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Case Studies

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Plaza Corporate Center

Kansas City, Missouri

A corporate real estate services engagement allowed Block Fund I to acquire a 105,234 square foot office building in Kansas City's highly desirable Country Club Plaza at a significant discount to replacement value through an off-market transaction.

Opportunity

In 2004, Block Fund Principals were engaged by a local financial company to provide advisory services on the firm's lease renegotiation. An audit of the lease identified an option to acquire the property, Plaza Corporate Center, at a price well below replacement value.

Strategy

We understood that the client was not seeking to purchase their building but wished to remain a tenant. Country Club Plaza's prime location demanded some of the highest rents in the Kansas City market. The client's lease renegotiation was at a stalemate as they would not be able to support the market rents without reducing their square footage or relocating a portion of their employees. We proposed a transaction in which Block Income Fund I would exercise the client's option to purchase Plaza Corporate Center and we would simultaneously offer the client a new lease.

Challenges

We knew that if the property came to market it would sell at a premium and our client would be forced to relocate due to the high rents. We were able to align our interest in purchasing the property at a discount with the client's interest in remaining a tenant in Plaza Corporate Center by offering the tenant a below market lease for their portion of the property.

Result

The resulting partnership enabled Block Funds to exercise the client's option to purchase the building and to simultaneously lease the property back to the client. Today, Plaza Corporate Center remains one of the premier properties in Block Income Fund I and enjoys 100% occupancy.

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