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

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 6th & 3rd project is the second North Loop/Warehouse District (Minneapolis, MN) transaction in nine months for our client, CEDARst Companies ("CEDAR"), a prominent multi-family developer based in Chicago, Illinois. The 6th & 3rd properties are located one block from CEDAR's first project, "The Duffey Lofts" site which land acquisition closed in July 2019, providing an excellent opportunity for CEDAR to scale its operation in the Twin Cities by more than 3.0x. The acquisition of the 6th & 3rd properties did not occur without headwinds. Primarily, the spread of COVID-19 into the US in February/March of 2020 and the economic shutdown and recession that ensued, posed a major challenge to the transaction. As a result of COVID-19, lenders across the nation turned off the spigot for making new loan commercial real estate loans. Additionally, private and institutional equity sources were rattled creating a "cash-is-king" mindset, not knowing if, and how long, an economic decline would last.

Our Approach

Lee & Associates provided ongoing brokerage and transactional support to CEDAR in a variety of ways. The Team was successful in raising equity capital and relational support to multiple local/regional lenders who, through the Team's local market knowledge and expertise, were still actively pursuing new loan financings despite the economic disruption caused by COVID-19. Due to state-to-state travel bans leading up to closing the 6th & 3rd, it proved critical to have local boots on the ground to allow for social-distanced contact with the seller, City and neighborhood leaders, investors, third parties conducting due diligence, and other points of contact necessary as part of the transaction.

The Challenge

The main challenge was driving the pricing to the highest achievable level that was acceptable to ownership while also balancing ownership's timeline for closing as well as the buyer community's timeline for closing. Ownership had done a lot of background work after originally purchasing the site, as they took the site through the township approval process (approximately 1 year time frame) in order to maximize their pricing when they wanted to sell the parcels. The marketing of the site was done in conjunction with ownership obtaining final approvals/entitlements from the township in order to construct a 300,700 SF modern warehouse/distribution facility, meaning that certain milestones still had to be achieved while the site was being marketed so that the Capital Markets team could push the buyer's pricing to the upper echelon of what was achievable based on other recent sales in the market.

Our Approach

Lee & Associates of Eastern Pennsylvania's Capital Markets team was tasked by Foxdale Properties with selling a land site consisting of two (2) parcels that they owned in Florence Township, NJ. Ownership took the land through the entitlement/approval process with the township prior to selling, where they received final & unappealable approvals for the construction of a 300,700 SF, Class A industrial warehouse facility.

The team's approach consisted of contacting every major industrial developer on the East Coast in order to effectively market the opportunity. Interest in the opportunity was extremely strong, as the site's premier infill location combined with its last mile delivery capabilities and immediate development potential in a rapidly growing submarket attracted a top group of bidders that included various public REIT's and private equity developers.

The Challenge

The client owned a 12,000 SF single story retail building that had been leased long term to a grocery store and a laundromat. A fire in the building compromised the structure but the tenants wanted to keep their businesses in this location. Given that they were good tenants, the owner wanted to give them a new space. However, with 85,000 SF of air rights it did not make sense to build another single story building on the lot.

Our Approach

After analyzing and considering various possible structures, it was decided that the best route for the client was to sell the property to a developer but keep the rights to the retail space at the base for their tenant to occupy. This meant that the developer would get the rights to 65,000 SF of space above the retail/community facility but they would have to build the entire building.

The Challenge

Due to the specific programming, unit sizes, and zoning constraints; the client had provided us with a number of specific parameters that they required for their use. Given these requirements we were left looking for a site that would be very hard to come by and highly sought after. Due to the nature of the capital in the deal they were also unable to take any tenant risk that could compromise the project.

Our Approach

Knowing that our client was serious about acquiring a site with realistic pricing expectations, we felt confident that we could create an opportunity. Their business model would generate more revenues per SF than any other use in the market so we knew that they could get competitive and the story reads well to sellers when trying to generate off-market opportunities. Using our database and various resources, we populated a list of underbuilt properties that fit the client’s criteria. We presented the client with dozens of opportunities which ultimately led them to the subject site. While the site was perfect in almost every way, there we several tenants in the property that had agreements in place to vacate in the future which still left a liability on the purchaser that they could not get comfortable with.