Houston Industrial Portfolio

In October 2006, a partnership led by Nelson Duffie Interests acquired 512,000 SF of single- and multi-tenant space consisting of 21 buildings grouped in seven locations, primarily Northwest Houston. These properties were acquired from an assest manager handling them for the Bankruptcy Court of California. Because of the previous owner, the properties were in poor shape: occupancy was extremely low at 82%, tenant moral was subpar, common areas had been neglected, the rents were low and the net income for the portfolio was below market.

Our team immediately began formulating the property turn-around plan. After we thoroughly surveyed the entire portfolio, we prioritized the renovations required. Initial exterior improvements included painting, concrete driveway repair, overhead door replacements and cleaning up and painting all vacant suites. With these repairs, plus our hands-on approach to management, maintenance and leasing, we raised the occupancy level to 95%. We also renewed more than 95% of the existing tenants to higher rents.

More importantly than just increasing the occupancy and lease renewals, we increased the net income for the portfolio to 35% higher than when it was acquired. That’s the type of ‘Intellectual Capital’ that Nelson Duffie can bring -- ‘Intellectual Capital’ that gets results.

With our turn-around mission complete, these properties were sold in June 2008, just 21 months after acquisition. The sale to a New York based investment company earned the partners a return on investment that exceeded proforma substantially. Nelson Duffie Interests was retained to provide asset management, property management and leasing for these assets. 
 
Timmons Square and Timmons Place

In November 2004, a partnership led by Nelson Duffie Interests purchased the Timmons Square and Timmons Place projects totaling approximately 80,000 SF. The properties, located in the Greenway Plaza / River Oaks area, had quite a bit of deferred maintenance and had not had a significant face lift in years causing occupancy to drop to 82%.

After closing, we relocated our corporate offices on site and embarked on an aggressive capital improvement program to enhance the look and image of the properties. The plan, while seemingly simple in concept, quickly restored the confidence of the current tenants and attracted a new base of tenants who wanted to be in a well located and recently renovated project with on-site, hands-on owners. The improvements included changing the color orientation of the buildings, landscaping, repairing/replacing the roof and HVAC, resurfacing the parking lot and most importantly upgrading the signage program. These simple upgrades, along with the implementation of our comprehensive, proactive marketing campaign, resulted in raising occupancy to more than 97%.

The success of our marketing plan was based on its focus in achieving three crucial goals. First, Nelson Duffie needed to renovate and lease the vacant suites. Second, we analyzed the existing tenant base and aggressively renewed the good credit worthy tenants. Third, we replaced the non credit worthy tenants with tenants that could and would pay market rents.

When our marketing and improvement plan was complete in April 2007, the portfolio was sold to an investment group and the Nelson Duffie led partnership received a well deserved return on their investment.
 

Fairmont Parkway Business Park

Fairmont Parkway Business Park is a 50-acre site in the heart of Houston’s Port area and near the expanding Bayport Terminal. Nelson Duffie Interests worked carefully on this acquisition for more than two years to thoroughly understand all the issues impacting this site and accommodate the seller’s tax issues. Once all the necessary due diligence was performed, a partnership led by Nelson Duffie Interests acquired the property in April 2007.  

As part of the Nelson Duffie property improvement plan, extensive work was done to reposition it by re-platting. We addressed drainage and traffic issues and coordinated some utility work. All possible opportunities were explored for this property from the sale of the site to one or multiple users or investors and even development of the site by Nelson Duffie to create multi- or single-tenant buildings for sale or lease. Aggressive work with our engineers and contractors resulted in this site being well positioned for continued expansion of the Bayport North business community and a unique site that had few comparables. 

The Fairmont Parkway Business Park property was sold in June 2008, after a 14-month hold to one user who acquired the entire site. Nelson Duffie’s investment partnership enjoyed a solid return on their investment. 
 

Brookhollow Business Park 

Brookhollow Business Park was an acquisition of five sites totaling 25 acres in Northwest Houston. These sites had been controlled by the same family ownership since the 1970s and were not in a position to be sold.  

In September 2006, after several years on the market, Nelson Duffie Interests and partners acquired the business park. We actively addressed and solved the drainage, mitigation and utility issues related to the changing environment after Tropical storm Allison. This meant working extensively with the County, Municipal Utility Districts, Engineers and the local brokerage community.  

The end result of this property transformation was three sales transactions to three different entities for development, all in one year. Four acres were sold in January 2008, two four-acre tracts were sold in June 2008 and the remaining nine acres were sold in December 2008. 
 

Hillcroft Shopping Center 

Hillcroft Shopping Center was a small but successful opportunity located on the West side of Houston. Nelson Duffie and investment partners acquired the center in June 2005. The retail property had a poor tenant mix with instability, was under leased from an income standpoint and had some environmental issues.  

The challenge to Nelson Duffie Interests was to reposition this near one-acre site with a retail center, gas station and billboard to provide income opportunities. We painted the center, improved signage, repaired the parking lot and did an extensive property cleanup. We also invested a good deal of time attracting a better tenant mix into the shopping center for enhanced profitability. 

Once we completed our work to enhance both the property and the tenant mix, we saw an increase in net income. The property was then sold to an investor in June 2007 for a healthy return on our investment.