Pacific Starr Group (“Asset Manager”) provided asset management services for the Owner of an industrial park consisting of six industrial buildings in San Diego, California (“Owner”).
Asset Manager saw a major opportunity to add value through envisioning and achieving a higher and better use for this property by providing various services including:
- Coordinating and overseeing acquisition due diligence and acquisition financing
- Repositioning the property from industrial to office R & D to attract both higher quality tenants and significantly higher rents
- Instituting a capital expenditure program to correct deferred maintenance deficiencies and upgrade project attractiveness and competitiveness within the market
- Establishing and managing a flexible business plan with detailed budgets and reporting to increase bottom operational line cash flow
- Changed standard lease type from full service gross to triple net, effectively passing on all operating expenses to tenants immediately at inception of each lease and increasing cash flow
- Selected and closely supervised third party property management and leasing companies as well as the lease and sales effort
- Subdivided the property then, managed the sale and marketing effort through complete disposition
Since sales to owner/users began to achieve higher prices than sale of a single, leased integrated property, we recognized an opportunity. Upon Owner’s approval, we sub-divided the property by creating a Planned Industrial Development (PID) resulting in six, individual buildings, each on its own fee lot. This enabled Owner to either sell each individually to an owner/user buyer or to lease individually and then sell to smaller, individual buyers at a higher, retail price creating a broader market for exit and a material increase in total value and liquidity.
The result was successful disposition through six individual sales—some to owner/users buyers, others to investor buyers—at significantly higher prices compared to selling to one institutional buyer.