The Client
A lender foreclosed on an enclosed 155,000 sf community shopping centre and needed a knowledgeable receiver and property manager.
The Challenge
To maintain the property and retain the tenants in the property to obtain the highest and best value on sale. Approximately 20% of the interior mall was leased and the tenant relations had to be maintained as a new retail property was being developed opposite the property. To add to the challenge the borrower had deferred all maintenance during a protracted foreclosure process.
The Journey/Discovery
The lender attempted to manage the property itself but quickly realized that the asset required proactive attention locally to attend to all the maintenance, operational and community related issues.
The Solution/Implementation
We performed an initial and detailed inspection, prioritized the maintenance work and crafted a one year budget for court approval. Once approved, we attended to much needed repairs, met with the existing tenants to explain the process and rebuild their confidence. One of the largest challenges was to reduce operating costs to position the property for sale and align the rent to the existing sales potential of the tenants. The largest cost was realty taxes with an assessment based on outdated information. We needed to convince the assessment authority that their value was grossly incorrect. In doing so, we would be able to reduce the overall property tax bill. By insisting that we meet the assessor onsite we were able to methodically paint a very black picture of the property value.
Value Add Outcome
Provided cost effective solution in a difficult situation. Provided expert knowledge, local attention to the pressing physical needs of the property and secured the remaining tenancy. We successfully reduced the property assessment by more than 50% based on our planned negotiation and property tour. Our work allowed the client the time to focus on the disposition of the asset and provide accurate and timely reporting to the courts and the lender’s senior management.