A ground lease can be an attractive method to develop commercial property. However, the tenant/developer's ability to obtain financing is crucial to a development's success using a ground lease.
Counsel must consider the potential lender's interests in the negotiation of a ground lease between the landlord and tenant. Counsel's primary task is to balance all the competing interests concerning each key provision, such as subordination, right to cure, and consent.
A lender's lien on a financeable ground lease is secured by a leasehold mortgage drafted to address the lender's and borrower/tenant's interests during the term of the lease and in the event of foreclosure.
Listen as our authoritative panel of real estate attorneys discusses how to balance the competing interests of the owner, lessee, and lender to create a financeable ground lease.
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The U.S. commercial real estate market posted a record first quarter for deal activity but conditions for investment have changed rapidly in recent weeks. Accelerating inflation, rising debt costs and recession fears are some of the challenges facing investors.
Please join Jim Costello, Chief Economist of MSCI Real Assets, for a discussion on:
Record-high property prices under pressure
Investment pullback in the second quarter - not all a function of interest rates
Changing liquidity and more normal patterns of buyer participation
Investors’ continued focus on industrial and apartments despite challenges
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Real estate lawyers use ROFOs, ROFRs, and purchase options in several contexts, including all types of commercial leases (office, retail, industrial, warehouse), ground leases, condominiums, and planned developments. Purchase rights can have a far-reaching impact on the grantor, holder, and subject property but are often an afterthought in the underlying transaction. They must be drafted with care, taking into account potential changes in parties and circumstances which may occur years later.
We will discuss best practices for drafting purchase rights, including the following considerations. The agreement that includes a purchase right should state the conditions for exercising the right to purchase and include a "time is of the essence" clause. All notices and other documentation must be in writing, and the parties should be identifiable. The parties should specify whether the preemptive right is a one-time or continuing right, whether the agreement requires strict compliance in exercising the right, and whether it is assignable.
The grantor should consider the burden on the title to the property. The grantor may have difficulty financing, selling, or leasing the property due to the purchase right. Lenders typically require subordination of an existing right before making a mortgage loan. Purchase rights should contain precise subordination language that addresses financing and foreclosure contingencies so that no further subordination is required.
Listen as our authoritative panel discusses the nuances of ROFOs, ROFRs, and purchase options, as well as key provisions to include in each. The panel will also review the title ramifications of preemptive purchase rights and their impact on future financing and sales transactions.
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Strafford Publications, Inc
This CLE webinar will provide tax & finance counsel with the tools to structure installment sales of commercial real estate. The panel will examine the potential advantages and pitfalls of installment sales, and discuss the complexities that arise when dealing with monetized installment sales.
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