Practice Areas & Industries: Hunton & Williams LLP

Practice/Industry Group Overview

Hunton & Williams' Real Estate, Finance & Development Team has the experience and expertise to satisfy the most sophisticated and demanding clients in the world. We provide an innovative multidisciplinary approach to helping our clients maximize profitability and minimize and manage the risks involved in acquiring, developing, financing and operating real estate.

Hunton & Williams has extensive experience in taking companies public as REITs and in subsequent financing transactions. We have handled over 25 REIT IPOs and nearly 200 capital market transactions for approximately 60 different REITs. In the course of those and other engagements, we have worked closely with the leading investment banking firms, accounting firms and other professionals active in the real estate finance industry. As a result, our REIT Group is particularly well qualified to assist companies accessing the public capital markets as well as private capital sources.

Our clients include equity and mortgage REITs, underwriters of REIT securities, REIT lenders, and sellers of assets to REITs. We have been involved in transactions for REITs owning or providing mortgage financing for office buildings, industrial facilities, apartment properties, hotels, storage facilities, healthcare properties, shopping centers, automobile dealerships, congregate care housing, golf courses, bank branches and office buildings, and subordinated and residual interests in securitized residential and commercial mortgage loans. Many of these REITs have been organized using the umbrella partnership or UPREIT structure, both to facilitate the initial acquisition of properties (and the tax planning for the existing owners of such properties) and to provide a tax-favored currency for future acquisitions.

Services Available
Transactional Work

Our transactional real estate practice is international in scope. We represent our clients in a full array of complex real estate transactions throughout the world, including:

• acquisition of commercial, industrial and multifamily residential properties
• organizing and financing real estate investment trusts
• securitization and collateralization of real estate assets
• leveraged lease, sale-leaseback and other innovative structured finance techniques

Our work includes assistance in securing the proper zoning, obtaining use and construction permits, preparing specialized documentation (such as proffered zoning conditions and planned unit development documents) and closing financing transactions.

We are experienced in virtually every type of commercial lending transaction, including first and subordinate mortgage loans, participating mortgage loans construction loans, combination construction/permanent loans, wrap-around mortgage loans and bridge loans.

We coordinate with our tax lawyers in structuring facade easements and transferable development rights for favorable tax treatment, and prepare the conveyancing and restrictive covenant documents required to ensure that the architectural and historic significance of older structures are maintained.

The firm represents foreign investors in locating, analyzing, structuring, managing and selling real estate investments throughout the United States.

The public and private sectors have discovered the advantage of pooling their resources to achieve a common goal. A project can take many forms:

• a municipal parking garage where the land is donated by a private landowner but financed with tax exempt municipal bonds
• a freeway interchange paid for by a developer where the public funds would not be available for several years
• redevelopment of a dilapidated part of a city by a private developer with the infrastructure, other public improvements and tax abatement provided by the local governing body

We have been on the forefront in structuring joint efforts in which the public sector is able to reduce its cash outlays and the private sector is able to combine its entrepreneurship with facilities only a local government can provide.

Our due diligence services team utilizes a cross-disciplinary group of lawyers from our real estate, land use and environmental practice areas to focus on the specialized needs of owners, managers and potential investors in complex individual real assets and real estate portfolios. The coordination of these related legal disciplines enables us to better identify and avoid potential problems and affords us the ability to respond to project requirements efficiently and comprehensively.

We have a particular focus on hotel and mortgage REITs, the formation of which requires consideration of many complex tax, securities, partnership, corporate and secured lending issues. Hunton & Williams pioneered the resurgence in the lodging industry's use of the REIT structure. In addition, we have served as counsel on substantially more hotel REIT and mortgage REIT transactions than any other firm.

The diverse nature of our REIT industry clients enhances the breadth of our experience both in handling financing transactions and addressing the ongoing disclosure, reporting and specialized tax compliance issues that inevitably arise after a financing is completed.

Structuring and closing a public or private REIT equity or debt financing involves a series of complex tax, securities, partnership, and real estate law issues. The preparation of a registration statement and the underlying documents for a publicly offered REIT financing transaction can be extremely time consuming, and the coordination of the financing activity with the real estate work can present difficult timing issues. Experienced counsel with a broad working knowledge of REITs and multi-property real estate transactions can be tremendously valuable in organizing and effecting a public or private financing in an efficient and cost-effective manner, while minimizing disruptions to the company's ongoing business operations.

We have been involved in numerous merger and acquisition transactions involving REITs, including mergers between publicly owned REITs, mergers between REITs and C corporations as well as acquisitions of privately owned REITs and other entities by publicly owned REITs. We also have advised Boards of Directors of REITs in transactions involving related parties or affiliated parties. Merger and acquisition transactions for REITs often involve complex issues of state and federal tax law, securities law and partnership law. We have helped structure numerous transactions to address these and other issues.

We are experienced in structuring transactions utilizing the UPREIT and DownREIT structure, to facilitate REITs' acquisitions of properties and tax planning for sellers of properties. A REIT's property acquisitions, particularly from broadly held partnerships, can often trigger unexpected registration, disclosure and fiduciary duty issues under complex regulatory "roll-up" rules. Hunton & Williams is thoroughly familiar with all of the regulations that impact the feasibility and structure of a "roll-up" transaction.

A number of REITs and other real estate owners have accessed the capital markets through long-term securitized mortgage financing. Mortgage securitization allows a property owner to obtain favorable financing rates while retaining 100 percent equity ownership of its properties. For this reason, securitization can be an attractive source of debt financing for REITs. Hunton & Williams has a nationally recognized mortgage securitization practice, ranking second in private mortgage-backed securities issuers' counsel in 1995 as measured by dollar volume by The American Lawyer. Hunton & Williams is one of the few law firms with substantial national experience in REITs and mortgage securitization.

Hunton & Williams has advised a number of companies and property owners contemplating the REIT structure and has represented a number of clients which elected C corporation or partnership status after considering the REIT structure alternative.

We conduct our REIT practice through a multidisciplinary team of lawyers specializing in tax, corporate, securities, real estate and environmental law. Our lawyers traditionally have taken leadership roles in addressing emerging issues and developing policies in our practice areas and serve in various capacities in professional and industry organizations involved in monitoring and shaping the tax and securities laws affecting REITs. For example, members of our REIT Group have served as Chairman of the American Bar Association (ABA) Business Law Section's Partnership Committee, that Committee's Subcommittee on REITs, REMICs, and Financing Trusts; the ABA Tax Section's Committee on Financial Transactions; and as members of the Executive Committee of the Commercial Real Estate Secondary Market and Securitization Association (CSSA). Our lawyers are active on a number of other important ABA committees, including the Federal and State Regulation of Securities Committees and are active members of industry associations, such as the National Association of Real Estate Investment Trusts (NAREIT) and its committees and write and speak frequently on topics of interest to the REIT community.