An independent Building Repurposing Highest & Best Use Study evaluating a 17-story, 184,960 SF office tower repositioning in Durham, North Carolina.
DURHAM, North Carolina — Wert-Berater, Inc., an independent feasibility study consulting firm serving lenders and government agencies since 1998, has completed a Building Repurposing Highest & Best Use Study in Durham, Durham County, North Carolina.
Wert-Berater served as independent feasibility consultant to the ownership and its advisors. Party names are withheld consistent with the confidential nature of underwriting and capital-advisory work; figures represent the project as evaluated at the study date.
Repositioning analysis of a vacant 17-story, 184,960-square-foot tower in Durham, North Carolina — a full highest and best use study built around ten redevelopment scenarios spanning market-rate apartments, condominium sell-out, medical and life-sciences conversion, mixed-use, upper-upscale hotel, senior living, demolition with land resale, and continuation as Class A office. Each scenario was modeled through discounted cash flow with IRR, MIRR, XIRR, DSCR, ROE, and residual land value calculations, then ranked on capitalized value, land residual, debt capacity, and risk.
The comparative grid put hard numbers against every path: market-rate apartments at $95,000,000 total project cost producing $121,000,000 of capitalized value and a 13.90 percent IRR; condominium sell-out at a 14.10 percent IRR; an upper-upscale hotel generating the highest revenue but carrying $110,000,000 of cost; demolition and land resale at $22,000,000; and Class A office conversion at a negative ten percent IRR — the decisive evidence that continuation in office use is not the highest and best use in today’s leasing market.
Each scenario was capitalized at approximately 65 percent loan-to-cost debt with the balance — 35 percent of total project cost — as sponsor equity, with hard costs, soft costs, sales and lease-up costs, and entrepreneurial profit expectations carried separately so that the residual land value under each program could be compared on a consistent basis.
The analytical problem was discipline against wishful thinking: a highly visible tower invites every reuse idea, and the study’s job was to eliminate most of them. Heavy commercial allocations and all-large-unit residential mixes drove land residuals to breakeven or below; the hotel scenario carried the largest absolute cost and flag-related lease-up expense; and the office-continuation case, far from supporting any land value, produced a negative residual in the prevailing leasing market. The concluded apartment-anchored program won on the combination of land residual, financeability, and risk diversification rather than on any single headline figure.
Wert-Berater, Inc. is an independent feasibility study consulting firm founded in 1998, providing lender- and agency-facing feasibility studies, highest-and-best-use analyses, and capital-advisory support. The firm has completed 4,000+ engagements across all 50 states and internationally, evaluating over $41.2 billion in project value for SBA, USDA, EB-5, conventional, and institutional financing decisions. In every engagement, fiduciary duty runs to the lender and the applicable agency.
Media contact: Donald Safranek, MSc, President, Wert-Berater, Inc. — +1 310-857-2443 ext. 800. Press inquiries only; client, lender, and property identities remain confidential.
This engagement was completed under the firm’s highest and best use study practice.
President, Wert-Berater, Inc. — independent feasibility study consultants since 1998. 4,000+ engagements completed across all 50 states and internationally, evaluating $41.2 billion in project value for SBA, USDA, EB-5, conventional, and institutional financing decisions. Fiduciary duty runs to the lender and agency in every engagement.
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Wert-Berater, Inc. is an independent provider of feasibility studies and other related services. The firm does not provide financing or equity investment advice, and does not arrange, broker, or place debt or equity capital of any kind.
All appraisal assignments are performed by Bruce E. Jones, MAI, ASA-GC, BCA, CMEA, a member of the Appraisal Institute since 2006, a staff member of Wert-Berater, Inc. and owner of Special Purpose Realty Valuation.