The Challenge

Anatolia Capital Corp. was looking to purchase high-exposure industrial lands surrounding the Golden Horseshoe with the intent to quickly develop an industrial park. Although swathes of agricultural and recently-designated-but-unserviced lands have been carefully acquired with plans for the medium- and longer-term, much of the low-hanging fruit within the GTA core have already been taken. As a result of the expertise and activity of Lee & Associates Toronto's Land Services group across the Greater Toronto Area, they were tasked with uncovering and qualifying any suitable opportunities.

Our Approach

Lee & Associates Toronto's Land Services group sought off-market, industrial zoned, mid-sized land parcels in close proximity to major highways across the Greater Toronto Area. Following an extensive search with our real estate intelligence team, we identified a site which already had plans to develop up to 750,000 square feet – with construction slated for early 2023.

We determined trending market sales in the area and underwrote an intensive development pipeline survey encompassing the surrounding Hamilton, Burlington, and Niagara area, and determined the limited supply forecast for the area in 2023. Our analysis concluded the subject lands offered a competitive advantage over many of the other sites given the readiness and existing services already in place for development, allowing it to capitalize on a robust leasing demand environment.

The Challenge

During the COVID-19 pandemic shutdown, more consumers turned to ordering online which spurred massive growth in the eCommerce sector, leading more businesses to turn to 3PLs like Smart Warehousing to help meet the growing demand. With more businesses asking for help, Smart Warehousing needed more warehouses and more space to accommodate the growth. Finding properties in markets across the country that fit the needs of Smart Warehousing was a true challenge. Before leasing a property, it would need to be checked to see if it would be a good fit and would check all the necessary boxes to be an efficient and operational warehouse for Smart Warehousing. Looking for good warehousing space requires not only all the brick-and-mortar checks like clearance height, cross-docks, and proximity to highways, but also whether the right people are near that location to serve their customers. With properties only lasting a few days on the market, Smart needed assistance finding the properties and getting negotiations and paperwork started to not lose out on the property.

Our Approach

To help aid Smart Warehousing in their expansion efforts, the team used our resources to help get potential properties reviewed to ensure they met the detailed requirements needed to be a functional property. With the immediate need for space from Smart, we knew we would need to broker aggressive market rate deals to enable Smart’s growth.  Along with negotiating contracts and leases for Smart, we knew we would have to expedite deals, settling contracts in days to help Smart deliver space to their customers.

The Challenge

Former Union 76 gas station site; main entrance pad to Serramonte Center (major regional power center, premium Bay Area Peninsula location). Subject property was the only pad not owned by the REIT that owns Serramonte Center; REIT offered to purchase the subject property for $5M ($221/PSF – land value). While the subject property was “clean” from an environmental standpoint (owner was in possession of a “No Further Action Letter” and “Tank Closure Letter”), the fact that the prior use was a gas station presented environmental challenges to be addressed no matter how the site was redeveloped and to whom it was leased or sold.

Our Approach

Advised client to find a tenant and determine if ground lease or build to suit option would maximize disposition value versus an outright land sale. Fully negotiated Verizon Wireless corporate lease on behalf of the client, including overcoming significant environmental, construction/delivery, over-market rent, and city-related issues. Provided fee development oversight to ensure entitlement, building department, and construction matters were in sync with tenant’s timing/expectations. Marketed the property for sale prior to construction being complete and tenant accepting delivery of the premises (creative marketing and deal structure).

The Challenge

Elion began their west coast expansion in 2020. Elion set out to identify core markets and then began looking for industrial investment properties, with the goal of uncovering value-add opportunities. San Diego was quickly identified as a hotspot for industrial real estate investment potential, but not without many barriers that would need to be overcome. Due to San Diego being severely land-constrained, development is limited to the repositioning of infill properties and nearly no new ground-up development. With supply at a maximum and demand that continues to grow, San Diego proves to be a core market with significant barriers to entry that make acquisitions challenging to identify and even more difficult to “shake loose”.

While Elion was aggressively searching for an upside, so was everybody else. Finding an off-market deal in a highly competitive market was a tough requirement, but not impossible with the right knowledge, relationships and experience.

Our Approach

In order to best assist this client, Greg Pieratt, SIOR took a three-part approach. First, he utilized his deep relationships in the local market to cast a wide net searching for potential properties. Next, Pieratt leveraged the reputation he has established for himself in San Diego county, locally representing one of the world’s largest logistics companies. He was able to further capitalize on the privileged exposure to off-market deals that comes from his many interactions with local brokers while doing industrial deals for his large logistics client. Finally, Pieratt tapped the Lee & Associates network of brokers- collaborating with Lee & Associates North County brokers Rusty Williams, SIOR, Chris Roth, SIOR, Jake Rubendall, Isaac Little, and Marko Dragovic.

The Challenge

In 2018, Billy Snowden identified an 11-acre property listed with a residential agent who was unaware of the property’s potential value as an industrial development. Billy recognized that Cabot Properties had recently completed a successful speculative distribution facility within the I-20 West Atlanta submarket and identified them as a logical buyer. As suspected, Cabot showed interest and pursued the property. While under due diligence, it was determined that a swap of land with the neighbor was necessary to improve the site’s efficiency, which Lee facilitated. Upon closing on the site, Cabot engaged the Lee & Associates team of Billy Snowden and Michael Sutter to oversee the marketing of the property.

Our Approach

The Lee Atlanta team created a branding strategy to market the new construction. With custom-branded marketing collateral, Lee Atlanta began to implement its plan by sending e-blasts, posting the new listing information on the largest commercial real estate data aggregator, creating drone videos of construction progress. The team also conducted tours once the construction was underway. The building’s construction was completed in February 2020. In March 2020, the COVID-19 pandemic put a stop to in-person tours and meetings regarding the facility. However, it didn’t take long for the e-commerce industry to start “feeling the strain” of the need to expand their facilities. Activity in the e-commerce sector increased dramatically, and more and more potential tenants viewed the drone photography and the videos of the building.

The Challenge

At the time of sale, the site was encumbered by a vacant 1,050,266 square foot warehouse building that was previously occupied by the U.S. General Services Administration. The facility was built for the GSA in the early 1990's. The main challenge was figuring out how the investment community was approaching the purchase of the building and site, and how we could maximize pricing based on that. Investors fell into two (2) categories: (1) knock the building down and construct new Class A modern warehouse/distribution product on the site; (2) lease the current facility to a new tenant and construct one (1) new building on the excess land located on site.

Our Approach

The buyer, which was a joint venture between Clarion Partners and MRP Industrial, decided that the way to maximize the value of the site was to knock the 1.0 million square foot building down and construct brand new, modern distribution space on the site. The capital markets team was able to procure the highest $/FAR pricing in the history of the Southern New Jersey industrial submarket, based on the buyer's initial estimates regarding the amount of square feet they would be able to build on the site.

The Challenge

Assist a long time owner of industrial property and Class B residential rentals in determining and implementing the most profitable strategy to turn a warehouse into a mixed use building on the Brooklyn waterfront. The potential scenarios included:

• Sell the lot to a developer and re-invest the proceeds in other areas with greater returns
• Secure a construction loan and construct a property, something they had never done before
• Create a joint venture with an experienced developer and building
• Structure a long-term leasehold where the new lessee spends the money to construct a building in exchange for 99 years of control

Our Approach

In the belief that they could develop a 90,000 sq. ft. building on their own, ownership hired an architect, drew up plans and went to their primary lender of over 30 years for a construction loan. While this bank had provided well over $200M in debt over the decades, the loan that was offered reflected a total lack of experience in ground-up development. The loan proceeds were materially lower than anticipated and the interest rate was double what experienced developers were able to achieve. Ownership needed guidance on how to achieve their goals of developing an economically viable and more valuable, mixed use property, taking advantage of 421-a tax benefits to minimize the tax liability for a quarter-century, constructing a rental asset that could be passed down to the next generation of this family ownership, and securing a market rate loan to ensure that the potential returns outweighed the construction risk.

We instantaneously recognized the superior location of this asset, which given its waterfront location would have unobstructed East River and Manhattan views in perpetuity. We quickly assessed the balance of the positive and negative attributes of the property and opportunity, and determined that a Joint Venture with an experienced developer offered the highest percentage chance for success. In order to create the JV, current ownership would need to “sell” a piece of the fee, approximately 10% to 20%, to make the project worthwhile to a new partner and show potential lenders that the minority partner had substantial skin in the game. We also believed that given the competitive advantages this property would eventually have, a new partner would accept a land value above what would be a market rate for a rental building, but still a discount from a condo valuation.

After speaking with a handful of very select developers, all with at least 30 years of experience in the industry, and some with over 100 years, we made a minor course adjustment. These developers all stated that because they still had to hire a third-party general contractor, the returns were not great enough. It was at this point we decided to “cut out the middle man” and source general contractors who were also property owners, and had enough liquidity to buy into the property and meet a potential lenders requirements. We were able to locate the appropriate group from our deep bench of relationships, and they agreed to our aggressive land value. They were about to execute the partnership agreement when 421-a expired, creating a major tax liability that could not be overcome without cutting the land value in half. Ownership decided to shelve the project until 421-a could be revived or a new tax incentive program created to minimize and freeze the real estate tax burden long enough for the project to make economic sense.

The Challenge

The main challenge was getting the deal across the finish line in the midst of the COVID-19 pandemic. Many companies are either 100% work from home right now or are asking their employees to commute into the office in shifts. There is uncertainty regarding when employees will return to the office on a full-time basis. Both the buyer and seller were flexible during this uncertain time, which allowed the deal to get done in a timely and efficient manner. The seller was flexible in terms of understanding their tenants' concerns dealing with the pandemic, while the buyer was creative regarding their deal structure from both an equity and debt standpoint. Overall, despite a few bumps throughout the due diligence process, the deal was able to be completed on time.

Our Approach

The team's approach was similar to how we typically market a suburban office deal of this class and tenant profile. We marketed it to the top investors in the area, specifically within the particular submarket, received a handful of offers, and subsequently pushed bids to the highest achievable price. The largest tenant at the building, who leases over half of the rentable square feet, extended their lease term for over 6 years during the marketing process (through 2031), which allowed us to sell the story about the anchor tenant occupying space at the facility on a long-term basis. This allowed us to push pricing even further.

The Challenge

After launching the marketing and sales effort of this asset in late 2019 and running a typical bidding process, we selected a buyer and went under contract in February 2020. Then, COVID-19 hit the US causing the most abrupt and major economic recession since the 2008 financial crisis. Unfortunately, the buyer had not completed its due diligence prior to the national "shutdown" that ensued, and ended up canceling the sale contract in March 2020. After a 90-day hiccup, the same buyer came back to the table and began conducting its due diligence. During due diligence, the buyer ran into significant challenges, namely from his preferred equity and debt sources, who had significantly tightened their grip on new investments and lending criteria in a post-COVID environment.

Our Approach

Given the immense challenge presented to the market in COVID-19, the Lee & Associates team remained nimble, working through the hourly/daily informational updates relating to COVID-19, and "shutdown" orders that were enforced at the state, and ultimately national, levels. Meanwhile, the tenant that occupies 100% of the Property, Thermo-Tech Premium Windows and Doors which is a wholly-owned subsidiary of Harvey Industries (Waltham, MA), showed tremendous fiscal and operational health post-COVID. Without this, the likelihood of closing this transaction at the agreed upon terms was extremely unlikely.