® Satisfy Your CLE, CPE and CPD Requirements! Negotiating Commercial Leases 2014 • Learn the ins and outs of lease restructuring options • Dissect industrial international distribution leases • Get valuable advice, current market tricks and trends, as well as negotiation strategies for common traps to avoid in commercial leasing • Examine alternative financial strategies for securing the landlord’s performance and security for owner cash flow obligations under large lease work letters and tenant improvement allowances • View the lease negotiation and retention of counsel through the timeline of practical-based ethical considerations under the ethics codes This is an approved New York transitional program November 6-7, 2014 New York City Boston, Cleveland, Columbus, Philadelphia, Pittsburgh, Mechanicsburg and New Brunswick Groupcast Locations Live Webcast — www.pli.edu November 17-18, 2014 Chicago Register Today at www.pli.edu/DHW4 or Call (800) 260-4PLI Negotiating Commercial Leases 2014 Why You Should Attend Leases can be a primary business asset and also contain landmines of liability. Known as the building blocks of value for all real estate, if leases are written poorly or administered without expertise, they can be the downfall of an otherwise sound real estate investment. This course is not to be missed for anyone who represents users or occupiers of space, or owners as investors in real estate. There’s no disputing the importance of intimately knowing the lease as a multidimensional financial tool, hell or high-water financial instrument, and contract of limitations and regulations. This program will help you to feel truly competent to negotiate these two hundred plus pages of sophisticated instruments, along with the hidden costs, risk shifting and common law demising. Your company and clients look to you to know the market and local traps, to obtain a “market and fair” deal, maintain the deal for the duration of the lease, and to avoid the unusual or unfair risks shifted from the landlord to the tenant via creative or subtle text. Your client is depending on you to preserve the investment in difficult “risky” times. This program will teach you “what’s hot and what’s not” to help you stay on the “cutting edge” of the current market negotiations and anticipate trends. With the market constantly changing and currently improving, and leases becoming more clever and intensive, learning how to stay a step ahead of the commercial leasing market and fine tune your skills, techniques and strategies is a wise investment of your time. What You Will Learn • Lease restructuring options • Industrial international distribution leases • Current market tricks and trends, advice and custom, as well as negotiation strategies for avoiding common traps • Examine alternative financial strategies for securing the landlord’s performance and security for owner cash flow obligations under large lease work letters and tenant improvement allowances • Practical traps caused – and increases in tenant alterations costs – from “triggering” violations and compliance obligations with pre-existing but deferred building, fire and safety laws • Understand the “Good-Guy/Bad-Guy” off-balance sheet guaranty – how to avoid hidden and enlarged backdoor liability • Default remedies, and complex real estate issues in arbitration vs. litigation • Re-emergence of the “takeover lease” – papering the risk and securing performance • Stemming the trend of transfer to tenant of traditional “Ownership Costs,” including repair, alterations, alteration and construction compliance risk, and insurance and compliance responsibilities and how to shift them back to the owners/landlords • Address the wave of reduced retail occupancy/operations levels and the mall’s attempts to avoid the triggering of co-tenancy and co-occupancy penalties; luxury retail leases and digital marketing and Point of Sale (POS) systems • View the lease negotiation and retention of counsel through the timeline of practical-based ethical considerations under the ethics codes Who Should Attend Attorneys who practice in the commercial real estate leasing field and other allied professionals, including Certified Public Accountants, retail facilities directors, real estate brokers, commercial property managers, property fund managers, government regulators/service providers and REIT investors and managers. Register Today at www.pli.edu/DHW4 or Call (800) 260-4PLI PROGRAM SCHEDULE Day One: 9:00 a.m. – 5:00 p.m. Morning Session: 9:00 a.m. – 12:15 p.m. 9:00 Changing Lease Forms and Negotiating Tactics in the New Improving Economy • Lease forms expanding again • Econometric layering of “theft by lease” – rebundle operating expense into fixed rent – anticipate inflation of escalations • In market recovery – landlord’s need to close deals quick – tenants at premium • Owners need to commence rent more quickly – reduce leasing legal fees • Lease takeover loan/agreements tools • Accelerate the many moving lease commencement dates – remove the risk • Mock negotiation on getting all superior interests to the table NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Pamela Caruso, Meyer Last, Michael E. Meyer, Gerald R. Uram, John Busey Wood CHI: Patrick G. Moran, Michael D. Rechtin, Jr. 10:00 Unanticipated Limitations in Long-Term Planning and Lease Restructuring A. Assignment and Subletting • An overview • Permitted transactions • Recapture rights and profit-sharing • Recognition agreements and consents • Structural impediments to assignment and sublease rights B. Lease Restructuring: Pitfalls and Benefits • How best to deal with tenant request to restructure the lease • Explore ways in which the landlord can benefit from tenant lease restructuring • Negotiation tips from both sides of the deal, such as being totally candid and accurate in supplying info • Avoid common pitfalls, such as failing to obtain consent of lender • What the landlord will insist upon • What the tenant should never agree to NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Nancy Ann Connery, Meyer Last, Michael E. Meyer, Gerald R. Uram, John Busey Wood CHI: Ellen Friedler, Nancy M. Olson 11:00 Networking Break 11:15 Negotiating Today’s Tenant Options • Fixed versus floating expansion spaces; setting the triggers, delivery windows and response times • Fixed rental rate versus then-current market rent; when should landlord have to re-offer declined right of first refusal space? • Overlapping and cascading options; creating multiple rights – structuring around other tenants’ existing and future senior rights • “Personal” options, minimum occupancy requirements and other ways to forfeit a tenant’s option • Calculating termination and contraction fees; reconfiguring a multitenant floor, who pays and who chooses? NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Nancy Ann Connery, Meyer Last, Michael E. Meyer, Gerald R. Uram CHI: M. Christine Graff 12:15 Lunch Afternoon Session: 1:15 p.m. – 5:00 p.m. 1:15 Fundamentals of Structuring for Buildability and Financing; Industrial International Distribution Leases A. Good Guy Guaranties and Takeover Leases • Off-balance sheet – springing obligations • “The gap” period obligations – “backdoor expanded personal liability” • Bankruptcy impact • Hot topics – backdoor liability accelerations – “lease takeover triggers!” • How to secure the payment and performance of the “lease taken over” • Representing a landlord in negotiating a restructuring of a tenant lease • Emergence of the equity or cash flow participation lease • Credit enhancements • Use of letters of credit B. Industrial and International Distribution Leases (New York City only) • Use and operations limitations and restrictions • Additional security and customs issues within ports and terminals • Access and hours of operations restrictions for international shipping and airports • Environmental regulation – Industrial Site Recovery Act (ISRA) and North American Industry Classification System (NAICS) numbers for use • Ground lease subordination to port and governmental superior interests B. Issues in Ground and Industrial Leases (Chicago only) Ground Leases • Overview of ground leases: what should parties consider when drafting the lease? • Appraisal during a rent reset: how do appraisers value the estate? • Subordinated vs. unsubordinated: what is the effect on the leasehold financing? • Letter of Intent: how should a developer protect its interest prior to a signed lease? • Amendment or modifications: how can the lease accommodate changes in the parties’ needs over the life of the term? Industrial Leases • Economic and risk considerations: how should a landlord balance economic exposure compared to financial benefit? • Meeting a tenant’s needs: what questions should a landlord ask to prepare for construction and use of an industrial facility? • Capital improvements and fixtures: how should the tenant evaluate potential costs of alterations? • Lease terms: how should the parties draft the lease term to accommodate for unanticipated delays in the tenant’s possession of the industrial facility? • Anticipating tenant use issues: how should a landlord address changes in tenant’s use within the lease? NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Gerald R. Uram, John Busey Wood CHI: Thomas C. Homburger 2:45 Hot Topics for Dealing with Long-Term Lease Structures, Audits and Credit Support • Where are we with new FAS-13 and what is the impact on the structure and negotiation of long-term leases? What is the importance of tenant’s audit rights? • Hear how vacancies and historically incorrect gross-up adjustments are serving to: – Overcharge in-place tenants – Understate landlord’s NOI – Understate management costs and taxes for base years • Learn how “green leases” and “green buildings” are leading to the development of new profit centers for landlords – new “green maintenance” laws • Find out how REITs are shifting corporate office costs to building tenants via allocations at an unprecedented rate. How is this impacting tenants? • Understand how new insurance products are being used to transform lease structure • Letters of credit – don’t get surprised later by the “fine print”! NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Gerald R. Uram, John Busey Wood CHI: James F. Whalen 3:45 Networking Break 4:00 Ethical Gaps, Mishaps and Traps in Real Estate Practice • Engagement letter gap – Scope creep – Later transactional conflicts • Conflicts issues arising from outside counsel’s dealings with in-house counsel acting as owner/officer of property management company, and independent counsel versus in-house counsel acting as a party to the transaction • Virtual office, multijurisdictional practice/unauthorized practice concerns/confidentiality problems • Bottom line for attendees: what is my practical procedural strategic plan to deal with conflicts, keep the fee and keep the client? • Practical ethical and civility conduct tips for negotiating transactions NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Robert J. Bergson, Michael E. Meyer, Gerald R. Uram, John Busey Wood CHI: Mary F. Andreoni 5:00 Adjourn Day Two: 9:00 a.m. – 4:30 p.m. Morning Session: 9:00 a.m. – 12:45 p.m. 9:00 Challenges in Building Today’s Tenant Improvements • Practice tip! High value property – selling pieces of the property – future condominium declaration • Hot topic – later creation of multiple superior interests and impact on expansion and option rights • Timeline of creation of interests – impairment of rights – securing the landlord work/$ • Negotiations of the SNDRA – “R” is for full recognition – deal with the lender in beginning – abatements and credits for landlord’s work funded by tenant loan! • Purchase extensions and options may not work after conversion • Bring the lender and security interest holders to the table first – secure the landlord’s work funding and related rental credits/abatements – hot topic – loss of abatements and offset protections • Owner in workout will not fund TI or brokerage commission – tenant the “equity investor” NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Neil Kessner, Michael E. Meyer, John Busey Wood CHI: Robert L. Fernandez 10:00 Remedies, and Complex Real Estate Issues: Arbitration vs. Litigation A. Remedies • Specific performance • Mandatory and effective mediation • Self-help • Offset rights that work • Perils of the eviction process • Acceleration of all rentals and costs – the “value of the premises” adjustment • Payments in lieu of rent during disputes as a “condition” to continued occupancy B. Arbitration vs. Litigation • Costs of litigation and discovery as well as absence of cases or judgments • Establishing minimum qualifications for arbitrators in arbitration provisions and selection process • Hot topics – current increase in “baseball panel arbitration” • Use of advocate arbitrators – use of one neutral or three neutrals • Impairing and invalidating the award • Compartmentalize the process – surgical arbitration for a clause only • Creation of the arbitration forum – drafting good and bad clauses • Practice tip: hidden issues in fair value market determinations NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Michael A. Marra, Luis M. Martinez, Michael E. Meyer, Elizabeth J. Shampnoi, John Busey Wood CHI: Eric A. Oesterle, David Siegel 11:30 Networking Break 11:45 Dealing with Large Hidden “Big Ticket” Items • Triggered violations from deferred but enacted laws on filing of plans and demolition • Costs included in CAM and operating expenses/capital disbursements – landlord build to suit but no cash and “under supervision” – how to protect the “turnkey” • Negotiating “work/TI” funding/completion rights with the lender for “recognition of landlord’s work abatements and credits” – future “delivery space” TI funding • Current failure to analyze and assure the “attached sketch” – compliance, use, repair obligations and “the missing terrace! . . . the added building systems!” • Sprinklers, electric meters and VAV boxes – analyzing landlord’s “base building” inclusions • Mock negotiation NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Michael E. Meyer, John Busey Wood CHI: TBD 12:45 Lunch Afternoon Session: 1:45 p.m. – 4:30 p.m. 1:45 Hot Issues in Retail Leasing in the Current Environment • Use clauses and tradenames • Exclusive use rights • Opening and operating covenants • Co-tenancy rights • Assignment and subletting • New issues facing landlords and tenants in the current retail environment • Use of “pop-up occupancies” in malls – impact of “temp operating agreements” • When the co-tenancy and “kick-out” for low gross sales needs confirmation – problems of enforcement • Early delivery and opening agreements while lease is being negotiated • Luxury retail leases • Digital marketing and Point of Sale (POS) systems NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Theani C. Louskos, M. Rosie Rees CHI: Ira Fierstein, M. Rosie Rees 3:15 Networking Break 3:30 Issues Surrounding Insurance and Damage and Destruction • Effect of the financial crisis on insurance • Who insures the insurer? • Coverage of catastrophic risks – coordinating the insurers • What the landlord needs and what the tenant needs • ACORD forms now truly worthless! Use of binders? NYC, BOS, CLE, COL, PHI, PITT, MECH, NB & WEB: Christine Chipurnoi, James A. Fenniman CHI: Arthur E. Pape 4:30 Adjourn Please plan to arrive with enough time to register before the conference begins. A networking breakfast will be available upon your arrival. FACULTY NEW YORK CITY, GROUPCAST LOCATIONS AND LIVE WEBCAST Co-Chairs: John Busey Wood Akerman LLP New York City Robert J. Bergson Abrams Garfinkel Margolis Bergson, LLP New York City Pamela Caruso Senior Vice President Real Estate Counsel Vornado Realty Trust New York City Christine Chipurnoi Senior Vice President Wells Fargo Insurance Services USA, Inc. New York City Nancy Ann Connery Schoeman Updike Kaufman Stern & Ascher LLP New York City Michael E. Meyer DLA Piper Los Angeles James A. Fenniman Executive Vice President Bollinger, Inc. New York City Neil Kessner Executive Vice President, General Counsel Real Property SL Green Realty Corp. New York City Meyer Last Fried, Frank, Harris, Shriver & Jacobson LLP New York City Theani C. Louskos Bartko, Zankel, Bunzel & Miller San Francisco Michael A. Marra Vice President American Arbitration Association Philadelphia Luis M. Martinez Vice President American Arbitration Association International Centre for Dispute Resolution New York City M. Rosie Rees Pircher, Nichols & Meeks Chicago Elizabeth J. Shampnoi Director, Dispute Advisory & Forensic Services Stout Risius Ross, Inc. New York City Gerald R. Uram Davis & Gilbert LLP New York City M. Christine Graff Winston & Strawn LLP Chicago Thomas C. Homburger K&L Gates LLP Chicago Eric A. Oesterle Miller Shakman & Beem LLP Chicago Nancy M. Olson Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates Chicago Arthur E. Pape The Pape Law Firm Wheaton, Illinois Michael D. Rechtin, Jr. Quarles & Brady LLP Chicago M. Rosie Rees Pircher, Nichols & Meeks Chicago David Siegel Sidley Austin LLP Chicago James F. Whalen Executive Vice President CBRE, Inc. Chicago CHICAGO Chair: Patrick G. Moran Dentons US LLP Chicago Mary F. Andreoni Ethics Education Counsel Attorney Registration and Disciplinary Commission Chicago Robert L. Fernandez Dentons US LLP Chicago Ira Fierstein Seyfarth Shaw LLP Chicago Ellen Friedler Strategic Leasing Law Group, LLP Chicago Program Attorney: Meghan K. Carney LIVE WEBCAST Same Great Program – From Your Location The New York City session of this program is available live via the web at www.pli.edu: Print the Course Handbook, submit questions electronically and get “real-time” education right from your PC! If you have any questions, please call PLI’s Customer Service Department at (800) 260-4PLI. 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