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It Is Important to Diversify Commercial Real Estate in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Commercial Real Estate on Thursday, September 12, 2013.

Real estate is an important investment for most people. However, this type of investment is subject to the rise and fall of the economy. This is why many people want to diversify their commercial real estate portfolio so they can minimize risk. The founders of the California Family Fitness gym chain decided to diversify their real estate portfolio recently by selling $98.7 million worth of real property.

The founders sold the ten properties, which are currently leased to California Family Fitness, in order to reinvest in other properties which were not solely dependent on only one tenant. Although the one tenant, California Family Fitness, is a healthy and growing company, the founders still wanted to further diversify in order to have a more balanced real estate portfolio. The founders of the gym chain currently operate another company Fit Development which will be used to purchase commercial real estate across multiple Western states.

The two founders of the gym chain, who had sold the chain in 2006 while retaining ten percent each, are currently contracted to purchase 500,000 square feet of properties in four different states, including California. However, the purchase needs to be completed soon, in order to take advantage of Section 1031 of the U.S. Tax Code. The code section allows the founders to purchase the commercial properties without incurring tax liabilities on the sale of their former properties, however they must finalize the purchase of the new properties within six months.

As one may be able to see in this case in California, selling and buying commercial real estate can require some knowledge of applicable law in order to make the transaction financially successful. However, each person will have different goals when making a real estate transaction. Certain tax and real estate laws may only apply in specific circumstances, therefore one’s strategy will have to apply the law to one’s specific situation.

Source: Sacramento Business Journal, California Family Fitness founders sell nearly $99M of real estate portfolio to reinvest in other properties, Kelly Johnson, Aug. 30, 2013

1031, Commercial Real Estate, Purchase

Innovative Services Need Adequate Business Planning in California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Friday, February 15, 2013.

When starting a business, it is important to consider all of the legal implications of doing business within the specified industry. Rules and regulations tend to differ for each industry and each type of business. Three new ride-sharing businesses found out how important this part of business planning is when the California Public Utilities Commission (CPUC) sent them cease-and-desist orders. The CPUC was concerned that these companies were not adhering to the same standards as similar services such as taxis.

Two of the companies which received cease-and-desist letters were Lyft and Uber. The CPUC claimed that companies such as Lyft and Uber were not adhering to regulations on taxis and similar services, which the CPUC calls ‘charter-party carriers.’ However, the ride-sharing companies argued that their services do not utilize the same business model as taxi companies and other similar businesses. They claim that the rules regulating charter-party carriers do not apply to ride-sharing services.

The dispute caused CPUC to fine several ride-sharing companies a total of $20,000 in citations. However, the CPUC had agreed to suspend the citations until rules and regulations for these types of services could be finalized. While new rules and regulations are being developed, the ride-sharing services have been allowed to operate under an interim agreement with the CPUC.

Ride-sharing services are not the only types of businesses which may be subject to regulations from authorities in California. Many of the more innovative businesses, such as these, may find themselves in a gray area of the law which has yet to be developed. This means that these types of businesses will require even more careful business planning in order to minimize fines and citations.

Source: The Verge, “Ride-sharing startup Lyft reaches agreement with California regulators, readies Los Angeles launch,” Bryan Bishop, Jan. 30, 2013

Business Formation & Planning, Cease and Desist, software companies, startups, tech startups

Startups See Opportunity Across California

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Thursday, July 26, 2012.

Until recently, the startup word was dominated by those who resided in the San Francisco area. With companies such as Google and Facebook originating in the Northern California Bay area, it was no mystery why many entrepreneurs looked to that area as the place to commence their business planning for their own startup company. However, recently many entrepreneurs have begun to spring their business ideas in a totally different venue — the sunny beaches of the greater Los Angeles area.

The appeal of the Southern California area is simple for many startups. The location offers cheaper rent, better weather and miles of sunny beaches that draw in a diverse range of individuals. As a result of this appeal, a majority of the startups in the area are within two blocks of the beach, creating a vast network of individuals looking to become the next startup success story.

The growing popularity has caught the eyes of many Northern California-based companies including search engine giant Google. Recently Google purchased a popular Venice building in an effort to capture the momentum of the growing Southern California technology market. Google has stated that their movement into the area is to turn the nation’s second largest city into “a veritable tech center.”

There are an abundance of dreams that are being constructed in the minds of many tech-oriented entrepreneurs in California. It is becoming more evident than ever before that both the business planning and execution of that plan can occur in the booming Southern California area. With the appeal of Los Angeles and the growing number of like-minded people striving for success within that geographical locale, the dream can finally be a reality for more than just a select few.

Source: Delaware Online, “Life’s a beach for tech hotbed,” Jefferson Graham, July 22, 2012

Business Formation & Planning, business location, Business Startup, getting started, startups

It Takes Time to Organize a Successful Business Merger

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Thursday, May 17, 2012.

Businesses make use of a number of strategies to expand or diversify their business. One of these strategies is a business merger, which brings two or more businesses together as one. In many cases, a business merger occurs when one business is to the point where they need to sell their business because they simply cannot afford to continue running it. However, this isn’t always the case, such as with a recent merger of two businesses in California.

Westinghouse Solar Inc., out of San Jose, and CBD Energy Inc, from out of the country, have announced a business merger as of May 9. The merger, which was approved by both companies’ board of directors, will take effect sometime within the third quarter of this year. It will take place after certain conditions regarding closing have been met and once all shareholders have approved the transaction.

A business merger is not something that occurs overnight. It took several months for these two companies to come to agreement on merger conditions. However, it can often take longer than a few months for two companies to find an agreement that is substantially beneficial for both companies. There are numerous meetings, discussions and it takes incredibly hard work to make a business merger really work.

Understandably, problems can arise with a business merger. Therefore, it is often beneficial to understand one’s rights under California law to ensure they are protected both as an individual and as a business. After months of hard work, a business merger that fails can be devastating. By taking steps to ensure success, a business merger can likely be obtained quickly, efficiently and equally beneficial for every party involved in the transaction.

Source: Market Watch, “Westinghouse Solar and CBD Energy Sign Definitive Merger Agreement,” May 9, 2012

Business Formation & Planning, Business Law, California, Mergers