Client Representation – Lease, acquisition and land sale
Challenge
Vertical Strategies Real Estate was appointed to advise Mason Vitamins with headquarters expansion plans. We were asked to evaluate the economic feasibility of developing a build to suit facility on five acres owned by Mason Vitamins, verses leasing or purchasing a facility to accommodate their growing needs.
Vertical Strategies Real Estate concerted team effort with our professional construction contacts presented Mason Vitamins a detail financial analysis and market intelligence of all property availabilities and construction cost/ time estimates. It was clear Mason Vitamins real estate needs at this time would be better served via purchase or lease as the build to suit option would cost an estimated 20%-25% greater.
Result
Vertical Strategies Real Estate identified a 147,000-sq. ft. high quality headquarters facility located at 15750 NW 59th Avenue in Miami Lakes, (top tier industrial submarket) that was being offered for sublease by Parker Hannifin Corp. (Master Tenant). The building had improvements in place that were ideal for Mason Vitamins operations with future growth potential to add nearly 50,000 sf.
Vertical Strategies Real Estate negotiated a rental rate significantly below market value for the remaining four-year sublease and then renegotiated with Parker Hannifin’s agents to subsidize that savings to transition the sublease to a direct 10-year lease with the master landlord. Result, lowered lease costs by an estimated $1.6 million.
Vertical Strategies Real Estate also negotiated a right of first offer written into the lease, which requires the landlord to first notify tenant prior to offering the property for sale to third parties. This right would give Mason Vitamins, the leverage to negotiate stronger price and terms in the future. A few years later, this right of first offer was exercised within the 15 days from notice and Mason Vitamins was successful in acquiring the Miami Lakes property estimated to be at $1 million below seller’s bottom-line sales price target. In addition, this acquisition by Mason Vitamins as an investment sale (income property) being offered to investors at the time of sale, effectively lowered Mason Vitamins’ lease cost basis by an estimated $950,000. After having established a successful relationship with Mason Vitamins, Vertical Strategies Real Estate secured the representation for the sale of their five acres. Vertical Strategies Real Estate initiative to call on neighboring FPL and negotiate a closing price estimated to be 8% over then current market comparable sales and given it was direct sale with no cooperating broker, there was a 30% savings on commissions.
Vertical Strategies Real Estate advisory services in representing Mason Vitamins’ lease, acquisition and land sale assignments procured in total a positive financial impact of $3.9 million for Mason Vitamins.