St. Petersburg, FL

Realized Deal : 490 First Avenue

Sponsored By Denholtz Properties

Risk Profile
Value-Add
Amount Invested
$100,000
Targeted IRR
19.7%
Actual IRR*
18.5%
Targeted Equity Multiple
2.3x
Actual Equity Multiple*
1.54x
Targeted Hold Period
5.0 years
Actual Hold Period
2.7 years

In February 2016, Denholtz Properties (“Denholtz”) launched an offering for a three-building, Class A office property located in St. Petersburg, Florida.

The property was acquired at a substantial discount to replacement cost as well as other existing, recently-traded, Class A buildings in the market at the time of purchase. In addition to the attractive basis, Denholtz’s business plan included adding value by converting the primarily single-tenant, office building into a vibrant and exciting multi-tenant destination. To make this possible, Denholtz had allocated nearly $8 million for renovation improvements targeting the lobby, corridors, and HVAC mechanical systems, and another $4.8 million for tenant improvements and leasing commissions.

Project Timeline

Good Start

June 2016

Denholtz’s original underwriting and projections revolved around the property’s previous owner and primary tenant, the Tampa Bay Times, downsizing and leasing back approximately 110,000 square feet of the office space after acquisition. A few months after closing, everything was proceeding as planned and Denholtz sent out the first distribution to investors. The Tampa Bay Times, which previously occupied the entire building, was in process of consolidating its space into the three floors they would now occupy. This transition was scheduled to be completed by August, at which time Denholtz could begin the full construction work.

Most Complicated Renovations Completed

June 2017

By mid-2017, Denholtz had completed the most complex projects including the installation of a new roof, renovation of the building’s HVAC system, full renovation of the main lobby, and upgrades to the three elevators. Exterior landscaping work was also well underway and the cafe and gym areas were nearly complete as well.

Successful Early Sale

December 2018

Although with some reluctance, Denholtz ultimately decided to proceed with an early sale of the property, citing substantial profit created to-date, and more importantly, the potential risk of a failure of the Tampa Bay Times as a viable entity, which could not be disregarded. Throughout the approximate two and a half year hold, Denholtz contributed over $10 million in total improvements, which garnered 1st place for the Tampa Bay Renovation of the Year in 2018.

Final Outcome

Highly successful execution of a complex renovation plan created the opportunity for Denholtz to successfully exit the investment approximately two and a half years earlier than planned, achieving strong returns for investors in-line with the original offering.

*Net of fees.

This report contains explanations of a series of events associated with Denholtz Properties’ 490 First Avenue offering that resulted in an approximate 54% (net of fees) absolute return on original equity to investors (including those from the CrowdStreet Marketplace). Certain aspects of the report such as dates of major events and the final outcome are easily verifiable while others, particularly underlying reasons behind the sponsor’s business plan execution, are not. 

The report partially relies upon the sponsor’s explanations, the information contained within sponsor-produced quarterly reports, and conference calls. This analysis is not an assertion of independently verified facts but, rather, is for informational purposes only, to convey CrowdStreet’s understanding of what transpired.

CrowdStreet makes no representation or warranty, express or implied, in relation to the fairness, accuracy, correctness, completeness, or reliability of the information contained in this report. CrowdStreet does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this report or for any decision based on it.

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