Distressed Asset Group

Recent Indicators Regarding Increase in Distressed Real Property in Florida

• Florida had the 9th highest state foreclosure rate in the nation in the second quarter of 2006; and the 3rd highest in the third quarter of 2006.
• Florida’s foreclosure rate is more than twice the national average.
• Among cities, Fort Lauderdale has the 2nd highest foreclosure rate and Miami has the 4th highest foreclosure rate in the national rankings.

^{As reported by RealtyTrac and cited by the Miami Daily Business Review Vol. 81, No.113, A2.}

• In 2006 there were 25,000 condos under construction in Miami-Dade County (more than the total sold in the last 9 years).
• Investment Speculators hold 75% of contracts under construction at that time.
  
  ^{As reported by Forbes Magazine and cited by the Miami Daily Business Review Vol. 81, No. 113, A2.}
   
• Miami had the highest foreclosure value rate in South Florida with 1,516 foreclosure cases valued at $383.8 (in millions), accounting for 12.9% of the value for all South Florida foreclosures.
• Wellington had South Florida’s second highest foreclosure value rate (5.6%) despite having the fewest number of foreclosure cases in South Florida (102 cases).
  
  ^{As reported in the Miami Daily Business Review Vol. 81, No. 237, A5 (May 17, 2007)}
  
• In the Florida housing market, 2,557 complaints were filed against developers in the year ending June 30, 2006, up from 1,825 for the year ending June 30, 2004.
  
  ^{As calculated by Florida's Department of Business and Professional Regulations.}
  
• In Miami-Dade county, 8,000 new condo units will be completed in 2007 and nearly 12,000 additional units will be completed in 2008.
• New buildings that have recently opened in downtown Miami report many units up for resale:
  • Blue: 87 of the 330 units up for resale
  • One Miami: 155 of the 800 units up for resale

            ^{As reported in the New York Times (May 26, 2007)}

• In 2007, Florida has the 2nd highest national foreclosure rate.
• Florida's 2007 foreclosure filings were more than twice the number of filings reported in 2006.
• Florida's 2007 foreclosure filings increased 275% from December, 2006.
• Florida's 2007 fourth quarter filings increased 211% from Florida's 2006 fourth quarter.

        ^{As reported by  RealtyTrac Inc. on January 29, 2008 at}
      http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3988&accnt=64847 

• Florida has seven (7) cities among the top thirty (30) cities in the nation having the highest foreclosure rates:

• Miami Ranked #8 (2.724 % of households)
• Ft. Lauderdale Ranked #10 (2.632% of households)
• Orlando Ranked #20 (1.932% of households)
• West Palm Beach Ranked #21 (1.924% of households)
• Tampa/St. Petersburg/ Clearwater Ranked #23 (1.908% of  households)
• Sarasota/Bradenton/Venice Ranked #24 (1.840% of households)
• Jacksonville Ranked #27 (1.748% of households)
  
  Why is KPKB so often selected in matters concerning Distressed Properties?
  
  • Our referrals tell us that they refer matters to us for the following reasons:
  • The extent of our experience representing senior and mezzanine lenders;
  • The extent of our resources to handle even the most complex matters;
  • Our business acumen;
  • Our high standards of professionalism;
  • Our experience in acquisitions of distressed assets.
  
  The following serves as an overview of the collective resources which Kluger Peretz Kaplan & Berlin brings to bear on challenging business problems and legal issues affecting senior lenders, mezzanine lenders, DIP lenders, private equity firms, hedge funds, and other parties owning or acquiring distressed real and personal property.
  
  Lenders and Investors
  
  Distressed real properties present a variety of issues to senior lenders, mezzanine lenders, and equity participants. These issues require insight and proven strategies to protect lenders and to maximize the return on their invested capital. For example:
• Impact of borrower bankruptcy
• Negotiating the resolution of intercreditor disputes
• Successor developer liability issues
• Assumption of property management and other rights and responsibilities
  
  There may be an assumption of rights and responsibilities arising out of contracts held by the developer with:
  
• Unit purchasers
• Vendors
• Contractors
• Property managers
• Employees
• Senior/junior lenders
• Escrow agents
• Other parties dealing with the developer
  
  What We Do for Lenders
  
  When representing lenders, we:
  
• Implement the expeditious foreclosure of collateral
• Advise regarding acquisition opportunities and strategies
• Negotiate and resolve complex issues arising from intercreditor agreements
• Identify and pursue tort and contract claims against third parties
• Assist in locating temporary, highly qualified management professionals to help manage real property projects
•  Advise about rights and responsibilities in distressed asset situations
  
  Intercreditor Disputes
  
  A developer’s default on a distressed real property project may result in litigation disputes between the Mezzanine Lender and the Senior Lender arising out of their intercreditor agreement. These disputes may include:
  
  • Mezzanine Lender’s right to foreclose;
  • Approval of property manager changes;
  • Mezzanine Lender’s use of condemnation awards.
  
  Condominium Issues
  
  Many issues arise when a senior or mezzanine lender takes over a
  condominium project. These issues may include:
  
  Completing and/or amending filings with the Florida Division of Florida Land Sales, Condominium and Mobile Homes, and with the U.S. Department of Housing and Urban Development – Interstate Land Sale/RETPA Division
  
  • Updating and notifying buyer of changes in condominium documentation
  • Notifying tenants of impending conversion to condominium
  • Marketing and sales issues 
  
  Bankruptcy Filing Impact
  
  Developers in distressed asset situations may file for or be placed under bankruptcy protection. A bankruptcy creates a variety of issues, including:
  
• Reorganization and liquidation strategies
• Asset and loan acquisition opportunities
• Intercreditor agreements
• Assumption and rejection of contracts and related damages
• Effects of the automatic stay on enforcement actions including against non-debtors
• Financing and cash collateral issues
  
  Benefit from Our Experience
  
  Kluger Peretz Kaplan & Berlin has represented developers, senior lenders, mezzanine lenders, borrowers, private equity groups, hedge funds, trustees, receivers, and institutions such as the RTC and the FDIC. 
  
  This wide ranging experience provides us with a unique perspective which enables us to analyze and resolve the critical issues facing clients in matters related to distressed real property.
  
  Our clients tell us that they refer matters to us for the following reasons:
• Our experience representing developers, lenders, private equity groups, and other parties dealing with distressed assets
• Our ability and resources to handle even the most complex matters
• Our business acumen
• Our acknowledged legal ability
• Our high standards of professionalism
• Our commitment to client communication
• Our commitment to achieve the best possible resolution in line with their objectives
  
  When you work with Kluger Peretz Kaplan & Berlin you have seamless access to multi-disciplinary resources in:
• Business and real estate transactions
• Litigation and dispute resolution
• Bankruptcy and creditors’ rights
• Intellectual property law
  
  KPKB’s Business and Real Estate Transactions Group
  
  KPKB’s Business & Real Estate Transactions Group represents clients wishing to buy or sell businesses, commercial real estate, or other assets; in forming corporations, partnerships, and joint ventures domestically and internationally; and in developing effective franchising networks.
  
  The Business & Real Estate Transactions Group is often involved in every stage of a client’s transactions, including:
  
  • clarifying the business purpose(s) to be accomplished by the transaction; 
  • proposing transaction structure alternatives to best achieve the business purpose;
  • evaluating the impact of tax issues on the various structural alternatives;
  • creating legal entities designed to bring about the optimal alternative; and,
  • documenting the respective rights and obligations of the parties to the transaction.
  
  KPKB’s Litigation and Dispute Resolution Group
  
  KPKB’s Litigation & Dispute Resolution Group has successfully litigated or settled disputes across a wide range of disciplines - from class actions and individual claims involving securities and financial fraud to corporate governance issues and professional liability - for national and international businesses and people of high net worth.
  
  The Litigation & Dispute Resolution Group has tremendous experience in litigating and resolving disputes arising from distressed real property, including disputes arising from breaches of:
  
  • Intercreditor agreements;
  • Development agreements;
  • Management agreements; and
  • Real property sale contracts.
  
  KPKB’s Bankruptcy and Creditors’ Rights Group
  
  From workouts to bankruptcy proceedings, our Bankruptcy and Creditors' Rights Group provides our clients aggressive counsel to secure their positions and their holdings.
  
  As key participants in local, national, and international cases across a wide range of industries, we’ve represented:
  
  • debtors in both out-of-court workouts and bankruptcy proceedings,
  • creditor committees in Chapter 11 proceedings in Florida and elsewhere,
  • Senior, mezzanine and DIP lenders,
  • acquirers of distressed or bankrupt companies (or assets of such companies),
  • trustees in Chapter 11 cases and broker-dealer cases pursuant to SIPA, and
  • agencies of the U.S. government in various regulatory liquidations
  
  The Team
  
  We recognize the value of your time.
  
• We respect your business goals.
• We bring over 90 years of combined legal experience in real estate, business transactions, litigation, and bankruptcy issues.
• Eliot Abbott, Jon Chassen, Steve Silverman, and Michael Seese bring experience and fresh thinking that goes beyond the basics.
  
  The Firm Behind the Team
  
  Our lawyers and staff exemplify leadership, scholarship, teamwork, experience, creativity, and ethical responsibility.
  
  Our firm is continually recognized as a top South Florida law firm; Kluger Peretz Kaplan & Berlin was first to be named “Best Professional Services Firm of the Year” Large Firm Category, by the South Florida Business Journal.
  
  The firm provides clients with responsive, insightful, and supportive service to realize their business goals.
  
  Steve Silverman – Litigation and Dispute Resolution
  
  • Complex commercial disputes and trials
  • Counsel to receivers and the FDIC/RTC in large, complex failed financial institution litigation and asset recovery investigations (including those relating to real property)
  • Defense of lender liability claims
  • Litigation of membership interest rights
  • All aspects of real property litigation
  • Chair of the firm’s Litigation and Dispute Resolution Practice
  • Member of firm’s management committee
  • “ America’s Leading Lawyers for Business,” Leaders in Florida, Litigation, Chambers USA
  • Super Lawyers, Florida Super Lawyers magazine
  • "Legal Elite," Florida Trends magazine
  • "The Best of the Bar," South Florida Business Journal
  • Florida Super Lawyers
  
  Eliot Abbott – Real Estate and Business Transactions
  
  • Native Floridian with local knowledge and contacts
  • Works all aspects of real estate transactions
  • Bond financing, tax increment financing, conventional financing, participation financing
  • Land acquisition and development
  • Residential and commercial condominiums
  • Ability to find the right idea, sometimes before his clients ever know they have an opportunity or a problem
  • Co-Chair of the firm’s Real Estate and Business Transactions Practice
  • Member of the firm’s management committee
  • Top Dealmaker of the Year, 2006 Finalist, Daily Business Review
  
  Jon Chassen – Real Estate and Business Transactions
  
  • Detailed, practical problem solver
  • Clients include lenders, sellers, purchasers, developers, and landlords and tenants
  • Complex real estate-related transactions and disputes
  • Commercial real estate contracts, leases, and documentation of loans secured by real estate
  • Condominium development and conversion
  • Co-chair of the firm’s Real Estate and Business Transaction practice
  
  Michael Seese – Bankruptcy and Creditors’ Rights
  
  • Identify, structure, and implement solutions to business and financial issues in bankruptcy, workouts and restructurings
  • Complex issues under Chapter 11
  • Asset acquisition
  • Senior, mezzanine, and DIP financing
  
  Debtor representation includes
  • Large international cargo carrier, reorganizing under Chapter 11
  • Large U.S. steel producer’s sale of assets Lender representation includes
  • Private equity group in acquiring hotel operation
  • Private equity group as a post-petition lender and ultimate acquirer of retail chain in 3 states
  • Large investor in recapitalization and buyout of condo developments
  
  Bankruptcy litigation and negotiation includes
  • Obtained a nationwide permanent injunction to prevent aircraft seizure in a case ancillary to a large and complex reorganization proceeding in South America.
  • Obtained authority to sell assets of major U.S. steel producer.
  
  Co-chair of firm’s Bankruptcy and Creditors’ Rights Practice
  • America’s Leading Lawyers for Business, Leaders in Florida, Bankruptcy, Chambers USA, 2007
  • Legal Elite, “Florida Trend” magazine, 2007
  • Super Lawyer, “Florida Super Lawyers” magazine, 2006-2007
  
  Contact Information for Kluger Peretz Kaplan & Berlin Distressed Asset Group
  
  Steve Silverman - Litigation                   
  ssilverman@kpkb.com
  Eliot Abbott - Real Estate                 
  eabbott@kpkb.com
  Jon Chassen - Real Estate                   
  jchassen@kpkb.com|
  Shari Olefson - Real Estate                 
  solefson@kpkb.com
  Karyl Argamasilla - Real Estate               
  kargamasilla@kpkb.com
  Jaime Coco - Real Estate               
  jcoco@kpkb.com
  Michael Seese - Bankruptcy
  mseese@kpkb.com   
  Eyal Berger - Bankruptcy/Litigation
  eberger@kpkb.com

201 South Biscayne Boulevard, Ste 1700
Miami FL 33131 
305.379.9000
www.kpkb.com