- Location: 4900 Prospectus Drive, Durham, NC
- Client: Harrod Construction, Kestrel Heights Charter Elementary School and Kestrel Heights Charter
- Size: 125,000 sf
- Type of Project: Buyer/Seller Representation
- Service Type: Capital Markets
Harrod Construction, LLC needed to identify and close on a replacement property in order to complete a successful 1031 tax deferred exchange. The seller, a west coast private equity firm, was motivated as the building had been empty for several years. The 125,000 sf property, a former manufacturing and warehouse facility, offered the buyer the opportunity to leverage his construction company’s expertise to redevelop 4900 Prospectus Drive.
Prior to closing, Lyons identified a high value prospect, a nearby charter school, as a viable tenant for a significant portion of the property. Kestrel Heights Charter High School, located at the entrance to the industrial park, had recently made a strategic decision to open elementary and middle schools. This plan would ultimately require a facility that could handle at least an additional 600 students.
Lyons was able to gain the trust of the school’s Board of Directors and facilitate the negotiation of acceptable terms with the new property owner (Harrod) in order to achieve a win-win situation for both the school (in great need of more space) and the Landlord (in need of tenants for the subject property).
Within 18 months of acquisition, the Charter School executed two leases of approximately 80,000 - 50,000 sf (for an Elementary School) and 30,000 sf for a Middle School). This brought the occupancy to approximately 65%.
The rental income from the leases was sufficient to establish positive cash flow for the investor with additional upside to be realized upon the lease up of the remainder of the building.
Kestrel Heights Charter School was able to achieve their goal of expanding their offerings to a full K-12 program at least 24 months ahead of where they would have been with new construction. Additionally, the negotiated rental rate for the new elementary & middle schools was over 50% less (per SF) than what they had been paying for their high school facility.
“Highest regard for Gary, and I’ve known him for 20+ years – both personally and professionally. Experienced, knowledgeable, credible, straight-shooter, pleasant to be around – what more can I say?”
Keith Harrod, President, Harrod Construction
“Gary covered 1,001 details over a year or more to bring the project home. His work led to an outstanding result for our school community. Gary’s qualities include honesty, dependability, excellent communication of detail, creativity in providing us with options and information we needed to understand. Start to finish, Gary made this process of entering a long term lease involving millions of dollars over ten years as painless as it could have been.”
Emory Mac Bare, Chairman, Board of Directors, Kestrel Heights Charter School