The Investment Property. The Bristol Business Center is a 1,162,000 SF industrial warehouse/distribution facility located on 182 acres in Bristol, CT. Roughly 19 miles southwest of Hartford, Bristol is home to a mix of industrial and service-related industries including ESPN, Otis Elevator and Honeywell.
The Opportunity/Challenge. Previous environmental issues at the site created uncertainty that made it difficult for potential buyers to underwrite the inherent downside environmental risk.
The Strategic Insight. Savanna realized that the asset value was suppressed by uncertainty related to the ongoing environmental remediation. The lower value meant that there would be good returns from the existing leases at the Bristol Business Center, but there was significantly more upside if Savanna could lease the remaining 430,000 SF of vacant space to a high credit tenant on a long term lease and increase the lease term for the current tenants. Yet more value could be created if the environmental risk was quantified and ultimately limited and encapsulated.
Plan Execution. Savanna reinvigorated the marketing and leasing effort at the property, and eventually leased up the vacant spaces through an extensive capital improvement program, upgrading the facility by adding a rail spur to the site, raising and replacing approximately 871,500 SF of roof, and renovating vacant areas. Savanna also continued to work with a previous user to remediate the environmental issues while limiting its potential exposure to this issue by obtaining a comprehensive environmental policy. Savanna had engaged a law firm specialized in environmental issues to work with environmental consultants, which enabled Savanna to obtain the necessary insurance policy.