REVA Raleigh Colonnade, DST
WHO WE ARE
REVA (Real Estate Value Advisors) has five decades and $12 billion of transaction experience in both rising markets and falling ones. Our office acquisitions prospered with growing revenues and strong tenancy through the downturns in the 1990s and the boom years in the early 2000s, and they continued to deliver strong cash flow and excellent returns to our investors through the recent challenges facing the market. REVA’s consistent focus on fundamentals, our disciplined approach, and our determined emphasis on frugal, effective, efficient asset management combine to deliver solid returns over the long term. The REVA shoe-leather and elbow-grease approach is straightforward and the results speak for themselves.
REVA (Real Estate Value Advisors) has completed more than $200,000,000 in Reg D syndications of commercial office buildings. We are intensely focused on making a good purchase at a reasonable price and then operating the property to maximize investor returns and asset value. Our experienced team currently serves nearly 400 investors and oversees a portfolio of more than $700,000,000 in office assets from Pennsylvania down the coast to Florida and westward into Georgia and Texas.
Even properties that are currently performing well often present numerous opportunities to improve efficiency in operations and leasing. REVA Management has been exceedingly successful in developing tactical improvements in operating efficiency; implementing rigorous oversight of vendors; and enhanced accountablility. Our Systematically Proactive(TM) regimen delivers high quality information that allows our team to focus on high impact, low cost opportunities to enrich the tenant experience and set the property apart.
Decades of experience also allow our principals to devise strategic repositioning and identity programs that result in significant increase in net effective rents, net operating income and property values.
Whether your asset has drifted into trouble or slammed into a brick wall, immediate and aggressive action is the key to an effective turnaround. Within 48 hours of taking responsibility for an asset, senior members of our team are dispatched to inspect the physical plant including rooftops and mechanical rooms, interview leasing agents and property managers as well as visit with tenants and tour the neighboring properties. The objective is to rapidly develop a tactical plan and approach to deliver maximum impact to stabilize the property. This step has to be achieved in the shortest amount of time while utilizing capital as efficiently as possible.
Time is critical – It is essential that someone be in charge and take a personal interest in solving problems, invigorating staff and protecting the lender and the owners’ respective investments. Failure to act could doom the property to an accelerating death spiral.
Creativity counts – A less seasoned and entrepreneurial asset manager could be discouraged or derailed by capital challenges, disgruntled tenants and upset vendors. We are there to meet in person with the prospective tenants and the leasing agents, demonstrating a high level of involvement, flexibility, responsiveness, and commitment.
Experience matters – Our team has been down these paths many times. We know the language and the landmarks, which allow us to navigate to a successful conclusion more often than not. If you have a property that is in jeopardy, whether from a lender that is threatening or tenants that are leaving, the last thing you want to be doing is providing on the job training to a novice asset manager.
Think like an owner – REVA has an owner-centric culture and we routinely implement decisions that save our clients and their properties hundreds of thousands of dollars. Our efforts to re-bid contracts and reevaluate vendors and property operations have often added income of $100,000 or more that drops straight to the bottom line. Little things make a huge difference and behaving like an owner is the key to long term success.
The owner acquired the property on January 14, 2015 for a purchase price of $27,450,000. The property is a Class A office building located in the tightest submarket of the Raleigh MSA. The Six Forks submarket has less than 5% vacancy in Class A office space and Colonnade II offers unparalleled sophistication and elegance.
The Colonnade II was completed in 2008 with Salix Pharmaceuticals, Inc. taking occupancy in 2011 making it the newest building in the Six Forks submarket. The site consists of a Class A five-story office building that is 100 percent leased to Salix.
Salix maintains its global corporate headquarters at Colonnade II, occupying the entire 126,926 square foot building with overflow space in Colonnade I. Raleigh based since 1998, relocated from Research Triangle to Collonade II in 2011 to improve employee recruiting and quality of life. Since their relocation to the Six Forks area, Salix has been in high growth mode as the company executes it business model of building a talented, market leading captive sales force to market drugs developed, owned and acquired by Salix. This strategy reduces risk and uncertainty, allowing Salix to leverage its in-house sales force to increase revenues.
Salix is a global leader in therapies for all types of gastrointestinal maladies and diseases. Salix is focused on maximizing the value of its highly trained captive sales force targeting gastrointerologists throughout the United States in selling proprietary product line which currently includes: Colazal (ulcerative colitis), Azasan (immune system suppressant), Proctocort & Anusol-HC (hemorrhoids), Xifaxan (diarrhea), Pepcid OS (acid reflux), Visicol, MoviPrep and OsmoPrep (pre-colonoscopy) to name a few.
On February 20, 2015 Valeant agreed to purchase Salix for $14.5 billion in cash, the offer was later amended upward to $15.8 bllion and is expected to close in August. The price increase successfully fended off rival offers and is a clear validation of the enormous enterprise value that Salix Pharmaceuticals represents.
The recently announced acquisition of Salix by Valeant Pharmaceuticals creates a tenant whose parent offfers an improved credit profile and revenues in 2015 forecast to exceed $10.5 billion. The favorable tax profile, global reach and combined market value of nearly $80 billion means the combined enterprise increases the strength, stability and growth prospects for the Salix Raleigh sales team to deliver increased dominance in the gastroenterology markets.
The Raleigh-Durham MSA exhibits vibrant growth that exceeds national trends, and enjoys a diverse and powerful economy with excellent job opportunities and a quality of life that has captured the attention of many who follow relocation trends. National publications have brought international recognition to the region for its pro-business atmosphere and affordable highquality lifestyle. Several factors distinguish the area from most other desirable MSA’s, including a diversified economy, excellent transportation infrastructure and a high quality of life.
MARKET – DEMOGRAPHICS
The Raleigh-Durham MSA does not have a dominant central city. Only 24% of residents of the metro area live in the largest city, Raleigh, the capital of the state of North Carolina. Raleigh was voted the #1 Best Place for Business in 2014 by Forbes (July 2014). It was also ranked #2 Fastest Growing Large Metro through 2020 by The U.S. Conference of Mayors (June 2014).
The area’s stable employment base is reflected in unemployment trends with relatively smooth peaks and valleys. With a tough economy, the unemployment rate has ranged from a high of 8.5% to a low of 5.0% within the past three years. The current unemployment rate of 5.0% in the Raleigh-Durham metro area was substantially lower than the statewide and national unemployment rates of 6.4% and 6.1%, respectivefully. The MSA ranks in the Top 12 major markets nationally for lowest unemployment. The 850,000+ member labor force within the region is supplemented each year by graduates of the area’s top-tier universities (Duke University, University of North Carolina, North Carolina State University & North Carolina Central University) and by workers and companies relocating from outside the area.