The Dirt Lawyer's Blog Archive

Sometimes real estate lingo sounds like an episode of The Sopranos. For instance: We gotta take a haircut on this deal, Paulie. Oh, just whack the tenant. Is (Broker X) a friend of mine or a friend of ours? We're gonna take out the bank. It's what we hafta do. Okay, maybe I am exaggerating. But taking out the bank is Joseph Freed's goal and its best alternative to a negotiated agreement since any such agreement at this point seems impossible. Freed is looking for equity and debt, according to Crain's today. You can read all about what is going on, including a hearing next Friday. While the receivership order was entered, I think based on the story that the order was stayed until the next hearing, by which time the receiver can take over upon presentation of a bond and insurance. Now, is Freed going up for interim appellate relief in the meantime? I haven't read the order in the case so I don't know whether the so-called magic words regarding such an appe

In yet another chapter in the black hole otherwise known as Block 37, that's what some people are saying about Bank of America, who got its wish today in the appointment of CB Richard Ellis as receiver over the retail portion of the property from Joseph Freed & Associates, LLC. As Eddie Baeb and Tom Corfman point out , and rightly in my opinion based on what little I know, "While the bank is within its rights to demand a receiver, the move may prove shortsighted, costing the bank more money over the long run and hurting the project's chances of success." Mike Reschke and David Stone, who both know their way around dirt, agree. The project is (does that means was?) about to open, so it'll be interesting to see how seamless the transition should be. On the legal side, this was largely a slam dunk for B of A, the successor to LaSalle Bank, which underwrote the original deal. Some would say this is what happens when an out of town bank comes in and takes over f

Kudos to Adam Metz and Company at GGP. Here's another 70 loan extensions at ya. I said some time ago that these guys know what they are doing. By the way, something I want to repeat but that I didn't say yesterday is this: Even though I have no connection to the company I really want it to succeed and stay on its own. I think there is still a first-rate team of folks there who know the mall business. The question of course still remains as to whether someone tries to swoop up the company as mentioned here yesterday. But they are hoping to get 170 of the SPEs out of Chapter 11 by year's end, and that alone is, in my humble opinion, an accomplishment.

A year ago , I said I would put a prediction in an envelope about Simon and GGP and see if I was right. Let's open it. "Simon will end up owning part of GGP. But a team up with Westfield makes the most sense, especially if they do try to take in the whole company. This was done before so it is familiar territory for them." My grade? Incomplete. Simon now is exploring ways to use its dry powder to buy some or all of GGP. My bet is still on some, with some interesting lender negotiations perhaps to occur. I noticed Westfield, which also has plenty of cash, was also mentioned in the WSJ story but apparently hasn't hired advisers. (By the way, that means bubkes, in my humble opinion.) So don't be shocked if we see another Rodamco-style deal .

Haven't done any tidbits in a while, so here goes! Block 37 - everyone is talking . Gee, you think the judge and Mayor Daley might have told Freed and B of A to lock themselves away in a conference room and not come out without a solution and an opening of the center before Thanksgiving? Seventh Circuit reverses en banc on the FHA mezuzah case between residents and their the condo association. Read here for the opinion, in which the two judges who originally sided with the association changed their minds. (Thank goodness, thanks to changes in the law, we won't be seeing any more cases like this.) Finally, a CMBS sells courtesy of Developers Diversified. Alas, it is only $400 million. AMB says industrial demand and activity will pick up. What did you think they would say: "The market sucks and will continue to do so until 2017 -- we'll see you then?" David Bodamer has a great post captioned, " Tracing the Commercial Real Estate Boom and Bust ." A

Okay, I'll admit it. I cannot remember the last time I stayed at a Holiday Inn. It isn't because I don't like the flag -- I do -- I think it is just a coincidence. (Full disclosure: I represent clients who have numerous franchise agreements with InterContinental Hotels Group, but I have not spoken to any of them about this post, nor do I know what their plans are respecting their properties.) In today's Journal there is a story about IHG's plan to force its Holiday properties to upgrade their hotels by February 1 or risk being in default under the franchise agreement, which means the lender also gets a notice of non-compliance. I understand the reasoning behind the PIP program. Right now differentiation is important in the business, and as I noted about my vacation, hotels are doing everything they can to attract customers and preserve RevPAR. They have to, because right now at least there are too many rooms and not enough customers. The story says the aver

First it was Block 37. Now it is the Spire. According to this Tribune story , Shelbourne Development and Garrett Kelleher are counter-suing the bank for fraud, saying that the bank was deceptive in the terms of arranging its portion of the financing for the now-dormant project. B of A went after Kelleher on a $4.9 million guarantee previously, and this is the response. As with past cases, I haven't read the papers and am not planning to do so unless someone sends them to me and/or pays me. According to the story, the counterclaim says that Shelbourne should not be deemed in default because of the economy, in which B of A has taken billions of bailout money. That smacks of the Trump Tower force majeure defense and I think that will be a tough battle. In addition, and again according to the story, one of the allegations of fraud is based on this: "the bank took the proceeds of a certificate of deposit owned by Shelbourne for more than $3.5 million and applied it to the amou

I'm back from vacation -- and an old fashioned driving one at that! We had a chance to motor our way to Virginia and back, visiting several hotels in different categories ranging from reasonable to five-star. Here are some random thoughts I had last week that I would like to share with you. Some properties are really stepping up the food service, perhaps in an attempt to attract customers and if not, then locals. We had excellent meals at two hotels -- as good as top places in Chicago -- and on prix fixe menus that were really attractive pricewise. I can especially recommend 1863, the restaurant at the Wyndham in Gettysburg, Pennsylvania. While we are on the topic of food, hoteliers HAVE to train their employees to be sensitive to food allergies. Why? Because THIS could happen. Here's how. While at a hotel in Virginia Beach, my wife (who, as you may know, is a physician) mentioned to a hotel staffer who was feeding us that I was terribly allergic to shellfish and that we

Here's a nice little story comparing the downturn in real estate in the 1990s to the one today. And there are many: cheap and easy credit, big price drops in every sector (I remember a friend in California who parents could not sell their house for 40% of its appraised value), cap rate compression and the like. And there are differences, too. This cycle has even bigger job losses, while the last cycle had overbuilding in many markets. We had an RTC then, and I'm not sure we are going in that direction at all. CMBS is a major player (and problem?) instead of the lifes and all. Blah, blah, blah. Having the historical context is good. But the important thing to remember about all this can be summed up in one word: opportunity. The biggest complaint that most of us are hearing is about these days is a continued lack of credit. At some point someone is going to make that happen. Bank on it, if you'll pardon the pun. And if you are not "shovel ready," so to spea