Case Studies

Real Results

In these difficult economic times, foundations, trusts and high net worth individuals are experiencing the attrition of their principal.

In the example below, the left column illustrates how non-performing or low-performing investments can eat away at the financial health of foundations, trusts and individuals.

The right column represents potential results from customized real estate asset strategies created by AMCS.

  
    3 Year Model
    Before

    AMCS
    With

    AMCS
    Increases

    Decreases
  
    2010
     
    Foundation 
    $10,000,000 
    $10,000,000 
    0%
  
    Income 
    $150,000 
    $700,000 
    367%
  
    Adjusted Value 
    $10,150,000 
    $10,700,000 
    5%
  
    Minimum Distribution 
    ($507,500)
    ($535,000)
    5%
  
    Cost of Operations 
    ($250,000)
    ($250,000)
    0%
  
    End of Year Value 
    $9,392,500 
    $9,915,000 
    6%
  
    2011
     
    Income 
    $140,887 
    $694,050 
    393%
  
    Adjusted Value 
    $9,533,387 
    $10,609,052 
    11%
  
    Minimum Distribution 
    ($476,669)
    ($530,453)
    11%
  
    Cost of Operations 
    ($250,000)
    ($250,000)
    0%
  
    End of Year Value 
    $8,806,718 
    $9,828,601 
    12%
  
    2012
     
    Income 
    $132,100 
    $688,002 
    421%
  
    Adjusted Value 
    $8,938,818 
    $10,516,603 
    18%
  
    Minimum Distribution 
    ($446,940)
    ($525,830)
    18%
  
    Cost of Operations 
    ($250,000)
    ($250,000)
    0%
  
    End of Year Value 
    $8,241,887 
    $9,740,773 
    18%

C. Family Foundation

"Less is More"

By reducing the foundations real estate assets, AMCS was able to increase the foundation’s values, yields, and abilities to invest in non-real estate assets.

There were 2 major factors that accelerated the attrition of their principal.

First, the foundation was given bad advice from it’s attorneys and accountants.

Second, the board was ill-equipped to manage a real estate turnaround. These factors paralyzed the foundation for years as it’s principal declined. AMCS was able to successfully turn their financial crisis into a financial gain in less than 1 year.

2011-2012	Before AMCS	With AMCS	Actual Results	Notes
C. Family Foundation
Real Estate Assets	$16,000,000	$10,700,000	-33%	Reduced real estate exposure caused by gifted assets. Reduced workload by selling management intensive real estate.
Debt	$6,000,000	$1,200,000	-80%	Significantly reduced risk by eliminating debt.
Cash, Equities, Fixed Income	$300,000	$3,000,000	900%	Increase in cash reserves from the sale of underperforming real estate assets.
Outstanding Bills	$420,000	$0	-100%	Eliminated bills from the increase in cash from sale of underperforming real estate assets.
Annual Income	$143,000	$650,000	355%	Strategic purchases of real estate assets that provided positive cash flow resulted in a significant increase in annual income.
Net worth	$10,023,000	$13,150,000	31%	Increased net worth by $3,100,000

Arizona Chase Bank

“Chasing What Really Matters”

AMCS analyzed the operating history of the property. It was able to turn the asset into one of increased income, appreciation and zero property management.

  
    2011-2012
    Before
AMCS
    With
AMCS
    Actual Results
    Notes
  

    Peoria, Arizona

    Chase Bank  
     
     
     
  

    Real Estate Asset 
    Natural credit ground leased property 
    20 year ground lease with 2% annual increases.  
    13%
    Appreciation $448,000
  

    Annual Income
    $0
    $200,000
    Infinite
    Year 1 appreciation and operating income 19%.
  

    Return on Purchase Price
    $3,362,000
    $3,810,000
    6%
    Year 10 return on purchase price 7%.
  

California Shopping Center

“Extreme Makeover: Shopping Center Edition”

This property was exposed to the perfect storm that consisted of bad property management, owners that deferred maintenance, and advisors who didn't understand real estate assets. In the aftermath, it left the owners with negative NOI and a significantly lowered valuation. With AMCS at the helm we were able to give the real estate asset an extreme makeover.

2011-2012	Before AMCS	With AMCS	Actual Results	Notes
Seal Beach, California Shopping Center
Occupancy Rate	45%	93%	106%	Implemented antigraffiti measures. Improved aesthetics of Shopping Center. Restructured and restriped parking lot.
NOI	$0.00	$420,000	Infinite	Developed strategic leasing plan and budgets for both tenant improvement and leasing commission.
Value	$4,200,000	$6,500,000	55%	Recruited "Anytime Fitness" to relocate. Filled a 5 year vacancy with Denny's. Improved monument sign.

Louisiana Office Building

“Stuck in the ‘80s”

From the outside, this property was flawless. It was clean, safe and well maintained. The property management company was doing excellent job. Ironically, the owners were still experiencing a low occupancy rate and were on the brink of losing the property.

The problem was on the inside but neither the owners nor the management company realized it. AMCS surveyed the competition and came to the conclusions that the property was not keeping up with the competition. The common areas were outdated causing a decline in occupancy and keeping potential tenants from signing new leases. Competitive properties were remodeled inside and out, and attracted more tenants. AMCS created a strategic plan to turn the property into one with a positive NOI and higher valuation.

  
    2011-2012
    Before
AMCS 
    With
AMCS
    Actual Results
    Notes
  
    Lafayette, Louisiana

    Office Building
     
    60,000 sf 
     
    Occupancy Rate
    48%
    95%
    98%
     Estimated ownership equity - $3.0M. 
  
    NOI 
    $99,000 
    $450,000 
    355%
    Surveyed competitors. Upgraded Common areas to be competitive.
  
    Value
    $1,850,000 
    $4,770,000 
    258%
    Upgraded AC and heating systems to eliminate chronic breakdowns and significantly reduce operating expenses.

Texas Power Center

“Out of Sight, Out of Mind”

This shopping center was owned and managed by out-of-state landlords. Because of infrequent visits, they did not see the major problems that were amassing from deferred maintenance. For example, 93% of the lights in the parking lot were defective.

AMCS was able to analyze the property and quickly mitigate the problematic issues as well as create a strategy that enhanced the tenant mix. Knowing that 85% of all shoppers are female, AMCS focused on attracting tenants that featured goods and services for women. More foot traffic and longer store hours resulted in positive NOI and valuation.

  
    2011-2012
    Before

    AMCS
    With

    AMCS
    Actual

    Results
    Notes
  
    San Antonio, Texas

    PowerCenter 
     
    178,000 sf 
     
    Occupancy Rate
    50%
    97%
    94%
    Corrected massive deferred maintenance. Replaced defective  parking lot and walkway lighting. Replace 93% of bulbs and ballasts in parking  lot lights.
  
    NOI 
    Negative NOI, in danger of foreclosure.
    Positive NOI.
     
    Hired local management to replace long distance owner / management team. Owners were unaware of problems.
  
    Value
    $8,900,000 ($2,600,000 below debt.)
    $15,500,000 ($4,000,000 above debt.)
    74.16%
    Re-themed tenant mix focusing on women-centric goods and services.

3 Year Model	Before AMCS	With AMCS	Increases Decreases
2010
Foundation	$10,000,000	$10,000,000	0%
Income	$150,000	$700,000	367%
Adjusted Value	$10,150,000	$10,700,000	5%
Minimum Distribution	($507,500)	($535,000)	5%
Cost of Operations	($250,000)	($250,000)	0%
End of Year Value	$9,392,500	$9,915,000	6%
2011
Income	$140,887	$694,050	393%
Adjusted Value	$9,533,387	$10,609,052	11%
Minimum Distribution	($476,669)	($530,453)	11%
Cost of Operations	($250,000)	($250,000)	0%
End of Year Value	$8,806,718	$9,828,601	12%
2012
Income	$132,100	$688,002	421%
Adjusted Value	$8,938,818	$10,516,603	18%
Minimum Distribution	($446,940)	($525,830)	18%
Cost of Operations	($250,000)	($250,000)	0%
End of Year Value	$8,241,887	$9,740,773	18%