Real Estate Ventures II: Negotiating Leases, Financings & Restructurings 11.352 Spring 2014 3-0-9
W. Tod McGrath, Lecturer,
[email protected]
Instructor: Teaching Assistants: Christina Fenbert,
[email protected] Adam Schwank,
[email protected] Michael Tilford,
[email protected] Time and Location: Thursday evenings 6:00 to 9:00 pm, MIT Center for Real Estate, Building 9-354 (unless otherwise noted). Course Description: Designed as a continuation of Real Estate Ventures I (11.351), this course prepares students to negotiate the most important business issues within seven of the principal agreements a real estate developer or investor executes in connection with the value creation, financing, and restructuring phases of a real estate venture. More specifically, (i) the value creation phase involves negotiating an Office Lease with a major law firm and a Retail Lease with a national retailer, (ii) the financing phase involves negotiating Permanent Loan, Mezzanine Loan, and Inter-creditor Agreements, and (iii) the restructuring phase addresses the important financial, legal, income tax, and governance issues associated with the venture falling into financial distress and the need to negotiate Standstill / Forbearance and Loan Modification Agreements, or file a petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Students generally spend 3 to 4 hours of class time discussing the most important business issues in each agreement and the case law relating thereto, working closely with prominent real estate attorneys who specialize in the construction of such agreements. The journey through each agreement ends with a 1 to 2 hour moderated negotiation which is judged by prominent industry practitioners. Students generally alternate between negotiating the role of the developer and the role of the counter-party to the agreement. Due to this format of instruction, enrollment in the course is limited. This course involves a significant amount of reading, which is required to be completed prior to working with the attorneys in class. Accordingly, prior to the first class session devoted to each agreement, students are required to hand in individual written responses (not more than 3 single-spaced pages in length) to questions relating to the specific form agreements, judicial opinions, and other background readings that are the subject of class discussion and negotiation. There is no mid-term or final exam, or prerequisite for this course (students need not have taken 11.351 Real Estate Ventures I). Grading: (for more detailed information, please refer to the attached grading matrix) Five (5) written responses (15% each) Class Participation Class Attendance
75% 13% 12% 100%
Real Estate Ventures II: Negotiating Leases, Financings & Restructurings 11.352 3‐0‐9 Spring 2014
Estimated Time Allocations: Prior to and During Class Sessions Office Lease
Retail Lease
Permanent Loan
In Boston @ Ropes & Gray 6:30 PM
Hours
Mezz. Loan
Inter‐
Standstill /
Loan Mod.
Creditor Agreement
Forbearance Agreement
Agreement
In Boston @ Nutter 6:30 PM
8
(Workout)
10:00 AM @ Fried Frank OPTIONAL
1:00 PM @ MIT CRE OPTIONAL
With BC, BU & Harvard Law
7
MIT NYU
6
5
During Class
Workout Program
4 3
NO CLASS
2
Spring Break
1
Leasing Leasing Panel
with NYU Schack, Stern & Law Business Objectives & Realities
Intro
1
Federal Income Tax Issues re: Foreclosure & Debt Restructuring
Single‐Asset Real Estate Real Estate Bankruptcy
A Litigator's Perspective on Real Estate on Real Estate Transaction Documents
Case Law
2 Agreement
#1
3
#2
#3
Agreement
#4
#5
4
Case Law & Treasury Regulations
5
Prior to
Class
6
Agreement
7
Case Law
Background Reading
Case Law Case Law
8 9 10
Agreement
11
Agreement
Case Law
Agreement
12
Agreement
13 14 15
6‐Feb
13‐Feb
20‐Feb Off Site
/ Lecture / Case Discussion
27‐Feb
6‐Mar
Readingg
13‐Mar
20‐Mar Off Site
27‐Mar
Preparing Written Assignments p g g
3‐Apr
10‐Apr
17‐Apr
24‐Apr Off Site
Deliberating with Counsel g
1‐May
8‐May
Negotiating g g
9‐May
Course Schedule: Thurs. Feb. 6th:
Course introduction; panel discussion of major issues in office lease negotiations; deliberation with counsel re: Office Lease.
Attorneys:
Jason Dunn, Ropes & Gray Stuart Offner, Mintz Levin Cohn Ferris Glovsky & Popeo Madeleine Timin, Boston Properties
Guests (to be confirmed): John Barry, Transwestern│RBJ Kristin Blount, CRE ’98, Colliers International David Provost, CRE ’95, Boston Properties
Thurs. Feb. 13th:
First written assignment due (beginning of class); discussion of office leasing and case law related thereto; continued deliberation with counsel re: Office Lease.
Attorneys:
Thurs. Feb. 20th:
Jason Dunn, Ropes & Gray Stuart Offner, Mintz Levin Cohn Ferris Glovsky & Popeo Madeleine Timin, Boston Properties
Continued deliberation with counsel; negotiation of Office Lease. Note: class session will be held at 6:30 PM at the law office of Ropes & Gray, Prudential Tower, Boston.
Attorneys:
Jason Dunn, Ropes & Gray Stuart Offner, Mintz Levin Cohn Ferris Glovsky & Popeo Madeleine Timin, Boston Properties
Celebrity Judges:
John Barry, Transwestern│RBJ Kristin Blount, CRE ’98, Colliers International Brad McGill, Jones Lang LaSalle David Provost, CRE ’95, Boston Properties Mark Weld, Clarion Partners Bill Gause, CRE ’93, Leggat McCall Properties
(to be confirmed)
Thurs. Feb. 27th:
Second written assignment due (beginning of class); discussion of retail leasing and case law related thereto; deliberation with counsel re: Retail Lease.
Attorneys:
Thurs. Mar. 6th:
Susan Murphy, Dain Torpy Barbara Trachtenberg, DLA Piper
Continued deliberation with counsel; negotiation of Retail Lease.
Attorneys:
Susan Murphy, Dain Torpy Barbara Trachtenberg, DLA Piper
Celebrity Judges:
Len Bierbrier, Bierbrier Development Matt Burwell and Richard Heller, Legal Sea Foods Aubrey Cannuscio, CRE ’97, Linear Retail Heather Hohenthal, CRE ’98, TA Associates Realty Dawn Neher, New England Development Ron Pastore, Sloan ’88, AEW Capital Management Bernie Schachter, CRE ’85, Staples Manny Steiner, New England Development
(to be confirmed)
Thurs. Mar. 13th:
Attorneys:
Thurs. Mar. 20th:
Attorneys:
Third written assignment due (beginning of class); overview of permanent loan agreements, non-recourse carve-out guarantees, prepayment fees and case law related thereto; deliberation with counsel re: Permanent Loan Agreement and guarantees. Marianne Ajemian, Nutter McClennen & Fish Jack Creedon, Ropes & Gray Jason Dunn, Ropes & Gray Bill Forbush, DLA Piper Sally Michael, Saul Ewing Gabriel Safar, Saul Ewing
Continued deliberation with counsel; negotiation of Permanent Loan Agreement and guarantees. Marianne Ajemian, Nutter McClennen & Fish Jack Creedon, Ropes & Gray Jason Dunn, Ropes & Gray Bill Forbush, DLA Piper Sally Michael, Saul Ewing Gabriel Safar, Saul Ewing
Celebrity Judges: (to be confirmed)
Steve Campbell, MIT Investment Management Co. Sam Davis, Allstate Peter Goedecke, Goedecke & Co. Dave Heller, US Bank Mike Hussey, US Bank Bill McPadden, John Hancock Jane Seiden, CRE ’88, The Community Builders Brett Tonks, Colony Realty Partners
Thurs. Mar. 27th:
No class (spring break).
Thurs. Apr. 3rd:
Discussion of mezzanine loan agreements; deliberation with counsel and negotiation of Mezzanine Loan Agreement.
Attorneys:
Marianne Ajemian, Nutter McClennen & Fish Peter Spellios, Related Beal
Celebrity Judges:
Brian Chaisson, Tishman Speyer Properties Kris Galetta, Alcion Ventures Bob Garrow, CrossHarbor Capital Partners Dan Mee, Tremont Realty Associates
(to be confirmed)
Thurs. Apr. 10th:
Fourth written assignment due (beginning of class); discussion of InterCreditor agreements; deliberation with counsel and negotiation of Inter-Creditor Agreement.
Attorneys:
Thurs. Apr. 17th: . Attorneys:
Marianne Ajemian, Nutter McClennen & Fish Bill Jordan, Cornerstone Real Estate Advisors
Deliberation with counsel and negotiation of Standstill / Forbearance Agreement.
Celebrity Judges: (to be confirmed)
Doug Burton, Wilmer Hale Tom Vangel, Murtha Cullina Joanne Adkins, CRE ’88, John Hancock Dan McGrath, CRE ’08, New Boston Fund Peter Merrigan, CRE ’93, Taurus Investment Holdings
Thurs. Apr. 25th:
Optional class session: discussion of business objectives and realities for both parties to a loan work-out; deliberation with counsel and negotiation of Loan Modification Agreement. Note: the Workout Program with New York University will be held from 10:00 AM to 7:30 PM at the law office of Fried Frank Harris Shriver & Jacobson at One New York Plaza in lower Manhattan.
Attorneys:
Michael Barker, Fried Frank Doug Burton, Wilmer Hale Nathaniel Margolis, John Hancock Harry Silvera, Fried Frank
Celebrity Judges:
Larry Ellman, CRE ’92, Berkshire Realty Ventures Bob Garrow, CrossHarbor Capital Partners Rob Gifford, AIG Global Real Estate Chris Hughes, CRE ’94, Praedium Group FX Jacoby, Kensington Investments Bob Lieber, Island Capital Peter McNally, CRE ’96, BlackRock
(to be confirmed)
Arvind Pai, CRE ’06, BlackRock Ron Pastore, Sloan ’88, AEW Capital Management Rob Verrone, Iron Hound Management Mark Walsh, Silverpeak Real Estate Partners
Thurs. May 1st:
Discussion of federal income tax issues associated with asset sales, loan modifications, loan purchases, foreclosure and case law related thereto.
Attorneys:
Thurs. May. 8th:
Steve Eichel, Choate, Hall & Stewart
Fifth (final) written assignment due (beginning of class); discussion of single asset real estate (SARE) bankruptcy and case law related thereto.
Attorneys:
Rick Mikels, Mintz Levin Cohn Ferris Glovsky & Popeo Tom Vangel, Murtha Cullina
Judge Celebrity:
The Honorable Joan N. Feeney, Justice, U.S. Bankruptcy Court
Fri. May 9th:
Optional class session for students with scheduled class conflicts: motions session of the U.S. District Court; discussion: a litigator’s perspective on real estate transaction documents. Note: the motions session will begin promptly at 2:00 PM in the CRE Lecture Hall. Lunch with Judge Young and his courtroom staff will be provided beforehand at 12:30 PM.
Judge Celebrity:
The Honorable William G. Young, Justice, U.S. District Court
Attorneys:
Dan Dain, Dain Torpy Tom Vangel, Murtha Cullina
11.352 Real Estate Ventures II
Course Grading Matrix ,
Student Last Name
15 Point Maximum Per Document If 3 Days Late:
* * * No Response(s) = 0 Absent = 0
(b)
Written Assignment
Late Submission
Adjusted Score
Class Attendance
Class Participation
[ 1 = Yes; 0 = No ]
[ a ‐ b ]
[ 1 = Yes; 0 = No ]
15
15
1 1 1
13 13
2/6/2013 2/13/2013 2/20/2013
Office Lease Office Lease Office Lease
2/27/2013 3/6/2013
Retail Lease Retail Lease
15
15
1 1
13 13
3/13/2013 3/20/2013
Permanent Loan Agreement Permanent Loan Agreement
15
15
1 1
13 13 13.0
4/3/2013
Mezzanine Loan Agreement
1
13
1
13
4/10/2013
Inter‐Creditor Agreement
4/17/2013
Standstill / Forbearance Agreement
1
13
4/24/2013
Loan Modification Agreement
1
13
5/1/2013
Riveting Tax Lecture
1
13
5/8/2013
SARE Bankruptcy Lecture
1
13
5/9/2013
USDC Motions Session; Litigator's Perspective
1
13
13 12.0
169 13.0
15
15
15
15
Totals Contribution to Course Grade
Total Course Grade Points
can't do both for same document
Trivial Response(s) = 0
Additional 30% off that assignment
Date Document
Student First Name
If Absent:
5th+ = 12 points off course grade
(a)
Spring 2014
75 75.0
105.0
Volunteer Scribe
Volunteer Negotiator
[ 1 = Yes; 0 = No ]
[ 1 = Yes; 0 = No ]
1
1 Mid‐term avg.
1 2
1 3