Tonkon Torp played a foundational role in paving the way for Oregon’s first five-star hotel development, the 35-story Ritz-Carlton hotel in downtown Portland. Attorneys from the Real Estate & Land Use Law Practice Group represented their client, the landowner, in negotiating an agreement to enter into a ground lease (AEGL) with BPM Real Estate Group, a Portland-based developer, assisting with the fulfillment of the AEGL’s conditions, and closing the transaction with the parties entering into the ground lease itself.
The firm enjoys a longstanding relationship with the landowner, having previously structured and completed several significant commercial real estate transactions with third parties for this client. During the entirety of this transaction, which began in late 2017, lead attorney Owen Blank, Kimberlee Stafford, and Rachel Atchison worked under restrictions to keep the Ritz-Carlton name under wraps.
The cornerstone of the project was drafting the AEGL, which lays out all the conditions to the 75-year term ground lease regarding due diligence rights, title insurance, and entitlements, and included the ground lease as an exhibit.
Over the course of the AEGL’s entitlement period, the attorneys completed six amendments to the AEGL. The amendments involved aspects of the feasibility study and due diligence, new legal descriptions that were required as BPM secured additional Floor Area Ratio (FAR) Rights for the project, and the termination of the landowner’s existing lease of the subject property to a third party. Several of these changes also amended the ground lease itself. The nature of coordinating the complex, interrelated documentation that was involved required each amendment to be properly filtered through all elements of the transaction. Once all the conditions of the landowner, the developer, and the City were met, closing the transaction was fast-tracked to accommodate the developer’s construction schedule.
This transaction was complicated by the developer’s plans to include 150 residential condominium units in the building, a model that the Ritz-Carlton has used in other properties around the world. Because residential condominiums are subject to a myriad of rules and regulations, the transaction’s documentation had to account for the rights of unit owners and the eventual Home Owner’s Association.
The attorneys also worked with BPM’s lender’s counsel in connection with the project’s $460 million financing. Tonkon’s role was focused on a recognition agreement, a three-party agreement between the landlord, tenant and lender.
The presence of a five-star hotel in Portland is an exciting new chapter for the City. Tonkon Torp is proud to be an active and trusted legal services provider for the City’s forward-looking real estate community.