- June 8, 2012
Forget visions of a lawyer in cheap suits glad handing trailer park owners selling decrepit metal boxes on wheels. St. Petersburg attorney David Bernstein handles multimillion-dollar mobile home park transactions.
By David R. Corder
David Bernstein encountered a credibility problem. Never mind the St. Petersburg attorney had negotiated more than a billion and a half dollars in mobile home community transactions over two decades. The Wall Street lawyers came well armed with an air of superiority. That was a mistake.
There's a good reason why Chateau Communities Inc. relied on Bernstein to handle the Florida portion of last fall's $2.2 billion merger with Hometown America LLC. Over the past dozen or so years, he represented the Denver-based real estate investment trust on a range of mobile home community acquisitions in Florida. Prior to that, he represented Chateau Communities' predecessor, ROC Communities Inc. Years earlier he even represented ROC's predecessor, Keller Investments Inc.
"It's a challenge dealing with New York lawyers who often think lawyers outside their state don't understand high finance or how to close complex real estate transactions," says Bernstein, chair of the manufactured home law practice at Ruden, McClosky, Smith, Schuster & Russell PA. "So right out of the box, it's important to establish credibility with the lender's counsel, in this case JP Morgan. We were able to do that pretty quickly."
Some of that respect came during complex negotiations over the merger's anticipated loan structure. More came as Bernstein educated the Wall Street lawyers about resident purchase rights in Florida mobile home communities and the state's exclusive assessment of documentary stamp taxes on real estate transactions.
"By discussing these issues up front with the New York lender's counsel, they got a good feel for our experience and expertise in handling large, profitable transactions in Florida," Bernstein says. "And if that didn't do it, catching all the typos in their documents certainly did."
That's just Bernstein's style, says Largo attorney Jonathan James Damonte. He should know. Damonte, who serves as vice chairman of the Florida Bar's mobile home and RV park law committee, sometimes sits across the table from Bernstein. "He's aggressive," Damonte says.
Bernstein didn't intend to focus on mobile home law. Why would he? The Miami Shores native graduated from the University of Florida in 1980 and entered the University of Miami School of Law with plans of becoming a criminal defense lawyer.
During his first year and half of law school, Bernstein worked as a clerk for the Miami-Dade state attorney in the major crimes division. He assisted prosecutors with heinous crimes involving some of the most notorious of Miami's cocaine traffickers in the early '80s. Death threats on court officers were commonplace.
"I quickly decided real estate sounded good, and started clerking for a couple of real estate firms," he says.
As he prepared for graduation, Bernstein interviewed with representatives of St. Petersburg-based Jacobs, Robbins, Gaynor, Burton, Hampp, Burns, Cole & Shasteen PA, then one of the Tampa Bay area's largest law firms. They sold him on the firm's reputation and the area's quality of life. Soon after, the Florida Legislature enacted the Florida Mobile Home Act.
"It was coincidental the law was passed July 1 of 1984, and I started working right after taking the bar (exam) in the last week of July 1984," he recalls.
The law created new and complex regulations in an industry that for decades had little oversight, Bernstein says. Very quickly those regulations created a new niche for real estate lawyers. A few years later Bernstein joined with about a dozen other attorneys to create the mobile home and RV park law committee as part of the Florida Bar's Real Property Probate and Trust Law Section.
"It has fostered significant litigation, real estate and finance transactions that prior to 1984 did not exist," Bernstein says of the law. "It is now a multibillion-dollar industry in Florida."
In fact, Florida residents occupied 849,304 mobile home units, according to the 2000 U.S. Census. That figure includes units in exclusive manufactured home communities replete with country club and golf course facilities. Appraisers valued just the Florida portion of the Chateau Communities-Hometown America deal at about half a billion dollars.
"It's not your grandfather's trailer anymore," Bernstein says.
Under the tutelage of Dunedin attorney Joe Gaynor, Bernstein immersed himself in mobile home law. "I soaked up like a sponge," he says. By 1987, he had established his own mobile home law practice within Jacobs Robins. "Most interestingly, as the stars would later align, I became acquainted with several industry clients who would ultimately grow into major figureheads in the manufactured housing industry."
In 1987, Bernstein represented Keller Investments Inc. in the sale of the Pinellas Cascades Mobile Home Park in Pinellas Park to ROC Communities Inc. Unbeknownst to him then, he would soon establish a professional relationship that would lead him to the multibillion-dollar merger between Chateau Communities and Hometown America, which now lays claim as one of the nation's largest owner-operators of manufactured home communities.
During the Keller Investments sale, Bernstein met Gary P. McDaniel and Rees F. Davis Jr. Formerly a Tampa entrepreneur, McDaniel partnered with Davis to create ROC Communities as a startup company.
"I had represented (Keller Investments) throughout the state," Bernstein says. "Lo and behold as (McDaniel and Davis) started buying assets, they in turn retained me to represent them as their Florida counsel."
By 1992, ROC Communities itself had became one of the largest owner-operators of mobile home parks in the nation. It became bigger that year when it merged into Chateau Communities, with McDaniel and Davis staying on as senior executives at the successor company. Not only did Bernstein participate in that merger, but he also witnessed the birth of a publicly traded REIT during meetings at the World Trade Center in New York City.
"I often joke with Gary and Rees that I knew them when they bought their first trailer park in Pinellas Park," Bernstein says. "That property ran its course all the way through the mergers. I jokingly like to refer to Pinellas Park as the origin of the nation's largest mobile home park company."
Davis says he values Bernstein's abilities as a transactional attorney, adding, "He's just very capable. You just know when you're in a transaction with David the details are going to get covered. (And) he'll also never lose sight of the big picture."
"David also has a very good way of creating consensus and getting people to understand sometimes complex issues, whether it's a one-off transaction with an entrepreneur or a portfolio acquisition or financing with a sophisticated investor group," Davis adds.
"All of them (lawyers) want to get involved in the business side of it, but not all of them have the poise, grace and clarity," Davis continues. "Often times it just gets in the way. David's a terrific individual."
Throughout the years, Bernstein has declined offers to join his clients' firms as in-house counsel. He attributes that decision to the advice of his late father, Bernard, a pioneer in the rental car industry in the 1960s. He says his father worked tirelessly to build the Avis rental car brand into a nationwide operation. "He was very intent on me becoming a professional, to control my future rather than working for a corporation that could be gone tomorrow," he says.
"I have been offered positions along the way to go in-house with several of the companies, including Greentree-Conseco, and I always refer to the words of my father and give thanks to those words as I watched the metamorphosis of those corporations," Bernstein says.
Bernstein's need to control his future became more apparent as change affected not only his clients, but his own law firm. The firm became known as Robbins, Gaynor, Burton, Hampp, Burns, Bronstein & Shasteen PA. Later, Bernstein earned name recognition in a successor firm known as Gaynor, Decker, Young, Malchon, Dickson, Schumaker & Bernstein PA. By the mid-1990s, however, a group of the partners decided to join Fort Lauderdale-based Ruden McClosky and open its St. Petersburg office.
The merger with Ruden McClosky complemented Bernstein's practice, as the St. Petersburg office focused on commercial law in the areas of real estate, banking and litigation. He also benefited from the evolution of the tax law practice in the local office.
"We have a team approach to the practice," Bernstein says. "What makes our practice group unique is the depth of our professional resources, which can skillfully cover all aspects of finance, real estate acquisition and operations."
That depth accounts for why Greentree-Conseco Finance Corp., an active manufactured housing lender, retained the law firm, Bernstein says. From 1997-2002, the St. Petersburg manufactured housing practice helped Greentree-Conseco developed about 50 mobile home communities valued at about $400 million in 14 states.
It may be too soon to say whether Hometown America intends to retain Bernstein as its Florida counsel. But it has a good incentive to do so. Under his watch, the law firm's tax department saved Hometown America about $350,000 in state documentary taxes during closings on the Florida properties. "We saved them probably half of what they would have otherwise paid," Bernstein says. "No one wants to pay taxes that they legally can avoid."
Bernstein sees a new trend emerging. He forecasts increased demand for his services from resident associations in manufactured home communities that want to buy out their corporate owners.
"We're in a state of transition," he says. "Far more properties will convert to resident ownership or other uses. Particularly in Pinellas County, properties are aging and, in many cases, functionally obsolete and have a higher and better use than a mobile home park. We're seeing properties converting to retail centers and residential subdivisions.
"There are a number of challenges at a number of levels," he says. "It's a very complex transaction that requires a delicate balance between the rights of the landlords and the tenants."