Engagement Results

Client:

Bell Atlantic Corporation

Industry:

REIT

Size:

$1.0 bb

Expertise:

Interim Management

Assignment:

A Fortune 50 company, Bell Atlantic Corporation, had invested significant capital into a wholly-owned investment real estate subsidiary, Bell Atlantic Properties. While the subsidiary had grown significantly in terms of assets under management, reaching approximately $1.0 billion in aggregate value, the enterprise was achieving below-market occupancy and cash flow levels. In addition, the parent company was increasingly focused on core telecommunications holdings rather than diversified lines of business such as investment real estate. The challenge was to improve operational performance in a manner that would maximize shareholder value for the parent company during a challenging real estate climate.

Actions:

A current principal of MainStream was hired as Chief Executive Officer and immediately assumed responsibility for management of the Company. A short-term tactical plan was created in context of a longer-term plan to create shareholder value through a sale of the enterprise to either a financial or strategic buyer. A review of the Company's leasing, property management, real estate services, and financing strategies was undertaken and a plan developed for approval of the Board of Directors. Implementation of the plan included hiring of a new management team; divestiture of certain assets of the Company; creation of an industry standard customer satisfaction program; investment of capital to upgrade the physical assets; establishment of a "best practices" policy at the development and asset management level; and implementation of a cost reduction program in all facets of the enterprise. Longer term, a program was developed to divest the business from the publicly traded parent company.

Results:

Revenue and cash flow of the enterprise improved by 25% over a three-year period after implementation of the tactical operations plan. Asset divestitures totaling $400 million were undertaken at attractive prices to shareholders. The Company was sold through a management led buyout to a New York based private equity firm in the largest MBO of a commercial real estate company during that time. The transaction was closed at valuation levels consistent with the goals of the publicly traded company.