Real Estate Advisor Law Blog

Real Estate Advisor Law Blog

Magic Concrete (aka Water Permeable Concrete)

Posted in Construction Related Issues, Water Quality Issues

permeable pavementHow do you make the rain water from those twice a year “100 year” storms disappear at a rate of 3-5 gallons of water per minute? Clean pollutants in the process and send the water directly into the municipal storm water system, but at a rate determined by your engineers? WATER PERMEABLE CONCRETE, that’s how! Watch the videos below to see how this material works:

Techno-Bloc Permeable Pavement

Tarmac Topmix Permeable Pavement


Cincinnati – the Center of Retail Development in America?

Posted in Retail Industry Issues


I just attended a CREW presentation which was entitled “New Retail Trends and Addressing Consumer Demands.” However, the presentation was actually about three high profile retail projects all located in Cincinnati, Ohio, and, it included three high profile developers, at least one of whom (depending upon who you asked) is also extremely talented.

Mark Fallon of Jeffrey R. Anderson Real Estate, discussed the continuing expansion of Rookwood. Mark explained how Rookwood was the antithesis of all the other retail developments in and around Cincinnati and joked that other than Kenwood, Rookwood is the only one really worth going to. I never realized how thoughtful the merchandising was and how mixed the use is until I saw his graphic presentation of the project. I also came to the realization that it’s a good idea to be nice to Mark because he is involved somehow in every significant restaurant or retail deal in Cincinnati.

David Birdsall, head of PECO Real Estate Partners, discussed the new Kenwood Collection. Besides wearing a really swanky suit, David explained that the office space was fully leased and retail would be open by Christmas 2016-remarkable progress given the history of this project. David also explained they are designing a huge urban park as public space in the project. Including open public spaces seems to be a new trend in retail developments.

Justin Leyda of Steiner + Associates discussed the new Liberty Center which opened in October. Justin said he first started working on this project in 2008. He commented their whole program is to create an experience and sense of place for the consumer to provide an alternative to online shopping. So Liberty Center also has large public spaces, including a chapel that doubles as a yoga studio, a twirling garden walk way, and lots of parks. They also program public events like the upcoming Holiday tree lighting spectacular. Justin looks young enough to be in high school – think Doogie Houser – but his skills belie his youthful appearance.

One interesting part of the presentation was their discussion of the significant challenges they have faced. David Birdsall talked about how they signed an LOI with Saks, but then Saks got sold and decided not to go forward. The Landlord had to redesign the whole project and find new tenants. Mark Fallon had a similar story where they designed the building for a cinema and then decided it did not make sense to go forward with that use, and had to re-fit the building. (Mark said his office is now in Cinema 2.) Justin Leyda talked about the cynicism he faced in building a multi-million square feet mixed use center in what was essentially a corn field.

The common thread for these three talented men is the secret to success for us all. Each of these guys is tremendously creative and hard-working and refuses to take no for an answer. It is never “if.” It is always “how.”

In terms of adding to the quality of life in Cincinnati, all of these projects are wildly successful. There are new restaurants, stores, offices, apartments and public spaces – all nationally recognized and all in Cincinnati. And I haven’t even started talking about downtown Cincinnati with The Banks and Over the Rhine.

Bringing the Downtown Shopping Experience to the Exurbs

Posted in Retail Industry Issues

Photo Courtesy of Liberty Center

I recently attended our client’s, Steiner + Associates, grand-opening ceremony for Liberty Center, a $350 million mixed-use development featuring, shopping, dining, luxury residential apartments, offices, a state-of-the-art movie theater and a new to market AC Hotel by Marriott located in the middle of the growing Cincinnati-Dayton metroplex along Interstate 75.

As I toured Liberty Center, the features that I thought that made this development stand out from competing suburban shopping centers were the attention and focus to making it a community-centered destination. It’s a place where people would want to gather and linger rather than just making a transaction. And being more than just a place where shopping transactions are made is important with the ever-growing competition from online shopping forums as well as changing consumer tastes. The inclusion of squares, parks, rooftop gardens, community center, a living room area in the Foundry building, public art and a multi-denominational chapel all contribute to creating an urban town center rather than just a suburban mall. In fact, the public sentiment is that Liberty Center was a “downtown that fell from the sky” in Liberty Township. Though these features do not directly contribute to the profitability or bottom-line of Liberty Center’s merchants and businesses, there is an indirect benefit. People will want to visit, and stay, for a variety of reasons and they’ll be able to do so by accomplishing multiple tasks or events with a trip to Liberty Center. This makes a visit more convenient, enjoyable and compelling. And thus, a community that will support the center’s businesses will be formed.

Though the idea of designing shopping centers as town squares is not a new concept, it is becoming a necessity to make centers, particularly those in suburban locations, more relevant to today’s shopper. The convenience of online shopping and the preference of the millennial and empty nester demographics to have walkable and inviting places to live, work and play has been driving demand for design concepts that respond to these needs for convenience and a sense of place.

I think there are a lot of good lessons to be learned from utilizing these design concepts in mixed-use developments to create a competitive advantage and other developers will certainly be taking cues from Liberty Center as future centers are being designed and planned.

Mission Possible: Combining HUD Construction Financing with Historic Tax Credits

Posted in Construction Related Issues, Finance Issues, Tax Credit Issues

thFQN0S1DOCombining HUD-insured multifamily construction financing (like Section 221(d)(4) loans) with historic tax credits (“HTC”) can seem like an impossible feat given their respective mazes of rules and requirements. Notwithstanding, each are valuable sources of capital for developing multifamily projects, and, if you can manage through those mazes, HUD financing and HTCs can be successfully combined. So, if you’re sizing up a combined HUD-HTC deal, here are points to consider:

  1. Team. No matter what side of the deal you’re on – developer, investor, HUD lender – having team members that have closed combined HUD-HTC deals makes a big difference. It’s particularly helpful if the HUD lender’s counsel and the HTC investor’s counsel have worked on twinned HUD-HTC deals. This experience eliminates the steep learning curve for each about the other’s various program requirements. You’ll find significantly more guidance from HUD on combining low income tax credits with HUD financing.
  2. Bridge Loans. If your project will need a bridge loan, work to shore up that source of funding as soon as you are able. HUD’s general policy is the borrower on the bridge loan cannot be the HUD borrower. It is important to understand early on how the bridge lender will be repaid and to make sure that source of repayment and flow of monies is acceptable to both investor and HUD counsel. For example, on the HUD side, you want to make sure the source of funds aren’t from HUD “project assets” – or else those monies will become subject to surplus cash rules which could inhibit the timing of repayment.
  3. Master Lease Structures. If the HTC investment will be structured using a master lease pass through, then the investor must be prepared for two tough pills to swallow: First, the master tenant entity (the entity into which the federal HTC investor invests) will be required to sign HUD’s form of Subordination, Non-Disturbance and Attornment Agreement (“SNDA”) which HUD generally does not negotiate. This SNDA gives HUD broad latitude to terminate the master lease in the event of default and foreclosure – this is opposite of the investor’s desired outcome to preserve the master lease in these situations. As a result, it is important for the investor and investor’s counsel to review and understand this SNDA as soon as possible in a transaction (before the investor’s term sheet is signed, if possible). Second, HUD requires the master tenant to execute its own Regulatory Agreement (see form HUD-92466M (06/14)). Again, this is something the HTC investor will need to be comfortable with and should be reviewed as early on in the transaction as possible.
  4. Logistics. Finally, logistics of closing… HTC deals seem to get negotiated right down to the last minute with closing emails zooming in cyberspace to meet wire deadlines. HUD wants none of that last minute drama! Rather, HUD has a very methodical closing process. HUD requires review of a “HUD package” (e.g. HUD and bridge loan documents, organizational documents, final construction invoices, projections) generally three to four weeks before closing. HUD lender’s counsel should make sure the deal team understands the HUD closing process early on in the deal so parties can accommodate and prepare.

It’s the Law

Posted in Leasing Issues

Its-the-law-cover-az1I have been told this is a Real Estate Law Blog and that it might be time to blog about real estate law for a change. I know wine and grilled cheese donuts may be more interesting, so bear with me while I transgress.

I just attended and spoke at the International Council of Shopping Centers (ICSC) Law Conference. I highly recommend this conference for anyone involved in retail real estate. The presentations are always informative and cause me to double check my lease forms and change my approach to certain issues. I always learn a thing or two at each conference and this year was no exception.

I presented along with Robert DiVita of Urban Edge Properties on Casualty and Eminent Domain. Not sure if this changed anyone’s life, or that anyone actually called it “riveting”, but I did hear positive feedback from those in attendance. I must admit that I heard from several people who have actually been through a casualty that the business folks decided what to do and never even consulted the Lease. Nonetheless, as attorneys we still have an obligation to make sure the Lease is correct and we tried to at least emphasize that the rent abatement and restoration obligation should mirror the insurance obligation.

The keynote speech this year was by Commander Rorke Denver, the author, actor and Navy Seal. He spoke about leadership, and provided great advice about working under stress. He said “Calm is contagious.” Panic is too – so you need to watch out how you are relating to your team members. He also demonstrated how we all can find an extra inch in everything we do if we simply try to do it.

The other benefit of this conference is the chance to meet in person the attorneys you have been working against. I often like the attorney on the other side once I meet them in person. I hope they feel the same way, because it is hard to be unreasonable or difficult after you have met them face to face and developed a relationship with them. At this conference, I connected or re-connected with several folks. I am already looking forward to next year when it returns to the East Coast.

Hopefully, this pacifies your yearnings for the law so I can turn my attention to pork bellies. I don’t mean commodities future trading, but the boneless cut of fatty meat from the belly of a pig. Sounds kind of disgusting, right? But it seems like every decent restaurant I go to these days has pork belly on the menu, and it is incredibly tasty! If you take nothing else from this blog, commit to trying pork bellies. It won’t change your life (like the first time you had béarnaise sauce on a filet mignon), but you will thank me.

Is it a Hotel Site?

Posted in Hospitality Industry Issues

Hotel Blog Post

Recently, I was able to attend the Lodging Conference in Phoenix.  Perhaps one of the best industry conferences I have had the benefit of attending.  Lenders,  investors, brokers, designers, franchise flags, management companies, owners and developers all come together to meet once a year in a relaxed atmosphere where deals for the following year are set in motion.

Like all real estate projects the hotel industry is bound to the old adage of “location, location, location.” So, as we all drive around and we see an interesting parcel we must all be asking the same question “Is it a hotel site?”

Since the planning, purchase and development of a site takes several years site selection professionals need to have great insight into the area, its trends, demographics and direction. Some of the primary factors hotel site selectors look for when identifying potential sites are:

  • Proximity to business activities;
  • Proximity to tourist, sports and recreation activities;
  • Proximity to colleges and universities;
  • Proximity to entertainment venues (restaurants, bars, shopping, sports arenas and theaters)
  • Transportation connectivity: public (buses, subways), private (cars, bicycles, walkability) and commercial (airports, taxis, Uber, DRVR, Lyft) and
  • The most current STR Report.

Once a site is identified, will the site appeal to your target guest in terms of price and location?  You don’t want to get too far out in front of development in a neighborhood, but you want to get far enough out to lock up the parcel at a price which will make your project financially viable.

So, next time a parcel catches your eye or peaks your interest, ask yourself “Is it a hotel site?”

Donuts Aren’t Just For Breakfast Anymore

Posted in Leasing Issues

The Classic Grilled Cheese Donut

I am attending the Tom + Chee franchisee convention to explain how we can help the franchisees in securing satisfactory leases for their new locations. Tom + Chee is a fast growing franchise with approximately 40 stores open. There should be one near you or coming to a location near you. Tom + Chee obviously has great tomato soup and grilled cheese sandwiches (where their name, Tom and Chee, comes from). But they also have a grilled cheese donut which is worth the price of admission. Trust me – you will become addicted at first bite.

Even if you have never been to a Tom + Chee, you might have seen them on Shark Tank where they were successful in obtaining investment funds from a shark.

We represent the Franchisor as leasing counsel. Where the franchisee has its own legal counsel, we review the leases on behalf of the Franchisor before the franchisee can execute the Lease, and bill a small fee to the franchisee for that service. In that case, the franchisee pays us for Franchisor review and pays its own attorney for franchisee review. Alternatively, we will negotiate the lease for the franchisee and bill the franchisee one single reduced rate for both services. We are glad to provide this benefit to the franchisees because… well, because I love grilled cheese donuts.

Field Notes from the 2015 Novogradac Historic Tax Credit Conference: Section 50(d) Income

Posted in Tax Credit Issues

Boose_039C3523_background_RGBI recently returned from Novogradac’s 2015 Historic Tax Credit Conference held last week in San Antonio, Texas. This national conference draws a wide range of professionals, investors, and developers who share a love of historic properties and work in the historic tax credit space. While a wide range of topics were discussed, the “hot topic” on the minds of many attendees was the IRC Section 50(d) income acceleration issue. In a nutshell, there is uncertainty in the industry as to the tax accounting treatment for IRC Section 50(d) income that arises from use of the popular Master Tenant pass-through structure in historic tax credit deals. Unfortunately, no one at the conference brought their crystal ball – the issue remains in the hands of the Internal Revenue Service which is anticipated to provide clarification on this issue in the coming months. In the meantime, the panelists provided the following input on how they are seeing current deals addressing the 50(d) issue, as well as some planning thoughts:

  • One obvious solution is to employ a direct investment structure. A direct structure avoids the 50(d) issues. Easier said than done, however, as a direct structure creates its own issues for the investor and developer. That’s a topic for another blog article.
  • Some investors may decrease their pricing on Master Lease structures in order to compensate for the possibility of being liable on 50(d) income.
  • For deals that have reached the end of the compliance period, we may see investors waiting to exercise their put options until the IRS issues guidance on the issue. This will enable the investors to understand the tax implications of their exit. One practitioner noted it will be important for investors and developers to review their put option agreements to understand when the option expires, and, if appropriate, to negotiate an extension of the put option.
  • Developers, be prepared – as you may be asked to indemnify investors against the 50(d) income realization risk.
  • For deals that have already closed, pull out your closing documents and take a look at how the 50(d) issue was handled in your transaction. Whether you are a developer or investor, it is important to understand how this issue could affect your position. This will be especially important after the IRS issues guidance on the topic. Your review should consider whether there is a way to fairly allocate the risk, depending, of course, on your interest in the property.

While the 50(d) issue has not cooled the historic tax credit market too dramatically (as it did, for example, when the Boardwalk Hall case and associated Revenue Procedure 2014-12 were pending), the ideal resolution to the issue by the IRS would be one that preserves the incentives to developers to restore our nation’s historic properties, reduces speculation, and restores efficiency in the HTC market for both investors and developers.

Leases R Us

Posted in Uncategorized

In anticipation of the October Grand Opening of Liberty Center, we recorded a video recognizing the creative genius and forward thinking of Yaromir Steiner and Steiner + Associates. It is posted at our website –

They have already announced a great roster of tenants who have signed leases: Dillard’s, Dick’s Sporting Goods, Kona Grill, The Cheesecake Factory, Funny Bone, Kendra Scott, Marbles: the Brain Store, Brio Tuscan Grille, Victoria’s Secret, Graeter’s, among others. We are proud to have done all of these leases for Steiner + Associates.

I am working on a donut store lease (I can’t give away who yet), because whoever invented donuts deserves a Nobel Prize (how does that joke go – I would kill for a Nobel Peace Prize). I am worried that Kevin Dawson of Barnes, Dennig will buy out the store before I have a chance to stop in. If you know Kevin and want to be able to buy donuts at Liberty Center, you would be very worried too. I am thinking about drafting a provision that limits the number of donuts you can buy if your name is Kevin. I like Kevin, but…

Check out our website to get a feel for the new Center and for how we and Steiner + Associates work –


Interest Rate Hike?

Posted in Uncategorized

We have been hearing a lot for a long time that interest rates are going to be on the rise.  In fact, in early summer, we did see a jump in the prime rate.  However, the Federal Reserve has not moved yet to increase the rate that it charges to banks.  It is anticipated that this will happen soon, perhaps as early as next month.  The Federal Reserve has kept its interest rate near zero since 2008 to keep lenders lending and borrowers borrowing.  In the early years of the recession, this did not seem to work on real estate loans which were, for the most part, not being made.  However, loan activity has been building in recent years.

We saw a lot of real estate loan activity so far this year.  Many borrowers looked to close new acquisitions or refinancings before the interest rate increase.  A small increase in the interest rate can have a large impact on the bottom line for an income generating property.  Some loans provide for an interest rate lock at the time the loan commitment is signed.  Clients ask whether or not they should rate lock right away or wait another few days or a week.  Short term swings in interest rates (that is, swings between today, tomorrow, and next week) are difficult if not impossible to predict.  In general, interest rates are expected to rise and the Federal Reserve is expected to increase its rates, leading to an increase in the rate that banks charge borrowers.  However, it is possible for rates to have some short term fluctuations making yesterday’s rate higher than tomorrow’s rate.

So, if rates jump a half a point or more, will the real estate market contract as a result?  Some clients have refinanced their loans well in advance of their original loan maturity date.  I expect that option to become less attractive this fall and to see some fall off of refinancings.  A property owner has to factor in the cost of refinancing, including any prepayment penalty, and compare that to the interest payment savings of refinancing.  However, for new property purchases, we have seen cap rates being compressed.  This is especially true for triple net properties with tenants with high credit ratings.  The increase in the interest rates could be balanced by rising cap rates.