Wednesday, February 27, 2008

Kimco Realty Corporation and Milton Cooper

There is nice piece in next month's Forbes on Kimco Realty Corporation and Milton Cooper: Beyond the Big Box.
"REITs have to follow certain rules in order to avoid most corporate income taxes. Chiefly, they must pay out 90% of their income to shareholders in dividends. Many REITs are content to own buildings and collect rent. Others, like Boston Properties, have also moved into developing their own buildings. But Cooper gets 45% of his earnings from sources like managing real estate for pension funds, lending to bankrupt retailers and buying distressed properties. Only a few other REITs, such as Developers Diversified and ProLogis, have branched out like this."

"So in 1998 Cooper had a brainstorm: go into business with pension funds, developing and managing shopping centers for funds such as New York Common Retirement Fund and G.E. Pension Trust. Here was a bunch that was happy with returns as low as 6%, if the investments were safe. Many also were required to have some capital in real estate. Typical partnership deal: The pension funds contribute 85% of the project cost, Kimco the remainder. Once the center is built Kimco earns a fee for managing the properties, around 4% of rents."

Friday, February 22, 2008

Massachusetts Blawgs

I decided to poke around and try to list as many Massachusetts based legal blogs as I could find. Here is the list. Sorry if I missed any. Send me the links and I will update this list.

Boston Criminal Lawyer Blog

Covers topics such as felonies, violent crime, assault and battery, drug offenses, and wrongful convictions.
Published by Altman & Altman LLP.

Boston Employment Lawyer Blog
Information on age discrimination, employment contracts, hostile work environments and other employment law topics.
Published by Conforto Law Group

Boston ERISA & Insurance Litigation Blog
Covers ERISA, insurance coverage, and insurance bad faith.
Published by Stephen Rosenberg of The McCormack Firm, LLC.

Boston Immigration & Nationality Blog

Serving immigrants in the Boston and Framingham metro areas
Published by Joshua Daley Paulin

Boston Injury Lawyer Blog
Discusses topics such as boating, car, motorcycle, and pedestrian accidents.
Published by Altman & Altman LLP.

This blog addresses topics in litigation knowledge management such as internal expertise identification, collaborative software for lawyers, search methods for lawyers, the convergence of ediscovery and enterprise search, and more.
Published by David Hobbie of Goodwin Procter LLP

Cogito Ergo Teneo; an intellectual property blawg
A blawg dedicated to reporting on recent U.S. copyright, trademark, and trade secret law, as well as any other interesting intellectual property news.
Published by Sean FWJ Fowler, general counsel for a technology company in Marlborough, MA.

The online home and blog of the Law Office of Woodworth & Frisella. They specialize in handling commercial collection matters for all kinds of business with a particular emphasis on software companies.

The blog of Professor Charles Nesson of the Harvard Law School

Erik J. Heels
Erik J. Heels is an MIT engineer, patent and trademark lawyer, Red Sox fan, and music lover. This is his blog about Technology, Law, Baseball, and Rock 'n' Roll.

Et Seq.
The Harvard Law School Library Blog

New developments in health care law and policy together with the observations and analysis of David Harlow, of The Harlow Group LLC, a health care law and consulting firm in Newton.

Home Contractor vs. Homeowner

Addresses contractor and homeowner disputes.
Published by Andrea Goldman

John Palfrey
As Clinical Professor of Law at Harvard Law School and Executive Director of the Berkman Center for Internet & Society, John’s work focuses on Internet law, intellectual property, and the potential of new technologies to strengthen democracies locally and around the world.

KM Space
The Law Firm Knowledge Management Blog, with postings on knowledge management, enterprise 2.0, legal technology and the practice of law
Published by Doug Cornelius

Law For Life
Estate planning, asset protection, elder law, probate, reverse mortgages and real estate
Published by Gosselin & Associates, P.C.

Law Links | Health Links
Connecting legal, health and marketing resources with a New England focus, by Amy Campbell of Infoworks! Amy also publishes Amy Campbell's Weblog, thinking about new media, web marketing and law firm marketing.

Massachusetts Campaign for Open Government

Karla J. de Steuben created the Massachusetts Campaign For Open Government website after she was told by a Massachusetts town official that she could not have a copy of a public record she requested because it would only confuse her.

Massachusetts Consumer Rights
News on consumer rights issues in Massachusetts by Attorney Kenneth D. Quat.
(The posts on this blog are very sporadic)

Massachusetts Divorce & Family Law Blog
Boston area attorney Steven Ballard discusses recent developments in divorce & family law.

Massachusetts Driving Law
Information on Speeding Tickets, Drunk Driving, OUI, DUI, Moving Violations, Citations, Insurance Surcharges, License Suspensions, Registry of Motor Vehicle Hearings, RMV issues, Clerk's Hearings, Junior Operators, Hardship Licenses, Revoked Licenses, Ignition Locks, Criminal Complaints, Criminal Charges and other driving related issues for Massachusetts Residents.
Published by Jessica A. Foley

Massachusetts DUI Podcast - MA Drunk Driving Defense Lawyer
Massachusetts DUI Attorney Russell Matson's Podcast

Massachusetts Law Updates
From the Massachusetts Trial Court Law Libraries

Massachusetts Personal Injury Blog
Information For Those Injured in Massachusetts Motor Vehicle Accidents, Bicycle Accidents, Pedestrian Accidents, Slips and Falls, Dog Bites, Massachusetts Medical Malpractice and other Accidents, by Boston Personal Injury Attorney Christopher F. Earley.

Massachusetts Estate Planning and Elder Law
Information, resources and commentary about estate planning, elder law, MassHealth/Medicaid, care-giving, family matters and growing older in Massachusetts by Leanna Hamill, Attorney at Law. Hingham.

This site focuses on Lee Gesmer's practice areas: IP, business law, Internet law, antitrust and practice in the Massachusetts state and federal courts.

Media Law
A blog about freedom of the press
Published by Robert J. Ambrogi
Mediation can challenge people to see things differently, bringing new insight and and greater understanding of themselves, each other, and the underlying conflict. That’s the aim behind this blog — to invite you to see things anew.
Published by Greater Boston attorney and mediator Diane Levin

Medical Malpractice Law News
All the medical malpractice news and resources that are fit to click
(Posted anonymously)
This Website is intended to serve as a current reference for legal issues related to the use of open source software, especially software licensed under the GNU public license, such as Linux.
The Website is currently maintained by Peter Moldave, a partner at Gesmer Updegrove LLP

Out of the Jungle
Thoughts on the present and future of legal information, legal research, and legal education.

Patricia Bloom-McDonald, Attorney at law
Information on elder law and estate planning

Real Estate Space
The Commercial Real Estate Finance Law Blog, with notes on real estate law and the real estate business from a Massachusetts lawyer
Doug Cornelius.

Robert Ambrogi's LawSites
Tracking new and intriguing Web sites for the legal profession.
Published by Robert J. Ambrogi

Standards Blog
Examines how standards are developed, and their impact on business, society, the world, and the future.
Published by Andy Updegrove of Gesmeer Updegrove LLP

Suffolk Law Library Blog
The blog of the Suffolk Law Library

The E-Legal Lawyer
Covers small business, cyber law and employment law issues.
Published by Michael Goldstein.

The TTABlog
Keeping tabs on the Trademark Trial and Appeal Board (TTAB) of the U.S. Patent and Trademark Office
Published by John L. Welch of Lowrie, Lando & Anastasi, LLP

Velvel on National Affairs
This progressive blog sets forth the personal views of the Dean of the Massachusetts School of Law on national events. Occasionally, the responses to his views or other interesting articles are also posted.
Published by Lawrence R. Velvel

Wednesday, February 20, 2008

IHOP Is Not Fast Food

In the case of McDonald v Rappaport et al, Judge Tauro of the United States District Court of Massachusetts, found that the International House of Pancakes is not a fast food restaurant. Judge Tauro also highlights a few drafting points for restrictive covenants.

In a lease with McDonald's Corporation, the landlord agreed to a provision that prohibited the landlord allowing a "so-called fast food restaurant, food service establishment, drive-in or walk-up eating facility" on property owned, leased or controlled by the landlord within two miles.

The court found the provision ambiguous as to whether "so-called fast food" modified only "restaurant" or also modified "food service establishment," "drive-in" and "walk-up." The court found that "so-called fast food" applied to each term after a bench trial. In evidence was an earlier draft of the provision that did not include "fast food."

The court also went on to note that a restrictive covenant like this is a restraint on alienation. In Massachusetts, "restrictions on land are disfavored, and they in general are to be construed against the grantor and in favor of freedom of alienation.” [citing Stop & Shop Supermarket Co. v. Urstadt Biddle Props., 740 N.E.2d 1286, 1289 (Mass.App. Ct. 2000)] So the narrower reading of applying the "so-called fast food" modification applies to all of the cited uses.

Even though the McDonald's lease does not define “so-called fast food,” McDonald's and IHOP did not dispute that IHOP is not a fast food restaurant under any definition of “fast food” or “quick service.” McDonald’s and IHOP both agreed that IHOP is a full service, family style restaurant.

Tuesday, February 19, 2008

Chicago Transfer Tax

The City of Chicago is trying to expand the scope of its real estate transfer tax to to be paid even when the buyer forfeits the down payment: City transfer tax may expand to cover incomplete real estate deals. I assume the idea is that the seller got some cash out of the deal and the city wants its piece of it.

This expansion is on top of the increase in the transfer tax from $7.50 to $10.50 for every $1000 of consideration starting on April 1

Thanks to David Stejkowski of the The Dirt Lawyer's Blog for pointing this out: Chicago's transfer tax: good grief - what next?

Saturday, February 16, 2008

The CMBS Market has Re-Opened

According to Bloomberg, Morgan Stanley and Bear Stearns Cos. sold the first commercial mortgage backed security of the year: Morgan Stanley Sells First Commercial Mortgage Security of 2008.

It was a $1.2 billion dollar package of which $630 million was in the senior position. As you might expect the spreads were very high and the subordination was very high.

Monday, February 11, 2008

Recording Fees for Multiple Transactions in a Single Document

The Massachusetts Appeals Court issued its decision in Patriot Resorts Corp v. Register of Deeds for Berkshire North (No. 06-P-725) [Social Law Library Membership Required].

At issue was the proper interpretation of MGL c. 262, § 38 and MGL c. 44B § 8, which specifies the fees for recording documents with a registry of deeds. Patriot assigned multiple mortgage interests to a single assignee using a single assignment document. The register of deeds assessed recording fees based on the number of mortgages assigned. Patriot contended that the fee should instead have been based on the single instrument of assignment. The Superior Court agreed with the register's position. Patriot appealed to the Massachusetts Appeals Court, who agreed with Patriot.

The appeals court reversed the judgment of the Superior Court, holding that the applicable statutes did not permit the registry to charge multiple fees for a single document even if the document was effectuating multiple actions.

Even with this ruling it looks like the registries are waiting for final resolution of the case, according to Dick Howe at the Middlesex Northern Registry of Deeds.

Saturday, February 9, 2008

Why Every Client Should Want an Attorney Who Blawgs

Teri G. Rasmussen of the Ohio Practical Business Law Counsel has a great post on Why Every Client Should Want an Attorney Who Blawgs.

Teri point out that her blawg gets twice as many hits as the website for her 30 person law firm.

Teri's reasons why lawyers should blog:
  1. Knowledge Entreprenuer.
  2. Communication 101.
  3. Authenticity and “Real Voice”.
  4. Quality and Competence.
  5. Commitment to “the Law” Made Practical.
Thanks to Kevin O'Keefe of Real Lawyers Have Blogs for pointing this one out.

Cross-posted from my KM Space blog on law firm knowledge management

Securitization and Lax Mortgage Lending

The Chain of Fools is the title of The Economist's Economics Focus column. The article points to the increasing evidence that securitization lead to lax mortgage lending in the United States.

The column is based largely on the study by Atif R. Mian and Amir Sufi of the University of Chicago's Business School: The Consequences of Mortgage Credit Expansion: Evidence from the 2007 Mortgage Default Crisis.

In the end the problem was severing the origination of mortgage loans from their ongoing management and servicing. The originators were motivated to increase the flow of mortgage paper, not necessarily to increase the quality of that mortgage paper. As evidence, you can look at the increase of NINJA loans (No Income, No Job or Assets) on the residential side of mortgage lending and the light covenant loans on the commercial side of mortgage lending.

Mortgage lenders farmed out the mortgage origination to brokers. The mortgage lenders in turn packaged the mortgage loans and securitized them. As a result, the broker and the lender were focused on the short term origination and not on the long term value of the mortgage debt.

In representing the borrowers of loans to be securitized, I often heard that the statement: "I can't sell that in the market." I never heard, "that will be affect my ability to manage or service the mortgage loan."

The underlying economic problem is that the originating lenders did not keep any "skin in the game." Nearly all of their economic return was in the origination, not the long term success.

Friday, February 8, 2008

REITs and Joint Ventures

Arleen Jacobius of reports on institutional investors entering into joint ventures with REITs to as an alternative to direct real estate investments: Joint Ventures Emerging as New Vehicle for REITs.

The nice match of pension funds and REITs is that they are both used to dealing with the complexities of the tax code and other regulatory schemes that affect their investments in real estate. The rules for REITs on their income tests and asset tests are similar to the UBIT rules in compliance.

The pension funds get the benefit of a large professional REIT manging and operating the portfolio, but the additional control rights they would expect if they own the real estate outright. In exchange for the convenience of not having day-to-day management of the asset, they trade a piece of the upside on the real estate by giving the REIT a promote on the increase in value of the property.

I see that the article also quotes Steve Lyons of Reed Smith. Steve and I have worked together on a few REIT joint ventures.

Macklowe and his Capital

According to the Wall Street Journal, Harry Macklowe is still battling his lenders and his lenders are battling each other over his New York skyscrapers: Macklowe, Lenders Seek a Deal. At stake are: 717 Fifth Avenue, Worldwide Plaza, 1301 Avenue of the Americas, Park Avenue Tower, 527 Madison Avenue, 1540 Broadway, 850 Third Avenue and Tower 56 with about 6.5 million square feet of space.

It looks like his senior debt with Deutsche Bank is due shortly. Given the state of the debt markets he is no position to refinance that senior loan. On top of that, he needs to satisfy his subordinate lenders in mezzanine and other higher tranches of debt. According to the article, there are 20 other lenders holding subordinate debt.

I would assume that Mr. Macklowe is trying to turn over the buildings to Deutsche Bank, but the subordinate lenders (who have the most to lose) want to control the sale process.

My guess is that the lawyers for the lenders and Macklowe are working around the clock trying to evaluate who can do what to who in the process. According to Square Feet Blog, Macklowe personally guaranteed $1 billion of that debt and is putting his trophy GM Building up for sale to make good on the guaranty.

It seems that Blackstone's acquisition of Equity Office was the high-water mark of the real estate capital markets. Macklowe's acquisition of these 7 properties was a flip from Blackstone as part of the large acquisition of Equity Office Properties. [Blackstone Makes Quick Cash]