Fortune 1000 Health Insurance Company

2018 NAIOP Office Transaction of the Year

Challenge
Allegro facilitated a Fortune 1000 health insurance company’s real estate strategy development in advance of multiple upcoming lease expirations. This resulted in a recommendation to consolidate the client’s facilities from six locations into either a single headquarters facility or a headquarters facility coupled with a separate operations center. While successfully leading the client through the purchase of a historic 381,000 sq. ft. headquarters building, Allegro continued to work on an operations center transaction that had been approved by the client in conjunction with the headquarters acquisition.  Together, these two transactions would ultimately enable the client to complete the consolidation of its entire headquarters and operations workforce.

Solution
Allegro served as the project quarterback in order to identify and secure a space with ample capacity for the client to consolidate its operations-related workforce. Allegro managed the development of the selection criteria, led the market search effort, conducted highly detailed financial analysis, implemented the negotiation strategy, and built internal consensus among the management team and the Board of Directors through a series meetings and board presentations.

After an extensive search and a two-phase RFP process, Allegro assisted the client in leasing a four-story, 344,355 sq. ft. office tower that is the face of a 1.6 million sq. ft. office/warehouse complex on 152 acres.  The project will entail a complete gutting of the office tower with significant base building improvements provided by the landlord as well as a contemporary interior layout and design. As part of the transaction, a complex negotiation took place to address several building issues discovered during due diligence. Enhancements included HVAC equipment replacement, elevator installation and stairwell improvements, the build-out of additional restrooms on each floor, and more. Throughout the process, Allegro assisted with the selection and management of third-party consultants, including the architect, owner’s representative, and contractor. Additionally, Allegro worked with the prior tenant to ensure that their relocation and the timing of the demolition, construction, and delivery of the space aligned with the client’s pending lease expirations.

Simultaneously, Allegro drafted Request for Incentive documents, met with municipal, county, and state economic development officials, and factored the financial impact of incentives into the quantitative analyses and Board of Directors presentations. Allegro successfully negotiated economic incentives with the city, including an aggressive, customized payroll tax credit schedule and real estate tax abatement for the cost/value of gutting and improving the office tower. Additionally, Allegro shepherded a three-party agreement between the City, State, and property owner to rebuild and publicly dedicate a portion of the property’s internal roadways, which will result in a first-class corporate park image and environment.

Allegro successfully helped the client navigate an extremely complex transaction that met their goals and brought together more than 1,600 jobs to the operations center. Coupled with the headquarters acquisition, this transaction will result in a reduction of over 15% in annual occupancy costs for the client and establishes the company’s operating platform for years to come.