Global Viewpoints

Healthcare Trust of America to Pay $29.5M for the Triad Tech Center in Baltimore

Edited: Jennifer Brenner
Source: Healthcare Trust of America, Inc.

Healthcare Trust of America, Inc. (“HTA”), a self-managed, non-traded, real estate investment trust, announced the execution of a purchase and sale agreement to acquire the approximately 101,400 square foot Triad Technology Center in Baltimore, Maryland for approximately $29,250,000. The closing of the acquisition is subject to the satisfaction of a number of conditions.

The building, which is located on the Johns Hopkins University Bayview Medical Center Research Campus, is 100% leased to the U.S. Government and primarily occupied by the National Institutes of Health (“NIH”). The Bayview campus is a 130 acre site that is home to the Johns Hopkins University Medical Center and is ten minutes from downtown Baltimore. The building houses three NIH groups including the National Institute on Aging’s Intramural Research Program, the National Institute on Drug Abuse, and the National Human Genome Research Institute.

“This is an opportunity to acquire a unique asset that supports federal research on healthcare issues facing our society today,” stated Mark D. Engstrom, HTA’s executive vice president of acquisitions. “This acquisition is our second in the Baltimore/Washington D.C. marketplace and we continue to look for strategic opportunities to partner with strong healthcare organizations.”

Edens & Avant Develops Publix-Anchored Hendrix Crossing

Edited: Jennifer Brenner
Source: Edens & Avant

Construction has begun at Hendrix Crossing, a 61,725 square-foot neighborhood center being developed in Lexington, SC, by Edens & Avant, one of the nation's leading retail real estate companies. Publix will anchor the center, which opens early February 2011.

"Publix's decision to have a second location in Lexington validates the tremendous growth we've seen there in the past ten years - a more than 50% increase in population," remarked Lyle Darnall, Edens & Avant managing director. "We're looking forward to bringing more convenient shopping to this expanding community."

Hendrix Crossing is located at the intersection of Highway 378 and Charter Oak Road, a major artery connecting the Lake Murray neighborhoods to Interstate 20. The center is poised to capture the future residential growth along the Highway 378 corridor. Planned for the center is a blend of national and regional retailers that will complement Publix, offering restaurants, convenience services and some traditional shop retail. The center is 83% pre-leased, with two outparcels and several small shop spaces currently being marketed.

Edens & Avant develops, owns and operates neighborhood shopping places in primary markets throughout the East Coast. Focusing on innovative development and redevelopment together with key acquisitions in urban areas, the company has built a portfolio of more than 130 retail centers in 15 states. Edens & Avant has Regional Headquarters in Boston, Washington DC, Atlanta, Miami and Columbia, SC (Corporate Office).

Canadian Real Estate Developer Files US$120M Counterclaim and Plans Defence Against US Fraud Case

Edited: Jennifer Brenner
Source: Elliott Companies

On February 1, 2010, Canadian real estate developers Fred Elliott, Derek Elliott and the Elliott Companies filed a defense and a US$120 million dollar counterclaim in the District Court for the Southern District of Florida (Miami) against Klaus Hofmann and 175 others.

The 356 page document, filed by the Elliott Companies before U.S. District Judge Alan Gold, comprises the Elliott Companies' Answer, Affirmative Defenses and Counterclaim to a lawsuit originally launched by Hofmann and others on March 3, 2009. The lead counsel for the plaintiff groups were Michael Diaz, of the Miami area firm Diaz Reus, LLP, and Hilda Piloto of the Chicago based firm Arnstein & Lehr, LLP. Mr Diaz pulled his plaintiffs out of the lawsuit in October, 2009 by filing a voluntary dismissal.

Among other things, the Hofmann Complaint accuses the Elliotts and their companies of mail and wire fraud, money laundering and violations of the Federal Racketeer Influenced and Corrupt Organization (RICO) Act. The Elliotts and Elliott Companies deny all such allegations, which they state are wholly without merit, and vow to vigorously defend the same.

In their Answer, the Elliotts and Elliott Companies allege that the lawsuit was orchestrated by James Catledge and his Impact companies, including Impact Net Worth, Impact America and NetWorth Solutions, all based in Las Vegas, Nevada. The Answer alleges that Catledge and Impact were contracted by the Elliotts to be exclusive U.S. sales agents for Elliott real estate products. The Answer further alleges that Catledge and Impact misrepresented the status of their securities and real estate licensing (they had none) and actually provided false documentation to the Elliott Companies suggesting that Catledge and the Impact agents did have valid regulatory licenses. The Answer goes on to state that, in response to misrepresentations regarding licensing and "grossly deficient" sales practices, the Elliott Companies terminated Catledge and Impact in June, 2008 and issued a demand letter in October, 2008, demanding payment of US$29,000,000 in compensation for damages caused by Catledge and Impact.

In response, the Answer alleges, Catledge and Impact launched the Hofmann lawsuit. The Answer goes on to state:

Upon information and belief, in October 2008, Catledge, in an effort to deflect attention away from himself, and in order to take revenge on the Elliotts for asserting claims against him, began a brutal campaign to discredit and destroy the Elliotts and their companies with litigation and defamatory publicity spanning multiple jurisdictions, including this one.

The Elliott Companies' Florida legal team (Peter Russin and James Moon of Meland Russin & Budwick, P.A.) focused on a number of core affirmative defenses including, among other things, Plaintiffs' failure to state a claim, after 11 months of litigation, failure to add James Catledge and the Impact entities and agents as indispensible parties and the failure, to supply sufficient (or in some cases any) documentation in support of the Plaintiffs' claims.

The Elliotts and Elliott Companies counterclaimed against many of the Plaintiffs for failure to pay on their purchase promissory notes, which helped cause the Elliott Companies' financial difficulties, and against all Plaintiffs in the amount of $120 million for damages caused by abuse of process. Specifically, the Elliott Counterclaim alleges that Catledge, Impact related individuals, Diaz and Piloto essentially conspired with the Plaintiffs to put the Elliott Companies out of business. The Counterclaim alleges that the elements of this abuse of process included obtaining ex parte injunctions against the Elliott Companies in Florida, the Turks and Caicos Islands and the Dominican Republic. (The Florida injunction expired and was not renewed by the court and the Turks and Caicos Islands injunction was overturned due to misrepresentations made to the Turks and Caicos court.) The Elliott Companies allege that, as a result of these actions, the Elliott Companies' resort properties at Cofresi and Juan Dolio, Dominican Republic, were foreclosed upon, resulting in a loss to the Elliott Companies of approximately $120 million, based on appraised values.

Fred and Derek Elliott were introduced to Catledge in 2004 who, at that time, was principal of what the Elliotts understood to be a legitimate financial services company offering mortgages, annuities, insurance, mutual funds and real estate/time share products out of Henderson (Las Vegas), Nevada. Catledge owned and still owns a web of network marketing companies known by various names such as Impact, Inc., Impact America and Net Worth Solutions. From 2004 through 2008, the Elliott Companies exclusively contracted Catledge and the Impact Entities and their representatives (sales agents) to offer and sell Elliott Company resort - related vacation ownership products to individuals in various jurisdictions, including the United States.

Catledge and Impact are currently being prosecuted for securities fraud and registration violations in Idaho and are under investigation by the SEC in Utah.

Derek Elliott, president of a number of the Elliott Companies, stated: "This was never a "ponzi-scheme" or "ponzi-like" scheme. At all times sales were fully backed by inventory. It cannot be more apparent that Catledge and his attorneys instigated and directed the litigation strategy against the Elliott Companies in a very effective pre-emptive strike to deflect blame and to short circuit our planned litigation against Catledge and the Impact Entities."

The Elliott Group of companies was founded 35 years ago by Canadian Frederick C. Elliott. The Elliott Group which described itself as "a real estate company in the hospitality industry", developed the well regarded Sun Village - Cofresi Resort on the north coast of the Dominican Republic.

The Elliott Group was the most recognized Canadian hotel group in the Dominican Republic. The expansion of the Sun Village Resorts brand to the south coast of the Dominican Republic, was underway with their Juan Dolio resort development, formerly set to open in 2010. The Elliott Group employed over 400 people in the Dominican Republic, prior to the launch of the Hofmann Plaintiffs' lawsuit, all of whom lost their jobs as a result of the suit.

Profits for Haiti: Commercial Real Estate Experts Do Their Part to Help Survivors

Edited: Jennifer Brenner
Source: Guardian Solutions

By now everyone knows that on January 12th a 7.0 earthquake hit Haiti's capital, Port-Au-Prince and caused massive devastation to the city. As the news out of Haiti continues to be bad, Guardian Solutions, a commercial loan modification firm, does its part to keep awareness high on the situation and lend its support to the Haiti relief effort.

In order to help relieve the ongoing suffering in Haiti, Guardian Solutions has elected to donate 10% of its profit via various charities to families in need within the city of Port-Au-Prince and the surrounding area.

"The situation in Haiti is one that just can't be ignored. While there is nothing we can do for those that lost their lives, we can help those that managed to survive. We're in the business of helping people with their commercial property troubles, so helping people with more dire problems was not a difficult choice for us," said Jeramie P. Concklin, Chief Executive Officer of Guardian Solutions.

The authorities in Haiti recently increased their estimate of the number of people killed by earthquake from 212,000 to 230,000, with the final figure likely to be much higher. It is also estimated that the quake destroyed more than 4,000 buildings.

"...We have already partially funded a group of volunteers that will be arriving in Haiti on the 19th to help rebuild a school," continued Concklin.

Lack of food, clean water, medical care and the spread of disease may push the death toll even higher. The desperation and enormity of the situation has inspired Americans to respond quickly and generously. But what is needed is a sustained effort. The situation there is likely to be bad for a long time.

"Recently a man was pulled out alive from the rubble of a flattened marketplace after being buried for 27 days. Miracles are continuing to happen in Haiti; we should all do what we can to ease the suffering of these survivors and to get them back to some semblance of normalcy in their lives," added Jeramie P. Concklin.

If you are inspired to help by donating, it is important that you do your homework first. Below is a list of a few reputable charities responding to the crisis along with what they plan to do with your donation. Each of these charities has a history of working on massive disasters and/or of working in Haiti.

American Red Cross - The ARC is sending tarps, hygiene items and cooking sets for approximately 5,000 families and is helping the injured who may need blood.

AmeriCares - Sending $5 million of medical aid to survivors including antibiotics, pain relievers, bandages and medical supplies for survivors with trauma injuries.

CARE - Deploying emergency team members to Port-au-Prince and will be distributing food.

Convoy of Hope - Setting up an emergency command center just outside Port-au-Prince where food, water and supplies are being distributed.

Doctors Without Borders - Currently treating people on the ground and will be operating an inflatable hospital.

Yes, It's Escalation Season Again! Part 3: Billing The Tenants

Written By: William H. Brownfield, CRE, CCIM, EscalationAdvisors.com

If you’ve done it right, you’ll be able to sleep comfortably at night.

Last week in Part 2, we made reference to Cool Hand Luke’s “failure to communicate” and how that contributed to his untimely demise. This week, as part of the billing process, we want to focus on what you – as a Property Manager, Property Accountant or Property Owner – can and should do to communicate effectively with your tenants. There are still a few remaining pieces of the Checklist for you to follow, which we combine into an invoice package you can send to tenants.

The most obvious tool you can use to communicate with is the cover letter, so make good use of it. Also, pay an equal amount of attention to how you present information in the other pieces of the invoice package (the invoice and the expense summary). Here’s some general advice: Keep it Simple. Give them enough information to understand what they are paying for. Save the details for later.

Checklist of Documents Required for Billing the Tenants

Cover Letter

• Prepare a cover letter for each different Expense Pool. Use the narrative to:
  • discuss current trends for operating expenses in your market (e.g. up, down, or sideways, and why)
  • emphasize what ownership & management did last year to reduce or control cost increases
  • thank the tenant(s) for what they did last year that helped to reduce or control operating expenses (e.g. monitoring electricity consumption, encouraging/rewarding employees who participated in the recycling program, etc)
  • note any unusual items
  • explain significant year-to-year changes (such as utility rate or property tax changes)
  • emphasize ownership’s commitment to controlling costs in the current year and explaining current cost savings strategies
  • give payment instructions and ask for payment by a certain date (per the lease agreement)

Invoice

• Prepare a simple invoice for each tenant that summarizes the charges due. We recommend that the invoice present several pieces of information that will help the reader understand how you determined what they owe, such as:
• the allowable operating expenses per their lease, less any Base Year (if applicable)
• the Tenant’s pro rata share of the building (expressed as a percentage)
• the percentage of year that the tenant occupied its space
• and finally, the amount due, less any prepayments that the tenant made during the year (if any)
• If a credit is due – indicate on the invoice whether you will be issuing a credit to their account or issuing a refund check to them

Expense Summary

• An Expense Summary should be prepared and presented for each Expense Pool. Each should show the major expense categories that comprise all of the operating expenses, property taxes, and capital amortizations that apply to a particular Expense Pool. These category totals should be shown both in whole dollars and in cost per square foot for the entire building. At this initial stage, we recommend that you not overwhelm the tenant with too much information. Additional details can be presented later, once they begin asking questions about specific issues or costs.

Prepare for an Audit

• Create an escalation file with the YTD General Ledger, detailed supporting schedules and any other information that will assist you or your successor in the event of tenant questions or an escalation audit.
• Hold and keep this information for at least 5 years, or until a year or two past the expiration date of the leases in question.

And... the drum rollllll please... SEND THE INVOICES OUT! If you owe the tenants a credit, personally deliver the check to each one and use the visit as an opportunity to stay in touch with what they need from you and ownership.

Next week will be Part 4 of this series, Collecting What’s Due. Don’t worry. We won’t give you any collection advice. Instead, we will discuss why expense audits occur. In Part 5, the final piece in this series, we will discuss the current state of escalations within the industry.