guardian life/

The Clients
Guardian Life Insurance Company, based in New York.
Prelco, Inc., a Vermont family company that owns several investment properties.

The Project
When Grand Union went bankrupt and closed its 31,000-square-foot grocery store in Bennington, VT in 2004, Guardian Life—mortgage holder of the property—found itself owner of a large empty building.

The Challenges
• Without a local caretaker, the property soon fell into disrepair with graffiti, broken windows, an overgrown parking lot with fallen lights and a leaky badly deteriorated roof that caused extensive water damage throughout the building.
• Since the property was a non-performing asset, Guardian Life was eager to sell and remove the financial drain from its accounts.
• It would be nearly impossible to sell the building in its current state without a huge loss and the costs of the major repairs needed would be a large and risky investment without a buyer lined up. 

The Solutions
• Guardian Life engaged White + Burke as the property’s asset manager to develop a strategy to stabilize the property and maximize its value.
• Since interior renovation requirements for the building would be specific to the future user, we recommended against large-scale renovations to the inside and proposed a strategy of cleanup and exterior work to secure the property to prevent further deterioration and vandalism.
• We found a roofer, bid the job, replaced the roof, had the windows boarded up, coordinated clean-up of the inside and outside of the building, and hired a local caretaker who could check the property regularly. We also contacted the Bennington Police to request more frequent drive-bys to deter intentional damage.
• After the property was cleaned up, we put the building on the market and represented Guardian Life as a seller’s agent, actively pursuing potential buyers and tenants. We ultimately brokered a 10-year lease with Tractor Supply Company, which agreed to invest $1 million in building renovations in exchange for a more favorable lease deal.
• While Guardian Life had originally preferred to sell the property, the combination of the long-term lease and sizeable investment into the value of the property made it an asset that they could keep on their books without risk of further regulatory write-down.
• Nearly a year later, we were approached by Prelco, Inc., a client we had worked with previously. Prelco owned 1,800 acres of wild land in Richmond, VT and was seeking advice about how best to manage the land’s mounting tax bill while keeping it undeveloped.
•Several land conservation organizations were interested in purchasing the property. Some stakeholders in Prelco wanted to retain ownership of the land while the majority wanted to sell the property for the highest price. But there were significant tax implications of selling such a large asset.
• Prelco’s tax advisors recommended that they conduct a “1031 Exchange”, an IRS approved method to defer payment of capital gains taxes.
• White + Burke was engaged to find a suitable exchange property and structure the transaction.
• Knowing that Guardian Life had previously been interested in selling the building occupied by Tractor Supply Company, and that Prelco now needed a sound investment property, we introduced the two parties.
• We represented Prelco as the buyer’s agent and completed the 1031 Exchange in 2006. 

The Outcome
Guardian Life was able to turn a foreclosed property into a stable performing asset, while Tractor Supply Company is a tenant in the building at an affordable price with space customized for their business needs. Prelco retained ownership of its acreage while selling the development rights to the Vermont Land Trust, and deferring capital gains taxes by re-investing the sales proceeds into ownership of a profitable investment property that has a Tractor Supply as a long-term tenant.