Real Estate & Finance Practice

Heller Ehrman represents investors, developers, owners and operators on real estate projects throughout the United States and abroad. We routinely structure, negotiate and document purchases, sales, ventures and financings across the full spectrum of real estate products. Our experience ranges from urban office high-rise and mixed-use condominium projects, to industrial and R&D developments, residential projects, destination resort hotels and luxury time-share facilities. These transactions vary from relatively simple single-asset deals to some of the most complex capital formation, real estate portfolio and real estate M&A transactions in the industry.

We routinely address the structural challenges of capital investment in contemporary real estate deals that demand far more than conventional asset transaction experience. We counsel clients through the complexities of development joint ventures, real estate operating companies, pooled investment funds, private placements and public offerings, ground lease financing, incentive-based strategic alliances, mortgage loans, mezzanine debt, hybrid debt-equity transactions, securitized assets, energy project finance and virtually every other variation on the theme of real estate investment. We have particular experience dealing with the special challenges of the hospitality industry and the investment activities of pension trusts and other public or private tax-exempt entities, as well as investment funds with offshore and tax-exempt investors and REITs.

Facts About Our Practice

• Includes more than 40 attorneys with experience handling real estate transactions in every region of the United States and in countries in Europe, Latin America the Caribbean, Asia and the Middle East.
• Remains one of the highest-profile hotel practices in the nation. We count Four Seasons Hotels Ltd., Fairmont Hotels & Resorts Inc., Starwood Hotels and Resorts Worldwide Inc., Hyatt Hotels Corporation and a variety of institutional hotel owners and investors among our clients.
• Represent major capital sources for investment in real estate and real estate operating companies, including Lehman Brothers, AEW Capital Management, Alaska Permanent Fund Corporation, J.P. Morgan Partners, GIC Real Estate, Inc. , Cargill Financial Services Corporation and Wells Fargo Bank, N.A.

Our Capabilities

Acquisitions and Dispositions

We have extensive experience in the management of large-scale and issue-intensive real estate transactions throughout the country and abroad, including high-volume portfolio programs of acquisition or sale, single-transaction portfolio or operating company deals and single-asset, structurally complex deals.

Venture Formation

We handle ventures and operating company investments for all types of clients and deals – from large, single-asset projects to resort development properties, multi-property portfolios, energy projects and residential land development deals. Our lawyers are very familiar with the business, tax and legal subtleties of "promote" or "incentive" structures in both single-asset and portfolio ventures. We also understand the importance of effective exit vehicles and the interplay between equity rights and management responsibilities.

Real Estate Financing

A core component of our practice is real estate finance, broadly defined to embrace traditional real estate-secured commercial lending, mortgage-backed public debt financings, all manner of subordinated or mezzanine debt, letter of credit-supported and other credit-enhanced bond financings, major project financings and a wide variety of contingent interest/equity "kicker" financings.

Hotels & Resorts

We represent many of the leaders in the hospitality industry, including operators, owners, investors and lenders. Our balanced practice allows us to bring a unique perspective to the issues confronting each of the various actors in the industry. Our attorneys have documented the development and operation of the full range of project types – from high-rise urban hotels to luxury resort properties to serviced residential properties (both traditional “whole” ownership and fractional ownership). We address, where applicable, the complex issues of access to and use and management of golf, tennis and other recreational facilities. Critically, we understand not only the legal landscape, but also the norms and customs of the industry and the state of the ever-evolving market.

Real Estate Fund Formation

Our fund formation work covers a wide range of industries, but we have particular experience in forming real estate funds. Funds are not one-size-fits-all – they have their own conventions and sensitivities and must reflect the character of the underlying investments and the expectations of both fund sponsors and real estate investors. Our real estate, securities, tax and ERISA attorneys work collaboratively to bring value to the fund structuring process and to address the legal and business issues facing sponsors and investors.

Leasing

We represent landlords and tenants in retail, office and mixed-use leasing matters. The core of our leasing practice is landlord representation, both on “stand-alone” transactions and in connection with large-scale leasing programs across the country.

Sale and Acquisition of Secured Loan Portfolio Transactions

Our lawyers  frequently represent financial institutions and institutional investors in purchases and sales of secured loan portfolios and participating interests in  portfolios.  Loan-pool transactions now play a major role in the capital formation and deployment activities of many of our institutional clients and are important contributors to the efficiency of the real estate market generally. We are very experienced in dealing with the conventions and expectations of both buyers and sellers and the organizational challenges of these transactions.

Bankruptcy and Distressed Real Estate

In collaboration with Heller Ehrman's bankruptcy lawyers, we handle all manner and aspects of workouts, from space leases to secured loans, management contracts and partnership relationships in distress. Our attorneys have particular experience in the representation of institutional clients in their acquisition, management and liquidation of portfolios of distressed real property-secured loans.

Engagements

Acquisitions and Dispositions of Scale

• AEW Capital Management, L.P.: Represented in an acquisition program of Southern California commercial properties as part of a joint venture with Layton Belling & Associates. The series of portfolio acquisition financing transactions culminated in the sale of a portfolio of more than 50 properties to Arden Realty REIT for more than $650 million (in cash, OP Units and warrants "with negotiated warrant agreement, registration rights and related securities documentation). We also represented AEW in the sale of Carefree Resorts" portfolio of trophy resort hotels (including The Boulders, The Peaks at Telluride, Carmel Valley Ranch and others) and its related management company for more than $250 million to a public hotel REIT.
  
• Alaska Permanent Fund: Represent this $26.5 billion, state-owned investment fund (accumulated from state oil revenues) in connection with a program of purchases and sales of interests in shopping centers, office buildings, apartment complexes and industrial portfolios in more than 20 states. These investments involve property values ranging from $20 million to $530 million. The engagements usually involve the acquisition, disposition or exchange of ownership interests (sometimes involving the exercise of rights of first refusal or "shoot-out" provisions) in co-investment vehicles, including general partnerships, limited partnerships, limited liability companies and 501(c)- (25) corporations.
  
• Canadian Pacific Hotels & Resorts: Represented Canadian Pacific and its controlled management company, Fairmont Hotels & Resorts, in the acquisition of the controlling interests in The Kea Lani Resort situated in Wailea, Maui, Hawaii for more than $250 million. The transaction was consummated through a tax-driven "mixing bowl" structure, with the purchase of tiers of partnership interests and executory agreements to redeem retained-seller interests in the future. The Kea Lani was one of the several largest hotel transactions in North America in 2000.
  
• CIBC World Markets: Represent as U.S. counsel on its approximately $1.5 billion secured financing of Nomura International's acquisition in 2001 of the Le Meridien hotel chain from The Compass Group. Working as part of a team of counsel in over 30 countries, we have assisted in all legal, financing, and real estate matters relating to the four hotels and over 25 entities within the U.S. security pool.
  
• Morgan Stanley Real Estate Investment Funds: Represented Morgan Stanley and its affiliate, GMS Realty LLC, in the sale for more than $280 million of a portfolio of 15 office and retail properties located throughout Southern California and the Bay Area.
  
• UNICO Properties, Inc.: Represented in joint venture purchases and financings of high-rise office buildings in the central business districts of San Francisco ($150 million), Bellevue, Washington ($95 million) and Boise ($28 million).

Operating Company Investments

• AEW Capital Management LLP: Represented AEW over many years in a series of venture capital investments in operating companies formed with local real estate actors, with product types ranging from raw land developed to the point of entitlement and sale to home builders to real estate Internet information services, to acquisition of office and industrial products with turnaround opportunities. The exit strategy with these operating company platforms includes entity sale or a public exit in an IPO. Beginning with our work with AEW, we have gained tremendous experience working with all variations of "promote" or incentive fee structures, with tiers of compensation to the real estate local actor depending on the IRR achievement of the company portfolio.
  
• Cargill Financial Services Corporation: Represent as its counsel in the formation and operation of a series of operating company investments with local partners in California and Hawaii.
  
• J.P. Morgan Partners (formerly Chase Capital Partners): Represented in 2000 and 2001 in the formation of an operating company platform for the acquisition and redevelopment of multifamily projects in Southern California and a joint venture with a public REIT for an off-balance sheet program to acquire industrial projects throughout the United States.
• Lehman Brothers: Represented in the formation and investment activities of a variety of real estate operating company platforms involving residential land development and home/condominium building in states throughout the country, including California, Washington, Oregon, New Mexico, Nevada, Illinois, Florida and Georgia. Deal structures included equity investments in master partnerships with developers, mezzanine loans with equity participations and loan participations. The total invested capital to date is in excess of $500 million.

Finance

• Alaska Permanent Fund: Represented in connection with the creation and operation of a $300 million mortgage lending program and the refinancing of $220- million in non-recourse term debt secured by the Tysons Corner Shopping Center in Virginia, in connection with the restructuring of the ownership entity.
  
• Bank of America: Represented in connection with the structuring, documentation and closing of a $400 million syndicated unsecured revolving credit facility to BRE Properties, a national publicly-traded apartment REIT. We also represented Bank of America in connection with the extension of a $25.9 million letter of credit, a $48 million acquisition and construction loan and an $80 million construction loan for redevelopment of downtown Seattle retail corridor. The project involved relocation of Nordstrom's flagship store, redevelopment of the existing downtown store and construction of high-end retail mall on an adjacent block. We also represented BoA as the U.S. lessor in $175 million off-balance sheet lease financing of Argentine facility for polyethylene production.
  
• Chugach Electric Association, Inc.: Represented Chugach, the largest electric utility in Alaska, in a registered public offering of more than $460 million of first mortgage bonds underwritten by J.P. Morgan Securities, Inc. and Smith Barney.
  
• Citicorp Industrial Credit; OLS Energy; Babcock & Brown: Represented these clients in connection with a series of $20 million to $50 million U.S. project financings of cogeneration facilities.
  
• GIC Real Estate: Represented in connection with a $370 million loan by a consortium of offshore lenders to finance the acquisition of the AT&T Building in Chicago.
  
• J.P. Morgan Partners (Chase Capital Partners): Represented in a series of cross-collateralized mezzanine loan transactions with a Southern California multifamily developer involving projects in California and Northern Virginia.
  
• Massachusetts Mutual Life Insurance Company: Represented in connection with a $54million permanent loan to a limited partnership controlled by Warren E. Spieker, Jr., secured in part by fee and ground-leased land and a vertical subdivision with condominium elements.
  
• Ritz-Carlton San Francisco: Represented in structuring, documenting and closing a $135 million mortgage loan in connection with the acquisition of the hotel, using conduit financing made by a CS First Boston fund on a highly leveraged, limited recourse basis.
  
• UNICO Properties, Inc.: Represented in connection with a $78 million non-recourse loan from GE Capital for acquisition of Skyline Tower in Bellevue, WA.
  
• Union Bank of California: Represented in the structuring, documentation and closing of a $39 million acquisition and development loan and $19 million revolving construction loan for development of housing project in Dublin, CA.
  
• Wells Fargo Bank: Represented in connection with the structuring, documentation and closing of a $105 million construction loan to an affiliate of Fremont Properties (controlled by the Bechtel family) to finance a new 24-story office tower in downtown San Francisco. We also represented the bank in connection with the extension of a $240 million bridge loan facility for various affiliates of Lewis Homes, a private residential developer, to facilitate the sale of various home building divisions to Kaufman and Broad, and a tax-driven reorganization of family ownership interests.
  

International

• U.S. Studio Loews Cineplex: Represented the exhibition arm of Loews Cineplex in a U.S. $250 million joint venture for the creation of an exhibition chain in Italy.
  
• Fairmont Hotels & Resorts: Represented (and its predecessor parent Canadian Pacific Hotels) in hotel investment, development and management projects and the formatiom of international strategic alliances relating to hotels in Puerto Rico, the Pacific Basin and the Middle East. In each case, we work with local counsel at the site of the assets, in the tax residences of each investment entity and in the UK where UK governing law applies.
  
• J.P. Morgan Partners: Represented in negotiating and documenting a joint venture with a German office building development company and creating the investment and ownership vehicles for the acquisition by the venture of its initial project in Darmstadt, Germany.
  
• Four Seasons Hotels: Counsel for almost 20 years as principal U.S. counsel, working on numerous hotel development venture investments, management agreement negotiations, financings and time share regimes ranging from city center hotels to destination resorts, including hotels in Mexico, the Caribbean and Asia.
  
• Bank of America: Represented as the U.S. lessor in $175 million off-balance-sheet lease financing of Argentine facility for polyethylene production.
• AEW Capital Management: Counsel in connction with its real estate fund management activities in Italy, including two Banca Nazionale del Lavoro funds, as well as subsidiary management issues and executive compensation programs.
  
• Alfa Bank: Counsel to Russia's Alfa Bank in connection with development of an $80,000,000 multiple-use facility in downtown Moscow, in a joint venture with Alfred Taubman's Athena Group.
  
• The Royal Group: Represented the Canadian developer of a Marriott destination resort, casino and residential development on the Island of St. Kitts in the Caribbean.
  
• Den Norske Bank: Represented in a complex workout of a loan to a Norwegian development company with projects in Norway and U.S.
  
• Westin Hotels: Represented in a mezzanine financing and hotel management transaction relating to a destination hotel on Guam, with transaction negotiated and documented in Tokyo with Japanese developer and consortium of Japanese banks. We also handled management contract negotiations for hotels in Mexico, Canada and Hainen, China.
  
• Mexican Interests: Counsel to Mexican sellers of a portfolio of destination resort hotels and development property in Cabo San Lucas, Mexico.
  
• William E. Simon & Sons: Represented in connection with the acquisition of a significant hotel and resort in Puerto Vallarta, Mexico. Our representation included structuring, negotiating and documenting the joint venture, handling the acquisition of an employee holding company and a water and utility company, and counseling our client on tax and labor matters in Mexico. We also represented William E. Simon in connection with an 800-acre hotel, golf course, residential and timeshare project in Mazatlan, Mexico.
  
• Strategic Hotel Capital: Represented in the purchase of a five-star luxury hotel in Mexico City. Our representation included providing advice on the full array of legal issues involving real estate, finance and corporate matters in Mexico.
• Villa Vera Hotel Associates: Represented in the purchase and ultimate sale of resort hotel in Acapulco Mexico, including advice on various financing, labor and tax matters.
  
• Maruko Inc.: Represented in nearly $1.5 billion of transactions in the late 1980s and early 1990's, involving complex cross-border structures and ultimately the then largest cross-border real estate bankruptcy.
  
• GIC Real Estate: Represented in a variety of direct cross-border acquisitions, financings and investments in real estate funds established for offshore investment.
  
• Elegant Hotels: Represented Elegant's U.K. parent in the development of form agreements and a structure for the growth of a luxury boutique hotel chain in Europe and the Caribbean.
• U.S. Developer: Represented a U.S. company in the acquisition of land for development of a 78,000-square meter mixed-use complex in Puerto Madero, Buenos Aires, Argentina, and in the formation of a joint venture with local developers, including utilization of Argentinean financial trust and offshore holding companies.
  
• Fund Sponsor: Counsel to a U.S. sponsor in the formation of a real estate fund targeted at European high net-worth individual investors.
  
• Developer: Handled a development joint venture project with a Brazilian construction company involving a 65,000 square meter office building in Sao Paolo, Brazil.
  
• CEMEX: Handled management issues and the sale of Marriott hotels in Cancun and Mazatlan, Mexico, including counsel on real estate, finance, tax and international arbitration regarding management agreement issues.
  

Hotels & Resorts

• AEW Capital Management, LLP.: Represented in a variety of investments in the hospitality industry on behalf of its tax exempt clients or funds, including a venture investment in the Century Plaza Hotel in Los Angeles and a program of mezzanine participating loans secured by hotels in the Southeastern United States.
  
• Canadian Pacific Hotels & Resorts and Fairmont Hotels & Resorts: Represented Canadian Pacific and Fairmont Hotels & Resorts, the management company of which Canadian Pacific holds majority ownership and control, in acquisition and development projects, development of form management documents and negotiation of hotel-management agreements as part of Fairmont's expansion into new markets in the United States and abroad.
  
• Four Seasons Hotels: Represented for more than 15 years as principal U.S. counsel, working on numerous hotel development venture investments, management agreement negotiations, financings and time-share regimes for products ranging from city center hotels to destination resorts throughout the United States and Mexico.
  
• Starwood Hotels & Resorts: Represented in numerous partnership investments and companion hotel management agreements for projects involving all of Starwood's brands, including Sheraton, Westin, The W and St. Regis Hotels. Recent transactions include investments in New Orleans, LA; Bethesda, MD; Detroit, MI; Providence, RI; St. Louis, MO; San Antonio's La Cantera, TX; Phoenix, AZ and Overland Park, KS.
  
• Strategic Hotel Capital, LLC: Represented in its acquisition of the Hyatt Regency Aventine and a sports complex in La Jolla, California. The transaction was conducted with Whitehall Fund as the joint purchaser with Strategic of a mixed use project including both the hotel component and an office tower, parking and retail/restaurant facilities. Concurrent with the closing, Strategic and Whitehall divided the property through a complex set of CC&R's, involving joint use of certain building systems, shared facilities use and cost allocation and an ultimate three-dimensional subdivision.
  

Corporate Facilities

• ALZA Corporation: Represented in the acquisition of land and development of over $100 million, campus-style headquarters in Mountain View, California. The project involved negotiation and documentation of entitlements, mitigation of threatened species (burrowing owl), multiple government agency negotiation for levee improvements, negotiation of construction documents and construction dispute issues.
  
• Lam Research Corporation: Represented in the off-balance sheet financing of its development of corporate facilities.
  
• NEC Electronics Inc.: Represented in its development of its Santa Clara campus in Silicon Valley.
  
• Visa International: Represented in the acquisition and multi-phased development of its corporate headquarters in Foster City, CA. The project included the negotiation of development agreements with local agencies to vest development rights and negotiation and documentation of design and construction documents.
  

Contacts

Attorneys