Asher Bristol 234 Fifth Avenue, New York, NY 10001
Case Studies
Madison Avenue Fine Art Gallery Property Tax Escalations - A proportional response
This Madison Avenue building had ground floor space worth 10 times the value of the upper floors. We Negotiated the property tax escalation clause based on income pro rata share rather than space pro rata share. Property Taxes in NYC are based on property income and building value. As a result, the tenant share of tax increases was 5.5% rather than 16.67% had it been based on measurement. Tax escalations for the tenant are a third of what they might have been in a traditionally structured lease.
Significance
This works in reverse for the landlord with a value add if ground floor retail has significantly higher rental value. Escalations can be structured to total more than 100% of expense increases.
Operating Escalations: Annual Percentage Increase Vs. Direct Operating - The Art of Listening
A $200M lease deal was in jeopardy due to an impasse in negotiations regarding operating escalations. The landlord wanted percentage increases, the tenant wanted direct operating escalations over a base stop. The tenant was very P&L sensitive and did not want to “Book” escalations. A solution was crafted which gave each what they needed, saving the deal.
Significance
The goals of each side were determined by the simple method of asking and listening. A comprehensive knowledge of real estate helped to formulate a creative solution; problem solving skills that add value and satisfaction for Landlord & Tenant.
US Headquarters of International Company Option to Purchase - What is it worth?
The lease for the US Headquarters of an international Company included a purchase option at a stipulated price. While the company did not have an interest in owning the property they did recognize that there was significant value in the opportunity. How to access this value and how to price it were problematic. We designed a valuation methodology and revealed the potential to extract more than $30M at 90% of market rent through a sale-leaseback structure.
Significance
Corporations may be sitting on value buried in their real estate - owned or leased. A holistic knowledge of what is valuable, to whom, and how to tap into it is vitally important in our highly competitive economy.
Herald Square Building Improvement & Subsequent Property Tax Increase - The Sum of the Parts......
A NYC Landlord renovated an old office property into a hotel with retail and two floors of office at the base. The change in use and capital investment caused the R.E. tax to increase substantially through reassessment and a rate change. The office and retail tenants go bananas over the huge increase and the space is rendered less marketable. The proposed action reversed the damage to marketability and enhanced the sale value of the property.
Significance
The sum of the parts may be greater than the whole. Sometimes, you have to take things apart in order to find out.
Midwest Office Flex - A Capital Idea
Capital costs cannot typically be passed thru to tenants. However, with an office flex property in the Midwest this was achieved. A dozen dumpsters in the parking lot were taking up a lot of space and annoying the tenants. Consolidating these to a compactor freed up 10 parking spaces, improved the value and appearance of the property and reduced waste removal costs. This capital cost was legitimately passed through to tenants based on the resulting reduction of operating expenses.
Significance
If it ain’t broke, don’t fix it – make it better.