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Eastdil Realty, Inc. (Eastdil Realty), to evaluate the Bank's
real estate holdings and to make recommendations regarding the
possible sale of properties held by the Bank. Ross Consulting
prepared a report dated February 6, 1984, entitled “Working
Outline--Real Estate Sale Considerations” (the Ross report),
which was reviewed by the Committee at its meeting of
February 17, 1984. The Ross report's recommendations regarding
the Atrium were, in part, as follows:
Our recommendations flow from the assumption that
UBC will construct the Atrium. Examination of benefits
therefrom (either higher rents or higher purchase
price) suggest that UBC should build only if legally or
“morally” bound to.
Ross presumes that the proposed Atrium will be
more valuable, or will add more value to adjacent
properties, once completed. Our analysis has proceeded
from the standpoint of weighing cost of waiting for
completion versus benefit to be gained thereby.
Therefore, wait to sell Atrium until constructed, if
economically possible. Although Atrium adds to Bank
image, it does not yield 1:1 dollars to third party
investor return. Guarantees for construction will
complicate the deal.
To “cleanly” justify Atrium construction, cash
flow must be increased by 2.5 million a year
($25 million cost capitalized by 10%). This amount is
a 100% increase over current annual UBC II rental
income. Whether current leases in UBC II can be
renegotiated and UBC will pay higher rents in III on a
leaseback due to Atrium's presence remains to be seen.
Higher rents are more likely to be negotiated during a
possibly healthier downtown real estate market in 1986-
1988, especially with the new Atrium serving to
“refurbish” the UBD complex, as opposed to
renegotiation of rents in the current “tenant's
market,” pointing at architectural plans for the
Atrium.
Presume that maximum value of Atrium would be
realized by sale of UBC II and III together (to same
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