After several years of operations, and a falling market, the German pension fund turned the building back to the lender (Travelers) at a substantial loss. The lender hired Divaris Real Estate, Inc. and Divaris Property Management Corp. to assist in the repositioning of this asset and the lease up of a near vacant building.

SCOPE OF ASSIGNMENT

The lender took back the building via a deed in lieu of foreclosure. Their game plan was to reposition the building to make it as competitive as possible, lease it up and sell it. We were appointed to assist with the following:

• Survey the building from a physical standpoint. This included attractiveness, functionality and operating economics.
• Analyze existing leases and stabilize occupancy.
• Conduct a market study and provide a time line in a program to re-tenant the property.
• Engage an architect and develop a renovation program to make the building more competitive with the market.
• Develop an energy management program.
• After renovation, tenant stabilization and re-tenanting, sell the property at 90% occupancy.

RESULTS

We determined that the HVAC system had no controls and therefore was costing substantially more to operate than necessary. We developed specifications, bid out and installed a state of the art energy management system reducing energy costs by 35%.

• We met with every tenant and renegotiated every lease, stabilizing existing tenants.
• We engaged an architect and developed a building renovation plan that included:
• New exterior landscaping.
• New front entrance.
• Accent lights on exterior.
• Installation of attractive architectural features to the building.
• The building has a five-story atrium, so we removed walls from suites that faced the atrium and replaced them with floor to ceiling windows, which opened the suites up.
• Removed old wall coverings in atrium and replaced with attractive wood.
• Created and installed a fountain in the center court of atrium.
• Subdivided part of atrium and installed a café.
• Installed new ceiling throughout common area.
• Retrofitted all lights with electronic ballasts and energy efficient lights.
• Conducted an aggressive marketing campaign that resulted in landing a full floor (20,000 sf) tenant, hospital owned HMO.
• Developed and implemented a marketing program that leased up the vacant spaces at top market rates.
• Developed a sales program that resulted in owner recouping previous unpaid balance of mortgage plus renovation costs resulting in a double-digit return.