Orkin Real Estate - Case Studies

Speech by Bob Orkin Principal of Robert Orkin Interests, Ltd.

The following is an account of my involvement in Century Development Corporation's attempt to acquire the Techman Land in Phase IV of Greenway Plaza. This land acquisition was conducted in conjunction with Mobil Oil's option to purchase land in Greenway Plaza, Phases III and IV, in 1980.
Bob Orkin Speech (PDF format)

Five Case Studies Summary: Work Performed by Robert Orkin Interests, Inc.

1. CENTURY/USB, LTD. OWNER’S REPRESENTATIVE TO UNION CARBIDE PENSION TRUST-restructured $10 million leasehold mortgage and $7 million in preferred equity, and recast the joint venture agreement with Union Carbide Pension Trust. In this capacity, Bob Orkin dealt directly with Union Carbide’s advisor, Baring Realty Advisors, Union Carbide management, and accountants and attorneys for all the partners. In his role as an Owner’s Representative, he acted as an important control point in communicating with all of the necessary parties—joint venture partners, lender, property manager and marketing agent, pension fund advisor, attorneys, and accountants. The purpose of the restructuring was to prevent a foreclosure and to delay for ten years income taxes of approximately $ 1 million that would have been due. The partners were advised to invest the “tax deferred” money at 7% which under the “Rule of 72” doubled their money after ten years. This enabled the partners to pay the income taxes at the end of year 10 (instead of paying in year 1) and have an amount remaining equal to what was paid as taxes.

2. TENANT REPRESENTATIVE FOR HOUSTON WOMEN’S OB-GYN ASSOCIATES-acted as broker in negotiating a new lease for this tenant in One Fannin Place, next to HCA/Women’s Hospital. In connection with this task, Mr. Orkin looked at all of the major office buildings in the Texas Medical Center area, and then prepared a matrix analysis comparing all of the potential buildings as to financial costs (e.g., rental rates, build-out allowance, etc.) and as to non-financial items (e.g., lobbies, elevators, parking, etc.). Additionally, he coordinated the space planning efforts among the landlord, tenant, and space planner. After the drawings for the new space were priced, he reviewed three different contractors’ prices and offered suggestions on how to reduce the construction time and bring down the costs. He also negotiated an early termination agreement at 7580 Fannin before the tenant moved into her new location, One Fannin Place.

3. CONSULTANT TO GOLF COURSE/MASTER PLANNED COMMUNITY DEVELOPER- after acquisition by the owner/development group of 1,450 acres in Austin for development of River Place, a master-planned residential community, and 250 acres in Houston for operation of a 27-hole golf course, Jersey Meadow, Bob was asked to review much of the financial analysis and documentation involved in this $28.5 million transaction. This task included reviewing and restructuring the limited partnerships, loan agreements, etc., and offering suggestions on ways to “institutionalize” the financial reporting procedures and create an effective project management system. The owner was a partnership of a golf course company and a municipal pension fund. In the first year of operations in Austin, homebuilders purchased over 100 lots and built a total of $20 million dollar worth of homes. The Houston golf course has added a miniature golf course whose performance exceeds original cash flow projections.

4. BROKERED 30,000 SQUARE FOOT SUBLEASE AGREEMENT FROM BRITISH PETROLEUM FOR TEJAS POWER CORPORATION-prior to acquisition by Pacific Corp., Tejas Power Corporation was an American Stock Exchange company with a market value of approximately $350 Million. They retained Bob Orkin, President of Robert Orkin Interests, Inc., to consult regarding whether to buy their former headquarters building, extend their lease in previous space or seek new facilities. His work included evaluating all of the economics of the 60,000 square foot building they occupied at that time. Had they elected to purchase the building, Tejas would have formed a partnership with Bob Orkin and he would have managed and leased the building. Ultimately, he showed Tejas the benefits of moving from a Class B building to a Class A building for almost no additional cost in 1993. He generated all of the net present value calculations for owning versus leasing, and for comparing leasing at one building versus leasing at another. This information was used for presentation to Tejas Board of Directors. He negotiated a complex 30,000 square foot Sublease Agreement from British Petroleum with ratification of the arrangement by BP building owner Barker-Patrinely Crimson Corporation.

5. ACQUISITION OF OFFICE BUILDING FOR WILLIAMS BAILEY LAW FIRM-retained by the law firm to help decide whether they should build a new facility, continue as a tenant at the 8441 Gulf Freeway building, or buy an existing building. After Orkin digested the data and analyzed the pros and cons of each, he recommended that the law firm seek to purchase the building where they were a tenant, 8441 Gulf Freeway. Orkin negotiated on behalf of the principals of the law firm with the seller, a financial institution from the state of Washington. He was able to save the buyer $25 square foot on the purchase price of the building. After negotiating the earnest money contract, Orkin supervised all of the building inspections and environmental testing, secured third party financing, negotiated the property management/marketing contract with a third party, closed the deal, and became the asset manager. A year later Robert Orkin Interests Inc. (ROI) took over the property management and leasing services for the property. In less than a year, ROI increased the space leased from 50% to 95%. Today, the building remains 95%+ leased.

6. DEVELOPMENT OF NBC BANK PLAZA-acted as Project Manager for the development of the 30-story, $85 Million NBC Bank Plaza (now 112 E. Pecan), the tallest office building in downtown San Antonio. Worked with Cambridge Seven Associates (design architect) and Lloyd Jones Fillpot (working drawings architect) and H.B. Zachary-W.S. Bellows JV (general contractor) on the design and construction of the project. Secured construction financing from Citicorp and an $85 million permanent loan take-out commitment from the Teacher Retirement System of Texas Pension Fund. Negotiated major tenant leases with NBC Bank (175,000 SF), Cox and Smith Law Firm (70,000 SF), and Peat Marwick accounting firm (30,000 SF). Completed the building on-time and in-budget even though during construction the lead tenant, NBC Bank became insolvent, and the landlord, Century Corp., also became insolvent.