Foreclosure & Bankruptcy 101

Transcription

1 Foreclosure & Bankruptcy 101 Presentation to the Real Estate Finance Association of the Greater Boston Real Estate Board John T. Morrier Walter Boldys Mintz Levin One Financial Center Boston, MA January 29, 2008

2 Current Lending Climate U.S. Commercial property prices will probably fall 10% in 2008, after rising 60% from 2002.* Delinquencies of securitized commercial mortgages may quadruple - to 4%- in the next eighteen months.* Lending standards are becoming stricter, spreads are widening and the cheap money is gone.* Many borrowers will be unable to refinance when their loans mature.* It is inevitable that lenders will foreclose and that borrowers will seek bankruptcy protection. Source: *Bloomberg, January 25, 2008, Bernanke s Easing Thwarted Surging Commercial Mortgage Rates by Bob Ivry

3 What is Foreclosure? The legal process whereby a lender realizes on collateral secured by a real estate mortgage and related security agreements. Each state has its own foreclosure process, unlike bankruptcy, which is national and a creature of Federal law. Foreclosure is either judicial or non-judicial In a Judicial foreclosure state, the lender must prosecute a foreclosure action in the courts. The lender obtains a foreclosure judgment, which is enforced by a court supervised sale of property. In a non-judicial foreclosure state, the lender itself has the power to sell the property at auction without having to go to court. Sale of the property wipes out the borrower s ownership and all interests subordinate to the mortgage, including junior liens and leases entered into after the recording of the mortgage.

4 Alternatives to a Contested Foreclosure Work-out of the loan. Modification. Discounted pay-off. Deed in lieu of foreclosure. Sale of the loan. Friendly foreclosure.

5 Lenders Remedies Prior to the Foreclosure Sale Unless the lender acts, the borrower will remain in possession and control of the property until the foreclosure sale. Lender may: Request a court to appoint a receiver to take control of the property. Enter the property and become a mortgagee in possession. Direct the tenants to pay all rents to the lender pursuant to the assignment of leases and rents. Seek injunctive relief against the borrower to enforce the loan documents. Take possession of any cash collateral. Cash letters of credit. Sue to enforce any guaranties and indemnities.

6 Steps in a Typical Foreclosure Determine the nature of the default and whether it allows the lender to foreclose. Monetary Defaults. Failure timely to pay principal and interest, including failure to pay the loan at maturity. Failure to pay or maintain taxes, insurance, reserves or escrows. Non-Monetary Defaults. Change of ownership or control of the property without the consent of the lender. Borrower s incurring additional debt or liens without the consent of the lender. Tenant issues. Environmental problems. Waste.

7 Steps in a Typical Foreclosure Review the loan documents and determine whether there are guarantors, indemnitors or other lenders (such as mezzanine lenders and second mortgagees). Send notice of default as required by the loan documents. Not a routine servicing letter; must be carefully drafted. If the notice of default is defective, the lender will have to start over and send a corrected notice. Should describe all the defaults, monetary and non-monetary, known to the lender. Loan documents may give third parties the right to receive notice of default and an opportunity to cure.

8 Steps in a Typical Foreclosure Determine what the collateral is. Collateral typically includes: Real property. Lands and buildings. Rents, issues and profits. Personal property. Tangible personal property. Cash, bank accounts, deposits, escrows. Letters of credit. Determine the current market value of the collateral. This is the single most important fact in a foreclosure (and a bankruptcy). Compute the total debt. This is the second important fact in a foreclosure (and a bankruptcy).

9 Steps in a Typical Foreclosure Review tenants leases and any SNDA agreements. Review the original environmental report and order a new or updated Phase I environmental report. Identify the property manager and/or leasing and sales broker that the lender will wish to use if it acquires the property at the foreclosure sale. Hire a professional auctioneer to conduct the foreclosure sale. Auctioneer may advertise the sale. Auctioneer may prepare a bidding package.

10 Steps in a Typical Foreclosure Draft terms of the foreclosure sale. Send notice of foreclosure sale to the borrower and to all parties entitled to receive notice ( such as junior lienors and tenants with subordinate leases). In Massachusetts, send separate notice to parties liable for a deficiency following the foreclosure sale. Publish notice of the foreclosure sale as required by statute.

11 The Foreclosure Sale The sale is a public auction at which anyone may bid. Terms of sale usually require bidders to qualify by bringing certified checks in the amount of the required deposit. The successful bidder is the highest qualified bidder. Delivery of the foreclosure deed and payment of the balance of the bid price typically occur 15 to 30 days after the sale. Lender may offer financing to the successful bidder.

12 The Foreclosure Sale Lender may credit bid up to the amount of the debt. Lender should not reveal its bidding strategy prior to the sale. Lender has a duty to get the highest price at the sale. Lender must not chill bidding or favor one bidder over another.

13 The Foreclosure Sale The sale may result in a deficiency or a surplus. Deficiency: successful bid is less than the amount of the debt. Borrower or guarantors may be personally liable for the deficiency. Surplus: successful bid is larger than the amount of the debt. Lender must distribute any surplus in cash to junior lienors and/or borrower. If lender bids the full amount of the debt, the debt is satisfied. If the lender is the successful bidder it must be prepared immediately to become the owner of the property.

14 The Foreclosure Sale

15 Bankruptcy as a Defense to Foreclosure If a borrower wants to block a foreclosure sale, it usually files a bankruptcy action. Borrower may seek state court injunction.

16 Key Real Estate issues in Chapter 11 Automatic Stay Single Asset Real Estate Absolute Priority Rule Valuation Adequate Protection Lien Stripping/Cramdown

17 Goal Reorganization Plan Forced Negotiation Contract with Creditors

18 Automatic Stay Automatically Stays all actions which attempt to collect a debt Stays foreclosure proceedings automatically Exceptions: evictions post-judgment

19 Relief from Stay Where Debtor has no equity in the property And property not necessary for reorganization

20 Single Asset Real Estate Single property or project Generates substantially all of the Debtor s income No business other than that incidental to ownership Relief from Stay if no plan proposed within 90 days

21 Absolute Priority Rule First: Secured Creditors (to extent of security interest) Next: Priority Creditors Cost of running the case and the business during the case Taxes, employee claims, other statutory priorities Next: Unsecured Creditors Last: Equity Interests No Junior class creditors may receive value unless prior class paid in full or consents. Consent means ½ in number and 2/3 in amount of claims in class

22 Valuation Market Liquidation Reorganization/Going Concern

23 Adequate Protection To Compensate for declining collateral value Issue: Are rents separate collateral from real property Post-petition interest may accrue if lender is over secured

24 Lien Stripping/Cramdown Debtor may try to reduce lien to current value of collateral Balance of claim s unsecured.

25 John Morrier is Of Counsel in Mintz Levin s Boston office and practices in the Bankruptcy, Restructuring and Commercial Law Section. John is also a member of the firm s Insurance/Bankruptcy Group and Subprime practice group. John s practice is focused on all aspects of bankruptcy and commercial law, including litigation in federal and state courts and negotiating and documenting commercial loan transactions for lenders and borrowers. John T. Morrier Of Counsel Bankruptcy, Restructuring and Commercial (617) JMorrier@mintz.com Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA T F He represents secured and unsecured creditors, debtors, executives, insurers, landlords, estate professionals and other parties in bankruptcy proceedings and out of court restructurings, workouts and other insolvency matters. He has particular experience advising clients in buying and selling assets in distress situations and advising directors and officers in their duties in solvencychallenged situations. In his practice, John works with clients to develop and execute business strategy in a broad array of industries, including companies in the manufacturing, retail, finance, healthcare, biotechnology, real estate, and professional services fields. John is ranked among the top Massachusetts bankruptcy lawyers by Chambers USA - America s Leading Business Lawyers, is listed in Best Lawyers in America, and is named a Massachusetts Super Lawyer by Boston and Law & Politics magazines. John is admitted to practice in the state and federal courts of Massachusetts and Maine. He is a member of the Boston Bar Association and serves on the BBA s Bankruptcy Section Steering Committee, and is also a member of the Massachusetts Bar Association, the American Bankruptcy Institute and the Turnaround Management Association. John received his bachelor s, Juris Doctor and Master of Business Administration degrees from Boston College. Publications and Speaking Engagements: Panelist, Recharacterization of Debt to Equity, Boston Bar Association, Bench Meets Bar Conference, May Author, Recharacterization of Debt to Equity: from Kabuki outcomes to a Gestalt Approach, Association of Commercial Finance Attorneys Annual Conference, May Panelist, Confirmation Standards under the new BAPCPA, Boston Bar Association March 2006 Author, Client Advisory: President Signs Major Bankruptcy Reform into Law, April, 2005 Panelist, Sales of Businesses in Chapter 11 and Issues in Professional Retention Association of Commercial Finance Attorneys annual conference, May, 2004 Panelist, Sales of Businesses in Chapter 11, American Bankruptcy Institute Northeast Bankruptcy Conference July 2003 Panelist, Bankruptcy Bench Meets Bar, Massachusetts Continuing Legal Education, May 2003 Contributing Author, Crocker s Notes on Common Forms, MCLE, 2001 ed. M INTZ,LEVIN,COHN,FERRIS,GLOVSKY AND P OPEO,P.C. Boston Washington New York Stamford Los Angeles Palo Alto San Diego London

26 Walter is an associate in the Real Estate Section, practicing in the Boston office. Prior to joining Mintz Levin in October 2006, Walter was of counsel with another Massachusetts law firm. For twenty-one years he was a member of the law department of John Hancock Financial Services, where his work involved all aspects of the company's real estate investments. He was responsible for closing hundreds of commercial mortgage loans for the general account and the conduit lending program. His experience includes the negotiation and structuring of mortgage loans for all property types, including multi-family, co-ops, office, retail, hotels, industrial, mobile homes, dormitories, parking garages and nonprofit uses. He also advised John Hancock's mortgage banking subsidiary and was an integral part of the securitization program. Walter Boldys Associate Real Estate (617) WBoldys@mintz.com Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA T F Walter handled all bankruptcies, work-outs and foreclosures arising from John Hancock's $7 billion mortgage portfolio. He negotiated and closed numerous loan modifications, including a $153 million hotel loan in Washington, a $60 million industrial loan in Los Angeles and a $70 million office loan in Chicago. He is an expert in creditors' rights and served as the Chairman of the American Council of Life Insurance's Committee on Bankruptcy Legislation. He has lobbied Congress for reforms to the Bankruptcy Code on behalf of the life insurance industry and the Mortgage Bankers Association. Walter also handled the redevelopment and disposition of numerous foreclosed and equity properties. He oversaw the complete renovation and sale of an office building in Boston's Back Bay and the conversion of a shopping center in Tampa, Florida to a state of the art call center. He has negotiated and drafted leases with major tenants, handled construction disputes and title litigation, and dealt extensively with property managers and brokers. He was counsel to John Hancock's development subsidiary in the construction and sale of a luxury condominium in Manchester, New Hampshire. Walter was also co-counsel to John Hancock's low income housing tax credit program. His responsibilities included construction and environmental matters, partnership defaults and restructurings, risk management and project financing. Walter graduated from Rutgers College with high honors and was elected to Phi Beta Kappa. He received his J. D. from Boston University School of Law and was admitted to the bar in Massachusetts in He is a member of the Massachusetts and Boston Bar Associations, the Real Estate Bar Association and the Real Estate Finance Association. M INTZ,LEVIN,COHN,FERRIS,GLOVSKY AND P OPEO,P.C. Boston Washington New York Stamford Los Angeles Palo Alto San Diego London

27 OVERVIEW OF THE FIRM MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. is a full-service, multidisciplinary law firm of nearly 500 attorneys and senior professionals, with offices in Boston, Washington, Stamford, New York, Los Angeles, Palo Alto, San Diego and London, and a diverse international clientele. The firm has extensive expertise in innovative, as well as traditional, industries and practice areas, including industry practice groups that specialize in the retail, high technology, communications, life sciences, financial services, insurance, healthcare and medical device industries. Our primary practice areas include intellectual property, corporate, litigation, labor and employment, real estate, public finance, environmental, bankruptcy, and immigration. We serve clients of all sizes and at all stages of growth, from individuals to start-up and later-stage venture-backed companies to global corporations. Mintz Levin s success is built on a deep commitment both to its clients best interests and to excellence in every aspect of its practice. A COMMITMENT TO SERVICE Mintz Levin is driven by an entrepreneurial spirit that translates into the creative, energetic representation of clients. We pride ourselves on the quality of our strategic thinking and our ability to think like clients to understand the goals, critical issues and opportunities that drive them. We think the growth of our practice is evidence that our clients share and appreciate this entrepreneurial spirit. Responsive, aggressive problemsolving and the commitment to client service have been Mintz Levin trademarks since the firm was founded in As a result of the firm s continuous growth, we have even more resources available to assist us in achieving our clients goals. THE CLIENT S UNIQUE REQUIREMENTS Our ability to deliver professional legal services in traditional areas such as litigation, employment law, corporate, real estate, public finance, commercial law, tax, and financial planning is the foundation of Mintz Levin s successful practice. The firm has always distinguished itself by insisting upon the highest standards of professional service from all of its attorneys in these practice areas, and has further distinguished itself in the last several years through the development of highly-skilled legal practice groups in a number of evolving, cutting-edge, specialized areas of practice. We offer clients the greatest possible depth of experience and knowledge in diverse and complex legal areas, including sophisticated finance, venture capital, intellectual property, communications, environmental law, health care and fraud and abuse, immigration, insurance, and employee benefits and executive compensation. In all of its work for clients, Mintz Levin is guided by a key question: how can we ensure that our work addresses all of the immediate needs of the client while delivering long-term benefits to the organization and its business as a whole? Our goal is always to accomplish this in the manner most appropriate to each individual client. We believe that our clients are served best when their needs are first anticipated by their counsel and then resolved through the efficient cooperation of attorneys who have established themselves as leaders in their respective practice areas. Our attorneys draw upon extensive legal backgrounds and, in many cases, years of experience in business and the public sector. Attorneys in each of Mintz Levin s practice areas provide crossdisciplinary expertise and teamwork as dictated by a client s needs and circumstances. GLOBAL PRACTICE Building on the strength of our domestic practice and recognizing the globalization of the business marketplace, Mintz Levin plays an important role in helping clients advance their interests around the world. M INTZ,LEVIN,COHN,FERRIS,GLOVSKY AND P OPEO,P.C. Boston Washington New York Stamford Los Angeles Palo Alto San Diego London

28 MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. Overview of the Firm Page 2 Through the expertise of our attorneys and senior professionals in the U.S. and London, England, the firm offers experienced representation for international business activities, drawing on all of its practice areas. Our attorneys regularly represent clients on a wide range of international matters including financings, mergers and acquisitions, distribution and license agreements, and opening branches in new markets, as well as litigation and arbitration. We also offer our clients important strategic and legal advice on international regulatory and compliance matters. Our international practice is an important and growing part of our total activity. OUR CONSULTING AFFILIATES Mintz Levin has established several consulting affiliates to address its clients business and personal needs: ML Strategies, LLC is a specialized consulting firm which helps clients to manage complexity by providing interrelated professional services that support corporate growth and success. The firm provides services and expertise in the strategic areas of government affairs and representation; project development; public relations and crisis communications; environmental health and safety; health care strategy; and international business. Mintz Levin Financial Advisors, LLC provides high net worth individuals and families with complete wealth management services. TECHNOLOGY Mintz Levin is committed to providing the best possible working environment for its attorneys and clients, and continues to invest substantial resources in information technology that allows the most effective and cost-efficient work. We are fully networked to exchange critical information and communicate within the firm and with our clients quickly and accurately, controlling legal costs for our clients. In some cases our technology is linked directly with our clients systems to assure maximum accessibility to our attorneys and to facilitate the free flow of documents and messages. The firm has a state-of-the-art video conferencing facility and uses on-line capabilities whenever client benefit can be realized these include on-line information services, the World Wide Web and . PRICING Mintz Levin recognizes that aggressive management and control of legal fees and expenses are of critical importance to its clients. We are committed to working with our clients to define up front, in writing and with as much precision as possible the scope of each engagement and the agreed-upon budget for performance of the work. It is our job to manage staffing and monitor the rendering of services consistent with the budget. With a view to enhancing the cost effectiveness of our practice, we continually analyze what it costs us to conduct litigation or manage transactions. Each of our practice sections designs quality management plans to improve our legal forms, strengthen our delivery systems, develop and utilize legal databases and generally improve our practice efficiency. We also conduct training sessions for our attorneys on effective cost estimation and budgeting techniques, and on the management of cases and transactions within those budgets. We have put in place a program to gather client feedback on a regular basis, to assess our performance and consider how we might work together to do better. SERVICE TO THE COMMUNITY Mintz Levin has a long tradition of charitable support and civic involvement, and many of our attorneys have been recognized for their pro bono and community service activities. The firm played a critical role in

29 MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. Overview of the Firm Page 3 establishing and provides ongoing support to Jane Doe Inc., Massachusetts Coalition Against Sexual Assault and Domestic Violence, for example. We have also donated substantial time and effort to a variety of community organizations including youth and education programs. Many of the firm s attorneys are actively involved in the Boston, Massachusetts, District of Columbia, New York, Connecticut, California, London, American and International Bar Associations. We are particularly proud of our leadership in the Boston Bar Association s judicial reform efforts. THE FIRM CULTURE AND DIVERSE CLIENTELE Mintz Levin is guided by an abiding respect for its founders values of professional excellence and collegiality while simultaneously developing as an innovative and progressive law firm. As a result of the wide range of services offered by Mintz Levin, the firm s client base is as diverse as the skill of its attorneys. We represent a variety of commercial, financial and industrial enterprises, both publicly and privately owned, ranging from individuals and small corporations to Fortune 500 companies and governmental entities, agencies and authorities. Mintz Levin serves as counsel to national and international companies in high technology, biotechnology, information technology, including Internet companies, communications, franchising, insurance, real estate development and energy, as well as major banking and securities firms. We believe that in many ways our clients represent us. We are committed to the essential task of gaining thorough knowledge of our clients businesses and the markets in which they must compete. This knowledge, along with the professional skills of attorneys who are leaders in their fields and our orientation to practical and responsive service, allows us to address our clients basic legal needs while helping them solve specialized legal and business problems in a creative and cost efficient manner. PRACTICE AREAS Banking Bankruptcy and Workout Biotechnology Corporate Communications Education Employee Benefits and Executive Compensation Employment, Labor and Benefits Energy and Clean Technology Environmental Law Federal Relations Health Law Homeland Security Immigration Intellectual Property International Practice Litigation Private Client Section Public Finance Real Estate Tax Technology Law

30 OUR BANKRUPTCY,RESTRUCTURING AND COMMERCIAL LAW PRACTICE Mintz Levin offers a nationally recognized bankruptcy practice, which is supported by a full service firm of approximately more than 450 attorneys including specialists in virtually all areas of law. Unlike many bankruptcy practices, Mintz Levin has represented all parties and interests involved in a debtor/creditor relationship including debtors, creditors committees, examiners, trustees, lenders and borrowers, landlords, equipment lessors, acquirers, bondholders and indenture trustees. Our bankruptcy practice extends to cases and transactions involving national and regional retailers, manufacturing companies involved in all business industries, high-technology and biotechnology companies, electronic component manufacturers and consumer electronics chains, chains of convenience stores, communications companies, textile manufacturers, food service companies, insurance companies and other financial services companies, entities holding large commercial real estate portfolios, marine cargo facilities, hospitals, nursing homes, airlines, public authorities, restaurants, entertainment facilities, and hotels. We have represented numerous companies in out-of-court workouts and Chapter 11 proceedings. We are the largest bankruptcy department in New England and our depth allows us to provide clients unparalleled attention and skill on a daily basis. We emphasize helping clients find creative and cost-efficient solutions to their problems. Our knowledge and understanding of creditors remedies and issues important to other constituencies in workouts and bankruptcy proceedings significantly increase our ability to represent our debtor clients more effectively and efficiently. One of our most important roles is to put people together in sound win-win relationships. One of our strongest assets is the ability of our attorneys to draw upon the wide variety of excellent resources available within the firm. This is of particular value in bankruptcy cases. Non-bankruptcy issues can often become the focus of significant disputes of crucial importance to a Chapter 11 proceeding. We frequently address the interplay of bankruptcy law and employee benefits, lender liability law, labor law, pension law, landlordtenant law, tax law, public and private bond finance, health care law, and environmental law. Working together with all areas of the firm s practice, our attorneys are particularly qualified to provide comprehensive, creative, and costeffective representation in the most complex insolvency and reorganization proceedings. Depending upon the client s direction, we are equally capable of pursuing an aggressive legal approach, involving experienced commercial litigators who can enforce a client s rights in any court in the nation or internationally, and negotiating a consensual compromise, involving transactional attorneys who have experience in the most sophisticated, cutting-edge deals and documentation. Our overlapping expertise in litigation and transactional matters allows us to provide added value to our clients, who benefit from dealing with counsel who know the nuts and bolts of deal documents as well as how to attack or defend them. Throughout this process, we are always cognizant of the cost and expense that must be shouldered by the client, and the fact that, in the end, the client s needs and desires are paramount. M INTZ,LEVIN,COHN,FERRIS,GLOVSKY AND P OPEO,P.C. Boston Washington New York Stamford Los Angeles Palo Alto San Diego London

31 OUR REAL ESTATE PRACTICE Mintz Levin has been representing clients in sophisticated, large-scale real estate development and financial transactions throughout the United States for over twenty-five years. Combining professional skills and resources with practical judgment and political acumen to advance its clients real estate interests, the Real Estate Section takes a multidisciplinary approach that involves attorneys and resources from other practice sections within the firm as necessary, including environmental law, telecommunications, health care, business and finance, corporate securities law, and tax law. Mintz Levin s extensive experience includes analyzing and structuring complex deals, coordinating projects of significant scope and complexity and providing strong negotiation throughout the development process as well as the range of other real estate matters and transactions. Mintz Levin s Real Estate Section, comprising approximately 35 attorneys and senior professionals and five paralegals, is engaged in a sophisticated development and finance practice involving real property and transactions throughout the United States. The practice involves representation of developers, lenders, tenants and landlords, as well as investors in and users of commercial and residential properties, including office buildings, shopping centers and other retail projects, industrial and R&D facilities, hotels, residential rental and condominium properties, hospitals, nursing homes and other health care facilities, congregate, assistedliving and continuing care retirement communities, and recreational communities. Our clients also include public agencies, developers, syndicators, and financial institutions involved in the development, financing, and ownership of multi-family housing. We represent entities developing major urban mixed-use projects, developers of large regional shopping malls and retail power centers, public and private corporations with facilities around the world. In addition, we represent telecommunications service providers and building owners in leasing, licensing and related transactions. Mintz Levin also has a consulting affiliate, ML Strategies, LLC, available to provide strategic planning and related professional services in government, community and media relations and on environmental issues. Collaborative teams of attorneys and the professionals of ML Strategies afford clients a breadth of integrated experience not traditionally available from a single firm. Mintz Levin also has a specialized financial advisory group, ML Capital, LLC, which helps real estate owners and developers raise private capital to fund corporate growth and ongoing investment programs. REAL ESTATE PRACTICE AREAS The following pages describe the principal areas in which Mintz Levin provides real estate representation. It should be noted, however, that we work on a variety of matters beyond the scope of these summaries. More specific descriptions of our experience in real estate matters are available upon request. Project Development Mintz Levin s real estate attorneys combine professional skills, practical judgment, and political acumen to advance our clients real estate interests. One of our key strengths is the ability to analyze, structure, and coordinate projects involving significant complexity. We provide advice on land acquisitions and dispositions, ground leases, cross-easements and other discrete realty interests, regulatory compliance and permitting, construction phasing, financing, and the utilization, leasing, and management of the development. In undertaking such projects, our real estate attorneys assist clients in structuring and negotiating property acquisitions; obtaining zoning planning, subdivision, environmental, and other land use approvals for both new construction and rehabilitation of existing facilities; drafting and negotiating architectural design and construction contracts; securing and negotiating construction and permanent debt financing and refinancing; structuring equity participations and syndications; leasing residential, industrial, office, and retail properties; and the ultimate disposition of completed projects. M INTZ,LEVIN,COHN,FERRIS,GLOVSKY AND P OPEO,P.C. Boston Washington New York Stamford Los Angeles Palo Alto San Diego London

32 MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. Our Real Estate Practice Page 2 Regulatory Compliance Our real estate attorneys are known for their experience in guiding clients through the maze of often contradictory regulatory requirements and helping clients to foresee and address issues before they become costly problems. Since the early 1970s, the scope and volume of regulations affecting real estate development and operations have burgeoned to a point where there is almost no area left unaffected. Zoning is a primary regulatory tool. Zoning regulations can vary markedly among municipalities, and most provide mechanisms for attaining greater value by enhancing density. In urban areas, layers of additional regulations have been enacted with more sophisticated constraints such as interim overlay planning districts and density bonuses for amenities. Mintz Levin is known both for designing solutions to the density issue and for challenging invalid density limits. In addition, our attorneys in Boston and New York have a great deal of experience representing communications clients in connection with zoning and planning for telecommunications infrastructure. A number of regulatory tools also are grouped under the rubric of environmental laws. The impact of the regulation of real estate development has been felt perhaps nowhere more than in the environmental arena. Our Real Estate Section works closely with our Environmental Law Section to identify and obtain all permits and approvals necessary to construct and operate a development, ranging from facility siting laws to MEPA review, subdivision laws, compliance with the Americans with Disabilities Act, permits to discharge wastewater and permits to discharge pollutants to the air. From ensuring that applications are complete and consistent with applicable laws and regulations as well as less formal agency policies and requirements, to advising clients on potential community relations issues, to seeing that public hearings are conducted in a manner that will reflect positively on a project, we have guided many complex developments to completion. We also can call upon our Government and Public Affairs Group for assistance on matters concerning legislative or executive decision-making at the local, state, and federal levels, including new legislation and regulations when needed to effectuate a client s proposal. Senior Living Mintz Levin provides legal advice to senior living sponsors, developers, health care providers, lenders and investors in the senior living area. We have extensive experience in the financing, development and sponsorship of senior housing, continuing care retirement communities, and assisted-living residences. When appropriate, we involve members of the firm s Health Care Section in matters concerning the delivery of health care services. Affordable Housing Mintz Levin is well known for its experience and skills in the area of affordable housing. We provide financial and development expertise to owners, sponsors, and public agencies involved in the development, financing, and ownership of affordable housing. Clients in this field receive financing through agencies such as HUD, FNMA, GNMA, FHA, state housing finance agencies, and the Federal Home Loan Bank for family, elderly, and assisted-living developments. We also represent banks in structuring and implementing responses to community housing needs. Since 1980, Mintz Levin has represented its clients on several hundred affordable housing projects, acting as developer s counsel, bond and underwriter s counsel, syndication/tax counsel, and owner s counsel.

33 MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. Our Real Estate Practice Page 3 Sale/leasebacks Mintz Levin real estate attorneys supervise a national program of site acquisition, permitting and development for a major retailer that operates in excess of 4,000 stores nationwide. We supervise the retailer s regional feefor-service developers to assure consistency of site control and environmental, title and survey compliance. We provide regular electronic updates by a comprehensive charting system which notes the status of each closing requirement and due diligence item to the retailer and its developers, keeping everyone on track. Several times a year, we also represent the retailer in a sale/leaseback financing transaction that generally involves approximately 100 retail locations in states. The acquisition debt is generally sold by private placement or by a 144a offering. Mintz Levin attorneys worked successfully with our client to structure the sale/leaseback transactions to occur prior to completion of construction of the stores, accelerating the benefits to our client considerably. Securitization/REITs Working with Mintz Levin s securities and tax attorneys, our real estate attorneys assist clients in the review, structuring, acquisition, and disposition of real estate debt and equity asset portfolios in connection with the organization and operation of REITs and other securitization vehicles. We also advise commercial real estate developers and operators considering conversion from a traditional founder-dominated, asset-oriented organization to a more corporate-oriented structure as a means to provide access to public and private capital markets. Our attorneys bring to these tasks significant experience and knowledge in providing important help to clients as they determine which of the many and ever-changing investment/disposition strategies offered by the capital markets make sense for them. Institutional Lending and Workouts Our Real Estate Section represents institutional lenders throughout the country and around the world in structuring and negotiating sophisticated construction and permanent financing arrangements on projects of all types and sizes. In addition to conventional mortgage loans, we work closely with attorneys in our Business and Finance Section to assist clients in all aspects of taxable and tax-exempt bond financings. Our experience as counsel to both lenders and borrowers in financing transactions enables us to anticipate and address issues in a practical and businesslike manner that is most likely to ensure the successful and economical completion of the loan. Where developments do not proceed as expected and additional lender protection is required, we work extensively with our clients in restructuring loan transactions, obtaining additional collateral, negotiating extended payment schedules, and, if necessary, instituting foreclosure or other appropriate enforcement remedies. Several real estate attorneys in the firm s Bond Workout Group concentrate on representing bondholders and trustees in restructuring real estate-backed bond financings. The Real Estate Section works with both our Commercial Law (Bankruptcy) Section and our Litigation Section on these matters. Biotechnology Facilities Mintz Levin is proud to have one of the region s leading biotechnology practices, representing many companies involved in the rapidly evolving biotechnology industry. As part of our service to these clients, our real estate, business and finance, and health care attorneys have formed the Health and Biotechnology Facilities Group. This group brings a multidisciplinary approach to developing, leasing and financing health care and biotechnology facilities. Developer and user services include preparation and negotiation of specialized architectural and construction contracts and leases, and assisting clients in the analysis of and compliance with local regulations on specialized uses such as outpatient clinics, drug rehabilitation centers,

34 MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. Our Real Estate Practice Page 4 nuclear medicine, and biotechnology research and manufacturing facilities, many of which are not anticipated uses in current municipal zoning by-laws. On the financing side, we offer insight into the special issues affecting these types of facilities, particularly where traditional lenders remedies are not available. In appropriate matters, our Business and Finance Section assists in all aspects of taxable and tax-exempt bond financing. Syndication Our Real Estate Section represents developers and syndicators in the private placement of real estate partnership interests. Mintz Levin s attorneys have extensive experience in structuring, negotiating, and drafting syndication offering materials, general and limited partnership agreements, and joint venture agreements. The experience of the firm s securities practice helps guide clients through the complexities of federal and state securities laws and regulations and applicable broker/dealer regulations. Leasing and Project Operation Mintz Levin has served as lead counsel in connection with many of the largest lease transactions in New England and New York. A significant portion of our representation of real estate clients involves the day-today aspects of owning and operating commercial real estate, such as leasing, management and brokerage. We are actively involved on behalf of clients in the leasing of office, manufacturing, research and development, medical and retail facilities. The firm has devoted significant resources to automating those aspects of lease transactions that are repetitive in nature, thus saving valuable resources for the more important negotiation phase, where sophisticated legal advice can be critical. Automated lease preparation software developed inhouse at Mintz Levin allows us to prepare and deliver customized leases in an extremely short time frame at modest cost to our clients. This capability has proven invaluable to landlord clients in today s competitive environment. In addition, we bring the experience we have gained in representing lessors and lenders to our representation of commercial tenants in their lease negotiations, particularly as it pertains to communicationsrelated transactions, such as leasing and licensing of rooftop locations. Tax Appeals With assistance from the firm s consulting affiliate, ML Strategies, LLC, Real Estate Section attorneys guide both developer/owner clients and institutional lenders through the time-sensitive real estate and personal property tax abatement processes, and classification and restriction alternatives leading to abatements, in order to enhance net operating income and cash flow by minimizing taxes. We are actively involved with clients in prosecuting tax appeals when necessary at the conclusion of the tax abatement process. Such abatements and appeals can add significant value to a development, particularly in times of rapidly escalating values. Communications Industry Expertise Mintz Levin s real estate and communications attorneys have the largest specialized expertise in the United States serving the real estate related needs of both real estate and communications clients, including property owners, service providers and tenants, in a wide range of matters. Included in the comprehensive experience of these eighteen attorneys are hundreds of transactions involving the leasing and licensing of rooftop locations on office, residential and retail buildings; wiring of office, residential and retail properties for communications services; leasing of and co-location on freestanding antenna towers for wireless and other communications uses; and leasing of communications switch facility or carrier hotel leases and co-location facilities for both property owners and tenants. These attorneys also have been actively involved in zoning and planning for telecommunications infrastructure. In addition, they have experience in transactional work involving the sale, leasing, acquisition and development of radio and television tower sites and co-location of space on towers for multiple telecommunications users. Adding to this capability is Mintz Levin s nationally recognized communications law practice, with its breadth and depth working in the regulatory and legislative

35 MINTZ,LEVIN,COHN,FERRIS,GLOVSKY AND POPEO, P.C. Our Real Estate Practice Page 5 environments. The firm s capability in the nexus between real estate and communications makes Mintz Levin more effective on behalf of clients who are traditional owners of real estate, as well as clients who are cuttingedge communications companies.