Richmond, Va. (PRWEB) December 30, 2014
Doing something often enough reveals patterns. That’s what has happened with Allegiancy, a commercial real estate asset manager, over the past 25 years as they have managed various real estate assets around the United States.
Allegiancy has found three recurring patterns: 1) properties without cash needing maintenance; 2) properties in distress from lack of attention and more than fundamental problems; and 3) properties with tenants threatening to leave and new tenants not signing on.
Allegiancy immediately recognized these patterns in three properties they took on in Atlanta; Columbia, S.C.; and Phoenix.
Property 1: Breckenridge Exchange – Atlanta, Georgia
The Atlanta property was paralyzed by lack of money. The property owners and manager were desperate and skimping wherever they could. They hadn’t added any new leases in two years. The property looked uncared for, and the tenants had lost all loyalty. Unpaid rent had reached tens of thousands of dollars.
Allegiancy’s approach: Spend a little, gain a lot.
Allegiancy met with the tenants and property manager to walk the property. They immediately saw several low-cost, high-impact improvements that could add curb appeal and signal tangible change.
Allegiancy had all the curbs painted, which instantly improved first impressions. Rather than replacing the large entry sign, they took out overgrown trees, cut back bushes covering it, and power washed it. They had all the budgeted flowers placed at the entrance of the property for maximum impact. Essentially, Allegiancy undertook a few simple projects to demonstrate leadership and visible progress to tenants.
Allegiancy’s Results: Happy tenants, new leasing.
The care shown to tenants gave them confidence and boosted new leasing efforts. The owners were saved tens of thousands of dollars in legal fees to fight tenant defections. And Allegiancy actually leased more than 30,000 square feet of new space over eight months in a market with a 20 percent vacancy rate. This property’s value was soon restored.
Property 2: Farrow Road – Columbia, S.C.
At the South Carolina property, the tenants were seriously concerned about the lack of maintenance of their building, but the cost of needed repairs had overwhelmed the property manager and owners. For example, the roof was leaking, and the low bid to fix it was $100,000. New gutters had been bid at $15,000, and new painting was estimated to cost $40,000. This was all money the property didn’t have.
Allegiancy Approach: “Talk to the boots-in-dirt.”
As is their practice, the Allegiancy team reevaluated the issues and re-bid the work with new contractors. With the roof, they hit paydirt. Allegiancy had seen a lot of roof issues around the country. They knew that most office roofs are flat, and leaks are generally around the perimeter, meaning that the entire roof usually doesn’t need to be replaced. By climbing up on the roof and talking with the actual roofers, Allegiancy found that was once again the case. That’s when they heard, “We could really fix these leaks around the edges, and you’d be good.” At a cost of $19,000, not $100,000.
Similarly, Allegiancy found gutters for $1,500, not $15,000, and they determined that much of the paint work could be reduced or deferred. With the money saved, Allegiancy could then address more pressing tenant issues including landscaping and pest control.
Allegiancy’s Results: Money saved, value earned
The Allegiancy “shoe leather and elbow grease” approach saved Columbia property owners more than $100,000. That savings meant the property could survive. With minimal spending, they addressed tenant concerns and secured the property’s stable future.
Property 3: Phoenix Peak – Phoenix, Arizona
Phoenix Peak looked tired and sad. In fact, its lobby and elevators told a story of wear and neglect, but bids to renovate them came in at $98,000. Under the experienced leadership of Allegiancy, renovation instead became a thorough cleaning, fresh paint, and leased artwork mounted throughout the building. This approach worked wonders with minimal capital spending.
Allegiancy’s Approach: Ask “Why?”
The Phoenix lobby turned out not to be an isolated case. The building also had a malfunctioning building controls system. Replacement was recommended, but the lowest bid was $120,000. Allegiancy kept asking “Why?” and digging deeper to understand what was really needed. Allegiancy found an Internet-enabled thermostat control system for $15,000 that solved the problems and greatly improved efficiency.
By asking “Why?” often, listening to tenants, and using their own expertise, Allegiancy selected a few other low-cost, high-impact projects, including targeted landscaping, refurbishing insides of elevators, and upgrading the HVAC control system.
Allegiancy’s Results: Value restored
Within a year, this property was performing well financially and building cash reserves. Existing tenants were satisfied, and many renewed and expanded their leases. New leasing was reinvigorated, and occupancy went from 70 to 95 percent. The owners were ecstatic because they hadn’t had to pay for the improvements out of pocket, and their property was actually generating income. Property value went from an appraisal of just under $6 million to a sale price of $10.2 million.
Allegiancy president Chris Sadler said: “After years of doing this, we’ve learned that the right set of improvement projects can affect every aspect of a property. We look to make a noticeable difference quickly so that tenants and prospective tenants immediately feel good about their property ‘home.’”
Allegiancy CEO Steve Sadler added, “It turns out that the little things do make the huge difference, and acting like a property owner is the key to building long-term success. In short, we just do what the owners would do if they were here.”
More information about how Allegiancy was able to achieve these results is available here.
Allegiancy is changing the business of asset management for commercial real estate owners and investors. With an advanced technology platform and singular focus on serving as the owners’ advocate, the company brings fresh vigor to an often poorly understood business. Combining its proactive Value Assurance? operational rigor with an intense focus on cash flow and profitability, Allegiancy is expanding on a track record of more than four decades of success.
Headquartered in Richmond, Va., and led by a team of seasoned professionals and more than 100 years of experience, Allegiancy manages properties that have outperformed their peers by 45 percent since 2006. The company has more than $300 million in assets under management (AUM) and delivers clients attractive returns and profitable, hassle-free investments in commercial real estate.
More information about Allegiancy may be found at http://www.allegiancy.us.
To schedule an interview with Allegiancy’s leadership, contact Audrey Bevel at audrey(at)allegiancy(dot)us or 866.842.7545 ext. 204 or or (804)201-7161.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements are based upon the Allegiancy, LLC’s (the “Company”) present expectations, but these statements are not guaranteed to occur. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Investors should not place undue reliance upon forward-looking statements. For further discussion of the factors that could affect outcomes, please refer to the “Risk Factors” section of the offering circular dated January 14, 2014 and filed by the Company with the U.S. Securities and Exchange Commission on January 15, 2014. The offering circular, and any supplements or updates thereto, is available on the EDGAR system located on http://www.sec.gov.