and Other Financing Considerations Maximizing Opportunities to - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Negotiating and Litigating Rooftop Leases: Deal Structures, Key Provisions, Subordination and Other Financing Considerations Maximizing Opportunities to Monetize Rooftop Space for Telecom Equipment, Solar Energy, Green Space and Hospitality WEDNESDAY, JANUARY 6, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Stephen A. Kisker, Member, Chiesa Shahinian & Giantomasi , West Orange, N.J. Dov Treiman, Esq., Adam Leitman Bailey , New York The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

Tips for Optimal Quality FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-873-1442 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.

Continuing Education Credits FOR LIVE EVENT ONLY In order for us to process your continuing education credit, you must confirm your participation in this webinar by completing and submitting the Attendance Affirmation/Evaluation after the webinar. A link to the Attendance Affirmation/Evaluation will be in the thank you email that you will receive immediately following the program. For additional information about continuing education, call us at 1-800-926-7926 ext. 35.

Program Materials FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: Click on the ^ symbol next to “Conference Materials” in the middle of the left - • hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. •

Negotiating and Litigating Rooftop Leases: Deal Structures, Key Provisions, Subordination and Other Financing Considerations Stephen A. Kisker, Esq. CHIESA SHAHINIAN & GIANTOMASI PC ONE BOLAND DRIVE, WEST ORANGE, NJ 07052 SKISKER@CSGLAW.COM 973.530.2074 WEST ORANGE NEW JERSEY TRENTON NEW JERSEY NEW YORK NEW YORK CSGLAW.COM

Types of Rooftop Leases Cell Towers and Other Communication Equipment  PCS, broadband, FM & TV  From luxury to necessity – explosive growth 6

Solar Panels and Micro Wind Turbines  On site consumption or grid feed  Distributed generation of clean, renewable energy 7

Micro Wind Turbines 8

Rooftop Farms  Distributed generation of high quality produce in urban areas  Rainwater recapture and reuse 9

Rooftop Bars and Restaurants 10

Rooftop Oasis 11

Current Trends  Site/ Lease Buyouts  Lump sum up-front payment for existing leases and/or locations  Developed secondary market  Options to Lease  Small income stream reserving right to lease in the future  Allows a company to lock up territory with no long term commitment 12

Current Trends (cont’d)  Rooftop Management Companies  Treat your roof like any other income generating real estate asset  Solar, Solar, Solar  30% Investment Tax Credit extended  Installation costs continue to drop  Efficiency continues to increase  Federal Clean Power Plan  Paris Global Climate Change Agreement 13

Benefits of a Rooftop Lease  Income – either up front or over time  Immediate roof repairs and/or maintenance at little or no upfront cost  Increase the value of the remainder of the building with little or no cost 14

Detriments to a Rooftop Lease  Forgo future opportunities for easy cash up front  Roof repair and maintenance  Loss of flexibility (casualty, condemnation, financing, sale, redevelopment and expansion)  Frequently requires use of more than just the roof (staging areas, utility easement, parking, access, data rooms, inverter pads and cable runs)  Structural issues 15

Deal Structures  Simple Single Lease  Benefits  Monetize your roof with lump sum up-front or periodic rent payments  Condition the lease on roof repairs or upgrades and/or place the ongoing maintenance burden on the tenant  Little effort or cost for building owner  Detriments  Sacrifice future opportunities  Roof leaks / maintenance issues  Redevelopment / sale / reconstruction restrictions or complications  May not maximize value of entire roof  Financing complications 16

Deal Structures (cont’d)  Multiple Leases for One Roof  Benefits  Opportunity to maximize value of roof  Monetize your roof with lump sum up-front or periodic rent payments  Condition lease on roof repairs or upgrades and/or place the ongoing maintenance burden on the tenant  Detriments  Coordination of and interference by multiple tenants – both on and off the roof  Maintenance / repair obligations and disputes (who caused the leak !?!)  Much more effort to put together and manage  Multiple seats at the table upon sale, redevelopment, casualty, condemnation or major reconstruction 17

Deal Structures (cont’d)  Buyout of Existing Leases and Locations  Benefits  Monetize future income stream now  Eliminate future management/administrative burden  Remove the risk of payment defaults  Detriments  Long term agreements that are very difficult to terminate  Sacrifice future opportunities and flexibility  Greater redevelopment/sale/reconstruction restrictions or complications  May not maximize value of entire roof  Frowned upon by lenders 18

Options to Lease  Benefits  “Free” money  Very little effort and limited obligations  Detriments  Loss of future opportunity  Disputes and litigation 19

Lease, License or Easement  Lease  Benefits  An estate in land that provides the tenant with greater protection and an alternative financing method (leasehold mortgage)  If properly perfected it is binding on future property owners  In some states it offers landlord protection from construction liens filed by a tenant’s contractor  Detriments  Frequently more difficult to terminate and regain possession  Subject to state and municipal lease formalities and tenant protection measures such as duty to mitigate, covenant of good faith and statute of frauds  Frequently requires lender approval 20

Lease, License or Easement (cont’d)  License  Benefits  Not an estate in land but rather a contract right  Frequently easier to terminate and regain possession  Not subject to state and municipal lease formalities and tenant protection measures such as duty to mitigate and statute of frauds  Does not always require lender approval  Detriments  May subject owner’s property to construction lien resulting from licensee’s non -payment for licensee improvements  May not be sufficient protection to get the deal done 21

Lease, License or Easement (cont’d)  Easement  Benefits  An interest in land that provides the holder with greater protection  Not an executory contract subject to termination in bankruptcy  Runs with the land – can be difficult to terminate  Not subject to state and municipal lease formalities and tenant protection measures such as duty to mitigate damages  Detriments  Difficult to terminate and regain possession  Not easily financeable  Unorthodox  May be subject to state formalities applicable to estates in land such as the statute of frauds  Almost always requires lender approval  May subject owner’s property to construction liens resulting from licensee’s non -payment for licensee improvements 22

Practical Considerations in Structuring a Rooftop Deal  Maintenance  Roof warranty  Roof leaks and general maintenance  Rooftop equipment (vents, HVAC, etc.)  Removal of installations for roof repairs and replacements  Casualty and condemnation  Ancillary Rights  Access  Parking  Utilities  Staging area  Interference / sunlight / wind resourse 23

Practical Considerations in Structuring a Rooftop Deal  What Else Can I Do With my Roof?  Lender Consent / Financing Issues  Will my existing and future lenders sign on?  Can I get recognition/nondisturbance protection?  Technology / Project Developer Risk  How long will the project function as expected?  Will the project developer build a quality project and operate it for the long haul?  Will the project developer be able to deliver the project as and when promised?  What happens if the project developer disappears or defaults?  Resale  Will the project be viewed as adding value 10 years later? 24