Thursday, March 29, 2007

Griffin Partners Buys Houston Office Tower for $114.5M

Griffin Partners Buys Houston Office Tower for $114.5M

A joint venture of Griffin Partners and Urdang Capital Management acquired the Class A office tower at 1301 Fannin St. in downtown Houston for $114.5 million, or $144 per square foot. The seller was a partnership between The Shidler Group and Angelo, Gordon & Co. Built in 1983 and renovated in 2004, the 25-story office building totals 795,115 square feet of office and data center space. It sits on 1.4 acres at the corner of Fannin and Polk in the city's Central Business District. The site is 87% occupied by tenants including AIM Management Group, JPMorgan Chase and ExxonMobil. "In late 2006 into 2007, we have been repositioning some of the assets in our portfolio and the opportunity presented itself to sell this exceptional Class A building," said Matt Root, a partner with Shidler. "We believe in the long-term attractiveness of the Houston market and will look for other opportunities to invest here in the future." Griffin Partners was self-represented and will handle leasing and management of the building. Adam Edwards and Dan Broderick of Eastdil Secured, and Matt Root of Shidler Group, represented the selling partnership. For more information see; www.houstonrealtyadvisors.net

Wednesday, March 28, 2007

From Lease Audits: The Essential Guide

Whenever a landlord or tenant discovers an error from a lease audit, the typical response will be to present the findings to the other side in an effort to obtain a settlement.

"If the tenant has confronted the landlord with the claim, and the landlord and tenant have been unable to resolve the matter through negotiation, how might the tenant proceed?

Tenant self-help
These approaches tend to be quite risky and often quite unwise, but nonetheless the sort of things which an agitated, concerned and self-righteous tenant might consider.
* Withhold rent
* Move out of the premises
* Change tactics, negotiate a lease extension with release of claim by a reason of error as a carrot to landlord to sweeten the terms
* Develop tenant group to make joint claim
* Bad-mouth the landlord
* Decide to currently do nothing


Lawsuits
* Claim for breach of lease
* Claim for fraud
* Claim under RICO (Racketeer Influenced and Corrupt Organizations
Act) or state deceptive practices act
* Claim for negligent misrepresentation
* Claim for declaratory judgment
* Claim for reformation
* Claim for recission


Alternative Dispute Resolution
* Mediation
* Arbitration


The particular size and nature of the error will have an obvious role in framing tenant's choice. The state of the rental market in the locale where the leased premises are located at the time will often be important. The significance of the error in the overall structure of tenant's affairs may substantially control the decisions which the tenant makes. Tenant's analysis of the landlord's likely reaction to tenant's approach will also affect tenant's actions." for more information see; www.houstonrealtyadvisors.net

Tuesday, March 27, 2007

Consent to a sublease

Failure to secure consent to a subleasing, as required by the terms of a
lease, does not by itself void a subleasing since it is generally
accepted that lessees may transfer their leases despite restrictions in
their lease against doing so.
from http://www2.blogger.com/www.meislik.com <http://www.meislik.com/>
A subsubtenant sued its sublandlord, seeking damages and the return of
her property after the sublandlord allegedly forcibly removed [the
subsubtenant] from, and took possession of, her massage therapy
business. The sublandlord sought to have the suit dismissed.
Originally, a businesswoman had bought the sublandlord's massage
business and then subleased the premises. Those premises had been
leased by the sublandlord from a real-estate company. The record did
not show whether the sublandlord needed the owner's permission
before making the sublease agreement. The businesswoman then resold the
massage business to the subtenant who thereafter took possession of the
premises, [and] began renovations and conducted business therein.
The sublandlord claimed that the subtenant took possession of the
premises without her knowledge, and the businesswoman's husband
admitted that he sold the business to the subtenant without the
sublandlord's consent or knowledge. Thereafter, the subtenant
claimed that she paid rent directly to the lessor. Later, the subtenant
and the businesswoman each received a letter from the sublandlord
purporting to terminate the original sublease agreement between the
sublandlord and the businesswoman. The subtenant claimed that about
three months after receiving that letter, the sublandlord "and
others arrived at the premises and forcibly removed" the subtenant
from the store and discarded certain of her property.
Park v. Timber Creek Plaza, LLC 02-4929 (U.S. Dist. Ct. D. N.J. 2005)
(Unpublished) February 22, 2005 The subtenant alleged that the
sublandlord deprived her of her property without due process of law in
violation of the 14th Amendment of the Constitution. The District Court
dismissed that claim since "deprivation of property without due
process of law requires a showing of state action and the subtenant
failed to show that the sublandlord had exercised power "possessed
by virtue of state law and made possible only because the wrongdoer
[was] clothed with authority of state law."
The Court held that, in New Jersey, in order to recover under a claim of
forcible entry and detainment of property, the claimant must make a
showing of legal actual possession at the time of entry... as well as a
showing of legal entitlement to actual possession - although title to
the property is not required. The sublandlord argued that the subtenant
was not legally entitled to possession of the premises since she was not
a named party to any contractual agreement found in [the] record and
since she subleased the premises without the sublandlord's knowledge
or consent, thereby violating the terms of the original sublease between
the sublandlord and the businesswoman, thereby voiding the
businesswoman's sublease agreement with the subtenant. The Court
rejected this argument, finding that the businesswoman's
"failure to secure the permission of [the sublandlord] prior to
subleasing the premises would not by itself void that agreement"
since it is generally accepted that lessees may transfer their leases
despite restrictions in the lease against doing so.
Thus, the Court held that any sublease agreement entered into by [the
businesswoman] was not void ... for failure to obtain the
sublessor's consent. Additionally, the Court found that a dismissal
of the subtenant's claim would be improper since a reasonable jury
could conclude, based on the facts ... that [the subtenant] was in
actual legal possession of the premises on the date of the alleged
incident.
This conclusion was supported by the fact that the sublandlord entered
into a second sublease with the businesswoman in what appeared to be an
effort to circumvent the subtenant's entitlement to the premises
after the sublandlord and the businesswoman entered into their sublease
agreement. The Court likewise rejected the sublandlord's contention
that an unwritten commercial sublease is void since the rule had since
been changed. Finally, the Court held that since each party gave
dissimilar accounts of what had occurred, it was more proper for a jury
to resolve those factual disputes.
The subtenant sought damages for wrongful distraint, which the Court
referred to as the `seizure of another's property to secure the
performance of a duty, such as payment of overdue rent.'
The sublandlord argued that the Court had no evidence that the subtenant
owned any of the property distrained and, thus, [was] not entitled to
any damages. The Court agreed and dismissed the subtenant's
conversion, trover, and wrongful distraint claims since her evidence on
the issue of ownership was a mere scintilla and [was] not significantly
probative." for more information see:
www.houstonrealtyadvisors.net

www.houstonrealtyadvisors.net

Friday, March 23, 2007

Square footage certification

"Any bozo who can hold a tape measure can measure square footage."
from Lease Audits: The Essential Guide
"This text will assume that the goal of measuring square footage is to achieve an accurate result which is objectively verifiable and which complies with law or standards for measurement as applicable to the lease in question.
The trick is to measure the premises to the same supportable number twice in a row. An even better trick is to measure, arrive at a sum, and then tell another person how you measured it - such that he can do so without further coaching and come up with the same sum. The final coup de grace is to measure the space accurately such that it can be remeasured to the same sum while following instructions which are legally supportable as the proper way to measure space under the lease applicable to those circumstances.
Either of 3 possibilities may permit the motivate novice to attempt to measure a given leased premises:
(1) Blithe ignorance coupled with overconfidence;
(2) Care, study, and innate aptitude; or
(3) Extreme simplicity of premises to be measured.
Issues which are important include each of the following:
A. Whether certified numbers are based upon as-built measurements which are essential to reliable accuracy.
B. The certification must be based upon a configuration of exterior walls, both of the building and of the suite, which exists at a time relevant to the analysis.
C. The certification should state the underlying basis of the measurement, often that it is in accordance with a stated standard - be it BOMA or some other standard which is accepted as the appropriate one for the particular premises at issue.
D. Require that the certification be directed to the tenant who relies upon it so that the person performing the certification knows that tenant is relying upon it." for more information see ; www.houstonrealtyadvisors.net

Thursday, March 22, 2007

Uncertainty as renewal notice deadline approaches

Avoid uncertainty as renewal notice deadline approaches
When a landlord gives a tenant a renewal option, typically the landlord requires the tenant to notify the landlord of its intent to exercise this option by a certain deadline.

"The landlord may think that if the tenant misses this deadline, it loses the right to exercise the renewal option. But that's not always true. Some state courts may rule that if a tenant misses the renewal notice deadline because of, for example, an oversight, the landlord must still honor its late renewal notice.


So what does a landlord do if a tenant's renewal notice deadline is rapidly approaching and the tenant has not given its renewal notice?
Landlords may be wary about starting negotiations with a replacement tenant until they are sure that the current tenant is not planning to renew its lease.


To avoid this problem, some landlords send certain tenants a letter reminding them of the upcoming renewal option deadline, and stressing that a late notice will not be honored. The landlord will not want to send a renewal option a letter reminding it of its upcoming renewal notice deadline to every tenant with a renewal option Deciding when to send such a letter will depend in large part on what your state's position is on late renewal notices and the enforcement of time is of the essence clauses.


Most states' courts have followed the view that an owner should be compelled to honor a late renewal notice only under very limited circumstances, such as when the failure to serve notice on time was caused by fraud, duress, undue influence, misrepresentation, or mistake.


A handful of states may require owners to honor a tenant's late renewal notice if the owner was not prejudiced. Courts in these states typically weight the following 4 factors when deciding whether an owner must honor a tenant's late renewal notice:


(1) Reason for failure to give timely notice – whether the
reason for the late notice was due to an honest and justifiable mistake;


(2) The length of tenant's delay – whether the tenant
gave its notice only a few days late or months late;


(3) Prejudice suffered by owner – whether the late notice
prejudiced the landlord because it wasted money marketing the space or negotiating a new lease with a replacement tenant; and


(4) Hardship suffered by tenant – whether the tenant will
be hurt if the landlord does not honor the late renewal notice, e.g.
tenant won't recoup substantial cost of its improvements."
for more information see www.houstonrealtyadvisors.net

from Professional Building Office Management, June 2004

Tuesday, March 20, 2007

Renewal Tips when the time comes

Follow 11 tips when negotiating renewal near lease end.


"Like many other tenants, you may have signed a lease without a renewal option. A renewal option may not have been important to you when you negotiated the lease because you didn't anticipate staying in the space beyond the initial term. Or the owner may have refused to give you a renewal option when you negotiated the lease.


Renewing the lease can be a golden opportunity to get a better deal from the owner, especially if the tenant has proven itself as a good tenant, or the real estate market (from the owner's perspective) is weak.


Follow these 11 negotiating tips if you want to renew a lease that does not already have a renewal option:


(1) Start renewal negotiations early.


(2) Prepare for negotiations by researching market.


(3) Don't accept owner's first renewal rent
figure.


(4) Ask for Operating Expense/CAM cost exclusions or cap.


(5) Don't let owner take away key concessions.


(6) Consider changes in neighborhood/market when setting
renewal term.


(7) Don't let owner factor TIA (tenant improvement
allowance) repayment into base renewal rate.


(8) Use renewal negotiations as opportunity to fix lease
problems.


(9) Apply security deposit toward base renewal rent.


(10) Don't agree to do building upgrades during renewal
term.


(11) Be willing to leave space behind."

for more information see: www.houstonrealtyadvisors.net
Ed A. Ayres 713-782-0260

Houston Premium Outlets breaks ground

CONSTRUCTION BEGINS ON 75-ACRE RETAIL OUTLET CENTERHOUSTON — Construction has begun on Houston Premium Outlets, a 75-acre retail outlet center located in Houston. Chelsea Property Group recently acquired 179 acres located along Highway 290 between Mason Road and Fairfield Place Drive for the development of the project. Houston Premium Outlets will be the first Chelsea Premium Outlet Center in Houston and it is scheduled to open in spring 2008. The project will be located in close proximity to Fairfield Town Center, a 100-acre retail project that is scheduled to open in fall 2008/spring 2009.

Monday, March 19, 2007

Tenant Improvement Allowance

When negotiating a lease, a tenant will expect an owner to agree to provide a tenant improvement allowance (TIA) to help pay the cost of altering and improving the space.


from Commercial Tenant's Lease Insider, December 2005


"The tenant will want to use the TIA to pay hard costs (the costs of labor and materials) and soft costs (such as architectural fees and engineering fees).


To avoid disputes with the owner over which soft costs the TIA will cover, list them in the lease. A broad list of soft costs includes:


* Architectural fees.


* Engineering fees.


* Legal fees.


* Consultant's fees.


* Building permit and filing fees.


* Interest/financing costs.


* Design fees.


* Furniture and movable office equipment costs.


* Signage costs; and


* Moving costs.


Expect a savvy owner to limit the amount of soft costs that the TIA will cover, for example:


(a) Cap on TIA covering soft costs.


(b) Exclude controversial costs.


(c) Line item budget.


Example: Some leases bar the TIA from being used for telecommunications equipment. That can be a problem because telecommunications conduit and switching equipment can be a big part of the construction costs. The tenant should make sure that hard construction costs include telecommunications conduit and switching equipment."

Messages in this topic (1)
________________________________________________________________________
________________________________________________________________________
2a. 2006 estimated expenses
Posted by: "Larry Mayerhofer" lmayerhofer@sbcglobal.net lawrence_mayerhofer
Date: Wed Jun 21, 2006 11:29 am (PDT)
Often when a building changes ownership, the assessed valuation will be adjusted (with the current hot market for office buildings, it typically increases). The assessor has all of the sale data, and if the sales price was $8.1 million, it is likely that the valuation will be increased as of the sale date. Unfortunately it may take months or years for the assessment to be finalized (especially if the new owner appeals). Since it is almost impossible for the owner to recover retroactive tax increases years later, when many of the tenants have vacated, it is in their best interest to try to bill them upfront.
Now would be a good time to establish a good relationship with the new owner. I recommend that a group of tenants meet with the owner to discuss the reason for the higher tax estimate. If the owner was assured that they could eventually recover the retroactive taxes they might reduce the 2006 prebillings. It could take a letter agreement or lease amendment to memorialize the arrangement.
On the other hand, if the owner doesn't expect the taxes to rise, a group of tenants could put pressure on them to reduce the prebillings to a more realistic level.
by:Larry Mayerhofer; for more information see:

www.houstonrealtyadvisors.net

Friday, March 16, 2007

Order up and Serving up a Restaurant Lease

Tenants and their attorneys should know what's on their plates before bringing a new restaurant to town.


from Heartland Real Estate Business, 2004
"Just as the typical retail lease addresses a host of issues that are unique to the realm of retail leasing, the typical restaurant lease, while being a retail lease at heart, should address a broad range of additional development and operational issues that are not the focus of a generic retail lease.
In addition to negotiating traditional retail concepts, such as operating covenants, use clauses, exclusive uses, percentage rent and common area maintenance costs, the landlord and tenant should also focus on specific matters to negotiating a restaurant lease, such as:
(1) What land use approvals might be necessary;
(2) The availability of appropriate liquor licenses;
(3) The availability, location and capacity of necessary utilities; &
(4) The challenges that may be faced in venting kitchen equipment.
Each of these matters can have a significant impact on the operations and costs of a new restaurant.
Land Use Approvals
In entering the typical retail lease, a tenant or its attorney rarely give much time and attention to zoning and other land use approvals.
The assumption is that if the landlord and its lender each invested the dollars necessary to develop the center and the landlord obtained the permits necessary to build the center, certainly the center is properly zoned for retail use. In most cases, this is a fairly safe assumption, both with respect to a generic retail use and to a base restaurant use.
However, it would be a mistake to assume that such zoning also permits many of the ancillary operational aspects critical to running a successful restaurant.
For instance, in many jurisdictions, obtaining a liquor license, serving food or beverages in outdoor seating areas and operating the restaurant beyond normal retail hours all require the issuance of a conditional use or similar permit. While obtaining a conditional use permit is a mere formality in most jurisdictions and circumstances, sometimes it is not so easy. Therefore, a tenant and its attorney should keep at least two things in mind.
First, from time to time, there is public opposition to the issuance of a conditional use permit. Residents may object to the noise generated by outdoor seating or may blame a number of other perceived ills on the alcohol served or the late hours kept by the restaurant. In this case, the conditional use permit may be rejected outright or its issuance may be subject to conditions that are just not workable from a tenant's perspective.
Second, even if issuance of the conditional use permit is a slam dunk, issuance of the permit almost always requires action by one or more governmental commissions and/or boards, many of which meet only once a month. A tenant and its attorney need to carefully coordinate the local jurisdiction's schedule with the tenant's construction schedule and the opening/rent commencement date. From the tenant's perspective, it would be nice for the lease to be contingent on its ability to obtain an acceptable conditional use permit and for the rent commencement date to be tied to so many days after issuance of the permit. However, as is often the case, if the landlord is not willing to give the tenant latitude in the lease, the tenant and its attorney really need to do their homework before executing a binding lease.
Liquor Licenses
In negotiating the generic retail lease, a tenant's ability to obtain a liquor license is a non-issue. But, in negotiating a restaurant lease, a tenant's ability to obtain all necessary liquor licenses should be of utmost concern to both the tenant and the landlord. If the tenant cannot serve alcoholic beverages in its sit-down restaurant, the restaurant will not likely survive, and the landlord will not have a viable, rent-paying tenant. Thus, very early on in the lease negotiation, it would behoove the parties to spend the time and effort necessary to familiarize themselves with the process and potential pitfalls in obtaining all liquor licenses appropriate to the tenant's operations.
The requirements and procedures for obtaining appropriate liquor licenses vary widely from state to state and can vary widely from local jurisdiction to local jurisdiction within the same state. In many states, in order to serve alcoholic beverages, the tenant must obtain appropriate liquor licenses at each of the municipal, county and states levels. Usually, such licenses must be applied for in succession (i.e., after the tenant obtains the municipal licenses, the tenant moves on to the state and then on to the county), and thus the entire process can take a number of months.
Almost all jurisdictions tend to focus on the identity and background of the equity owners of the restaurant, as well as the person in charge of day-to-day operations (often called the managing officer). Usually, the liquor license application delves into the criminal histories, including prior liquor license violations, of the equity owners and managing officer and requires that the managing officer be a taxpaying resident of the state in which the restaurant is located. One should keep in mind that restaurant owners and operators who, by all appearances are upstanding, model citizens, frequently have colorful pasts.
At the local level, the tenant and its counsel should be wary of municipalities that cap the total number of liquor licenses that it will issue or that condition issuance of liquor licenses on the signature of a petition by a certain percentage of residents and/or business owners within a certain radius of the restaurant. At the state, county and local levels, other potential pitfalls in obtaining appropriate liquor licenses include:
· Prohibitions on the issuance of licenses to establishments
located within a certain distance from a school or church;
· Prohibitions on the issuance of licenses to persons employed
by or having an ownership or other financial interest in a manufacturer, distiller or distributor of alcoholic beverages;
· Requirements calling for the finger printing of all officers
and directors of the ultimate owner of the restaurant (when the restaurant is ultimately owned by a Fortune 500 company, good luck explaining that requirement to the board of directors); and
· Limitations on the total number of licenses that may be
held at one time by an entity and its affiliates.
In the realm of liquor licensing, state, county and local jurisdictions across the country have lots of quirky, and often arcane, procedures and requirements on the books. The parties to a restaurant lease would be well advised to do their due diligence thoroughly and to do so early in the lease negotiation. Nobody wants to be under construction and then discover that the tenant will be unable to obtain liquor licenses necessary to the successful operation of the restaurant.
Utilities
All retail premises require basic utility services (electric, telephone, water and sewer). The concern with restaurant premises is that they almost always require more than basic service. Restaurants need natural gas to properly and efficiently operate kitchen equipment, and they often require cable or satellite service for clear reception for televisions located within the bar area or elsewhere throughout the restaurant. In addition, the operation of commercial refrigerators, freezers and other kitchen equipment requires greater electrical capacities than are provided to the typical retail space. Also, kitchen operations, combined with additional restrooms, often exceed the capacities of water and sewer lines provided to the typical retail space.
Because virtually all retail leases contain a clause imposing the cost of upgrading utility services upon the tenant, the tenant and its attorney need to focus on the availability, existing location, and existing and required capacities of utility service to the proposed premises. In terms of availability of service, from time to time, tenants find that natural gas service has not been extended to the shopping center or to anywhere within the vicinity of the shopping center. Every once in a while, shopping centers simply do not have enough electrical capacity to serve the needs of all of their tenants.
In terms of location of service, in some cases (frequently in regional shopping centers), gas service is available to the center, but the closest point of connection may be hundreds of yards from the premises.
In this case, extending the gas line to the premises can add tens of thousands of dollars to the tenant's anticipated construction costs.
In terms of capacity of service, even if all applicable utilities are stubbed to the premises, often the capacity of electrical, water and sewer service is not sufficient for a restaurant use.
In order to keep construction costs under control and to avoid unpleasant surprises, in negotiating the utility provisions in a restaurant lease, the tenant and its attorney should always do three things.
First, they should work in close consultation with the tenant's architect/engineer. Most attorneys and their clients do not have a technical background and are completely lost when it comes to establishing, describing or even understanding appropriate utility requirements.
Second, they should have the tenant's architect or other qualified professional do an on-site inspection of the proposed premises to confirm current conditions. More often than not, the tenant will get burned when relying on the landlord's oral representations regarding existing utility capacities and conditions.
Finally, once the tenant's utility requirements have been established by the architect and/or engineer, the tenant and its attorney should make sure the specific requirements are clearly set forth in the lease. This is tenant's get-out-of-jail-free card if and when issues regarding insufficient utility capacities arise.
Venting Kitchen Equipment
Venting can become a significant logistical and cost issue for restaurants. Cooking equipment located in the kitchen of a restaurant requires venting, usually to the roof of the building where the restaurant is located. If the restaurant is located in a single-level shopping center or on the top floor of a multi-level center, venting to the roof is relatively simple. However, if, for example, the restaurant is located on the first floor of a three-level regional shopping center, venting to the roof can be challenging and extremely expensive. Often a direct, vertical route to the roof is prohibited by the location of other tenants directly above the kitchen of the restaurant.
Logistically, whether there is a direct, vertical route to the roof or an indirect route must be taken, the installation of such venting can be a nightmare; it will almost certainly involve performing work in the premises of other tenants and may even require the removal and subsequent re-installation of portions of the walls or ceilings of other tenants. From a cost perspective, if the tenant is forced to take an indirect route to the roof, the additional cost for venting can easily exceed six figures.
So, what are the tenant and its attorney to do?
First, as is the case with utilities, get the landlord's and the tenant's architects involved early in the process. The landlord and the tenant need to have a clear understanding of what practical challenges may have to be faced. Once the parties have an idea of the scope of any potential problems, the landlord and the tenant (and their
attorneys) can make an informed decision in addressing an appropriate allocation of costs between the parties.
Second, if the installation of the tenant's venting will require work within the premises of other tenants, the obligation to perform such installation work should be imposed on the landlord, regardless of who ultimately pays for the cost of such work. The landlord's leases with other tenants should grant landlord access to the premises of these tenants and should contain appropriate exculpation provisions.
Therefore, the landlord is the party best suited to perform this type of work.
While a restaurant lease is a retail lease at heart, restaurants operate in ways that are very different from the generic retail use. Thus, in negotiating a restaurant lease, the landlord, the tenant and their attorneys need to recognize these differences and adequately address these issues. In addition, they should address a range of other differences between restaurants and generic retail. For example, restaurants generally have different operating hours than typical retail uses; restaurants create more and different types of trash than other retailers; and drive-through facilities create all sorts of regulatory and development issues. These factors impact the way that a restaurant is developed and operated." For more information see: www.houstonrealtyadvisors.net

INVESTOR CONUNDRUM: (How Much) To Risk, or Not To Risk?

High Commercial Prices and Mortgage Woes Have Investors Re-Evaluating Risk in Their Holdings and Investment Strategies
Justin Mann, chief operating officer of Monopoly Trading Co. in Seneca, SC, has been taking a greater role in the family real estate business. Monopoly Trading owns a variety of properties, including a golf course, ranches, mobile home communities, single tenant and multi-tenant office buildings and retail centers, warehouses, storage facilities and undeveloped land. Like many investors with substantial real estate holdings, Mann has been watching the economy and analyzing his company's performance on a daily basis. He has evaluated each of its different entities and their respective markets and he has come to one conclusion. "We need to get back to our core businesses to strengthen the company," Mann said. "I absolutely feel that investors should tidy up and reduce the risk in their portfolios. The main reason being so that not only will they be able to weather a storm but they will be able to continue to grow -- and at record paces -- and produce record numbers by being able to acquire properties from owners that took on too much risk and have to sell short." Mann is not alone in re-evaluating his investment position. Top dollar commercial property values, falling housing values, escalating mortgage defaults, tightening credit and an agitated stock market have commercial real estate investors reassessing their portfolios and re-evaluating whether the strategies of the last couple of years can carry them through the coming years. Particularly, they are analyzing their risk exposure and more specifically whether they have relied too much on risk. Investors, both small and large, are reassessing. The California Public Employees Retirement System (CalPERS), the largest pension fund in the country with $230 billion in assets, being among them. CalPERS' Global Real Estate Investment Office notified the pension funds investment committee about it its planned strategic review of CalPERS' real estate portfolio and operations and development of a new investment plan for the coming years. It has been nearly 12 years since CalPERS completed its last strategic review of its real estate program. Since that time, the program has grown dramatically in size and complexity. "Given the drop in core return expectations and in response to market opportunities, the real estate program has shifted from a mainly domestic, core portfolio to a diversified, global portfolio with an emphasis on non-core initiatives," CalPERS Global Real Estate Investment Office explained to the investment committee. "For example, in 2000, non-core investments represented 24.5% of the real estate portfolio; by 2006, CalPERS had approximately 47% of its portfolio in non-core and REIT investments. During this same period, the number of investment relationships tripled." CalPERS' real estate portfolio was the biggest percentage gainer among asset classes last year, returning 27.6% for investments in office, retail, apartment, industrial, housing, land, and California urban properties. By comparison, the NCREIF industry benchmark earned 17.6%. CalPERS has retained Pension Consulting Alliance Inc. as a consultant to assist in the strategic review and the development of an investment plan. Over the next couple of months, CalPERS and PCA officials will be meeting with core partners. Among the key questions they will be asking is whether CalPERS should reduce the risk in its portfolio and where are the best places to invest on a risk-adjusted basis. CalPERS and PCA expect to have a draft of new investment plan ready to present to CalPERS' core partners at their annual meeting early this summer. And while evidence of portfolio re-evaluations are widespread, not everyone is concluding that it is time to lessen their risk exposure. In fact, many investors are becoming more comfortable with some form of risk. Robert Aigner, senior vice president of Harsch Investment Properties in Bellevue, WA, said he doesn't find investors afraid of risk. He cited Equity Office Properties sale to Blackstone and the subsequent sale of properties to regional players. "Risk is a function of return," Aigner said. "In order to address the cascading waterfall of returns on the above mentioned transaction, I see investors actually becoming more comfortable with risk (read lower cap rate) than previously believed. This is especially true for core assets and locations." Others are seeing a shift of investment types in which investors are willing to take a risk. "There's always risk, sometimes more and sometimes less. What's interesting is that one's own perception of risk can be very different than another party's perception of risk," said Terri Gumula, vice president, acquisitions of Real Estate Capital Partners in New York. "I'm seeing an increasing number of deal recapitalization come across my desk which can present some interesting opportunities." Recapitalization occurs when a new partner buys into an existing partnership or joint venture. "In today's environment, investors need to find ways to deploy capital without having to meet the market's pricing scale," said Gregory J. Nieder, principal, executive vice president, Foresite Realty Partners LLC. "Investing in opportunities through note purchases, taking subordinate debt positions or providing fresh equity in project recapitalizations can allow for strong returns while keeping one's basis low enough to justify the risks." In some partnerships and joint ventures today, the partners' initial expectations on returns are not being met, resulting in an existing equity partner's desire to get out of a deal and redeploy its capital to an investment with a higher return. Meanwhile, the local operating partner wants to keep the assets to take advantage of strong leasing demand and rising rents, such as are evident in today's office market. "While the scenario you mentioned is certainly happening, the recapitalizations we are looking at would typically allow us to come in with fresh equity for someone who has used up available funds in their capital stack," Nieder said. "For example, rising construction and leasing costs have caused some owners to run out of funds before finishing a redevelopment or leasing effort." "In those situations," Nieder said, "a new equity partner can come in and recapitalize the partnership with equity and debt to finish the project. Therefore, because it is not really a take-out of existing equity plus profit, you can keep a 'carryover basis' to some degree and even with the increased costs that went into the building, be in a better position than what the open market may dictate." "Also, generally the new equity gets a preferential return position vis-à-vis the original equity," Nieder said. "The reason why the original operating partner would stay in is exactly as you mentioned, to take advantage of the full creation of value through demand and rising rents." However, not even strong fundamentals in the office and flex rental markets are enough reason for some investors to take unnecessary chances. There just comes a point where prices are too high and rents won’t keep pace. "Despite the fact that construction costs, historically low inventories, and a strong economy make for the perfect rent spike environment, the fact remains that tenants pricing of the market is less elastic," said Frank L. Buckley, managing director of Ramsey-Shilling Commercial Real Estate Services in Los Angeles. "Occupancy costs are a percentage of revenue … [that] margin is sacrosanct." Even Justin Mann of Monopoly Trading, while he is not scared off by risk, prefers to sit on cash for a while. "I think strategies will vary for everyone depending on your company's strengths and weaknesses," Mann explained. "We are heavy in rental properties both multifamily and office properties. We are selling a lot of our land holdings to put our money in NNN leased properties. Our desire is to increase our monthly cash flow so that we can attack fewer projects but produce them with a much higher quality thereby creating a greater return on our investment." "With this money we are planning to take a certain percentage and invest it in higher risk projects, believe it or not, that we have the potential to see even greater returns on," Mann said, but adding, "the majority of it, however, will go back into more NNN properties to further increase our cash flow." COSTAR March 17, 2007 http://www.costar.com/News/Article.aspx?id=2154F78EEED207F9C55712E79AB68FA4&ref=100 For more information see www.houstonrealtyadvisors.net

Thursday, March 15, 2007

Landlord found in breach

Landlord found in breach of stipulation to pay surrender amount for Tenant's early vacatur.
from The New York Law Journal, June 15, 2006
"Respondent Vista Media Group, Inc. (Vista) moves for an order restoring this commercial holdover proceeding to the trial calendar; and upon such restoration, directing petitioner One York Property, LLC (One
York) to comply with the stipulation of settlement dated March 31, 2005 and for judgment in the amount of $294,250 plus costs and legal fees.
Petitioner opposes the motion.
Pursuant to a lease dated June 4, 1999, One York is the successor landlord and Vista was the successor-tenant of that portion of the roof of a building located at 55 Avenue of the Americas (premises) on which Vista owned and operated an outdoor advertising sign structure, i.e., a billboard. The lease was for a ten year term, commencing on July 1, 1999, and expiring June 30, 2009.
One York Property LLC v. Vista Media Group Inc., 068991/05
Decided: May 17, 2006
On March 31, 2005, the parties entered into a lease modification and termination agreement (termination agreement), accelerating the termination date of the lease from June 30, 2009 to March 31, 2005 (termination date). The termination agreement provides that, notwithstanding the acceleration of the termination date to March 31, 2005, Vista may remain in possession of the premises through January 15,
2006 (vacate date).
In order to fully effectuate the agreement between One York and Vista with regard to their respective rights and obligations following the termination date and through the vacate date, as agreed by the parties, One York commenced a holdover proceeding in this Court on April 27, 2005. The holdover proceeding was resolved by the written stipulation of settlement which was so ordered by the Court. The stipulation of settlement provides that, on or before the vacate date, Vista shall remove all of its property from the premises other than the advertising device and deliver vacant possession thereof to One York. The stipulation of settlement provides further that the billboard and any other property remaining on the premises after the vacate date shall be deemed abandoned by Vista and One York may take possession of same without accountability to Vista.
In consideration of Vista's undertakings and provided Vista timely vacates the premises on or before the vacate date, the stipulation of settlement provides, in paragraph 10, that One York shall pay to Vista the sum of $294,250 (the 'surrender amount') simultaneously with Vista's actual vacatur of the premises in accordance with all of the terms and provisions of this stipulation. The stipulation of settlement provides further that [n]otwithstanding any other provisions of this stipulation or the lease, in the event the surrender amount is not paid in accordance with the provisions of this paragraph 10, the vacate date shall be postponed to the date on which the surrender amount is paid to Vista. The stipulation of settlement also states that this Court shall retain jurisdiction to enforce the terms of this stipulation in the event of a default by either party.
The moving affidavit of Christopher T. Young, the president of Vista, alleges that respondent surrendered possession of the premises to One York as of January 10, 2006-five days before the vacate date provided in the stipulation of settlement-and requested that petitioner pay the surrender amount to respondent. Mr. Young states that he spoke with Stanley Perelman, the principal of One York, and advised him of respondent's surrender of the premises and demand for payment of the surrender amount.
Mr. Young alleges further that:
(1) Vista has fully complied with its obligations under the stipulation of settlement and surrendered possession in good faith;
(2) One York has refused and continues to refuse to pay the surrender amount to Vista in breach of the stipulation of settlement;
(3) Vista is fully entitled to receive its bargained-for consideration-the surrender amount-without any further delay; and
(4) Vista is entitled to an award of reasonable attorney's fees pursuant to paragraph 8(i) of the termination agreement.
In opposition, Mr. Perelman argues that respondent's motion must be denied, in its entirety, as a matter of law on grounds that:
i) after entering into the stipulation of settlement, this summary proceeding was terminated and respondent's damages are limited to those attributable to breach of such agreement, which damages must be sought in a separate action in Supreme Court;
ii) this Court, which is a court of limited jurisdiction, lacks jurisdiction over respondent's claims for injunctive or equitable relief seeking to compel petitioner to pay respondent the amount of $294,250 plus costs and legal fees;
iii) this Court no longer has jurisdiction over this summary proceeding because respondent has surrendered possession of the premises; and
iv) under the operative agreements, respondent is obligated to pay petitioner for structural damage it allegedly caused to the premise, petitioner does not owe respondent anything, and this Court lacks jurisdiction over the parties' post-settlement monetary claims.
The Court of Appeals addressed whether a stipulation settling a lawsuit may be enforced by way of motion or plenary action in Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51, 396 N.E.2d 1029 (1979). There, the Court wrote:
A settlement agreement entered into by parties to a lawsuit does not terminate the action unless there has been an express stipulation of discontinuance or actual entry of judgment in accordance with the terms of the settlement. Absent such termination, the court retains its supervisory power over the action and may lend aid to a party who had moved for enforcement of the settlement. Thus, under Teitelbaum, we must look to the language of the stipulation of settlement to determine whether the instant action was terminated.
Vista consented in paragraph 2 of the stipulation to the issuance, forthwith, of a judgment of possession ('Judgment') in favor of One York and against all respondents. Paragraph 21 of the stipulation states:
The parties agree that this stipulation may be so ordered by any judge or judicial hearing officer of the Civil Court and that any judge or judicial hearing officer may issue the judgment and warrant provided for herein without further notice to any party.
At first glance, the language in paragraphs 2 and 21 suggests that the parties contemplated that a judgment would be entered following the execution of the stipulation. However, another provision in the stipulation clearly reveals that the parties did not intend the stipulation to deprive this Court of authority to enforce it.
Paragraph 18 of the stipulation plainly states:
The Court shall retain jurisdiction to enforce the terms of the stipulation in the event of a default by either party.
In light of the above provision, there is no question that this Court retains the power to enforce the stipulation by way of motion. Where, as here, the discontinuance of the action was, in effect, conditioned upon the proper payment of the amount provided in the stipulation of settlement, the parties did not unequivocally terminate the action. See, e.g., Berrian v. McCombs, 280 A.D.2d 442, 720 N.Y.S.2d 513 (2nd Dep't.
2001). Accordingly, respondent may enforce the stipulation by motion in this Court and is not required to file a separate plenary action in Supreme Court.
Petitioner's 2nd contention is that this Court, which is a court of limited jurisdiction, lacks jurisdiction over respondent's claim for injunctive or equitable relief. Petitioner's contention is meritless for several reasons.
We disagree with petitioner's contention that respondent is seeking injunctive or equitable relief. An adequate remedy-at-law exists when the movant can be made whole or compensated by way of monetary damages.
Ansonia Associates v. Ansonia Residents' Association, 78 A.D.2d 211, 214 (1st Dep't. 1980) (If adequate relief can be obtained by a money judgment there is no need for equitable relief). In the instant motion, respondent asks the Court to enforce the stipulation by directing petitioner to pay a specific sum of money. Where, as here, a stipulation may be enforced by the entry of a money judgment, an adequate remedy-at-law clearly exists.
Even if we were to assume for the sake of argument that respondent is seeking equitable or injunctive relief, the Appellate Division has held that, if a lower court can address a landlord-tenant dispute, it is generally desirable that it do so.
In Lexington Avenue Associates v. Kandell, 283 A.D.2d 379 (1st Dep't.
2001), the Appellate Division wrote:
Civil Court has jurisdiction of landlord tenant disputes and when it can decide the dispute, as in this case, it is desirable that it do so.
Here, Civil Court has jurisdiction to enforce the subject stipulation of settlement, which, in the context of a Civil Court nonpayment summary proceeding, requires defendant to vacate the apartment that plaintiff temporarily gave her while repairs to her apartment were ongoing, and to re-occupy her own apartments, upon certain stated conditions, and also provides for Civil Court's continuing jurisdiction for purposes of its implementation. Clearly, Civil Court should be the forum to decide whether the conditions stated in the stipulation exist, and to award any incidental relief to which plaintiff may be entitled, including rent, use and occupancy and attorneys' fees, if they do.
Likewise, the case of 1029 Sixth, LLC v. Riniv Corporation, 9 A.D.3d 142 (1st Dep't. 2004), is instructive. In Riniv, four companion commercial holdover proceedings were settled by so-ordered stipulations. The landlord appealed from orders of the Appellate Term, which reversed the Civil Court and required the landlord to make payments to respondent-tenants pursuant to their stipulations. The Appellate Division agreed with the Civil Court's view, and concluded that the Appellate Term was wrong in excusing the tenants' failure to comply with the terms of the stipulation and requiring the landlord to comply with the stipulation despite the tenants' default.
In Riniv, it is important to note that the reviewing courts tacitly assumed that Civil Court had the authority to enforce the stipulation of settlement. No one raised the jurisdiction of Civil Court as an issue.
The silence of both the Appellate Term and Appellate Division implies that Civil Court has jurisdiction to enforce stipulations of settlement involving commercial holdover proceedings.
The petitioner's contention is meritless because the stipulation states on its face that this Court shall retain jurisdiction. The stipulation does not state that this Court relinquished jurisdiction once respondent surrendered possession. Petitioner's final contention is that, under the operative agreements, respondent is obligated to pay petitioner for structural damage it allegedly caused to the premises; consequently, petitioner does not owe respondent anything, and this Court lacks jurisdiction over the parties' post-settlement monetary claims.
Petitioner's final contention is patently meritless. On its face, the stipulation required respondent to surrender possession by a date certain; in exchange, petitioner was to pay $294,250 to respondent. It is undisputed that respondent surrendered possession in a timely manner, and petitioner concedes that it has paid respondent nothing.
The Court has reviewed the stipulation carefully. However, the stipulation does not state that petitioner is permitted to deduct the cost of any alleged damage from the $294,250 sum specifically provided for in the stipulation, nor does it state that said payment is conditioned upon surrender of the premises in a certain condition.
For all of the above reasons, respondent's motion to restore this matter to the trial calendar is granted. The Court further finds that petitioner breached the stipulation by failing to pay $294,250 which was the bargained-for consideration for the acceleration of the termination date of the lease and surrender of the roof space.
Respondent's request for attorney's fees pursuant to paragraph 8(i) of the termination agreement is also granted.
Paragraph 8(a) of the termination agreement provides:
This agreement when read together with the stipulation of settlement, constitutes the entire agreement between the parties with respect to the subject matter hereof, and all understandings and agreements heretofore or simultaneously had between the parties are merged in and are contained in this agreement.
In the event Owner or Tenant shall commence litigation against the other to enforce its rights under this agreement or the lease, the prevailing party shall be entitled to recover from the other the reasonable costs and expenses (including reasonable attorneys' fees) thereby incurred.
Respondent is entitled to an award of reasonable attorneys' fees under the above provisions as it is the prevailing party. Accordingly, respondent's attorney is directed to prepare an affirmation of services and to serve said affirmation upon petitioner. If petitioner objects to the amount of attorneys' fees, the Court will schedule a hearing to resolve the dispute, upon application.
The clerk is directed to enter judgment in favor of respondent and against petitioner in the sum of $294,250 plus costs together with interest at the statutory rate from January 15, 2006 onward."

Messages in this topic (1)
________________________________________________________________________
________________________________________________________________________
2. Windstorm insurance
Posted by: "Elaine Roston" Elaine Roston elaineroston
Date: Mon Jun 19, 2006 6:00 am (PDT)
Commercial real estate values in coastal areas may suffer as insurance companies reduce exposure to hurricane-prone areas.
from GlobeSt.com, June 13, 2006
"As hurricane season begins, insurance companies are increasing premiums, raising deductibles, dropping coverage amounts, and in some cases even dropping coverage altogether at coastal locations.
Commercial mortgage-backed securities (CMBS) servicers have noticed a sharp increase of anywhere between 25% and 400% in windstorm and flood insurance premiums since June 1, the official start of hurricane season. This may present a problem for commercial real estate properties where premium increases cannot be passed through to tenants. The resulting value decline may be severe enough so a property can no longer support its full debt services, increasing the likelihood of payment default.
Deductibles are rising, too. Increases have occurred of 10% and 15% of replacement value for renewals, compared to between 2% and 5% a year ago. Some CMBS servicers are requiring borrowers to provide guarantees to cover the difference between the two deductibles in order to mitigate the additional risk.
With insurers placing caps on, or dropping windstorm coverage, there is a concern that windstorm insurance along coastal areas may become commercially unavailable. She cites a possible echo of the severe terrorism insurance issues that occurred in late 2001 and early 2002.
Mortgages secured in CMBS typically carry property and casualty insurance coverage equal to the replacement cost of the property, and the majority include wind as a covered peril, except for properties located close to coasts. The determination of close proximity to a coast differs by insurance companies' risk appetite. Some insurers exclude wind for properties within 20 miles of the coast, while others exclude those within 100 miles. When wind is excluded, a separate wind policy or rider should be purchased."for more information see www.houstonrealtyadvisors.net

Tuesday, March 13, 2007

Trouble Ahead for Office Market?

Office investors have had plenty of reason to celebrate of late. Soaring construction costs have kept new supply in check while effective rents in the third quarter shot up by 2.3%, the biggest hike in six years, reports real estate data firm Reis. The national vacancy rate is also falling, now registering 13.5%, down from 15.1% a year ago.

But the U.S. economy is emitting mixed signals. The number of non-farm payrolls increased by just 51,000 in September after climbing by 188,000 in August. The September tally also registered well below Wall Street expectations. A median estimate of 23 economists polled by Dow Jones Newswires in August had projected an increase of 125,000 jobs in September.
And now there's more cause for concern. While the national office sector recorded roughly 16 million sq. ft. of net absorption in the second quarter, absorption slowed to 10.7 million sq. ft. in the third quarter. Net absorption — defined as the percentage change in the amount of space taken by tenants from one quarter to the next — is the strongest indicator of tenant demand.
Weaker demand for office space driven by efficiency-minded tenants could dampen this recovery in the coming months, say industry experts. “The fourth quarter could be a real turning point for the office market,” says Sam Chandan, chief real estate economist at Manhattan-based Reis.
“The consensus is that 2007 will bring slower economic growth than 2006, which may go down as a banner year for the office market.” Second-quarter GDP registered 2.6%, down from 5.6% in the first quarter.
“These absorption numbers are a cautionary note,” warns Chandan. “But when you also consider that many well-respected economists believe that 2007 will bring a recession, it could make it even tougher for the [office] market to recover.”
Many corporate tenants are controlling their occupancy costs more effectively today than they have in the past. Instead of aggressively expanding into new space, many are simply backfilling space they already lease. Eric Bowles, director of global research at corporate real estate association CoreNet Global, believes that this newfound efficiency will directly impact net absorption.
“We've seen the average amount of space per [office] worker drop over the past few years,” says Bowles. “The mantra among big office users is simply to use their space in a wiser and more efficient way.” When companies relocate today, they are typically downsizing from an average of 250 sq. ft. per worker to 175 sq. ft., according to CoreNet Global.
Nortel Networks is a fitting example. When the Canadian telecom giant relocated to new office headquarters in Toronto last year, the company reduced the average amount of space it allocates per worker from 376 sq. ft. to 199 sq. ft. Nortel moved 3,875 workers into the Toronto tower.
“Many companies have become notoriously good at using their office space more efficiently,” says Bowles of CoreNet. “Many large tenants simply don't have the need to expand their footprint.” for more inforamtion see: www.houstonrealtyadvisors.net

Industrial Fundamentals Winding Down in the North East U.S.

A long-running recovery in industrial property fundamentals appears to be winding down as an abundance of speculative warehouse and distribution space enters the market. As a result, analysts fear that the market will be awash in excess space over the next 12 to 18 months. Some key markets like California’s booming Inland Empire are better equipped to absorb this space, say analysts. But other industrial hubs like Chicago — where year-end industrial vacancy hit 8.2%, or 50 basis points higher than the national average — may have trouble absorbing this heavy load of space. Excess space could make it tougher for industrial landlords to boost rents. The fear is very real, particularly in a market segment where developers can introduce new supply at a speedy clip. “Of all property classes, the industrial market is the most sensitive to new supply right now,” says Bob Bach, national director of market research at Oak Brook, Ill.-based Grubb & Ellis. “These facilities go up fast, and in places like Chicago the market just keeps expanding out, which opens up more viable sites.” A weight of recent evidence supports his cautious view. After posting 10 consecutive quarterly declines, the national industrial vacancy rate flattened at 7.7% between the end of September and December 2006. Grubb & Ellis reports that rental rates in most markets followed a similar trajectory. Both Grubb & Ellis and Boston-based Property & Portfolio Research believe the national industrial market will end this year with higher vacancy. During the first quarter of 2007, PPR projects that 38.5 million sq. ft. of new industrial space will hit the national market. That’s just slightly below the previous quarterly peak of 42.5 million sq. ft., which was completed in the third quarter of 2006. It’s hard to say if this pause in vacancy declines was a quarterly hiccup or an emerging trend. Since every U.S. industrial market answers to a different set of economic factors, general forecasts are tough to defend. Yet a staggering amount of new industrial supply is entering the market at a time when the global economy is acting particularly volatile. The Shanghai Composite Index posted a 9% decline in late February, and that drop sent shockwaves through the U.S. markets. A global economy creates both opportunity and risk. If global trade volume begins to narrow the flow of shipping containers into U.S. ports, plenty of speculative warehouses could remain vacant. “We’re particularly bearish on the Chicago market,” says Laura Stone, senior economist at Boston-based Torto-Wheaton Research. “Net absorption in Chicago will continue to slow through 2008, and rent growth will also be tempered [in 2008],” adds Stone, who has fewer concerns about the Inland Empire’s booming industrial market. Booming may be an understatement. At the end of last year, the Inland Empire was just 1.5% vacant. What makes that tight vacancy rate all the more impressive, too, is the heavy volume of new supply that’s been introduced to this market in recent years. “This supply would really be a problem in most markets,” says developer Kipp Dubbs, president and CEO of Laguna Hills-based Omni West Group. Omni West specializes in small-box industrial facilities no larger than 20,000 sq. ft. in the Inland Empire region. “But we’re seeing huge volumes of container traffic move into our ports and the economic growth is expected to last,” says Dubbs. PPR expects slower global economic growth (particularly here in the U.S.) to have a drag on import and export volumes in 2007. This would cut into industrial leasing absorption as new supply continues to hit the market over the next two years. Industrial completions should hit 144 million sq. ft. this year, down from 153 million sq. ft. in 2006. But this slight decline won’t mute the effect that new supply will have on the industrial market, according to PPR. “I’ll reserve judgment on the extent of this new [industrial] supply,” says Bach of Grubb & Ellis. “It still seems too early to call it chronic overbuilding.” For more information see: www.houstonrealtyadvisors.net

Friday, March 9, 2007

Landlord Found in Breach

Landlord found in breach of stipulation to pay surrender amount for Tenant's early vacatur.
from The New York Law Journal, June 15, 2006
"Respondent Vista Media Group, Inc. (Vista) moves for an order restoring this commercial holdover proceeding to the trial calendar; and upon such restoration, directing petitioner One York Property, LLC (One
York) to comply with the stipulation of settlement dated March 31, 2005 and for judgment in the amount of $294,250 plus costs and legal fees.
Petitioner opposes the motion.
Pursuant to a lease dated June 4, 1999, One York is the successor landlord and Vista was the successor-tenant of that portion of the roof of a building located at 55 Avenue of the Americas (premises) on which Vista owned and operated an outdoor advertising sign structure, i.e., a billboard. The lease was for a ten year term, commencing on July 1, 1999, and expiring June 30, 2009.
One York Property LLC v. Vista Media Group Inc., 068991/05
Decided: May 17, 2006
On March 31, 2005, the parties entered into a lease modification and termination agreement (termination agreement), accelerating the termination date of the lease from June 30, 2009 to March 31, 2005 (termination date). The termination agreement provides that, notwithstanding the acceleration of the termination date to March 31, 2005, Vista may remain in possession of the premises through January 15,
2006 (vacate date).
In order to fully effectuate the agreement between One York and Vista with regard to their respective rights and obligations following the termination date and through the vacate date, as agreed by the parties, One York commenced a holdover proceeding in this Court on April 27, 2005. The holdover proceeding was resolved by the written stipulation of settlement which was so ordered by the Court. The stipulation of settlement provides that, on or before the vacate date, Vista shall remove all of its property from the premises other than the advertising device and deliver vacant possession thereof to One York. The stipulation of settlement provides further that the billboard and any other property remaining on the premises after the vacate date shall be deemed abandoned by Vista and One York may take possession of same without accountability to Vista.
In consideration of Vista's undertakings and provided Vista timely vacates the premises on or before the vacate date, the stipulation of settlement provides, in paragraph 10, that One York shall pay to Vista the sum of $294,250 (the 'surrender amount') simultaneously with Vista's actual vacatur of the premises in accordance with all of the terms and provisions of this stipulation. The stipulation of settlement provides further that [n]otwithstanding any other provisions of this stipulation or the lease, in the event the surrender amount is not paid in accordance with the provisions of this paragraph 10, the vacate date shall be postponed to the date on which the surrender amount is paid to Vista. The stipulation of settlement also states that this Court shall retain jurisdiction to enforce the terms of this stipulation in the event of a default by either party.
The moving affidavit of Christopher T. Young, the president of Vista, alleges that respondent surrendered possession of the premises to One York as of January 10, 2006-five days before the vacate date provided in the stipulation of settlement-and requested that petitioner pay the surrender amount to respondent. Mr. Young states that he spoke with Stanley Perelman, the principal of One York, and advised him of respondent's surrender of the premises and demand for payment of the surrender amount.
Mr. Young alleges further that:
(1) Vista has fully complied with its obligations under the stipulation of settlement and surrendered possession in good faith;
(2) One York has refused and continues to refuse to pay the surrender amount to Vista in breach of the stipulation of settlement;
(3) Vista is fully entitled to receive its bargained-for consideration-the surrender amount-without any further delay; and
(4) Vista is entitled to an award of reasonable attorney's fees pursuant to paragraph 8(i) of the termination agreement.
In opposition, Mr. Perelman argues that respondent's motion must be denied, in its entirety, as a matter of law on grounds that:
i) after entering into the stipulation of settlement, this summary proceeding was terminated and respondent's damages are limited to those attributable to breach of such agreement, which damages must be sought in a separate action in Supreme Court;
ii) this Court, which is a court of limited jurisdiction, lacks jurisdiction over respondent's claims for injunctive or equitable relief seeking to compel petitioner to pay respondent the amount of $294,250 plus costs and legal fees;
iii) this Court no longer has jurisdiction over this summary proceeding because respondent has surrendered possession of the premises; and
iv) under the operative agreements, respondent is obligated to pay petitioner for structural damage it allegedly caused to the premise, petitioner does not owe respondent anything, and this Court lacks jurisdiction over the parties' post-settlement monetary claims.
The Court of Appeals addressed whether a stipulation settling a lawsuit may be enforced by way of motion or plenary action in Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51, 396 N.E.2d 1029 (1979). There, the Court wrote:
A settlement agreement entered into by parties to a lawsuit does not terminate the action unless there has been an express stipulation of discontinuance or actual entry of judgment in accordance with the terms of the settlement. Absent such termination, the court retains its supervisory power over the action and may lend aid to a party who had moved for enforcement of the settlement. Thus, under Teitelbaum, we must look to the language of the stipulation of settlement to determine whether the instant action was terminated.
Vista consented in paragraph 2 of the stipulation to the issuance, forthwith, of a judgment of possession ('Judgment') in favor of One York and against all respondents. Paragraph 21 of the stipulation states:
The parties agree that this stipulation may be so ordered by any judge or judicial hearing officer of the Civil Court and that any judge or judicial hearing officer may issue the judgment and warrant provided for herein without further notice to any party.
At first glance, the language in paragraphs 2 and 21 suggests that the parties contemplated that a judgment would be entered following the execution of the stipulation. However, another provision in the stipulation clearly reveals that the parties did not intend the stipulation to deprive this Court of authority to enforce it.
Paragraph 18 of the stipulation plainly states:
The Court shall retain jurisdiction to enforce the terms of the stipulation in the event of a default by either party.
In light of the above provision, there is no question that this Court retains the power to enforce the stipulation by way of motion. Where, as here, the discontinuance of the action was, in effect, conditioned upon the proper payment of the amount provided in the stipulation of settlement, the parties did not unequivocally terminate the action. See, e.g., Berrian v. McCombs, 280 A.D.2d 442, 720 N.Y.S.2d 513 (2nd Dep't.
2001). Accordingly, respondent may enforce the stipulation by motion in this Court and is not required to file a separate plenary action in Supreme Court.
Petitioner's 2nd contention is that this Court, which is a court of limited jurisdiction, lacks jurisdiction over respondent's claim for injunctive or equitable relief. Petitioner's contention is meritless for several reasons.
We disagree with petitioner's contention that respondent is seeking injunctive or equitable relief. An adequate remedy-at-law exists when the movant can be made whole or compensated by way of monetary damages.
Ansonia Associates v. Ansonia Residents' Association, 78 A.D.2d 211, 214 (1st Dep't. 1980) (If adequate relief can be obtained by a money judgment there is no need for equitable relief). In the instant motion, respondent asks the Court to enforce the stipulation by directing petitioner to pay a specific sum of money. Where, as here, a stipulation may be enforced by the entry of a money judgment, an adequate remedy-at-law clearly exists.
Even if we were to assume for the sake of argument that respondent is seeking equitable or injunctive relief, the Appellate Division has held that, if a lower court can address a landlord-tenant dispute, it is generally desirable that it do so.
In Lexington Avenue Associates v. Kandell, 283 A.D.2d 379 (1st Dep't.
2001), the Appellate Division wrote:
Civil Court has jurisdiction of landlord tenant disputes and when it can decide the dispute, as in this case, it is desirable that it do so.
Here, Civil Court has jurisdiction to enforce the subject stipulation of settlement, which, in the context of a Civil Court nonpayment summary proceeding, requires defendant to vacate the apartment that plaintiff temporarily gave her while repairs to her apartment were ongoing, and to re-occupy her own apartments, upon certain stated conditions, and also provides for Civil Court's continuing jurisdiction for purposes of its implementation. Clearly, Civil Court should be the forum to decide whether the conditions stated in the stipulation exist, and to award any incidental relief to which plaintiff may be entitled, including rent, use and occupancy and attorneys' fees, if they do.
Likewise, the case of 1029 Sixth, LLC v. Riniv Corporation, 9 A.D.3d 142 (1st Dep't. 2004), is instructive. In Riniv, four companion commercial holdover proceedings were settled by so-ordered stipulations. The landlord appealed from orders of the Appellate Term, which reversed the Civil Court and required the landlord to make payments to respondent-tenants pursuant to their stipulations. The Appellate Division agreed with the Civil Court's view, and concluded that the Appellate Term was wrong in excusing the tenants' failure to comply with the terms of the stipulation and requiring the landlord to comply with the stipulation despite the tenants' default.
In Riniv, it is important to note that the reviewing courts tacitly assumed that Civil Court had the authority to enforce the stipulation of settlement. No one raised the jurisdiction of Civil Court as an issue.
The silence of both the Appellate Term and Appellate Division implies that Civil Court has jurisdiction to enforce stipulations of settlement involving commercial holdover proceedings.
The petitioner's contention is meritless because the stipulation states on its face that this Court shall retain jurisdiction. The stipulation does not state that this Court relinquished jurisdiction once respondent surrendered possession. Petitioner's final contention is that, under the operative agreements, respondent is obligated to pay petitioner for structural damage it allegedly caused to the premises; consequently, petitioner does not owe respondent anything, and this Court lacks jurisdiction over the parties' post-settlement monetary claims.
Petitioner's final contention is patently meritless. On its face, the stipulation required respondent to surrender possession by a date certain; in exchange, petitioner was to pay $294,250 to respondent. It is undisputed that respondent surrendered possession in a timely manner, and petitioner concedes that it has paid respondent nothing.
The Court has reviewed the stipulation carefully. However, the stipulation does not state that petitioner is permitted to deduct the cost of any alleged damage from the $294,250 sum specifically provided for in the stipulation, nor does it state that said payment is conditioned upon surrender of the premises in a certain condition.
For all of the above reasons, respondent's motion to restore this matter to the trial calendar is granted. The Court further finds that petitioner breached the stipulation by failing to pay $294,250 which was the bargained-for consideration for the acceleration of the termination date of the lease and surrender of the roof space.
Respondent's request for attorney's fees pursuant to paragraph 8(i) of the termination agreement is also granted.
Paragraph 8(a) of the termination agreement provides:
This agreement when read together with the stipulation of settlement, constitutes the entire agreement between the parties with respect to the subject matter hereof, and all understandings and agreements heretofore or simultaneously had between the parties are merged in and are contained in this agreement.
In the event Owner or Tenant shall commence litigation against the other to enforce its rights under this agreement or the lease, the prevailing party shall be entitled to recover from the other the reasonable costs and expenses (including reasonable attorneys' fees) thereby incurred.
Respondent is entitled to an award of reasonable attorneys' fees under the above provisions as it is the prevailing party. Accordingly, respondent's attorney is directed to prepare an affirmation of services and to serve said affirmation upon petitioner. If petitioner objects to the amount of attorneys' fees, the Court will schedule a hearing to resolve the dispute, upon application.
The clerk is directed to enter judgment in favor of respondent and against petitioner in the sum of $294,250 plus costs together with interest at the statutory rate from January 15, 2006 onward." for more information see www.houstonrealtyadvisors.net

Thursday, March 8, 2007

Large Houston Sublease signed yesterday

Texas Energy Ventures Inks New Lease
Firm Subleases 33,500 SF at ABB Lummus Bldg.

Texas Energy Ventures LLC, a privately held retail and wholesale energy holding company, signed a deal to sublease 33,587 square feet from ABB Inc. for three years at 3010 Briarpark Drive in Houston, TX. Currently, Texas Energy has Houston offices at 1235 N. Loop West and 2603 Augusta. Those locations will be consolidated and the company will fully occupy its new space early this month. The Equis Corp. team of Thomas R.E. McKenzie, Bruce A. Fehn and Joshua Marcell represented Texas Energy Ventures, while Lucian Bukowski of The Staubach Co. handled the deal for ABB Inc. For more information on great subleases check out:
www.houstonrealtyadvisors.net

Wednesday, March 7, 2007

Landlord Found in Breach

Landlord found in breach of stipulation to pay surrender amount for Tenant's early vacatur.
from The New York Law Journal, June 15, 2006
"Respondent Vista Media Group, Inc. (Vista) moves for an order restoring this commercial holdover proceeding to the trial calendar; and upon such restoration, directing petitioner One York Property, LLC (One
York) to comply with the stipulation of settlement dated March 31, 2005 and for judgment in the amount of $294,250 plus costs and legal fees.
Petitioner opposes the motion.
Pursuant to a lease dated June 4, 1999, One York is the successor landlord and Vista was the successor-tenant of that portion of the roof of a building located at 55 Avenue of the Americas (premises) on which Vista owned and operated an outdoor advertising sign structure, i.e., a billboard. The lease was for a ten year term, commencing on July 1, 1999, and expiring June 30, 2009.
One York Property LLC v. Vista Media Group Inc., 068991/05
Decided: May 17, 2006
On March 31, 2005, the parties entered into a lease modification and termination agreement (termination agreement), accelerating the termination date of the lease from June 30, 2009 to March 31, 2005 (termination date). The termination agreement provides that, notwithstanding the acceleration of the termination date to March 31, 2005, Vista may remain in possession of the premises through January 15,
2006 (vacate date).
In order to fully effectuate the agreement between One York and Vista with regard to their respective rights and obligations following the termination date and through the vacate date, as agreed by the parties, One York commenced a holdover proceeding in this Court on April 27, 2005. The holdover proceeding was resolved by the written stipulation of settlement which was so ordered by the Court. The stipulation of settlement provides that, on or before the vacate date, Vista shall remove all of its property from the premises other than the advertising device and deliver vacant possession thereof to One York. The stipulation of settlement provides further that the billboard and any other property remaining on the premises after the vacate date shall be deemed abandoned by Vista and One York may take possession of same without accountability to Vista.
In consideration of Vista's undertakings and provided Vista timely vacates the premises on or before the vacate date, the stipulation of settlement provides, in paragraph 10, that One York shall pay to Vista the sum of $294,250 (the 'surrender amount') simultaneously with Vista's actual vacatur of the premises in accordance with all of the terms and provisions of this stipulation. The stipulation of settlement provides further that [n]otwithstanding any other provisions of this stipulation or the lease, in the event the surrender amount is not paid in accordance with the provisions of this paragraph 10, the vacate date shall be postponed to the date on which the surrender amount is paid to Vista. The stipulation of settlement also states that this Court shall retain jurisdiction to enforce the terms of this stipulation in the event of a default by either party.
The moving affidavit of Christopher T. Young, the president of Vista, alleges that respondent surrendered possession of the premises to One York as of January 10, 2006-five days before the vacate date provided in the stipulation of settlement-and requested that petitioner pay the surrender amount to respondent. Mr. Young states that he spoke with Stanley Perelman, the principal of One York, and advised him of respondent's surrender of the premises and demand for payment of the surrender amount.
Mr. Young alleges further that:
(1) Vista has fully complied with its obligations under the stipulation of settlement and surrendered possession in good faith;
(2) One York has refused and continues to refuse to pay the surrender amount to Vista in breach of the stipulation of settlement;
(3) Vista is fully entitled to receive its bargained-for consideration-the surrender amount-without any further delay; and
(4) Vista is entitled to an award of reasonable attorney's fees pursuant to paragraph 8(i) of the termination agreement.
In opposition, Mr. Perelman argues that respondent's motion must be denied, in its entirety, as a matter of law on grounds that:
i) after entering into the stipulation of settlement, this summary proceeding was terminated and respondent's damages are limited to those attributable to breach of such agreement, which damages must be sought in a separate action in Supreme Court;
ii) this Court, which is a court of limited jurisdiction, lacks jurisdiction over respondent's claims for injunctive or equitable relief seeking to compel petitioner to pay respondent the amount of $294,250 plus costs and legal fees;
iii) this Court no longer has jurisdiction over this summary proceeding because respondent has surrendered possession of the premises; and
iv) under the operative agreements, respondent is obligated to pay petitioner for structural damage it allegedly caused to the premise, petitioner does not owe respondent anything, and this Court lacks jurisdiction over the parties' post-settlement monetary claims.
The Court of Appeals addressed whether a stipulation settling a lawsuit may be enforced by way of motion or plenary action in Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51, 396 N.E.2d 1029 (1979). There, the Court wrote:
A settlement agreement entered into by parties to a lawsuit does not terminate the action unless there has been an express stipulation of discontinuance or actual entry of judgment in accordance with the terms of the settlement. Absent such termination, the court retains its supervisory power over the action and may lend aid to a party who had moved for enforcement of the settlement. Thus, under Teitelbaum, we must look to the language of the stipulation of settlement to determine whether the instant action was terminated.
Vista consented in paragraph 2 of the stipulation to the issuance, forthwith, of a judgment of possession ('Judgment') in favor of One York and against all respondents. Paragraph 21 of the stipulation states:
The parties agree that this stipulation may be so ordered by any judge or judicial hearing officer of the Civil Court and that any judge or judicial hearing officer may issue the judgment and warrant provided for herein without further notice to any party.
At first glance, the language in paragraphs 2 and 21 suggests that the parties contemplated that a judgment would be entered following the execution of the stipulation. However, another provision in the stipulation clearly reveals that the parties did not intend the stipulation to deprive this Court of authority to enforce it.
Paragraph 18 of the stipulation plainly states:
The Court shall retain jurisdiction to enforce the terms of the stipulation in the event of a default by either party.
In light of the above provision, there is no question that this Court retains the power to enforce the stipulation by way of motion. Where, as here, the discontinuance of the action was, in effect, conditioned upon the proper payment of the amount provided in the stipulation of settlement, the parties did not unequivocally terminate the action. See, e.g., Berrian v. McCombs, 280 A.D.2d 442, 720 N.Y.S.2d 513 (2nd Dep't.
2001). Accordingly, respondent may enforce the stipulation by motion in this Court and is not required to file a separate plenary action in Supreme Court.
Petitioner's 2nd contention is that this Court, which is a court of limited jurisdiction, lacks jurisdiction over respondent's claim for injunctive or equitable relief. Petitioner's contention is meritless for several reasons.
We disagree with petitioner's contention that respondent is seeking injunctive or equitable relief. An adequate remedy-at-law exists when the movant can be made whole or compensated by way of monetary damages.
Ansonia Associates v. Ansonia Residents' Association, 78 A.D.2d 211, 214 (1st Dep't. 1980) (If adequate relief can be obtained by a money judgment there is no need for equitable relief). In the instant motion, respondent asks the Court to enforce the stipulation by directing petitioner to pay a specific sum of money. Where, as here, a stipulation may be enforced by the entry of a money judgment, an adequate remedy-at-law clearly exists.
Even if we were to assume for the sake of argument that respondent is seeking equitable or injunctive relief, the Appellate Division has held that, if a lower court can address a landlord-tenant dispute, it is generally desirable that it do so.
In Lexington Avenue Associates v. Kandell, 283 A.D.2d 379 (1st Dep't.
2001), the Appellate Division wrote:
Civil Court has jurisdiction of landlord tenant disputes and when it can decide the dispute, as in this case, it is desirable that it do so.
Here, Civil Court has jurisdiction to enforce the subject stipulation of settlement, which, in the context of a Civil Court nonpayment summary proceeding, requires defendant to vacate the apartment that plaintiff temporarily gave her while repairs to her apartment were ongoing, and to re-occupy her own apartments, upon certain stated conditions, and also provides for Civil Court's continuing jurisdiction for purposes of its implementation. Clearly, Civil Court should be the forum to decide whether the conditions stated in the stipulation exist, and to award any incidental relief to which plaintiff may be entitled, including rent, use and occupancy and attorneys' fees, if they do.
Likewise, the case of 1029 Sixth, LLC v. Riniv Corporation, 9 A.D.3d 142 (1st Dep't. 2004), is instructive. In Riniv, four companion commercial holdover proceedings were settled by so-ordered stipulations. The landlord appealed from orders of the Appellate Term, which reversed the Civil Court and required the landlord to make payments to respondent-tenants pursuant to their stipulations. The Appellate Division agreed with the Civil Court's view, and concluded that the Appellate Term was wrong in excusing the tenants' failure to comply with the terms of the stipulation and requiring the landlord to comply with the stipulation despite the tenants' default.
In Riniv, it is important to note that the reviewing courts tacitly assumed that Civil Court had the authority to enforce the stipulation of settlement. No one raised the jurisdiction of Civil Court as an issue.
The silence of both the Appellate Term and Appellate Division implies that Civil Court has jurisdiction to enforce stipulations of settlement involving commercial holdover proceedings.
The petitioner's contention is meritless because the stipulation states on its face that this Court shall retain jurisdiction. The stipulation does not state that this Court relinquished jurisdiction once respondent surrendered possession. Petitioner's final contention is that, under the operative agreements, respondent is obligated to pay petitioner for structural damage it allegedly caused to the premises; consequently, petitioner does not owe respondent anything, and this Court lacks jurisdiction over the parties' post-settlement monetary claims.
Petitioner's final contention is patently meritless. On its face, the stipulation required respondent to surrender possession by a date certain; in exchange, petitioner was to pay $294,250 to respondent. It is undisputed that respondent surrendered possession in a timely manner, and petitioner concedes that it has paid respondent nothing.
The Court has reviewed the stipulation carefully. However, the stipulation does not state that petitioner is permitted to deduct the cost of any alleged damage from the $294,250 sum specifically provided for in the stipulation, nor does it state that said payment is conditioned upon surrender of the premises in a certain condition.
For all of the above reasons, respondent's motion to restore this matter to the trial calendar is granted. The Court further finds that petitioner breached the stipulation by failing to pay $294,250 which was the bargained-for consideration for the acceleration of the termination date of the lease and surrender of the roof space.
Respondent's request for attorney's fees pursuant to paragraph 8(i) of the termination agreement is also granted.
Paragraph 8(a) of the termination agreement provides:
This agreement when read together with the stipulation of settlement, constitutes the entire agreement between the parties with respect to the subject matter hereof, and all understandings and agreements heretofore or simultaneously had between the parties are merged in and are contained in this agreement.
In the event Owner or Tenant shall commence litigation against the other to enforce its rights under this agreement or the lease, the prevailing party shall be entitled to recover from the other the reasonable costs and expenses (including reasonable attorneys' fees) thereby incurred.
Respondent is entitled to an award of reasonable attorneys' fees under the above provisions as it is the prevailing party. Accordingly, respondent's attorney is directed to prepare an affirmation of services and to serve said affirmation upon petitioner. If petitioner objects to the amount of attorneys' fees, the Court will schedule a hearing to resolve the dispute, upon application.
The clerk is directed to enter judgment in favor of respondent and against petitioner in the sum of $294,250 plus costs together with interest at the statutory rate from January 15, 2006 onward." For more information see: www.houstonrealtyadvisors.net

Monday, March 5, 2007

Negotiating office leases – from the tenant’s perspective

It is easy for any attorney to lose sight of the major legal and business issues when negotiating office leases.


from the New York Law Journal, June 12, 2006


"The top 10 issues in office leasing, considering the business impact to the tenant: (not necessarily in any particular order of
importance)


1. Term sheets/letters of intent
The tenant will achieve the best results by assembling a full team of professionals to handle the transaction, including a real estate attorney, an architect or space planner, a general contractor, construction manager of construction consultant, an insurant consultant, and an experienced real estate broker.


2. Assignment and subletting
If the tenant's business changes such that it needs more or less space, or needs to relocate, the assignment and subletting provision is the vehicle for addressing these and many other issues.


3. Alteration rights
Space becomes old and tired after 5 to 10 years and needs sprucing up, and a tenant's business structure changes, requiring a different layout for its office space.


4. Building services
These need to be clearly enunciated. For example, is electricity included in the lease, is it charged based on rent inclusion, is it charged based on submetering, may the tenant obtain directly metered electricity and what profit component or expense reimbursements may the landlord charge?


5. Security deposits
Of critical important to both landlord and tenant is who the tenant is, what its creditworthiness is, and what credit support, such as cash security deposit or letters of credit, are provided.


6. Guarantees
Over the past 10 years, so-called good guy lease guarantees have become much more common in leasing transactions. A good guy guarantee is a limited guarantee of the lease designed to assure the landlord that possession of the premises will be returned to it in the event of a default by the tenant and termination of the lease, without the need for the landlord to go to court and evict the tenant, and without the risk of having to deal with a bankruptcy filing and other delays by the tenant.


7. Subordination and nondisturbance
For larger or more creditworthy tenants, or those with more negotiating leverage, it is important to try to obtain a nondisturbance agreement from all current and future lenders and ground lessors.


8. Tenant defaults and Landlord remedies
Almost all references to a default by the tenant under the lease should be qualified to refer to a default after notice if required under lease, and expiration of any applicable cure period. In this way, the tenant gets the benefit of its negotiated notice and cure rights under the default provision. Most or all of the default provisions should spell out that the tenant will receive notice and an opportunity to cure before the landlord may terminate the lease.


9. Landlord Defaults
It is rare that there is a provision spelling out landlord defaults and giving notice and cure opportunities or tenant remedies. On occasion, a tenant with more leverage in a negotiation can get a landlord to agree to grant it a similar notice and cure provision and remedies for defaults. However, that is a rare exception, generally applicable only to large gorilla tenants.


10. End of Term
The scope of the tenant's restoration obligation should be negotiated up front, and an effort made to get the landlord to agree that typical tenant improvements that will not cost the landlord an excessive amount to demolish or remove, and are not extremely difficult to remove, can remain. Tenants must also anticipate that their new space may not be ready exactly on time at the expiration of the lease.
Some leases will also allow landlords to collect, in addition to or in lieu of the increased (holdover) rent, all of its damages suffered in connection with a holdover. Those damages can amount to many millions of dollars as a result of losing a new deal with a new tenant." For more information see: www.houstonrealtyadvisors.net

Biotics Research Corporation Building

Real Estate Beat
Rosenberg begins project for first tenant in city business park
Houston Business Journal - March 27, 1998
by Laura A. Stromberg
Print this Article
Email this Article
Reprints
RSS Feeds
Most Viewed
Most Emailed
The city of Rosenberg has begun construction on a facility for the first tenant in its new Reading Center Business Park.
Biotics Research Corp. will be relocating about 55 employees from a site in Stafford in November, when the company's 42,000-square-foot facility is expected to be ready for move-in.
The facility is the first of a proposed three-phase development project for Biotics.
The 84-acre park is the first truly dedicated business park for Rosenberg, says City Manager Bill Knesek.
"With Biotics coming into the park, we'll now be able to start the infra-structure," Knesek says. "We're very excited about this. It now allows us to have ready-to-go sites."
The entire park is owned by Tilley Investment-Rosenberg, a limited partnership headed by local businessman Alan King.
Tilley was represented by Beeman Strong of Beeman Strong & Co. in the Biotics transaction.
Amelang Partners will develop the new facility for Biotics, with Rocky Stevens heading the project.
Biotics was represented by Ed Ayres of Houston Realty Advisors, Inc. www.houstonrealtyadvisors.net

Biotics, a 20-year-old company, manufactures specially designed nutritional products.
The company currently employs 55 and plans to create an additional 25 jobs in production and supervisory positions.