Remember the market after 9/11? Deals could not get done in large part because of terrorism insurance. Actually, it was the lack of terrorism insurance. Insurers did not want to write the risk, and lenders did not want to lend. For months I sat on my hands with large deals waiting to close. Then the government stepped in, backstopped the policies and risk and we suddenly moved like crazy people doing deals.I think if I were the president I would throw the bankers in a room and say, "Okay. You have hundreds of billions of our money. And you are still hoarding it and buying banks and, with...
I hope you are not owed money by the State of California
That's right. The world's eighth largest economy is out of money and cannot pay its bills:Facing a $42 billion budget deficit, State Controller John Chiang told the Sacramento Bee he has already borrowed $21.5 billion to try to cover the state's checks, but by Feb. 1, there will be no more options left but to simply stop paying some of the bills – including tax refunds, welfare checks, student grants and other payments owned to California citizens. So, if you are owed money, you get an IOU. That's right. An IOU. I don't have much ground info yet on how Californians are feeling, other than...
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California
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taxes
Expanding in a recession
They say the best time to start a business is in a down economy. For personal reasons I hope this is right. And so does Carlson Hotels, which, according to this story, plans to add 300 more properties to its portfolio through 2013. A cynic could say that since they opened 89 new places in 2008 this is a slower expansion, but any good news is great these days. And with more travelers going to brands like those Carlson sells, expanding in a down time (when costs may also be lower) may make financial sense. Lawyers' jobs could be easier since some people are just happy to sell or have work or provide...
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hotels
All Quiet on All Fronts?
While I have some projects I am working on, things are admittedly quieter than normal right now. Some of this is because it is January, which is usually a slow month. Some of it, however, is because of the economy. Many players still seem to be in a wait-and-see mode, and they are not bashful about. Another reason is capital, as some lenders are cutting back on deal flow, TARP money notwithstanding. (Kudos, however, to U.S. Bancorp, SunTrust Banks Inc. and BB&T Corp. for taking TARP money and upping lending activity.)But I know I am not alone. My colleagues in the CRE blogosphere are...
Obama the General Partner
I received a great email a few minutes ago from Private Equity Real Estate about President Obama's inaugural speech, likening it to a general partner speaking to limited partners. Rather than try to do its justice in a summary, I repeat the content of the post in its entirety:The words of US President Barack Obama this week during his inauguration speech might just as well have been said by a GP to his LPs during an annual investor meeting. Here we present an abridged version, with our translations. I stand here today humbled by the task before us, grateful for the trust you have bestowed....
TARP to change under Obama -- hurrah!
From Globest.com:With the presidential inauguration less than 24-hours past, the real estate community is already seeking out signs on the direction President Barack Obama will take TARP. One likely development that will be welcome to CRE is a greater focus on accountability for banks that choose to tap the billion-dollar-plus program. Specifically, banks that participate will be required to account for the money at a more granular level.Let's hope so. Money flowing is what will work, in my humble opinion. If banks are "stabilized," as the story says (yesterday's plunge notwithstanding),...
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government
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lending
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loans
The Battle of the Tranches
There is a very interesting story in today's WSJ that explains the incredible complexity of huge, multi-site deals, foreclosures and various investors in CMBS.This story is about the John Hancock Tower (in Boston, not the iconic Chicago building). The tower was part of a seven site deal of a fund of Broadway Real Estate Partners two years ago. The deal's now in default, according to the story.Back in the old days, when a deal went south, you had one lender, or maybe a syndicate of lenders with interests that were usually somewhat aligned. And you sat at a table, did conference calls or ever...
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CMBS
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foreclosure
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lenders
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loans
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mezzanine loans
Need bar exam questions? Just read the Sunday paper
Here's a classic from the local paper where I live. The new owners of Jackson's Pet Shop in Bradley, Misty Henrichs and Ryne Walker, say they're just renters and therefore not required to repair or replace the industrial appliance. Landlord Mark Feyman, of Glenview, on the other hand, insists the owners are occupying his building illegally and have refused to sign a lease with him so he won't fix the furnace until they sign a contract or move out.I obviously haven't read the documents or called Jeff Bennett or the landlord's local lawyer, but based on the story and the comments therein, I think...
And there goes Circuit City
I know no one is shocked that CC is calling it quits. I can't remember the last time I walked in one. The bleeding never stopped and unless there's a last minute white knight the liquidation begins tomorrow, and 30,000 people will be unemployed. Sad.The dirt is often a significant factor in what kills these companies. As today's Journal states,Retail experts have cited the 2005 overhaul of the U.S. bankruptcy code as one reason so many chains are closing their doors. One such change shortened the period in which a retailer may accept or reject store leases. Retailers used to get a year or...
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bankruptcy
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retail
Let's call it a....secondary market
Business Week's Hot Property blog has a good post today about a CRE bailout. And perhaps we should all stop calling it that.The NAIOP's proposal is: loan guarantees from Treasury and the FDIC. And they point out this is not unlike 2001-2002, when we all went through the wringers of terrorism insurance. That was a royal pain but we got through it thanks to the government backing. Do the same with CRE and it could be a win-win situation.As the story points out, this is more a liquidity issue than an overbuilding one (at least for now...let's see what retailer goes under today), and guarantees...
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government
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trends
GGP - to file or not to file?
That's apparently the discussion had between GGP and its lenders at a New York meeting on Monday, according to the Journal. While not imminent,even if General Growth succeeds in extending those debts further, the company is facing so many other loan maturities this year that some analysts speculate the company eventually will seek bankruptcy protection. In all, General Growth has roughly two dozen separate loans totaling more than $2 billion coming due in 2009.It looks like Kirkland and Weil, Gotschal have been giving sage advice to Metz, Nolan & Co. (Oh, and the Bucksbaums, too.) In short:[I]n...
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bankruptcy
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Chicago
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lenders
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retail
OT: Tribune to publish tabloid format papers
Phil Rosenthal reports that the Chicago Tribune, hoping to improve its sales (and perhaps hoping for the demise of the Sun-Times?), is going to sell its retail edition (meaning non-home delivery) in a tabloid format. Home delivery customers will still get the broadsheet format, albeit the narrower version adopted by most all broadsheets. I can't help but think of Jim Traficant, the now-jailed ex-Congressman who used to say on the floor of the House: "Beam me up."The Trib already publishes the Red Eye, a tab directed at younger folks. But the additional publishing costs are still there and you...
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Tribune
Blog because you like it
Just some personal thoughts posted elsewhere...Blog because you like it or consider it a good exercise in keeping current. Consider the additional writing, speaking and clients (or declined business) a fringe benefit. Thanks to the Law Blog for pointing this ou...
Yes, that's right - a knockoff mall
This one is a classic. How would you like to be the IP lawyer defending "McDnoald’s, a Starbucks-style coffee shop called Bucksstar Coffee, and a wannabe Pizza Hut called Pizza Huh."Of course, you are in Nanjing....Can you imagine going to a whole mall of knockoffs? I'd probably get a kick out of it. I could buy a Folex watch! Seriously, though -- if it is a goof or a parody that is one thing. But there are also major branding and retail issues with this type of stuff, and a whole mall of knockoffs seems to take the illicitness right out of it and tries to legitimize it. That probably takes...
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retail
Build it up by tearing it down
That's the concept espoused by Michael Pollock: tear down old shopping areas and build high-density residential, or at least in Chandler, Arizona. "Housing would increase population, creating customers for infill retail spots, he said."Of course, we've been seeing developments like this for a while in cities, and that can be really exciting. (I am an even bigger fax of mixed-use.) Lots of fun dirt and rezoning work to do, as well. You can even have environmental thrown in to the mix if your center had, oh, a dry cleaner. If you can sell the city poobahs on this one it can be a very profitable...
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apartments
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mixed-use
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retail
Oh my....3% delinquincies by year end
That's what we are seeing in an article in today's Journal captioned "Commercial Property Loses Shelter." Yes, you heard it here: DB tells us that CMBS deals that are 30 days or more past due is up to...gasp...1.2%. And,"[t]he delinquency rate will likely hit 3% by the end of 2009, its highest point in more than a decade." Furthermore:According to research firm Foresight Analytics, soured commercial mortgages on banks' books jumped to 2.2% as of the third quarter of last year, from 1.5% at the end of 2007. The research firm estimates that the rate could rise to 2.6% in the fourth quarter...
Need your closing finished or a title company?
Have you been impacted by the closure of the retail or other direct operations of Lawyers Title or Commonwealth Land Title? Some good people I know have lost or are losing their jobs. I don't even have the full story of the impact yet. I do understand -- through a press release -- that the residential closing offices in Illinois except Crystal Lake were all closed yesterday.That said, please note that agency operations have not been impacted negatively by the merger (As I was typing, in fact, an email from Fidelity came in with a new contacts list.) Please therefore feel free to contact...
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title insurance
Office buildings - is it really this bad?
The New York Times has a gloomy piece today on the cycle of layoffs to subleases to vacancies to building owners not being able to pay the mortgages, thus leading to a potential "ticking time bomb." According to the story,Many commercial property owners will face a dilemma similar to that of today’s homeowners who cannot easily get mortgage relief because their loans were sliced and sold to many different parties. There often is not a single entity with whom to negotiate, because investors have different interests. By many accounts, building owners have been caught off guard by how quickly the...
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Chicago
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CMBS
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government
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new york
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office buildings
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orange county
GGP changing BK counsel -- is there a reason?
General Growth Properties has switched its bankruptcy counsel, dropping Sidley Austin in favor of Weil Gotshal. Weil has worked on some major BKs, including Lehman (and don't forget its advisory role to GM), and one might think the preeminent Harvey Miller might be coming into play. GGP is also bringing in Kirkland's Jamie Sprayregen (the brilliance of whom I have extolled here previously). Of course, no one is commenting, but it seems to this complete outsider that GGP wants heavy hitters with so much debt coming due, and those are two of the best in the busines...
A New Year - A Statement of Purpose
I've been mulling over writing this article for a while. To quote the late (and improperly maligned) Adm. James Stockdale, "Why am I here?" And in tandem with that: what is my purpose for writing this blog?I like to write. I always have. Whether I am any good at it is another story, but some people seem to think so. And yes, that is flattering. This blog is just one person's opinions about the world, primary that of real estate. I sometimes go off on tangents, and I try not to get too political. I might be full of it, but if you think I am, don't read. That's the beauty of the blogosphere.You...
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blogs