PERFECTLY TIMED 17-PROPERTY 1031 EXCHANGE
A client approached us with a fragmented portfolio of buildings and commercial condominiums. We identified that these properties were under leveraged and were worth more to owner/users, than as investment properties. However, selling these individually meant multiple small and challenging 1031 exchanges OR large tax consequences.
A large, high quality, class A Office asset with a short term corporate credit lease and upcoming capital expenditures, presented a pronounced risk for the client. A very competitive office market increased the likelihood of rent degradation and/or a large capital outlay and cessation of cash flow.
Commercial Asset Advisors worked hand in hand with the client on a strategy to quietly eliminate this risk, maintain cash flow, increase value, and avoid taxes.
3625, 3665, & 3675 Ruffin Rd are three of six buildings in Ruffin Business Park. Two of these office properties suffered from years of mismanagement, deficient leasing efforts and significant deferred maintenance. As a result, the properties became 100% vacant, fell into default and ultimately were foreclosed upon by the lender. The third was suffering from deferred maintenance and slow leasing, resulting in over 40% vacancy, and a weak existing rent roll. Good real estate was failing to live up to its potential.
CAA developed a plan to create immediate tenancy and cash flow.
DISTRESS TO SUCCESS
This class “B” multi-tenant office building had been slowly modified over the years and suffered from a lack of hands on attention. Challenges included deferred maintenance, multiple struggling tenants. Even simple items, like an inadequate number of mailboxes had to be addressed. Larger firms tried and failed with their one size fits all approach.
As a result, the property had negative cash flow, instable tenancy and over 60% vacancy.
FLEX / INDUSTRIAL REPOSITION
After ground up construction was completed in 2008, this 55,000 SF project was delivered vacant. With an uphill leasing battle going into 2010, the property still had significant vacancy. The economic recession was in full swing and there was virtually no demand for light manufacturing showroom and R&D spaces that the project was originally designed for. CAA was engaged to implement a creative leasing strategy and save the building from serious distress.
One of our investors was looking to identify an asset with some stability in the rent roll, but still with the ability to increase value and obtain an above average yield quickly. Commercial Asset Advisors was engaged to identify and evaluate multiple on and off market opportunities for the client.