How the Troubled Asset Relief Program Affects You
The Troubled Asset Relief Program (TARP) is the $700 billion congressional rescue package enacted only a few weeks ago. Here is how it potentially affects you:
- In as little as three weeks time, firms will have an opportunity to unload troubled assets because the Troubled Asset Relief Program allows the government to buy them directly from you.
- “Troubled assets” is defined VERY broadly, and includes residential or commercial mortgages and any security, obligation or instrument related to those mortgages. Theoretically, even mezzanine loans could be subject to this program.
- We’re not just talking about massive banks and insurance companies, we’re also talking about smaller financial institutions or even individual entities who hold troubled assets. Individual mortgage securities, whether whole or fractional will be considered - if they are presented within the soon to be designed guidelines!
- Some of you have already written down the value of the assets on your books - selling troubled assets to the Troubled Asset Relief Program could be an opportunity for you to profit.
How Can You Take Advantage of the Troubled Asset Relief Program now?
Our professionals can execute a three-point plan to facilitate your participation in the the Troubled Asset Relief Program program:
- Identification - We can help you identify which assets qualify for the Troubled Asset Relief Program and can position them for sale when the acquisition process begins.
- Valuation - Transparency will be paramount. Sonnenschein’s Real Estate group has extensive experience conducting due diligence reviews of all real property asset classes. From wholly-owned mortgage based assets to fractional interests in mortgage-backed securities, we can help you present assets in the most accurate light possible.
- Negotiation - We are in uncharted territory. Sonnenschein’s Real Estate and policy professionals have the broad experience necessary to meet face to face with this massive and yet unknown division of the Treasury Department. We can help you market your assets to the Troubled Asset Relief Program in a way that gets them the best possible price, limiting the exposure of your write-downs.
Why Sonnenschein?
Experience
Our Real Estate Practice has in-depth experience in all forms of real estate and corporate transactions and in all related areas of legal expertise. We've worked on acquisitions, dispositions and financings in virtually every state in the country, including transactions involving commercial office buildings, industrial buildings, apartment complexes, hotels, mixed-use buildings, and brownfield sites. Those transactions have ranged in size anywhere from $1 million to $2 billion, and have ranged in complexity from straight-forward purchase/sale transactions to more complicated transactions involving ground leases, joint-venture agreements, commercial condominiums and tax credit investments. Because of our experience with some of the most advanced parties involved in the real estate realm today, we have a keen sense of what is "market" in these transactions and we understand what is important (and what isn’t) when reviewing and negotiating these transactions.
Speed
The Troubled Asset Relief Program didn’t exist a few weeks ago! There are only a few weeks left before they begin purchasing troubled assets. You need a firm that can devote substantive intellectual horsepower at a moment’s notice. With nearly 100 attorneys spread over seven offices, our broad national reach and sheer size are our sweet spot.
A Snapshot of our Massive Portfolio Reviews:
Our Real Estate Group has reviewed tax credit allocation documentation, partnership agreements, title and survey, zoning and land use, tax consequences, credit enhancement instruments, financial projections and deal structures for portfolios in nearly every state in the country, and in many countries around the world.
The kinds of portfolios we’ve reviewed include:
- A $1.55 billion recapitalization of land bank ownership structure with 40 plus properties across the United States;
- A $1.8 billion acquisition by the world’s largest industrial REIT of a portfolio of over 120 improved industrial properties and 500 acres of developable land;
- Divestiture of more than 150 owned and leased properties pursuant to an anti-trust agreement negotiated as part of a stock purchase creating the world's largest network of renal care facilities;
- The acquisition of more than 100 parcels of owned and leased real property in four states on behalf of an international construction materials manufacturer; and
- The acquisition of 150 fee and leased movie theatre properties on behalf of a movie theater exhibition company acquiring another movie theatre company out of bankruptcy.
Efficiency
Sonnenschein has the organizational expertise to quickly manage reviews of massive and diverse real property portfolios. We ask the right questions from the beginning saving you precious time and money. Our proactive approach to review means that we staff a project with the right number of professionals from the beginning.
For more information on how we might help you, please contact Jana Cohen Barbe (312-876-7967 or jbarbe@sonnenschein.com) or Michael Demetriou (312-876-2840 or mdemetriou@sonnenschein.com).
