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Motel-565882567-e1648218576751-300x224Single asset real estate (SARE) is a unique classification under the Bankruptcy Code with implications for both debtors and lenders. SARE classification is apparent for a property such as a shopping center, apartment complex or office building where the debtor’s income is generated exclusively from real estate operations, but is less apparent for a hospitality property where the debtor may provide incidental services. Although a full-service hotel with a pool, fitness center and restaurant is not a SARE property, recent trends indicate that even hourly motels offering little-to-no onsite amenities may not qualify for SARE classification. Because SARE classification is viewed as providing lenders with distinct advantages in a chapter 11 case, property owners seeking chapter 11 protection to reorganize often try to avoid that classification, while lenders seek to impose it through sometimes costly litigation.

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New home construction projects experience the fastest growth rate since 2006, President Biden signs the Consolidated Appropriations Act of 2022 into law, big U.S. hotel chains place developments in Russia on hold, and more.

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Hotel-door-200153517-e1647970117955-300x270Branded hotel managers are not bad people, but they’re sometimes bad managers if profitability is your objective. If you noticed that operating margins improved when brand standards were relaxed during the pandemic, and when the brands were forced to reduce corporate charges, you’re not alone. The brands will suggest that these were temporary measures reflecting their concern for their owners. But there were some important lessons learned during the pandemic—including some that are not often spoken about at hotel conferences—that astute owners and their asset managers should not soon forget.

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In a long-awaited decision which overturned the Court of Appeal’s ruling in the Triple Point Technology vs PTT Public Company case, the UK Supreme Court confirmed the general law of LDs, which is that—absent clear words to the contrary—they accrue up to the date of termination of a contract regardless of whether the contractor completes the work; after that, general damages are recoverable. This approach was held to reflect “commercial reality and the accepted function of liquidated damages.” Although the contract in question was not a construction contract, the decision is equally relevant in the construction sphere.

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The popular term “PropTech” is projected to disappear as real estate digitization continues, the impact of the Russia-Ukraine conflict on the U.S. housing market is analyzed, China’s home prices continue to fall, and more.

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Several commercial real estate firms have joined the growing list of companies temporarily suspending—or outright terminating—property and facility management operations in Russia amid economic sanctions and mounting international pressure. CBRE is the latest to make such a move, discontinuing its Russian leasing, investment and property management operations and denouncing Russia’s invasion of Ukraine in a statement issued March 7. Other major players, including Savills, Knight Frank, and Colliers, have already suspended operations in the country, citing similar concern for international sanctions and the humanitarian impact of the invasion. Colliers is going even further to suspend operations in Belarus as well. Recently, global real estate service giant JLL switched course, issuing a formal statement that “with great sadness,” it will begin the process of separating from its domestic operations in Russia, though not commenting on whether the separation will be temporary or permanent. This is a significant change from just earlier this month , where, when asked about pulling operations from the country, JLL stated it would stay abreast of the situation abroad and continue to ensure the safety of its people and clients.

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Jamie Bobotek, Pillsbury partner, will be moderating during the “Redefining Live-Work-Play: A National Landing Development Outlook” panel at Bisnow’s National Landing Update: NoVa’s Newest Live, Work, Play Destination event on March 22. For more information and to register, please visit the event page.

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In the wake of the COVID-19 pandemic, many service industries are reevaluating their physical footprint, and the aviation industry is no exception. Opportunities abound for developers, designers, and contractors to update and expand airport terminals to accommodate traditional needs while also meeting the growing demand for more open space (including larger outdoor areas in terminals and larger cargo facilities to meet the needs of Amazon, FedEx and UPS).

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Economic sanctions placed on Russia cause a shift in the U.S. real estate market, investments in virtual real estate continue to grow as market equilibrium returns, climate change concerns have made a notable impact on regional real estate interest, and more.

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On February 15, 2022, the Federal Communications Commission (FCC) released a Report and Order adopting new rules to further broadband competition for the millions of Americans living and working in apartments, public housing, office buildings, and other multiple-tenant environments (MTEs). In their recently-published client alert, Pillsbury colleagues Glenn Richards and Betsy Craig discuss how the commission rules out certain revenue sharing agreements, requires disclosure of exclusive marketing arrangements and restricts sale-and-leaseback arrangements.

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