A property management and development company contacted Allegro to help identify and acquire multi-family redevelopment opportunities in downtown Cleveland, Ohio. In 2012, the 165,000 square foot Garfield building was one of the first opportunities identified, as it had been sitting vacant on a prime corner of downtown Cleveland for many years. Unfortunately, the building was encumbered by an existing lease that did not expire until the end of 2014 and a commercial note with an outstanding balance that proved difficult to negotiate around.
Allegro was tasked with contacting and fostering a relationship with the seller, slowly working to bring a conceptual transaction to reality. This posed a challenge at the onset of the transaction as the seller was an unknown California entity. Making contact, identifying the correct decision makers, and building a rapport over the phone with people regarding an asset they had never seen and had no motivation to sell proved difficult. A thoughtful and mindful approach kept the seller interested from the beginning.
By studying the financial issues at hand including an existing lease that provided a steady revenue stream for the seller, substantial debt on the property, and a defeasance penalty and bullet payment, Allegro was able to advise the buyer as to when the ideal time would be for a reasonable acquisition and what the structure would need to be. The transaction was timed specifically to close within the allowable window under the defeasance terms but prior to the due date of the bullet payment. The timetable required significant organization and task management ensuring that tax credits, financing, and due diligence requirements were accounted for in advance of closing.
The client previously had no presence in the downtown Cleveland market. With significant focus and determination over the course of three years, Allegro was able to foster a working relationship with the seller and negotiate terms for the buyer to successfully close the deal on January 23, 2015, ultimately giving the client the foothold they desired within the downtown area.