By Duncan Hubbard

Partner | Real Estate

In this issue of REF News and Views, we bring you an analysis of Hope Capital Ltd v Alexander Reece Thomson LLP, a case which has caused much discussion amongst Lenders when it comes to instructing their Valuers, and much discussion around duty, breach and damage, the core components of bringing successful negligence claims.

We also take this opportunity to offer our thoughts for the CRE market in 2024.

We will not rehearse the doom and gloom of the rate rises, inflationary issues and cost of capital, which have been well documented by market commentators in 2023 and the back end of 2022. We hope and believe the storm is passing.

Many of us will remember in 2008-9 during the “credit crunch” how governments and the central banks looked to unlock capital and stimulate the velocity of circulation of money starting with “ZIRP” (zero interest policies), “then to “NIRP” (negative interest policies) and finally “to “quantative easing”, all to stimulate capital and growth. Everything was done to make inflation. The legacy of this artificial inflation undoubtedly exacerbated by post COVID supply chain inflation issues and led to the interest rate rises which have had a severe impact in our sector this year. It has been widely reported that investment in 2023 has been at a decade low, tracing back to the credit crunch.

However, the good news is that inflation has significantly fallen in the last couple of months and many commentators believe there is a real prospect of rate reductions starting in Q3 of 2024. Canvassing the views of many of our clients in London, we believe that this will mean a significantly better year in 2024 for CRE. Whilst many of our Fund clients have been in holding patterns, many have also planted the seeds for a strong 2024 by setting up the infrastructures to be prepared to push the button in 2024. There is a wealth of capital looking for the right opportunities now and the anticipated interest rate stabilisation should give the confidence for Funds to compete to buy and Lenders to finance opportunities and thus the CRE CLO market to crank up the volume.

We are optimistic for a fruitful and busy 2024, and wish all our clients, readers and friends a happy holiday and a prosperous New Year.

By Steven M. Herman

Senior Counsel | Real Estate

By Caleb Eiland

Associate | Real Estate

The New York Court of Appeals recently delivered an opinion in Skaneateles Country Club v. Cambs (unpublished at this time) that upheld an at-will termination of boat slip license. In 1999, Skaneateles Country Club built 80 boat slips on Skaneateles Lake for use by its members. One member, Olivia Cambs, entered into an “Assignment Agreement” with SCC, paid the required $4,500 initial capitalization payment, and agreed to pay an annual maintenance fee – all in exchange for the right to use and occupy a boat slip assigned by SCC.

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By Duncan Hubbard

Partner | Real Estate

By William Lo

Associate | Real Estate

On 27 September 2023, the British High Court ruled that the claimant relying on the defendant’s report suffered no actionable loss, despite the defendant’s admission of negligence.

The case of Hope Capital Ltd v Alexander Reece Thomson LLP revolved around a lender's claim against its appointed valuer for breach of contract and negligence concerning a loan security valuation. The Court dismissed the lender's claim ruling in favour of the valuer where it determined that the lender’s loss is the consequence of the various inherent risks of the commercial transaction, not because of the risk that the valuation was overvalued, being the only risk that the valuer can fairly be held responsible for.

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Here is a rundown of some of Cadwalader’s recent work on behalf of clients.

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REF News & Views readers, as the holiday season approaches, we want to take a moment to express our gratitude for your continuous support throughout the year. Wishing you all a joyful and safe holiday season filled with warmth and cheer. We eagerly anticipate reconnecting in the new year!