The Closers

The lawyers behind NYC’s biggest sales and financings may not get the glory,
but they get deals done

Sep.September 01, 2015 07:00 AM
(Click to enlarge)

(Click to enlarge)

Just about everyone in the New York City real estate industry knows — or at least think they know — about the city’s priciest deals.

However, far fewer are aware of which lawyers put those deals together.

This month, The Real Deal pulled all of the publicly available data for the priciest financings and building sales citywide, from July 2014 to June 2015, and then matched that info with the recorded law firm on the deal. (While these deals often employ a slew of attorneys, only the lenders’ and sellers’ attorneys that were publicly recorded were given credit here.)

The results shine a light on an inconspicuous segment of the real estate industry that plays a significant behind-the-scenes role in making sure the city’s biggest real estate deals make it to the closing table.

And unlike the investment sales brokerage world in New York City, which is dominated by a handful of high-profile players, there are a wide range of law firms and few “usual suspects” on these deals.

In fact, only a few of the largest real estate practices in New York (see story on page 56) turn up in these mega-transactions. And many of the firms working behind the scenes on these deals are based outside of New York entirely.

“It’s a full-service business: You’re part placement agent; part mortgage broker; part leasing broker; part sales broker, and of course, part lawyer,” said Jonathan Mechanic, chairman of the real estate practice as Fried, Frank, Harris, Shriver & Jacobson.

That practice repped RXR Realty in its purchase of 32 Old Slip in the Financial District for $478 million, and Murray Hill Properties’ and Clarion Partners’ acquisition of nearby 180 Maiden Lane for $470 million.

“Some people recognize the role you play in these deals,” said Mechanic. “But most of the time you’re an unsung hero.”

Financing gurus

In New York, landlords are tapping massive amounts of capital to pay down loans.

But in many cases they are enlisting non-New York lawyers to do so, largely because of the relationship those attorneys have with lenders, sources say.

The law firms behind four of the five largest New York City financings, which include both acquisition and loan deals in the last year, are not headquartered in Manhattan, even if some have offices in the borough.

The biggest of the bunch involved the Oklahoma-based Anderson, McCoy & Orta, which represented Bank of America in its issuance of a $1.4 billion refinancing loan for the MetLife Building, the 58-story office tower, located at 200 Park Avenue, co-owned by Tishman Speyer and the Irvine Company.

The bank, which was joined by Wells Fargo in the deal, plans to divvy up the 10-year debt into bonds that will be sold off to investors, according to news reports. The deal valued the MetLife building at a staggering $3 billion.

Vanessa Orta, the managing director of Anderson, McCoy & Orta, which counts BofA as a frequent client, did not return a phone call. But her web profile bills her as an expert in loans underwritten by commercial mortgage-backed securities.

Despite its midwestern address, the firm’s website touts its work in major urban areas, noting “all of our clients are outside the state of Oklahoma” and that “we start our day on Eastern time and end it on Pacific time.”

Meanwhile, the Philadelphia-based law firm Dechert also acted as counsel for BofA in the refinancing of the land under Saks Fifth Avenue’s flagship store at 611 Fifth Avenue.

Morgan Stanley, Goldman Sachs Mortgage Company and the Bank of Nova Scotia were all on the deal — a $1.25 billion, 20-year mortgage, which was issued to Saks’ parent company, Hudson’s Bay Company. Proceeds from the loan, the second priciest on TRD’s list, will be used to pay down $1.2 billion in debt, according to news reports.

David Forti, the lead attorney on the deal for Dechert, said BofA asked him not to comment.

Similarly, another non-New York City based firm handled the third-priciest financing on TRD’s list. The Chicago-based law firm Sidley Austin orchestrated the $1.1 billion loan for Deutsche Bank that allowed Chicago-based Callahan Capital Properties and Ivanhoe Cambridge, the Canadian pension fund subsidiary, to buy the 42-story,
1.2 million-square-foot tower 1095 Avenue of the Americas, also know as 3 Bryant Park, from the Blackstone Group.

Another Windy City firm, Katten Muchin Rosenman, which has been active in New York, negotiated the fifth priciest financing: A $785 million mortgage issued by AIG for the $1.2 billion the purchase of the Helmsley Building at 230 Park Avenue by RXR. 

The only New York firm to have a hand in a top-five deal was Skadden, Arps, Slate, Meagher & Flom. In that case, the firm represented Deutsche Bank in its $1 billion loan to Jeff Sutton’s Wharton Properties and General Growth Properties to buy 730 Fifth Avenue.

Known as the Crown Building, the 25-story Art Deco spire was sold by the Winter and Spitzer families for $1.8 billion. Skadden declined to comment.

Purchasing power

Given the complexity of these transactions, lawyers from different firms often handle the sale and the loan.

A case in point: The 3 Bryant Park deal. Sidley Austin secured the mortgage, while Katten Muchin handled the actual sale, which at $2.2 billion was the priciest building trade of the 12-month period TRD examined.

Like with the top financing deals, out-of-town firms had a major presence.

In addition to Katten Muchin, for example, Hogan Lovells, which is headquartered in London and Washington, D.C., represented the Anbang Insurance Group, the buyer of the Waldorf-Astoria hotel, in the year’s second-largest deal, though several firms were also involved, including Skadden; Fried Frank; and Greenberg Traurig.

Anbang paid Hilton Worldwide $1.95 billion for the 47-story hotel, which is located at 301 Park Avenue in Midtown.

But some New York-based practices had starring roles.

The year’s third-priciest deal, the $1.8 billion purchase of the Crown Building, was shepherded across the finish line for the buyers by Midtown-headquartered Greenberg Traurig. Robert Ivanhoe, chair of the powerhouse firm’s real estate practice, said the 24-story tower was not publicly marketed, and that once the firm got word that the building was selling, his team had roughly 48 hours to make the deal happen.

The closing, however, took three days because the deal was so complex. Not only did it involve a joint-venture buyer, but the top 20 floors were, in turn, sold for $500 million as a commercial condo to Michael Shvo and Vladislav Doronin, who are planning apartments there.

“I was in a room until three or four in the morning for a couple nights until it got signed,” Ivanhoe said.

He added that four other Greenberg attorneys were with him, and that Joseph Shenker, the chairman of Sullivan & Cromwell, repped the sellers. “It was really something,” Ivanhoe said.

Likewise, a Manhattan practice, Gibson, Dunn & Crutcher, also held the reins in RXR’s Helmsley Building buy.

Sources say they expect more mega deals coming down the pike, but given the financial collapse of 2008, the industry seems to be aware that the landscape could easily shift.

“The only major chink in the armor is what’s going on in China,” Ivanhoe said last month, referring to the drop in the Chinese stock market.

But will those overseas problems crater the building industry here? “It’s too early to say,” Ivanhoe said.

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