It’s finally time to liquidate your holdings and make distributions. What is the best way to do this? Who would buy your property and why? How should you approach this.

Owner/User Sale: The highest value of your property is most often times achieved when sold to a buyer who will own the property and use it for its business operations. Your ability to sell your property to an owner/user will be determined by the current leases in place and by the properties layout. The fewer tenants, the shorter the lease terms and most open layout the better in most cases. A single tenant building being sold by its prior occupant would be the most traditional sale. There are times where a building is leased out to a handful of tenants with lease expirations and the building can then be delivered vacant with a useable layout for an owner/user to purchase the property at the highest value.

Capital Markets: The majority of investment property dispositions are that of leased investments and are valued based on the net return on invested capital. How do you craft the story of the current properties arrangement in the context of future value creation to the buyer? Why has this property performed well in the past? What improvements have been made to the property? How is the property most likely to succeed in the future? What is the highest and best use for the property? What are the income and expense figures for the property? What are market leasing assumptions? What is the lending environment for purchasing this property? How can all of this be articulated within a professional marketing package and presented the right pools of buyers?

Development: In some cases, there is development potential that can yield the highest value for the property. This is the case with raw land but also with existing properties. Office and medical office building often times have excess land for development of additional square footage and/or parking structures. Pads can be built out on retail parcels. Industrial buildings with excess parking can be converted to R&D and creative office buildings. Functionally obsolescent industrial buildings can be reconfigured in a way to increase the ceiling height, improve the loading or reconfigure the office.

We work with investors to help them clarify the disposition strategy to make sure they are approaching the market in a manner most consistent with their goals and market conditions. Feel free to contact Justin at jbsmith@lee-associates.com and/or 949-790-3151 to discuss in more detail.