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Case Studies

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Technology Park Business Center

Norcross, Georgia

The Block Funds team engineered a buyout of a tenant occupying 36,000 square feet in our Technology Business Center located in Norcross, Georgia. Through our active management, the lease buyout resulted in a 22.73% return to investors.

Opportunity

Block Fund I acquired the Technology Business Center in 2004. The multi-tenant building enjoyed a number of high quality credit technology tenants with long-term leases. A tenant occupying 36,000 square feet of the building or 50% of the gross leasable space approached management about a possible lease buyout.

Strategy

Our thorough underwriting indicated that the tenant was strategically restructuring its operations to support expansion and not under any financial duress. Our investment team began engineering a financial model of the lease buyout accounting for market conditions and the net present value of the lease obligation.

Challenges

In engineering the buyout the greatest variable was our ability to secure a new tenant and accurately identify the costs associated with tenant improvements. Leveraging our national network of relationships we quickly identified a number of prospective tenants and determined a budget for improvements.

Result

After extensive modeling, Block Funds offered and the tenant accepted a $1.2 million buyout which was the full NPV of the remaining lease obligation including triple-net charges. The 36,000 square feet was leased within months of the buyout and after accounting for all capital costs Block Income Fund I investors enjoyed a 22.73% return from the buyout.

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