Advisory and Resolution – Multi-Gen Hollywood Business and Real Estate Portfolio

Advisory and Resolution – Multi-Gen Hollywood Business and Real Estate Portfolio

Challenge – Lineage Asset Advisors was hired through an estate planning attorney to advise a multi-generational family company that had owned and operated their business for over 90 years at their headquarters in East Hollywood.

The first generation had purpose-built the real estate for their business between 1920 and 1950 with 30 foot bow-truss ceilings and a unique combination of warehouse and office. The real estate portfolio was entirely occupied by the business and owned in two separate entities, one was a legacy S-corp and the other an LLC. The company was operated by one faction of the multi-generational family and the other faction was partnered in both the company and the real estate which was a result of how the estate planning was set up by past generations. The COVID pandemic placed a strain on the business revenue and the family faction that did not operate the business agreed to sell their share of the company to the operating faction. The operating faction eventually moved out of the facilities because of operating inefficiencies thus leaving the buildings’ vacant and evoking a disagreement about what strategies the two partnering factions should deploy with these highly symbolic legacy properties.

Solution – Lineage was hired prior to the pandemic to put together a comprehensive Portfolio Assessment for the family real estate owners and to discuss current and future options for both the business and this highly unique real estate portfolio. The Portfolio Assessment included analysis of both “as is” leasing, value-add, and redevelopment strategies. The disagreements on what to do with the real estate reached a boiling point during the pandemic and Lineage was brought in to provide additional real estate advisory services and mediate the internal conflict on real estate strategy. Lineage assisted the family real estate owners in understanding all stakeholders’ perspectives and vision with the real estate and worked with them in managing through internal dynamics issues. Lineage performed due diligence on environmental, title, deferred maintenance, and existing leases that had been signed on the parking lot they owned next door. Ultimately, Lineage’s up-front work, understanding of the family dynamics, and education amongst the family stakeholders lead to an aligned decision to dispose of the real estate and part ways without enduring further conflict and legal disputes. Lineage worked with the family to prepare the due diligence for the disposition process and assisted in terminating legacy leases that were a hindrance to the future potential of the project prior to going to market.

Outcome – Lineage ran a Request for Proposal to select the appropriate brokerage team to market the portfolio and implement the disposition of these unique assets. The RFP included interviews with the brokers and analysis of their proposals and their underwriting assumptions to verify the validity of their values. Lineage assisted owners in selecting the appropriate brokers for the assignment and managed the transaction process as a liaison between the brokers, the two factions of real estate owners, and the multiple attorneys involved. Lineage established a clear process for managing the due diligence, the legal, and the communication. During the transaction there were a number of hurdles in negotiation with the buyers that Lineage assisted in resolving including a claim that potentially clouded title from a neighboring property owner and discrepancies on building sizes due to old records. The result of the project was a successful close of escrow at a premium purchase price and overcoming a significant amount of internal conflict in the process.