Midwest Utility Company

Situation
This $2.5 B utility company had not reviewed its real estate portfolio or updated its real estate strategy in decades. While real estate values in this third tier market had not changed dramatically in years, the question of leasing versus owning remained unresolved. The company had been investing in the property for decades with significant capital improvements made to the asset, which increased the value of the building for the owner.

Resolution
BREA conducted an alternative strategy analysis for this Midwestern utility company that identified and explored viable, cost-saving options associated with its 250,000sf headquarters property.

This company had been the sole lesee of its headquarters’ building for 45 years and was determining if it should buy the building or continue to lease it.  The building still met their physical needs and the rent was below market.  However, because it was a triple net lease the company was responsible for all operating and maintenance costs for the property and over the years had replaced the HVAC system, lighting, roof and repaved the parking lot among other capital investments. The tenant was improving this aging asset and providing steady, long term cash flow for the owner.