 Case Study: Northwood Commons, retail and office project in Safety Harbor, Florida
NREV applied its turnaround strategies and services, as receiver, property manager, leasing agent and construction manager, to revitalize Northwood Commons (the Project), a retail and office center in Safety Harbor, Florida. The Project’s state of disrepair and declining occupancy was exemplified by the condition of its main pylon sign on McMullen Booth Road. This sign still had panels for many of the tenants who had left the Project over the prior 6 months, or were about to leave. The sign panels were dimly lighted, broken and impossible to remove individually. Many of the remaining tenants had short lease terms. The mortgage was 14 months delinquent. Upon becoming the court –appointed receiver, Monroe, contracted with NREV for all commercial services, focused on the Project for 22 months, and turned the center around with an intense effort which began immediately:
1. Initial Review of Project: NREV conducted an initial inspection and legal review according to the procedures described in the Property Management section of NREV services. As the Project was 28 years old and distressed, the inspection and review was extensive. Thereafter, NREV prepared an operating and capital budget, rent roll, and Value Plan with goals and timetables.
2. Protection of the Project: While the Project’s insurance was current, it failed to meet certain key mortgage requirements. Such insurance expired within six weeks, real estate taxes were due in four months, and approximately $40,000 had to be paid immediately to maintain essential services and avert liens. The center had no cash, other than a $25,000 cash advance. By employing strict rent collection practices and negotiating payment plans, and conserving costs, NREV met all such obligations in a timely manner.
3. Legal Compliance: NREV brought the Project into legal compliance by repairing significant deferred maintenance. The most serious problem was an outstanding 2010 complaint by SWFWMD, involving the entire drainage system, which had recently been transferred to the enforcement section. Extensive work was needed to achieve a full compliance letter, as described by the civil engineer hired by the receiver. The City of Safety Harbor cited this achievement as a major reason for awarding the project the Mayor’s award of excellence, as described in section 17 below. While restoring the drainage area, the Receiver and Wild Birds Unlimited converted the area to a wild bird habitat area which now serves as an attraction for the retailers and was key in attracting two office tenants, ROTH-Sodexo and the State Farm insurance agency, who lease over 22% of the Project’s formerly troubled 2-story office building.
4. Deferred Maintenance and Capital Repairs: NREV conducted an extensive deferred maintenance and capital repair program, which immediately increased the confidence of existing tenants in the Project’s viability – facilitating lease renewals and new leasing.
