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Analyzing, Stabilizing and Repositioning Distressed Assets

Analyzing, Stabilizing and Repositioning Distressed Assets. Jessica Schramm Dan Shapiro Thompson Coburn, LLP Robbins, Salomon & Patt , Ltd. I. Defining the Terms. A.Distressed Assets Deal Crashed Financially Developer or Mastermind Crashed Death by Market

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Analyzing, Stabilizing and Repositioning Distressed Assets

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  1. Analyzing, Stabilizing and Repositioning Distressed Assets Jessica Schramm Dan Shapiro Thompson Coburn, LLP Robbins, Salomon & Patt, Ltd.

  2. I. Defining the Terms A.Distressed Assets • Deal Crashed Financially • Developer or Mastermind Crashed • Death by Market B.Stabilization and Repositioning • Clean up the Unfinished Aspects of the Project • Negotiate New Entitlements • Made Ready for “Market” or Development

  3. II. Analyzing a Busted Deal: From the High Profile Chicago’s: Waterview Tower/ Shangri-La Hotel or The Spire Located at 111 West Wacker, a proposed 90-story tower for a 220 room luxury hotel with a 26-story parking structure. Stalled in 2008. Located at 330 North Lake Shore Drive, a proposed 115-story residential tower providing 1,193 units. Stalled in 2008.

  4. II. Analyzing a Busted Deal: To the More Common A Townhome Deal: On the Surface it’s a Beauty

  5. II. Analyzing a Busted Deal [Continued] A Townhome Deal: Underneath it’s a Beast

  6. II. Analyzing a Busted Deal [Continued] • Assess the Current Property Conditions • Assess the Existing Development Rights • Identify the Highest and Best Use for the Parcel • Reposition through New Entitlements

  7. A. Assess the Current Property Conditions 1. Code Compliance i. Maintenance ii. Building iii. Fire iv. Health v. Zoning vi. Licensure vii. Finance (Water/ Sewer) viii. Environmental

  8. A. Assess the Current Property Conditions [Continued] 2. Assess any Pending Litigation i. Code Enforcement Actions a) Administrative Hearing Division b) Circuit Court ii. Pending Foreclosure Actions a) Maintain an Internal Database b) Consider Adoption of a Vacant Building Ordinance

  9. A. Assess the Current Property Conditions [Continued] 3. Assess what Improvements Currently exist on the Property i. Are the improvements Code Compliant? If not, are they Legal, Non-Conforming? a) Use b) Density (lot size, unit count, and floor area) c) Parking d) Setbacks e) Site Coverage f) Building Height g) Construction Type for Building Code Compliance

  10. A. Assess the Current Property Conditions [Continued] • ii. What Development Rights remain on the Parcel?

  11. B. Assess the Existing Development Rights 1. Identify Recorded Entitlements i. Types of Documents: • Annexation Agreements • Redevelopment Agreements • Planned Developments • Covenants/Declarations • Easements • Plats of Subdivision, Dedication and Vacation ii. What is valid and what has expired? iii. What rights and obligations are contained therein? iv. In most cases, the rights and obligations will transfer.

  12. B. Assess the Existing Development Rights [Continued] 2. Identify Municipal Entitlements i. Types of Documents, other than those recorded, may include Entitlement Ordinances and Resolutions and Permits and Licenses ii. What is valid and what has expired? Most should include sunset provisions. iii. What rights and obligations are contained therein? iv. Will such rights transfer? Special Uses rarely transfer without formal approval.

  13. B. Assess the Existing Development Rights [Continued] 3. Identify all Current Building Permits and Licenses i. What permits or licenses are valid and what has expired? ii. In the case of permits, who has authorization to use the prior plans? iii. In the case of licensing, what licenses will transfer? Most licenses, including those which are use permits, will likely not transfer.

  14. C. Identify the Highest and Best Use for the Parcel 1. Engage a Planner to Study the Area and Assess the Highest and Best Use 2. Consider the Comprehensive Plan 3. Consider Current Market Conditions and Trends 4. Consider Key Targets for Infill Development

  15. D. Reposition through New Entitlements 1. Consider any Necessary or Desirable Amendments to the Original Entitlements 2. Create Incentives through Attractive Zoning 3. Utilize Financial Incentives, including the creation of tax credits, funds and grants 4. Utilize Public-Private Partnership Agreements 5. Create Value through Stabilization and Repositioning

  16. V. Question and Answer For Additional Information Contact: Dan Shapiro 312/ 456-0383 dshapiro@rsplaw.com Jessica Schramm 312/ 580-2249 jschramm@thompsoncoburn.com

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