McCarthy Cook

Successor Asset Management Program

McCarthy Cook & Co. has provided innovative real estate investment solutions to institutional investors for nearly 15 years. Since it’s founding in 1995, MCC has completed over $4.5 billion of investment transactions involving office, medical research and mixed-use assets in the Western United States. MCC’s focus on the acquisition and development of institutional-quality properties and ability to utilize management, leasing, entitlement, development and construction management skills to enhance value have enabled the firm to achieve outstanding investment returns.

In addition to traditional real estate investment management, MCC offers its real estate expertise to clients through its Successor Asset Management Program. These services are provided to clients that have encountered investment manager, organizational or other changes as well as potentially distressed, under performing, neglected and mismanaged real estate in their portfolios. MCC has demonstrated its ability to assume management responsibilities of takeover assets quickly and to propose effective solutions, thus minimizing disruptions to the asset.

MCC has acted as managing partner in joint ventures with institutional investors including: Blackstone, JP Morgan, Stockbridge (formerly Paine/Webber), BayNorth (formerly Charlesbank), RREEF, Morgan Stanley, Alliance Bernstein, Canyon Capital Realty Advisors, Edgemoor, and Northwood Investors.

McCarthy Cook’s Expertise

MCC has successfully acquired, leased, developed, managed and sold numerous assets in its role as lead manager and operating partner with institutional investors:

Acquisitions: MCC has closed over $1.5 billion of acquisitions since its founding.

Debt Restructuring: MCC and its partners have acquired debt positions in properties totaling approximately $300 million. Certain of these positions were subsequently converted to fee title in the real estate assets.

Asset/Property Management: MCC’s philosophy is to set clear objectives and establish a business plan for each management team and to empower those teams to execute the plan to the highest level of tenant satisfaction consistent with the financial goals. MCC’s principals remain personally involved and accessible to the managers, staff and tenants.

Leasing: MCC has a seasoned team of entrepreneurial leasing directors that report directly to the principals. MCC is highly responsive to tenants and brokers and utilizes proprietary market information to achieve the highest net economics on lease transactions under all types of market conditions. To date, MCC has completed 5.3 million square feet of leases valued at $1.09 billion.

Financing: Typically, MCC is responsible for arranging financing for its joint venture partnerships. MCC has structured and closed acquisition loans, term loans and construction financing with a variety of major institutional lenders including, Helaba Bank, HypoBank, Lehman Brothers, Manufacturers Bank, MetLife, Principal Life Insurance Co., AIG (SA), Wells Fargo, Bear Sterns, Merrill Lynch, JP Morgan and Credit Suisse First Boston. To date, MCC has completed approximately $1.57 billion of financing.

Entitlements: MCC’s executive team leads entitlement efforts and manages the important governmental and consultant relationships that often determine success or failure. MCC has successfully obtained 3.3 million square feet of entitlements in San Diego, Orange County, San Francisco, Sacramento and Phoenix.

Development: MCC has successfully developed approximately 500,000 square feet of land infrastructure, office, medical office, medical research, retail, health club and parking facilities.

McCarthy Cook’s Asset Management Strategy

The components of MCC’s asset management strategy include the following in-depth evaluations and planning:

Marginal Cost/Marginal Return: Determines an asset’s current market value and its future economic potential using Argus cash flow analyses and pther proprietary evaluation matrix. The evaluation also quantifies the benefits to be derived from an economic rehabilitation or enhancement of the asset.

Marketing and Leasing Plan: Provides the experience, creativity, resources and tenacity to plan, modify, coordinate, and implement an effective marketing/leasing program that will maximize the value of each asset. This program is led by MCC’s senior executives and is based on the firm’s ability to gather critical market data in order to establish the most aggressive, achievable marketing and leasing parameters.

Market Evaluation: Analyzes effective market rents and other appropriate data for each property in order to determine the actual cash flow to be derived from the asset.

Capital Structure Evaluation: Determines the most feasible strategy to produce a positive economic return to the client.

Location Evaluation: Provides the necessary background information for developing an operating plan, fine-tuning a marketing strategy, setting competitive rental rates, and gaining knowledge of government restrictions such as zoning ordinances, pending changes for land use, and tax burdens.

Physical Evaluation: Reveals structural or mechanical defects of the property, the extent and cost of any deferred maintenance, the project’s capacity to support anticipated future uses of its existing tenant base, and the economic benefits to be derived from a full or partial physical rehabilitation.

Relationship Management: Develops direct relationships with tenants, local government agencies, suppliers and service providers as part of MCC’s differentiated approach to asset management.

Management Evaluation: Ensures that the property management staff is motivated to establish and maintain the highest level of tenant service, and economic efficiency in the short- and long-term operation of the property.

Budget Evaluation: Evaluates all pre-existing budgets to determine their cost-effectiveness and contribution to the property’s overall performance including rigorous comparison of historical budgets with new MCC zero-based budget to identify opportunities for savings or renegotiations.

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