The Top Lawyers in New York Commercial Real Estate Right Now
Tom Acitelli Aug. 10, 2011, 10:18 a.m.
Behind every big real estate transaction is a phalanx of attorneys ticking off the billable hours. But in a slowly recovering market, with tepid lending and almost no new development, what exactly is the role of a real estate lawyer? Much more than dollar amounts are being negotiated, that’s for sure. And what differentiates one firm from the next?
We tapped the top New York City real estate practices and asked them these questions.
Stroock & Stroock & Lavan
“With the capital markets the way they are, every deal is complicated,” said Leonard Boxer, head of the real estate practice at Stroock & Stroock & Lavan. Now entering it’s ninth decade of practice, Stroock’s real estate group counts among its clients some of the most visible figures and institutions in Big Real Estate: Silverstein Properties, Wells Fargo, Citibank, JPMorgan Chase, the Feil Organization and, what the heck, the Mets—while Mr. Boxer himself counsels the Real Estate Board of New York.
The legal landscape has changed permanently to favor attorneys with a real sense of business, he said. “Brokers are so knowledgeable; they will negotiate an L.O.I. so comprehensive … it will be, like, 100 pages.” An L.O.I. used to be a single page. “Today if a piece of property is available, there are rounds of bids. It’s almost like baseball,” Mr. Boxer said. “They don’t need just a good lawyer.”
In his role at REBNY, Mr. Boxer is also involved in all sorts of policy matters, particularly the fight in Albany this past spring over changes to rent regulations.
And despite being involved with the “most visible transaction, one we live with every day”—representing Silverstein at the World Trade Center site—Stroock remains involved in a number of lesser-known deals that have long girded its practice. For example, there was the recent sale of Liberty Towers, a 675-unit residential high-rise in Jersey City.
How did Mr. Boxer end up at Stroock, his firm since 1987? In the 1980s, while real estate transactions began to rival corporate transactions in volume, many small real estate firms were being bought up by the big guys. His boutique firm—Olnick, Boxer, Blumberg, Lane & Troy—was sought after, as was Mr. Boxer himself. But he was fiercely loyal to his people and would not budge on one matter: he wanted any buyer to take his whole firm, down to the mail room. “And, quite frankly, Stroock was the only firm that would do it.”
Loeb & Loeb
“Time is the enemy of all transactions,” said Raymond Sanseverino, head of the real estate practice at Loeb & Loeb.
His practice of 50 attorneys stands apart for its responsiveness, according to Mr. Sanseverino. For instance, earlier this year, Loeb & Loeb negotiated more than 400,000 square feet at 120 Park Avenue for Bloomberg in only 12 days, after competing parties began vying for the space.
Loeb & Loeb also repped JPMorgan Chase as sublandlord in their vacating of 445,000 square feet at 245 Park; perfumer Coty in a huge lease at the Empire State Building; and the landlord at 875 Third Avenue in its 110,000-square-foot lease to Cerberus Capital.
Loeb & Loeb is also no stranger to unconventional requirements. They oversaw the Chinese state news agency Xinhua’s move to 2 Times Square, which required the State Department’s approval among myriad logistical challenges. But it all worked out smoothly in the end, with Xinhua leasing some quintessentially capitalistic real estate. “They’ll have a view of the ball dropping,” Mr. Sanseverino said.
“We know the market,” he added in explaining the practice’s approach in general. “We’re in it everyday.”
Aside from pricing, he advises clients on what provisions are realistic to ask for. These days, for instance, nondisturbance agreements are much easier to obtain and tenants are seeing more money for capital improvements. Mr. Sanseverino also believes in cool-headed negotiation. “These parties have to live together for 10, 15 years. There is never a need to scorch the earth.”
Richard Sussman and Michael Lefkowitz
Rosenberg & Estis
Representing huge developers in huge deals is not normally the work of a smaller firm. But for Rosenberg & Estis, a firm of 50 attorneys dedicated entirely to real estate, it has become not uncommon.
The firm has represented clients like the Durst and Brodsky organizations in large, complex deals, including, for Durst, the carefully watched 1 World Trade Center negotiation, as well as in quainter ones, like the CUNY School of Social Work lease at 118th and Third Avenue.
Among Rosenberg & Estis’s achievements this year was also the closure (finally!) of the financing for the no-longer-so-new Bank of America Tower at 1 Bryant Park. “It was a Herculean deal,” Mr. Sussman said. He said they essentially created an “integrated financial instrument” involving C.M.B.S.’s and Liberty Bonds. “This had never been done before, as I understand it.”
Rosenberg & Estis was also behind commercial debt fund RCG Longview, which was making predevelopment loans on sites like 180 Avenue of the Americas, at a time when more traditional lenders were keeping their distance. Enabling lenders like RCG greases the wheels of the commercial industry as a whole, according to Mr. Lefkowitz. “They have the advantage of being more nimble.”
So what is Rosenberg & Estis giving its clients beyond mere due diligence? “We actively work to structure everything. An economic situation which is not ‘vanilla’ requires a lot of work,” Mr. Sussman said. For instance, after the Durst Organization won the stake bid at 1 World Trade, “there was still a lot of dealmaking to be done,” said Mr. Lefkowitz. In the CUNY deal, the firm ended up using reversionary interest among other less orthodox tools. “We work with them from the earliest moment, especially with the off the market deals,” Mr. Sussman said.
Kramer, Levin, Naftalis & Frankel
Mega-firm Kramer, Levin, Naftalis & Frankel closed tons of high-profile real estate transactions in 2011, including the sale of the upper portion of the old New York Times Building to Blackstone and the sale of St. Vincent’s to Rudin Management.
The year also has seen lots of stalled deals being recapitalized and lots of medium-size clients returning to the market, according to Jay Neveloff, head of Kramer Levin’s real estate practice. He says clients are more inclined to go to their attorney to make sure they have an accurate read on the market and that he is happy to oblige. “The top lawyers in the city are performing broader functions. You really get involved in the business of your clients.”
Kramer Levin boasts New York City’s largest land-use practice, with attorneys who have worked for the Department of City Planning, the Landmarks Preservation Commission and the Parks Department. Currently, they represent Columbia University in its ongoing land-use negotiations in Harlem.
In the end, perhaps Kramer Levin’s size is its strongest asset for clients. “I have the ability, if I have clients who want to meet an owner, or make a joint venture, go to a bank,” Mr. Neveloff said, “I have the ability to open those doors. Or, if I don’t, I have someone in my office who can do that.”
Sullivan & Cromwell
Did you know that real estate securitization structures were created by adapting commercial paper financing structures originally used for nuclear plants? Neither did The Commercial Observer, but this is the sort of knowledge one is treated to in conversation with Joseph Shenker, chairman of the real estate practice at Sullivan & Cromwell.
“We do high-end, sophisticated deals,” he said. “This justifies our fee structure.”
Sullivan & Cromwell has been behind some of the highest-profile debt restructurings of the last year, including at 280 Park Avenue, 1 Park Avenue, Independence Plaza in Tribeca, 230 Park Avenue and 666 Fifth Avenue. And with many properties in the city requiring some financial, uh, adjustments, they have lots to do. “When they are buying a complicated piece of mezz debt, they have all these questions,” Mr. Shenker explained. “[We] provide one-stop shopping.”
On 230 Park, for instance, the sale involved a deleveraging of the capital structure. “It amounted to Invesco putting in equity and paying down the total debt, a somewhat typical transaction” Tony Colletta, the lead counsel on the deal, said. On 280 Park, SL Green and Vornado pooled their acquired debt and added equity. It was “a complex and delicate transaction,” said Arthur Adler, another partner at Sullivan & Cromwell, who handled the deal.
The real estate cycle seems to provide such seemingly endless maneuvering for law firms. “The nice thing about New York real estate is you see the same buildings again and again,” Mr. Shenker said.
In teaching his real estate transactions class at Harvard Law, Jonathan Mechanic uses the Lipstick Building as a case study. Not only has he been involved in nearly every aspect of the building’s purchase, lease and debt repackaging—he repped Tishman Speyer in their original purchase; oversaw the lease to major tenant Latham & Watkins; repped Tishman Speyer in the next sale and then the Royal Bank of Canada in the building’s recent prepackaged bankruptcy—his conference room window looks out over it. The building, having had what Mr. Mechanic calls a “truncated life cycle,” represents the extremes of New York City real estate, and helps his students learn what he considers the most important lesson of real estate law: “To be a good lawyer you need to understand the business.”
The night before he spoke with The Commercial Observer, Mr. Mechanic, oft referred to as the most powerful real estate lawyer in the world, just happened to run into Frank Gehry and Bruce Ratner grabbing a drink at the Greenwich Hotel—for Mr. Mechanic, a typical evening in the business.
Mr. Mechanic has worked for Fried Frank since 1978, save for a five-year run as general counsel for developer Howard Ronson. This year alone has seen Fried Frank work on deals that are not just significant for their size but for the impact they will have on the city. Mr. Mechanic repped Condé Nast in its move to 1 World Trade Center, in “a total collaborative effort,” among the Durst Organization, the publisher and the Port Authority. Just recently, Fried Frank was involved in the Whitney’s move downtown; the recently finished 8 Spruce Street, designed by Mr. Gehry and developed by Mr. Rather; and Google’s purchase of 111 Eighth Avenue.
And what of the near future? Mr. Mechanic says to look for redevelopment of the South Street Seaport, lots of deals at the Hudson Yards and a vibrant market for retail and office space near the World Trade Center.
No list of top real estate practices would be complete without the inclusion of Skadden, Arps, Slate, Meagher and Flom.
Among their notable transactions of late? There was SL Green’s debt restructuring at 280 Park Avenue; the Helmsley Charitable Trust’s sale of the Helmsley Hotel for $314 million; and, of course, the 20-year lease for Wilmer, Cutler, Pickering, Hale and Dorr LLP’s new space at 7 World Trade Center. That lease was the first to use Mayor Bloomberg’s new “green lease language,” which lets tenants and owners share the cost of energy efficiency upgrades.
Neil Rock, head of Skadden Arps’s real estate practice, is the type of real estate attorney whose projects alter the very landscape of the city. He represents the Empire State Development Corporation, the state’s economic development arm, in connection with Atlantic Yards and the New York Convention Center Development Corporation regarding the Jacob Javits Center and of the High Line. Little surprise, then, that Forbes calls Skadden Arps “Wall Street’s most powerful” law firm. The real estate, practice, appears to be no slouch either.
Bill McInerney and Steve Herman
Cadwalader Wickersham & Taft LLP
Bill McInerney heads a real estate practice that is not at all shy about its aptitude on the financial side of real estate deals. “We can originate the asset, but also have the expertise to exit the asset” in various ways, including the private market, Mr. McInerney said. “As the market rebounds, we are in a position to take advantage.”
Together with Steve Herman, head of the bank finance practice, Mr. McInerney sees a bright next couple of years. Not only did Cadwalader not slash its staff as so many firms did post-Lehman, they specialize in the types of deals that will be most in demand in the coming years. “There is $100 billion in debt that is overleveraged,” Mr. Herman said. So the real estate industry will be seeing “restructuring for years to come.” Their “soup to nuts,” practice, as Mr. McInerney calls it, deals end to end with origination, securitization and sale of real estate debt, as in the recent case of the Extended Stay Hotels portfolio.
Cadwalader was the firm most active in commercial mortgage back securities … you know, back before the CMBS crash in 2009. “I’ve lived through multiple cycles in this industry,” Mr. Herman said. And he believes anyone overly upset by the current debacle is simply revealing how young they are. “Last downturn, there were many more bankruptcies and contested foreclosures. Since then, we’ve developed structures to mitigate that, and they’ve had the desired effect.”
If you have a hotel to sell, or some money to invest in the hospitality industry, say, Holland Knight might be a nice fit.
The firm has worked with Marriott, Starwood and BD Hotels, as well as on the sales of boutique hotels. They have also repped big clients in commercial leases, construction and development, including the Empire State Development Corporation, Clarion Partners and Jetblue (in its recent office move to Long Island City).
Martin Miner, head of the real estate practice, has over 30 years of experience in the field. Asked what he offers clients nowadays, he answered without hesitation: “Great personalities.” And The Commercial Observer can attest to Mr. Miner’s charm. In a world of cold, calculated financial maneuvers, a warm personality goes a long way.
Mr. Miner has in the past lent his charm to a class on real estate transactions at Columbia’s business school. “I try to tell them that the market doesn’t always go up,” he said of his students. “I try to tell them that in today’s real estate world, corporate law and real estate law are very close. You need to have both to be accomplished today.”
Ron Sernau and David Weinberger
This real estate duo pride themselves on teamwork and on the individual expertise each brings to the table. Sound cliché? So be it, according to David Weinberger. With him on the lender’s side and Ron Sernau on the borrower’s, their firm has worked on some massive deals in the last year—repping Vornado (a frequent client) at 1 Park Avenue; CBRE Investors in its purchase of 1540 Broadway; Harbor Group at 4 New York Plaza; and their own firm in their recent move to 11 Times Square, where Mr. Sernau analogizes his firm to “the shoemaker’s children, with holes in their shoes.”
With expertise on both sides of a transaction, Mr. Sernau sees Proskauer attorneys as “a part of the brokerage process,” not simply as legal advisers. That involves risk, of course, but risk is part of the inherent beauty of real estate for Mr. Sernau. For example, Proskauer recently represented Harry Macklowe in his return to the real estate stage: the purchase of 150 East 72nd street, which closed in June. “He has the chutzpah to put down his money when the rest of us are running away,” Mr. Sernau said.
What sets Proskauer apart in Mr. Weinberger’s view is how business is never proprietary at his firm. Regardless of who brings in business—he or she, and yes, approximately half Proskauer’s partners are women!—the person with the best qualifications works on a deal. “We get the best talent for the task,” Mr. Weinberger said.
When it comes to experience navigating the myriad interconnections that run this town, it’s hard to beat 10 years on the City Council. One meets the right people and gets to know how things really work. Kenneth Fisher of Cozen O’Connor, who specializes in real estate development, zoning and land-use matters, brings just that political capital to the table.
He is the man to call when dealing with any of the many labyrinthine city commissions, panels and approval processes that are part of every bigger Gotham real estate deal, even, somehow, the as-of-right ones.
No stranger to controversy, as he has represented clients like landlord the Pinnacle Group, The Real Deal once called Mr. Fisher “the go-to-guy for real estate clients embroiled in contentious projects.”
Mr. Fisher, who has analogized real estate in New York City to oil in Saudi Arabia, has retained his focus on public real estate policy since his move back to private practice. He is a founding chair of the board of directors of the Governors Island Alliance, a nonprofit redeveloping that public space, on whose board he continues to serve, and represents a number of nonprofits in their legal negotiations.