Challenge
Progressive Insurance Company (“Progressive”) was operating out of two facilities, one owned and one leased, in Austin, Texas. The combined space of these facilities was not large enough to support Progressive’s current operations or to support projected future growth. Allegro was engaged by Progressive to assess their current market presence in Austin and to devise a real estate strategy that would meet operational needs and accommodate future growth.
Solution
Allegro researched and identified several relocation alternatives in Austin to consolidate the two existing facilities. These alternatives were evaluated with selection criteria identified by the client. Progressive entered into a long-term lease which included an option to purchase the building at a fixed price, directly related to the cost of construction for the developer. During construction, Allegro prepared a business case which identified an opportunity to capture a significant amount of value by executing the option to purchase, as permitted within their recently executed lease agreement. As a result, Progressive purchased the building and completed the unfinished interior and exterior site improvements.
As the property neared completion and occupancy, Allegro began to pursue opportunities for Progressive to execute a sale-leaseback and capture the additional value identified in the business case. Allegro identified numerous qualified purchasers and created a competitive bidding process which maximized the profit to be realized by the sale of the property. Progressive completed a sale-leaseback of the building and generated a significant amount of cash while securing an upgraded, consolidated facility at the same cost obligation as the initial long term lease.
Once Progressive selected a desired relocation alternative, Allegro actively marketed Progressive’s existing owned facility. Despite a relatively soft office market in Austin, Allegro identified potential purchasers and created a competitive bidding process which ultimately achieved an aggressive sales price for Progressive.
Progressive, through Allegro’s guidance, maximized efficiency and provided opportunities for future growth by consolidating their operations into a larger facility. Progressive also garnered a significant amount of cash, without further expense obligation, through completing a sale-leaseback.
