The subject property was a 4,510 square foot single tenant retail store built in 2010 with a strong national credit tenant.
The subject property was purchased for a very high price due to a long-term lease with a high-quality tenant. The high-rent lease was originally entered into by the tenant because it was a preconditional requirement for the original developer to build out the building to the tenant’s specifications. The county auditor valued the subject property based on the transfer price of the real estate, which included the long-term lease. This excessive valuation led to the tenant paying an unfair amount of property taxes.
Peak 5 Advisors was able to prove that the subject property benefited from a lease that included rent and rent escalation bumps that were well above those of regional market lease comps. After proving to the county that the landlord would not be able to renew the lease at terms anywhere near the current level, the county dropped the value significantly to reflect current retail rental market conditions in the region. As a result, the client saved approximately $50,000 annually, which was a decrease of nearly 65% compared to the previously in-place taxes.
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