Three decades of negotiating high-profile real estate deals teach one to recognise good opportunities. Marco Caffuzzi found such an opportunity at Latham & Watkins. The experienced real estate lawyer concluded his 30-year tenure at Skadden, Arps, Slate, Meagher & Flom this year to join Latham's New York real estate practice as a partner. Caffuzzi's career has been characterised by its breadth, encompassing work with lenders, borrowers, landlords, and tenants. He represented Silverstein Properties for over twelve years on the redevelopment of the World Trade Center, including the transaction for nearly 2 million square feet for American Express at 2 World Trade Center.
Rather than resting on his laurels, Caffuzzi seized the opportunity to change offices in May. Commercial Observer spoke with Caffuzzi in early September to discuss his move, the formative projects of his career, and the continuous evolution of New York's complex transaction landscape.
Formative Projects and the Move
When asked about a specific project that defined his career, Marco Caffuzzi named his work for Larry Silverstein and Silverstein Properties concerning the rebuilding of the World Trade Center, which continues to this day. His former firm, Skadden, represented the Port Authority in 2001 in the sale of the World Trade Center to Silverstein. He himself became involved when the firm represented Silverstein in 2006, and the entire deal was restructured. A new plan for the redevelopment of the entire site had to be devised, which required many years of struggle among stakeholders until it finally came to fruition. The original deals were highly unique, a combination of municipal bond execution with a superstructure of CMBS structuring, which had not been achieved before. Caffuzzi expressed pride in having been involved, as it is a major part of New York's fabric. He emphasised that in this case, being confrontational was not productive, but negotiating productively was. A transaction related to financing is imminent, where the same group of 20 or 25 lawyers from various stakeholders will collaborate once again.
Caffuzzi attributed his decision to move to Latham & Watkins to two main factors. One reason was Doug Heitner, the current global head of Latham's real estate group and one of his best friends. Doug was once a first-year associate under Caffuzzi at Skadden and worked with him on the World Trade Center. They always talked about working together again. Another reason was Latham itself, which has seen enormous growth and a strong expansion of its real estate practice over the last 12 or 15 years. The energy and enthusiasm there were infectious. On a personal level, Caffuzzi, at 58, was ready for a new adventure. He finds a certain poetry in the fact that Doug started his career with him, and he is, in a way, ending his career with him as his supervisor.
Broad Experience and Market Complexity
Caffuzzi advises a diverse range of clients and transactions. He notes that it is increasingly rare for large law firms to have partners with such broad expertise, as many specialise in particular transaction types. He himself never had an interest in specialisation and believes his clients value this comprehensive perspective. He may not know every aspect of a transaction, but he masters 90 percent of the issues and has the ability to master the remaining 10 percent. He considers this approach to be dying out but sees an advantage for young lawyers in having broad experience that expands their knowledge repertoire. For example, when representing a bank in a construction loan for an office building and a lease for an anchor tenant, it is beneficial to understand how leases work and possible remedies for late delivery by the developer.
The complexity of transactions has increased significantly. Financing has become far more multifaceted. Different clients provide different components of the capital structure and have different execution methods. The borrower brings in equity. In a typical deal, this might involve a mortgage loan, a mezzanine loan, and preferred equity. More frequently, borrower-side partnerships form between domestic operators and foreign investors. The latter, depending on whether they are sovereign wealth funds, private equity funds, or family offices, have different objectives and needs, resulting in a complex overlay of tax issues. 25 or 35 years ago, US banks and insurance companies would provide mortgage loans, and that was that. With the emergence of mezzanine loans and the increase in foreign lenders, complexities gradually arose, especially when international or tax-sensitive investors are involved. This now shapes almost every deal.
