Case Studies

Situation

Zeidel & Associates represents the owner-operator of a successful brewery, beer garden, ballroom, design workshop, shops and art studio spaces in Mexico established under its beer brand name. It recently added a hotel with a restaurant, spa and social club. The development of the hotel involved the rescue and transformation of old industrial space. 

Our client intended to retain a U.S.-based company its related company used for another hotel in Mexico to serve as the operator/manager of the hotel. The hotel had already signed a letter of intent when we were hired, and the manager had presented them with an initial draft of the hotel management agreement. Although this agreement would be governed by Mexican law, our client and its Mexican legal counsel needed sophisticated U.S. counsel to negotiate the hotel management agreement in accordance with U.S. hospitality industry protocols.

Approach

The attorneys at Zeidel & Associates revised the hotel management agreement to include owner protections typical in U.S. contracts and non-negotiable points our client provided. We also revised the original draft to give our client-owner a more significant degree of involvement and control over the hotel, as the owner of the brewery brand. This is an unusual relationship for a branded hotel manager, who is accustomed to near-total control over hotel operations and branding. Also deficient in the hotel management agreement was language addressing the ongoing interaction and coordination between the brewery amenities and the hotel.

The PIP (property improvement plan) the manager provided, which included capital improvements it expected the client to make to the hotel, was also problematic. Since the hotel had just been completed to our client’s standards, it had no intention of making any changes.

The manager was not very receptive to the firm’s comments, which clearly indicated that further negotiation would be difficult and lengthy.

Result

Despite the multiple drafts of the agreement that had been drafted and an all-hands call with the manager and its counsel, our client decided to hire a local operator that would be more aligned with its vision rather than the U.S.-based operator.

Our client appreciated Zeidel & Associates’ ability to identify the risks of working with the U.S.-based manager in time for it to pivot to an alternative arrangement that would permit them to open the hotel on schedule. The hotel is currently open and operating

Situation

Zeidel & Associates was retained by a privately owned nonprofit museum in New York City. The museum was unhappy with the company that had operated and managed its restaurant, café, and event space for the past 10 years. When the firm was hired, the museum had already completed an extensive RFP process with a food and beverage consultant and selected a new operator that would re-concept the space and deliver the upscale experience the museum was known for. The new operators had also been approved by the board of trustees, comprised of a who’s who of prominent, wealthy New Yorkers.

Zeidel & Associates was charged with drafting and negotiating a new management agreement. The timing of this deal was critical as the museum wanted to transition to the new operator during the summer so it would be ready to welcome guests and event clients for the busy fall and holiday seasons.

The museum informed us early on that the agreement should be akin to a lease in that the operator would bear the expenses and keep the revenue. The museum would contribute a limited amount towards the operator’s renovation construction costs, and the operator would pay the museum a percentage of sales from the restaurant, café and event space, which typically hosted more than 100 events a year.

Approach

With extensive experience structuring food and beverage arrangements as management, consulting, licensing, leases and every combination of those, the attorneys at Zeidel & Associates were well positioned to execute the assignment within our client’s desired timeframe.

There were many documents and opinions to cull through, including the response to the RFP and input from numerous museum stakeholders who wanted to ensure a more positive experience with the new operator. We parsed through and synthesized the clauses the general counsel drafted and the significant input he garnered to resolve conflicting, vague and problematic requests. This was a painstaking process that required our keen understanding of these types of agreements.

Once the firm finalized the initial draft of the agreement and it was presented to the management company and its lawyer, we received proposed changes as is standard. We negotiated the changes with numerous all-hands calls, redrafts, and other negotiations. Among the issues of concern were:

• Our need for a guarantor for the newly formed manager entity
• The ownership of intellectual property
• Contract termination rights
• Insurance levels needed
• Payments associated with internal museum catering events.

It was agreed that the manager would be the museum’s exclusive caterer, with some limited exceptions.

Of major concern was the backlog at the New York State Liquor Authority and the possible delay in securing the appropriate liquor license. As a result, Zeidel & Associates suggested using the draft agreement to apply for the license rather than waiting for the executed agreement, a strategy that enabled us to keep both tracks progressing at the same time.

While negotiations were advancing at a good pace, the new manager hosted a gala for the museum to showcase its capabilities, which the museum stakeholders, including the board chair, considered a failure both in quality of food and service, making all parties concerned about the manager selection. Given the time constraints, they decided to move forward but amended the agreement to include a six-month probationary period for exclusivity, which would require the manager to satisfy certain measurable conditions and key performance indicators, such as guest satisfaction metrics, pursuant to a survey that the museum would develop and administer. We also included ongoing metrics that would need to be satisfied to maintain exclusivity, and the inability to achieve them would be a breach of the agreement and permit termination.

Result

Once everyone agreed to the threshold concept, we negotiated the remaining outstanding items and were able to successfully complete the agreement. The agreement was accepted and executed by the manager on the day that the restaurant was slated to open.

Situation

Zeidel & Associates was retained to represent the owner of a luxury boutique beachfront hotel in South Beach, Florida. It is a family-owned and operated property that had been working with a “celebrity” chef as the manager of its food and beverage facilities, including the lobby and pool bars, event space, a gourmet steakhouse, a coffee bar and others, for years. He also managed room service.

Our client, however, was dissatisfied with the chef’s increasingly passive approach as the operator, but they still valued him as a highly regarded chef and creative contributor. As a result, the owner wanted to take over control of the reservation and booking responsibilities from the chef and reactivate, upgrade, and perhaps reconceptualize the existing space.

To advance their plan, our client negotiated a Letter of Intent (LOI) with a new restaurant operator who would handle the possible rebranding of the facilities and the operations, with the expectation of retaining the chef in a narrower role. The owners hired Zeidel & Associates to prepare the food and beverage management agreement to ensure that they were appropriately protected with the new operator in place.

Approach

Zeidel & Associates was instructed to keep the agreement simple, so we initially drafted a short form management contract. However, after our client gave us feedback, it was clear that we needed to address several additional specific concerns. One, for example, was that our client wanted the new operator to perform an in-depth analysis of the current operation to determine whether a new concept was needed or whether to keep the existing brand under the chef’s name. They also wanted existing employees’ performances evaluated and recommendations to improve staffing. Once this initial reporting was completed, the parties would determine the scope, nature and budget for necessary upgrades and finalize changes to the concepts, menus and related elements, with the chef’s input. We modified our agreement form to address these and other client concerns.

Another complex issue was related to the ownership of intellectual property. We needed to address several possible scenarios: 1) keeping in some form the existing brand with the current chef’s name, 2) the new manager replacing the established brand with its own existing concepts, and 3) developing entirely new concepts explicitly created for this property. Given the number of food and beverage outlets on the property, a combination of these could be implemented. Accordingly, we needed to parse through who would own the rights to the concepts under each scenario and each party’s respective rights to the contributions made by the others. It also had to address if and when the concepts could be replicated at other locations and by whom.

Result

Zeidel & Associates reworked the agreement to address these complexities to the client’s satisfaction. We also worked with liquor licensing counsel and employment and labor counsel to address their concerns appropriately. In addition, the management company raised concerns about the language in our agreement, which required negotiation. One sticking point of paramount importance to us was for the manager to provide an entity, under a joinder or a guaranty, to stand behind its obligations under this agreement, which was ultimately agreed upon. We then drafted the agreement with the chef, which incorporated a reduction in his fees, clarification of the IP concerns, and a modification of his scope of services to provide for collaboration with the new management company.

Situation

While under contract to sell its hotel, a property owner realized it had a complicated title issue. Its Albany, New York, hotel was situated on land that originally had been part of a larger tract. Years before this closing that large tract had been subdivided into several parcels with separate deeds. It previously sold one of such subdivided parcels and then merged those remaining into the single, current hotel parcel. The surveyor for the current hotel buyer claimed that there was an error in the legal description on the deed for one of the subdivision parcels, which had been merged into the hotel parcel, creating a cloud on the title.
The owner retained Zeidel & Associates to confirm whether the surveyor had a legitimate issue with the legal description in the public records for the hotel parcel and to draft the documents necessary to correct the legal description on record and to transfer the title of the hotel parcel to the buyer at the closing.

Approach

Zeidel & Associates analyzed several years of recorded deeds and surveys and worked with the hotel buyer’s attorney to understand the seller’s chain of title and confirm the boundaries of the hotel’s land. We discovered that the deed for one of the historic subdivision parcels, comprising a portion of the hotel’s parking area, had a handwritten change on the typed legal description. By comparing the recorded surveys for subdivision parcels with evidence of the boundaries post-merger, we were able to determine that this handwritten change was made in error and to confirm the accurate legal description for this parcel. At our client’s request, we then prepared a correction deed to fix the deficiency in the title.
Our next task was to prepare the deed to transfer the hotel parcel from our client to the buyer. We were faced with a decision as to whether this deed should include customary title warranties for the benefit of the buyer. Normally, a seller is willing to give these warranties to a buyer because it received them from its own seller when it purchased the property. In this case, however, the client had received two deeds, each for a portion of the property, and under the deed with the erroneous handwritten change, it received no such warranties.
Further, when the two portions of the property had been combined, the only documentation consisted of a recorded subdivision map and not a deed, and therefore, there was no historical record of a complete legal description for the entire merged hotel parcel. After further research, our team confirmed that the property depicted on the buyer’s updated survey was the same as the property on the recorded subdivision map. On this basis, the client was comfortable with giving the buyer a warranty deed at the closing, as expected by the buyer.

Result

Zeidel & Associates successfully untangled the land’s chain of title and boundaries. Based on our detailed research and understanding of what an accurate survey and related description should be, we successfully assured the client, hotel buyer, title insurance company and lender that the legal description of the property was accurate and marketable, thereby permitting the transaction to close in a timely manner. Our client appreciated our team’s ability to parse through the historical documentation to identify and resolve the relevant issues so our client could confidently transfer the hotel property to the buyer’s satisfaction without exposing the hotel owner to risk.

Situation

Zeidel & Associates P.C. was retained to represent a tenant in a recreational cannabis dispensary leasing transaction in an upscale retail area in midtown Manhattan. This was the firm’s second New York City dispensary transaction in the past six months. The client planned to receive a conditional adult-use retail dispensary license from New York State as part of its program to award the first licenses to businesses owned by “justice-involved individuals.”

Approach

As part of our negotiations, we asked the landlord to represent that the leased space, which included portions of the building’s ground floor and basement and a mezzanine floor, had a valid certificate of occupancy (CO), but the landlord rejected the request. Our research uncovered that the landlord did not have a CO for the entire leased space: the original 1956 CO permitted the basement to be used for storage and shipping and the ground floor to be used for a retail store. There was no mention of the mezzanine level. However, an expired temporary CO from 2018 did reference the mezzanine’s use for retail but made no reference to the use of the ground level.

Zeidel & Associates consulted with the tenant’s architect to confirm our conclusion: the lack of specificity in the COs, coupled with the landlord’s unwillingness to make representations regarding them, exposed our client to unwanted risk, which, worst case, could involve the city requiring our client to demolish the mezzanine for an illegal installation. After exhaustive negotiations, the landlord agreed to obtain a CO, at its cost, that indicated that the mezzanine level could be legally used for a store.

Result

At the 11th hour, however, the landlord refused to represent in the lease that it owned the premises, as we had asked. Zeidel & Associates learned that the landlord did not, in fact, own the building but rather leased it under a ground lease. While this complication might have puzzled another firm and derailed the negotiations, our extensive experience with ground leases enabled us to quickly review the ground lease documents and understand what representations, warranties and covenants we needed to protect our client. The landlord agreed, and we closed the deal quickly.

Our client was so pleased with our ability to navigate the complexities of this transaction and negotiate a favorable lease that they asked us to handle three more dispensary leases, which are currently underway.

Situation

Zeidel & Associates was retained to represent an equity and debt real estate investment company with approximately $49.2 billion in assets. The company was considering funding a preferred equity investment in a high-profile acquisition of a 410,000-square-foot office building in downtown Manhattan. The building would be converted into 571 market-rate apartments, marking one of the largest office-to-residential conversions in New York.

The project’s sponsors included a highly regarded real estate investment, development, and management firm and the largest developer of office-to-residential conversions in New York City. Several other investors had already passed on the project.

Zeidel & Associates was hired for our breadth of experience and understanding of construction projects.

Upon reviewing the Letter of Intent, we realized that it did not fully address the relationships and arrangements for the construction portion of the transaction. Although the construction manager was said to be responsible for the project, it was clear to us that they were only advisors and disclaimed all responsibility for the quality of work, schedule, and costs. We were also told that the owner would be hiring all subcontractors directly, which indicated there was no general contractor for the project, which is an unusual structure for our client’s projects.

Approach

With a construction structure outside the norm, we pressed for more information about the general contractor structure and were given a two-page agreement between the proposed owner of the project and a wholly owned subsidiary. Based on an all-hands call, we identified that the sponsor intended to act as its own general contractor without any supporting documentation. Further, the sponsor confirmed that the construction manager did not bear any liability for anything other than its own acts.

We explained to our client that if the sponsor defaulted on its obligations, and as a remedy, our client assumed ownership and development of the property, they would not have a general contractor or in-house capability (or desire) to assume the role. And since, presumably, the project would be in distress at that point, our client would likely inherit disputes with subcontractors, delay issues, cost overruns, and more and would be left without the structure to get the project back on track.

Result

We guided our client through potential solutions to mitigate their risk, which we also presented to the sponsor. The sponsor agreed to provide a broad completion guarantee and address transition concerns, such as onboarding a replacement general contractor, assignment and termination of subcontracts, resolution of liens and the like.

Further, we negotiated an expansion of the scope of duties in the internal general contractor agreement to reflect those that the sponsor was providing. We also negotiated an amendment to the construction management agreement, which would be triggered only if our client was forced to take over the project. It included a more fulsome scope of responsibilities, providing more confidence that a new third-party general contractor would be willing to complete a project in progress.

The investment closed with the expectation that the building would be converted into hundreds of new apartments in Lower Manhattan amid a citywide housing shortage. Our client was pleased that this investment would highlight its ability to deliver creative financing solutions for all projects, including those going through a change of use.

Situation

Zeidel & Associates represented an organization in a lease for one of the first recreational marijuana dispensaries in New York City. The organization is controlled by a nonprofit, which qualified it for this historical opportunity, as the city reserved the first 10 dispensary licenses for nonprofit groups or applicants with their own or relatives with marijuana convictions.

Approach

Zeidel & Associates had anticipated that the landlord would raise objections regarding the leasing of space to a dispensary, considering that under federal law, cannabis is still classified as a controlled substance, therefore, its possession, distribution, sale and use are prohibited, regardless of state laws. These legal complexities create issues related to banking, the landlord’s acceptance of potentially “tainted” rent payments, and the unlikely possibility of government seizure of the property. Furthermore, since the lease technically provides a location for “illegal” activities, it could put the owner in default on its mortgage or other agreements.

Despite the risks, the landlord was not concerned, and the lease negotiation proceeded smoothly. Zeidel & Associates carefully examined and revised the lease, making changes to protect its tenant-client from issues typical of retail leases and others specific to a cannabis dispensary lease, as the initial draft did not address the unique legal position of cannabis.

To close the transaction by the end of the year, Zeidel & Associates collaborated with the landlord to tackle issues related to this new use of retail space, including restrictions in the building’s condominium documents, security concerns related to the potential congregation of customers outside the store, and the challenges posed by insurance and banking-related limitations on cannabis use. The landlord had broad discretionary rights regarding the use of this retail space, which it exercised in favor of the tenant.

Result

Zeidel & Associates completed the transaction under a tight deadline, and our client was able to open for business in a portion of the space to start generating revenue while finishing the build-out. While handling a cannabis lease is a new frontier for the real estate market, the firm’s deep understanding of the New York City real estate market and extensive experience working with tenants and landlords enabled them to partner successfully with the landlord to expedite the transaction. The client’s developer/partner has already retained Zeidel & Associates to represent it on a second dispensary lease in New York City.

Situation

Zeidel & Associates’ client, a national hospitality company, entered a joint venture with a developer on an uber-luxury residential condominium tower in South Florida with multimillion-dollar units, a top-tier waterfront restaurant, and an anticipated rooftop helipad, pool, tennis courts and other amenities serving the building’s residents. Our client is also the majority owner of the restaurant and is helping design the kitchens in the residential units.

Zeidel & Associates was hired to draft and negotiate the lease and management agreement for the restaurant on behalf of the hospitality company. Complicating matters, however, was that the developer/landlord wore two hats, as both the landlord under the lease and a minority interest holder in the tenant restaurant. Further, the joint venture tenant was hiring the hospitality company to operate the restaurant under the management agreement. This structure required outside-the-box thinking regarding standard tenant/landlord and manager positions on issues because some of the agreed-upon economics could be addressed in the joint venture agreements rather than the lease and management agreement.  

Adding to the complexity, the lease/management documents had to be negotiated and finalized simultaneously, with the joint venture and condominium documents being drafted and negotiated by separate counsel. Delays in receiving the initial draft of the joint venture and condominium documents challenged Zeidel & Associates’ ability to ensure that the various deal documents conformed to protect our client. The parties also had an aggressive schedule for finalizing the documents, which required all to be signed simultaneously for a timely launch of the marketing campaign to sell the luxury residences.

Approach

Zeidel & Associates quickly delivered thoughtful and relevant initial lease comments and the restaurant management agreement for the parties to review prior to the developer/landlord’s counsel distributing the joint venture agreement, initial drafts of the condominium documents and the ancillary agreements. In addition, Zeidel & Associates attorneys’ ability to anticipate important commercial tenants’ leasing and management issues affecting its client, which were likely to arise from the deal structure, before receiving the other deal documents, helped our client resolve such issues earlier and gave the parties lead time to fully negotiate the terms.

Result

Zeidel & Associates’ approach resulted in our client being able to take the lead in directing terms of the joint venture deal, secure important tenant protections in the lease and favorable terms for the restaurant manager. Despite the landlord’s/developer’s condominium counsel initially releasing the condominium documents for review so close to the deal signing deadline, the tenant issues potentially raised by such documents had been mostly resolved in the lease draft. At such a late point in the process, Zeidel & Associates attorneys’ review of the condominium documents was needed merely to ensure that necessary tenant protections raised by the structure were already finalized by the parties and addressed in the lease.

The client and its partners appreciated Zeidel & Associates’ high quality and thorough work product on this fast-paced transaction.

Situation

The owner of a luxury resort and private villa development in the Caribbean retained Zeidel & Associates to assist with a new project on a nearby undeveloped island, accessible only by boat, on which it wished to develop a restaurant and other amenities for guests and residents of the resort/villas. When the firm was hired, our client was in negotiations with a UK restauranteur to assist with the development and then to operate the amenities under a lease structure, with the firm’s client as the landlord. Zeidel and Associates was retained to formalize the documentation for this arrangement.

Approach

The firm needed to quickly synthesize the negotiations that occurred over the past several months to date and begin to paper the transaction. In the interest of expediency, we chose to work with a “heads of terms” generated by the tenant, with the expectation that the process would move faster using the tenant’s language, where acceptable, rather than starting with a new form, which we would have preferred. The heads of terms addressed several unique issues related to the development of the island’s infrastructure as well as the new building structures, docking rights, the phased development, termination rights for the board of residence owners, and many other issues. 

In our discussions with our client’s local counsel, we learned about the unique tax structure on the island that would have made the lease structure and, therefore, the project unfeasible as it would have resulted in a heavy tax burden for the tenant. The tenant proposed several legal structures to address this issue, but we quickly understood that the solution was to scrap the months of lease work the parties had done before retaining Zeidel & Associates and to quickly pivot our strategy to a management structure more akin to the hotel management agreement in place, which had already passed muster from a tax perspective. The change in the legal relationships required us to rewrite the heads of terms to reflect the new structure, with language that maintained the agreed upon economic structure and rights and obligations of the parties, as much as possible, while creatively resolving the tax issues.

Result

While the shift at the 11^th hour was no easy task, Zeidel & Associates’ extensive experience navigating between leasing to management agreements enabled us to pivot quickly and smoothly. We devised a management structure that the tenant accepted, so the parties could finalize the revised heads of terms. Zeidel & Associates is currently drafting the long-form management agreement.

Situation

A prominent national commercial real estate company – a longtime client of Zeidel & Associates – is developing a multi-phased project in the Dix Park area of Raleigh, NC, with four multi-family residential buildings, an office building, and common open space, estimated to cost a total of $600 million. The developer, the majority stakeholder in the project, is a developer, operator, investor, and lender with offices and projects throughout the United States.  

Zeidel & Associates was retained to draft architect, engineering, pre-construction, and construction agreements.

Approach

The multiple construction and design professionals being hired for this project, coupled with its phasing, complicated the agreements’ structuring. For the first phase, our client retained two architects to design two of the mixed-use buildings and the common area between them and one contractor for the site work and the first two multi-use buildings.

The number of parties and changing terms of the project with different leverage positions and a client under tight scheduling deadlines made the coordination unwieldy. We needed to keep our client and the stable of design professionals focused on the endgame and agree on acceptable compromises.  There was also concern about the limited partner who had additional issues at the 11^th hour.

Result

To protect the different owner entities – distributing liability between the LLCs – and to craft a coordinated payment structure, we drafted separate construction agreements for the site work and buildings in the first phase rather than drafting one agreement. After nearly a year of negotiations, we completed the architect, engineering and construction agreements and had them fully executed with the complex framework for the first phase of this multi-year project.

Situation

Zeidel and Associates was hired by the largest publicly traded developer/office building owner in the United States to assist with finding a management company to provide and oversee upscale food and beverage and conference facilities in one of the most iconic New York City office towers.

Initially, the owner engaged its existing outside real estate counsel that handles most of its leasing, but the agreement being negotiated with the management company was more akin to a hospitality contract, so the firm did not know how respond to the management company’s markup. This delayed negotiations and could have affected the timeline of the entire project. Frustrated, the building owner replaced its firm with Zeidel & Associates because of our vast experience in real estate leasing and hospitality and our understanding of how to navigate the arrangement being contemplated.

Approach

Our team promptly reviewed the manager’s remarks, which we perceived as aggressive. We then provided our client with an accounting of the concerns raised, including the need for employee claim indemnification, which was a new concept for them since they were used to traditional office leases. To assist our client with evaluating the comments effectively, we explained the standards typical in the hospitality industry. We gathered input from various departments within our client’s company and external advisors, such as building management, insurance, privacy, intellectual property, and accounting. Additionally, we consulted with all relevant stakeholders to obtain their feedback on the proposed changes.

Result

After a protracted negotiation with the management company and much soul-searching, our client chose not to proceed with the transaction. Instead, they elected to retain a food and beverage vendor currently servicing one of its other properties under an agreement that could be easily replicated.

The liability the management company wanted our client to assume was too significant for their comfort level. While we would have liked to advance the transaction, the added value we provided in helping our client understand and assess the risk to make an informed decision for their operation was a successful engagement for us and our client.

Situation

Zeidel & Associates was retained by a startup hospitality disrupter whose goal is to be hipper than a traditional hotel and more reliable than an Airbnb. Its guest rooms are located in apartment units in residential buildings with amenities and services similar to traditional hotels but delivered through technology such as mobile apps. The company currently operates approximately 6,300 hotel units worldwide in more than 35 cities in 10 countries.

The firm was hired to negotiate leases with landlords in New York City (and elsewhere) that our client’s Deputy General Counsel found especially difficult to work with and felt that their other outside firms were not sophisticated enough to handle. We also were charged with expediting the closing of leasing transactions as the current speed was negatively impacting the company’s ability to meet its quarterly leasing goals for a public offering. It was also important to the client that its own tenant-friendly leases be signed rather than the landlords’ form leases.

Approach

Zeidel & Associates quickly got up to speed on ongoing negotiations, which were difficult for many reasons. The transactions were complex and involved all, or significant portions of, full buildings. Some of the properties were encumbered by an existing hotel manager, were new ground-up developments, or had been vacant for many years — each presenting its own unique challenges. Also, the client’s form lease was more tenant-friendly than New York City real estate developers were accustomed to and contained provisions that they were often unwilling to accept. There was also pressure to close deals by quarterly deadlines and other internal and external factors.

We moved full steam ahead on numerous lease negotiations simultaneously, dedicating significant resources to meet the aggressive quarterly deadlines. We used our familiarity with New York City real estate personalities and best practices, which our client lacked, to reach compromises on contentious issues. We also leveraged our construction and design expertise to close the gap on the many buildout issues on which the parties could not agree.

Result

The firm worked on more than 15 hotel leases in less than two years and helped our client successfully complete its public offering.

Situation

A high-end restaurant group was assuming the management of food and beverage operations in a new, high-profile mixed-use urban development. It would include both public and private club dining establishments.

The initially conceived arrangement, which was captured in a letter of intent, involved a single agreement giving the restauranteur control over the operation of the businesses and specified a compensation structure based on percentages of revenue and profits. However, the plan dissolved when it was discovered that local law required private dining clubs to be operated as a non-profit that a third party could not manage. Hence, the agreed-upon compensation and organizational structure were no longer viable. This development caused our client concern about its earning potential if a profit was not legally permitted; maintaining brand standards, as it could not oversee operations; and the legal expenses to analyse these issues and restructure this transaction.

Approach

Zeidel & Associates, with the owner’s counsel, created a new structure with three separate agreements: a restaurant management agreement for the public restaurant, a consulting agreement for the private dining club that would operate at breakeven, and a management contract for all club facilities other than food and beverage, unrelated to the physical space.

Zeidel & Associates reduced the level of complexity by rejecting opposing counsel’s drafts of wholly distinct, unrelated agreements, and successfully advocating for integrated documents that mirrored each other as much as possible. This mitigated duplication of efforts and increased legal costs, and expedited the completion of the transaction, as the firm would not be forced to negotiate three independent agreements in a conflicting fashion.

Result

The firm convinced the parties to use a single form as the basis for all three agreements. This meant only certain critical terms needed to be changed, which saved our client time and legal fees. Next, the firm re-negotiated the business terms to protect our client’s position by splitting economic terms across the three agreements. We bifurcated the economics to come as close to the original business deal as possible while complying with local liquor laws.

In addition, Zeidel & Associates determined which business terms would be embodied in each agreement for our client’s protection and how to interrelate them so personnel could easily administer the relationship in the future.

The client was thrilled with the firm’s ability to synthesize the legal complexities and close the deal quickly and cost-effectively.

Situation

Zeidel & Associates represents a New York City-based integrated developer, operator, investor, and lender with offices and affiliates in major markets across the United States. The company has more than $13 billion in loan originations, co-originations and acquisitions and has investments across the real estate credit spectrum, including first mortgage, mezzanine, CMBS and preferred equity financing. Its development affiliate is a full-service development, planning, advisory, and management firm specializing in entitling, designing, and delivering premier residential real estate projects.

Zeidel & Associates has been supporting this client’s multi-family development portfolio for many years, handling its architect, construction and other pre-development and development contracts, creating turnkey agreements that can be used on projects throughout the country.

Approach

Over the past year, the client’s pace of acquisition and development, focused on the West Coast, has increased significantly, drastically expanding the number of complex architectural, engineering, and construction agreements Zeidel & Associates is drafting and negotiating on their behalf. There are multiple engagements for each project that require agreements. The client also began acquiring industrial parcels, in addition to its multifamily holdings.

While the major uptick in the number of contracts posed one set of challenges, the firm also was confronted with issues related to varied state laws that required us to coordinate with local counsel in multiple jurisdictions that our client was entering for the first time.  Further, due to the timing, the firm was instrumental in helping our client navigate acceptable solutions to supply chain and material cost escalation issues with its contractors. The firm successfully navigated unusually difficult negotiations with vendors that were negatively impacted by a limited qualified labor pool.

Result

The new projects on which Zeidel & Associates are currently assisting include:

• 124 acres in Scottsdale, AZ
• 224 acres of industrial land in Deer Valley, AZ, being developed into 4 million SF of industrial and manufacturing space,
• A 20.25-acre land parcel in Deer Valley, AZ, for a 97-unit build-for-rent single-family residential community
• A recently completed 170-unit luxury apartment development in Scottsdale, AZ
• A new, multi-phased project in Raleigh, NC, to be developed into four multi-family buildings and an office building, with building designs by different architects
• A 158-unit residential development in Englewood, Colorado

In addition to working on the new projects in the pipeline, we also resumed working on development projects in Seattle and in other markets that were temporarily put on hold due to the pandemic.

Situation

A leading global investment manager with approximately $35.6B in assets across more than 100 investments will purchase a minority equity interest in a ground-up hotel project partly funded by public bonds. The project had been in development for about 15 years but was stalled due to the pandemic, so there was an urgency when it resumed. It encompasses a 1,600-room resort, which is part of a larger project involving the transformation of vacant industrial land, with 275,000 square feet of meeting space, restaurants, a spa, a pool with a lazy river and adjacent public promenades.

Zeidel & Associates was retained to review the proposed drafts of $800 million in construction contracts. Given the high-profile nature of the project, our client asked us to review the documents to ensure they protected its interest. The developer, with whom they had previously worked, would be leading negotiations and handling the relationship with the contractor.

Approach

The documentation was complex, with separate construction agreements for the hotel, the parking structure, the convention center and site improvements. Zeidel & Associates needed to quickly synthesize provisions and structural concepts, including the public-private development documentation, ground leases and development agreements, etc., that had been discussed for years.

The firm then needed to address deficiencies that we determined were critical. We quickly realized that the developer and contractor had been negotiating the documents for some time and had reached understandings that were not always in our client’s favor. They also were pressuring us to simply sign off on the documents and not make waves.

Result

To protect our client’s investment, we convinced the developer and its attorneys (a large global law firm) to reopen negotiations so we could improve the owner’s position in the documents and thereby protect all the investors. This was a difficult process, but the firm succeeded in renegotiating the contracts with language that vastly improved protections for the investors, and the transaction closed in May 2022.

Situation

Zeidel & Associates represents one of the largest global career support and job search companies with more than 10,000 employees worldwide. It was expanding its extensive portfolio of leased office space, which it renovates in accordance with its own unique specifications under the supervision of a team of expert, in-house renovation specialists and project managers. However, the company did not have a consistent approach to the legal documentation of these extensive design and construction projects. Hence, Zeidel & Associates was asked to develop and implement one based on best practices we developed over many years of working in the construction sector.

Approach

Zeidel & Associates conducted a contracts audit and determined that the agreements our client was using for its renovation projects did not provide sufficient legal protection. The firm then created a new set of contracts, specifically tailored to our client’s need, to be used for architecture and design, construction and construction management, project management, feasibility, and agreements with other consultants. We solicitated input from our client’s internal project managers, lawyers and insurance team in order to identify and address deficiencies and problems on past projects. The firm then advised our client on how to manage its design and consulting vendors to achieve the widest acceptance of the new form contracts.

As new renovation projects arose, Zeidel & Associates implemented the new contract forms by partnering with our client’s internal teams and negotiating with outside vendors. Further, our extensive leasing experience armed us with the understanding of how to ensure that the design and construction agreements were aligned with the requirements of the renovation dictated in the individual leases.

When the pandemic unexpectedly struck, the firm shifted its focus from handling new projects to managing active ones, as offices closed, and employees transitioned to a remote work environment. Projects were in danger of falling behind or being shut down by executive orders and shelter-in-place ordinances. Zeidel & Associates conducted an in-depth analysis to understand how the contracts would address the effects of the pandemic to help our client respond to governmental action and claims from general contractors and other professionals for more time and/or fees to complete projects, and otherwise mitigate its potential liability. The firm also analyzed the complex and evolving legal landscape of pandemic-related executive orders and associated restrictions, which determined which construction projects could proceed (due to their “essential” nature, “critical infrastructure” or otherwise), and which could not, as determined on a jurisdiction-by-jurisdiction basis. The firm also modified its forms to address the rights and obligations of the parties more directly as they relate to the pandemic.

Result

To date, Zeidel & Associates has implemented its design and construction forms at more than 15 leased locations throughout the United States. We recently shifted our efforts again, this time to support our client’s efforts to reopen its offices and resume construction projects, by hiring designers and contractors to design and implement social-distancing modifications and other necessary changes within its office space across the country.

Situation

Zeidel & Associates represents a premier private investment firm focused on global real estate, which currently holds approximately $80 billion of assets under management. The firm was in the process of developing a new hotel brand to manage properties it and unrelated third parties would own.

Challenge

The investment firm turned to us to help them design and implement much-needed efficient internal processes to handle the large volume of legal documents this new venture would generate. Two areas of focus involved the entering into and administering of vendor agreements, which are critical to the launch and ongoing management of any hotel. These agreements range from contracts for food and beverage management, to spa services, IT licensing, laundry, parking, security, etc. The sheer number of vendor contracts was overwhelming the in-house legal and finance teams, as well as the hotel staff.

Solution

The newly designed efficient process that Zeidel & Associates created started with drafting a form agreement that could be easily duplicated for a variety of vendors, with language that effectively protected both our client and third-party owners. We also instituted a checklist for contract review to be completed by appropriate client team members to create a workflow, with built-in accountability, to be followed before legal review would be triggered. Third, we developed a set of standard terms and conditions to be attached to vendor contracts that were not on our own form, to ensure certain critical legal protections. We also tracked repeat vendor relationships so negotiated templates could be reused rather than renegotiated each time. Lastly, we instituted a document management system to track the status of contracts, identify critical dates such as expiration and renewal, and maintain ready access to executed agreements.

Zeidel & Associates handled more than 350 contracts within this project, helping the brand successfully launch on both the east and west coasts.

Situation

Zeidel & Associates represents a start-up “hotel” operator that offers large, modern apartment units within residential developments mostly comprised of traditional rentals. Our client’s hybrid model captures the benefits of Airbnb and the traditional hotel model, by providing a consistent, branded, guest experience, with a contactless system — no front desk or guest room keys – but with support services such a digital concierge.

While the company initially encountered the typical challenges of a start-up, the pandemic unexpectedly provided an environment that drove demand for its business model. Displaced workers, healthcare professionals and college students were attracted to our client’s accommodations and amenities: full kitchens, in-suite laundry and generous living space that could easily accommodate remote work and school and were well suited for a lengthy stay. While most of the hospitality industry suffered, our client’s exponential growth led it to seize the opportunity to find new locations. The company turned to Zeidel & Associates to execute an aggressive acquisition plan.

Approach

Zeidel & Associates drew on our unique combination of real estate and hotel experience to provide a practical approach to the process, which was paramount given the challenges with which we were confronted. Our client identified strategic locations across the U.S. in upscale residential apartment projects developed by residential real estate owners that were accustomed to working with individual tenants and leases, not hotel uses and related concerns. These owners expected our client to sign a bundle of their standard individual leases, which would not address the complexities of a hotel business. As it was not realistic to educate the building owners about the nature of hotel documentation, we had to develop a process within parameters with which they were comfortable to expedite the transactions.

Zeidel & Associates was asked to address the weaknesses in the proposed documentation, without creating an excessive delay or complexities that could deter the owners from pursuing an unfamiliar transaction. These competing goals required a delicate approach to modifying and negotiating each lease.

The firm worked quickly, collaborating with property owners on a master lease approach, which incorporated the apartment lease forms with which they were familiar, modified globally for the hotel business. This addressed significant issues for our client’s protection. We found this structure gave the property owners the comfort of working with its own documents and avoided overwhelming them with the unfamiliar legal contracts we preferred. Accordingly, in view of our client’s imperative to move quickly into these markets, this required us to carefully evaluate each apartment lease on a case-by-case basis, for the legal and operational issues and carefully weigh the implications of proposing changes to property owners who were not accustomed to extensive negotiations. At the same time, we pursued traditionally structured hotel management agreements in other locations, where possible.

Result

Our client expanded its operation to 10 properties. Its New York City location, which we handled, was ranked the #1 hotel in the U.S. by Tripadvisor’s Travelers’ Choice™ 2021 Best of the Best Awards.

Situation

Zeidel & Associates represents a prestigious multimillion dollar nonprofit that leased approximately 80 office locations across the country. Due to the impact of the COVID-19 pandemic and other factors, it decided to consolidate and vacate offices, with the goal of reducing its office portfolio to less than 30 locations. Zeidel & Associates was charged with creating and executing a strategy to downsize its real estate footprint.

Approach

Zeidel & Associates’ strategy to reduce its client’s footprint involved closing offices as of their natural lease expiration dates, exercising termination options when available, amending leases to provide for early exits, and negotiating leases for new offices to replace existing, unused space. This work required detailed review of the client’s extensive lease documentation portfolio, with existing leases carefully and accurately evaluated to determine potential exit strategies. Further, the firm instituted protocols to ensure that new leases would contain maximum flexibility in line with the client’s new strategy. As part of the process, the firm provided advice and counsel on relevant company polices, updated RFP forms and internal lease review checklists, analyzed critical termination dates and resulting termination payments drafted termination notices, and negotiated new letters of intent, leases and amendments, all of which was coordinated with the nonprofit’s general counsel, real estate facilities group and its senior real estate committee.

Result

As a result of this process, the client has closed, relocated and/or consolidated numerous offices across the county. This project is ongoing and will take several years to fully implement.

Situation

Zeidel & Associates represents a renowned, high-end restaurant operator based in New York City that has numerous iconic brands and concepts that are known for their exclusivity and celebrity clientele. The company needed urgent help to close time-sensitive transactions in an efficient and cost-effective manner, and looked to Zeidel & Associates for our reputation, Big Law and in-house experience and competitive rates.  

While many New York City-based restaurants were shuttering during the height of the pandemic, our client chose to aggressively pursue an expansion into the greater Miami area. Due to Florida’s less stringent COVID restrictions, many restauranteurs were drawn to the state, which stimulated intense competition for suitable restaurant space, much of which had been recently abandoned. Our client also wished to pursue an opportunity to participate in the revitalization of a resort located in Boca Raton, which would feature multiple food and beverage venues with unique concepts.

Approach

In order to support our client’s intended expansion into a heated Florida market, Zeidel & Associates immediately evaluated and provided feedback on numerous potential leases simultaneously to preserve all opportunities that would allow our client to quickly pivot into this new market. With speed to market as the driving factor, we focused on identifying and resolving the critical “deal breakers.”  At the same time, we secured valuable New York City space for our client’s existing New York City brands, to support our client’s expectation that the New York restaurant market would eventually rebound.

Result

With great urgency, Zeidel & Associates pinpointed our client’s most critical liability issues and found creative ways to protect it against risks posed by committing to space under time pressure with landlords who had their choice of new tenants. Almost immediately after signing several of these leases, our client opened its signature restaurants in Miami, creating an immediate “buzz” and quickly establishing itself as an integral part of the Miami restaurant scene.

Situation

Zeidel & Associates represents one of the most respected third-party management hotel companies in the country, which currently manages more than 80 hotels. The management company, like all other hospitality companies worldwide, was impacted suddenly and severely by COVID-19 and was forced to implement major layoffs, pay cuts and other cost-saving measures. As new legislation related to hotel operations was quickly passed, our client wanted to ensure it complied with the complex and rapidly evolving legal landscape related to hotel operations and government “shut-down” orders implemented across the country. Our client quickly became overwhelmed with the large number of federal, state, and local requirements and directives and needed guidance on which of its hotels were permitted to remain open as an “essential service” and under what conditions and stipulations.

Approach

Zeidel & Associates’ client did not have the expertise or manpower to determine whether a guest was permitted to stay in its hotels by qualifying as an essential worker or meeting other criteria. Accordingly, it was decided that each guest would be required to confirm in writing that he/she was there for a permitted purpose under applicable laws and waive any claims against the hotel as a result of the guest’s noncompliance. The attorneys at Zeidel & Associates needed to research the voluminous and rapidly evolving legal requirements applicable to each locale where our client managed hotels in order to draft appropriate waivers that accurately referenced applicable regulations and that adhered to the general legal requirements for waivers. This, however, was not a single assignment. Throughout the pandemic, with constantly changing requirements and mandates, our client needed a legal partner who could quickly respond with new waivers and counsel to ensure ongoing compliance, mitigation of risk, and safety of its employees and guests.

Solution

Initially, we drafted waiver forms, tailored to the requirements of each state and local jurisdiction, that each guest was required to sign when checking into a hotel. This accomplished our client’s goal of creating a written record in case of enforcement by legal authorities. As the crisis evolved, so did the legal requirements affecting our client. As stay-at-home orders were replaced with re-opening guidelines that included social distancing, masks, physical barriers, and indoor capacity limits, which had little to no consistency between states or even between counties within the same state, new waivers were needed.

The waivers we originally created needed to be updated with the changing legal landscape, including increased activities and other reopening considerations, such as outdoor dining and small weddings and other events, which the hotels wanted for much-needed additional revenue.

We efficiently analyzed local ordinances that supplemented and were sometimes inconsistent with governors’ executive orders or city regulations or vice versa. For example, California established a “Blueprint for a Safer Economy,” which laid out opening requirements for various activities, including private events, based on a tier/rating system of COVID-19 positivity rates in a county, while at the same time counties such as Los Angeles and San Francisco imposed additional requirements. Therefore, these waivers could not be templated or customized by each of the hotels, so Zeidel & Associates handled all of the research and guidance to develop waiver forms that were specifically tailored to each local jurisdiction, which we updated regularly to reflect evolving requirements.

The magnitude and complexity of this project made it impossible for the hotel management company to navigate and implement without outside support. To date for this client, Zeidel & Associates has drafted waivers for 14 states and numerous local jurisdictions within each state.