Picoco

Newport Beach, California

Financial Services Company Takes Giant Leap Into Office Building Ownership with Sale LeaseBack

Project

Sublease/Investment Sale Leaseback

Industry

Financial Services

Size

60,000 SF

Location

Newport Beach, California

Challenge
Challenge

VoitWorks was engaged to sublet its Newport Center office space it had outgrown and simultaneously purchase a building for Picoco’s expanding business. Due to a lack of available office buildings for sale, the prospect of identifying a suitable building and negotiating a favorable purchase transaction was particularly challenging.

Solution
Solution

Having researched all disposition opportunities, including subleasing, assigning or terminating the lease, it was determined that a sublease would provide the most economic and timely method to dispose of Picoco’s rental liability. We immediately commenced an aggressive marketing campaign targeting the entire local commercial brokerage community and an extensive database of local businesses. We also canvassed surrounding buildings to ensure complete exposure to every tenant in the area. In the meantime, we conducted further off-market research and leveraged our relationships and knowledge of building owners in Picoco’s target market to identify an off-market building which more than accommodated all of Picoco’s real estate requirement. Sale leaseback negotiations began immediately to secure a purchase price at fair market value, along with a newly negotiated leaseback to the current building owner, including a loan assumption to finance the purchase.

Results
Results

Within only thirty days, we sublet Picoco’s premises at the exact same terms as the lease eliminating its rental liability. We also negotiated the sale of surplus furniture systems, which covered all Picoco’s lease disposition costs. The new building sale leaseback transaction was completed on time and at fair market value offering the benefit of substantial rental income from the previous owner. In just a few months, Picoco enjoyed a smooth relocation into its prestigious new office space headquarters, providing for an excellent long-term real estate investment with the ability to expand into the building as it grows its business over time. Sale Leaseback transactions can be challenging and convoluted but the entire process was completed in just a matter of months.

“VoitWorks’ market exposure and the speed at which they implemented an aggressive market campaign provided a quick and inexpensive solution for substantially reducing our overhead.”

Negotiated Concessions Include:

  • Rapid disposition of its current lease

  • 100% elimination of its remaining lease obligation

  • Fair market value purchase price

  • Favorable financing terms via loan assumption

  • Substantial rental income on its new building

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