ATLANTA—Allen Aldridge, senior vice president of acquisitions, dispositions and asset management for Atlanta-based KBS Realty Advisors, shared with us the biggest challenge he ever faced in the commercial real estate industry in part one of our exclusive interview. You can read that here: KBS Exec Recalls Ghosts From CRE Past.

Here's the summary of the challenge: “Downturns in the market present the greatest challenges and the 2008 great recession was one of the largest,” he tells Globest.com. “Plans and pro forma no longer mattered as demand turned negative, credit issues arose, decisions were delayed and no tenants would commit long term. Asset sales also plummeted leaving everyone for a short period to focus on making the real estate you owned work.”

In part two of this exclusive interview, we asked him to share how he got through that challenge. He also shares his career goals going forward.

Globest.com: How did you get through that challenge?

Aldridge: Fortunately, KBS has a culture of being extremely focused, disciplined, proactive and entrepreneurial in terms of solutions. While many in the market cut back on capital spending, we forged ahead with spec suite programs, targeted common area capital improvements and dedicated more resources to tenant retention. 

We highlighted our financial stability and access to capital as brokers grew more worried about the ability of landlords to make payments of tenant improvement allowances and commissions, in addition a concern of a landlord's ability to hold on to assets. We were also first in the market to significantly cut rates while targeting deals with better credit and lower capital requirements allowing us to capture a higher market share of the shrinking demand pool. 

While overall asset values dropped as a result of flattening to lower NOI's (net operating income) and buyer and appraiser rent growth assumptions going from greater than inflation to negative or flat, we were successful in maintaining our occupancy with increased retention and mostly avoiding the loss of any major tenants. And in some cases we went beyond this by proactively looking for opportunities to renew credit tenants early. 

In one example, during our weekly calls we heard Caterpillar was preparing to make capital improvements to their space in a building we owned in Nashville. We offered to fund the improvements and in exchange were able to extend their lease five years beyond the four years of remaining term. When we went to sell this asset two years later as part of the normal life cycle for this fund, we found the value was significantly bolstered by 30% of the building being long-term leased to a major credit tenant.

We were able to do the same with a 120,000-square-foot single tenant building in Tampa, Florida, where we came to terms early with Ford Motor Company during a struggling time for the auto industry in 2009. A year later, they were beginning to recover, their credit was upgraded and we were successful in selling this asset at a low cap rate and higher price per square foot in an otherwise struggling market.

GlobeSt.com: What are your goals moving forward?

Aldridge: You have to embrace change and the inevitable volatility as shown in the recent stock market correction. We don't know what impact this or other unforeseen world events may have on our markets moving forward so my goals remain the same. 

And that is to surround myself with focused, disciplined and creative problem solvers both internally and in the managers, brokers and investment sales people we team with to execute our strategies. An equally important personal goal is to always conduct myself in the highest ethical manner and to represent KBS in the most professional means possible.