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Acquisition and Development
Sutherland's real estate lawyers are experienced in all phases of the development process, from negotiation of letters of intent and purchase and sale agreements through project completion and permanent finance. Our lawyers have considerable experience in the creation of condominiums and residential cooperatives. Our acquisition and development work includes advice on governmental regulatory matters, zoning matters and environmental issues. Offshore clients often involve us in investment decisions, ask us to devise structures for their transactions and to locate and coordinate other professionals.
Please click on "Representative Transactions" to view recent acquisition and development transactions.
Caribbean Development
Over the next 10 years, a new wave of premier hotels and resorts will emerge throughout the Caribbean. Many, if not most, will require a complex arrangement of public/private cooperation to be successful.
Hundreds of promising projects are under discussion - but only a relative handful will ever reach completion. Even fewer properties will deliver the long-term benefits that are the mark of successful development. One thing is clear: the projects that move first have the best chance of winning in the intensely competitive premium tourist market.
Sutherland's experience in putting together mutually beneficial public/private partnerships accelerates the development process by helping governments and developers find common ground sooner. In providing creative solutions that move projects forward, we call on the firm's deep experience in tax policy, complex loan and bond transactions and real estate and resort development. Using those resources, we have recently:
- represented InterContinental Hotels Group in its investment in the Cayo Largo Resort development in Fajardo, Puerto Rico, the first new construction InterContinental resort in the Caribbean;
- represented the owner/developer of the Hilton d'Haiti in Port-au-Prince, Haiti;
- represented a major hotel company in its investment in a resort property in St. Lucia;
- drafted a timeshare statute for the government of St. Maarten to provide a more definitive structure for both developers and timeshare purchasers; and
- represented Terrabrook in the planned development of a Four Seasons resort hotel, golf club and residential community in Loquillo, Puerto Rico;
- represented the developers of a 350-room Hyatt resort in Curacao; and
- represented the developers of a four-star resort in St. Lucia.
We also regularly represent hotel companies and developers in connection with investment and management opportunities throughout the Caribbean, including Antigua, Bahamas, Barbados, St. Maarten and elsewhere.
Blending developer expertise and local initiative
Public/private partnerships depend on an intricate balance of private funding, development expertise and local vision and initiative. The successful Caribbean partnerships will be truly international, involving capital and development know-how from several nations. Each will have to overcome cultural differences, and each will have to satisfy supra-national legal and lending standards - a formidable set of hurdles. We know first hand the interests of the players on both sides of the table. Our clients include national and local governments and taxing authorities, lenders, title insurance companies, hotel operators, investors and developers.
For a wide range of projects, Sutherland lawyers have been the catalysts for expediting agreement on the right balance of:
- credit enhancements and government guarantees,
- tax abatements,
- suspension or modification of work rules and hiring policies,
- duty exemptions on building materials and hotel equipment,
- environmental trade-offs, and
- legislative action to improve the quality of titles.
Caribbean and international tax experience
Sutherland has long been known as one of the leading tax law firms in the United States. More than 60 of our lawyers focus on tax law and the structuring of sensitive transactions.
Our international tax experience is valuable in resort development, since we are often able to provide immediate advice on what is possible and what is not. Our tax lawyers have a close familiarity with the tax and commercial laws of many countries. Recent representations have included:
- the Government of Bermuda in tax treaty negotiations with the U.S. Treasury Department;
- a financing structure that exempts payments made by a U.S. borrower to a Barbados company from U.S. and Barbados taxes;
- a business structure for operations in the Dominican Republic that minimizes tax for U.S. shareholders;
- a plan for business operations in Jamaica to provide a local and U.S. tax-efficient structure; and
- development of a public and private employee pension plan for the government of St. Maarten.
In addition, we regularly represent Bermuda-based insurance companies that insure risks throughout the Caribbean.
Experience that opens up new possibilities
Our past assignments for hospitality industry owners, managers and lenders provide us with a solid background and time-saving models in structuring resort development partnerships. We have negotiated management and franchise agreements with most of the leading worldwide hotel chains, including Doubletree, Four Seasons, Hilton, Hyatt, InterContinental, Marriott, Omni, Ritz-Carlton, Radisson, Sheraton, Westin and Wyndham.
Recent engagements include:
- InterContinental Hotels Group in its $75 million acquisition of the Inter-Continental San Juan Resort and Casino in Isla Verde, Puerto Rico;
- Santa Barbara Plantation in its development of a Hyatt resort in Curacao;
- Allegro Resorts in the acquisition of Jack Tar Village, the owner of resorts located in Mexico, St. Kitts, Jamaica and the Dominican Republic;
- the owner/developer of the Hilton d'Haiti in Port-au-Prince, Haiti;
- the owner of the Coral Sands Hotel in Harbour Island, Bahamas, in the sale of the property
- InterContinental Hotels Group in its $60 million acquisition of the former Ritz-Carlton on Central Park South;
- InterContinental Hotels Group in the negotiation of management contracts for a portfolio of more than 80 hotel properties across the United States;
- InterContinental Hotels Group in its $34 million acquisition of the Stephen F. Austin Hotel in downtown Austin, Texas;
- TIAA-CREF in hotel financings for two major Ritz-Carlton resorts, and a $315 million sale of its hotel portfolio to Starwood;
- various owners in the negotiation of management and development agreements for luxury hotels in central Beirut, Lebanon;
- Honours Golf and Pro-Star Golf in the acquisition of golf community properties; and
- InterContinental Hotels Group in the $32 million acquisition of the Crowne Plaza at United Nations, New York.
Hospitality and Leisure
Sutherland Asbill & Brennan lawyers represent hotel and resort developers, owners, managers and lenders in projects across the nation and around the world. In addition, Sutherland lawyers are at the forefront of the two hottest areas of tourism-destination development: golf courses and conference centers.
Golf Course Development
Guiding the development of quality venues
Sutherland lawyers have extensive experience with golf course resorts and communities. In many transactions within the hospitality and leisure industry, we have negotiated acquisition agreements, operating agreements, reciprocal easements and covenants, use agreements and similar documents regarding golf course properties. Now we are guiding the development of upscale golf resorts and clubs around the U.S. and elsewhere. Our work includes planning with government officials to resolve land use and environmental issues as well as negotiation of contracts with golf architects, building contractors and golf course managers.
The public/private partnership that has developed an Arnold Palmer-designed course adjacent to the Georgia International Horse Park in Conyers, Georgia, a town of 12,000 on the outskirts of Atlanta, is an excellent example of our golf course experience. We represented the City of Conyers in every phase of the 1,600-acre project, including negotiation of the financing and a long-term ground lease of the golf course to a golf course management company.
Our recent golf course engagements also include representations of Cherokee Plantation and Carnegie Abbey in the development of private club resorts, including golf clubs, in South Carolina and Rhode Island. We have also represented Honours Golf, in various golf course acquisitions and management deals.
Conference Centers
Bringing people together
Local governments and universities across America are discovering the benefits of small and mid-sized conference centers. We guide public/private partnerships in development of facilities for small and mid-sized conferences supported by 300 to 500 room hotels and resort facilities that provide new jobs, tourist revenues and prestige for the communities as well as interesting opportunities for developers and investors.
Public/Private Partnerships
Blending development know-how and political savvy
Sutherland lawyers are pioneers in the creation of innovative public/private partnerships. Each project demands a careful blend of private capital with local and regional participation in the form of tax abatement, infrastructure support and other contributions.
The challenge presented by these ventures is to carefully balance private and public financing (general obligation and revenue bonds) in an efficient tax and income structure. The experience of our public finance lawyers is critical in arriving at arrangements that satisfy the interests of local governments, bond underwriters and developers' while avoiding the pitfalls presented by IRS private use restrictions and other tax rules.
We know first hand the interests of the players on both sides of the table. Our clients include local governments and taxing authorities, as well as hotel and conference center operators, investors, developers and lenders. In providing structures for successful partnerships, we call on the firm's deep experience in tax policy, complex loan and bond transactions, and real estate and resort development.
Hotel Acquisitions and Dispositions
Counseling major players in the industry
We have substantial experience in representing buyers and sellers of hotels and resorts in U.S. markets and abroad. Recent examples include:
- sale of eight-hotel portfolio to Starwood Lodging,
- purchase and sale of former Ritz-Carlton (New York),
- purchase of Stephen F. Austin Hotel (Austin),
- sale of Holiday Inn and Crowne Plaza hotels (New Orleans),
- sale of Ritz-Carlton Kansas City (Kansas City),
- purchase of Crowne Plaza at the United Nations (New York),
- purchase of InterContinental San Juan Resort and Casino (Puerto Rico),
- purchase of Jack Tar Village, the owner of resorts located in Mexico, St. Kitts, Jamaica and the Dominican Republic,
- sale of Savannah Hyatt (Savannah), and
- purchase of Wyndham Garden Inn (Atlanta).
Hotel Finance
Using industry knowledge to move deals quickly
We represent developers, investors and public/private partnerships in the financing of hotels, resorts and convention facilities. On the lender side, we have represented several major players such as Teachers Insurance and Annuity Association of America, Wachovia Bank, CapMark Services, SunTrust Mortgage Co., John Hancock Mutual Life Insurance Company, Colonial Bank, UBS Realty Investors, The Travelers Insurance Company and GMAC Commercial Mortgage.
Our experience gives us the ability to deal with special hotel industry concerns that often delay financing transactions. From many complex financings, we have amassed a knowledge base of forms and solutions to expedite issues that arise in:
- Loan Documentation - Loans secured by hotels require special terms and conditions, especially those relating to the lender's security interest in accounts, personalty and proceeds from operations.
- Management Agreements - The terms of hotel management agreements are important to lenders for two basic reasons. First, prudent underwriting requires a comprehensive review of the rights and obligations of the owner and the hotel manager with respect to hotel operations. Second, the lender must consider the possibility that it may become the owner.
- Ancillary Documents - Modern hotels, particularly convention and resort facilities, are often part of a larger mixed-use development that involves complicated sets of covenants, restrictions and easements of vital concern to lenders. Also, many modern hotel owners are landlords with respect to concession space and operations within the hotel.
- Tri-Party, Inter-Creditor and Cooperation Agreements - Hotel financing transactions frequently involve several parties, including the owner, the owners of adjacent or related parcels within a mixed-use development, the hotel operator and holders of subordinate or priority debt instruments, as well as the construction lender, if a construction loan is in place. Thus it is common to negotiate extensive agreements governing the rights of the various parties in the event of a foreclosure, the occurrence of defaults under the management agreement or the exercise of remedies by one of several competing lenders.
Management and Franchise Agreements
Knowing how the other side thinks
In representing owners, lenders and developers in the negotiation of management and/or franchise agreements, our experience enables us to anticipate the styles, preferences and requirements of the leading hotel chains in the United States. Our lawyers are among the country's most experienced in managing the legal and business issues in franchise and management agreements, including agreements with the following brands:
- Candlewood Hotels - various hotel properties throughout the country
- Doubletree Hotels -- San Diego, Albuquerque, Minneapolis and Atlanta
- Doral Hotels -- Doral Ocean Beach Resort (Miami)
- Elegant Hotels - St. Lucia
- Four Seasons -- Puerto Rico (proposed)
- Guest Quarters -- Minneapolis
- Hampton Inns -- various Florida properties
- Hilton Hotels -- Minneapolis, Atlanta and Port-au-Prince, Haiti
- Hyatt Hotels -- Grand Cypress Resorts (Orlando), Philadelphia and Curaçao
- InterContinental Hotels -- Hilton Head Island, Lenox Square (Atlanta), Philadelphia and Los Angeles
- J.W. Marriott -- various hotel properties throughout the country
- Omni/Dunfey Hotels -- Atlanta
- Ritz Carlton -- Atlanta, Naples, Philadelphia, Grand Cypress Resorts (Orlando) and Alameda Plaza (Kansas City)
- Sheraton Hotels -- Atlanta
- Westin -- Atlanta, Hilton Head Island and Los Angeles Airport
- Wyndham International - Viva Resorts in the Dominican Republic, Mexico and The Bahamas
In addition, we have represented hotel operating companies with respect to management agreements for well-known "five star" hotels including the Beverly Hills Hotel, the Wigwam Resort, and the Colonnade Hotel of Boston, as well as many agreements for InterContinental Hotels Group and for other properties across America. We have also developed the standard form of management agreement for several operators.
Partnerships and Joint Ventures
Orchestrating tax and partnership law
Sutherland real estate and tax lawyers have structured partnerships and joint ventures to meet the business goals of owners, developers and operators of a wide variety of hotel and resort properties. We have the capability to assure compliance with the complicated tax rules that govern the allocation of partnership profits and losses while also assuring that the economic bargain struck by the parties is properly documented and preserved.
We have recently organized joint ventures for the development of major projects costing in excess of one billion dollars, including joint ventures for development and ownership of hotel and resort properties such as:
- Royal Palm Crowne Plaza Resort in Miami Beach
- resorts on Kiawah Island, South Carolina
- proposed Four Seasons Resort in Loquillo, Puerto Rico
- Doral Ocean Beach Resort in Miami
- InterContinental Cayo Largo Resort in Puerto Rico
- Hilton properties in Georgia, Colorado, Illinois, Florida and California
- proposed Los Colinas Convention Hotel, Texas
Hotel Construction
Protecting the interests of owners and developers
We represent hotel developers in connection with construction contracts and construction management agreements. Our experience in this arena includes agreements for the Royal Palm Crowne Plaza in Miami Beach and the InterContinental Cayo Largo Resort in Puerto Rico.
In addition to hotel construction contracts, we have negotiated architectural contracts, interior design agreements and agreements for the renovation of, and procurement of furniture, fixtures and equipment for, major hotel projects, including the Westin Diplomat Resort and Country Club in Hollywood, Florida, the Mark Hopkins InterContinental in San Francisco and the InterContinental Chicago.
Tax Structuring and Controversies
Understanding tax-sensitive transactions
Sutherland has long been known as one of the leading tax law firms in the United States. More than 60 of our lawyers focus on tax law and the structuring of tax-sensitive transactions.
Our tax experience is valuable in hotel and resort development since we are often able to provide immediate advice on what is possible and what is not. We frequently alert clients to tax issues involved in equipment leasing, equity participation financing, ground leases and the uniform capitalization rules for self-constructed property.
Litigation
Preventing and resolving disputes
Our knowledge enables Sutherland clients to avoid the most common disputes in industry and to resolve disagreements when they do arise. On behalf of developers, owners and operators of hotel properties, we draft agreements that prevent problems and protect their interests in areas that include:
- Construction Disputes - Our lawyers are experienced in the resolution of construction disputes through mediation, arbitration, and litigation.
- Hotel Owner/Operator Disputes - We are regularly called on to resolve disputes between owners and operators of hotels. The disputes often involve performance issues under management contracts and the owner' s right to terminate. In connection with the termination of the management contract for a major resort hotel, we successfully represented the right of an owner to oust an operator through non-violent, self-help remedies.
- Miscellaneous Disputes - Our litigation experience includes defense of liability claims, contract litigation, collection matters, tax controversies, acquisition disputes and license/franchise disputes.
Bankruptcy and Creditors' Rights
Providing for the downside
The possibility of bankruptcy or serious performance difficulties is in the back of everyone's mind in the negotiation of hotel financings and management agreements. Having dealt with troubled properties in many settings, we are effectively able to counsel on agreements that minimize the risks on both sides and provide a path for seeing the project through difficulties should they occur.
Our business restructuring and bankruptcy group consists of approximately 20 lawyers who represent both debtors and creditors. Our experience includes termination of franchise and management agreements, foreclosure proceedings, interim management pending foreclosure, sales-free and clear-of-liens issues, perfection of the right to receive hotel revenues and profits, post-petition financing, preferences and fraudulent conveyances and plan confirmation issues.
Leasing
Our real estate practice brings us into contact with virtually every kind of commercial real estate activity on a local, regional and national basis and includes all phases of commercial real estate development, investment and finance. Our representation of insurance companies, banks and other institutional lenders, investors and developers has included construction financing, development financing, traditional long-term mortgage financing, subordinate and wrap-around mortgage financing, leasehold and air rights mortgage financing, participating mortgage financing, long-term and short-term leases, sale lease-backs, joint ventures, industrial revenue bond financing and secured indenture financing. Our experience in representing lenders, investors and developers also includes real property litigation, zoning and land use planning, foreclosures, receiverships, bankruptcy problems and creditors' rights generally. We are also involved in planning with respect to the federal income tax consequences of real estate transactions.
Leasing Practice
We have long been a leader in providing high-quality legal services to businesses engaged in leasing transactions, whether as landlord or tenant. We regularly represent landlords and tenants in all types of office, retail and industrial leasing transactions. A summary of our experience is as follows:
- Office: We represent a wide variety of landlords in leasing first-class office space, both in Atlanta and elsewhere in the United States. Representative clients include Tishman West Companies, Allegiance Realty (formerly Balcor Companies), Carter & Associates, the Dutch Institutional Holding Company, First American Bank, Vantage Properties and the Travelers Life Insurance Company.
- Retail: We have represented a number of developers and owners of shopping centers and are experienced in all aspects of retail leasing matters. For example, we currently represent Ronald deWaal who owns approximately 20 malls and regional shopping centers across the Southeast. In the past, we have represented The Mitchell Company, the Krupp Companies and James F. Sams in the development and leasing of retail shopping centers. We also have extensive experience in representing tenants in retail leases. For example, we represent W H Smith on a nationwide basis in connection with its hotel and airport retail leasing, and Waterstone's Booksellers, W H Smith's retail book division, in connection with certain aspects of its retail operations. We also represent Storehouse, a leading retailer of housewares and furniture.
- Warehouse and Industrial: We have substantial experience in representing the owners of warehouses and other industrial properties and are thoroughly familiar with the special issues inherent in the warehouse/industrial leases. Our clients in this area include Pattillo Construction Company, Carter & Associates, Wilma Southeast, The Travelers Life Insurance Company and Vantage Properties.
- Other Lease Transactions: We are also experienced in a wide variety of lease transactions such as long term ground leases, mineral, timber and other natural resource leases, master leases of income producing property and leases used in industrial development financing transactions.
- Brokerage: We are experienced in all aspects of the lease brokerage business. We understand the issues that arise in the negotiation of commission agreements, particularly in large, complicated transactions. We also regularly represent real estate brokers in brokerage matters.
We are experienced in negotiating and documenting technical legal concepts such as indemnities, waivers of subrogation, subordination provisions, insurance provisions, provisions regarding the assumption of takeover of existing leases, and fire, casualty and condemnation provisions. However, when representing a landlord, our primary focus is on the financial and economic provisions of the lease, such as the CAM and operating expense pass-through provisions, rental escalation clauses and the workletter.
We also understand the intense time pressures often involved in lease transactions and that many lease transactions will not be consummated unless the lease is promptly negotiated and documented. We pride ourselves on our dealmaking attitude and our ability to work with all parties, including the other side's lawyer and broker, in a non-adversarial and cooperative manner so as to achieve an expeditious handling of the lease negotiation and documentation process.
Americans With Disabilities Act
We have substantial knowledge relating to the facilities issues inherent in the Americans with Disabilities Act. Jim Jordan has written and spoken extensively concerning the ADA. Jim has spoken on the ADA at seminars given by the firm for our clients, by the Real Estate Section of the State Bar of Georgia, by two Atlanta-based architectural firms, by two real estate brokerage companies and by the Atlanta Chapter of Commercial Real Estate Women. We take the ADA into account when negotiating and documenting leases, and we regularly counsel our clients concerning compliance with the facilities issues of the ADA.
Office and Industrial Development and Leasing
We have a diverse and sophisticated office and industrial development and leasing practice. We regularly represent institutional owners, developers and users of office, mixed use and industrial properties in purchase and sale, financing and leasing transactions in major markets across the United States. Our experience extends to all product types -- including multi-tenant and single tenant facilities -- and speculative as well as build-to-suit projects.
We have a number of lawyers and legal assistants who practice regularly in the office and industrial development and leasing practice area. Our lawyers are active in industry trade groups, such as the National Association of Industrial and Office Parks and Urban Land Institute and participate regularly in continuing education programs, both as speakers, authors and moderators. In addition to understanding the legal issues inherent in lease transactions, we focus on our clients' business deals and the economic and financial issues that are part and parcel of these deals. We are connected to our clients via the Internet or client-specific extranets and use technology aggressively to manage costs, decrease turnaround time and outperform the competition.
Areas of Experience
We have the capability, depth and proven track record to handle every aspect of office, mixed use or industrial developments and leasing transactions in a cost effective, responsive and focused manner. Our areas of experience include:
- Leases: We represent a broad group of landlords and tenants in every type of office and industrial lease transaction -- this representation is at the core of our nationally recognized leasing practice. We are fast, efficient and cost-effective in drafting, reviewing, negotiating and documenting lease agreements and work letters, construction provisions of leases and related documents such as SNDAs.
- Build to Suit Transactions: We have substantial experience in representing landlords, tenants and purchasers in build to suit transactions. Much of our recent experience pertains to telecommunication and other high tech facilities. Most recently, we have represented a client in developing facilities for T-Mobile in Oregon, Idaho and Missouri. We are currently representing ViaSat, a high technology company, in connection with the development of its corporate campus in suburban Atlanta. We are proficient as to construction matters which are at the heart of every build to suit transaction and work in a collaborative manner with design and construction professionals. We also understand the requirements of lenders and institutional purchasers and pride ourselves on our ability to structure the transaction in a manner which satisfies such requirements yet still protects the interests of our client, whether it be the landlord or the tenant.
- General Development Matters: We represent developer clients across the full spectrum of general development matters, including the negotiation and documentation of easement agreements, development agreements, reciprocal easement agreements and use agreements. We handle large, complicated phased mixed-use developments, sale/leaseback transactions and public/private partnerships and are knowledgeable as to the legal structuring and documentation issues relating to these projects.
- Acquisitions and Dispositions: We structure, negotiate and document on a routine basis purchase and sale transactions involving office buildings and other office and industrial projects. We are experienced in like-kind exchanges and are experienced in all aspects of financing office buildings and other office and industrial projects.
- Joint Ventures: We regularly counsel our clients concerning the structuring and formation of joint ventures of all types, including limited liability companies and general, limited and limited liability partnerships. We have significant experience in the financial and governance aspects of such arrangements, including internal rate of return hurdles, buy-sell provisions, rights of first refusal and, of course, tax allocations.
- Environmental Matters: We are experienced in assessing environmental risks inherent in office and industrial projects, evaluating options and negotiating and documenting complicated environmental provisions in lease and purchase and sale transactions. Rather than raise problems without providing solutions, we pride ourselves on our ability to evaluate risks and then identify creative solutions to the underlying problem in order to permit the transaction to be closed notwithstanding the existence of environmental contamination.
- Resolution of Disputes and Bankruptcies: We have litigation and bankruptcy commensurate with our status as a full-service national law firm. We are experienced in virtually every type of real estate dispute, including lease disputes, joint venture disputes and disputes between adjoining landowners. Consistent with our client-centered approach to our practice, these matters are usually managed by the real estate lawyer who understands the client's business and economic objectives. We work closely with our experienced real estate litigators who understand the real estate business and efficiently and expeditiously resolve real estate disputes.
- Construction Contracts: Our firm boasts a nationally recognized construction law practice and one of our partners is former President of the American College of Construction Lawyers. This experience allows us to assist our clients in negotiating with contractors, subcontractors and architects and in resolving construction disputes that commonly arise in the development and redevelopment of real estate projects.
- Americans with Disabilities Act: We are knowledgeable in the facilities issues triggered by the Americans with Disabilities Act. One of our partners, Jim Jordan, has spoken extensively on the ADA in various industry and client forums. We are cognizant of the ADA when negotiating and documenting leases, and we counsel our clients regularly concerning compliance with facilities issues relating to the ADA.
- Brokerage Agreements: We are experienced in all aspect of the lease brokerage business. We understand the issues that arise in the negotiation of commission agreements, particularly in large, complicated transactions.
The Sutherland Approach
In order for lease negotiations to proceed smoothly, the client, its broker and its counsel must act together as a team. We are team players and are focused on achieving the client's business objectives. We view our role as creative and cost-effective problem solvers and hold ourselves accountable to implement and affect the client's strategy.
We understand the intense time pressures often involved in lease transactions and that many deals will not be closed unless the lease is promptly negotiated and documented. We are enthusiastic proponents of technology and use it aggressively to manage costs and to accelerate delivery and transmission of draft lease instruments and completion of transactions. We are committed to our clients to provide high quality legal services which are responsive to their objectives and budgets and which beat -- rather than merely meet -- their deadlines.
If you would like to learn more about our experience in the office and industrial development area, please contact Ed Hales at 404.853.8077 or ed.hales@sablaw.com.
Real Estate Finance
Our real estate lawyers represent major banks, insurance companies, non-bank lenders, domestic and foreign investors and others in connection with all types of real estate financings, including construction and permanent loans, multi-state financings, portfolio and securitized transactions, leasehold financing, sale/leaseback transactions, short term variable rate financing, participating mortgages, and subordinate and mezzanine financing. We represent a number of mortgage conduits and CMBS loan correspondents engaged in nationwide lending and resale of mortgages into REMICs and to other sponsors of CMBS offerings. We also regularly represent master, primary and special servicers of securitized loans in all aspects of the servicing of post securitized loans. In addition to debt financing, we regularly handle major equity formation transactions through joint ventures, syndicated partnerships, and stock offerings.
Real Estate Litigation
Sutherland Asbill & Brennan LLP has significant experience in real estate related litigation and an extensive construction litigation and alternative dispute resolution practice. We have represented owners and developers for many years in disputes and lawsuits between the various entities involved in the development process (i.e., developer-owners, contractors, management companies, brokers, lenders, sureties, architects and engineers, local and state governments and investors). These matters include:
- Rezoning and permitting appeals, both administratively and in state and federal courts
- Suits relating to long-term management agreements
- Joint-venture and partnership disputes
- Commercial, office and industrial leasing disputes
- Brokerage commission claims
- Complex guarantor litigation
- Restrictive covenant/boundary disputes
- Condemnation, including "business loss" cases
- Negotiating and preparing contracts
- Project financing
- Bid submissions and protests
- Bonding issues
- Anticipation, avoidance and early resolution of construction problems
A representative sampling of such cases includes the following:
- Suits on behalf of owners to terminate long-term management contracts and to recover damages for mismanagement. This has included, for example, the successful representation of the owner of a large luxury hotel which terminated its management company under a long-term management agreement and took back possession of the hotel through self-help. We planned and directed the successful takeover of the hotel, successfully defended resulting lawsuits for damages and the return of possession of the hotel, and recovered over $1 million in damages for mismanagement.
- Successful defense of a suit by an alleged owner of a part interest in a large real estate project, who was seeking to prevent the sale of the project to a third party. We have handled several suits involving similar claims, where one party claims a partial interest in a project by virtue of an alleged joint-venture agreement or some other arrangement.
- Defense of several suits by real estate brokers for commissions in connection with the sale of real estate. Although normally we have defended against such commission claims, we recently tried a case in which we recovered a substantial commission for a broker.
- Successful suits on behalf of owners to recover amounts due under complex management and guarantee agreements, where the managers/guarantors tried to avoid their obligations to make cash flow and other guaranteed payments to the owner once their management contracts were terminated.
- Suits on behalf of owners and developers to recover damages for defective work and construction delays. For example, on behalf of an owner we recently obtained an arbitration award for approximately $1 million against a management company/contractor for defective work in connection with a large apartment project.
Retail
Sutherland has an unusually broad and diverse retail development and leasing practice. We regularly represent developers and retailers in purchase and sale, financing and leasing transactions in virtually every major market in the United States. Our experience extends to all product types, including regional malls, power centers, community centers and stand alone retail facilities.
We have a number of lawyers and legal assistants who are actively engaged in our retail practice. Our lawyers are active in industry trade groups, such as the International Council of Shopping Centers, and engage in a wide variety of continuing education programs, both as speakers and participants.
Sutherland Approach
Our approach is client focused and directed. In addition to understanding the legal issues inherent in retail transactions, we strive to understand our clients' objectives and the business issues underlying these objectives. Before we provide counsel and advice, we take the time necessary to truly listen to our clients in order to understand their objectives and goals as to the project or transaction at hand.
In order for a complex retail transaction to proceed smoothly, the client and its consultants - brokers, architects, engineers and counsel - must all act together as a coordinated team. We understand the importance of teamwork and strive to work together and cooperate with all the players to ensure that our client's objectives are achieved. Our role in the transaction varies from time to time during the development cycle. At times, we are in the background while our client and its consultants take the lead. At other critical times, such as the closing of an acquisition, sale or financing or the negotiation and documentation of tenant leases and other related documents, we serve a primary role and are responsible for coordinating the activities of all parties involved to achieve the objective at hand. We are comfortable in either role and understand when to lead and when to follow.
We are experienced in negotiating and documenting technical legal concepts contained in loan, lease and purchase documentation, such as indemnities, waivers of subrogation, exculpation provisions, subordination provisions, insurance provisions, provisions regarding the assumption or takeover of existing leases, and fire, casualty and condemnation provisions. Consistent with our clients' objectives, however, we focus primarily on the financial, economic and use provisions to ensure that the documents do not contain any hidden surprises.
We regularly represent both landlords and tenants, buyers and sellers and lenders and borrowers. We find that in representing a client in a particular transaction, our prior experience representing the "other side" in similar transactions provides us with an understanding of what is and is not truly important to the "other side" and allows us to quickly identify possible compromise positions. This experience allows us to achieve the best possible result for our client in an efficient manner without protracted negotiations.
Finally, we are aware of the intense time pressures often involved in retail transactions and understand that many transactions will not be consummated unless the relevant documents are promptly negotiated and documented. We pride ourselves on our dealmaking attitude and our ability to work with all parties, including the other side's lawyer, in a non-adversarial and cooperative manner so as to achieve the successful and expeditious completion of the negotiation, documentation and closing process.
We are creative and cost-effective problem solvers. We commit to our clients to provide the highest quality legal services which are responsive to their objectives and to consistently beat, not just meet, their deadlines.
Areas of Experience
We have a demonstrated ability to handle, in a cost effective and efficient manner, every aspect of a retail transaction, whether it be straightforward or extremely complicated. We are experienced in the following aspects of retail transactions:
- Leases: We regularly represent landlords and tenants as to every type of retail transaction, including ground leases, space leases and building leases, and virtually every type of big box retail concept, including specialized transactions such as grocery stores, theaters and the like. We regularly prepare and negotiate letters of intent for "big-box" retail leases, and are also experienced with related lease documents such as SNDA's.
- Reciprocal Easement and Operating Agreements: We have substantial experience in negotiating and documenting reciprocal easement and operating agreements which provide the framework for the operation of many complex retail projects. We have experience in negotiating these documents in mall and shopping center transactions from the perspective of the owner and the retailer.
- General Development Matters: We are experienced in representing our developer clients in a wide variety of general development matters including the negotiation and documentation of easement agreements, development agreements, abandonment of public streets and other development matters.
- Acquisitions and Dispositions, Section 1031 Like-Kind Exchanges and Financing Transactions: We are experienced in structuring, negotiating and documenting purchase and sale transactions involving malls and shopping centers. We also are regularly engaged in structuring Section 1031 like-kind exchanges. We are thoroughly experienced in all aspects of financing shopping centers and other retail projects.
- Joint Ventures: We regularly counsel our retail clients concerning the structuring and formation of joint ventures of all types including limited liability companies and general, limited and limited liability partnerships. We have experience in the financial and governance aspects of such arrangements including buy-sell provisions, as well as the complicated tax allocation provisions.
- Environmental Matters: We are experienced in assessing environmental risks inherent in retail projects, evaluating options and negotiating and documenting complicated environmental provisions in lease and purchase and sale transactions. Rather than raise problems without providing solutions, we pride ourselves on our ability to realistically evaluate risks and then find creative solutions to the underlying problem so as to allow the transaction to be consummated despite the existence of environmental contamination.
- Resolution of Disputes and Bankruptcies: In addition to our diverse real estate practice, we are a full service firm with substantial litigation and bankruptcy experience. In this regard, we have experience in resolving virtually every type of real estate dispute including lease disputes, joint venture disputes and disputes between adjoining landowners.
- Construction Contracts: Our firm boasts a nationally recognized construction law practice. This experience allows us to assist our clients in negotiating with contractors, subcontractors and architects and in resolving construction disputes which sometimes arise in connection with the development and redevelopment of real estate projects.
- Zoning Matters: We understand the importance of zoning matters, including approvals and entitlements, to the successful development of a retail project and are experienced in negotiating such matters in the context of purchase contracts and leases and in administering the work of local zoning counsel in the particular jurisdiction.
If you would like to learn more about our experience in the retail area, please contact Jim Jordan, our firmwide chair of the Retail Practice, at 404.853.8101 or jim.jordan@sablaw.com.
Timber and Forest Products
The timber and forest products practice at Sutherland dates to the 1930s, when our founding partner, Bill Sutherland, was engaged by many of the major Southern timberland owners and investors to respond to the emerging rules of the federal Internal Revenue Code. Our representation of private and institutional timber owners and forest products companies with timber holdings throughout the country developed into a major practice area as the firm expanded to its present size of more than 350 lawyers. The national Timber and Forest Products Group was formed in the early 1990s in response to client demands for comprehensive legal services in support of this industry.
The creation of significant depletion planning opportunities that Sutherland tax and litigation lawyers established in major Tax Court cases for Oregon and California timber owners, the dramatic appreciation of timber prices as federal lands were removed from the market, the emergence of pass-through entities as dominant financing vehicles, and the undervaluation by Wall Street of timber inventories are all among the factors that have created enormous opportunities for our clients and for our firm. In response, and in a distinct departure from the organizational structure traditionally used by law firms, we enlisted into our Timber and Forest Products Group lawyers from the varied disciplines of tax, real estate, corporate finance, environmental and litigation.
The client-driven nature of our Group's organizational structure has contributed substantially to our rapid success and continued growth. We regularly hear from the clients that we serve - including integrated forest product companies, private and public owners, and financial service companies - that our inter-disciplinary team approach provides unique value.
In the following sections, we provide detail on the Sutherland approach and the recent transactions in which the Group has participated.
Our Approach
We believe that a thorough understanding of our client operations and long-term strategies is essential to effective representation. We are committed to investing our time and effort to learn about the varied approaches followed by our clients in acquiring, managing and exploiting timber holdings. Members of our Group are active in major industry organizations. This brings us into contact with a wide range of industry participants and with forestry consultants throughout the country and the world. We regularly speak at seminars and other programs held by major university schools of forestry, the World Forestry Center, the Forest Landowners Association and the American Bar Association. We have found this industry background and knowledge to be invaluable in serving the needs of our clients.
Over the past few years, we have successfully represented clients in scores of timberland transactions, involving millions of acres, and with aggregate consideration of more than $6 billion. These transactions have included acquisitions, sales, exchanges, joint ventures, complex cutting contracts and management agreements, leases of timber properties, acquisition of foreign timber rights, traditional mortgage financings, specialized installment note financings, private and public securitizations, debt financings and sale/leasebacks. Our documents and databases allow us to take a "fast-track" approach. A number of the acquisition transactions have used an indirect means to acquire control of timber properties, such as the acquisition of a controlling interest in a partnership or limited liability company which in turn holds the timberland.
Both our client base and the geographic range of our transactional experience reflect our commitment to provide a national center in this industry. We represent major publicly-held forest products companies, closely-held forest products companies and timber operators, investment partnerships, large tax-exempt investors (including both pension funds and the endowment funds of several national universities), individual landowners and bank and other institutional lenders. Our work has involved large properties in all the major timber-growing regions in the United States, including the Southeast (with transactional experience stretching from Virginia to Texas); the Pacific Northwest (with major transactions centered in Oregon, Washington, Idaho and California); the Upper Atlantic States (including Pennsylvania, New York and New England); and the Upper Midwest.
Foreign Experience
As timber investors have expanded their investment horizons overseas, we are called upon regularly by clients to assist them in investments in Central and South America. We have assisted the largest timberland concession holder in Guyana in connection with a dispute with the government over the payment of royalties and other fees. We have also advised clients with respect to timberland investments in Brazil, Panama, Venezuela and Bolivia. Most recently, we assisted a Brazilian forest products company in the disposition of timber rights to a U.S. university endowment.
Capturing the Tax Advantages of Timber Investments
An essential part of our approach to major timber transactions is the recognition that timber is a tax-favored asset (because routine disposition of timber is taxed as capital gain), and that, in most cases, sellers of timberlands have a very low tax basis in their properties in relation to current values. As a part of our work in representing buyers and sellers of timber properties, we have found creative solutions to assure that gains from dispositions of timber will be offset by the maximum allowance for depletion, that taxable investors will receive the benefit of taxation at capital gains rates, and that gains to tax-exempt investors will not be treated as unrelated business taxable income. We have also worked with sellers of timber properties to devise methods to defer recognition of capital gain. Frequently, these assignments are undertaken in a situation where the forest products company that will use the timber resource in its conversion facilities wants to be certain that the asset will not be reflected on its balance sheet.
Depletion Issues
Our work in the depletion area reflects our success in litigating, in the United States Tax Court and the Ninth Circuit Court of Appeals, the precedent-setting case of RLC Industries Co. v. Commissioner (discussed below). This decision established, for the first time, the substantial latitude timber owners have in establishing blocks for depletion in order to derive the greatest tax benefit. In RLC, the company used that latitude to combine newly-purchased, high-cost timber into a single pool with long-held, low-cost timber that it was preparing to harvest. The averaging which is inherent in the single pool approach substantially raised the depletion rate on the lower cost timber. In other instances, the acquirer of a timber property may find it advantageous to subdivide the property into multiple blocks, in order to enhance the depletion allowance on early harvests. We have found that careful study of this issue, done at the time of acquisition and in conjunction with the on-the-ground forest managers, can produce substantial benefits.
Cutting Contracts
We have pioneered the use of a variety of timber cutting agreements, some extending for as long as three rotations (a total of 79 years), to provide continued capital gain treatment to the timber owner, with assured access (but off-balance sheet treatment) to the forest products company buyer. We have devised other cutting agreements that can provide either immediate cash to the timber owner or an assured cash flow over a period of years, with the contract still being treated as a disposition of timber with a retained economic interest in the hands of the timber owner, thereby avoiding the "dealer" issue and producing capital gain.
Planning For Exempt Investors
In the early 1980s, we secured the first of what has become a series of private letter rulings from the Internal Revenue Service which recognize that dispositions of timber by an exempt organization (or by a partnership composed of exempt organizations) pursuant to a cutting agreement in which the timber owner has a retained economic interest, does not produce unrelated business taxable income to the selling exempt organization. The initial rulings, which were limited to dispositions of timber where the owner met the holding period for capital gaines, was an essential step in paving the way for widespread timber investments by pension funds, university endowments and other such organizations. In 2001, we obtained the first ruling issued for a major university by the IRS confirming our opinion that dispositions of timber held for less than one year does not generate UBTI where the exempt owner has a retained economic interest.
"Pass-Through" Vehicles
In the current tax environment - with historically low capital gains rates applicable to individual investors, but with corporate taxpayers receiving no preferential capital gains treatment - much of our work has been to devise acceptable "pass-through" vehicles which can provide the benefit of capital gains treatment (or no UBTI) to the investor without burdening the investment with a corporate level tax. As noted above, many of the transactions in which we've participated involve partnerships, joint ventures and limited liability companies. These vehicles may be either private or publicly traded.
In addition, a change to the Internal Revenue Code made by the 1997 Tax Act makes it feasible for the first time for a Real Estate Investment Trust (a "REIT") to concentrate on timber investment and exploitation. In 1998 and 1999, we served as issuer's counsel to a client for which we obtained the first private letter ruling from the Internal Revenue Service which confirmed our analysis that timber properties are appropriate assets for a REIT, and that regular dispositions of standing timber produce qualifying REIT income. We represented this client through the full process of registering with the SEC, and although IPO market conditions caused the client to withdraw its public offering, we continue to believe that the Timber REIT concept will be accepted by the public markets as the preferred approach for securitizing investments in timber properties. We expect to be in the forefront of the development of these vehicles.
Deferral Opportunities
We have also assisted owners of timber properties to defer the recognition of taxable gain on disposition of these properties. These approaches have taken the form of exchange transactions, installment notes (including an approach which permits immediate monetization of the note), extended cutting agreements and partnership transactions.
Timber Taxation Controversies
Our firm includes one of the largest tax practices in the country - with approximately 60 of our lawyers concentrating their practice on tax issues. We have found that this broad base of experience has been an essential resource in the development of our practice in more narrow areas such as timber taxation. Bill Sutherland, our founding partner and one of the founders of the Tax Section of the American Bar Association, began our practice in timber taxation in the 1930s, and it has continued to expand. Our work has encompassed every area of timber taxation, including, in recent years:
- valuation of timber for purposes of section 631(a)
- valuation of timberland for purposes of gift tax and for charitable contributions
- qualification of timber cutting contracts under section 631(b)
- depletion issues, including the proper composition of a timber "block"
- allocation of basis of purchased land and timber
- like-kind exchange issues
- losses of mature timber from pine beetle and other natural causes
- losses of timber seedlings from drought.
While most of the timber tax controversies we have handled have been satisfactorily resolved without litigation, we have been called upon from time to time to litigate in this area, and we have handled a series of important cases. Recent examples include:
RLC Industries Co. v. Commissioner, 98 T.C. No. 33 (1992), aff'd, 58 F.3d 413 (9th Cir. 1995). In an important case of first impression, the Tax Court determined the extent of a taxpayer's ability to include newly purchased timber in an existing timber block for purposes of depletion. The taxpayer had owned Oregon timber, which carried a low basis, and sought to include newly-purchased California timber in the same depletion block. The Tax Court, after a two-week trial, permitted the pooling approach sought by the taxpayer, and held that the Commissioner had abused her discretion in seeking to force the taxpayer to hold the timber in two separate blocks. The United States Court of Appeals for the Ninth Circuit affirmed the decision in 1995, invalidating the regulation relied upon by the Commissioner.
Glynn Land Co. v. United States, 602 F. Supp. 346 (Feb. 12, 1985), a District Court case of first impression, in which the court held that dispositions of timber pursuant to a 79-year, three-rotation timber cutting agreement, which our firm had designed, qualified for capital gain treatment pursuant to section 631(b). To the best of our knowledge, this is the only long-term agreement which has been held to qualify for section 631(b) treatment.
Georgia Kraft v. United States, a Court of Claims case involving the application of a systematic approach to valuation of timber for section 631(a). The case was settled prior to trial, with a complete concession by the government on the valuation approach adopted by the taxpayer, and a rejection of the "end use" theory urged by the Revenue Agents.
Saunders v. United States, 81-2 U.S.T.C. 13,419 (U.S.D.C. M.D. Ga. 1981), a United States District Court case involving the value of timber and timberland subject to a long-term lease. The taxpayer's valuation was accepted by the court in its entirety.
Agribusiness and Timber Litigation, Environmental and Energy
Our litigation group includes approximately 100 lawyers. We have a demonstrated capability to handle complicated cases, and, of particular interest to forest products companies and timber owners, we are experienced in agribusiness matters, in environmental issues and in litigation involving scientific and technical issues.
Of particular interest is our defense of a forest products company in 1995 in a major lawsuit brought by the landowner (represented by nationally known individual in breaking long-term leases) to terminate long-term timberland management and timber purchase agreements, and to recover $25-$30 million in damages for alleged mismanagement, breach of contract, fraud, professional malpractice and other claims. In a hard fought, three-week jury trial, we were able to convince the jury to rule in our clients' favor on a critical threshold issue. The case settled (on confidential terms) immediately after this jury victory. In preparing for the case, we dealt with a wide variety of issues relevant to the landowner/forest products company relationship, worked with a range of timber experts to develop expert studies pertaining to the case, and cross-examined numerous experts who have testified in recent years in support of lawsuits to break long-term timber leases.
We have also successfully represented forest products company clients in arbitrations rising out of contracts to supply wood chips at a formula price to paper manufacturers, in OSHA cases involving noise controls in pulp and paper manufacturing, in energy cases involving a proposed mandatory conversion of large power boilers from oil and gas firing to coal firing, and in environmental and endangered species matters. These matters required us to develop extensive expert testimony on issues ranging from wood chip values in particular market areas to engineering and environmental issues.
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