The Dirt Lawyer's Blog Archive

I've done a ground lease deal or two in my time. They are fun. But if you are buying a building subject to a ground lease you have to make sure you comply with the lease terms or you may have to face the consequences. Such is the case at the Drake Hotel, where the ground lessor is suing the ground lessee , alleging a default under the lease for, among other things, failing to provide the lessor with copies of financing and hotel management documents. All I can say is good grief. One thing I've always liked about being the ground lessor is the ability to just sit down, be quiet and collect rent. Obviously that isn't the case here, and I have seen and been involved with matters where the ground lessor raised a fuss. Here's an example of one. Full disclosure: the lessee is represented by my good friend and former colleague, Gene Leone . Gene is quoted in Tom Corfman's story as saying, “In 26 years of practice I have seen some very silly things, this is near t...

This is a trend we'll see even more of as additional office space comes online and older space becomes functionally obsolete or just can't be leased. Perhaps my favorite project in Chicago is 55 E. Monroe , because people I know of (Walton Street Capital and Glenstar Properties) are doing it and because I used to work at the building. The syndicated construction and mezz loans (still making this a highly leveraged deal) have closed and I gather the conversion should start soon. Only the higher, view-protected floors are being converted, and again, while there is a glut of condos on the market, this building screams location location location. If you have anything but the purest west view, the scenery is spectacular, and, because of where the building is, that view is going nowhere. And the area itself, right off Michigan near Millennium Park, is hot. I will be interested to see how they handle the ~45,000 sf floorplates with condos and the interesting shape of the building...