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CASE STUDY
Traverse Bay Woolen Company
Owners of Traverse Bay Woolen Company, on Michigan's Upper Peninsula, after a successful retirement sale, were left with a real estate parcel that included a vacant 40,000 square foot building and two smaller tenant spaces on a half-acre lot. They wanted to sell the real estate but not at a distressed price. Despite some feelers from prospective buyers, they had nothing definite.
The smaller tenants needed an anchor on the site to draw traffic. The owners needed time to assess the value of the property and market it in an orderly way. They were faced with the prospect of forsaking any return on their investment during the remaining months of the active resort season. If a tenant failed during the interim while they waited for a buyer, the value of the property could diminish.
Several brainstorming sessions with Natelsons, Inc. produced a plan. Natelsons would lease the building at least for the upcoming resort season, stocking it with merchandise similar to what customers were used to buying at that location. Natelsons would provide all inventory, buying, advertising and credit backing, with a key former employee of the property owners on salary to oversee the operation.
The lease provided an option for the owners to terminate with thirty days notice if they had a buyer or long-term lessee and for Natelsons to extend the term through year-end if it was in the interest of both parties to do so.
Besides rent for the space, Natelsons obligated themselves to pay all utility, snow removal and services expenses during the term of the lease, including rental of a prominent highway billboard on the property. Together, the three tenants occupied all leaseable space. The property presented itself as an attractive investment.
The plan went forward; and Natelsons Traverse Bay Outlet store stayed open through December.
By the end of the year, the owners had a favorable deal for the sale of the building. Natelsons moved out and left the premises broom clean. The deal closed early enough in the new year for the new owner/retailer to open in time for the summer resort season.
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