Browse Tag: gsa

Trump Hotel Lease In DC Not Illegal

In a letter delivered to The Trump Organization yesterday, a US government agency acting as landlord to the President’s luxury hotel in Washington DC has determined the President’s hotel is in compliance with its lease.

The GSA lease, discussed earlier here at CRE Blog, has a 60-year term on the renovated former US Post Office Pavilion property that the President, while in real-estate developer mode, converted to the luxury Trump International Hotel D.C.

The GSA, whose purpose is to manage half a trillion dollars worth of federal property in a portfolio of over 8,300 owned and leased buildings, sent the letter in response to unique questions arising from the non-divestment of President Trump from his portfolio of properties.  GSA is the owner of the building in question and was called upon to review the structure of the lease for compliance.

The letter is fascinating in that it provides a rare view into an operating structure of a Trump property, plus a snapshot of some of the Trump / Trump family’s real estate empire’s various legal structures.  It also references that the hotel operations group undertook changes to Section II of its internal operating agreement in order, one assumes, to achieve compliance.

Getting Paid? No, says GSA.

CBS Marketwatch reports that the changes and structure as expressed in the letter makes it so that distributions sourced from the hotel will not make it to the pocket of the President; such funds instead will remain within the operating LLC rather than going to his ownership vehicle.

Download the entire GSA letter here — and take a long look at what full compliance means in these unprecedented times.

President Trump’s 60-Year Lease With Uncle Sam

The inauguration of President Donald Trump, titan of commercial real estate, marked the start of a great number of legal fights concerning his numerous undivested CRE holdings.  One set of concerns raised by the political opposition centers on what it means legally for the sitting President to be doing business with foreign governments, something that appears to be happening routinely within the context of his ownership of Trump International Hotel in Washington, DC, just blocks from the White House.  The broad argument from political opponents goes: with each hotel bill paid by a foreign government staying at the luxury hotel comes a potential conflict of interest as long as the President continues to own that hotel.

Any guest-related potential conflicts aside, the development details of the hotel itself may hold unprecedented potential conflicts. The hotel property was redeveloped inside a former Post Office owned by the US Government — more specifically, the General Services Administration, an independent federal agency established in 1949 that contributes to the management of around half a trillion dollars of US federal property including over 8,300 owned and leased buildings.

GSA is the owner of the Trump International building. The lease has a reported 60-year term with two 20-year options.  The lease has clauses that are drawing attention from industry and governmental players in a way that promises much fighting in the future.

Breach? No Way To Know Yet

The legal confusion is not made clearer by the political forces interested in it.  Efforts by Congressional Democrats to undermine the administration have called certain lease clauses into question: As USA Today reports:

The [hotel] lease reads: “No member or delegate to Congress, or elected official of the Government of the United States or the Government of the District of Columbia, shall be admitted to any share or part of this Lease, or to any benefit that may arise therefrom; provided, however, that this provision shall not be construed as extending to any Person who may be a shareholder or other beneficial owner of any publicly held corporation or other entity, if this Lease is for the general benefit of such corporation or other entity.”

Thus far, the landlord does not see a breach —  GSA has not been moved to act on the strength of these inquiries, stating:

“GSA does not have a position that the lease provision requires the President-elect to divest of his financial interests. We can make no definitive statement at this time about what would constitute a breach of the agreement, and to do so now would be premature. In fact, no determination regarding the Old Post Office can be completed until the full circumstances surrounding the President-elect’s business arrangements have been finalized and he has assumed office,” the statement reads. “GSA is committed to responsibly administering all of the leases to which it is a party.”

For a in-depth look at the lease, read Steven Schooner and Daniel Gordon’s legal analysis piece at Atlantic “Has Trump’s Election Breached His D.C. Hotel Lease?”

The potentials for conflict are certainly there – without them, GSA might not respond – and the wrangling over the outcome will no doubt continue for much, much longer.

Add this to the giant pile of unprecedented commercial real estate issues raised by the inauguration of Donald Trump.

Download: NAR Commercial Regulatory Report

I’m not sure how I missed this, but miss it I did.  NAR’s June 2014 Commercial Regulatory Report is available for free download, containing updates and summaries of  recent NAR actions in the regulatory space, including FAA, EPA, SEC, GSA and SBA.  If any property in your portfolio involves air, ground or finance (find me one that doesn’t!) you need to check out the report.

Check it out below or download a PDF from Realtor.org

June 2014 Commercial Regulatory Report_SAS

 

P3: Federal Property and Public/Private Partnerships

Logo of the United States General Services Adm...

A few days ago, Stephanie Spear,  NAR’s Policy Representative for Commercial Real Estate attended the 3rd Annual Washington DC Federal Property & Public/Private Partnerships Summit put on by Bisnow.  As Stephanie was kind enough to share her notes, a quick report follows on the three sessions, each dedicated to a different aspect of public/private partnerships.

Take it away, Stephanie:

GSA is undergoing a cultural shift in terms of how they approach space and how space is used. This is a result of the Total New Workplace initiative and the executive order to Freeze the Footprint. There are enough large sized, high profile P3 projects that have been successful that it is reasonable to expect more P3 opportunities in the future.

Bottom line for commercial members is that while government funding isn’t increasing, it’s staying steady and there are many opportunities to do business with the government through traditional landlord/tenant relationships and the emerging P3 arrangements. Building owners/lessors who can accommodate the changing needs of the modern workforce will have a better chance of a successful working relationship with the GSA.

Session Notes

Panel 1:  GSA Operations Now And The Future, featuring the Commissioner of the GSA Public Buildings Service and the director of the GSA’s National Capital Region office.

 

  • Freeze the federal footprint – is happening but is creating more opportunities for private industry partners (landlords, building owners) because agencies have to be more creative with how they use space
  • Market is more competitive because agencies are signing shorter leases so there is more churning going on
  • GSA wants to have agencies be more forward-thinking about the end of their leases and work with landlords to think about it well in advance, work with landlords to get new needs met, concessions, manage the progress from upstream
  • Increased emphasis on reducing the number of lease holdovers being held by GSA
  • Agencies are being responsive to funding challenges and cooperating with shrinking footprint efforts because they understand that it frees up more money for running the actual program
  • “Total New Workplace” – GSA encouragement of new building designs for a remote workforce, hoteling spaces and cooperative work spaces
  • GSA personnel, telework, technology, IT priorities all go into the shrinking footprint and what exactly the remainders look like
  • GSA transparency goals
  • Making a lot of use of Section 14/412 construction/swap authority to be creative about using space, rebuilding, etc
  • Many success stories of P3 projects – The Yards, Old Post Office, St Elizabeth’s – hope to be a model because private industry partners are where the money is – govt doesn’t have, won’t have access to huge cash needed to do these big deals
  • GSA surplus property
  • Trying to be more mindful of using govt resources, part of a larger data-driven effort to be more efficient
  • Property Disposal Unit – 669% increase in properties sold in FY2013 over Fy2012

Panel 2: Talked about a P3 project in DC – was very interesting but hyper-local to DC

Panel 3: Perspectives on Leasing with GSA

  • Cultural shifts from GSA are having an impact on the way agencies use space – ‘total new workplace’ goals are main culprit
  • Skepticism about whether this new style of work will stick around, we have seen it come and go in private sector
  • Competition for contracts has focused on price only instead of best value
  • Structural requirements in procurements are challenging to accommodate in leases
  • Avoiding holdover leases
  • Working with tenants in advance of the lease termination to avoid vacancies
  • Shorter leases will favor new buildings because old buildings can’t be prepared fast enough to accommodate tenants’ needs

 

The GSA’s AAAP Program Makes Leasing To Uncle Sam Easy

gsa-aaap

Commercial real estate professionals should hear that leasing to the federal government just got a lot easier.

The General Services Administration’s mission is to manage and support the space requirements and other basic functions of the “alphabet soup” of federal government agencies. Of course that includes lots of Washington, DC real estate, but a recent expansion of a technology-supported property and space acquisition program has added Los Angeles, Seattle, Boston, Philadelphia, Denver and Dallas to the

It’s a savings to taxpayers to streamline the leasing process, and that’s what GSA has undertaken with its expanded Automated Advanced Acquisition Program (AAAP) program. As the GSA says, AAAP will

[…] [make] it easier than ever before for realtors, brokers, lessors, property managers, building owners and developers to electronically offer building space for lease to the federal government. The goal is to drive savings to taxpayers by improving federal leasing efficiency in the real estate market. GSA’s Automated Advanced Acquisition Program (AAAP), which originally launched in 1991 in the Washington, D.C. area, is now available in LA, Seattle, Boston, Philadelphia, Denver, and Dallas.

Here’s How It Works
Registered commercial real estate participants can submit and update offers to lease space to the federal government within specified time frames, in response to a GSA Request for Lease Proposal. The submission process is web-based, which as you can guess leads to

  • a more efficient lease process
  • cheaper acquisition of real property lease assets
  • improved agency satisfaction

Keep in mind, AAAP is one of several procurement platforms GSA currently uses to lease office space in Washington, D.C., Atlanta, Chicago, New York, and Kansas City.

Click here to check out a post with full introductory information on AAAP, including a schedule of Industry Day events in key cities.