June 1, 2010

Real Estate Restructuring Work Proving a Boon to Firms

by Robert Carr
The American Lawyer

Real estate restructuring work, a bandwagon that many firms jumped on in the past year, shows no signs of slowing. More than $1.4 trillion in commercial loans are coming to term in the next four years, according to the Congressional Oversight Panel studying financial reform, and will likely keep the distressed-property business booming.

That trend is paying off for many firms and their workout practice groups. Katharine Bachman, vice-chair of the real estate practice group at Wilmer Cutler Pickering Hale and Dorr, says her group has seen a real spike in restructuring work. When the firm first organized its Distressed Real Estate Solutions Group at the end of 2008, only a small percentage of the real estate practice concentrated on loan collections and distressed asset investments.

"Today, approximately 30 percent of our real estate work is in the distressed arena. We project that this percentage will increase as investment markets loosen ... particularly given the fact that so much commercial real estate debt -- financed at higher valuations than the current market -- is coming due over the next few years," she says.

Last week Jenner & Block announced the formation of their Real Estate Finance Litigation and Workout Task Force, bringing together attorneys from the real estate, complex commercial litigation, bankruptcy, corporate and environmental practices. Don Resnick, chairman of the firm's real estate practice, says creating a cross-functional team made sense.

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