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WitHout reCourse: Harvey, tHe real estate laWyer
thought that Portman just might be the right person to provide the nec- essary pizzazz to make the site a success.
The plan was to form a partnership in which Portman and his inves- tor group would be the general partner, essentially in charge of obtaining financing and designing, building, and operating the hotel. The Sharp- Greene group would contribute its rights to the site and, in exchange, ultimately share in the rewards of ownership as a limited partner. Sharp and Greene proposed a transaction in which, if Portman could not suc- ceed in accomplishing what he would set out to do (obtaining credible construction and “permanent” financing for the project6) within an agreed-upon period of time, then they would retake control of the prop- erty. For his part, if he failed, Portman and his group would become limited partners in place of the Sharp-Greene group. In other words, the roles would essentially be reversed. Negotiations therefore centered around, among numerous other issues, the formation of the partnership, the complications that were inherent in the property that would be con- veyed, the conditions that would lead to the contribution of the property, the approvals and controls that the Sharp-Greene group wished to have in the partnership (with respect, for example, to the attributes of the financing), the “splits” and “priorities” (remember them?) relating to the operating and capital profits, if any, the events that would trigger the reversal of roles, and the rights of the parties thereafter.
Add to that the fact that Sharp and Greene were about as far from being neophytes as was possible in the toughest real estate market in the country, and the fact that the documents that affected the existing site were about as complicated as one could imagine,7 and I think that you
6. Large development projects are financed by use of a “construction” loan, which is replaced, after the actual building is complete, by a “permanent” loan, which is long-term in nature but hardly “permanent.”
7. One major item was the so-called “Piccadilly Straddle Agreement,” which was necessary and so named because the Piccadilly Hotel site would be leased but not owned and, therefore, the new hotel would be built on—would straddle—land owned by two separate parties (the new partnership and the owners of the Piccadilly land). That state of affairs would lead to incalcu- lable complexities relating to the rights of the two land holders in connection with such matters
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