Monday, April 30, 2007

Produce or Perish - the new mantra

The AmLaw 100 is out, and the surprises are few and far between. It was nice to see that real estate is mentioned as a very busy practice.

Part of me is discomforted by the "Produce (at an attractive rate) or perish" mentality of the big law firms. But as a good portion of our profession is becoming more like a business, it is a reality, and maybe not a bad one for those who choose to take that track. And it is not like deequitization of partners, two-tier partnerships, permanent non-equity partners and the like have not been around for a while. Heck, I saw its effects a decade ago, and not even at firms you expect to be associated with that type of bloodletting. And the reality of it made me do some hard thinking about my future career.

My impression (or perhaps it was a dream) years ago -- however naive it was -- of how I wanted things to be in the legal profession was not unlike that of tenure in academe (where the saying, of course, is publish or perish). You bust your hump for x years (used to be 5-7, now more like 10ish), if you are good you make partner and you have what amounts to tenure.

Once you make partner, just like a good associate or full professor with tenure continues to teach, do research and publish, you don't stop working and feed off the fat because that is (a) immoral, (b) unfair to your partners and (c) not a way to be a productive member of society. It is just the right thing to do. But maybe you bill a little less in order to write or generate business or train associates in how to be a good lawyer. (I know many partners who equal or out-bill the associates regularly.)

I guess I'm also an anachronism when it comes to compensation issues as well. Most of the legal world these days is in an "eat what you kill" mode. I disagree with this model and stick to the principle that compensation should be lockstep with points accumulating over time, perhaps with a little leeway for major rainmaking activities or for other compelling reasons. I may be old fashioned, but anything good enough for Wachtell or Cravath is good enough for me. It also creates the culture of clients belonging to a firm rather than any specific client, and largely eliminates the terror of many BigLaw firms: the dreaded Compensation Committee.

Barron's Bearish on Icahn

Well, just as I am start talking about what great negotiators the folks at American Real Estate Partners are, Barron's contends that its shares are some 40% overvalued. (I'm linking the wire report for those that do not have a subscription.) Maybe I am confusing tough legal negotiation with tough business negotiation. But I doubt it. Barron's could be wrong, or the analysts may be selecting the wrong assets. How much did EOP's price go up between October of 2006 and the closing? Wasn't it just over 40%?

Of course, Barron's also thought the EOP deal night be the top of the market. Time will tell.

Saturday, April 28, 2007

Lawyering - love or money?

Peter Olson made a good point in his Solo in Chicago Blog Thursday. For some lawyers, our profession has become all about money. There's a feeling among many of a lack of collegiality or that one is just a cog. This is, luckily, not universal, and I never felt that way when I was an associate. So I agree largely with Peter about the direction some lawyers and firms are going, but I'm not perhaps that sanguine, probably because I had what I think were excellent mid-sized and large firm experiences.

Not that money is a bad thing. I just think there needs to be a balance between making money and enjoying life. I commend those who can and are willing to bill 2400 hours a year in pursuit of the brass ring. There's a great reward, but also a price that comes with it. For those that have the right balance, then they have it best of all.

I hope and like to think I have that balance, but if I do, I should get off this blog and get out to the golf course!

Friday, April 27, 2007

Roth on EOP - sour grapes or sage wisdom?

Tom Corfman and company once again dug up some good material on the Vornado/Blackstone/EOP acquisition -- this time from Steve Roth's annual shareholder letter. This is a must read for anyone who cares about big-time real estate deals.

I'd been hearing through the grapevine and reading little tidbits about how things went down, and this just confirms it all. Other than Zell's poem, this is my favorite, and perhaps the most telling, part of the letter:

"We are in the income property business, and our strategy is to hold assets for income and long-term capital appreciation for the benefit of our shareholders. Blackstone’s model is to buy wholesale and sell retail, holding for so long as to time markets, build platforms, etc., to create best returns for their investors, and they do it brilliantly. In this case, it seems they bought high and sold even higher, disposing of over half the EOP portfolio for what we make to be about a 10% profit on assets, a huge return on their equity, within days. By and large, they sold what would have been our keepers. Interestingly, all their sales have been to highly leveraged players, funds or other intermediaries who intend, after a hold period of their own, to re-sell (except for Harry in New York) for a profit. In fact, some of these assets have now been sold two or even three times in weeks. Except for Harry in New York, none of these assets has yet found a long-term permanent owner, if such exists any more.

If all this doesn’t convince market participants that these office properties are scarce and cheap, nothing will. And all this should also convince market participants that private market values are well higher than public trading prices, and that private market players can be and are much more aggressive."

I go with the wisdom option. These are just two different investment strategies, both of which work. And again, I like the flipping because it keeps us lawyers employed.

Shopping on a Ship

The LA Times reports that a developer in Santa Monica is making a lowball bid to buy the lease on the Queen Mary in Long Beach. O & S Holdings wants to "refurbish the ship and develop the landing as a retail-entertainment complex."

I used to live in Long Beach eons ago, and I was a regular visitor to the Queen, so any time I read about her I am interested. But this?

Ho hum. Zzzzzzz. Wake me up, Charlie. Haven't I seen or heard this several times before? The only thing I imagine going for it this time around is the revitalization of Long Beach. Come on, Disney -- yes, DISNEY -- could not make the Queen Mary work as a mixed-use attraction. The Spruce Goose even had the sense to move to Oregon.

Maybe if at first you don't succeed, try, try again. And the price is cheap. And I've always loved waterfront property.

Now JPMorgan's in the Chase? Read carefully

Well, I think this deal mentioned in the Tribune today is a non-starter. Even the story casts doubts on it, which makes me wonder why it was printed in the first place.

I'm no corporate guy, but I just think this one has regulatory problems written all over it. Let's combine the #1 and #2 banks in Chicago...right. But crazier things have happened.

The worst part of this deal is the bloodbath that would occur in layoffs. I can see huge, huge redundancies here, both in the back office and on the retail side. This is one deal I'd rather not see.

The only upside I could see is that you'd probably have a chance to pick up some bank branch buildings on the cheap, even cheaper if Chase would put restrictive covenants on the land.

One thing's for sure. There are a lot of lawyers billing a lot of hours on one deal.

Thursday, April 26, 2007

Land use - abusive and perverted?

Now that I hopefully have your attention, take a look at the SIU Law Library Law Dawg Blawg selecting a book on the Kelo case from multiple perspectives. I'm going to try and find this one and read it, because I was just...well...ummm...not a happy camper about it. (This is a family-friendly blog, I had to grasp for some non-obscene words.) I used to work at a law firm in San Diego where a good portion of its business came from representing developers in inverse condemnation proceedings or entitlement actions. Sometimes we had to fight against the anti-development folks over vernal pools and endangered species (some of which often questionably existed at a site, to put it kindly).

But I always saved my most vitriol for the California Coastal Commission, which, along with local coastal commissions, tries to make to make it next to impossible to build anything near the ocean. I sometimes appreciate the end result of their goals, but not the means by which they are accomplished. Recent case in point: Feduniak v. Coastal Commission, where a very rich guy bought a house on 17 Mile Drive near Monterey and built a three hole pitch and putt golf course. Apparently this was done in violation of a 1983 coastal permit.

The Sixth District appellate court ruled that had to require the owner to take out the course and restore the land to its natural condition. As the California Appellate Report Blog states, it looks like a lot of people are going to get sued, though there may be some SOL issues to consider (and keeping with a family blog, SOL means statute of limitations, though I guess it also means the other thing too in the same context.)

This case also gives me an excuse to quote one of my favorite California land use cases, Healing v. California Coastal Commission (1994) 22 Cal.App.4th 1158. Poor Healing tried for a decade to get a coastal permit to build a house and was, in short, given the runaround between the local government, which hadn't adopted a coastal plan, and the Commission, which refused to grant a permit because a local coastal plan was pending, thus apparently preventing any development at all. The court stated:

"It is in the nature of our work that we see many virtuoso performances in the theatres of bureaucracy but we confess a sort of perverse admiration for the Commission's role in this case. It has soared beyond both the ridiculous and the sublime and presented a scenario sufficiently extraordinary to relieve us of any obligation to explain why we are reversing the judgment on Healing's mandate petition."

Wednesday, April 25, 2007

Bankruptcy Boom Expected - RE opportunities abound

Seeing this post from Mario Panedo's Bay Area Investment Blog about leases and sales of properties from bankrupt companies reminded me that law firms are gearing up for an expected increase in restructuring and bankruptcy. (Tell the 13000+ Dow that.)

BK is a great opportunity to buy properties on the cheap. My clients have made some major coin doing so. But there's risk, and title and due diligence issues often abound, and you just cannot go into a deal blindly. But if done right, sky's the limit. It is also a profitable but riskier area for dirt lawyers, who have to be careful in guiding clients through the morass.

Where are the CRE bloggers?

Commercial real estate is so interesting to me that I was surprised to learn more people are not blogging about it. Maybe people are too "busy" with deals. (Trust me, readers, this does not take nearly the time I thought it would.)

Here is a good posting by folks out in California developing what they think will be a great new blog. I wish them much success in their effort.

Block 37 - Trying to stay ahead of the Cubs and Blackhawks in futility

Well, thanks to Freed and Golub, Block 37 is finally well underway. Gee, it only took 20 years. You'd think it was I-355 or something. (Oh, wait, I think 355 is closer to 35 years in the making when all is said and done.) Even the New York Times and the BBC are in on the act. The Times story can be found here. I never did read Ross Miller's book about Block 37, but I know enough about it to not have to.

All I know is that I have avoided -- and will continue to avoid for the foreseeable future -- going into the Loop, Block 37 or no. Being across from Macy's is no great thing. I was happy to relocate my Chicago office to west of the river (this is an up and coming area, and I can't wait for U.S. Equities' Metra Market to be finished). I don't care about Channel 2, and I can go to these retailers in more convenient locations. So, boo hoo, I doubt you'll ever see me there. (I'm sure the developers are just quaking in their boots over that fact.) OTOH, it is located in the heart of all the Loop development, and having its own CTA station won't hurt, especially if they ever start running airport express trains.

I want Block 37 to be a hit, so I hope Bruce Kaplan is right. A former colleague of mine is at Freed, and I've worked with Golub a lot in the past and know a bunch of people there, both mid-level and senior, so I want them both to succeed. Heck, maybe I'm just too nice. But I'm also a believer in bad karma, and if any property in town has it, Block 37 does. Hopefully karma won't run over dogma.

Hold on to your kilts - RBS wants LaSalle, too

Not shockingly, RBS, together with Fortis and Santander has countered the Barclay's offer for ABN Amro with a $98.5 billion offer. The difference? No sale of the LaSalle Bank operations to B of A.

Having never dealt with them on a deal, I don't know much about RBS as a commercial real estate lender or otherwise. I only know that Jack Nicklaus is a major media pitch man for the bank, so much so that a £5 RBS note with his picture was issued a couple of years ago, which is a singular honor so far as I know.

Business Week seems to think that RBS has the better offer, and while I liked the B of A idea, one thing may bode well for Chicagoans: there may be fewer local layoffs as a result, although there may be a bloodbath in Europe as the plan appears to be to break ABN up among the consortium. Either way, LaSalle is a trophy property that both banks need to fill a gap in the Midwest.

Time for a Spring Document Cleaning?

Governor Blagojevich's proposed gross receipts tax is upsetting a lot of people in the real estate business. Here is a link to the status of the bill and to its current text. (Warning: the PDF version of the bill is 273 pages.)

One of my clients asked me to perform a review of my forms to make sure the gross receipts tax is adequately covered in, for example, leases. In my case they do, but in reviewing some other documents I can't say the same is always true. This being the season for cleaning-up and all, this may be a good time to go through documents and make sure new and proposed laws are being adequately addressed in your documents.

Tuesday, April 24, 2007

Icon Icahn Lays Off in Casino Deal

Never bet against Carl Icahn. His American Real Estate Properties, LP is about the toughest negotiator you can run up against in a deal.

Whitehall's $1.3 billion acquisition of four Nevada casinos (the Stratosphere, two smaller off-Strip casinos and a Laughlin property), is a good deal for AREP: gaming properties are hot right now, which means it is a good time for opportunists to move on. So AREP is.

By the way, I like the fact that AREP mentioned its legal counsel (against whom I have worked) in the press release. It is not necessary, but it is a nice gesture.

Monday, April 23, 2007

Crain's on Geller - Buyouts, Books and Britons

Crain's did a nice feature on Laurence Geller of Strategic Hotels today, including a reference to a novel he is publishing called -- quite aptly -- Do Not Disturb. Despite all the talk of value creation and hostile takeover blather, I liked the article.

Mr. Geller and I ought to be acquaintances by now, and it is entirely my fault that we are not. And it is not because of dirt, or hotel deals or anything like that. Nor is it because our offices were once one floor apart in the same building.

You see, Mr. Geller is the new President of The Churchill Centre, a group in which I have been a card carrying member for a few years because of my love of books by and about Winston Churchill. I keep missing meetings and conferences because my own work commitments, travel and other sundry excuses. I look forward to meeting him eventually so we can talk -- not about business but about the greatest Briton who ever lived.

Okay, so the Barclays Chicago Marathon is now the Bank of America Chicago Marathon? Or not so fast, my friend?

So, ABN is merging into Barclays but selling off LaSalle to B of A. Assuming it goes through, Maybe this merger is good in terms of corporate citizenship, but I still wonder what happens to the good old fashioned middle market customer? Will they be put off by the mighty Bank of America? Only time will tell. And will Northern Trust continue to stay "undiluted by merger"? Aside: I still miss the LaSalle land trust department (sold off, alas, to Chicago Title) and my old friends there.

Plainfield's Imitation is Bolingbrook's Flattery

I saw the last couple of days that Poag & McEwen are going to build a new lifestyle center in Plainfield anchored by Von Maur. This is an interesting play. The development is between two regional malls, Fox Valley and Louis Joliet. (I refuse, as I think most do, to call them Westfield Shoppingtowns as a matter of principle.) Von Maur is a great store; I liken it to what Marshall Field & Company was, oh, 30 years ago.

At 610,000 sf, this will be like the Forest City's new 715,000 sf Promenade Bolingbrook, but not as good a play in my view. Plainfield has, granted, grown by leaps and bounds the last 10-15 years, as has south Naperville, and the demos must be phenomenal. I would never have imagined or said this growing up (what, with the Old Chicago debacle of the 70s and all that), but, in addition to decent demos, Bolingbrook has the advantages of location in that it is on 355 and near 55, has Ikea across the street and has a Bass Pro Shops going in, all of which make it a destination in and of itself. (Okay, it has Macy's, too, but I am still not over the Federated deal enough to walk into one.) Also, the nearest regional malls (the same two, plus Oakbrook and Yorktown, which is now building a lifestyle component), are not close at hand. I like Von Maur but not enough to fight all the traffic on Route 59 that makes Fox Valley such a miserable place to visit.

I'm not saying this is a bad deal. I think it will do well and that a good mix of tenants should opt to go there. I'll even not be surprised if a few relocate from the morass further north, as regional malls just don't have the power they once had. I just don't think this is the home run that Promenade should be.

Friday, April 20, 2007

Plan Commission approves Kelleher's Spire

Okay, I'll admit it: I am an unabashed supporter of the Spire project. It is fitting that what I think is the most architecturally significant city in the world have such a project at its very gateway: the lakefront.

Its approval by the Chicago Plan Commission yesterday is, granted, just the first step. City Council still has to approve (does anyone think they'll say no?) and financing has to be finalized, with Anglo-Irish Bank (a somewhat newer but aggressive competitor in our market) leading the way.

If Garrett Kelleher's Shelbourne Development is really putting that much money into the deal, that goes a long way toward getting it done because he can start construction without having his construction financing in place, thus creating momentum even without pre-sales or the usual developer hype. It is a hype of his own, and I like the entrepreneurial moxie associated with it.

Granted, we've seen this before with proposed tall buildings in Chicago together with some spectacular flame-outs that I will not mention again. And Steven Fifield and Greg Merdinger, for reasons I will leave you to discern, are skeptical or incredulous about the credibility of Kelleher to do this project with only his cash and Anglo-Irish's money. (I'm reasonably confident I read somewhere that Anglo-Irish would not fund the whole thing themselves, probably meaning it would be lead lender/administrative agent in a syndicated construction loan.)

All I know is this. Unlike some others, Kelleher appears to be putting much of his own coin into the deal. And money talks. Or maybe I am just letting my enthusiasm for this project cloud my natural lawyerly pessimism.

Thursday, April 19, 2007

Live, Work or Stay Above the Ike

Walton Street Capital, LLC has been trying to figure out what do to with the Old Chicago Post Office Building for as long as I can remember. Many ideas have been bandied about, some more out there than others. Other ideas have included a casino, a waterpark, an auto mall and a telecom hotel.

The latest idea that was approved by a busy Plan Commission is a little more conventional than a mausoleum: dump some of the million square feet in the middle of the building, and build an office tower and residential/hotel tower, with parking spaces and the obligatory green rooftop garden to make certain people in high places happy. Of course, it was reported more than a year ago that similar ideas were being discussed between the City and Walton. So either the deal is heating up again (probably with some plan reworking), or the Sun-Times scooped the Tribune by thirteen months. Your guess is as good as mine, but I'll guess the latter since now the news is of approval and the submission of the plan to City Council.

Raph Dawson of Walton, ever the optimist (and a nice and VERY smart guy, to boot), described this as a "fascinating project, if we can pull it off." The president of Landmarks Illinois, who ought to be the optimist given how hard it is to develop such dirt, called it the poster child of white elephants. Uh huh. I wonder how much asbestos is still there. But I also know this. Walton Street doesn't give up easily when there's that much money to be made.

Besides, white elephants are fun deals. It is what my clients do so well.

Presdential Towers in Waterton's hands

This one was announced a while back, so it is no big surprise, but Waterton Associates, which has been buying up high rise apartments downtown, just closed on its $470 million acquisition of Presidential Towers from Pritzker Realty Group.

Waterton apparently won an auction-style sale with some 21 bidders. I used to work a little bit with Pete Vilim and David Schwartz a while back. This one surprised me a little, but, while ethics prevent me from getting into specifics, I can tell you that they are very good at taking calculated risks on deals. While I am not an expert on their business dealings, I don't think they have a reputation of overpaying, either, and as David said in a short blurb in today's Tribune, the purchase price is "significantly below replacement cost." Media reports also say they are going to start taking a look at extensive renovations to the 20+ year old buildings.

This is a trophy acquisition for Pete and David and their company, and I'm happy to read about it. I can't say the same for another large deal I read about yesterday that I will not write about under this theory.

Wednesday, April 18, 2007

Reusing old buildings

I like old buildings, especially ones that have been adapted to new uses. My Chicago office is a great example of this. Here's another project in Kankakee that I drive by frequently that also looks very promising. The old library is being converted into city offices for the mayor and aldermen. I think I also read the council chamber will be there, too.

But, even as a developer's lawyer, I see the point of Blair Kamin of the Chicago Tribune about doing what he calls a "facade-ectomy" on a building. I wonder if it is worth the bother. If a building is that obsolete -- and Kamin would probably not agree with me here -- just tear it down and start over unless it is that significant to demand preservation in some form.

Ouch -- life without CrackBerry for a night

Granted, this is only tangentially related to real estate or real estate law, but most real estate lawyers I know carry a BlackBerry these days, so I think it is acceptable for me to whine about the loss of service last night and continuing until just recently.

Having had a CrackBerry since nearly the beginning of time (ca. 2000), I'll admit I'm addicted to it, so much so that when I tried going six months without one my wife relented and bought me one for Valentine's Day. (What a great gift.) At least I've stopped keeping it on and at my bedside at night like one of my former colleagues (who shall remain nameless to protect the guilty) did and, for all I know, still does.

International golf developments growing like weeds, or at least like rye grass

I enjoy being a real estate lawyer, but I have a passion for golf, even though I am not a good golfer. Most real estate people do; I wonder if it is a dirt thing.

Today's New York Times has a feature on worldwide golf expansion with residential communities, not unlike those being built in the U.S., springing up everywhere. Apparently there's gold in them there South Korean (and other worldwide) hills. I just wonder if they will build to the point that you will reach glut-like proportions, where the number of rounds played stays the same while the number of courses increases. The industry is working on solving this problem; I like the concept of playing just six or nine holes without stigma because I can play the loop in an hour or so. All of this, of course, is good for the consumer. As I learned at Father Guido Sarducci's Five Minute University, "Economics? 'Supply and demand.' That's it."

Tuesday, April 17, 2007

Coming soon to Chicago: low priced luxury hotel rooms?

Could there be a glut in a few years in the Chicago luxury hotel market? Developers sure don't think so, and snagging the 2016 Olympics would not hurt, either. Trump International Hotel and Tower is well underway (Donald, nice glitzy website, but the music is plain the musicians). Shangri-La (a great flag -- right up there with Peninsula in Asia imo) has broken ground on Wacker Drive, Palladian's Mandarin Oriental Tower is looking good but not yet moving, the Amalfi is up and running and getting rave reviews (but has a website with only slightly better music than Trump), and so on and so on and so on.

This isn't stopping Peebles Corp., which has apparently inked a deal to buy 300 N. Michigan Avenue and shop it in part to high-end hoteliers looking for a franchise in town. The story cites Carlson's luxury flag of Regent Hotels as a possibility.

Of course condotels are great for the developers because they allow alternate financing; from my experience, hotels were traditionally a little more difficult to deal with in the loan market. As an individual investment, however, other than at the absolute tip-top of the market, I think this 2005 BusinessWeek story sums up my thoughts. (For the record: I started looking condotels around 2000 and, for better or worse, decided to take a pass.)

Monday, April 16, 2007

Former EOP Buildings: Round and round they go, and when the flips stop....

You did not have to be part of the EOP Blackstone merger to get in on the action of that mega-deal. The media reports Blackstone has yielded over $23 billion by selling a chunk of the properties.

Now the buyers of some of those properties are getting into the act with quick turnarounds of their own. The one that caught my eye the most is a portfolio of eleven buildings and a development site in Orange County, California, being sold by Maguire Properties to a JV comprising of Bixby Land Company and PNC Financial Services Group.

Dreams Come True: Strong Retail Development PLUS El Pollo Loco

Tom Corfman at Crain's (the Tribune should have kept him at all costs) cites in this story a recent report from CB Richard Ellis that retail development is continuing at a strong pace.

The overall vacancy rate of 7.53% is skewed by extremely high vacancy rates in the south suburbs and in Kane County (ouch!). The 4.57% rate for the City North market is, of course, very low, thus keeping that market hot.

It was nice of Tom to include two projects of my clients, but even better for him to tell us that El Pollo Loco is finally coming to Chicago. One of my favorite places in California (along with Yoshinoya Beef Bowl), EPL is hoping to build 35 locations in the area.

Friday, April 13, 2007

Howard Tullman - at it again!

I don't know Howard Tullman personally. I have, however, represented clients where he was on the other side of the deal, and some of my best clients do know him.

Great, the guy is a savvy investor and VC. That's one thing. But what I really like about the guy is what he has done for educational institutions in Chicago. reports today that Flashpoint Academy, a new school for recording, film, game development and computer animation opening this fall, has leased 58,000 sf of space at 111 W. Washington in Chicago.

I hope Tullman is as successful in this venture as he was with turning around Kendall College. I did a little work for Kendall back in the late 90s, and back then it was a very good, but somewhat sleepy, it seemed, cooking school in Evanston with, IIRC, a small liberal arts program to boot.

Tullman became the president of Kendall and found an opportunity to move the school to a location downtown. In a deal I also worked on in the late 90s, Sara Lee Corporation leased a century-old rehabbed building (a project called Riverworks) near downtown Chicago for bakery test kitchens. Early on in the lease, Sara Lee decided to move their test kitchens elsewhere. What do you do with the build-to-suit location? In a stroke of development brilliance by all parties involved (I was not, alas, part of that portion of the deal, so no credit to me at all), Kendall moved to the city and the school has gone gangbusters since.

Mr. Tullman is also a dedicated blogger. Assuming he does it himself, I don't know how he finds the time, but good for him!

Thursday, April 12, 2007

California Dirt Lawyer Resources

Hoge, Fenton, Jones & Appel, a law firm in northern California, has a great site of resources on the quagmire that is Califcornia real estate law. I'm very impressed.

The only bone I have to pick with my left coast colleagues is their characterization of a "dirt lawyer" as one who practices only zoning and land use law. When I was in California I did a lot of work in zoning and land use, with an emphasis on CEQA (the California Environmental Quality Act, for those of you outside the Golden State). While I am happy to share the name with the zoning folks, I think transactional real estate lawyers are more accurately given the name.

That being said, when I was a young CEQA geek, I thought that the all real estate lawyers only did land use. I did not even know that transactional real estate lawyers existed. So there! Great effort, Hoge Fenton!

It must be spring...brokers moving around

The cold weather notwithstanding, a sure sign of spring to me is seeing commercial real estate brokers change shops. Ordinarily I would not even pay attention to the news, but when I see people that I have worked with or at least encountered on a deal -- directly or indirectly -- it gets a little more attention.

The acquisition of Equis by United Group was certain to cause some shifting of people in the end. So, while the moves of Kevin Duckler to head up Newmark in Chicago and the departure of two other Equis teams to Staubach are not, in and of themselves surprising, the comments of some of the now-Staubach reps about Equis were a little surprising.

I'm happy to say that I could not say a bad word about my former law firms if you paid me, but even if I could, I wouldn't. We play in a very small world, and what goes around comes around. Today's enemy is tomorrow's friend.

All the Dirt That's Fit to Print?

Remember, it's not just Sam Zell that is buying newspapers or interested in them. Other real estate moguls are in the market, too.

Why? Are good deals getting harder and harder to come by in the market? I think so. But then I never thought I would see the days of 4-cap deals, either. They obviously think media is a better value than real estate right now.

Also, face it: while print media may be somewhat moribund, Tribune has some two dozen TV stations and other assets to consider. And if you spin off the Cubs (which, as a Cubs fan, I think will go for a huge price) and sell the LA Times to Geffen, you are in pretty good shape.

Speaking of the Tribune acquisition, this op-ed piece in the Wall Street Journal about Zell's ESOP plan made me chuckle.

Since this is a real estate blog, I won't even get into how funny I think it would be if Broad and Burkle or another investor came in with a higher counter-offer for the company, thus setting up the same brilliant bidding war that Zell did with EOP.

Wednesday, April 11, 2007

Building the New City

Plans are continuing to move forward regarding the redevelopment of the New City YMCA property near North Avenue and Halsted Street in Chicago.

Structured Development, LLC and Wilton, CT based Commonfund Realty, Inc. have teamed up to develop the 8.5 acre parcel, plans for which were recently unveiled to the public. The mixed-use project of residential and retail development, together with a public plaza and parking spaces, is expected to cost some $270 million.

Disclaimer in the interest of fairness: I represent Structured Development in this matter. All information disclosed here is public.

Real Estate Law in the 2000s - The Fire Drill

As long as I indirectly mentioned the Blackstone/EOP deal earlier, I took a look today at the website for Blackstone's Real Estate Group. Impressive? Of course. One particular item that caught my eye was the group's touted (and, as I understand, actual) ability to close complex transactions in very short periods of time.

This trend can have its price for the real estate lawyer. When I was a young associate, I worked hard, but I used to look at wonder at the corporate transactional folks and the amount of time they would spend each day on a deal. When a deal was hot, they seemed to try to cram 25 hours into a 24 hour day.

The same is going on in real estate now to some degree. Many of my colleagues have become like the corporate guys, moving, as one puts it, "from one crisis to the next."

Many young lawyers, burdened by debt, will tolerate the hours because the money is, in a word, good, not to mention necessary to pay down debt. But are they practicing law? Yes, they are, but it is a different law than I learned. Others, however, are still looking for a balance, as evidenced by this report from Peter Lattman at the Wall Street Journal's Law Blog and by Law Students Building a Better Legal Profession. I like what these Generation Y people have to say, but I have my doubts as to whether any of it will become a reality.

This is NOT a slam at the private equity folks, whom I have worked for, with and against on so many deals. I admire and respect what they do and the amount of work put into each deal. They know how to create value. Nor is it a slam against lawyers working hard and making money. Speed is often an essential element of transactions these days, and we as lawyers just have to adjust by working more hours or throwing more bodies at deals. We just have to remember that everything comes with a price, not only for the PE guys (and their bonuses), but for the lawyers (whose bonuses are not in the PE league) as well.

Starwood's CEO Departure: The Real Story? Will Barry Come Back?

Today's Wall Street Journal article on the "resignation" of Starwood Hotels and Resorts CEO Steven Heyer gets curiouser and curiouser. Giving up $35 million because "life is too short"? Must be nice. Given some of the allegations, which Heyer denies, it almost sounds like a TV movie in the making.

At least one analyst thinks the company may be in play. It also makes you wonder whether founder Barry Sternlicht, who recruited Heyer but then left the company in 2005 after a spat with him, get into the game himself. Sternlicht, who runs Starwood Capital, appears to be in a position to take the plunge if he wants. He and his former boss at JMB Realty, Neil Bluhm of Walton Street Capital, LLC, recently were willing to buy a chunk of the Equity Office portfolio as part of the aborted effort by Vornado Realty Trust to acquire EOP.

According to news yesterday, Sternlicht is already moving into restaurants in New York and may, if today's reports from are correct, in fact not yet be done if he acquires the almost perfectly-named Starr Restaurant Group. Starr, meet Starwood. Starwood, Starr. I better stop before I become David Letterman at the Oscars.