Conectiv Energy, REAL ESTATE PORTFOLIO ANALYSIS AND PROPERTY REPOSITIONING

Formed from the merger of Delmarva Power and Atlantic Energy, Conectiv needed to position itself in the newly competitive energy business. Conectiv wished to make its real estate operation more efficient to take advantage of the economies of scale of the combined organizations. Alan Razak and his firm were retained to advise Conectiv on how to better utilize the newly joined real estate portfolio, align real estate with corporate strategy and provide the flexibility to respond to market changes. The strategic real estate plan for streamlining this portfolio focused on four major tasks:

  1. Formulating plans for real estate that no longer served the organization’s needs, including relocation and consolidation of existing uses.
  2. Structuring flexibility into Conectiv’s occupancies, allowing quicker response to markets changes.
  3. Recommending changes in real estate management to yield human resource and financial savings.
  4. Utilizing financial markets to limit capital invested in real estate and real estate ownership.

We inventoried and evaluated approximately 50 sale or repositioning candidate properties, evaluating the properties on criteria established jointly with Conectiv, developed five different consolidation approaches, and advised Conectiv on the best approach for each property, noting when it would be possible to utilize Conectiv’s in-house real estate staff and when it would be advisable to involve third parties. The analysis included financial modeling, market assess­ments, development scenario planning, and evaluations of the effects of the major dispositions on taxes, regulatory and financial reporting. The approach for each site was tailored to its physical, market, and financial characteristics. The analysis led to a disposition plan which when implemented was designed to remove from Conectiv’s books real estate assets of over $50 million, providing Conectiv with additional cash , and reducing occupancy expenses by more than $8 million annually.

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