18020 SOUTH SANTA FE
When Hager Pacific Properties acquired the South Santa Fe Avenue industrial building in Fall, 2004, the seller was embroiled in litigation among its partners and the entire sale process was subject to judicial review. Additional property challenges also included:
| • |
Potential PCB contamination; |
| • |
Property master leased to an entity no longer in occupancy; |
| • |
Master lease extended for a long period of time at below market rents; |
| • |
Sub-tenant occupied substantially more than its leased premises; and |
| • |
Older, metal construction needed repair and significant renovation. |
Working closely with the referee, Hager Pacific was able to satisfy all parties during escrow. HPP negotiated an early termination agreement with the master tenant which included a termination fee, an environmental indemnity and cleanup requirement with the obligation for the sub tenant to vacate a portion of the site. A long term tenant has now been secured and the sub tenant lease has been renegotiated to provide HPP with cash flow during the extensive ($1.2 million) tenant improvement/renovation program.
As a result of these repositioning efforts, the South Santa Fe Avenue industrial building is now 100 percent leased at significantly higher rental rates. Other results include:
| • |
Uninterrupted cash flow during the renovation and tenant improvement period; |
| • |
Successful relationship developed with referee leading to other transactions; and |
| • |
Property value maximized through repositioning, leasing, environmental cleanup and property improvements. |
|
