A Fortune 1000 Industrial and Consumer Electronic Products Distributor divested a business unit, but as part of the business negotiations, retained the lease obligations for the North American real estate portfolio. The CFO called upon Allegro to determine the appropriate write-off against the capital gain from the sale of the business unit to account for disposition of these non-producing leasehold interests. Further, the company required assistance to devise exit strategies for each property and negotiate the resulting transactions. The write-off figures needed to be provided within 30 days of the start of the engagement to comply with SEC financial reporting requirements.
The company engaged Allegro to assess the leases in place for 19 Offices and two warehouses across North America. Allegro conducted market research, analyzed remaining lease commitments and contacted landlords to determine the most practical and beneficial exit strategies for each property. Allegro recommended methods to dispose of each leasehold interest, including exercising termination rights, marketing facilities for sublease and negotiating lease buyouts. Additionally, Allegro leveraged the liquidated damage clauses to facilitate the exercise of these rights for the client. Allegro’s responsibilities continued with the negotiation of buyout and sublease transactions on many of the facilities. Allegro accurately reported the projected write-off within the required 30 days, enabling the CFO to timely report the write-offs related to the business divestiture. Allegro’s decision analysis and initial negotiations positioned each lease project for immediate action. Consequently, the client was able to eliminate the bulk of the real estate portfolio obligations within three months of the business divestiture.