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NCB reaches billion dollar mark financing 20,000 units.

National Cooperative Bank, headquartered in Washington, D.C., with a large office in New York City, offers a full complement of subordinate financing for cooperative corporations, specializing in delivering substantial cash refunds on "closing" costs.

NCB, rounded in 1978 and re-constituted as a privately-owned cooperative financial institution in 1982, has originated more than $1 billion in real estate loans and has financed over 20,000 units of affordable cooperative housing. NCB's Manhattan office, located on East 45th Street, specializes in providing underlying mortgage financing for cooperative housing corporations.

Last month, the New York office of NCB was responsible for completing over $16.7 million in financing for 10 metropolitan area housing corporations. NCB, one of the largest originators of underlying mortgages for cooperative housing corporations, arranged $13,375,000 in "first mortgage" last month, as well as $2,700,000 in second mortgages for co-ops.

Following two years of steady declines, the cost of purchasing a New York City co-op apartment increased a modest 2.4 percent during 1993, according to data compiled by NCB.

Sheldon Gartenstein, Paulette Bonano, and Ed Howe III, vice presidents and loan officers of NCB in New York, are three reasons that NCB was responsible for arranging approximately $190 million in financing for housing cooperatives last year.

"This is the heart of multi-family coops, about 85 percent are here," said Gartenstein, who has originated more than $350 million of multi-family first and second mortgages in his eight years with NCB. "I think we're the third largest lenders to co-ops in the city."

"After that, it drops off drastically," said Howe, who previously was a lending officer at Citibank's Real Estate Financial Services Group in Manhattan. "I don't think anyone is over $50 million."

Gartenstein explained that NCB is a cooperative itself, and, as such, its borrowers become members and share in the bank's dividends. He said there are approximately 1,000 such members at present.

A co-op that finances its underlying mortgage with NCB can expect a refund of as much as 60 percent of its commitment or origination fees, after its first full year as a member. In the second and subsequent years, the co-op can expect to receive cash refunds equal to approximately 8 percent of the membership fee, equal to 1 percent of the loan value, in subsequent years.

Gartenstein, a recognized leader in the field of cooperative lending and a graduate of City College, was responsible last month for arranging a $2.2 million second mortgage for the co-op at 69-15 150th Street in Flushing, a $1.9 million first mortgage and a $500,000 line of credit for the co-op at 607 West Avenue, and a $1.5 million first mortgage for the co-op at 522 West End Avenue.

Because NCB securitizes most of its loan, the bank is able to access the secondary market for mortgages and compete aggressively for business among cooperative housing corporations.

"In February we completed over $16.7 million in financing for New York coops," said Bonanno, who specializes in meeting capital needs of housing cooperatives through underlying mortgage finance and/or lines of credit. "This figure more than doubles our January financing total and confirms NCB's prediction of a resurgence of financing activity for New York coops in the coming months."

"There has been a marked improvement in the regional economy and this is having a very positive effect on the New York co-op market," Bonanno stated. "This continuing low interest environment has instilled a new confidence that will support future financing activity."

Last month, Howe was responsible for arranging a $4.4 million first mortgage for the co-op at 666 Pelham Road in New Rochelle, a $1.8 million first mortgage for the co-op at 321 West 90th Street, and an $800,000 first mortgage for the co-op at 36 West 15th Street.

"In doing deals now, compared to 18 months ago, there's a lot more sales activity," said Howe, who has completed more than 130 financing transactions and has originated more than $175 million worth of underlying mortgages during the four years he has been with NCB. "When units turn over it shows confidence."

Earlier this year, NCB, recognized as the most reliable source of co-op pricing trends for New York City and the entire northeast region, released the 1993 Co-op Index, which provided an outlook for the 1994 co-op market in New York.

In a marked improvement over the 14.4 percent and 18.4 percent drop in values charted in 1992 and 1991, respectively, the value of a New York City coop increased 2.4 percent during 1993 to an average value of $55,720, according to NCB. At the same time, rents at co-op buildings also reversed two years of declines, increasing 8.2 percent last year, from $432 per room in 1992 to $468 per room in 1993.

"Even though New York City co-op values have yet to reach their 1989 high point of $84,473 per room, the. 1993 increase of 2.4 percent is an encouraging sign," said Gartenstein, who was awarded NCB's Real Estate Lender of the Year title in 1987, 1988 and 1992. 'This increases follows two years of steady and significant declines, representing stabilization of coOp values in the overall New York market."

According to Gartenstein, Upper West Side values decreased 5 percent in 1993, from $66,416 per room in 1992 to $63,104, while values on the Upper East Side declined 5.8 percent, from $89,633 per room in 1992 to $84,456 in 1993.

"The Manhattan numbers are getting a little bit better, going forward in a much healthier market," said Bonanno, who is active in share loan financing, and has earned a reputation for expertise in the financing of specialized housing products. "I think the outer boroughs still need to catch up."

Brooklyn and Queens neighborhoods experienced an 8.2 percent decline in values, from $25,123 per room in 1992 to $23,068 in 1993, said Bonanno, who has originated more than 300 loans totalling in excess of $300 million during her six years at NCB.

Howe, a graduate of Citibank's Commercial Credit Training Program, noted that the Westchester market also experienced a decline last year. Perroom values in the Westchester market declined 14.9 percent last year, Howe said, from $23,051 per room in 1992 to $19,627 in 1993.

According to NCB, two neighborhoods registered increases in values last year. Co-op housing values in the Lower Manhattan neighborhoods increased 5.5 percent, from $45,533 per room in 1992 to $48,021 in 1993, and values in the Midtown Manhattan neighborhood increased 1.6 percent, from $50,145 per room in 1992 to $50,933 in 1993.

While rental rates for lofts, located primarily in SoHo, TriBeCa and Chelsea, increased in 1993, market values for lolls declined, said Bonanno, a graduate of Long Island University who was an assistant vice president at Chemical Bank's Real Estate Group prior to joining NCB.

Rental rates for logs were up 5.6 percent in 1993, Bonanno stated, while market values for loft co-ops declined 6.6 percent last year, from $198 per room in 1992 to $185 in 1993.

Since 1988, NCB found that on average in New York City, values have declined 34 percent from the high point per room of $85,473 in 1989 to $55,720 in 1993. Also, according to NCB, the Upper East Side high point market value per room was $155,047 in 1990 and has since declined by 46 percent to $84,456 in 1993. On the Upper West Side, the high point market value per room was $'91,925 in 1990 and has since declined by 31 percent to $63,104 in 1993.
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Title Annotation:National Cooperative Bank
Author:Alger, Derek
Publication:Real Estate Weekly
Article Type:Company Profile
Date:Mar 16, 1994
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