Robert Barron and Marc Shuster (Melanie Bell)
Robert Barron and Marc Shuster, Berger Singerman
It’s a deal both sides expect to dance and sing over for years to come.
That’s exactly why Royal Caribbean Cruises Ltd. agreed to build a 130,000-square-foot, $20 million dramatic arts center on what is now a surface parking lot on Florida International University’s Biscayne Bay campus, and why FIU offered to lease it back to the cruise line for a nominal ground rent.
In the end, both sides gain a state-of-the-art facility where theater arts students and cruise line performers can train and practice.
With one side being one of South Florida’s largest corporations and the other one of its largest universities, however, making it happen required creative solutions.
“The dirt is owned by the state,” said Berger Singerman partner Robert Barron, one of two firm team-members who put the lease deal together.
The very nature of public-private partnerships, however, requires a different approach, and a different mindset, he said. “The parties need to rearrange their expectations so that they can negotiate an agreement that can work in this environment. And by this I mean items such as insurance issues are different when a tenant is negotiating with a landlord that is the state. Liability issues are different.”
Those are some of the reasons the deal took three years to complete.
Royal was rapidly outgrowing its Hollywood training facility. FIU faced the budget constraints of state-allotted funds. Both, though, had similar interests and could offer each other what the other needed: FIU had land; Royal had money.
“There was a real opportunity to make one plus one equals three,” said Marc Shuster, the other Berger Singerman partner involved.
As part of the deal, Royal agreed to maintain the facility. It also gets use of a dormitory to house performers while they’re onshore and training. FIU gets to use the facility as well and, Shuster said, “at the end of the lease term the building converts to FIU’s.”
In part, the lease “is a vehicle that shifts risk,” Shuster said. And, for Royal, “It solves a basic need they have, which is, ‘What do we do with the Yugoslavian ballet dancer? Where can she train and where can she live?’ ” In addition, Royal will take in FIU interns.
The result, Shuster said, is “a wonderful beacon to show other businesses that the public-private partnership is not only attractive, it’s necessary. … It’s completely a win-win.” Construction is due to be completed in 2015.
Attorneys restructured lease for four cargo planes serving DHL
Franklin Caplan, Daniel Lampert, Phyllis Bean and Iryna Ivashchuk
The goal was the restructuring of a lease for four cargo airplanes worth $700 million.
The challenge came in the multijurisdictional nature of the deal and the need to keep the planes flying as the pieces came together. DHL is based in Germany, Southern Air in Kentucky. The planes at any given moment were “literally all over the world,” said Franklin Caplan, a Berger Singerman partner on the transaction team for Southern Air.
That meant, as they worked the deal, checking on the status of the aircraft at multiple locations, and coordinating with lenders and company representatives in different time zones.
“It was like the philharmonic—the orchestra conductor watching instruments and they all have to sound the right note at the same time,” Caplan said.
Except, in this case, the oboes might be in Cleveland and the violins in Jakarta.
At the outset, Southern Air leased the planes from Oak Hill Capital Partners, the holders of a large equity stake in the cargo company. Under the new deal, DHL leases the aircraft from Oak Hill and then sublets them to Southern Air. Because of DHL’s outstanding credit rating, it can get the planes at a much more favorable price.
“It really was a proverbial win-win,” Caplan said. “It just happened to be rather complicated to get there.”
The deal continued an existing agreement between the companies, involving environmentally advanced, fuel-efficient, Boeing 777 wide-body jets. Southern Air already had the planes in service, providing air transportation for DHL delivery operations.
“That alignment of interests can overcome or tamp down a lot of transactional complications,” he said. “The incentive is so clear. It’s like the North Star.”
However, coordinating the lease with the “flight service agreement,” which provided stipulations about the flight schedules, maintenance, repair and other operational requirements, added to the complexity.
“It’s an intrinsic challenge because of the nature of the deal, but it’s kind of a special case,” he said. “The way to keep up with it actually is to be ahead of it.”
The need to keep third parties informed with interim status reports, he said, “was a simultaneous but separate challenge.”
The key, said Caplan, was “DHL and Southern Air had a built-in good working relationship. … That’s very important.”
So, too, the relationships within Berger Singerman. Three of the four members of the team—Caplan, partner Daniel Lampert and Phyllis Bean—had been working together since they were young attorneys. “We know each other well enough to be able to pivot off of each other,” Caplan said. The fourth, associate Iryna Ivashchuk, is young but very capable, he said, and helped keep the others organized.
Southeast Financial Center performed juggling act to satisfy law firms
Donald Cartwright and Nicole Vassilaros, JLL
David Preve, Barbara Liberatore Black and Matthew Goodman, Cresa South Florida
Finding 70,000 square feet of office space in downtown Miami for a law firm that hadn’t moved in three decades might have been difficult enough. In the end, creating a suitable fit seemed like solving a giant Rubik’s Cube: Every move required a realignment and, since it eventually involved three prestigious law firms, several other companies and 7½ floors of the Southeast Financial Center, precise timing.
It also had to be done confidentially.
Shutts & Bowen, the 104-year-old Miami law firm, needed three floors of space and time to find, plan and build out its new offices before late 2015. In all, it needed 69,155 square feet. It worked with a team from Cresa South Florida, including managing principal David Preve, Barbara Liberatore Black and Matthew Goodman, to locate a suitable space.
“They had to do something sooner than later because large blocks of space were becoming more scarce in the marketplace,” Preve said. “That’s where the puzzle-solving begins.”
To make it happen, Donald Cartwright and Nicole Vassilaros of JLL, formerly Jones Lang LaSalle Americas Inc., exclusive agents for the Southeast Financial Center, wound up juggling the expansions, downsizings and relocations of four tenants and multiple subtenants within the building.
In all, it wound up involving close to 157,000 square feet of space.
When Shutts & Bowen began its search, Squire Sanders was leasing the 40th through 43rd floors of the Southeast Financial Center and, in turn, subleasing the 43rd to other tenants. Cartwright and Vassilaros knew the firm was interested in giving up the 40th floor. They figured they could move Squire Sanders and then offer the 40th, 41st and 42nd floors to Shutts & Bowen.
But Squire Sanders didn’t want to go to a lower floor.
“What appeared to be a fairly no-brainer, if you will, became complicated because when it came time to really make a decision about those floors, Squire Sanders wasn’t really keen on moving to a lower floor even though they would make a ton of money doing it.”
Simultaneously, though, White & Case, with offices on the 47th through 50th floors, was looking to reduce its 75,000 square feet of space. With time running out for the Shutts & Bowen deal, Cartwright and Vassilaros worked out a way to move an existing tenant from the 46th floor to the 44th floor, move White & Case to 48 through 50, and give Squire Sanders the 47th and a part of the 46th.
“Anytime you have a transaction like this, everybody has to be a winner,” Preve said. “This isn’t about somebody going over the top. Everybody has to walk away with the right answer for their needs.”