The Dirt Lawyer's Blog Archive

Pop up stores by national chains is supposedly the latest "phenomenon" in retail.  Of course, this has been going on in a smaller scale by small tenants and even national retailers such as Hickory Farms for many years.  The leases, being short term, are figured out and conformed and done.  But what about the long term? Some say this trend will continue over the long term.  I tend to agree.  Unfortunately I think it will depress prices unless lenders and buyers figure out a way to quantify and underwriter the pop ups, or pops enter into long term seasonal leases as a compromise, if landlords are willing to do so (and I would do so if the landlord had a cancellation right if it leases up the rest of the space in the mall -- there are all kinds of legal things we can do!)  In a way, it makes a lot of sense.  Cut down labor costs and dirt costs, concentrating on the couple of months that matter most. What do I think might also happen?  It will hurt t...

This Globest.com piece might be the best I have read in a while.  Why?  Because it makes sense: “Everybody got so burned by the downturn that they want safety and liquidity,” said Jonathan Gray of Blackstone Real Estate Advisors, during New York University Schack Institute’s 43rd Annual Conference on Capital Markets in Real Estate. Partly because everybody is chasing those same few deals in New York City, Washington, DC and a few other key markets, that means more opportunities in properties that are high-quality yet impaired.... Bingo.  If you want to make good money, get out into the rest of the country where the rest of us are not seeing a recovery as much as others.  And the story is also telling as to the amount lenders are putting out there.  Even though everyone says lenders are lending, transaction volume is still down 50%, 60% and more from a few years ago (not that we should be at those volumes again anyway). And even if you get that deal, the L...

This was published in Crain's a week ago, but it bears writing about, however briefly: The long and short?  Mega Chicago restaurateur Phil Stefani guaranteed a $7 million construction loan used to renovate the building where his office is located, and which is owned in part by Stefani and others, including the well-known local developer Keith Lord..  The loan is past-due and the lender, Harris Bank, is pushing what he described as tough new terms for an extension, including new equity and prepaid interest. Why is the project under water? In large part, because its anchor tenant, Amcore Bank, went under.  But here is the real kicker.  Amcore was also the lender for the project!  When it was shut down by the FDIC, the feds rejected the lease at Stefani's building and handed over the loan and Amcore's operations to Harris. So...now Harris is putting on the squeeze because the lease of its predecessor in interest tanked the value of the property. You can read about...

According to this WSJ article Holiday Inn has just completed " a sweeping, global overhaul that upgraded their hotels' bedding, signs, lobbies and showers, among other things, at an average cost to [franchisees] of $300,000 a property." In the industry this is called a PIP.  So now what? On to the next one?  The next idea is to incorporate breakfast buffets (a la Embassy Suites?), socialize the meal process and streamline food and beverage service to cut back on labor costs.  This will, however, be implemented gradually, starting with some test markets to see if the idea works.  Although I am not a frequent HI, I actually like this idea.  That said, while the whole social networking thing is an interesting concept, most lobbies I see aren't usually big hubs of activity unless there is free food.  Also, just because you finish one program does not mean you should not be on to the next idea to maintain relevance.  It is almost like the people who rede...

Okay, I'm taking a risk here, especially after the whole "I think Sarah Palin is a lousy speaker" debacle at ICSC.  And I know this has almost nothing to do with commercial real estate. But what the heck. I am a firm believer in common sense when it comes to immigration.  As the husband of a legal immigrant, I believe in open borders -- to an extent.  If someone, for instance, is most likely going to make a significant contribution to our country, why not let that person in? Take my wife, for instance.  She jumped through years and years of hoops to obtain a green card and her "blue passport" (meaning US citizenship).  Her marrying me had nothing to do with it.  And she is a most productive member of society, treating our children and paying oodles and gobs of taxes to boot.  I want the best and brightest of the world -- doctors, engineers, software pros, etc. -- to come here to the maximum extent possible.  We have some programs available to enco...

Several people have asked whether I would be at the Chicago ICSC Deal Making conference tomorrow and Friday.  I'm going to pass on this one, but will probably be at one or more in the future.  I am also skipping the legal conference this year as it is in Florida, but I do plan to attend next year's law conference as it will probably be somewhere in the west, where I prefer to travel. I also have some personal and business commitments that would limit my ability to be there anyway. The ICSC conferences are great.  I love meeting people with whom I have been in touch, be they lawyers, deal people, brokers, clients and even people who were on the other side in past deals. (I have converted more than one of those into clients in the past.) But a lawyer's function, when the focus is major league deal making, is helping get that deal done.  Right now non-retail matters are keeping me busy.  On the off chance a deal was being worked out where I need to be involved I'...

Let me preface this post by saying I am NOT a CPA or tax lawyer (see the Disclamer for that) and no expert on matters pertaining to accounting.  But that said, I run across issues related to accounting all the time.  Many times in leases or loan agreements or other real estate documents you will encounter language requiring that financial matters be prepared in accordance with generally accepted accounting principles, or GAAP. Some of my clients hate this language.  Why? Because they believe that while they are often close to GAAP reporting, it isn't "quite" GAAP and it rarely is in the real estate industry.  (Oh, and it can be expensive, especially for smaller players.) They fear that a tenant or lender could use this as a trap to find a ticky-tack default.  These clients often prefer seeing the language "sound accounting principles consistently applied."  Of course, there is a counter argument to that phrase; namely, what does it really mean?  Could ...