21631 Ridgetop Circle Case Story

21631 Ridgetop Circle

Real Estate Transaction- Sale

BACKGROUND

Two separate clients had a problem that was solved through one strategic real estate transaction. Verity represented two separate entities in purchasing real estate space to operate their organizations. Each client had specific needs, concerns, and goals along with differing uses.

CHALLENGE

Finding assets that met each client’s needs and goals.

VERITY’S SOLUTION

21631 Ridgetop Circle. At the time, the 60,000-sf building was vacant for four years. Verity initially approached the owners to acquire the building for each client separately but because of the size and risk, the deal did not work for either client. After some time and little progress, Verity approached both clients to purchase the Ridgetop I as a joint venture. At first, they both declined the offer. One client wasn’t sure the location was desirable and was unsure co-locating with the other’s use would work. The other client was unable to form a joint venture. They needed to own property fee simple.

In addition, neither client wanted to take the liability of owning excess space in, at the time, a slow leasing market. Verity presented a plan to take the lead on the acquisition and guide them through converting the asset to a condominium so each entity could own fee simple

The first solution addressed concerns of compatible uses. We collaborated with architects to ensure that the design of the building produced separated units that would appear as a standalone building.

The second solution addressed the excess vacant space. First, Verity presented a financial model that would acquire the property at a cost where risk was minimal and almost non-existent to other options pursued. Secondly, Verity presented a plan that turned the liability into an asset for each client. One client’s mission was to serve the community with a desire to do more within the community, but they needed additional funding. Verity showed them the value of the excess space that could produces the revenue needed to fund the community activities and personnel to execute these activities. The other client had various business relationships that this property, geographically, would be an asset and a demand. The excess space was proposed to be leased to those partners allowing for relationships to build and develop.

The third obstacle was purchasing the building at the favorable price needed to negate the risk of the excess space. Initially, the owner was not interested in breaking the portfolio apart. However, once presented with the value increase to the building by taking 100% vacant out of the portfolio led to an agreement to sell the building.

The last solution was finding and executing the transaction with two separate buyers and financing plans. Presenting market and financial data to the owner of the building and the financial institutions helped struct a deal was where all parties benefited.

CONCLUSION

We took a non-traditional approach to real estate that focused on meeting client organization needs through real estate where all parties benefited. One client benefited by owning and controlling their space to meet market fluctuations of their business while not occurring extreme risk of funding unused space, along with forging business relationships with their partners. The other client by owning space that allows their community to congregate with excess space to support community initiatives. Additionally, the owner was able to sell the entire portfolio at favorable terms.