NEWS FRONT
PHILADELPHIA—A regional bank has chosen real
estate advisory and investment banking firm
Llenrock Group to market a portfolio of
assets worth between $75 million and $100
million. Though the locally based bank is
keeping its identity confidential, the poten-
tial sale is a result of distressed borrowers
and not problems facing the financial insti-
tution, Andrew Benioff, the locally based
Llenrock founder, emphasizes. “The bank is
still very interested in continuing to finance
the deals,” he relates. “But the current devel-
opers are out of gas.”
The assets, most of which are in the
development phase, are in Delaware,
Pennsylvania and New Jersey. About 55%
of them are commercial and represent the
retail, industrial, office and multifamily
sectors; the remainder are single-family
residential.
Llenrock scored the sales assignment
through a past business relationship
Benioff had with one of the bank’s executives. The firm is working on 12 transactions for the bank right now, and that
number could double, he predicts.
Llenrock Shops
$100M Bank Portfolio
“The bank is still very interested
in continuing to finance the
deals. But the current
developers are out of gas.”
ANDREW BENIOFF, Llenrock Group
So far, Llenrock has whittled the list of
potential buyers down to three, the vast
majority of which are private. According
to Benioff, the company was considering
publicly traded REITs, but most of these
assets have a development component
and “many public companies are not interested in doing development transactions.”
Still, publicly traded REITs, have been
raising some serious cash: $10.3 billion in
public debt and equity offerings in the first
quarter, according to Navigant Capital
Advisors. Nearly 75% of the capital raised
was in the form of secured and unsecured
debt offerings, with an additional 20%
related to secondary equity offerings and
the balance in IPOs. “The access to public
capital markets was used predominately to
continue the deleveraging process and
A New Dawn for NJ Development
New Jersey has long been known for its onerous regulatory and land use-
permitting system. That bureaucracy, in tandem with the state’s high taxes and
cost of doing business, has stifled economic growth and opportunity. Gov. Chris
Christie’s first three Executive Orders, adopted on Jan. 20, 2010, all focus on
regulatory and permitting reform, with the goal of fostering development in the
state of New Jersey and improving its economic condition.
Executive Order No. 1 froze all proposed rules and regu-
lations until April 18, 2010 to
allow for a review to determine
which were unworkable, over-
ly proscriptive or ill advised.
In Executive Order No. 2, the
Governor ordered state agencies to implement a number of
“common-sense principles” to provide immediate, intermedi-
ate and long-term relief from regulatory burdens.
These include the adoption of a time-of-application rule, which effectively
ended a 12-year battle between developers and the League of Municipalities.
As of May 5, 2011, permits and approvals will be governed by the rules in effect
at the time an application is filed, so changes to local ordinances or laws won’t
negatively affect pending applications. State agencies were also directed to
adopt regulations that allow for waivers from strict compliance with conflicting
or overly burdensome rules and to cultivate an approach to regulations that
favors performance-based outcomes and compliance over the punitive imposition of penalties for technical violations that do not result in negative impacts
to public health, safety and the environment. While some municipal officials
opposed the signing of the bill, it enjoyed widespread support in both houses
of the legislature.
Under the common-sense principles intended to provide intermediate relief,
state agencies were instructed to amend or rescind rules and processes that are
unnecessary, ineffective, contradictory, redundant, inefficient or needlessly burdensome; that unnecessarily impede economic growth; or that have had unintended negative consequences.
Common-sense principles intended to provide long-term relief direct state
agencies to, among other things, focus all proposed rules on achieving outcomes
rather than focusing on the process used to achieve compliance; draft all proposed rules so they impose the least possible burden and costs to business; work
to resolve regulatory violations without enforcement proceedings; and waive penalties, when appropriate, for first-time or isolated procedural noncompliance.
Significantly, Gov. Christie also ordered state agencies to reduce the processing
time for regulatory approvals, permits, licenses and responses. In addition, agencies are to work cooperatively with applicants to expedite processing and to keep
in mind business deadlines and other commercial demands.
Executive Order No. 3 established a red tape review group to review existing and pending rules, regulations and processes to determine their economic
effects and whether they are overly burdensome on businesses and workers. The
group’s April 19, 2010 report recommended the withdrawal or modification of 16
of the 128 rules frozen by Executive Order No. 1.
It remains to be seen if, and how, state agencies will implement the directives
of the first three Executive Orders, and the effect that any such implementation
will have on New Jersey’s economic recovery. However, it is clear that this governor is committed to bringing an end to the anti-development attitude of certain
state agencies.
By Elizabeth W. Eaton
Elizabeth W. Eaton is an associate with Roseland, NJ-based Connell Foley LLP. She may be
contacted at eeaton@connellfoley.com. The views expressed here are the author’s own.
