PROFILE OF THE WEEK: FRANCES AND GLENN SCHOR THE TREELINE COMPANIES.

Uncovering hidden value

Frances and Glenn Schor know the meaning of the word value. As active real estate investors, they have built a successful business by identifying, uncovering and realizing significant hidden value in under-performing properties throughout the New York metropolitan region, concentrating primarily in New York City, Westchester and Long Island. Since founding their company in 1985, the Treeline principals have amassed a steadily growing multi-million square foot office building portfolio and continue to aggressively seek additional investment opportunities throughout the region.

"When considering an acquisition, what is most important to our company and its partners is the potential for creating added value," explains Frances Schor, Treeline's President. "The Treeline approach to real estate investing is all about realizing maximum returns through unlocking the bidden potential in an asset. When analyzing a prospective investment, we look not only for current income but also for opportunities to employ our unique expertise to turn around and reposition commercial real estate."

The formation of The Treeline Company, which is headquartered in Carle Place, on Long Island, was a natural outcome of Frances Schor's activities as a real estate broker and Glenn Schor's work as a real estate attorney. They got started in the field by purchasing and renovating brownstones, co-operatives and condominiums. This evolved into the construction of new co-ops, condominiums and multi-family houses throughout the five boroughs as well as sub-divided vacant land parcels, a venture which ultimately lead to building luxury homes in Westchester.

The roots of Treeline's transition to commercial real estate were sown in the late 1980's when the entire real estate market experienced a severe downturn. The Schors, having vast real estate experience and a large network of contacts, were engaged by many institutions to manage distressed projects. They recognized the inherent value in many of these properties and worked effectively with lenders in restructuring the value of these assets. By the early 1990's, Treeline managed portfolios for several local banks, including Independence Savings Bank, The Dime and Greater New York Savings Bank (now merged into Astoria Federal Savings Bank) and First Nationwide Bank.

"From there, it was a small step to purchasing, renovating and repositioning undervalued commercial and retail properties," commented Glenn Schor, Treeline's Chief Operating Officer. Managing these under-performing assets with ingenuity, creativity, finance expertise and construction know-how, Treeline successfully repositioned the buildings, attracted credit tenants and substantially raised property values, which culminated in either higher rent rolls or larger. resale prices.

One of Treeline's most profitable turn arounds was the sale of 33 Walt Whitman Road in Long Island's Huntington Station. Treeline purchased SF this 100,000 SF office building with seller financing during a severe Suffolk County office market downturn. The property was acquired for $3 million or $30 per SF in 1994 when it was 90% vacant. Through creative: marketing, measured capital improvements and attractive pricing of space, Treeline successfully raised the property's tenancy to near 100%, making it one of the premier office buildings in its area. In 1997 the building was refinanced through GMAC Commercial Mortgage for $5.1 million. It sold in 2000 for $10.1 million or $100 per SF. In addition, investors received a cash flow return in every quarter from 1995 to the date of sale.

"We finance our acquisitions through major financial institutions as well as through private investment from our core group of investors and partners," said Ms. Schor. "We work closely with our investors and partners, striving to keep them constantly abreast of developments concerning their investments. Each Treeline project has successfully produced profitable results for the Treeline Companies and investor groups."

Another example of Treeline's "magic touch" was the lucrative turnaround of 175 Remsen Street in Brooklyn. The property was 90% vacant at acquisition and was acquired for $4 million, which was financed by a bridge loan of $2 million from Intervest. After investing $2 million in capital improvements financed by Deutsche Bank, Treeline brought the building's occupancy level to 100%. The Intervest and Deutsche Bank financings were converted into $11.5 million in permanent financing from Deutsche Bank. Treeline investors received a return of the original capital plus a tax deferred distribution of $5.5 million. The project generates a significant cash flow on a current basis with no investment capital.

In White Plains, Treeline acquired 2 and 4 Gannett Drive, two Class A office properties. The acquisition was financed utilizing a fixed rate loan originated by UBS Warburg. The building's tenant roster includes national corporations whose credit and strength have supported the assets' image as a premier Westchester location. In addition, the properties produce consistent income and cash flow for the benefit of Treeline's investors. While rents at acquisition were significantly below market rents, lease renewals will result in spectacular short-term increases in cash flow and the long-term outlook for these assets, in terms of heightened value, is excellent.

One of Treeline's recent acquisitions is 100, 200, and 300 Garden City Plaza, three strategically located commercial properties adjacent to the Roosevelt Field Mall in Garden City. Treeline paid $43.5 million for the buildings which total more than 400,000 SF of office space. Treeline plans to begin a major upgrade of the complex later this year, including the renovation and modernization of the lobbies and public areas. "Like many of our real estate investments, Garden City Plaza has the potential to be repositioned as one of the area's elite office centers," asserted Ms. Schor.

Looking ahead, she said that her company would continue to focus on identifying properties around the New York metropolitan area where it can implement a pro-active plan to streamline costs while enhancing tenant amenities. "That strategy benefits both our tenants and our investors alike," she noted.