$2.1M in 1st Year Cash Flow, Plus $1.2M in Dispositions Over Next 3 Years

$50M Acquisition of 400,000 Square Foot Office Building with First Floor Retail in Colorado

Meridian was retained to conduct a detailed engineering-based cost segregation study for depreciation / fixed asset purposes on the purchase of a 400,000 square foot $50 million dollar office building in Colorado. Our study generated net present value cash flows over the life of the investment of $2.1 million and an Increase in first year cash flow by $1.2 million.

Two years later, the building owners re-leased a first floor retail tenant’s space to a restaurant group. The HVAC for the space was a single zone RTU with ductwork above the acoustical ceiling.

The reconfiguration for the restaurant, open ceiling style, required amending the layout and ductwork materials, providing an opportunity to retire the remaining basis in the original retail ductwork. The details in the original Meridian study are easily identifiable, so the partial disposition can be maximized, resulting in an additional $261K tax write-off.

This was one of several opportunities in the restaurant space. In year three, there were roof repairs and two office tenant changes requiring basic upgrades to the lighting, kitchen, and plumbing. The same amount of evaluation was applied to the build-outs based on contributions by both the landlord and tenant, enabling the building owner to optimize both depreciation and retirements for the property’s life. In Just Three Years, Total Disposition Write Offs For This Client Were $1.4M.