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Parking Fund Formation                                                              
 


Madison and Wells Garage

Parking Fund Formation
Objective

The objective was to acquire parking assets and to utilize a REIT structure that allowed selected REIT’s which were grandfathered with favorable “paired share” or “stapled stock”  tax provisions to lease real estate assets to a “paired” operating company and receive REIT tax treatment on the operating company income. 
  • The REIT had acquired a parking operating company, and sought to compliment it by acquiring parking assets.
  • At the time there was no staff to support the acquisition effort and no pipeline of acquisition opportunities.

Execution
  • An acquisition system including new hires, acquisition criteria, an underwriting process, due diligence procedures and a parking operations interface was created and implemented within three months. 
  • The first acquisition, a parking garage at Madison and Wells Streets in downtown Chicago, was put under contract at $42 million on a pre-sale basis. 
  • It was a high profile garage that immediately gave the fund nationwide exposure and soon after led to the development of a $300 million pipeline of additional opportunities.

Outcome
  • Within eight months, eight parking properties with a total value in excess of $80 million were acquired. 
  • The tax treatment was later rescinded by Congress and acquisitions were subsequently halted. 
  • The Madison and Wells garage eventually sold for $56 million.