Resources From Observation to Acquisition: The Royal Caribbean Deal – Jeff Lowrance

April 19, 2024

In the realm of real estate, the narrative often unfolds in the interplay between tenacity and curiosity, revealing opportunities hidden beneath the surface. My journey with the Royal Caribbean office building encapsulates this truth, beginning amidst the backdrop of the COVID-19 pandemic in April 2020. It was a time when no one was returning to the office; instead, most were just starting to adapt to remote work. Fast forward to April 2021, and the situation remained uncertain for many. An empty parking lot served as my first clue, an anomaly amid a bustling world returning to work. What lay behind this silence intrigued me—a space that had once been a landmark within the Crossgate District, with 300-500 employees, now stood vacant, serving as a testament to change and possibility.

Planting the Seed

I knew the Vice President, Chris Angel Gomez. Jeff, Greg Gaddert, and I met him in 2017-2018 and it made sense to connect with Royal Caribbean since they were located in the Crossgate District. The allure of the property’s location coupled with our commitment to its development, sparked the idea of potential collaboration. I met with Chris Gomez over lunch and expressed our readiness to assist should Royal Caribbean ever consider selling—an initial step towards what would become a protracted negotiation.

The Pitch and Facing Rejection

As 2021 unfolded, our persistent outreach efforts led to a significant moment on a Zoom call, where we engaged with several decision-makers within Royal Caribbean, presenting our proposal to list the property. Despite our fervent attempts, Royal Caribbean opted for a different path, aligning with the Jones Lange Lasalle office out of Miami, Florida—where the Global Headquarters of Royal Caribbean is located. Undeterred by rejection, we persisted, suggesting that Jones Lange Lasalle needed a local partner and that Lange Real Estate made the most sense given our dedication to the Crossgate District and Lange Companies’ presence across the entire 13 sq mile area in southwest Wichita. However, despite our efforts, the doors remained closed, and the negotiation continued to elude us.

Pivot: From Broker to Buyer

In 2022, after two years of very long-drawn-out efforts to involve Lange RE in the deal, we pivoted towards positioning LANGE as a potential buyer for the property. This strategic shift was part of our plan all along, but we knew it would take time and patience. Pursuing the listing first is often part of the strategy for complex acquisitions. Despite Royal Caribbean’s significant investment into the property, we believed its market value was lower, supported by comparable sales in Wichita. Moreover, we understood the disparity between real estate values in Miami, Florida, where Royal Caribbean’s decision-makers were located, and those in Wichita. Real estate values, especially for Class A office spaces, were considerably higher in Miami than in Wichita. However, communication from Royal Caribbean and their agent with JLL ceased, prompting us to adapt our approach. We took a bold step and submitted an offer, but unfortunately, it failed to impress them.

Persistence: The Monthly Offer

I’m not one to be ignored. I decided to adopt a novel approach—sending a signed offer every 30 days. I did this for the better part of the year, like clockwork, once a month. This relentless pursuit, though initially met with silence, eventually broke through the barriers, reigniting discussions and paving the path forward. In November 2022, Royal Caribbean decided to agree with our purchase price, but they wanted to close before the end of the year. Closing on a multi-million-dollar acquisition of a large office complex typically takes 90-120 days, encompassing due diligence and financing. Nonetheless, our team mobilized rapidly and ensured all necessary steps were completed to facilitate the purchase. However, Royal Caribbean ultimately decided to retain the property and become the landlord for a call center tenant from Kansas City. The call center deal fell through, which unexpectedly brought them back to the negotiation table.

A New Year, A New Offer

In February of 2023, Jeff Lange and I reflected on the deal’s impasse, discussing how the property would make a fantastic LANGE Headquarters and could sustain our office needs for Lange companies in Wichita for the next 25 years plus. We decided to challenge the status quo. With a cheeky yet calculated move, we sent a weekly offer just to see if we could get a reaction. Since I hate losing and don’t like to give up, this sounded interesting to me so why not make it fun?

I obtained the Royal Caribbean CFO’s email and added him, along with the Properties Director and their Real Estate agent, to my email list. From February to September, I sent our offer weekly. Their real estate agent eventually called me, joking that he laughed each time he read my weekly offer. I told him I laughed each time I sent it. He asked if we’d be willing to come up a little with our offer, prompting a brief negotiation.

Nonetheless, we were able to agree and negotiate a shorter due diligence period of 45 days. We also agreed to close the deal in 30 days, demonstrating our commitment to expediting the process. Despite reaching these terms, it took over 30 days to obtain signatures from Royal Caribbean. We finally signed the deal in early December 2023 and closed in March 2024.

Patience, Persistence, and The Human Touch

Amidst the twists and turns of this multi-year saga, several key lessons emerged:

  • Curiosity Breeds Opportunity: A keen observation of the vacant parking lot initiated the journey.
  • Royal Caribbean rejected our proposals three times over 2.5 years: they declined to let Lange Real Estate list the property, refused co-listing with Jones Lange Lasalle, and turned down our offer to purchase. However, rejection did not deter us; instead, each ‘No’ fueled our determination to persevere.
  • Perseverance and Patience Pay Off: Persistent engagement led to breakthroughs.
  • Never Underestimate the Human Element: Respectful and consistent communication proved pivotal.
  • Sometimes a ‘No’ Just Means ‘Not Right Now’ It’s a mistake to assume the other party is disregarding you. They are busy, we are busy, everyone is busy. I always follow up and push for an answer whether that’s a yes, no, never, or maybe.
  • The Art of the Offer: Bold negotiation strategies can reshape the trajectory of a deal.

As the curtains draw on this saga, the Royal Caribbean building stands not only as an asset but as a testament to our company’s resilience, vision, and unwavering commitment to seizing opportunities in the ever-evolving landscape of real estate.

 

By Jeff Lowrance, Commercial Realtor

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