On the Level: John Maheras

CHARLOTTE – John Maheras puts together commercial real estate deals as a partner at one of Charlotte’s leading law firms, Horack Talley.

He’s apparently so good at it that members of the International Council of Shopping Centers (ICSC) recently voted him state director for North and South Carolina. He takes office in May and will keep the volunteer post for a three-year term.

The 44-year-old first-generation Greek-American was steeped in the ins and outs, and the ups and downs, of commercial real estate from an early age: In the 1960s, his father opened Charlotte’s first Mexican restaurant, Pedro’s, on East Independence Boulevard.

“I gained a lot of respect for restaurant owners,” Maheras said. “It’s one of the toughest businesses to be in.”

After matriculating at Charlotte public schools, he graduated from Davidson College and earned his law degree in Chapel Hill.

Comfortably ensconced in the Horack Talley offices on the 26th floor of One Wells Fargo Center, Maheras graciously submitted to On the Level’s interrogation techniques and had the following observations about the industry for which he smoothes out bumps.

Tell us about what you do. My practice is commercial real estate, development and leasing-and-acquisition and both, with some corporate work on the side, joint-venture work, and representing investors. I’ve always been interested in real estate law, from law school on. I started my practice in 1994 in litigation. In 1998, I made the transition to real estate law and joined (the legal firm of) Perry Patrick, and I’ve been here at Horack Talley for nine or 10 years.

How’s business? Is the market recovering? The market has been getting better since 2009, after the crash. We’ve found steady growth, tons more activity. As an example, in the first half of this year, I will have done about one lease a week and four acquisitions. We’re moving in the right direction. In Charlotte, things could have been worse. In the Wells Fargo merger (with First Union), a lot of employees did not lose their jobs, especially the higher-income ones, and that has kept some of the momentum going.

You’re busier at work, yet you also volunteer your time for the ICSC? It’s good exposure for me and for the firm. And I’ll be giving back at little to the industry that has helped me build my practice. Each state director oversees local activities of the organization, to make sure there are enough activities at the state conference and to network with the developers and brokers. I’ll be helping organize the state conference here that brings retailing brokers and developers. There are also regional and national conferences, where everybody has booths, everybody gets together, including ancillary professions like architects and builders and planners. It’s about networking and strategy sessions, common goals. There is a lobbying component on the national and state levels, out of the New York City-based national office. I go to the national conference every year; this year it’s in Las Vegas.

What the major issues you’ll be facing as the state director of the ICSC? There are two major issues facing the industry right now, and the first is financing for acquisitions and upfits, which in many cases has been very difficult to get since the crash. Some banks are starting to become a little less restrictive when it comes to doing upfits for office spaces. Smaller tenants need financing for that. It puts a landlord in a difficult position because they often have to put up a bigger percentage of the upfit costs. They don’t want to give up more money; what do you do if a tenant goes belly-up after you’ve invested in their upfit? Landlords are put at risk. Sometimes they’ll offer 10 months of free rent instead. But we have seen lenders start to extend financing. But they are still scrutinizing each loan very closely. The problem is there is no collateral for an upfit, so the banks are betting that a business will do well. In terms of acquisition financing, if you can get the financing at all, instead of requiring 5 to 10 percent, now the lenders want 20 to 30 percent. And they want to see tenants, they want to know your initial occupancy. There are no more loans for spec commercial projects. But things are getting better, especially among the smaller banks and mid-tier banks. They’re getting more aggressive in their loans. The bigger banks are still hesitant.

What’s the other issue? On the leasing side of this business, in ’08, when landlords wanted shopping centers fully occupied, they reduced rent from, let’s say, $25 a square foot to $20, to keep as fully occupied as possible. Those were temporary deals. Now that things are picking up, they’re going back to their lessees and saying, “This was not meant to be permanent.” That’s a good sign that things are picking up. But the landlords now are having to go back and look at their business models to try to decide if it’s better to keep tenants in place by continuing to offer those discounts or to seek new tenants who can and will pay market rates. On the other side, the tenants don’t want to pay more, so they’re worried. It’s an issue for both landlords and tenants.

You go back and forth representing buyers and sellers, landlords and tenants. Isn’t that kind of tricky, ethics-wise? That’s easier in leasing situations. In sales situations, once you represent a buyer one time or a seller one time, it’s hard to represent the other side in a deal involving them. In leasing situations, there tend to be fewer surprises in the negotiations.

Now that you’re the grand poobah of shopping centers in the Carolinas, are you power-mad? Ready to enter politics? Nah, I enjoy practicing law. I’ll be here. I’m not going anywhere. This is a really good place to be a partner. I just really enjoy the challenges of bringing deals together. Everyone at the table has common goals, they want the deal to go through, both the buyer and seller. You have to protect the interests of your client, but you want the deal to go through. That requires a lot of thought and thinking outside-the-box.

BROWN can be reached (704) 247-2912, [email protected], or on Twitter at @tonymecktimes.