In a joint venture with Miami-based Breakers Capital Partners, we acquired Atrium at Broken Sound, a 100,729-square-foot office building located in a The Park at Broken Sound, a mixed-use complex located in Boca Raton, Florida.
At acquisition the property was 90% occupied, with a strong and diverse set of tenants ranging from regional headquarters to law, pharmaceutical, real estate and marketing firms. The property had suffered from years of poor management and operating inefficiencies, but we saw an opportunity to drive value by capitalizing on the asset’s formidable appeal rooted in its location, aesthetic, bright atrium, covered parking and generator.
We enacted a business plan to realize the asset’s full value by undergoing a capital improvement program, preventative maintenance initiatives and a hands-on management strategy. The work is ongoing.
We believe that the area’s strong population supports short and long-term demand from cost-conscious, small to mid-sized tenants. Demographic trends, high barrier to entry and limited development opportunities, will portend well for future revenue growth.
In 2016, in JV with Breakers Capital Partners, we acquired 4200-4400 Northcorp Parkway, a two-building, 115,000-square-foot Class A commercial property in Palm Beach Gardens, FL. The property is part of the premier micro-market of Class A office space in northern Palm Beach County that has historically attracted strong tenants. We identified a unique opportunity where demand was poised to outpace supply and where broader market fundamentals were supportive of those trends. With a focus on driving value through astute operating and property oversite, we have ensured high-quality marketing, operations, arrears management and building standard. Through our diligent building operations and successful rent roll management, we have generated strong returns and realized significant leasing upside.
Since acquisition, we have increased rents by nearly 20% and have brought the weighted average lease term to 7.6 years. The property is stabilized, and consistently generates steady returns to our investors. We continue to realize the asset’s broader investment potential as the property’s net operating income continues to increase as South Florida’s economic and demographic shifts continue to fuel job growth.
This investment demonstrates our experience managing existing tenancy, creating operating efficiencies and uncovering market arbitrage opportunities to unlock asset value and prudently maximize returns.
In 2015, in a JV with Clarion Partners, we acquired 211 East 43rd Street, a 211,000-square-foot office building located within the Grand Central sub-market of Manhattan. At the time of closing, the property was 65% occupied with no identity within the submarket. After acquiring the property, we rebranded the asset and implemented an extensive capital plan, including an overall façade rehabilitation, a cosmetic overhaul to the southern lower façade, a redesign and upgrade of the lobby and updated mechanical and operational efficiencies. Through an aggressive leasing strategy, we focused on differentiating the property from its competitors by providing a unique product including superior quality pre-built suites with unmatched light and air setbacks, single-or double- floor layouts and a central core. Our attention to detail and quality resulted in outpaced lease-up performance. The property is currently stabilized at 97% occupancy, average in-place rents have increased by nearly 40% more than 10% above underwriting assumptions and NOI has more than doubled.
The acquisition of 211 East 43rd Street illustrates our integrated and broad skill set in repositioning an underperforming asset and effectively utilizing our team’s marketing, operating, design and development capabilities to execute on a business plan.