Commercial Real Estate Teetering on the Edge?

So far there has been a great deal of news coverage of the residential real estate meltdown that began the current severe recession. However, little focus to date has been on the commercial real estate sector which is likewise teetering on the edge of a meltdown due to the huge drop in business expansion plus businesses suffering major reductions in cash flow and overall business revenues. Around the Hampton Roads area for instance, much office and retail space remains empty after months and months on the market just as quantities of new space are about to become available as construction of projects begun before the economic collapse near completion. It could become a very nasty situation if the economy continues to languish or get worse with banks being only some of the parties about to suffer major problems. Here are some highlights from MSNBC:

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Even as banks grapple with rising foreclosures, many lenders have something else to worry about: A rising tide of potential losses from commercial real estate loans that could reach into the billions. Delinquency rates and defaults on office and retail buildings and hotels have more than doubled in just six months. For apartments and industrial buildings, the rates have increased more than 80 percent, according to Reis Inc.

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While homeowners are defaulting at almost four times the rate of commercial landlords, the sudden spike in late payments has many industry insiders worried about the collateral threat to the economy and financial system. Nearly $73 billion worth of commercial real estate loans are in some level of financial distress, according to Real Capital Analytics.

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"Because of the severity of the economic downturn, now the pressure ... for commercial real estate, is much higher," said Hessam Nadji, managing director at Marcus & Millichap Real Estate Investment Services. The economy has forced many businesses to downsize and others like Linens 'N Things and Circuit City to go out of business. That's left behind empty storefronts, office buildings and warehouse space.

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Landlords are finding it hard to attract new tenants. Increasingly, they are slashing rents or offering incentives like money for tenant renovation. Tenants, likewise, have also become more aggressive about demanding concessions from landlords. Starbucks, for example, recently pressed its landlords to renegotiate the rents for leases at company operated stores.

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Overall, some $270.5 billion commercial property loans are expected to come due this year alone, said McLaughlin, a financial analyst for Reis. And it's likely many borrowers won't be able to refinance.

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[S]ales of foreclosures and other distressed properties can create a downward spiral for similar properties in the neighborhood. Vacant commercial buildings, like vacant homes, also invite vandals and vagrants.

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And through all of this, my former wife - and judges who have never been in private practice - can't understand why my income is down significantly.

Experienced Legal Services to the LGBT Community

Other bloggers from time to time hawk their products, so I figured I'd do a marketing post for the type of legal work that I can provide to members of the LGBT community who want an experienced, openly gay lawyer. Therefore, here's a run down of what types of work my practice includes. Anyone interested in legal services can e-mail me directly or via the firm website at http://www.hamarlaw.com/. Here's the summary of services:

Residential Real Estate: The firm routinely provides residential real estate services that have included:
· settlement services for hundreds of residential real estate transactions
· document preparation involved, but not been limited to, the preparation of documents ranging from residential purchase agreements, mortgage loan packages, deeds and deeds of trust, leases
· lease preparation and landlord/tenant advise
· boundary line agreements and assorted easement agreements
· document preparation services to local title insurance settlement agencies.

Commercial Real Estate: In the area of commercial real estate transactions, the firm handles:
· large numbers of commercial loan transactions secured by real estate holdings
· restructuring problem loans
· commercial real estate acquisitions and sales, ranging in size from single convenience stores to multiple television stations
· condominium law matters
· tax-exempt financing for the acquisition and construction of manufacturing facilities, solid waste disposal facilities
· tax-exempt and low income housing tax credit financing for multifamily housing facilities and elderly housing projects.

Corporate and Business Transactions: The firm has 30 years of experience in performing legal services for banking, commercial and corporate practice transactions, and has a recognized specialty practice in taxable and tax-exempt bond finance work. Among the areas where clients are provided experienced assistance are:
· Formation and administration of corporations and limited liability companies
· General and limited partnership formation and administration
· Business acquisitions and sales, including stock sales and asset sales
· Commercial real estate transactions, including acreage acquisition and subdivision matters
· Complex business finance transactions
· Low income housing tax credit financing under Section 42 IRC
· Tax exempt bond finance for manufacturing, air cargo and qualified housing projects

Estate Planning and Non-Traditional Family Law: The likewise has experience in assisting clients in preparing estate planning and related documents. In light of Virginia's "Marriage Amendment," there are some basic documents and steps that every unmarried couple, same-sex couple or not, should have prepared and duly signed. These include, but are not limited to:
· Wills - A will specifies how you wish your property to be distributed upon your death. In a will, you designate the person you wish to handle your estate -- your spouse, partner or another individual.
· Trust Agreements - A properly established and funded trust avoids publicly probating assets owned by the trust at the time of one’s death and is more difficult to challenge in court than a will. In addition, a trust can provide beneficiaries with creditor protection in certain circumstances.
· Medical Power of Attorney - A medical power of attorney allows one’s spouse, partner or other party to make medical decisions on one’s behalf in the event one is not able to do so due to in-competency or other incapacity. Properly drafted, a health care power of attorney can also ensure hospital visitation rights to the designated attorney-in-fact.
· Advanced Medical Directive - § 54.1-2983 of the Virginia Code provides that any mentally competent adult may, at any time, make a written advance directive (i) authorizing the providing, withholding or withdrawal of life-prolonging procedures in the event such person should have a terminal condition, and (ii) appointing an agent to make health care decisions for the declarant under the circumstances stated in the advance directive if the declarant should be determined to be incapable of making an informed decision.
· General/Business Power of Attorney - This form of power of attorney allows a member of either an unmarried couple or a same-sex couple to authorize their partner to handle their financial affairs in the event of disability or unavailability.

Firm experience in providing legal services concerning unmarried and gay relationship issues, also includes:
· property co-ownership and/or co-tenancy agreements
· equity sharing agreements
· the formation of contract based domestic partnerships and dissolution of the same
· parenting agreements and powers of attorney concerning non-adoptive minor children.