Alex Jacobs, a partner at real estate law firm Pircher Nichols & Meeks LLP in Century City, has spent the bulk of his career representing commercial owners and developers. He narrowed his focus to hospitality projects in the last several years after gaining New York boutique hotel company Sydell Group LLC as a client. Since then, he has represented the company in its acquisition, development and financing of five hotels, including the Saguaro Palm Springs hotel and Line Hotel in Koreatown.
When and how did you get started in the hotel business?
I had the opportunity to work on a number of hotel and resort deals for clients as part of my general real estate practice, but it was not until late 2010 that I began working for the Sydell Group.
What makes a hotel deal different from other commercial real estate deals?
Buying or selling a hotel property involves more than a transfer of property. A hotel is an operating business that must be transferred from one owner to another without any disruption in service to guests. Unlike an office building, for example, a hotel will have hundreds of “tenants” coming and going every day and the hotel’s management company will be running a complex operation on an ongoing basis. Assuming the hotel will not be repositioned or rebranded, the general public should not be made aware of the sale. It’s a challenge to make sure the transition is smooth and that those attributes that make a hotel an attractive asset are not lost or impaired as part of the acquisition process.
What unique legal issues must be addressed developing/buying a hotel versus other commercial real estate?
When purchasing an office building or a shopping center, a lawyer should review, among other things, the state of title and survey, existing leases, zoning and entitlements, environmental matters, and existing financing and property management agreements. However, with the purchase of a hotel property, a lawyer also needs to focus on the hotel management agreement; food and beverage management agreement or leases; the transfer of the liquor license; union and labor issues; sales, use and occupancy taxes; and franchise and booking agreements with travel agencies and other distributors. Failure to pay attention to these additional issues could have severe ramifications. For example, a disruption in the hotel’s liquor license could have a significant adverse impact on hotel revenues.
What’s the most challenging aspect of working on hotel projects?
Successfully addressing and balancing all the different moving parts that are involved in running a hotel operation. There are intellectual property, branding, licensing and employment issues that a hotel owner must address. Hotel owners must focus on issues in a hotel management agreement that simply do not arise in a commercial property management agreement. When the development or redevelopment of a hotel is contemplated, the process is often more detailed and complicated than for a commercial property.
What is the most rewarding?
While working on interesting and complex deals is often a reward in itself, it’s nice after a deal has been announced to the public to discuss the project with friends and family. Most of my family and friends have never heard of the office buildings, shopping centers or residential communities that I have been involved in, but more often than not, they have heard of the hotel properties or the celebrity chef who will be managing the food and beverage facilities.
What is your favorite hotel that you have not been part of?
My favorite is the NoMad Hotel in New York. The interior design is stunning and the rooms look and feel like Parisian apartments. If you’re lucky enough to get a table in the restaurant, you’re in for a sublime culinary experience at one of the hottest restaurants in New York.
Company: Pircher Nichols & Meeks LLP
Location: Century City | Age: 37
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