Attorney Andrew Pearlstein calls his real estate practice, based out of Seyfarth Shaw’s Seaport Lane offices, “New York-style.” He does so because most of his work is in the capital markets and based on Wall Street contacts and the Big Apple-based real estate funds he represents, including Marathon Asset Management, Cantor Fitzgerald and FundCore Finance Group. Pearlstein focuses heavily on real estate finance, especially in how to make a loan currently in a workout situation saleable.
Andrew Pearlstein
Title: Partner, Seyfarth Shaw; Boston
Age: 56
Experience: 31 years
Q: Some people have been talking lately about commercial-mortgage-backed securities (CMBS) markets starting to climb out of the doldrums. What’s happening now?
A: The CMBS market had just started to come back, but has hit a sizeable road bump because of what’s been happening in Congress, with jobs and the slow growth in the economy, and the economic crisis in Europe. So what’s happening is the investors that would be coming into these deals have gotten cold feet, and that means the capital markets execution is much more difficult. It’s slowed down the number of loans that are coming through because in order to be able to get these loans ready to sell off, you need those investors. And those investors are shying away or they want a higher return for taking the risk of buying them. So if they want a higher return, the CMBS lenders have to price them higher, which makes them so they’re not competitive with life [insurance] companies. Life companies right now are killing the CMBS lenders. This may just be a temporary blip … but there’s a lot of worry about slow economic growth and no new jobs. And the federal government is going to cut spending … taking all that capital out of the marketplace. We still have a lot of deals going on, but there’s certainly been an effect. Another thing happening is that the recovery in U.S. real estate has been in primary markets, the big cities. What isn’t so easy is when you have an asset in a secondary or tertiary market. Then it’s much more difficult for them to come back and get loans done. We did a deal in Massachusetts that we foreclosed on and it was in a secondary market, and it’s going to be very difficult for that asset to come back from the lender and recover, if it ever does.
Q: What’s one of the toughest parts of making these types of transactions happen smoothly?
A: I’ve had to spend a lot of time learning capital markets and how bonds trade and what’s important to the buyers. When these people buy these bonds they’re looking for uninterrupted cash flow for the period of the loan. We have to build into these loans … a way to reduce the likelihood that there will be a bankruptcy.
Q: What makes a practice focused on capital markets interesting for you as an attorney?
A: I like deals. I like understanding how to manipulate all the pieces and making sure all the parties work together to get a transaction closed. There’s an art and a skill to getting all the right people in the right place to say the right things and get a deal closed. I find that quite interesting and invigorating. So my focus as a transactional lawyer is to use good business judgment and common sense, which unfortunately some lawyers don’t have. You have to know how to bring people together and bring the deal points together and become a trusted adviser to a client, especially at my stage now where I’m talking a lot about the business deal and how to get things done.
Five Things You Might Not Know About Andrew Pearlstein:
- For the past 10 years, Pearlstein and his family have traveled to a time-share they own in Aruba. “We bought a timeshare and it’s our time to be together during the Christmas week. It’s our time to reconnect, so that’s our favorite place to travel.”
- He is a member of Blue Hill Country Club in Canton. His wife is now learning to play golf “so we’ll have something to do as we get older.”
- His preferred reading materials these days are books that explain what factors lead to the recent recession.
- Pearlstein is an admissions interviewer for his undergraduate alma mater, the University of Pennsylvania. “That’s been rewarding because you get to keep in touch with young people and what’s going on at your school.”
- For the last three years, he has been assisting in teaching the construction lending segment of a real estate finance course at the MIT Center for Real Estate.
