San Diego's PREMIER Full Service Private Client Brokerage Firm
Call Us Today! 858.360.3000
CASE STUDIES
PERFECTLY TIMED 17-PROPERTY 1031 EXCHANGE
CHALLENGE:
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.
SUCCESS:
CAA was able to design the structured sale of 14 properties to 6 different buyers with virtually simultaneous closes of escrow, AND structure the acquisition of 3 larger and superior investment properties from 3 different sellers, which were all able to be closed prior to the expiration of the IRS mandated 45-day identification period. The complexities of aligning the timelines for 10 different parties on 17 properties isn’t something most brokers have the competency, creativity, or experience to complete. This was another example of perfectly executed, 1031 exchange. Our client was able to increase cashflow, with better tenant quality, in newer fee-simple buildings, while deferring taxes and improving their financing.
SUCCESS HIGHLIGHTS
VALUE-ADD INVESTMENT
SUCCESS:
CAA identified an on-market opportunity, that we believed was overlooked by others and had unrealized value. While in escrow, we developed a strategy to increase stability and cash flow.
Within 60 days of close of escrow 3 new lease deals were signed, including a 10-year renewal and expansion of a credit tenant, who occupied the majority of the building. The rent roll was strengthened, the risk profile was improved, and the projected cash on cash return was increased by nearly 450 basis points.
The improvements in value, increases in cash flow, and reduced risk were a direct result of our experienced and disciplined investment underwriting, combined with our leasing expertise. Our unique skillset of successfully handling both the initial investment and subsequent lease transactions, provides our clients with honest data and objective analysis’ to make strong investment decisions.
SUCCESS HIGHLIGHTS
1031 EXCHANGE
CHALLENGE:
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.
SUCCESS:
CAA created an off market bidding war for the asset, and negotiated a high sales price and flexible timing for exchange. Leveraging CAA’s resources and relationships CAA identified and evaluated multiple on and off market up leg opportunities. CAA negotiated a sales price below appraised value and attractive terms on a recently constructed 100% leased off market multi-tenant Retail center.
Not only did Commercial Asset Advisors improved our client’s return on investment by over 200 basis points. We achieved our client’s goal of avoiding large capital outlays, and creating long term safety and the risk diversification they needed.
SUCCESS HIGHLIGHTS
OFFICE REDEVELOPMENT
CHALLENGE:
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
CHALLENGE:
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.
SUCCESS:
CAA immediately completed a thorough due diligence and prepared a plan to complete in making modest upgrades and improvements. Within 1 year, by overseeing and managing the improvements, successfully restructuring multiple existing leases, completing 15 new leases with new tenants, and addressing any maintenance issues, CAA was able to recapture nearly 5,000 square feet, achieve 100% occupancy and dramatically increase cash flow.
SUCCESS HIGHLIGHTS
FLEX / INDUSTRIAL REPOSITION
CHALLENGE:
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.
SUCCESS:
By thinking outside the box and researching the Municipal Code, we found that the local zoning prohibited many types of retail and fitness uses (some of the only users demanding space). We identified a list of specific uses and advised the owner on getting a Master Conditional Use Permit to allow our project to be more competitive than other projects. ECP’s advice, hard work and leasing efforts directly resulted in getting the center to 100% occupancy.
Today 20 of the 25 spaces are occupied by alternative users. Due to the scarcity of these spaces, our rents currently exceed that of comparable space in the market.
SUCCESS HIGHLIGHTS
CHALLENGE:
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.
SUCCESS:
Our client aquired the properties and CAA developed strategic recommendations for building improvements, and executed an aggressive repositioning, marketing and leasing effort. Once the client made reasonable upgrades to the building consistent with the “B” class competition, CAA’s efforts resulted in completing over 31 leases in less than 18 months, which increased occupancy from 19% to 99% - vastly outperforming our competitors.
This overwhelming success was completed in a very soft market with strong competition in the Kearny Mesa Submarket.