NAS Spruced Up 300 Four Falls for Sale

WEST CONSHOHOCKEN, PA— The recent sale of 300 Four Falls came in part because of two years of revitalization efforts by National Asset Services, which says it created greater marketability for the property’s sale by a tenant-in-common ownership structure counting down a maturing loan. As GlobeSt.com reported last week, an affiliate of Maguire Hayden Real Estate Company has acquired the seven-story West Conshohocken office property for $98.4 million. “The TICs decided to change management, because they felt that there were challenges that were not being addressed to their satisfaction by the previous manager,” Karen E. Kennedy , president and founder of NAS , tells GlobeSt.com exclusively. “We were brought in based on relationship and track record.” Not to be confused with the actual building tenants, tenants-in-common are collections of investors, and in fact many tenants-in-common are “serial TICs,” says Kennedy , with portfolios of different investments across the country, with whom NAS works on other assets. Although news reports about the recent property sale indicate that it changed hands at about the same price as its last sale, Kennedy notes that the property’s value had suffered, and takes credit for pulling the value back up. “We were brought in when there was a loss in equity, and we were able to restore that,” she says. “That was our goal and our marching orders, and we were successful. To do that in less than three years is a pretty strong statement about the value of the property and the challenges that we faced.” NAS assumed asset management responsibility for 300 Four Falls , a 298,371 square-foot, class A office property, in February 2014. “When you have TIC properties, unfortunately, that structure often means there isn’t sufficient cash to do deals,” Kennedy says. “There’s no money for commissions, and brokers, fairly enough, need to make money as well, and tenants need landlords they can rely on to maintain their building in a first-class way. We restore that and get rid of that stigma wherever we can. That’s what we did in this case. The TICs stepped up and wrote checks, and added to their investment as owners do, but they did so because they knew we would be making decisions as an asset-manager, as a single point of contact between the brokerage community and the TICs as co-owners, and between the lender who also needed to get on board with this.” Company executives say they worked quickly to increase revenue while reducing operating expenses with cost effective maintenance and prudent capital expenditures.  In less than two years, occupancy increased to 98 percent and net operating income increased 16 percent, establishing an enhanced market position for sale of the property. Kennedy credits Adi Peery, CSM , NAS senior portfolio manager, with the property’s successful turnaround. “I drove the submarket with our leasing team, I wanted to understand what our building had over the other buildings, so I toured them all,” Peery recalls. “Then I met with all the tenants and the manager and made sure we had a clean line of communications. We were able to really turn around the perception of the tenants as well, because they had been frustrated, and that helped us get the renewals that we needed.” NAS was able to lease 27,559 square feet of additional space in 2014 and 2015 just over nine percent of the building’s leasable square footage.  The additional leasing filled space vacant since the 31-member TIC group acquired the property in 2005.  During the same two-year period, NAS and the new property management company, CBRE Fameco , successfully increased tenant renewals by raising tenant approval from extreme dissatisfaction, experienced under prior administration, to support of the management team. “We also looked at the amenities, and I didn’t particularly like our café, so we tried to source a new user, and with the leasing team, we were able to get Chip Roman, who is a pretty well-known Philadelphia restaurateur, and he opened Tradestone Café,” says Peery. “That was a pretty big deal for the tenants, because his restaurants are highly regarded.” “Ownership saw a complete change from reactive management to proactive management,” says John Moffat , a member of the 300 Four Falls Steering Committee .  “Within two weeks of taking over, NAS was on top of the issues at the property, including deferred maintenance, capital improvements, leasing, tenant relations and lender relations.” ” NAS demonstrated an outstanding ability to navigate simultaneous complex challenges in a professional, diligent, transparent, and most importantly effective manner,” says Jeff Resnik, 300 Four Falls Steering Committee member. “Within a very tight timeline, NAS successfully identified and addressed several physical maintenance and tenant relation issues which had been impairing our leasing efforts, and as a direct result of this work we were able to bring to market a well-maintained and fully leased asset.” ” NAS took over the management of 300 Four Falls at a time when it was in serious trouble, having been grossly mismanaged for several years of unacceptable vacancy, maintenance problems, deteriorating relationships with the tenants, and with poor communication with the investors,” say Steering Committee members Judith and Michael Margulies.  ” NAS dramatically provided the reverse with refreshing transparency to our Steering Committee and all investors.  It culminated with the recent, successful sale of this Class-A property.” Built in 2003, 300 Four Falls consists of seven stories constructed atop a six-story parking garage and offers over 400 feet of frontage along the Schuylkill Expressway.  The building is within one-half mile of Schuylkill Expressway and Interstate 476 interchange.