Last summer, KI Florida Fund acquired Laurel Run Professional Center, a 53K sq. ft. property at 2100 SE 17th Street in Ocala, Florida. The property is an 80’s vintage garden style suburban office park located at the entrance of a nice gated residential subdivision. It is comprised of 9 one- and two-story buildings on several acres with mature trees and ample parking.
After previously offering to purchase the note for this distressed suburban office park, Kennedy Investments attended its court ordered foreclosure sale, tendering a winning bid of $1.6M (~$31 per sq. ft.) for the park. Following court approval, a certificate of title was awarded to Laurel Run Ocala, LLC (a wholly owned subsidiary of KI Florida Fund I) on June 5th. The discounted acquisition of Laurel Run is an excellent representation of Kennedy Investments’ strengths in investing on behalf of its Fund investors. The property was distressed due to its physical, financial and occupancy, we had prior knowledge and were familiar with the property and local market, and we were able to act very quickly. Kennedy Investments won the auction because it was able to tender a cash bid within days of learning the property was headed to auction.
At purchase, Laurel Run Professional Center was only ~20% occupied and in need of approximately $1.75M of additional investment for major capital improvements, deferred maintenance and leasing costs, for an estimated total investment of $3.35M (~$64 per sq. ft.). Because the property was purchased so quickly after the lender had previously refused out offer, it took a little longer than a traditional acquisition to plan the renovation, hire contractors, obtain permits, and begin work (approximately 6 months).
But today, the park is well on its way to recovery. Major work has begun on the property, including new roofs, a full repaint, re-construction of fire damage in one of the buildings, new trees and landscaping, and numerous other capital improvements. New leases are being signed and a top local leasing agent, Randy Buss of NAI Heritage in Ocala, has been retained to market the property. We look forward to sharing the progress of the renovation of this value-added acquisition in the coming year.
