At its core, real estate financing is about closing loans. In the aftermath of the Sept. 11 terrorist attacks on the World Trade Center, that task became especially difficult in markets served by M. Robert Goldman Co. because of the company's location within the New York metropolitan area.
In order to complete transactions in the weeks following the terrorist attacks, commercial mortgage bankers have had to rely on personal relationships and resolve to preserve deals that either were in the works or nearing completion in the days prior to Sept. 11.
Deals despite uncertainty
Relying on close ties with lenders and customers, M. Robert Goldman Co. successfully concluded three financing transactions during the market instability that followed the tragedy. These included:
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$18 million in financing for Melville Corporate Center at 105 Maxess Road in Melville, New York;
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$13 million in permanent financing for a 324,445 sq. ft. industrial building in Parsippany, N.J., owned and operated by the principals of Amerex Group Inc., an outerwear distributor;
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$8.7 million in acquisition financing for the purchase of a 3-story office building at 125 Baylis Road, also in Melville.
In each of these transactions, unprecedented issues associated with the aftermath of Sept. 11 challenged the financing process and threatened the deals. Further complicating matters was the fact that each transaction was directly linked to downtown Manhattan. For example, Thatcher Proffitt & Wood, a law firm with offices on Floors 38, 39 and 40 of 2 WTC (one of the twin towers), represented Charlotte, N.C.-based Bank of America, the lender for 125 Baylis Road. Miraculously, all of Thatcher Proffitt & Wood's employees safely escaped.
Guardian Life Insurance Co. of America, the lender in both the Melville Corporate Center and Amerex transactions, is headquartered at 7 Hanover Square, a short distance from the WTC complex.
The Melville Corporate Center is owned and managed by an entity of Melville-based T. Weiss Realty Corp., which oversaw the conversion of the building from a 75,000 sq. ft. manufacturing facility to its present use as a 150,000 sq. ft. Class-A office building. On the morning of Sept. 11, the property's final fire inspection was in progress when the fire marshal was called away. With the loan commitment about to expire, Guardian's staff continued to work from their homes and were able to extend the commitment and the closing process, even as they were kept away from their offices for more than a week.
Woodbridge Enterprises Inc., a company controlled by the principals of outerwear distributor Amerex, will use the mortgage proceeds on the Amerex transaction to pay off present debt, provide capital for strategic acquisitions and possibly construct a 150,000 sq. ft. building on a nearby site. The loan, committed by Guardian as well, was scheduled to close the week of Sept. 11, but was similarly extended to accommodate the extraordinary circumstances.
In the case of 125 Baylis Road — a 99,487 sq. ft. office building under contract of sale by Melville-based Reckson Associates Realty Corp. to the property's largest tenant, Holtz Rubenstein & Co. — the loan commitment expired Sept. 15 and the sales contract was subject to a “time is of the essence” clause. The loan was to be part of Bank of America's conduit program, so all parties were particularly anxious because the securitized lending environment is much more sensitive to uncertainty in the marketplace. To its credit, Bank of America extended its commitment and held the spread as each of the parties worked to assist Thatcher, Proffitt & Wood while its staff closed the loan from their homes.
Committed to service
If not for the involved parties' sensitivity to the situation and continuing commitment to the deals, the loans would have been adversely affected. Of particular importance was both lenders' willingness to extend the commitments and hold rates, spreads and proceeds.
During a period when many transactions were jeopardized, the perseverance and determination of Guardian Life Insurance, Bank of America and Thatcher Proffitt & Wood testify to each of these institutions' resolve to continue conducting business despite enormous obstacles.
Jonathan Goldman is executive vice president of M. Robert Goldman & Co. Inc., a privately held mortgage banking firm based in Great Neck, N.Y.