See GRAPEVINE on Back Page

11 RATING AGENCY RANKING

12 MASTER-SERVICER RANKING

13 SPECIAL-SERVICER RANKING

14 B-PIECE BUYER RANKING

2 Goldman-Citi Deal Beats Price Talk

2 PPM’s Born Tapped for CREFC Panel

2 Senior-Housing REIT Pulls Offering

4 Thor Seeks Loan for Brooklyn Deal

6 CBRE Originates Freddie Loans

8 DBRS Adds Analysts, Scouts for More

12 Wells Tops Master-Servicer Table

13 Rialto, Midland Lead Rankings

15 Capital One Shares DC Office Loan

15 Eightfold, Rialto Circle B-Pieces

16 CBRE Hires 3 Ex-Sabal Lenders

Originators Kenneth Margala and ErnieIriarte have left CCRE and joined IH Capital.They’ll open a West Coast office next week for the conduit-lending shop, a partner-ship between Iron Hound Management and BNY Mellon. The Irvine, Calif., outpost will be the third regional office for New York-based IH Capital, after Dallas and Charlotte. Margala and Iriarte report to CMBS lending chief Chuck Wolter. At CCRE, Margala was a managing director and Iriarte was a vice president.

Meanwhile, originator Akbar Tajani has jumped from CCRE to Pine River Capital of New York. He started this week as a director, reporting to commercial real estate lending chief Jack Taylor. Tajani

Kroll, Morningstar Gain CMBS Market ShareUpstarts Kroll and Morningstar gained market share in the rating of commercial

MBS transactions in the first half, while traditional giant Fitch lost ground.Kroll and Morningstar both advanced in the conduit sector, which accounted for

more than half of first-half U.S. issuance. Kroll rated 75.7% of conduit volume, up from 64.7% a year earlier. And Morningstar’s share nearly tripled, to 45.1%. Fitch, on the other hand, saw its share slump to 45.2%, from 67.9%, according to Commer-cial Mortgage Alert’s CMBS Database (see ranking on Page 11).

Overall, Moody’s remained in first place, with a 65.1% share of U.S. issuance, up from 63.4% in last year’s first half. Kroll moved up one notch to second place, with a 56.6% share, up from 52.5%. Morningstar jumped three places to third, with a 44.4% share, up from 27.8%. Fitch dropped two notches to fourth, with a 44% share, down from 52.8%. DBRS slipped one place to fifth, with a 34.8% share, down from 40.7%. And beleaguered S&P fell one place to sixth, with a 34.4% share, barely

See SHARE on Page 10

Wells Backs Buyer of Manhattan Office TowerWells Fargo has agreed to provide about $360 million of floating-rate debt for the

purchase of a Midtown Manhattan office building.A partnership led by Angelo, Gordon & Co. is poised to buy the 745,000-square-

foot property, at 575 Lexington Avenue, for about $510 million. The debt package would consist of a $300 million senior mortgage and a $60 million mezzanine piece. It would have a three-year term and extension options totaling two years.

Wells has committed to originating the senior piece. It is expected to retain half and syndicate the other $150 million. It’s unclear whether the bank has placed the mezzanine portion. The overall loan-to-value ratio is 70%. Estreich & Co. is broker-ing the financing.

Angelo Gordon is teaming up with Normandy Real Estate and George Comfort &Sons to buy the 35-story tower, between East 51st and East 52nd Streets. Normandy,

See TOWER on Page 6

Investors Push for ‘Life of Loan’ ProtectionsB-piece buyers are pressing commercial MBS issuers to specify that the guaran-

tees provided to bondholders about the accuracy of collateral-loan data extend for the full life of the mortgages.

The push follows last month’s ruling by the New York State Court of Appeals that the “representations and warranties” in both residential and commercial MBS transactions are binding for only six years unless otherwise specified. New York’s statute of limitations has a six-year limit for breach of contracts.

The ruling upended the prevailing assumption that CMBS investors could seek relief for violations of reps and warranties at any time during the life of a loan. Many CMBS mortgages have 10-year terms. Issuers can be required to buy back loans at par value if it turns out they provided inaccurate or incomplete information about collateral.

“It’s a windfall for the issuers, because most reps-and-warranty issues don’t come to the surface until late in the loan term — usually when the borrower can’t make

See PROTECTIONS on Page 16

THE GRAPEVINE

JULY 17, 2015

Goldman-Citi Deal Beats Price TalkThe first conduit offering to price in two weeks flew off the

shelves yesterday at higher-than-expected prices.All of the long-term, investment-grade bonds in the $1 bil-

lion offering from Goldman Sachs and Citigroup (GSMS 2015-GC32) were heavily oversubscribed, enabling the dealers to achieve spreads below their initial guidance. The collateral loans were contributed by Goldman, Citi, CCRE, Starwood Mortgage and MC-Five Mile.

The benchmark super-seniors went for 100 bp over swaps, after being shopped initially at 103-bp area (see Initial Pric-ings on Page 17). The spread-tightening was most pronounced among the triple-B-minus bonds, which went for 375 bp after being shopped at 400-bp area.

The benchmark spread was 7 bp tighter than in the previous conduit transaction, which priced July 1 (COMM 2015-PC1). But it matched the 100-bp spread on the comparable bonds in the deal before that, which priced June 30 (WFCM 2015-NXS2). The triple-B-minus bonds in both earlier deals went out the door with far-wider spreads: 440 bp in the COMM issue and 425 bp in the WFCM deal.

It’s unclear whether dealers on two other conduit offer-ings being marketed yesterday can achieve similar pricing to the GSMS deal. The benchmark bonds in a $1.3 billion con-duit offering by J.P. Morgan, Barclays, Starwood, Redwood Commercial and MC-Five Mile (JPMBB 2015-C30) were being marketed with price talk of 105-bp area. And the correspond-ing class of a $935 million offering by Morgan Stanley, Bank of America, CIBC and Starwood (MSBAM 2015-C24) was poised to be shopped at 104-bp area, according to early “whisper” talk circulated by dealers.

Meanwhile, the triple-B-minus class of the JPMBB deal was being talked at 400-bp area, while the comparable tranche of the MSBAM offering was being whispered at 410-bp area.

CMBS investors are increasingly discriminating among deals, and several buysiders said they preferred the overall credit quality of the GSMS collateral over that of the loans in the two pending transactions. For example, only 49.5% of loans in the GSMS deal allow interest-only payments by bor-rowers for all or part of the terms. That metric is much higher for the JPMBB (72.6%) and MSBAM deals (71.6%). Also, the GSMS collateral pool included two investment-grade loans that were already familiar to buysiders — pari-passu slices of senior mortgages whose larger portions were securitized a few months ago via stand-alone deals (CGBAM 2015-SMRT and MSCCG 2015-ALDR).

The next conduit in the queue is a $740.3 million offering by Wells Fargo, Rialto Capital, C-III Commercial Mortgage, Basis Investment and National Cooperative Bank (WFCM 2015-C30).

Meanwhile, CCRE rolled out a $140 million offering backed by the senior portion of a $175 million, floating-rate debt pack-age it originated for a Five Mile Capital partnership on the Ritz-Carlton Grand Cayman luxury resort (CFCRE 2015-RUM). The debt has a two-year term with three one-year extension options.

PPM’s Born Tapped for CREFC PanelKent Born of PPM America has been nominated to lead a CRE

Finance Council bondholder committee that was the subject of controversy in recent weeks.

Born was tapped to head the Investment-Grade Bondhold-ers Sub-Forum in a special nomination process overseen by outgoing chairman Joshua Mason of Blackstone, according to an email that CREFC chief executive Stephen Renna sent to the trade group’s Board of Governors yesterday.

The email said that the nomination must be approved unan-imously by the board, which has about 60 members. Responses are due July 24.

Adam Smith of Deutsche Asset & Wealth Management had been in line to take the panel’s reins last month, but he was ousted following a dispute over who would succeed him next year. Smith’s recommendation of Genworth Financial’s Patricia Bach was bypassed by the trade group’s Executive Committee, which instead selected Julio Siberio of Pimco.

Smith and his boss, James Grady, charged that the Executive Committee usurped its authority by rejecting Bach’s nomina-tion. The dispute culminated in the removal of Smith himself as the incoming chairman. Grady then complained to the Board of Governors in a blistering letter on June 1 and asked it to review the matter. The trade group hasn’t responded.

Siberio subsequently withdrew his nomination as chairman-elect, and another candidate evidently has yet to be nominated.

Born is a senior managing director and co-head of the com-mercial real estate group at PPM Finance, which is an affiliate of PPM America, a Chicago investment-management firm.

Senior-Housing REIT Pulls OfferingIn an unusual move, Senior Housing Properties yesterday

pulled a planned $300 million offering of long-term corpo-rate bonds because investors were demanding a higher-than-expected spread.

The REIT’s underwriters shopped the 10-year issue of unsecured bonds at the “high 200-bp” range. But when it looked like the spread would have to be increased by roughly one-eighth of a percentage point to clear the market — to roughly 300 bp over Treasurys — Senior Housing decided to withdraw the deal. The underwriters were Citigroup, RBC Capital, UBS and Wells Fargo.

Senior Housing, which is rated Baa3/BBB- by Moody’s and S&P, will likely turn to a cheaper source of capital, said one per-son familiar with the transaction, adding: “It’s not like there’s a gun pressed to their head. They have an ability to be patient about it.”

The Newton, Mass., firm, which owns senior and assisted-living communities, planned to use some of the proceeds to finance its $60.8 million acquisition last month of a 17% stake in Reit Management & Research, a Mineola, N.Y., firm that manages Senior Housing. Some proceeds would also have been used to fund 38 senior-living communities it had acquired in December and to pay down its unsecured credit line.

July 17, 2015 2Commercial Mortgage ALERT

n the big game of real estate, everyone is asking

the same thing: What inning are we in? Is it time to bring in the closer? After all, memories of the Great Recession are not far from the mind.

Next month will mark six full years of the current U.S. economic cycle, making the current recovery longer than the average and on par with

the expansion that began after the dot-com crash and ended with the 2008 financial crisis. Real estate values are considered by many to be rich and there is debate about how much high-er they can go. Is it time for the smart money to make the call to the bullpen?

The answer, of course, is maybe. While everyone wants to sell high, if you are too conservative, you could miss an opportunity to profit from continued economic expansion. Employment is healthy, with a 5.4% unemployment rate. However, incomes aren’t rising fast enough to provoke inflation, which is down 0.1% year-over-year through mid-2015. This has allowed Fed Chairman Janet Yellen to remain patient.

WORD ON THE STREET“Many of our clients believe commercial real

estate prices have become too expensive,” said Brad Dubeck, New York/New Jersey Market Executive for Bank of America Merrill Lynch. “A significant number have been selling assets over the past 18 months, taking advantage of historically low cap rates. Sponsors who remain in acquisition mode tend to be attracted to the larger gateway markets, which are benefiting the most from capital investment and job growth.

“They admit we might be in the later innings of this cycle but remain convinced many opportunities still exist for prudent real estate investments. Moreover, there are certain players, in particular foreign investors, who remain very bullish and see the game in its early innings. In particular, they believe low interest rates will prevail for the foreseeable future.”

Any rapid or aggressive tightening of the money supply by the Federal Reserve would be a surprise to many, Dubeck noted. Rates must rise, but the real question is when and whether the downside impact can be managed.

He added that the real estate economy has become accustomed to low interest rates and rate increases will change capital flows and cause some disruption.

MORE GOOD TIMES ANTICIPATEDFor now that disruption seems a ways off —

but for how many innings? Most key indicators point to a mid- rather than late-stage cycle. Multi-family and residential housing markets are hot and new supply of other asset classes is modest.

“The Federal Reserve’s first rate hike is likely to occur at the same time primary elections and budget negotiations are in full swing,” U.S. Trust’s May 26 issue of Capital Markets Outlook said. “For investors, the Fed’s indepen-dence is most important and inflation forecasts should mostly reflect its credibility. Barring legislation that interferes with this, the dispersion of inflation forecasts should not be overly disruptive to markets.”

Despite signs of froth, such as the influx of capital flooding the market, mainly from non- regulated lenders and foreign investors, real estate investors evince a guarded optimism.

WHEN TO SEND IN THE CLOSERSavvy investors look for indicators of the top

of the cycle such as speculative, high-leverage financing and development; or paying richly for land despite facing large risks to develop it. But nobody really knows where the shock is going to come from.

The Capital Markets Outlook issue stated that a strong U.S. economy should remain a tailwind for the world economy:

“There are, of course, a wide range of variables to consider here, from inflation and commodity prices to trade exposures, bal-ance-of-payments positions, sector composition, government policy and political risk. But for each market, three directly comparable factors that we think will be important to watch are: 1. Delivered economic performance versus consensus expecta-tions 2. Starting equity market valuation multiples 3. The outlook for local monetary policy.”

Regardless of the point of the real estate cycle, Bank of America Merrill Lynch will be an industry-leading provider of capital, market intelligence and advice to clients.

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The real estate cycle: What inning are we in?

Brad DubeckMarket ExecutiveNew York/ New JerseyBank of America Merrill Lynch

For marketing disclaimer, visit bankofamerica.com/disclaimer. ©2015 Bank of America Corporation 06-15-0608.A

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CAD-06-15-0608_A.indd 1 6/25/15 3:16 PM

July 17, 2015 4Commercial Mortgage ALERT

Thor Seeks Loan for Brooklyn DealThor Equities is looking to borrow $93 million to finance its

pending purchase of a Downtown Brooklyn office building.The New York shop is set to pay about $136 million for the

245,000-square-foot property, at 180 Livingston Street. It’s talk-ing to lenders about a floating-rate loan with a term of about five years.

Thor is acquiring the building, plus a small nearby parcel, via two transactions. Treeline Cos. of New York is selling the top four floors of the six-story building, plus the right to build additional floors with up to 142,000 sf. The lower floors and the

parcel are being sold by Brooklyn Tabernacle, whose church is across the street.

Cushman & Wakefield is representing Treeline, which put its portion of the property on the market late last year. Thor appar-ently struck an unbrokered deal with the church.

Market pros said the buyer’s most likely expansion strategy would be to add residential space, which could generate more income than office space.

The building is fully leased, but Brooklyn Tabernacle plans to vacate, freeing up about 20% of the building. The Metropoli-tan Transportation Authority leases most of the remaining office space, and restaurant Dallas BBQ occupies part of the ground

floor.The building is between Hoyt

and Smith Streets, roughly half-way between Borough Hall and the busy Flatbush Avenue corri-dor.

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July 17, 2015 6Commercial Mortgage ALERT

CBRE Originates Freddie LoansCBRE Capital Markets has originated $111 million of Freddie

Mac loans on three Houston apartment complexes.The 1,254-unit portfolio is owned by Abbey Residential of

Birmingham, Ala. The fixed-rate loans, which closed two weeks ago, have seven-year terms and 3.75% coupons. The loan-to-value ratio is 80%, pegging the portfolio’s value at $139 million. Freddie will securitize the mortgages.

The garden-style properties are 15-20 miles west of down-town Houston, along Interstate 10. The units of each range in size from studios to two bedrooms. Abbey used the proceeds

to retire existing debt on the properties, which it acquired or developed over the past decade.

CBRE wrote:•A $90 million mortgage on the 720-unit Abbey at Enclave,

at 1910 Westmead Drive. Built: 1982. Occupancy rate: 96%.•A $30 million loan on the 300-unit Abbey at Barker Cypress,

at 1760 Cypress Road. Built: 2004. Occupancy rate: 94%.•A $21 million mortgage on the 234-unit Abbey at Briar-

grove Park, at 1202 Seagler Road. Built: 1971. Occupancy rate: 98%.

Abbey, which was founded in 1984, owns a 9,000-apartment portfolio in Alabama, Florida and Texas.

Tower ... From Page 1

a Morristown, N.J., fund operator, is also in the current ownership group, along with New York Life and Prudential Real Estate Inves-tors.

The transaction will give Angelo Gordon, the New York fund opera-tor, a majority stake. Normandy will continue to hold its roughly 25% interest, New York-based George Comfort will take a small slice of equity, and New York Life and Pru will exit. Eastdil Secured is brokering the transaction.

The New York Life group bought the building from Cali-fornia State Teachers and New York developer Larry Silverstein in 2012 for $360 million. The deal was financed with $260 million of floating-rate debt from CIBC and Blackstone. That loan is about to mature, although it has two single-year extension options.

The current owners have spent $15.6 million on upgrades to the lobby and the mechanical systems of the 1958-vintage building. The property is about 77% occupied, a source said, providing opportu-nity to boost cashflow by nearly $10 million by leasing the vacant space. Weill Cornell Medical Col-lege is the largest tenant, leasing 212,000 sf, or 28% of the space, until 2028. Other tenants include law firm Boies Schiller (95,000 sf) and Janney Montgomery (31,000 sf). There’s also 12,000 sf of retail space and underground parking for 150 cars.

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July 17, 2015 8Commercial Mortgage ALERT

DBRS Adds Analysts, Scouts for MoreDBRS has added five commercial MBS analysts to its team in

Chicago that rates new issues in the U.S.John Amman and Alexis Cohen joined the Toronto-based

agency on Monday as vice presidents, reporting to senior vice president Kevin Mammoser. Three entry-level staffers joined the team last month as financial analysts: Trent Good, Isabela Carrasco and Wesley Sorrell.

Amman spent the last 10 months overseeing commercial real estate appraisals and reviews at GE Capital, following a

nine-year run at PricewaterhouseCoopers. Cohen was a CMBS loan underwriter for about a year at RBS — which exited the sector late last year — and previously was a senior analyst at Chicago fund shop Heitman and at CBRE.

DBRS has been expanding its CMBS team to keep up with the ongoing surge in issuance. There are now 23 analysts in the new-issue group in Chicago, and DBRS plans to hire one more financial analyst in the next month or so. It also wants to add two or three CMBS analysts to its four-member U.S. surveil-lance team in Chicago. Those openings require 5-10 years of experience, and each recruit would likely come aboard as an

assistant vice president or vice president.

The firm’s global CMBS opera-tion, co-headed by Mary Jane Potthoff and Erin Stafford in Chi-cago, also includes analysts in Toronto and London.

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July 17, 2015 10Commercial Mortgage ALERT

Share ... From Page 1

exceeding the year-earlier 34.3%.Morningstar attributed its big gain in the conduit sector

to long-running efforts to provide detailed and timely pre-sale reports on new deals. “It’s just a matter of building trust with the arrangers and investors,” said CMBS chief Ken Cheng. “We’ve been working closely with them to improve our analy-sis, with an emphasis on providing clear and concise opinions.”

Fitch said it was bypassed on some conduit transactions because it took a tougher stance on credit quality than some of its competitors. “We were not comfortable with subordina-tion levels on some deals earlier this year and remained firm in our stance, so we are not surprised by the outcome,” said Huxley Somerville, head of the agency’s U.S. CMBS group. But he added that Fitch’s volume could rebound in the second half because “recent deals show the market coming back to our view on credit enhancement.”

As for Moody’s, the agency clearly owes its position at the top of the overall U.S. ranking to its dominant role in the con-duit market. Moody’s rated at least the senior portion of every conduit deal from January to June, up from an already-impres-

sive 86.6% share a year earlier.Conduit dealers are pretty much forced to use Moody’s,

even though it takes a tougher stance on credit quality than other agencies, because many investors require ratings from either Moody’s or S&P. And S&P has been banned from rat-ing conduit transactions this year, as a result of securities-fraud charges levied against it by the SEC and certain state regula-tors in connection with a handful of 2011 deals. To be sure, S&P wasn’t doing too well in the conduit sector even before the SEC ban — mainly because issuers had problems with how the agency executed its ratings methodology on such deals.

The blow to S&P was cushioned, however, by strong growth in single-borrower issuance, which nearly doubled, to $19.5 billion. S&P has a dominant position in that sector, and the ban doesn’t apply to it. S&P rated 87.8% of single-borrower volume in the first half, up from 81.6% a year earlier. S&P’s CMBS cri-teria generally provide issuers of single-borrower transactions with the most investment-grade proceeds under current condi-tions in the commercial real estate market.

Fitch also fared much better in the single-borrower sector, ranking second and increasing its market share to 45.9% from 29.7%.

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July 17, 2015 11Commercial Mortgage ALERT

Rating Agencies for CMBS Issued in the First Half 1H-15 Market 1H-14 Market Issuance No. of Share Issuance No. of Share ’14-’15

Global CMBS ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 Moody’s $36,164.7 38 62.8 $26,429.9 31 62.6 36.8 2 Kroll 30,847.7 35 53.6 21,422.1 26 50.7 44.0 3 Fitch 25,574.8 30 44.4 22,597.9 26 53.5 13.2 4 Morningstar 24,203.3 29 42.1 11,369.3 16 26.9 112.9 5 S&P 20,964.6 34 36.4 14,192.4 23 33.6 47.7 6 DBRS 20,604.1 28 35.8 17,460.9 23 41.4 18.0 TOTAL 57,543.7 84 100.0 42,222.7 61 100.0 36.3

1H-15 Market 1H-14 Market Issuance No. of Share Issuance No. of Share ’14-’15

US CMBS ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 Moody’s $35,492.4 36 65.1 $25,884.4 29 63.4 37.1 2 Kroll 30,847.7 35 56.6 21,422.1 26 52.5 44.0 3 Morningstar 24,203.3 29 44.4 11,369.3 16 27.8 112.9 4 Fitch 23,994.8 26 44.0 21,571.2 23 52.8 11.2 5 DBRS 18,970.3 22 34.8 16,617.7 21 40.7 14.2 6 S&P 18,748.7 28 34.4 14,008.9 22 34.3 33.8 TOTAL 54,492.8 75 100.0 40,834.0 57 100.0 33.4

1H-15 Market 1H-14 Market Issuance No. of Share Issuance No. of Share ’14-’15

Non-US CMBS ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 S&P $2,215.9 6 72.6 $183.5 1 13.2 1,107.5 2 DBRS 1,633.8 6 53.6 843.2 2 60.7 93.8 3 Fitch 1,580.0 4 51.8 1,026.7 3 73.9 53.9 4 Moody’s 672.3 2 22.0 545.5 2 39.3 23.2 TOTAL 3,051.0 9 100.0 1,388.7 4 100.0 119.7

1H-15 Market 1H-14 Market Issuance No. of Share Issuance No. of Share ’14-’15

US Conduit/Fusion ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 Moody’s $30,126.5 27 100.0 $22,356.6 20 86.6 34.8 2 Kroll 22,812.2 20 75.7 16,703.8 15 64.7 36.6 3 DBRS 15,487.4 14 51.4 14,151.3 13 54.8 9.4 4 Fitch 13,627.4 12 45.2 17,534.2 15 67.9 -22.3 5 Morningstar 13,579.7 12 45.1 4,319.5 4 16.7 214.4 S&P 0.0 0 0.0 3,469.7 3 13.4 -100.0 TOTAL 30,126.5 27 100.0 25,826.4 23 100.0 16.7

1H-15 Market 1H-14 Market Issuance No. of Share Issuance No. of Share ’14-’15

US Single-Borrower ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 S&P $17,133.0 25 87.8 $8,951.8 15 81.6 91.4 2 Fitch 8,958.0 9 45.9 3,260.0 5 29.7 174.8 3 Morningstar 8,861.5 13 45.4 6,846.6 11 62.4 29.4 4 Kroll 6,095.0 8 31.2 2,556.5 5 23.3 138.4 5 Moody’s 3,846.5 4 19.7 1,540.0 2 14.0 149.8 6 DBRS 2,768.6 5 14.2 1,465.0 3 13.4 89.0 TOTAL 19,513.0 28 100.0 10,966.8 18 100.0 77.9

RANKINGS

July 17, 2015 12Commercial Mortgage ALERT

Wells Remains Top Master Servicer; KeyBank Edges Ahead of Midland

Master Servicers for US CMBS Issued in the First Half 1H-15 Market 1H-14 Market Volume No. of Share Volume No. of Share ’14-’15 ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg.

1 Wells Fargo $30,707.6 44 56.5 $24,209.3 36 59.4 26.8 2 KeyBank 11,211.6 23 20.6 9,868.7 17 24.2 13.6 3 Midland Loan Services 10,277.1 18 18.9 5,446.8 11 13.4 88.7 4 Berkadia 961.2 3 1.8 186.8 1 0.5 414.6 5 STORE Capital Corp. 395.0 1 0.7 277.5 1 0.7 42.3 6 RAIT Financial 223.0 1 0.4 196.1 1 0.5 13.8 7 A10 Capital 209.8 1 0.4 132.4 1 0.3 58.5 8 National Cooperative Bank 145.4 2 0.3 80.5 2 0.2 80.7 9 FirstCity Servicing 112.7 1 0.2 0.0 0 0.0 10 Freddie Mac 94.4 2 0.2 0.0 0 0.0 OTHERS 0.0 0 0.0 341.3 1 0.8 -100.0 Total with Master Servicer 54,338.0 74 100.0 40,739.4 56 100.0 33.4

RANKINGS

Wells Fargo once again won far more master-servicing con-tracts than its rivals on commercial MBS issues floated dur-ing the first half, even as KeyBank and Midland Loan Services chipped away at its market share.

Wells, which has dominated the field since the crash, was the successful bidder for the master-servicing assignments on $30.7 billion of CMBS offerings that priced as of June 30. That represented 56.5% of new-deal volume in the busiest half of any year since the market recovered, according to Commercial Mortgage Alert’s CMBS Database. But it marked a slight drop from Wells’ 63.9% share of the business for all of 2014.

Key snared the contracts on 20.6% of first-half deals, and PNC’s Midland unit nabbed 18.9%. The two firms — the only major competitors to Wells — had landed in a virtual tie for second place last year, with 16% apiece. Loan servicing is largely a fixed-cost operation, so the CMBS sector has tradi-tionally been dominated by a few companies that benefit from economies of scale when bidding for assignments.

Meanwhile, the ongoing boom in CMBS issuance — up by a third in the first half compared with a year earlier — is offset-ting the runoff of servicing contracts for pre-crash loans now reaching maturity. Executives at Wells, Key and Midland said in separate interviews that more legacy loans than expected have been getting refinanced via new securitized mortgages.

“We thought last year that about 20% of the maturing [CMBS] debt would be unable to get refinanced,” said Alan Kronovet, Wells’ head of commercial mortgage servicing. But the refinancing rate has been more like 85%, and “that 5% difference means a lot,” he said. What’s more, Kronovet added, most of that refinancing business is returning to CMBS lending.

It helps that many borrowers are moving to refinance their

properties and defease their existing CMBS debt a year or two before maturity, anticipating that interest rates will finally begin to rise by yearend, said Stacey Berger, an executive vice president at Midland. “The borrowers who have the ability to refinance are trying to do so as quickly as they can, and it’s our expectation that a lot of it will go back into CMBS,” Berger said. “The picture is a lot more clear than it was a year ago.”

While the servicers welcome the influx of business, it brings them more responsibilities, as commercial-mortgage structures have become more complex since the crash. Marty O’Connor, an executive vice president at Key, said servicers must moni-tor an increasing array of metrics that can trigger actions such as capturing excess cashflows. “We used to see it just on large loans. Now we’re seeing it on a lot more of the smaller loans,” especially over the last two years or so, he said.

Master servicers base their bids mainly on the projected income from the interest they expect to earn on the “float” — loan payments held briefly before being forwarded to bond-holders. Bidders also take into account the cost of servicing mortgages until they get paid off or removed from the trust for other reasons. Those expenses include advances that master servicers must make when borrowers fall behind on monthly payments, as well as increased capital-reserve requirements they face under new federal bank regulations.

Wells has a decided advantage because the bank is a major real estate lender — although it would still top the master-ser-vicer ranking even if it didn’t get first dibs on contracts for its own CMBS transactions.

Midland has usually been in the top three in recent years, but its slice of the business tends to fluctuate based on market conditions. Key’s dramatic rise over the last two years stems

See WELLS on Page 15

July 17, 2015 13Commercial Mortgage ALERT

Rialto Tops B-Piece Ranking; Midland Leads Special Servicers

RANKINGS

Special Servicers for US CMBS Issued in the First Half 1H-15 Market 1H-14 Market Volume No. of Share Volume No. of Share ’14-’15 ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg.

1 Midland Loan Services $13,288.6 22 24.5 $7,984.8 18 19.6 66.4 2 Wells Fargo 10,782.5 17 19.8 3,610.9 9 8.9 198.6 3 Rialto Capital 7,378.3 11 13.6 7,363.7 12 18.1 0.2 4 KeyBank 5,464.6 12 10.1 3,777.5 7 9.3 44.7 5 LNR Partners 4,135.8 10 7.6 10,381.1 16 25.5 -60.2 6 CWCapital Asset Management 3,524.0 6 6.5 1,227.5 3 3.0 187.1 7 Strategic Asset Services 1,614.6 3 3.0 1,450.0 1 3.6 11.4 8 Torchlight Loan Services 1,574.2 5 2.9 689.1 1 1.7 128.4 9 Aegon USA Realty 1,400.0 1 2.6 306.3 1 0.8 357.0 10 C-III Asset Management 1,210.0 2 2.2 0.0 0 0.0 11 Pacific Life 1,200.0 2 2.2 0.0 0 0.0 12 Trimont Real Estate Advisors 1,052.0 3 1.9 780.5 2 1.9 34.8 13 STORE Capital Corp. 395.0 1 0.7 277.5 1 0.7 42.3 14 Hudson Advisors 281.5 1 0.5 278.5 1 0.7 1.1 15 Berkadia 280.0 1 0.5 186.8 1 0.5 49.9 16 RAIT Financial 223.0 1 0.4 196.1 1 0.5 13.8 17 A10 Capital 209.8 1 0.4 132.4 1 0.3 58.5 18 National Cooperative Bank 145.4 2 0.3 80.5 2 0.2 80.7 19 FirstCity Servicing 112.7 1 0.2 0.0 0 0.0 20 Berkeley Point Capital 65.9 1 0.1 0.0 0 0.0 OTHERS 0.0 0 0.0 2,016.2 4 4.9 -100.0 Total with Special Servicer 54,338.0 74 100.0 40,739.4 56 100.0 33.4

Rialto Capital, the dominant buyer of B-pieces for the past several years, maintained its active pace of purchases in the first half.

The Miami shop acquired the below-investment-grade por-tions of seven conduit transactions totaling $7.5 billion, equal to one-quarter of new conduit issuance from January to June.

Separately, Midland Loan Services topped the ranking of special servicers on conduit and other commercial MBS trans-actions, garnering a 24.5% market share of that sector.

The two rankings are related, because B-piece buyers control the appointment of special servicers on conduit deals. Some B-piece buyers hand off the responsibility to their own special-servicing platforms, while those without such platforms hire third parties.

Rialto, which won the B-piece ranking in three of the past four years, retained first place in the first half even though its former B-piece chief, Matt Salem, and several associates defected to newcomer KKR late last year. Rialto quickly lured back three of the defectors and installed two — Josh Cromer and Joe Bachkosky — as co-heads of the team.

Seer Capital, a New York hedge-fund operator, finished sec-ond in the B-piece ranking, edging out DoubleLine Capital. Seer

bought the junior classes of six transactions totaling $4.5 bil-lion, barely eclipsing the $4.4 billion total of DoubleLine’s four purchases. Seer finished second in the full-year 2014 ranking, while DoubleLine placed sixth.

Rounding out the top five were Eightfold Real Estate Capital ($3.5 billion) and KKR, which acquired its first two B-pieces, on transactions totaling $2.5 billion.

The blended yield on B-pieces rose in the first half, to about 15.5% at midyear from roughly 14.5-15% in January, according to market pros. They said that trend, which was in line with falling prices on investment-grade paper, reflected both con-cern that credit quality was falling and the impact of macro-economic factors.

Midland, which finished third in the special-servicing rank-ing in full-year 2014, surged to the top in the first half on the strength of its role as a third-party servicer for B-piece buy-ers, including DoubleLine, Eightfold and KKR. Midland was appointed as special servicer of 22 transactions totaling $13.3 billion.

“The investors we have teamed up with have been very active, and that is the basis for our market share,” said Midland

See RIALTO on Page 15

July 17, 2015 14Commercial Mortgage ALERT

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Buyers of CMBS B-Pieces in the First Half 1H-15 Market 1H-14 Market Volume No. of Share Volume No. of Share ’14-’15 ($Mil.) Deals (%) ($Mil.) Deals (%) % Chg. 1 Rialto Capital $7,457.0 7 24.8 $7,287.4 6 27.5 2.3 2 Seer Capital 4,531.3 6 15.0 2,866.9 4 10.8 58.1 3 DoubleLine Capital 4,408.0 4 14.6 1,409.6 1 5.3 212.7 4 Eightfold Real Estate Capital 3,503.7 3 11.6 2,087.5 2 7.9 67.8 5 KKR 2,486.6 2 8.3 0.0 0 0.0 6 LNR Partners 1,912.1 4 6.3 4,727.9 9 17.8 -59.6 7 Torchlight Investors 1,866.1 2 6.2 878.0 1 3.3 112.5 8 Ellington Management 1,763.7 3 5.9 4,770.5 6 18.0 -63.0 9 BlackRock 984.5 1 3.3 0.0 0 0.0 10 AllianceBernstein 606.8 1 2.0 630.2 1 2.4 -3.7 10 Raith Capital 606.8 1 2.0 1,168.4 2 4.4 -48.1 OTHERS 0.0 0 0.0 675.0 1 2.5 -100.0 Total (with unrated classes) 30,126.5 27 100.0 26,501.4 24 100.0 13.7

RANKINGS

July 17, 2015 15Commercial Mortgage ALERT

Capital One Shares DC Office LoanHudson City Savings Bank and Synovus Financial joined Cap-

ital One in providing a $110 million mortgage on a Washington office building.

The floating-rate loan to Brookfield Asset Management has a term of five years. It’s backed by the 355,000-square-foot prop-erty at 64 New York Avenue NE. Capital One led the mortgage and brought in Hudson City, of Paramus, N.J., and Synovus, based in Columbus, Ga., at the closing a few weeks ago.

Brookfield used the bulk of the proceeds to retire a $95.5 million mortgage originated two years ago by Mesa West Capi-tal. A portion of the new loan was set aside to be drawn down later for leasing costs and improvements, which a source said might include adding a garage.

The building was completed in 2000 by local firm Douglas Development. Toronto-based Brookfield purchased it in 2005 for $103.1 million, via its $240 million Brookfield Opportunity Real Estate Fund.

When Mesa West originated its loan in January 2013, the property was about 45% occupied. Later that year, Brookfield included it in a bundle of properties it offered for sale. But it ultimately opted to retain 64 New York Avenue and lease it up. The occupancy rate is now 93.4%, according to CoStar. The main tenant is the District of Columbia’s Department of Human Services, which is leasing 275,000 sf until 2022.

The building, also known as 77 P Street NE, is about eight blocks north of Union Station.

Eightfold, Rialto Circle B-PiecesEightfold Real Estate Capital and Rialto Capital have sepa-

rately circled the junior portions of upcoming conduit deals.Eightfold is buying the subordinate piece of an issue by

Deutsche Bank and CCRE (COMM 2015-CCRE25). Deutsche and CCRE, a lending affiliate of Cantor Fitzgerald, negotiated the arrangement with Eightfold, rather than putting the bonds out for bid. Eightfold acquired the B-pieces of three transac-tions totaling $3.5 billion in the first half, ranking fourth in the sector (see ranking on Page 14).

Meanwhile, Rialto circled the bottom portion of a trans-action led by Wells Fargo (WFCM 2015-C30). A handful of B-piece investors bid on those bonds. Rialto ranked first in the midyear ranking of B-piece buyers, with seven deals totaling $7.5 billion.

Rialto ... From Page 13

executive vice president Stacey Berger.Wells Fargo ranked second among special servicers, with 17

transactions totaling $10.8 billion, followed by Rialto ($7.4 bil-lion), KeyBank ($5.5 billion) and LNR Partners ($4.1 billion).

There was a split in the makeup of the top five’s activity. The assignments of Midland, Rialto and LNR stemmed solely or predominantly from conduit deals. The tallies for Wells and

KeyBank were tied mostly to single-borrower transactions.As of yearend, the firms with the largest amounts of special-

servicing contracts on CMBS, CDO or asset-backed loans were LNR ($134.9 billion), C-III Asset Management ($105.7 billion) and CWCapital Asset Management ($100.6 billion), accord-ing to the Mortgage Bankers Association. The firms with the most loans actually in special servicing at the end of May were CWCapital ($11.7 billion), LNR ($11.5 billion) and C-III ($6.8 billion), according to J.P. Morgan.

Wells ... From Page 12

from ongoing efforts to expand its master-servicing operation — including the 2013 purchase of $92 billion of primary- and master-servicing rights from Bank of America.

At yearend, Wells held $344.4 billion of master- and primary-servicing contracts on U.S. commercial mortgages in private-label securitizations, according to the Mortgage Bankers Association. It was followed by Midland ($138.7 billion), Key ($105.8 billion) and Berkadia ($54.5 billion).

Wells also ranked first, with $474.4 billion of mandates, when all types of commercial mortgages were counted — including portfolio loans and agency debt, according to the MBA. Next up were Midland ($396.8 billion), Berkadia ($236.3 billion) and Key ($174.4 billion).

Call: 1-212-901-0542 www.imn.org/landwest15 | Email: amelvin@imn.org

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July 17, 2015 16Commercial Mortgage ALERT

CBRE Hires 3 Ex-Sabal LendersCBRE Capital Markets has lured three lenders from Sabal

Financial as part of an effort to ramp up its origination of small-balance apartment loans under a new Freddie Mac program.

CBRE, which joined the program in April, is shooting to originate $200 million of mortgages by yearend.

The originators who jumped from Sabal are Jeffrey Pirhalla, Darryl Boukedes and Adam Dosskey. All were named vice presi-dents. Pirhalla and Boukedes remain based in Charlotte and will cover the Mid-Atlantic states. Dosskey continues to work in Sacramento and will cover Northern California.

In addition, CBRE has tasked 20 originators from its busi-ness-lending and its debt and structured-finance groups to also write loans for the Freddie initiative.

There are now nine lenders in Freddie’s program, which was rolled out last October. The participants write loans of $1 mil-lion to $5 million on affordable apartment properties with 5-50 units. Freddie purchases the mortgages and will securitize them lender-by-lender, once $100 million of loans are accumulated.

Arbor Commercial Mortgage, Greystone and ReadyCap Com-mercial each reached the $100 million threshold in the past month, while Hunt Mortgage is closing in on the mark. The first securitization under the program is expected within a few weeks.

The other members of the initiative are Community Preser-vation Corp., Magna Bank, Red Mortgage Capital and Sabal.

Protections ... From Page 1

his balloon payment,” said one veteran buyer of junior bonds.

Some investors that have bid for B-pieces since the decision have started asking issuers to provide life-of-loan guarantees. One pro said his firm has added the provision to the boilerplate language in its bid letters.

“Of course we’re going to push back,” said another longtime B-piece buyer. “And you may see investors higher up the stack starting to push back on this, too.”

While it’s too soon to say whether B-piece buyers will have the muscle to get such provisions included, some issuers said they were unlikely to make concessions, contending that six years of protection is adequate.

“Whenever a loan goes bad in year nine for credit reasons, the investors always start looking for ways to stick it to the issuer,” said one dealer. “Where is their due diligence? They complain about everything.”

In 2011, the CRE Finance Council adopted voluntary stan-dards for reps and warranties. Investors could push to have a “life of loan” provision added, although no formal steps have been taken yet.

Dan Rubock, a senior vice president of Moody’s, said that the court ruling wouldn’t prevent life-of-loan provisions from being enforceable if issuers and investors agree. In a report last month, he also noted that most CMBS transactions select New York as the venue for lawsuits, although he added that the effect of the ruling could be relatively small, since breaches of reps and warranties have rarely resulted in loan buybacks in the CMBS market.

The unanimous appeals court ruling stemmed from a resi-dential MBS case called ACE Securities Corp. vs. DB Structured Products Inc. Judge Susan Phillips Read wrote the 18-page decision.

CALENDAR

CALENDAR Main Events Dates Event Location Sponsor Information Nov. 9-10 CREFC Europe Autumn Conference London CREFC Europe www.crefc.org

Jan. 11-13, 2016 CRE Finance Council January Conference 2016 Miami CRE Finance Council www.crefc.org

Jan. 31-Feb. 3 CREF/Multifamily Housing Convention & Expo Orlando MBA www.mortgagebankers.org

June 13-16 CRE Finance Council Annual Conference 2016 New York CRE Finance Council www.crefc.org

Events in US Dates Event Location Sponsor Information July 22 After Work Seminar Series: Language of Servicing San Francisco CRE Finance Council www.crefc.org

July 27-29 Annual Meeting 2015 Dallas Appraisal Institute www.appraisalinstitute.org

July 28 Networking Event New York YREPNY www.yrepny.org

Aug. 5 Smart Communications New York CRE Finance Council www.crefc.org

Sept. 10 After Work Seminar New York CRE Finance Council www.crefc.org

Sept. 16-18 ABS East Miami IMN www.imn.org

Sept. 17 Unraveling the Mysteries of Rule 17g-5 Miami CRE Finance Council www.crefc.org

Sept. 17-18 Bank Special Asset Forum: Real Estate, C&I, SBA Loans Chicago IMN www.imn.org

Sept. 27-30 AmeriCatalyst 2015: RUBICON Austin AmeriCatalyst americatalyst.com

To view the complete conference calendar, visit The Marketplace section of CMAlert.com

July 17, 2015 17Commercial Mortgage ALERT

INITIAL PRICINGSINITIAL PRICINGS

GS Mortgage Securities Trust, 2015-GC32 Pricing date: July 16

Property types: Retail (39.1%), hotel (15.9%), manufactured housing (11.1%), office (10.5%), mixed-use (8.6%), multi-family (7%), self-storage (4.8%) and industrial (3%). Concentrations: California (19%), Texas (16.6%) and Colorado (12.7%). Loan contributors: Goldman (40.4%), Citi (30.1%), CCRE (13.4%), Starwood (9.6%) and MC-Five Mile (6.5%). Largest loans: A $100 million portion of a $145 million loan to Ascentia Real Estate on 32 manufactured-housing communities, with 4,965 total pads, in six states; a $74.2 million loan to Rouse Properties on the 302,000-square-foot Fig Garden Village power center in Fresno, Calif.; a $65.5 million loan to Cypress Equities and Akard Street Partners on the 595,000-sf Bassett Place power center in El Paso, Texas; a $65 million loan to DiamondRock Hospitality on the 196-room JW Marriott Cherry Creek in Denver; a $56.8 million portion of a $259 million loan to Crow Family Holdings on the 3.1 million-sf Dallas Market Center trade mart in Dallas; a $50 million portion of a $140 million loan to Swig Investment on the 811,000-sf Kaiser Center office building in Oakland; a $30 million loan to Millcraft Investments on the 175-room Hilton Garden Inn Pittsburgh/Southpointe in Can-onsburg, Pa.; a $25.6 million loan to John Burnette on the 243-room DoubleTree hotel in Tallahassee, Fla.; a $25 million senior portion of a $412.5 million loan to StorageMart and Stanley Kroenke on 66 self-storage properties, encompassing 4.5 million sf, in 15 states; and a $25 million portion of a $345 million loan to Martin Selig on nine Seattle office buildings encompassing 1.6 million sf. B-piece buyer: Seer Capital. Notes: Goldman, Citi, CCRE, Starwood and MC-Five Mile teamed up to securitize commercial mortgages that they had originated. CMA code: 20150151.

Closing date: July 31

Amount: $1,003.1 million

Seller/borrower:

Goldman Sachs,

Citigroup,

CCRE,

Starwood Mortgage,

MC-Five Mile

Lead managers: Goldman Sachs,

Citigroup

Co-managers: Cantor Fitzgerald,

Drexel Hamilton

Master servicers: Midland Loan Services,

KeyBank

Special servicers:

CWCapital Asset Management,

Midland Loan Services,

KeyBank

Operating advisor: Park Bridge Lender Services

Trustee: Wells Fargo

Certificate administrator: Wells Fargo

Offering type: SEC-registered

Amount Rating Rating Rating Subord. Coupon Dollar Yield Maturity Avg. Life Spread Class ($Mil.) (Moody's) (Fitch) (Kroll) (%) (%) Price (%) (Date) (Years) (bp) Note Type A-1 54.451 Aaa AAA AAA 30.00 1.593 99.999 1.581 7/10/48 2.59 S+48 Fixed A-2 50.885 Aaa AAA AAA 30.00 3.062 102.997 2.395 7/10/48 4.81 S+68 Fixed A-3 180.000 Aaa AAA AAA 30.00 3.498 100.993 3.391 7/10/48 9.81 S+98 Fixed A-4 331.866 Aaa AAA AAA 30.00 3.764 102.993 3.420 7/10/48 9.91 S+100 Fixed A-AB 84.984 Aaa AAA AAA 30.00 3.513 102.999 3.065 7/10/48 7.43 S+90 Fixed A-S 70.218 Aa2 AAA AAA 23.00 4.018 102.998 3.673 7/10/48 9.94 S+125 Fixed B 60.188 NR AA- AA- 17.00 4.549 102.993 4.123 7/10/48 9.94 S+170 Fixed PEZ 173.038 NR A- A- 12.75 7/10/48 9.94 Fixed C 42.632 NR A- A- 12.75 4.559 98.309 4.723 7/10/48 9.94 S+230 Fixed D 51.410 NR BBB- BBB- 7.63 3.345 79.439 6.173 7/10/48 9.94 S+375 Fixed E 20.063 NR BB BB 5.63 7/10/48 9.94 Fixed F 10.031 NR B B 4.63 7/10/48 9.94 Fixed G 17.555 NR NR B- 2.88 7/10/48 9.94 Fixed H 28.840 NR NR NR 0.00 7/10/48 9.94 Fixed X-A(IO) 772.404* Aa1 AAA AAA 7/10/48 Fixed X-B(IO) 60.188* NR AA- AAA 7/10/48 Fixed

*Notional amount

July 17, 2015 18Commercial Mortgage ALERT

INITIAL PRICINGSINITIAL PRICINGS

WP Glimcher Mall Trust, 2015-WPG Pricing date: July 9

Property types: Retail (100%). Concentrations: Hawaii (52.5%) and Arizona (47.5%). Loan contributors: J.P. Morgan (60%) and Deutsche (40%). Notes: This transaction financed two shopping centers that were part of a broader recapi-talization. In all, O’Connor Capital purchased a 49% stake in five shopping centers from WP Glimcher, which retained the remaining 51% interest. The deal valued the portfolio at $1.63 billion. In conjunction with the recap, J.P. Morgan and Deutsche on May 20 originat-ed fixed-rate mortgages totaling $390 million on two of the properties: the 1.1 million-sf Pearlridge Center in Aiea, Hawaii, and the 542,000-sf Scottsdale Quarter in Scottsdale, Ariz. In this transaction, the lenders securitized a $105 million portion of the $225 million loan on Pearlridge Center and a $95 million portion of the $165 million loan on Scottsdale Quarter. The interest-only loans, which aren’t cross-collateralized, have 10-year terms and 3.53% coupons. The securitized Pearlridge Center debt encompasses a $59 million senior portion and a $46 million junior portion. The securitized Scottsdale Quarter loan encom-passes a $38 million senior portion and a $57 million junior portion. Classes A-C are tied to the senior components of the two loans. The unpooled PR classes are tied to the junior portion of the Pearlridge loan. The unpooled SQ classes are tied to junior portion of the Scottsdale Quarter loan. The transaction gave implied valuations of $424.5 million to Pearlridge Center and $345 million to Scottsdale Quarter. CMA code: 20150141.

Closing date: July 24

Amount: $200 million

Seller/borrower: WP Glimcher,

O’Connor Capital

Lead managers: J.P. Morgan,

Deutsche Bank

Co-manager: Drexel Hamilton

Master servicer: KeyBank

Special servicer: KeyBank

Trustee: Wells Fargo

Certificate administrator: Wells Fargo

Offering type: Rule 144A

Amount Rating Rating Subord. Coupon Dollar Yield Maturity Avg. Life Spread Class ($Mil.) (S&P) (MStar) (%) (%) Price (%) (Date) (Years) (bp) Note Type A 30.600 AAA AAA 46.62 3.633 99.899 3.602 6/5/35 9.86 S+130 Fixed B 32.100 AA- AA- 35.21 3.633 95.063 4.211 6/5/35 9.86 S+180 Fixed C 34.300 A- A- 26.41 3.633 93.535 4.411 6/5/35 9.86 S+200 Fixed PR-1 27.800 BBB- BBB- 8.09 6/5/35 9.86 Fixed PR -2 18.200 BB BB 0.00 6/5/35 9.86 Fixed SQ-1 15.900 BBB- BBB- 24.91 6/5/35 9.86 Fixed SQ -2 21.600 BB- BB- 11.82 6/5/35 9.86 Fixed SQ -3 19.500 B- B- 0.00 6/5/35 9.86 Fixed X(IO) 97.000* A- AAA 6/5/35 Fixed *Notional amount

July 17, 2015 19Commercial Mortgage ALERT

WORLDWIDE CMBS

US CMBS

LOAN SPREADS

ASKING SPREADS OVER TREASURYS ASKING OFFICE SPREADS

REIT BOND ISSUANCE

UNSECURED NOTES, MTNs ($Bil.) MONTHLY ISSUANCE ($Bil.)

Data points for all charts can be found in The Marketplace section of CMAlert.com

0

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Spread (bp) New Issue

Fixed Rate Avg. Week 52-wk (Conduit) Life 7/15 Earlier Avg.

AAA 5.0

10.0 S+63

S+98 S+67

S+103 59 86

AA 10.0 S+160 S+165 141

A 10.0 S+210 S+215 192

BBB- 10.0 S+397 S+403 355 Spread (bp) Legacy Fixed Rate Avg. Week 52-wk (Conduit) Life 7/15 Earlier Avg.

AAA 5.0

10.0 S+135

S+126 S+140 S+129

109 106

AA 10.0 S+958 S+962 957

A 10.0 S+1,427 S+1,431 1,458

BBB 10.0 S+3,017 S+3,024 3,036 Dollar Price Week 52-wk Markit CMBX 6 7/15 Earlier Avg.

AAA 96.0 95.5 97.1

AS 97.5 96.8 98.4

AA 98.4 97.5 99.6

A 97.6 96.4 99.5

BBB- 94.4 93.0 97.6

BB 93.4 92.0 97.1 Sources: Trepp, Markit

Month 7/10 Earlier

Office 150 155

Retail 143 151

Multi-family 145 148

Industrial 140 151 Source: Trepp

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O N D J F M A M J J

10-year loans with 50-59% LTV

CMBS TOTAL RETURNS

CMBS INDEX Total Return (%)

Avg. Month Year Since As of 7/15 Life to Date to Date 1/1/97

Inv.-grade 5.2 0.2 0.9 209.2

AAA 5.7 0.2 1.0 193.6

AA 3.9 0.1 0.5 88.8

A 3.7 0.2 1.0 74.9

BBB 4.0 0.2 1.3 84.4 Source: Barclays

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NEW-ISSUE SPREAD OVER SWAPS

CMBS SPREADS

10-Year AAA

WORLDWIDE CMBS ISSUANCE ($Bil.)2014 2015

01/06/00 J 0.0 0.0 Year-to-date volume ($Bil.)

01/13/00 1.6 0.0 2015 2014

01/20/00 2.1 0.2 US 57.4 47.0

01/27/00 4.2 2.5 Non-US 3.1 1.9

02/03/00 F 6.4 5.5 TOTAL 60.5 48.9

02/10/00 7.9 11.902/17/00 8.9 14.002/24/00 10.0 14.203/02/00 M 11.5 17.703/09/00 13.2 20.803/16/00 16.1 20.803/23/00 17.6 24.303/30/00 20.9 26.704/06/00 A 20.9 30.904/13/00 21.1 33.604/20/00 21.3 35.904/27/00 21.4 37.805/04/00 25.7 38.105/11/00 M 27.0 41.205/18/00 27.3 45.405/25/00 30.3 45.806/01/00 30.9 46.606/08/00 36.0 49.206/15/00 J 37.0 51.906/22/00 40.2 54.306/29/00 42.2 56.607/06/00 43.5 59.007/13/00 J 44.2 59.407/20/00 48.9 60.507/27/00 50.208/03/00 52.408/10/00 A 55.708/17/00 58.108/24/00 58.408/31/00 58.409/07/00 58.609/14/00 S 61.509/21/00 69.409/28/00 71.010/05/00 72.110/12/00 76.110/19/00 O 76.310/26/00 80.211/02/00 80.911/09/00 83.911/16/00 84.411/23/00 N 85.911/30/00 90.512/07/00 92.012/14/00 97.8

MARKET MONITOR

xxx 1Commercial Mortgage ALERT

AGENCY CMBS SPREADS

FREDDIE K SERIES Spread (bp)

Avg. Week 52-wk Life 7/16 Earlier Avg.

A1 5.5 S+35 S+35 34

A2 10.0 S+51 S+51 43

B 10.0 S+170 S+170 154

C 10.0 S+245 S+245 213

X1 9.0 T+150 T+150 138

X3 10.0 T+360 T+360 286

Freddie K Floater L+32 L+32 Week 52-wk 7/16 Earlier Avg.

10/9.5 TBA (60-day settle) S+63 S+61 53

Fannie SARM L+35 L+35 Source: J.P. Morgan

FANNIE DUS

Spread (bp)

Avg. Week 52-wk Life 7/16 Earlier Avg.

A1 5.5 S+35 S+35 34

A2 10.0 S+51 S+51 43

B 10.0 S+170 S+170 154

C 10.0 S+245 S+245 213

X1 9.0 T+150 T+150 138

X3 10.0 T+360 T+360 286

Freddie K Floater L+32 L+32 Week 52-wk 7/16 Earlier Avg.

10/9.5 TBA (60-day settle) S+63 S+61 53

Fannie SARM L+35 L+35 Source: J.P. Morgan

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July 17, 2015 20Commercial Mortgage ALERT

was at CCRE for two years, working on bridge loans and opportunistic equity plays. Previously, he spent five years at BlackRock.

After 25 years at McKenna Long, manag-ing director Brian Olasov joined Carlton Fields on July 1 as executive director of financial services consulting. He works with partner Greg Null, who heads the Tampa-based law firm’s commercial finance practice. Olasov, who isn’t a law-yer, consults with the firm’s clients and lawyers on capital-markets transactions and litigation. He also handles engage-ments from other law firms as an expert witness on commercial and residential MBS. He’ll relocate from Atlanta to New York around yearend. Olasov also serves as policy chairman on the executive committee of the CRE Finance Council.

Hunt Mortgage has hired Paul Weissman to lead its affordable-housing origina-tions team. Weissman started July 1 as a senior managing director. He’s based

in Denver, reporting to acting presi-dent Chris Hunt at the firm’s New York headquarters. Weissman spent the last six years at Minneapolis-based broker-dealer Dougherty & Co., where he was senior vice president. Before that he was a vice president at PNC and a director of affordable multi-family originations at Credit Suisse.

Michael Edelman is joining Meridian Capital as a senior managing director. He starts Monday at the New York loan bro-kerage, reporting to chief executive Ralph Herzka. Edelman’s duties include lining up new business, helping lead agency-lending efforts and working with Merid-ian’s new investment-sales platform to arrange acquisition financing. He previ-ously headed Northeast multi-family lending at Capital One. Edelman worked at Beech Street Capital from 2011 to 2013 and oversaw its correspondent relation-ship with Meridian. Before that, he spent more than 14 years at Freddie Mac.

JLL has hired Zane Sweet as a senior vice president on its capital-markets team in Irvine, Calif. He started Wednesday, working to line up debt and equity on

various property types. He reports to managing director Chris Casey. Sweet previously spent three and a half years at Berkadia, where he was a vice president, and had earlier stints at Miami-based Corzo Investments and HFF.

Attorney Chaim Gottesman joined Moody’s CMBS group on Monday as a vice president in New York. He focuses on legal aspects of new-deal ratings, working under senior vice president Dan Rubock. Gottesman previously was of counsel at Orrick Herrington, where he joined the CMBS practice early last year after almost a year in a similar role at Kaye Scholer. Before that, he was in-house counsel at CW Financial Services from 2006 to 2013 and an associate at Cadwalader Wickersham from 1999 to 2006.

Voya Investment has hired Bill Ireland as an assistant vice president to help source and originate commercial mortgages, mainly on the West Coast. It’s unclear where he’ll be based. Ireland spent the past year as a vice president at Realty Finance, a New York REIT, and had a four-year stint at HFF before that.