2015 Every Building Conference & Expo

Transcription

1 Beauty vs. the Beast

2 Presented by LuAnn Stiles Hill, RPA,Leed AP Senior Property Manager Liberty Property Trust

3 Beauty vs. the Beast Position your asset to be Best in Class to meet the needs of future customers

4 The Beast Case Study

5 Before

6 Before

7 Before

8 Before

9 Before

10 but yes, I could use some help

11 Understanding the Beast you Have C- asset Strategy Lead the market with Best in Class Beauty

12 Best Value Option Consider improvements that increase Marketability and flexibility Extend useful life Operational efficiency

13 Curb Appeal

14 Floor Restoration

15 Mezzanine Removal

16 Interior Improvements

17 Exterior Improvements

18 Competitive Advantage Future tenant use and infrastructure can further compound adaptability

19 Competitive Advantage

20 Competitive Advantage

21 After - C+

22 After - C+

23 After C+

24 After - C+

25 After - C+

26 After - C+

27 Financial Performance The Beauty Minimum Investment $3 psf Leasing opportunity minimum investment up to 7% yield add tenant improvements up to 9% yield Sale reality do nothing 1% over basis/allocation minimum investment 25% over basis/allocation

28 Presented by Blake Kelley Development Manager Prologis

29 Preventative Maintenance is Key

30 Preventative Maintenance is Key Roof Maintenance Cleaning (semi-annual, annual) Maintenance of scuppers and drains HVAC Maintenance Quarterly filter changes Cleaning of grills Parking Lots and Truck Courts Sump pump maintenance Crack fill/seal coat Curb and gutter repair Fire / Life Safety Quarterly/annual inspections and repairs Exterior Lighting Ultrasonic testing on parking lot pole lights to check for corrosion Sewer Lines Routine hydro-jetting of problem lines cuts down on main line back-up and breaks

31 Building Age Annual CapX Total 1 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $0.435 Capital Expenses Rise as the $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 Building Ages Capital Profile 100MM SF Portfolio, Avg Bldg Age 19 Yrs Total Roof (48%) Parking (24%) Exterior (14%) Other (10%) Contingency (4%) $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0

32 Curb Appeal is Imperative!

33 Budgeting for Capital Improvements

34 Roof Replacement: 20 Years Common defects or evidence of failure: Leaks! Significant mineral loss Water damage evident under roof deck Buckling TPO: tenting and delamination Alternative to roof replacement = Elastomeric Coating $1.30/sf vs. $ $5.00/sf

35 HVAC Replacement: 15 Years Common defects or evidence of failure: Noisy units Clogged filters / ductwork Lack of cooling / heating or airflow in general

36 Exterior Paint: 5-7 Years Common defects or evidence of failure: Panel joints: Physical separation of caulk from panel Peeling paint: May also be due to a previous improper application or mold/mildew behind paint Fading or streaking occurring in large sections Discoloration at roof or ground level

37 Common defects or evidence of failure: Alligatoring Asphalt: 15 Years Potholes Major separations in asphalt Heaving or shrinking

38 Other Building Components Which May Require Upgrade / Replacement

39 Other Components Floor Slab Common defects or evidence of failure: Cracking Wear patterns or rough floor surface due to path of travel Change in elevation (major and requires testing and possibly total replacement)

40 Lighting Metal Halide T-12 Strip T-8 Low Bay T-5 High Bay Other Components

41 Fire / Life Safety Other Components Changes in code requirements may result in upgrades Sprinkler Heads Diesel Fire Pumps & Generators Dealing with Air Quality Control Board (AQMD), permitting, etc.

42 Seismic Retrofits Life Safety #1 PML Discounted insurance rates Resale of the building

43 Presented by Nick Jones Asset Manager EastGroup Properties

44 Redevelopment Value add Facts: 40 years old (1974) 126,000 Square Feet (SF) Front-load Primarily setup for single-tenant Varying depths due to 29,000 SF expansion for 237 deep (92,000 SF) 150 deep (38,000 SF)

45 Floor Plan: As of 12/31/ % LEASED

46 Aging Buildings & Your Customer

47 Aging Buildings & Your Customer Previously discussed life span of various major building components Roof, asphalt, concrete, exterior paint/panel joints, etc. will inevitably need replacement Disruption and inconvenience from the Customer's perspective can result in postponement and budget overruns

48 Scenario: 794,000 s.f. Major Asphalt Repairs/Slurry Issues: Schedule changes due to consumer demand Customer could not anticipate with much notice Where to place 70+ trailers for the duration of the project Keeping the path of travel open at all times for the trucks to enter and exit the truck court Project Summary: Projected Start: Actual Start: Original # Moves: 3 Actual # Moves: 6 Budget Overrun: 15% June November Customer also paid out of pocket to shuffle & relocate the 70+ trailers during each phase of the project

49 Phasing Map 6 2 6

50 Unwelcome Surprises

51 Unexpected Loss due to Water Damage Alone Buildings Aged Years Loss Date Yr Built Cause Gross Amount 2/17/ Water Damage Fire Suppression System 23, /6/ Water Damage Water Supply System 3, /6/ Water Damage Water Supply System 3, /1/ Water Damage Fire Suppression System 13, /1/ Water Damage Water Supply System 7, /23/ Water Damage Water Supply System 102, /1/ Water Damage Water Supply System 23, /8/ Water Damage Water Supply System 21, /12/ Water Damage Water Supply System 13, /13/ Water Damage Sewer and Drains 14, /4/ Water Damage Fire Suppression System 14, /23/ Water Damage Water Supply System 41, /1/ Water Damage Fire Suppression System 68, /4/ Water Damage Fire Suppression System 18, /23/ Water Damage Fire Suppression System 35, /6/ Water Damage Water Supply System 3, /31/ Water Damage Fire Suppression System 19, /8/ Water Damage Fire Suppression System 37, /7/ Water Damage Water Supply System 15, /8/ Water Damage Fire Suppression System 20, /26/ Water Damage Fire Suppression System 24, /18/ Water Damage Sewer and Drains 71, /4/ Water Damage Water Supply System 14, /12/ Water Damage Fire Suppression System 12, /5/ Water Damage Fire Suppression System 498, /28/ Water Damage Fire Suppression System 14, /1/ Water Damage Fire Suppression System 20, /24/ Water Damage Sewer and Drains 49, /21/ Water Damage Water Supply System 40, /27/ Water Damage Fire Suppression System 200, /8/ Water Damage Fire Suppression System 10, /4/ Water Damage Water Supply System 20, /26/ Water Damage Water Supply System 16, /14/ Water Damage Water Supply System 19, /17/ Water Damage Water Supply System 22, /24/ Water Damage Water Supply System 34, /20/ Water Damage Water Supply System 26, /31/ Water Damage Sewer and Drains 14, /8/ Water Damage Fire Suppression System 14, /2/ Water Damage Water Supply System 19, /2/ Water Damage Fire Suppression System 29, Loss Date Yr Built Cause Gross Amount 11/30/ Water Damage Fire Suppression System 43, /12/ Water Damage Fire Suppression System 15, /23/ Water Damage Fire Suppression System 17, /8/ Water Damage Fire Suppression System 47, /15/ Water Damage Sewer and Drains 11, /21/ Water Damage Fire Suppression System 17, /5/ Water Damage Water Supply System 10, /4/ Water Damage Fire Suppression System 114, /7/ Water Damage Sewer and Drains 63, /7/ Water Damage Fire Suppression System 15, /24/ Water Damage Water Supply System 17, /26/ Water Damage Water Supply System 25, /23/ Water Damage Water Supply System 132, /10/ Water Damage Sewer and Drains 73, /11/ Water Damage Water Supply System 73, /7/ Water Damage Fire Suppression System 45, /16/ Water Damage Sewer and Drains 18, /27/ Water Damage Water Supply System 14, /12/ Water Damage Fire Suppression System 17, /9/ Water Damage Water Supply System 34, /26/ Water Damage Roof System 12, /25/ Water Damage Sewer and Drains 26, /13/ Water Damage Sewer and Drains 29, /5/ Water Damage Fire Suppression System 28, /30/ Water Damage Fire Suppression System 73, /30/ Water Damage Fire Suppression System 21, /21/ Water Damage Water Supply System 10, /10/ Water Damage Sewer and Drains 16, /6/ Water Damage Water Supply System 20, /26/ Water Damage Water Supply System 23, /4/ Water Damage Fire Suppression System 27, /6/ Water Damage Water Supply System 3, /6/ Water Damage Water Supply System 3, /18/ Water Damage Sewer and Drains 76, /16/ Water Damage Water Supply System 21, /23/ Water Damage Water Supply System 14, /7/ Water Damage Water Supply System 39, /29/ Water Damage Water Supply System 46, /27/ Water Damage Fire Suppression System 70, /17/ Water Damage Roof System 30, /1/ Water Damage Water Supply System 7, TOTAL: 3,084,238.33

52 Scenario: Fire Main Break Under Building Building Age: 35 years Details: Original underground section of PIV deteriorated due to age Water flow destabilized concrete and flooded entire 200ksf bldg. (including 14ksf office area) 500 sf section of concrete floor failed causing sink hole

53 Failed Concrete Sinkhole

54 Flooding of Warehouse

55 Staging of Damaged Product

56 Responding to the Customers Needs Restoration crew and GC on site within 1 hour to assess damage and begin: Water extraction Asbestos Abatement Complete re-carpet/paint of office area Structural work Nearby Prologis facility provided to customer for storage and staging of damaged product Customers 3 shift operation was uninterrupted!

57 Aging Building? Think Proactively! Parking lot replacement: Replace fire main pipe. Plan your replacement moves according to the layout of the piping so you re replacing the sections in a logical order. If your fire main is under the slab, move it above ground Replacing cast iron piping with newer PVC? Put a tracing wire on it to help locate future leaks Survey your water heaters in the office: Relocate those that are installed in places they can cause damage Make sure the overflow is plumbed to a drain

58

59 Floor Plan: As of 1/1/ % LEASED (102,000 SF = 5% of Jacksonville SF) VACANT 92,437 SF VACA NT 9,375 SF

60 EXTERIOR - DESIGN CHALLENGES Dated 1970 s aggregate rock on exterior 650 long façade with minimal architectural detail Concrete canopy running length of Building Mismatched suite entrances Limited ADA access Outdated suite and building lighting No landscaping (or irrigation) at front of Building Property Owners Association Approval

61 BEFORE (otherwise I probably wouldn t be on this panel!)

62 Scope of Work New entrance at Suite 18 with ADA lift Landscaping at new entrance 1.5 thick EFIS System with acrylic finish above canopy 3 thick EFIS System with acrylic finish above canopy Aluminum Cap at top of EFIS system Anodized aluminum fascia and struts at concrete canopy Acrylic finish on all panels below canopy Demo concrete stairs at unused suite entrances Upgraded Suite and Building lighting with LED fixtures

63 BEFORE

64 AFTER

65 Original Entrance Suite 18

66 Entryway in process

67 AFTER

68 Canopy Before & After

69 Summary $500K Building upgrades ESFR ; T5 Lighting ; Re-Roof $400K Demo and tenant improvements for New Tenant New electrical and HVAC for custom print room, upgrade WH & loading area $300K Exterior upgrades to façade Covered aggregate exterior and dramatically improved curb appeal New entryway Requirement in order to make this location their new regional HQ Upgraded Canopy and struts $1.2M Total cost (approx.) new tenant (TSS) leasing 102,000 SF $4.25 psf/a NNN rent (~25% above market) Seven year term

70 Questions?