LKQ Leases 36,000 square feet at 3800 Prince

LKQ is the largest nationwide provider of aftermarket collision replacement products with over $3.4 billion in sales in 2010. REA relocated LKQ to a new 36,000 square foot location in October 2011. Upon entering into negotiations it was discovered the desired location was overleveraged and the owner was not in a position to offer favorable terms to LKQ. To overcome this challenge, REA assembled an investment group to prompt the involved parties to take action to move this deal forward.

Challenge

LKQ is the largest nationwide provider of aftermarket collision replacement products with over $3.4 billion in sales in 2010. LKQ’s Albuquerque facility was functionally obsolete. Additionally, its location was in an area that was not convenient to the salvage yards it had acquired over the last few years. REA was retained by LKQ to represent them in securing a new location with ability to update the functionality of their space and be located closer to their collaborative businesses. After surveying the available options in the market, LKQ decided the location to best meet the companies’ needs was 3800 Prince. This property allowed for them to update their operations and be located within ½ mile of their salvage yard operation.

Solution

Upon entering into direct negotiations with the Landlord we quickly determined that the building owner was overleveraged and could not offer either market terms or any allowance for required improvements. Further investigation revealed the owner was in default of their loan. At the request of the LKQ, REA assembled an investment group with the intention of acquiring the debt on the building and eventually title to the building. The investment group priced their offer for the loan based upon the lease terms LKQ was willing to pay. This offer from the investment group prompted the lender to take foreclosure action and have a receiver appointed for the property. The investment group entered into negotiations with the court appointed receiver on both a lease and purchase option. A successful lease negotiation was concluded at market terms that met LKQ’s requirements for tenant improvements and lease rate.