Saving Two Million
While today we face the most challenging economic times in our country’s history, routinely up and down cycles occur in the economy and the commercial real estate markets. Corporations must be proactive to seek out ways to improve their company’s bottom line. There are numerous ways to lower costs for a company with regard to their real estate and facilities portfolios. Taking advantage of that is mandatory.
It was mandatory for the CFO and Real Estate Director at CheckFree Corillian and they were effective in saving their company $2,000,000. Corillian started up for business in the late 1990’s. Like most young technology companies they had highs and lows. Throughout the years their business model was effective, their online banking services well ahead of its time.
Challenged by the tech bust they responded swiftly to hire TMC to sublease some of their 150,000rsf campus in Hillsboro, Oregon. We effectively found a growing startup to take a full floor from Corillian on a sublease. We negotiated an “as is” transaction so Corillian had no out of pocket tenant improvement costs.
But Corillian was beset by contract rents that were higher than the current market rates. The CFO and RE Director were opportunistic when we talked about how we knew the landlord wanted to sell their holdings in Oregon. And discussions with the sublessee opened up the idea of expanding them to an additional floor. We saw the synergies and timing lining up to Corillian’s benefit. Having a diversified tenant base and staggered termination dates would help the landlord sell the property. Recasting Corillian’s lease would decrease their rents, and thereby improve their corporate income statements.
Through careful negotiation, and taking advantage of the timing in the market, Corillian lowered their RE costs by more than $2,000,000. Giving the sublessee to the landlord for a direct lease, with a staggered termination made their property more marketable. To entice the landlord to reduce scheduled rents, Corillian allowed for a 3-year extension. And most importantly Corillian’s income statements improved.
Shortly thereafter the landlord sold the property and Corillian and their shareholders benefited, as CheckFree of Atlanta purchased Corillian’s shares at a nice premium. By working together with TMC, Corillian’s senior management took a real estate action that directly impacted shareholders in a positive way. That’s good management.
With current economic conditions, analyzing ways like this to save corporate RE costs is critical. TMC does that. Call us for other examples of how to take advantage of current market conditions.
