Profile Of Tihie Week: Mitchell R. Lubricant

Real Estate Weekly, July 25, 2001

MITCHELL R. LUBART, SQUADRON ELLENOFF PLESENT & SHEINFELD

Shaping up transactions

Consider the variety of the work: It could be representing a merchant bank in the roll-up of a limited partnership into a REIT; introducing an investment bank and entrepreneur and then representing their joint venture in acquisitions of under-utilized assets; counseling a dance company in the development of its new home; structuring a transaction to bring a baseball stadium to Staten Island; working with an international media company to develop a newspaper printing plant, or dealing with the fast-paced (but now faded) telecom "hotel" boom - it's real estate to Mitchell R. Lubart, and he savors it all.

Lubart heads the real estate department at Squadron Ellenoff Plesent & Sheinfeld, a New York-based law firm. He represents Lehman Brothers, Argent Ventures, Starwood Capital and the News Corporation, among many others. Lubart built a practice by meeting people "across the table" and helping clients with product obtain capital and helping clients with capital obtain product. Former legal colleagues who have gone into business have also helped the growth of his practice. "Most of all," Lubart says, "our success is based upon exceptional service to the clients."

"The things we do can get complicated," says Lubart, "and there are often multiple parties, each with its own agenda. As a lawyer, you have to protect your client's interests without jeopardizing the transaction. Resolving competing interests while advocating for your client's particular interests is one of the challenges of the job."

In a rapid-fire speaking style flavored with what he calls "digressions," Lubart is animated about what he does. But for all the color of his delivery -- Lubart seems happiest when tying literary and historical references into his conversation -- he is conscientious about giving credit to colleagues and clients. He looks to his deputy, Alan Katz, not only to handle many difficult deals, but also to help manage the diverse practice. And when the conversation turns to development of a new stadium for the Class-A Staten Island Yankees, he invites his partner, Michael Kleinerman, to the interview.

Kleinerman explains how the minor league team and various governmental agencies had a myriad of particulars to work out before the brand new 6,500-seat stadium (complete with restaurants and luxury boxes) could come into play. "As in many cases like this," Lubart says, "the hardest issues are allocations of rights, responsibilities and cash flow."

Then there's the case of the New York Post printing plant in the South Bronx. Lubart shoots off the details in staccato: "18 months of both litigation and negotiations; federal courts and federal, state and city agencies; a capital structure involving a synthetic lease; governmental grants and industrial development bonds; environmental, construction and intellectual property issues; financial failure on the part of an equipment manufacturer, and a client for whom success is the only option."

"There were times I felt like Sisyphus," he says. "Fortunately, the political and business savvy of Arthur Siskind, Marty Singerman and Ken Chandler [key executives at the Post and News Corporation] imbued me with the muscle necessary to actually roll the rock to the top of the hill." He also mentions the vital part played by David Levinson of Insignia/ESG, real estate consultant to News Corporation and the Post.

One of Lubart's favorite transactions involved a merchant bank, many of whose principals and wealthy clients had invested in a limited partnership that bought an office building. "The partnership had a large mortgage maturing, huge blocks of space rolling, and an inability to recapitalize," he explains. "The investors had more than $120 million in potential negative basis and recapture liability. There were conflicting interests between the general partner and the investors, among various classes of investors, and between the partnership and the REIT. The REIT ultimately offered the investors an option to cash out or to exchange their interests for an instrument which provides 20 years of recapture protection. All of the businessmen involved were brilliant, all of the other counsel were tough and smart, and the tax issues were daunting," says Lubart, "Thank heaven my tax partner, Phil Altman, was not only brilliant but also patient with me."

When the troubled telecom industry is mentioned, Lubart slows down a bit. He worked on many transactions to acquire and lease space for communications companies to store their vast assemblages of equipment. When demand for telecom space slowed with the tech meltdown, landlords faced the prospect of financially weakened tenants and an excess of capacity.

"Over time it might well be a viable business with its own niche," the veteran real estate lawyer says. "In any event, some of my clients in the business, like Andrew Penson of Argent Ventures, are very smart and creative. I have confidence that they will find opportunities amidst the present chaos."