Case Study: Staying Active with a Value-Add Investment in Hicksville, NY

How RPS Capital Management helped a client transition from a vacant industrial property to a value-add asset with significant upside potential in Long Island.

CHALLENGE

Our client merged his company into a larger organization in the middle of a partnership dispute. After the merger, the fighting partners were left with a vacant industrial property suffering from environmental issues. Keeping the property would require a capital infusion and time commitment - risks that only one of the partners was willing / to undertake.

ACTION

The RPS team was called in to assist the client with strategies for liquidating the property and reinvesting the capital in a tax efficient manner. We demonstrated that they could acquire a property with more upside than their relinquished asset by using a tenants-in-common structure to purchase a value-add asset in their backyard. Ultimately, we were able to place the client into a single tenant net lease property with a short-term lease and below market rents.

RESULT

The client purchased a 7,500 SF restaurant building in Hicksville, New York. Although the restaurant has been at the location for 35 years, the tenant has two years remaining on the lease and is heading towards bankruptcy. However, the building sits on an oversized lot in one of the most active retail corridors on Long Island with a current rent that is 48% below market rate. The client has engaged the RPS Asset Management team to reposition the property to capture the significant upside potential.

TESTIMONIAL

“We had a complicated mess on our hands, and Rob Sharfstein of RPS calmly led us to a clean simple structure. He was knowledgeable, creative, timely and kept us focused on the solution. I highly recommend Rob and the RPS team, especially if you have a situation with a lot of moving parts.” – Lee Tepper