Real Estate Funding Strategy: Can You Change Your Real Estate?

Your asset class determines the demand and the likelihood of your capital raising success rate. Before you start your project, obviously you need to spend enormous time researching into your locations and what types of properties are in demand.

If you have already started the project, and finding difficulties in raising the development capital, do not give up, rather, come up with alternative plans that maybe transforming your properties into different purpose buildings.

Here are some examples we have assisted other real estate companies in transforming their business model:

Case Study 1:

A large Government Printing building was put up for sale by the Government as modern technologies have replaced the requirement for massive, printing houses. It was empty for more than 3 years, as it was a massive building but could not be used as an industrial warehouse due to its design nor as a retail shopping center due to lack of local demand.

Solution: We did some research and concluded the building’s structure is perfect as a security related building as it has reinforced concrete floor, able to sustain massive weight (3 to 4 times than commercial buildings).

In the end, the building was converted into an Internet Data Center and Telecommunication Facility, new generators were brought in as Back-Up fuel centers and Network Operating Centers were installed for Telecommunications companies.

Case Study 2:

A building was sold by a local Railway Authority as part of its asset restructure program. The property agent could not find buyers as they were too close to railway, therefore, unsuitable for commercial, residential or industrial purposes.

Solution: After the research, it was discovered the main advantage was height of the warehouse and proximity to electricity (next to the railway grid), the building was converted into an R&D center, mainly relating to semiconductors industry where additional power was sourced from the nearby sub-station servicing the railway grid.

Case Study 3:

One of the city’s fire departments built a new fire station and was looking to sell its old fire station. Initially, it was intended to convert into a commercial building, but the site was too small.

The building was eventually transformed into a historic 5-level residential apartment with impressive water views, some of the units were bought by fire services employees, and the lower part was converted into a local museum.

Case Study 4:

An old industrial warehouse was put on sale for many years, it was built as refrigerator factory, but as the factory was relocated to China, it was no longer needed.

Solution:

This is a classical example faced by many factories in the Western world, what do you do with your old factories? In this instance, because of its unique design, and with humidity and temperature control systems in place, it was eventually converted into a high-security gallery to store expensive art collections, paintings, as the control systems in place provided ensure these paintings are not damaged by moisture or changes in temperature.

There is another great example which I always tell our clients, it was an ex-US missile silo built during the Cold War for Inter-continental ballistic missiles (ICBMs) in the middle of somewhere in Nevada.

The building is a highly secure building, but has no use ‘” it was also bought out by an IT services company and established a large Internet Server Center underground, with solar energy panels on surface for energy, its secure design has attracted large corporations to store their mission-critical equipment there.

Therefore, you can always find alternative uses for your buildings if you are creative, and find a second-life for your properties. These days, for instance, a lot of industrial warehouses have been abandoned in US due to the recession, but clever real estate agents have sold some of them to biotechnology companies and convert them into R&D centers or manufacturing plants instead of warehouses.