Supporting a Leading Residential and Hospitality Management Company in Concurrent Property Management Transactions
Situation
A residential apartment and hospitality management company engaged Zeidel & Associates to assist with two significant property management transactions that were already underway and moving on accelerated timelines. The engagement coincided with the client’s General Counsel taking paternity leave, creating an immediate need for experienced outside counsel who could quickly absorb the status of negotiations, align with the company’s existing negotiating positions, and help bring both transactions to completion.
The transactions involved two separate properties in different states, each with unique ownership groups, deal structures, and contract forms. Both matters presented complex issues involving fiduciary duties, indemnification, termination rights and compensation structures.
Approach
Zeidel & Associates stepped into both negotiations midstream, reviewing existing drafts, understanding the business team’s priorities, and building on guidance left by the client’s legal department to ensure continuity in negotiations.
For one transaction, involving an international owner’s first U.S. rental project, we negotiated substantial revisions to the client’s own form of management agreement. Key issues included the scope of the manager’s fiduciary obligations, indemnification responsibilities, and the introduction of an innovative management fee structure tied to controllable net operating income rather than traditional revenue-based metrics.
The second transaction involved negotiation of the owner’s form management agreement form for a large residential hospitality project, and involved a range of issues, including termination rights, fiduciary duties, non-solicitation provisions, and an unusually broad indemnification framework that required input from senior levels of our client’s organization.
In both cases, we developed creative alternatives that addressed the owner’s concerns without materially expanding our client’s risk profile beyond the standards applicable to its portfolio.
Across both matters, we also negotiated assignment and subordination agreements with the lenders.
Throughout the engagement, we provided detailed issue analysis and strategic guidance to help the client evaluate proposed concessions, maintain consistency with its broader deal philosophy, and make informed business decisions under significant time pressure.
Result
Both transactions moved forward successfully, enabling our client to secure two important management engagements while maintaining an appropriate balance between commercial objectives and legal risk.