United Parcel Service needed to expand its large main Utah terminal in the Salt Lake City area. The cost to relocate this facility would have run into the tens of millions of dollars. UPS was highly motivated to expand its existing facility by acquiring several neighboring properties.

Unfortunately, expanding an existing UPS facility is difficult because the adjacent and nearby landowners usually try to extract huge profits for selling their land and buildings to such a successful company.

We were hired by UPS to help to acquire two (2) properties. The targets included an existing office/warehouse building of 24,400 square feet and an unimproved 1.9 acre site.

The single tenant office/warehouse building was not for sale. It was the "lynchpin property" and needed to be acquired first, since it was contiguous to the existing UPS terminal. It was leased by a small company that was having financial problems that wanted to sublease the entire building at a profit.

We approached the owner about approving a sublease with the added provision of an Option to Purchase the building at a defined price at a future date. The owner refused to consider selling the building under any circumstances. UPS could not just sublease the building because it wanted to have the right to demolish the building completely. After several months, the existing tenant defaulted on its lease and the building was vacated. We then made the owner an offer for UPS to purchase the building and were again rebuffed.

Months later we approached the new managing partner and again made an unsolicited offer to purchase the property. Instead, the new managing partner wanted UPS to lease the building at a rate that was 33% above market and would not consider UPS' offer to purchase. We even had the building appraised at UPS' expense and shared the appraisal with the owner, all to no avail.

Next, we took a calculated risk and decided just to wait it out. We did not think that anyone else would want to pay a 33% premium to lease an office/warehouse building that was 75% office space. Most office/warehouse users want 75% or greater for warehouse usage. Furthermore, our research showed that the owner still had a mortgage on the property. That meant that she had to write a check every month that the building sat vacant without any income. We guessed that she would tire of the situation at some point.

Eventually, the owner listed the building for sale at a price that was considerably above our opinion of value. Again, we did not believe that anyone would pay such a premium to purchase the building. After nearly a year of unsuccessfully marketing the property for sale and for lease, the owner's agent called us and showed some willingness to drop the price. Consequently, we made a new purchase offer and several rounds of counteroffers. UPS finally acquired the property from the reluctant owner at an 18% discount.