In the early 90’s, Heller Financial asked Ashley Capital to act as a loan asset consultant on a real estate portfolio in which Heller’s borrower had just filed for bankruptcy. The portfolio consisted of 1.5 million SF in fifty air cargo warehouse facilities throughout the United States. In its consulting capacity, Ashley provided the following services:
- Monitored leasing and property operations;
- Reviewed budgets; and
- Identified and administered a capital improvement program.
As negotiations progressed to resolve the debtor’s financial problems, it became apparent to Heller that the best way for its borrower to emerge from bankruptcy was to have Ashley acquire the majority of the debtor’s properties. This process concluded with Ashley’s purchase of the portfolio and Heller staying on as lender.
Given significant deferred maintenance issues as a result of the bankruptcy, Ashley undertook a major renovation program spending over $2 million in its first year of ownership. The result of Ashley’s efforts was an increase in the portfolio occupancy from 74% to 96%.
In October 1991, Ashley sold the portfolio to a strategic investor. The debt was fully repaid and the repositioning of the portfolio was a success.