WV GCLA Repositioning Report

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Repositioning options and scenarios for commercial real estate

Text of WV GCLA Repositioning Report

  • GCLA Repositioning Report

    December 2010

    Prepared By:

    Vahak Agojian, WV Director of Global Real Estate

    1

  • Introduction

    My name is Vahak Agojian and I am the Director of Global Real Estate for World Vision, who reports directly to Tony Moniaga, Partnership Leader for Global Real Estate and Corporate Services. My responsibility is to ensure that I maximize value and mitigate risk for World Vision globally by providing asset management real estate services. Those services include consulting, leasing, acquisition, disposition, construction and improvement projects for existing WV assets and for future WV projects.

    Purpose of the Report

    The purpose of the report is to provide information for everyone who is interested in understanding the scope of the GCLA Repositioning Project which consisted of three phases of due diligence.

    The GCLA Repositioning strategy was first introduced to me on October 5, 2010 in order to determine if there is a value added opportunity that would allow GCLA to reposition the two buildings it currently owns through disposition, and to identify acquisition opportunities through leasing or purchase of other properties along the 210 freeway corridor going east from WVs current location (commonly known as 800 & 840 West Chestnut in the city of Monrovia).

    The alternative was to analyze and determine what value added improvements could be made to the current property in order to achieve a higher and efficient better use of these buildings.

    In order to obtain this information, I implemented and completed a three phase due diligence process consisting of owner/user decision analysis, market feasibility analysis, and financial feasibility analysis. This purpose of this report is to identify the best opportunities for World Vision and to assist us in the decision making process .

    2

  • Assumptions used for Analysis

    The following information was obtained from a department head survey that was administered on November 5, 2010. The purpose was to capture basic information that is necessary to determine space needs for all departments, and to determine whether or not the GCLA staff count will shrink, stay the same, or grow over the next 3-5 years. Therefore, the following assumptions were used as the basis for this report.

    Global Center Los Angeles will continue to exist under this current structure that includes a staff of approximately 202 employees for at least the next 3-5 years.

    Collectively within all departments there will be slight growth of less than 2% annually.

    20% of the staff will continue to work from home at least 2 days a week

    GCLA will continue to have 295 visitors annually.

    62% of those visitors will work here and stay a week.

    Repositioning Options & Scenarios

    A. Sell existing property and buy new office building

    B. Sell existing property and lease new office building

    C. Hold and add 20,000 SF to the 800 building and after the completion of construction lease out or sell the 840 building

    D. Demo and rebuild the 840 building and after completion of construction lease or sell the 800 building

    E. Hold and remodel 800 & 840 buildings

    F. Hold and Do Nothing

    3

  • 800 & 840 Sale & Lease Values & Property Characteristics

    PER SQUARE FOOT: $213.65 TO $220.82 PSF (OWNER/USER) OR $170.04 TO $194.33 PSF (INVESTOR) INDICATED MARKET VALUE: $13,828,215 TO $14,291,830 (OWNER/USER) OR $11,005,481 TO $12,577,693 (INVESTOR) RECOMMENDED ASKING PRICE: $15,533,520 ($240.00 PSF) MARKETING TIME: 6 TO 12 MONTHS TARGET BUYERS: 800WCHESTNUT MEDIUM SIZE OFFICE USERS IN PASADENA, GLENDALE, ARCADIA AND MONROVIA; IDEAL FOR A REGIONAL CORPORATE HQ, INSURANCE COMPANY, OR BACK OFFICE USE. 840WCHESTNUT COULD ATTRACT SIMILAR OFFICE USERS TO 800, BUT WILL ALSO ATTRACT ATTENTION FROM TECH/FLEX USERS ASSOCIATED WITH JPL AND CALTECH.

    Combined Lease Value for 800 & 840

    PER SQUARE FOOT: 800WCHESTNUT $15.00 PSF, NNN / $22.00 PSF, FSG* 840WCHESTNUT - $13.80 PSF, NNN / $21.00 PSF, FSG RECOMMENDED ASKING PRICE: 800WCHESTNUT $17.00 PSF, NNN / $24.00 PSF, FSG 840WCHESTNUT - $15.00 PSF, NNN / $22.20 PSF, FSG MARKETING TIME: 9-18 MONTHS TARGET TENANTS: 800WCHESTNUT MEDIUM SIZE OFFICE TENANTS IN PASADENA, GLENDALE, ARCADIA AND MONROVIA; IDEAL FOR A REGIONAL CORPORATE HQ, INSURANCE COMPANY, OR BACK OFFICE USE. 840WCHESTNUT COULD ATTRACT SIMILAR OFFICE TENANTS TO 800, BUT WILL ALSO ATTRACT ATTENTION FROM TECH/FLEX TENANTS ASSOCIATED WITH JPL , CALTECH AND CITY OF HOPE.

    Property Description

    CAMPUS SIZE/SF: 64,723 SF SITUATED ON 5 PARCELS CONSISTING OF 3.5 ACRES 800WCHESTNUT 28,000SF (2-STORY) & 840WCHESTNUT 36,723SF (2-STORY) YEAR BUILT: 800WCHESTNUT 1982 & 840WCHESTNUT 1977 OFFICE AREA/ SF: 800WCHESTNUT 1ST FLOOR: 14,000SF 2ND FLOOR: 14,000SF & 840WCHESTNUT 1ST FLOOR: 24,400SF 2ND FLOOR 12,323SF WAREHOUSE AREA/ SF 800WCHESTNUT NONE & 840WCHESTNUT 7,000SF CEILING CLEARANCE: 24 (840WCHESTNUT) PARKING: 178 SPACES / 3 PER 1,000SF LOADING: 800WCHESTNUT DH: 0 GL: 0 & 840WCHESTNUT DH:1 GL:0

    4

  • 800 Chestnut

    840 Chestnut

    5

  • Aerial Photo of GCLA

    Parcel Map

    6

  • Monrovia staff drive time study

    7

  • Due Diligence Process & Data Gathering

    A. User Decision Analysis

    Various methodologies used for data gathering such as surveys, department head meetings, research and analysis to understand WVs needs and space requirements.

    Department Head Survey Summary

    GCLA Full Time Staff Members = 202

    Projected Staff Growth 3-5 yrs.=

  • Department Head Survey Matrix

    Gov pc 1 pc2 pc3 pc4 pv5 pc6 pc7 pc8 PC9 IT LEGAL CC FPNAAuditTRES HEACOMM sp OE Sec P REVGSCM VFI Civ M CS Glb op

    Dan Reb Reb Reb Reb CindyCindyCindyCindyCindy Tim Lars SteveFrank Kat Lars Kate chris eeg Ian Ian Ger Scott Ian Tony Dirk

    GCLA FT Staff Members 5 4 4 2 3 2 9 1 3 16 40 7 6 9 10 7 13 12 3 6 2 3 9 12 1 11 2 202 202Dept. Grow N Y N N N Y Y Y N N N N N Y N Y N N N N N N Y N N Y N 29%Dept. Shrink N N N N N N N N N N N N N N N N N Y N N N N N N N N N 96%Dept. Stay the Same Y N Y Y Y N N N Y Y Y Y Y N Y N Y N Y Y Y Y N Y Y N Y 67%Projected # Staff 3-5 yrs 5 6 4 2 3 3 11 2 3 16 40 7 6 13 10 10 13 11 3 6 2 1 10 12 1 12 2 214

  • Conference Room Usage

    Month/Year Total # of Reservations Total # of Hours

    Oct 09 562 2,009

    Nov 09 519 1,859

    Dec 09 469 1,966

    Jan 10 528 N/A

    Feb 10 494 N/A

    Mar 10 681 N/A

    Apr 10 571 N/A

    May 10 558 N/A

    Jun 10 572 N/A

    Jul 10 523 1,289

    Aug 10 543 1,272

    Sep 10 519 1,343

    Note: Due to the IT database upgrade in January 2010, the summary of total hours was no longer available. Corp Svcs. worked with the IT department to include the information back into the database which became effective 7/2010.

    10

  • B. Market Feasibility

    Conducted market feasibility studies, toured properties, met with various brokers to obtain information regarding availability, suitability, and market conditions etc. within a specific geographic area.

    Boundary Map

    Other Properties that were under Consideration

    11

  • C. Financial Feasibility

    Financial Feasibility NPV Snapshot

    Buy Via Verde

    Buy Haven Rancho

    Lease Via Verde

    New Construction 840 EOY "A" Cash Flows

    EOY "B" Cash Flows

    EOY "C" Cash Flows

    EOY "D" Cash Flows

    0 ($5,227,500.00)

    0 ($4,692,000.00)

    0 ($403,400.00)

    0 ($10,195,000.00) 1 ($1,073,776.00)

    1 ($1,003,833.00)

    1 ($921,254.00)

    1 ($373,245.00)

    2 ($1,081,596.00)

    2 ($1,011,653.00)

    2 ($1,240,015.00)

    2 ($380,710.00) 3 ($1,089,573.00)

    3 ($1,019,473.00)

    3 ($1,271,927.00)

    3 ($388,175.00)

    4 ($1,097,708.00)

    4 ($1,027,293.00)

    4 ($1,304,690.00)

    4 ($395,640.00) 5 ($1,106,007.00)

    5 ($1,035,113.00)

    5 ($1,338,328.00)

    5 ($403,105.00)

    6 ($1,114,472.00)

    6 ($1,042,933.00)

    6 ($1,372,866.00)

    6 ($410,570.00) 7 ($1,123,106.00)

    7 ($1,050,753.00)

    7 ($1,408,327.00)

    7 ($418,035.00)

    8 ($1,131,912.00)

    8 ($1,058,573.00)

    8 ($1,444,737.00)

    8 ($425,500.00) 9 ($1,140,895.00)

    9 ($1,066,393.00)

    9 ($1,482,124.00)

    9 ($432,965.00)

    10 ($1,150,057.00)

    10 ($1,074,213.00)

    10 ($1,520,512.00)

    10 ($440,430.00) NPV

    = ($13,779,465.45)

    NPV = ($12,690,851.35)

    NPV = ($10,518,273.12)

    NPV = ($13,313,381.49)

    CA $7,772,500.00

    CA $8,308,000.00

    CA $12,596,600.00

    CA $5,790,400.00

    After Sale of 800

    Add 20,000 SF to 800 & Lease out 840 Building

    Remodel 800 & 840

    Hold and do Nothing EOY "E" Cash Flows EOY "E1" Cash Flows

    EOY "F" Cash Flows

    EOY "G" Cash Flows

    0 ($3,368,123.00) 0 ($1,092,000.00)

    0 ($2,273,500.00)

    0 ($373,245.00) 1 ($373,245.00) 1 $546,383.00

    1 ($373,245.00)

    1 ($380,710.00)

    2 ($380,710.00) 2 $565,232.00

    2 ($380,710.00)

    2 ($388,175.00) 3 ($388,175.00) 3 $584,697.00

    3 ($388,175.00)

    3 ($395,640.00)

    4 ($395,640.00) 4 $604,795.00

    4 ($395,640.00)

    4 ($403,105.00) 5 ($403,105.00) 5 $625,547.00

    5 ($403,105.00)

    5 ($410,570.00)

    6 ($410,570.00) 6 $646,975.00

    6 ($410,570.00)

    6 ($418,035.00) 7 ($418,035.00) 7 $669,098.00

    7 ($41