Turning Around a Troubled Multi-Tenant Retail Property: From Challenges to Financial Success

Background

We were referred to an out-of-state client due to our expertise in resolving complex asset management issues. The client had previously sold an office building with ground-floor retail approximately ten years earlier but retained the mortgage. When the buyer defaulted—failing to pay the mortgage, property taxes, and insurance, as well as discontinuing essential services such as garbage collection, landscaping, and janitorial maintenance—the property fell into disarray.

The Challenge

At the time of our involvement, the client was working with attorneys to foreclose on the property with the goal of repossession and eventual sale. Compounding the challenges were tenants who had been paying rent to the defaulted buyer under unenforceable leases. Many of these tenants were uncertain about their future but wanted to remain in the building to continue their businesses.

Our Work

Our role was to take over property management, stabilize the asset, and make it marketable. We established clear financial records and identified two potential buyer profiles: Investors seeking consistent cash flow and developers interested in the area’s favorable zoning, which was driving a development boom.

The Results

Ultimately, the property was sold to an investor. Prior to closing, we executed triple-net (NNN) leases with all tenants, ensuring a reliable income stream for the new owner. These efforts allowed the buyer to secure favorable financing, and the sale concluded successfully.

Through proactive management, strategic planning, and tenant stabilization, we helped our client resolve a complex foreclosure scenario, facilitating a seamless sale and delivering strong outcomes for all stakeholders involved.