Executive of the Month: Weinstock, partner at Ruskin Moscou Faltischek; Elected chair of NYSBA Real Property Section

The New York Real Estate Journal recently sat down with Benjamin Weinstock of Ruskin Moscou Faltischek for a question and answer session. Q: How and when did you get your start in real estate? A: I graduated law school in 1978 and always had a very strong interest in real estate. My family owned a few properties and real estate transactions always fascinated me. I have been at the same firm my entire career and when I came to the firm as a young associate, I asked to be assigned to real estate matters. Back then, it was almost entirely house closings. I quickly learned that they are a fertile ground for allowing young attorneys the freedom and opportunity to represent a client - to handle every aspect of the transaction from beginning to end, and learn what works and what does not. Today, our firm handles only commercial transactions. However, we always have a few house closings kicking around for friends, family and the principals of our corporate clients. We use them as opportunities to train younger lawyers in the skills needed by all business lawyers. Q: Describe your involvement in NYSBA. How has your active participation affected your career? A: I joined the New York State Bar Association's Real Estate Section many years ago. My earliest involvement with the section was merely to attend legal seminars. I hungered for knowledge on advanced topics that were not then available to me in my daily practice. Through my many relationships with senior members of the Real Estate Bar, I was drawn further into participation with the State Bar Association. About 10 years ago, I was elected to the executive committee of the State Bar. This is the policy making board that also rolls up its sleeves and does the day-to-day work of the Property Section. As the result of conscientious hard work, I was elected chair of the section in January for a term that began on June 1st. I will serve in that capacity for one year. NYSBA is the largest voluntary State Bar Association in the United States and represents approximately 75,000 lawyers. Only the American Bar Association, with 400,000 members, is larger. My involvement in the association is one of the ways that I keep current on the law and trends in the industry. The various Section Committees deal with cutting edge issues that come to our attention before they are widely known. Oftentimes we comment on pending legislation, proposed legislation and are actively sought after for advice and counsel by industry leaders and the judiciary. Q: Describe trends (and growth) in the industry over the 30 plus years of your career. A: It is amazing how quickly 35 years pass. Having been involved in real estate for that entire time allowed me to see many peaks and valleys. Some of the standouts were the boom of 1986 and the fall of 2008. There were several other cycles in between. Taking a step back though, one clearly sees that properly values have clearly escalated dramatically. The old Jackie Mason joke that "I should have bought the property when it was $9" seems to be true. There isn't a property I can think of that is not worth more today than it was 30 years ago. When I started practicing, the urban legend was that property doubles in value every ten years. That notion is largely true, especially with the trophy properties. According to published reports, the Empire State Building was sold in 1991 for $42 million. Current bids on property exceed $2 billion, an almost 25 fold increase in value. I have also found that real estate transactions have alternately have become more complex and basic. The tax driven shelters with their mind bending complexity have disappeared. Today, 1031 tax deferred exchanges dominate and have spawned a new use for net ground lease properties and tenancies in common. With the changes in the tax law, and the additional Obamacare 3.8% tax, I believe the net lease properties will be challenged further because of the adverse tax consequences of the treatment of income from those properties. Q: How do you confront problems encountered in real estate deals? A: Lawyers tend to be risk adverse. They are trained in law school to be "issue spotters" and look for problems. The clients they represent often have the opposite mind set. Entrepreneurs are inherently risk takers. The fallout of this discrepancy is that some lawyers are effective as deal makers and some are not. While lawyers should not be taking risk on behalf of clients, they should be managing risk on behalf of clients. My approach to representing real estate clients is not to focus on the problems as a deterrent to a transaction. Instead, I dedicate myself to developing innovative solutions to get the job done. There is no such thing as a deal that does not have issues and problems. The key to unlock the success embedded in every deal is the ability to solve those problems in a win-win manner. Q: Describe some of the most memorable deals that you have closed. What is it about that particular deal that sets it apart from others you've worked on? A: One of the most memorable deals I worked on involved the sale of a large newly developed multi-use property in Manhattan. Problems arose in that transaction almost on an hourly basis. However, the buyer's commitment to the property and the parties willingness to show flexibility allowed us to overcome every controversial issue and achieve record-setting prices. Sometimes, it takes more than enthusiasm. Hard work and diligent dedication is required. Many years ago, I was called upon by a landlord to negotiate a large retail lease on Long Island. A major Manhattan-based retailer was opening a new department store and the rents and term of that lease caused it to be the largest transaction that closed in New York State that year. There was virtually round the clock negotiation for 2 ½ months. Secretaries worked 8 hour shifts consecutively to keep up with the flow of documents and revisions. Teams of lawyers on both sides negotiated the transaction. Many times clients would leave the office at 2 and come back a few hours later to resume discussion. Q: How important is it to be involved in community activities? A: Being involved with community organizations is more than altruistic. I believe that I receive as much as I give when I am active, either it is helping those in need or through my pro bono and charitable efforts, or enhancing the quality of the profession through my industry affiliations and teaching activities. These activities are good for the soul and good for the mind. I learn a great deal in my interaction with other professionals and lay people about many different subjects. That is the principal reason why I am involved with the State Bar Association. I am also a Fellow of the American College of Real Estate where I have lectured on retail leasing issues. I teach an advanced real estate transactions course in New York Law School's Masters of Law Program, for advanced degree candidates. I am the deputy mayor of the village of Cedarhurst where I reside. I serve on the Committee for the Handicapped in our Village and I am actively involved with many other charitable and educational organizations as well. An unexpected bonus from all of this community activity is that it taught me how to network and develop business. Many of the matters that originate for my firm are derived from my personal interaction with people I have met socially or through professional associations. I started my firm's Pro Bono Committee many years ago and we have used that committee as a vehicle of insuring that each and every lawyer in our firm is involved in appropriate community activities and professional associations. This is a serious commitment that we track on a consistent basis and heavily encourage. Q: You're the first Long Island practitioner to be elected to this statewide post. How is that significant? A: I grew up in Brooklyn and thought that Long Island was somewhere in the middle of Queens. When I interned as a Judge's Law Clerk in the Southern District, I sneered at the poor quality of papers I was receiving from Long Island lawyers. I assumed there was no legal talent to be had anywhere outside of Manhattan. Ok. So I was wrong. The disparagement of the quality of lawyers practicing outside of Manhattan is, to a large degree, unwarranted. In my travels throughout the State of New York, I have encountered excellent lawyers in every large or small place I have been to. Practitioners in the most remote corners of New York State have the same sophistication and ethical qualities as the most hardened New York City lawyer. All that many lack is the experience on large transactions that are not available to them. I have benefited from my ability to participate in very big deals. We have represented clients engaged in billion dollar transactions involving the most complicated and esoteric legal structures imaginable. I feel that those experiences broadened my ability to handle a very wide variety of real estate matters outside the narrow bandwidths of transactional and land use law. I have also formed personal connections with many other attorneys throughout the state and country that I can easily call upon for assistance when local for counsel issues require it. Ruskin Moscou Faltischek was counsel for the recent formation of a new title insurance underwriter in New York State, the first to be licensed in many years. My knowledge of the title insurance industry and the functions of the New York State Department of Financial Services were instrumental in "closing the deal" in obtaining licensure. One of our client's hold hundreds of ground leases across the country that constantly require attention. I have had the good fortune of handling these matters. Q: What do you consider to be the industry's greatest challenge in the year(s) to come? A: The pressures on the industry these days are unprecedented. Government over-regulation, both in land use and day-to-day operations, is a costly nightmare for developers and owners. The every rising tide of taxes and the pressure of insurance costs driven by a litigious population make it harder to bring significant profits to the bottom line. The popular public perspective of the real estate industry probably puts us somewhere between used car salesman and the oil industry. So-called "greedy" landlords are a favorite tax target of politicians who increase real estate taxes regularly. While the industry has always survived these challenges, I believe we have exceeded the upper limits of what is reasonable. A suburban office complex that charges $30 per s/f for rent, should not be required to pay $10 per s/f for real estate taxes. Many of our clients complain that their insurance costs have more than doubled in the last ten years. Many of the traditional local developers have abandoned suburban markets because of the inability to build "as of right." The list of stakeholders who have standing to participate in the development process grows continuously. Projects take years to get through the approval process at exorbitant cots. Time and uncertainty kill deals. The challenge is to bring the pendulum back to neutral. The development of real estate should be viewed as progressive and smart growth. The developer should not be treated like a pariah. Real estate taxes must stabilize and then reduce to more realistic levels. Real estate should not be a political piggy bank. It is hard earned wealth of risk taking entrepreneurs with the vision and dedication to bring forth value that did not previously exist. Our political philosophy and societal values should encourage the creation of new prosperity and growth rather than attack it.