The global pandemic has had a lasting impact on many sectors, with real estate no exception. With many retail and hospitality businesses suffering greatly from lack of trade, the industry has been badly hit, but quick to adapt.

And, while the downturn was swift and severe when the pandemic struck and businesses closed, there is no question that a bounce-back is under way, as Gene explains.

“It’s no exaggeration to say that, from a personal perspective, pretty much everything I was working on in March came to a crashing halt in April,” he says. “Buyers were concerned that their ‘pre-Covid pricing’ no longer held up, lenders were reluctant to loan and investment activity of any kind simply hit the pause button. There were transactions in the industrial, logistics and warehouse sector, but that space is not big enough to sustain an entire industry.

“Things continued to be slow in May as clients tried to figure out what to do. Buyers understandably didn’t want to close any deals in such uncertain times, and those who were selling were desperately trying to force buyers to close – if they could.

“It didn’t help that the financing markets froze up because lenders were fearing that tenants might go out of business, particularly in the retail and office sectors. And, of course, no one was staying in hotels. Occupancy rates plunged to single digits.

“It was only in May that everyone realized that the pandemic had actually created opportunities in certain portions of the real estate sector. The organic business started to come back.

“One of those opportunities has arisen in the United States, where families are pivoting to the suburbs. The single-family home rental market is booming. If someone wants some living space but can’t afford to purchase a home, there is one available for rent. That was not true to the same extent 10 years ago.”

Our activity in this space includes the representation of AHV Communities, which recently closed on the acquisition of approximately 23 acres of land in a suburb of Houston, Texas, and approximately 19 acres of land in Duvall, Washington. Both properties will be developed with single-family homes for rent. This client has two more closings slated to occur prior to year-end.

“Investors have followed the demand,” says Gene. “There is plenty of debt and equity capital available for the developers who can formulate and execute on the business plan.

“For instance, we have a client that is building a beautiful office complex in Atlanta on the strength of a lease of 360,000 square feet to Mailchimp. Bank OZK provided the construction financing on the deal, which closed in September.

“Another of our clients, Albion Residential, which builds luxury mid-rise apartment towers, just took down a piece of land in Nashville, Tennessee. It expects to break ground in February.

“Coincidentally, and in a sign of the times, this client also moved its headquarters from downtown Chicago to Oak Brook, a Chicago suburb.” Gene says: “While brick and mortar stores are suffering badly, online shopping is booming. Our clients in the business of owning distribution and logistics properties are in the driving seat.

“We recently represented Oaktree Capital Management in the formation of a joint venture to acquire a distribution center in Elk Grove Village, Illinois. Cap rates in this sector are compressing, but debt is relatively cheap, so the deals still happen.

“Activity in the life sciences sector is also strong,” adds Gene. “Unlike some other office sectors where employees can work remotely, life sciences employees must generally be on location. They cannot switch to a remote-working model, so investors look at life sciences office properties as unaffected by the flight to remote working. Of course, the sector is highly competitive and the properties cannot be created with the flip of a switch, which makes it difficult to find opportunities.

“As you would expect, we are seeing a lot of activity related to non-performing real estate loans. At the beginning of the pandemic shutdown, we were primarily handling forbearance agreements. But now, with the sense that some properties are not coming back, especially in the retail sector, the forbearance agreements are giving way to re-financings (with substantial equity injections) and deed-in-lieu transactions. We have clients who are throwing in the towel, and clients who are taking advantage of the opportunity created when others throw in the towel.”

Looking forward, Gene is optimistic about real estate markets generally and White & Case’s position in particular. “First, real estate is always going to be there. There is no getting around the physical assets that exist or which must be created. Those assets create transactions that require enormous legal talent. In good times and in bad, there is something to be done.”

And, addressing White & Case, Gene says: “We have tremendous organic real estate acumen, which is not always true of other firms. Many of our rivals focus on capital markets and finance. Real estate is secondary. But when we bring our real estate expertise alongside the Firm’s other areas of expertise, the synergies are powerful. It does not matter where the client is based, the source of the capital, the location of the assets or the transactional framework, we can do it.

“I would say that the prioritization of real estate is a strength of the group around the world. Our lawyers truly understand and prioritize real estate, which gives us an advantage over our competitors.”

The Firm’s Real Estate practice was strengthened substantially in 2018, when the Chicago office of Pircher, Nichols & Meeks, a real estate boutique, moved en masse to White & Case.

Gene, who spent 32 years at Pircher before joining the Firm, explains just how beneficial the move has been.

“White & Case acquired horsepower in the United States that the Firm did not previously have, and the Pircher team became part of this incredible firm. We can do anything relating to real estate in the context of corporate deals, bankruptcy restructurings, securitizations, international transactions, and matters involving critical tax sensitivities. When it comes to United States-based real estate, there is nothing we cannot do.

“From a personal perspective, it’s been great to join a firm with such tremendous talent and to work with teams around the world, from Prague to Singapore.”

Our success in the real estate sector in such a turbulent year presents a bright future.

Gene closes by saying: “It is a privilege to lead the Real Estate Industry Group. This is remarkably different from anything I’ve done before, and I am excited about our prospects.”