Shane Investment Property Group

The developer/owner had three issues. First, the property had been marketed by a national firm for over 6 months without success, thus the property was shopped to the local San Francisco Bay area market. Secondly, the assignment had to be sold within 45 days. Thirdly, the tenants and the building had significant issues.

For example, one of the tenants had recently been investigated for bad accounting practices, had their CEO indicted, and had plunged in the public markets. This was complicated by the fact that the building not only housed these two tenants, but the roof of the building itself was the foundation for 64 condominium units. These units were constructed overhead, but the retail would be responsible for any leaks to the condominium foundation (the seller's roof). Plus the property was and is located in an earthquake fault zone.

We quickly marketed the property on a national level, rather than just in California. We located several buyers and received multiple bids. After review, we settled on a Family Trust out of Detroit who had affiliates in San Francisco. Next, we negotiated an acceptable price. Working through the due diligence period we put the buyer in direct contact with CFO's of each tenant. We then obtained special structural reports, including x-rays of the structure itself to prove its soundness. In all, we closed within 90 days from start to finish.

The owner, a major developer with projects throughout the United States, had received multiple offers and was skeptical of our ability to obtain a higher value. However, our analysis showed that by marketing on a national level, sourcing buyers from all areas and from differing product types, we would obtain a higher price for the seller. This would be far better than any brokerage firm had accomplished for a seller in Atlanta at the time. In addition, we were given a 90 day timeframe in order to sell the property.

Due to our highly specialized marketing approach, within 3 weeks of marketing we had over ten offers, from five different states, and from owners of three different property types. We exceeded the "on the table" price by over $1 million, with a gross price nearly 10% higher to the Seller. Offers came from institutions, 1031 Exchange buyers, shopping center owners, apartment house owners, and land owners. We eventually settled on an out of state 1031 Exchange buyer who had sold a large orange grove in Florida, but who also had family in Georgia.

With a price over $10 million, Centre Stage was priced at over $330 per square foot, well above any comparable that had sold in any Atlanta suburb. While the location and property were superb, the property had a limited amount of credit tenancy and had rents that were some of the highest that had ever been achieved in Atlanta. Additionally, the buyer had to assume a 60% loan, requiring over $4 million down. The Seller, a major developer, gave Shane Investment Property Group only 30 days to package, market, and locate a buyer in order to faciltate their exchange.

Our marketing team simultaneously constructed a packaging, marketing, and due diligence process that shortened every timeframe. We immediately went national with our marketing focusing on high dollar per foot areas, such as Los Angeles, New York, Seattle, Chicago, etc. Since this property did not appeal to local and regional Buyers, we procured a buyer from California. That buyer, in a 1031 exchange, had sold an outlying area land parcel. For him the cash flow was adequate, and the price per square foot was acceptable.

The owner, one of the largest individual owners/developers in the southeast, selected SHANE based upon the firm’s track-record of achieving our clients’ price requirements as well as our ability to create certainty of closing. The property had three primary obstacles to overcome: 1) current vacancy, 2) near-term tenant rollover risk, 3) visibility/physical positioning.

In spite of the three obstacles outlined above, the property benefited from numerous selling points, including an average rental rate that was substantially below market. By positioning this asset’s selling points to appeal to the correctly profiled buyers, SHANE was able to generate multiple offers from which to choose a buyer with the greatest certainty of closing. Even in a period of turbulent market conditions, this property closed within 45-days of contract execution, as a result of the firm’s efforts in assisting with all aspects of the process.

SHANE was asked to assist the practice in structuring the sale/lease-back of their newest location. The Seller requested that SHANE’s medical group utilize their market expertise to outline lease terms that would appeal to multiple buyer types as well as a marketing plan that would allow access to these buyers. The firm determined the most likely obstacle was finding comparable transactions.

This proved to be another record-setting closing for SHANE, both in terms of CAP rate and price per square foot achieved. The medical group was able to find a cross-product type buyer who felt confident the practice’s credit and proximity to a regional hospital would result in a very stable income stream. SHANE’s long list of in-house closings proved to be very beneficial in assisting with the appraisal, as the building sold for in excess of $430 PSF.

SHANE was asked by our client to assist in the disposition of this asset, as the Seller had plans to utilize the proceeds for an alternative investment. As such, maximizing their return on the asset was critical. Our client had owned the center for a short time and made it clear that a certain return must be met. The major obstacle to overcome was the pricing and how it impacted interested parties’ cash flow, as there was a loan in place that was required to be assumed with approximately 35% down.

After determining which buyer profile this property would most appeal to, SHANE utilized a custom-tailored marketing approach to access the potential parties. Ultimately the firm sourced an international buyer who was able to overlook the low yield in light of the long-term prospects for the area and the center. The prospect of having an international party assume the in-place loan raised concern for the lender and threatened to derail the transaction. However, having handled numerous assumptions, SHANE was able to ensure that the process went smoothly and closed as scheduled.