A veteran of the stand-up comedy circuits, Los Angeles attorney Lew Feldman can rattle off an impressive string of jokes not suitable for publication here. But he is best known for his serious work as the head of Goodwin Procter’s public/private development practice and as one of the nation’s most prominent dealmakers within the real estate arena, putting together blockbuster deals like the massive L.A. Live complex in downtown Los Angeles.
Feldman joined Boston-based Goodwin Procter from the Century City office of Pillsbury Winthrop Shaw Pittman in 2006. He serves as chair of the Los Angeles office and has been tasked with expanding the firm’s California presence, a challenge in light of the economic climate. But Feldman says the firm has assembled a quality team out West, and it's clear that his own practice has continued to thrive in the downturn.
Lawdragon: Can you talk a little bit about what has been hot in your practice recently?
Lew Feldman: Infrastructure financing is a strong area today. Large military base reuse projects that were funded over the long term through private equity are being restructured and replanned. The federal government’s effort to stimulate infrastructure development as a way out of our current economic recession has also raised Public-Private Partnerships to the forefront of project finance. My practice has always been about bringing private and public financing sources together and creating solutions that serve the important interests of economic viability for the private party and solving important social needs – jobs and education, for example – for the public party.
With higher energy prices, alternative energy is a newly robust industry. Our public finance, securities and alternative energy practice groups are advising private developers and public entities with respect to a myriad of capital, financing and development issues for alternative energy projects, including public investment, tax sharing arrangements, and tax credits.
Also, higher fuel costs and increased environmental regulation are advancing urban infill transit-oriented development throughout the country. In California, our clients are creating or repositioning mixed-use projects near newly-constructed transit stations. We recently helped one of our developers obtain funding for the construction of the residential portion of an award-winning, $400 million mixed-use development in the Bay Area. The client received 40% of California’s annual bond allocation for that transaction, representing the largest private activity bond allocation thus far in California history.
An absence of jobs means workers are returning to public and private educational institutions. We are also working with one of the nation’s leading communications colleges on a Hollywood campus designed by Pritzker award winning architect, Thomas Mayne. The combination of public finance and real estate expertise puts us in the sweet spot for this type of representation.
LD: What about real estate investment trusts?
LF: They are beginning to emerge again, albeit mildly in historically relative terms. Purchases by REITs of portfolios and assets will accelerate, however. Private REITs going public is another trend that will likely continue to develop over the next 12 to 18 months, as public appetite for fixed income and inflation protected securities increases due to demographic factors such as the Baby Boomer bulge and the need for income over capital appreciation. With little institutional and life insurance company money available, the capital markets will be an exit strategy for those asset holders in need of capitalization or those wishing to participate in the purchase of distressed CMBS and RBS. This occurred in 1992 through 1996, and then again after 9/11 when the capital markets crashed and real estate was viewed as a safe haven. Let’s see if history repeats itself.
LD: How has your practice changed as a result of the economic crisis and decline in real estate market? What is your level of confidence about the market’s future?
LF: Throughout my career, I have strived to live in the real world and adapt to the reality of the present moment. My job is to provide my clients with innovative legal counsel that puts capital to use and transformative projects in the ground. In light of the current reality, my practice emphasis has shifted to a few key trend areas: distressed real estate, alternative energy and sustainable development, transit-oriented development, educational financing, and, of course, economic development.
As 2010 begins, the capital markets are imitating a recovery. Housing starts are up but commercial properties are distressed. Equity has been raised, but cash is on the sidelines. It’s much too early to toast to good times. The commercial and residential markets will likely continue to struggle throughout 2010, and distressed asset and portfolio acquisitions should increase as pricing adjusts and banks sell REO assets and CMBS spreads narrow. Interest rates will remain between 4 and 5% on the ten-year Treasury bill. The problem today is not the amount of capital available for investment and lending on new projects. It is the belief of investors and lenders that the distressed markets provide much better to risk-adjusted returns.
LD: What new opportunities have resulted from the American Reinvestment and Recovery Act?
LF: Despite a sluggish start, it looks like the Recovery Act train has picked up both speed and passengers. The rate of spending under the Act has hit approximately $3.6 billion per week, and some analysts predict that President Obama’s goal of spending $350 billion by September 30, 2010, is within reach. We have been helping several clients parse the particulars of the Act and successfully tap into the funding in a variety of areas.
The Recovery Act created a new vehicle: the “Build America Bonds” or “BABs”. BABs are taxable municipal bonds that provide a 35% interest subsidy to the bond issuer or the investor, thereby allowing government to access the taxable securities market. BABs can be used to finance nearly every project class that can otherwise be financed with tax-exempt bonds. We are currently structuring a series of BABs for a large Southern California city that intends to use the proceeds to finance water improvements.
LD: What was you and your firm's role in completing the financing structure for LA Live?
LF: We represented Anschutz Entertainment Group in connection with the L.A. Live sports and entertainment complex adjacent to Staples Center in downtown Los Angeles. The development features a 55-story Marriott convention center and Ritz Carlton condominium hotel, the 7,100 seat Nokia theater, Club Nokia, ESPN broadcast facilities, the Grammy museum, a 14-screen movie theater, and nearly a dozen restaurants and clubs. AEG and the City of Los Angeles reached an impasse regarding the financing of the hotel component. We developed a funding structure whereby the City used its charter city authority to allocate $272 million of future tax revenues from hotel occupancy to offset the gap between the current cost of construction and the projected capitalized value of the project.
LD: Is there any project or deal in your career that stands out as a favorite?
LF: Each deal is unique and holds its own reward and memories. There is one transaction, however, for which I have a special fondness. In the fifth year of my career – the year I first made partner, in fact – a developer client asked me to help him simultaneously restructure the financing of eight separate multifamily projects in five different jurisdictions. The transaction required us to negotiate the issuance of eight issues of bonds totaling approximately $20 million in 1987 dollars, including the replacement of credit enhancement by a Japanese bank and the creation of real property liens in eight locations, plus an assortment of public approval actions and public securities filings. When I closed that transaction, I looked around and said to myself, “I guess I am a partner.”
LD: Can you describe your role in the firm as the Los Angeles chair in terms of leading expansion efforts in the West? How has this been complicated in light of the economy?
LF: When I joined the firm in May 2006, my primary charge was the expansion of Goodwin Procter into California. We opened our Century City and San Francisco offices immediately and 14 months later had offices in downtown Los Angeles, San Diego, and Silicon Valley. We’ve grown from individual hires and not mergers. That has required meeting many wonderful lawyers and making new friends and colleagues. We have assembled an excellent team of lawyers who practice corporate, private equity, litigation, life sciences, intellectual property, real estate capital, public finance and alternative energy.
That growth is not an attempt to gain critical mass. It is to assemble a quality mass. Our ability to attract best in class lawyers reflects the firm’s positive direction and culture of collaboration as much as the attractiveness of Goodwin Procter’s resources and people. While Goodwin’s California expansion has been a success, as is the case with most law firms in the country, the Great Recession requires us to be extremely prudent in our strategy. As the economy begins to recover, I am confident our forward momentum will accelerate.
LD: Paint a picture for us of your stand-up comedy work: When did you start, what clubs did you perform in and when did you leave it behind?
LF: My father, Ken, was a funny guy. He knew every joke – I mean every joke. Starting at about 11, I tried to find jokes that he didn’t know. We had a comedic “stump the band” thing going. I’d hear something I thought was funny and bring it to him. I was rarely able to present a set up that he didn’t know or a punch line he couldn’t fill in. I had a lot of practice, and we laughed a lot. My mother has a terrific sense of humor, too.
In the 80’s, a new generation of comedians were like rock stars: Robin Williams, Steve Martin, Billy Crystal, Eddie Murphy and Whoopie Goldberg were just a few of the big names. Comedy clubs like Caroline’s, and Comic Strip Live opened, and concerts filled venues like the Met.
After practicing law for a few years, I indulged the bug by studying comedy with Richard Prior’s former wife, Shelly Bonus, at UCLA and hitting a few open mike nights at local comedy clubs. My most auspicious performance came at the now-defunct LA comedy club, Igby’s. I pretty much stopped doing comedy when my boys were born in 1998. But now I reserve my best jokes for captive audiences in our board room and at seminars and events.
LD: What was a joke or regular line you used that got the biggest laughs?
LF: A lot of my jokes were pretty blue and probably not suitable for print. [Feldman proceeded to tell about 15 minutes worth of jokes, including material from his stand-up work and jokes he has written recently. He was right – Lawdragon cannot print what he said.] Some of my stuff was about growing up in a redneck area and being Jewish, when those topics were a lot less overdone than they are now. I grew up in town in Arizona of 48,000 people, and for a lot of people I was the first Jew they had ever met. I was heavily influenced by George Carlin, who became a friend, Dennis Miller, Robin Williams, Bill Maher, and if you go back farther, by Milton Berle, Lenny Bruce and Mort Saul. Mort also became a friend. [Feldman then told a story about how he met and became friends with Maher at a comedy club in Los Angeles. Their exchange at the bar also cannot be printed here.]
LD: Has your comedy background contributed to your legal career, such as being able to handle pressure? Do you ever let inappropriate lines slip during legal negotiations?
LF: In my view, a sense of humor is a critical aspect of good communication and great relationships. I try to lighten a moment or break tension in a negotiation, but, always with consideration for my audience and a good sense of when humor isn’t appropriate. I’d like to think my clients and colleagues appreciate my funny bone. I’d like to think that – but who the hell knows?
LD: What do you do in your free time now to relax?
LF: I spend time with my 11-year-old twin boys. My work is challenging and rewarding, and I feel quite grateful and humbled for all the opportunities that have come my way. So, although it sounds like a sound bite, the time I spend with my family is and always will be the most precious part of each day.