Terra Firma enjoyed their current administrative office space for their building and remodeling business but had growth plans that involved adding shop space and equipment storage to their headquarters. They requested that Element survey the market and determine if there were any viable options that could accommodate their future needs. After combing the market and reviewing several options that weren't quite the right fit, Element was able to identify a building coming to the market that looked like it could be a great option. Element made the introductions and assisted in reviewing Terra Firma’s future space needs against the building's existing space layout.
Initially, the building seemed like it may be too big, but the property achieved many of the other requirements, particularly geographic location with it being within two miles of their existing offices. To overcome the sizing concern, Element completed several potential space use scenarios where Terra Firma could lease a portion of the building to a third party, offsetting near term costs and providing expansion space later. Element’s assistance with this effort gave Terra Firma the confidence to move forward on the transaction.
Element handled the offer presentation and purchase agreement negotiation, beating out four other bidders on the property. Element also managed the general and environmental due diligence processes on behalf of Terra Firma once the purchase agreement was executed. This included completing a Phase I ESA which resulted in the identification of an offsite Recognized Environmental Condition (REC) related to VOCs that were found in the soils of a nearby redevelopment project. While this was unfortunate news for both Buyer and Seller, it was much better to identify this issue during the due diligence process rather than after the transaction was complete and the Buyer, Terra Firma, carried all the risk and potential costs of any future remediation.
Terra Firma was still interested in the property and asked Element to help craft a strategy to both mitigate the environmental conditions and the costs associated with any potential environmental remediation project. Element took on the task of working with Terra Firma’s real estate attorney and environmental consultants to negotiate a plan with the Seller to complete the Phase II testing at the Seller’s cost along with Seller escrowed funds to cover the costs of remediation post-closing. Element also assisted in securing SBA financing for the project working with Terra Firma and a local lender.
From property identification through due diligence and closing, the project took 4 months, with the Seller leasing back the property for 4 months. Subsequent environmental remediation and Buyer buildout construction took 3 months, with total project from identification to open for business totaling approximately 11 months. Post purchase of Terra Firma’s new headquarters, Element also managed the disposition of the their existing building, achieving the targeted sale price based on Element’s property valuation techniques.
Element enjoyed being a trusted partner on the project, assisting Terra Firma in creating a new home for the company with a new cabinet shop, equipment storage and administrative office space in their new building.