Negotiating Commercial Leases: How Owners & Corporate Occupants Can Avoid Costly Errors - Spring 2009

Overview

Recently admitted NY attorneys: This program is accredited for transitional CLE credit

Why You Should Attend

With so much uncertainty in today’s economy, your client or company is relying on you now more than ever to make the best deal. The landscape of the commercial real estate market has changed and so have the rules. It is critical that you understand the hidden costs, shifting of risks and predatory practices of the “killer lease forms” and “sharp” practices. Attend this program to get up-to-speed on how to negotiate the best terms for your client or company in this changed world. Avoid costly errors or unintended risks and put your client in the most advantageous position!

What You Will Learn

• Current and cutting edge “practice tips” for bargaining and drafting expertise
• Impact of condominium conversions on existing commercial buildings
• How to deal with out of hand operating costs
• Study the effects of bankruptcy on leasing transactions
• Cash flow and present value: top ten deal goals
• Assignment and subletting strategies and procedures
• The top five issues for a major corporate user
• Work letter language and tax structuring
• Rentals, additional rentals and hidden profit centers
• Repair and compliance responsibility
• Services: the substandard specifications and resulting profits
• Recognition agreements and consents
• Special concerns in retail leasing: landlord’s recapture of space, tenant’s right to “go dark,” including anchor tenants’ covenants to open “for a day”

Plus

• Renewal and extension rights
• Early termination rights - rolling options and extension rights
• Operating expenses & CAM/audit rights: goals of tenant, landlord
• Insurance - landlord’s underinsurance; self insurance; no-fault; indemnities; waivers of direct liability
• Examine complex rental and escalation issues: arbitration vs. litigation
• How to “re-bundle” expenses and taxes

In addition

• Identify hidden costs associated with poorly drafted forms
• Boilerplate clauses - the lease as contract or conditional demising
• Services/the substandard specifications and resulting profits
• Expansion rights, rights of first refusal/first offer

Who Should Attend

Attorneys who practice in the commercial real estate leasing field or are being assigned the facilities responsibilities, and other allied professionals, including real estate brokers, appraisers, property managers, facilities directors, fund directors and ccountants/auditors.

Special Features

Live Webcast - Simultaneous live webcast of the New York session is available for individual viewing. Webcast participants will receive streaming audio and/or video of the program, view and print the Course Handbook, and have the ability to submit questions electronically.

For more information click on the Live Webcast link in the Related Items box.

Special Bonus to all Registrants

All attendees will receive a complimentary copy of PLI's comprehensive Course Handbook. This softcover, bound volume was written to augment the program and to stand alone as a permanent reference. PLI's Course Handbooks represent the definitive thinking of the nation's finest legal minds, and are often the standard reference in the field.

Please Note: Webcast attendees will receive a downloadable version of the Handbook one business day prior to the program.

PLI Group Discounts

Groups of 4-14 from the same organization, all registering at the same time, for a PLI program scheduled for presentation at the same site, are entitled to receive a group discount.  For further discount information, please contact membership@pli.edu or call (800) 260-4PLI.

PLI Can Arrange Group Viewing to Your Firm

Contact the Groupcasts Department via email at groupcasts@pli.edu for more details.

Cancellations

All cancellations received 3 business days prior to the program will be refunded 100%. If you do not cancel within the allotted time period, payment is due in full. You may substitute another individual to attend the program at any time.

Schedule

Please plan to arrive with enough time to register before the conference begins. A continental breakfast will be available upon your arrival.

Day One: 9:00 a.m. - 5:00 p.m.

Morning Session: 9:00 a.m. - 12:30 p.m.

9:00  Introduction and Overview

John Busey Wood

9:15  Leasing 101 - Fine Tuning the Basics

• Economic space vs. bricks and mortar
• Cash flow and present value: top ten deal goals
• The area fiction - rentable, carpetable, usable, allocable and fictionable/impact on “Proportionate Shares”
• The “real carpetable costs” of fixed rent - $65 r.s.f. Rockefeller Center $148 “carpetable”
• Repair and compliance responsibilities (the error of the “sketch attached”): back-door liabilities
• Who measures space - on what basis?

Bonnie Stone Sellers, John Busey Wood

10:15  Networking Break

10:30  Operating Expenses and Taxes

• Base years or base factors for new construction taxes; retroactive adjustments of base years
• Re-bundling the rent components and costs of running a property
• Accounting standards for including operating expenses and charges; rights of audit and review
• “Time Line” of the extreme econometric sport of moving commencement dates - “The Killer Lease Form”
• “Most Favored Tenant” - measurement and tenant’s proportionate share re-calculations
• Overcharges for supplies and extra services; cleaning cost fiction
• Electricity - the hidden profit center - “Incremental Connectable Survey”

Michael E. Meyer, John Busey Wood

11:30  Long-Range Planning - Unanticipated Limitations

• Assignment and subletting, corporate stock transactions, recapture, profit sharing and transfer of personal rights - discussion clauses
• Recognition agreements and consents - unsuspected amendments
• Expansion rights, rights of first refusal/first offer
• Renewal and extension rights
• Early termination of rights/puts
• Substitution of space
• Use and trade name limitations

Nancy A. Connery, John Busey Wood

12:30  Lunch

Afternoon Session: 1:30 p.m. - 5:00 p.m.

1:30  Retail Leasing: Special Concerns

• Use clauses and tradenames
• Exclusive use rights
• Opening and operating covenants
• Co-tenancy rights
• Assignment and subletting
• Radius restrictions
• Percentage rent
• Reimbursement of operating expenses

Theani C. Louskos, John Busey Wood

2:45  Networking Break

3:00  Insurance and Indemnities

• No-fault, commercial insurability, liability allocation of risk
• Conditional waivers of direct liability and actions/insurer’s subrogation rights dependent on landlord insuring
• Indemnities to other tenants - back-door liability
• Practice tip - base building and tenant improvements:
   - Who insures and who rebuilds?
   - Self-insurance

Alan M. Di Sciullo, James A. Fenniman, Arthur E. Pape 

4:00  Ethics

• Conflicts of interest
• Confidentiality
• Dealings with non-attorneys
• Balancing financial objectives and regulatory/ethical mandates

Patricia A. Wilson

5:00  Adjourn

Day Two: 9:00 a.m. - 1:45 p.m.

9:00  Saga of the Later Occurring Superior Interests - How to Lose Your Lease and Your Entire Investment - The “Killer Lease Form”

• Future subordination - “Killer Lease Form” - Article 27
• Layering of superior interests and “recognition” of lease rights
• Impact of condominium conversion on existing mixed use property
• Operations difficulties for multiple owners
• Common area control
• Changes or over-ruling lease rights
• Purchase and extension options may not work
• Why your broker does not show this to you

Ira Herman, John Busey Wood

10:00  Complex Rental and Escalation Issues: Arbitration vs. Litigation

• Costs of litigation and discovery as well as absence of cases or judgments
• Arbitration rules
• Biased arbitrators vs. trial for three neutrals
• Costs of litigation and inability of judges to try complicated rental issues

Michael A. Marra, Elizabeth J. Shampnoi

11:00  Networking Break

11:15  Lender’s View of the Lease

• The effect of the Bankruptcy Code on the rights of landlords and tenants
• Estoppel - the back-door amendment
• Recognition agreements and non-disturbance limitations and amendments
• Construction obligations of a lender after foreclosure
• Lender’s certifications - qualified - CAPS clauses
• Beware of accounting and financial terminology
   - GAAP vs. GAAP applied generally by real estate accountants or industry
   - Work letter language - tax structuring
• Appraisals: their importance to the lender and how to evaluate them

Nancy A. Connery, Ira Herman, Paula K. Konikoff

12:15  How to Handle Unexpected Excess Space and Real Estate - Reconfigure - Shed and Cost Effectiveness

• With unprecedented dislocations of real estate and facilities - get a handle on overhead 
  - Know your real costs of space 
  - Obtain reconfiguration together with disposal of space at lower effective costs 
  - Obtain market and brokerage services coordinated with construction and project administration at minimal costs with big impact 
  - Use and time studies of employees - “Hoteling in Your Office”

Len Eagle, Nicola M. Heryet, Erik Sznip, John Busey Wood, Joseph T. Yacovone

1:45  Adjourn

Faculty

Chairperson(s)

John Busey Wood, Thompson & Knight LLP

Speaker(s)

Nancy Ann Connery, Schoeman, Updike & Kaufman, LLP
Alan M. Di Sciullo, Director of Global Real Estate, Shearman & Sterling LLP
Len Eagle, Senior Managing Director - Project Management Group, Colliers International
James A. Fenniman, Executive Vice President, Bollinger, Inc
Ira Herman, Thompson & Knight LLP
Nicola M. Heryet, Senior Managing Director, Colliers ABR, Inc.
Paula K. Konikoff
Theani C. Louskos, Bartko, Zankel, Tarrant & Miller, P.C.
Michael A. Marra, Vice President, Construction Division, American Arbitration Association
Michael E. Meyer, DLA Piper LLP (US)
Arthur E. Pape, The Pape Law Firm
Bonnie Stone Sellers, Chief Executive Officer, Crossroads Property Strategies LLC
Elizabeth J. Shampnoi, Storch Amini & Munves, PC
Erik Sznip, Manager of Financial Advisory Services, Colliers ABR
Patricia A. Wilson, Professor of Law, Baylor Law School
Joseph Yacovone, Colliers ABR, Inc.

Program Attorney(s)

Meghan C. Forgione, Practising Law Institute

CLE Credit

Travel Information

New York City Seminar Location

PLI New York Center, 810 Seventh Avenue at 53rd Street (21st floor), New York, New York 10019. Message Center, program days only: (212) 824-5733.

New York City Hotel Accommodations

Due to high demand and limited inventory in NYC, we recommend reserving hotel rooms as early as possible.

The New York Hilton & Towers, 1335 Avenue of the Americas, New York, NY 10019. 1 block from PLI Center. Reservations 1-800-HILTONS or, 1-877-NYC-HILT. Please mention that you are booking a room under the Practising Law Institute Corporate rate and the Client File # is N495741. Reservations on line at www.hilton.com and enter the same Client File # in the Corporate ID # field to access Practising Law Institute rates.

The Warwick New York Hotel, 65 West 54th Street New York, NY 10019. 1 block from PLI Center. Reservations 800-223-4099 or, hotel direct 212-247-2700. Please mention that you are booking a room under the Practising Law Institute Corporate rate. Reservations on line at www.warwickhotelny.com Click reservations in menu bar on left. Select desired dates. In 'Special Rates' drop down window select Corporate Rate. In 'Rate Code' enter PLIN. Click search and select desired room type and rate plan. Or, you may email reservation requests to: res.ny@warwickhotels.com