correctly, all of the loans were in NYC – concentration risk anyone?

  • Loans

    This is securatization. They can’t possibly keep that on their sheet. They originate and then slap them together and sell them off.

  • sweetie

    Concur prior comment only geographically. NYC metropolitan region inaccurate. San Francisco,Southern California and Miami. Are implosion of growth charters. Never mention Bangkok Insurance and ASEAN free market I banks. Whom lent billions in loans America and Canada. Hot market for office towers. High rise developments San Francisco. Yes,the greedy power brokers. Present along commercial brokerage firms. Plenty of French,Dutch,Thai,Indian,Korean,Brazilian,German and Australian. Money lent in NYC no longer. Island of capital opposite debt. Developers are shopping for direct foreign. Loans there contacts bankers. Forgotten Nordic banks hold titles many. Buildings NYC,Chicago,Texas and L.A. Okay building unnecassary continuations. Of buildings BMR housing is neglected. Only chosen few shall ever. Appease tenants to remain for decades. Revise your listing many hidden. Silent partners investing commercial reals estate. They seek immediate returns. Insurance and chemical companies investing real estate. Lately.