The Dirt Lawyer's Blog Archive

Crain's moved a story this morning regarding a dispute over a tenant exclusive involving the InterContinental Hotel in Rosemont. As I understand it, Capital Grille occupied a standalone pad in the project under a lease that prohibited another “high-end steakhouse themed restaurant concepts serving liquor with price points above $22.00 per entrée” in the project. Apparently several types of competing restaurants were named. Apparently an Italian restaurant was supposed to go into the hotel but then blew out of the deal. Along came Wildfire, which was not listed among the competitors although it does sell steaks above $22.00 per entree and is a pretty classic supper club type atmosphere, though certainly noisier and more lively than Capital Grille, in my opinion. The developer's hand was forced because the franchisor declared a breach under its franchise agreement for not having a restaurant on site (and then granted an extension), although you wonder in this market if you

Please pardon the Dennis Miller-esque references to Looney Tunes cartoons, but I was listening to his show this morning. Anyway.... Where are we going? No one, of course, really knows. And that shows in some opinions out there right now. For instance, here is a story on the rest of the year and looking into 2010. The gist? Call it optimistically hopeful, but federal policymakers this week said the national recession could end this year, with the beginnings of recovery possibly taking hold in 2010. A pair of recent reports suggests that all is not lost for battered commercial real estate investors as well. In fact, the reports predict that a window of opportunity will probably open up within months for shrewd and well-capitalized investors as troubled assets begin to enter the disposition pipeline. In particular, analysts expect institutional investors to be in a good position this year to take advantage of changing conditions in a market that has swung hard over to the downside, a

I think that is what the PBS station used to say here when they did fund raising auctions every year back in the day. And I think you will see more of that in real estate, too. Deal Junkie reports that you may see a few prominent auctions in the next few weeks (including the John Hancock Tower in Boston that was the subject of this post recently). The post also cites a New York Times story stating that an auction trade association has reported a sharp increase in activity. Auctions in Chicago are not infrequent, due in no small part to the activities of Sheldon Good & Co. , a national real estate company headquartered here. I am sure Shelley is doing well, notwithstanding the sad loss of Steven Good early this year. But remember one thing: not all auctions are public. Take the EOP deal. That was essentially a private auction for the whole portfolio, followed by additional private auctions for some of the pieces. This is a great opportunity to maximize value when the time i

You may have heard that Younan Properties did not close on the acquisition of 180 North LaSalle in Chicago. There had already been three months of extensions granted and apparently Prime Group Realty Trust had had enough. In anticipation of being unable to meet the latest deadline Younan filed an action in the Chancery Division of the Cook County Circuit Court apparently seeking the return of its $6 million in earnest money. The case is 2009-CH-06451 if you want to see the docket. According to Crain's, Mr. Younan filed the lawsuit Feb. 13, claiming he was unable to close the $124-million deal after the global recession and frozen credit markets prompted a key lender to back out of talks to finance the purchase. Prime Group issued a statement Thursday saying the deal, due to close by Feb. 18, was terminated and that the Chicago-based REIT was entitled to keep the earnest money. Mr. Younan’s lawsuit says the credit freeze means the “doctrine of impossibility and the imprac

I'm under the weather and also under the gun on several projects (it never fails), so just a few quick thoughts for the day. On the gloomy side: In case you missed it, commercial and multifamily loan originations are in the tank . Mezz lenders are getting slaughtered , too. What is it with Chicago and luxury Asian hotels? First the Shangri-La has its problems, and now it looks like the Mandarin Oriental may not get off the ground, foreclosure and all that. The speculators say it is a matter of time, but my thought is that people will try to buy time until October for obvious reasons. And even the Fed is talking about CRE problems , although the hope is that the problems will not be as bad as the early 1990s. On the less gloomy side: Rob Bagguley of Transwestern has a great post at CPN about the encouraging signs of the market. I have to be reminded that there are good things going on and I thank Rob for doing so. Anecdotally I am seeing a slight uptick and thinking that perhaps

I'm getting fed up with government hypocrisy. Case in point: companies left and right are being criticized for holding "lavish parties" for key salespeople, or retreats, conventions or other corporate outings. I understand why. But I also know that we could be hurting the hospitality and convention industry more and more by canceling all these events. But if our government officials do it? No, that is a "serious working session." Both parties had trips to nearby resorts, with different sources of money. Republican lawmakers paid for their travel and lodging [at The Homestead], mostly with campaign funds. Staffers' bills and the rest of the tab was picked up by the Congressional Institute, which is funded by 54 "patrons," including General Electric Co. and the National Association of Home Builders. About 45 lobbyists attended a dinner on opening night. A few days later, as the stimulus bill inched forward, Democrats held a two-day issues conf

I know everyone and his or her mother has already commented on the layoffs at many firms yesterday. This is something we haven't seen since the early 90s and even then probably not on this scale. Nonetheless, to close out the week I do have a few comments on the situation. (There is also a good summary here that contains many of these ideas.) The layoffs had to happen not only because of a lack of work but also because of a lack of normal attrition in a down market. Of course, the fact that some law firm managers plan on and expect 25% attrition is entirely another problem. We've let our profession become a business driven by profit and loss. Because of the business model, some move around like nomads either because of it and/or because they know they are almost as fungible as associates. I'm not sure we can close Pandora's Box, but it is food for thought. First year associates are, by and large, overpaid and useless. I know. I used to be one. And now, of co

Gosh, I hope not. But in these times, anything even remotely resembling a frill is going to get axed, as you can see from this story about the person responsible for most of Lehman's deal toys. I always enjoy getting a tombstone or other memento of a deal I have done. My favorite is a Pepto-Bismol bottle that I have been tempted to open from time to time. One of my clients has an even better idea for free deal toys: they find mementos often left in the buildings they buy and tear down and put the mementos in their offices. There is some neat stuff to be found sometimes, and it is proof that one person's trash can be another's treasure!

This is what you hear banks saying. But then you read that originations are down 80% from 4Q 2007, when things were already starting to slow. And this is across the board in commercial and multi-family sectors. Lenders say, however, that they are lending and have to lend to stay in business and make money. So who do you believe? I have my opinion :)

Perhaps that is an overstatement. But it is the first thing that came to mind when I read this story in the WSJ about Lehman's real estate holdings. Having been involved with a few deals with Lehman, I was shocked when the company went down -- and the government let it. But that was then and this is now. There's a lot of negotiating and foreclosing and lawyering to be done with a portfolio this size. And in some cases money is even being thrown into deals that make (and made?) sense in order to preserve the asset, which I think is a good idea under the right circumstances. Now I am playing wait and see on the so-called stimulus and whether it will have any impact on jump-starting our market. Only time -- which a lot of people don't have much of with so many loans coming due -- will tell.

One interesting thought came to mind while reading this WSJ piece : what effect will the cancellation of all these Wall Street, banking and related conferences at resorts and other locations have on revenues in the hotel industry? Is it time to look for vacation bargains?

Here's some random thoughts from my fellow bloggers that caught my eye and that I recommend you read: Michael Mandel has a great piece on shadow space in the Manhattan market, which, alas, paints an even bleaker picture of market conditions. I never see anyone at my local Pier 1. I cannot believe it is still open. Apparently, I'm not alone in this thought. The ever-informative Deal Junkie , has a good little piece from the NYT Economix blog arguing that CRE will not have a crisis similar to that in the residential market. I've also always thought that, too, but all bets are off in this market and perception may be more important than reality. (And here is David Bodamer's analysis at Traffic Court . His points are, imho, spot on.) According to Retail Chatter , mega-retailer Tesco is trying to cram down rents with landlords on one side while trying to buy the fee interest in ground leased land on the other -- and at a 9 cap! Nice deal (for Tesco , that is) if

Assuming anyone is still there, if you work in the development group at Simon Properties, you may want to polish your resumes. While David Simon tried to assure analysts about the dividend, he also said the company doesn ’t plan to begin construction on new projects or major redevelopments in 2009 and there will be little new U.S. retail construction for years to come. “The new development business is dead for a decade,” Simon said on today’s call. “Maybe it’s eight years. Maybe it’s not completely dead. Maybe I’m over-dramatizing it for effect.” That's probably overdramatic and hopefully limited to regional malls. But for big deals in the exurbs? It may be a while. In spite of rosy predictions in this article where I live, I doubt we'll see much dirt pushed this year. H/T Traffic Court .