Our Practice

Real Estate Private Equity & Fund Formation

The attorneys with Cairncross & Hempelmann have extensive experience with legal, regulatory and tax issues associated with the formation, operation and liquidation of private equity real estate funds and strategic joint ventures. Our real estate private equity practice is an integral part of our overall real estate experience including all aspects of real estate acquisition, development, entitlement, finance (structured finance and secured debt and equity), construction, operation and liquidation. Our experience includes a deep understanding of 1933 and 1934 Act compliance, Investment Company Act issues, and federal income tax issues, including ERISA, UBTI, and FIRPTA requirements. We work closely with sponsors of private real estate equity funds and joint ventures, foreign and domestic investors, investment advisors, securities broker-dealers, etc. We counsel established real estate investment sponsors seeking to launch funds and entrepreneurial clients seeking joint venture partners to finance emerging opportunities. In structuring real estate private equity and joint ventures, our attorneys address the unique tax, regulatory and business needs affecting fund and venture participants, including significant experience with off-shore and tax-exempt real estate investors. Our services include:

• organizing domestic and offshore private equity and debt real estate funds
• reviewing and advising on fund investments on behalf of institutional and private investors, sponsors, managers and advisors
• preparing required disclosure documents, including prospectuses, offering memoranda and proxy statements
• complying with federal and state securities, tax laws and regulations, and ERISA and the rules of FINRA (f/k/a NASD)
• facilitating successful construction, mezzanine, and permanent debt financing for real estate funds, including a strong understanding of CMBS, LIHTC, New Markets and Historic Tax credit financing strategies to enhance fund performance
• assisting sponsors in resolving key issues related to operation and control of private equity funds including carried interest issues, vesting arrangements, and other management and control issues
• utilizing a myriad of U.S. entities (i.e. limited partnerships, limited liability companies, LLCs taxed as REITs and Trusts, Delaware Statutory Trusts, tenancy in common structures) as well as entities formed offshore to enhance regulatory compliance and tax strategies

We represent a variety of clients in the joint venture development or ownership of office building, shopping malls, manufacturing facilities, research and development facilities, multi-family and single-family residential developments, including high-rise towers, mixed-use projects, hotels and condo-hotels. We provide advice to a variety of investment vehicles with different objectives and techniques, including:

• Funds investing in broad categories of eligible real estate assets

o office
o commercial
o industrial
o multi-family and single-family residential

• Single-category funds

o shopping centers
o mobile home parks
o apartment buildings
o industrial parks

• Funds focusing on particular types of investments

o direct ownership
o participating and convertible mortgages
o joint ventures

• Funds having particular target market and size requirements for acquisitions; and
• Funds having particular investment practices

o the use of leverage
o the acquisition of development-stage property
o investment on an “opportunistic” basis

We have created investment funds using a variety of vehicles, including private real estate investment funds, limited liability companies, group trusts, corporate title-holding entities, limited and general partnerships and joint venture arrangements, and bank collective trusts.

Representative Work

Some of our representative private real estate equity work is described below:

• We have worked with one of the largest private developers in the U.S. in connection with private funds in excess of $500M in the past 5 years
• We have worked with the largest private landowner in the U.S. in joint venture and co-development efforts with private developers
• We have worked closely with regional developers in successfully raising private equity to develop commercial real estate projects in the Northwest
• We have worked with foreign investors from Japan, Canada, the European Union and China in real estate equity ventures in the U.S.

For more information: Contact Dan Vaughn at (206) 254-4484 or email at dvaughn@cairncross.com, Scott Bell at (206) 254-4426 or via email at sbell@cairncross.com, or John De Lanoy at (206) 254-4414 or jdelanoy@cairncross.com.