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4 Beaufain – Downtown Charleston Situation A single investor owned the three story 27,000 sq. ft. building at the corner of King and Beaufain. The street level floor was under long term lease to the nationally branded retailer Banana Republic. On the second floor was an office space tenant who was interested in getting out of the existing lease. And the third floor was empty and without tenants. The owner’s primary interest was the first floor as it generated steady income at a good rate, and required little attention from him. This was important as his days were devoted to his own business which was far removed from real estate. And because his business was not real estate he had little interest in dealing with tenant issues to say nothing of identifying and placing a tenant for the third floor. He brought the situation to SEMG. SEMG solution Our goal was to find a way to satisfy all parties. Our sensibilities told us the upper two floors might be a perfect spot for downtown residential units, and the existing demand for downtown condos underlined the notion. Additionally, we had a thirteen member investor group for whom we were working to find the right deal. Finally, we believed we could negotiate a settlement that would release the second floor tenant from his obligation, and that’s where we began. We negotiated a termination agreement for the second floor tenant who was able to reasonably buy his way out of the lease. Next we explored the notion of turning the upper two floors into sixteen condominiums and ran pro formas. We looked carefully at the results in and effort to make sure our projected numbers would match up with the investment objectives set forth by the investor group. We prepared what we thought to be a reasonable and fair offer and with the approval of the investor group took it to the owner of the building. We negotiated a sale and the deal was closed. In the end, our efforts worked well for all parties. The second floor tenant was able to get out of his lease. The investor group was able to close a sixteen unit condominium deal in one downtown’s most desirable locations. And the original owner retained ownership of the first floor on a free and clear basis, as he retired his mortgage with the proceeds from the sale of the two upper floors. |
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