COMMERCIAL CASE STUDIES

SENIOR HOUSING



Hilltop Village
25900 Euclid Avenue

Senior Housing
Privately Owned Real Estate Euclid, OH

Sale Price: $5,250,000

BUSINESS CHALLENGE

When the owner of this independent living community passed away, his estate hired a chief restructuring officer (CRO) to assist it in managing a pre-bankruptcy situation. The CRO in turn hired the AW team to accelerate the sale of this asset. Specifically, the AW team was charged with selling the operating 196 unit senior housing business as well as the real estate (an approximately 178,000 sf building set on 19.39 acres). The goal was for the estate to be able to use the proceeds from the sale to satisfy creditors and thereby avoid filing for bankruptcy. If the AW team could sell the operating business plus the real estate for a sufficient dollar amount by a date certain, the estate could satisfy the creditors. If not, the AW team would be tasked with conducting a 363 sale/bankruptcy auction of this asset and it would likely sell for a much lower price.

The sale of this property was particularly challenging due to its location in an economically challenged area just outside of downtown Cleveland. Specifically, the primary market area was lower income and could not support the higher rents that could be achieved in other suburbs of Cleveland. Additionally, some anticipated regulatory changes relating to fire suppression requirements threatened to add substantial cost for any new owner.

SOLUTION

The AW team engaged a consultant who specializes in senior housing to assist in developing a disposition strategy. Based on the close knit nature of the senior housing buyer community and the understanding that the most desirable senior housing assets typically sell in the off market period (versus on market), the AW team recommended a confidential off market sale.

RESULTS

The AW team aggressively promoted this independent living community for sale to its nationwide proprietary database of brokers and investors. Within 30 days, the AW team had offers from qualified buyers around the country.

Ultimately, the best buyer for this asset was one that owned a similar facility nearby. Despite the regulatory changes that threatened to squash the sale to this buyer in the eleventh hour, the AW team worked diligently to keep the transaction on track. The AW team successfully negotiated a sale price that was more than sufficient for the estate to satisfy its creditors and the transaction closed in time for the estate to avoid filing for bankruptcy.

VACANT INDUSTRIAL/OFFICE/FLEX



1019 E Chicago St
Elgin, IL
Industrial
Privately Owned Real Estate

Sale Price: $4,000,000

BUSINESS CHALLENGE

The owner of this vacant, approximately 95,512 sf former medical building set on 10.04 acres originally had purchased it with the intent of converting it into a trampoline park. The building was part of a portfolio of commercial real estate the owner recently had purchased nationwide. When the owner decided against converting the building, he listed it for sale with a very large, nationally known commercial real estate brokerage firm. Initially the asking price was $4,000,000. Over time, the brokers substantially lowered the asking price, but still the property did not sell. At the time the seller engaged the AW team to auction the property, the most recent asking price with the prior listing brokers had been $2,900,000.

The sale of this property was particularly challenging due to its large size, its 100% vacancy and its location on the border of two counties that had very disproportionate real estate property taxes (the property was in the county that has a much higher property tax level than the literally yards away, adjacent county).

SOLUTION

The AW team recommended a minimum bid/published reserve price of $2,500,000 and began aggressively promoting the property for an online auction that was scheduled to occur within 60 days.

RESULTS

Prior to the online auction, the AW team solicited pre auction offers and ignited a bidding war. Ultimately, it became clear that one of the buyers (who was tax exempt) was much more motivated than the others and willing to pay a premium price in order to obtain the property. The AW team recommended the owner counter that buyer’s second pre-auction offer with $4,000,000 (the original asking price that the owner’s prior brokers had set when they first listed the property for sale). The owner approved this recommended counter offer and the AW team was able to successfully negotiate with the buyer who ultimately accepted it.

The AW team was able to achieve a pre-auction sale price that was $1,500,000 over the owner’s published reserve price. This sale price not only was equal to the initial asking price for which the owners prior brokers had originally and unsuccessfully listed the property for sale, but also $1,100,000 more than the most recent asking price of the prior listing brokers.

VACANT OFFICE BUILDING



31100 Plymouth Rd
Livonia, MI
Office Building
Former AT&T Call Center
Privately Owned Real Estate

Sale Price: $736,700

BUSINESS CHALLENGE

This approximately 110,000 sf, former AT&T call center building in Livonia, Michigan had been vacant for several years. Built in 1972, It required a lot of capital to comply with current code enforcement issues. The building was situated in an industrial area, well outside of the office submarket of Livonia; this made it very difficult to determine market value as there were no truly comparable, recent sales to be used in pricing the property. Prior to listing with AW, the building had been marketed for sale for three years, during which time there was limited interest from buyers.

SOLUTION

The AW team implemented a multi-state targeted marketing plan to generate a higher level of interest from both possible end users and investors. The plan included marketing the property with an attractive opening bid (the seller had to have reasonable expectations in terms of pricing) and an aggressive target marketing and advertising plan aimed at increasing awareness on both the local and regional levels.

RESULTS

Initially, the property received solid interest, but no bids. Two months later, the seller agreed to reduce the suggested opening bid. This generated a bidding war that resulted in three bids from qualified bidders. The initial bids received were close in price--ranging from $550,000 to $600,000--which indicated that they were close to the true market value of the property. After the AW team negotiated with each bidder and called for best and final bids, a sale price of $736,700 was achieved.

REFERRING BROKER TESTIMONIAL

"I recommend AW! I was having a difficult time selling a 110,000 square foot vacant office building (built in 1972) in Livonia, Michigan. After more than two dozen tours with qualified investors and users, nobody was willing to make an offer at the list price, or even near the price. After two years of marketing, I contacted Diana Peterson to assist in marketing the property through an auction. The concept of an attractive suggested opening bid, with a date certain bid and aggressive marketing, created the demand we were looking for. At the auction date, we received two offers. We were able to bid up the offers. The selected bidder wired a non-refundable deposit and closed within 30 days. The auction process and AW was the key to the closing."

- Steve Eisenshtadt, SIOR, CCIM, JD Senior Vice President at Friedman Integrated Real Estate Solutions

OFFICE/MEDICAL BUILDING



3939 North Wilke Road
Arlington Heights, IL
Office/Medical Building
Privately Owned Real Estate

Sale Price: $700,000

BUSINESS CHALLENGE

This approximately 13,578 sf multi-tenant, stand alone, single-story, brick building on 1.32 acres had been listed for sale on the traditional market for over a year with an asking price of $850,000. While approximately 3,473 sf (one of the three units) was leased, the lease was on a month to month basis and the tenant had the right to terminate the lease upon the sale of the building.

The traditional for sale listing with prior brokers for this property had generated little to no interest with an asking price of $850,000, so the owner authorized a $100,000 price cut. Even with an asking price of $750,000, the building continued to garner very little interest and only a few showings. It was on the market three times as a traditional listing - once in 2007, once in 2009, and then again for 6 months in 2014. After receiving an offer of $300,000 for the building and countering that offer with $350,000, the owner ultimately engaged AW to sell the property in an online auction.

SOLUTION

The AW team recommended and the owner approved a minimum bid/published reserve price of $425,000, in order to generate maximum interest in the building. When creating the brochure and adding photos to all of its listings for the property, the AW team improved upon the previous broker’s marketing efforts which had primarily shown the small portion of the building that was in raw condition. By comparison, the AW team included many more interior photos highlighting the majority of the space which was finished and in excellent, move-in ready condition. The AW team also put together an extensive due diligence package. Finally, the AW team featured the property in multiple advertisements and PR efforts, and extensively target marketed the property to brokers and investors in the AW proprietary database, including brokers active in the area and surrounding areas of the property.

RESULTS

The AW team’s extensive target marketing not only generated more showings than the property had previously enjoyed, but identified three qualified, serious bidders. After all of the advertising for the property had run, and approximately 3 weeks before the online auction was scheduled to begin, the AW team advised the owner to allow AW to call for all best and final bids. The owner concurred and the AW team was able to ignite a pre-auction bidding war. This bidding war resulted in several offers and counter offers between two of the three serious bidders, with both bidders being unaware of the number of other bids being placed or the amount of other bids being placed. This ultimately resulted in a high bid and sale of the property for $700,000, with the second bidder requesting that their $614,250 bid be held as a backup bid. The sale of the property closed within two weeks, prior to the commencement of the online auction, with a sale price 165% greater than the minimum bid set for the auction and 233% greater than the most recent offer for the property.

SELLER TESTIMONIAL

"We worked with AW to sell a property in north Arlington Heights that was incredibly resistant to traditional marketing methods. We were very pleased with results that exceeded our expectations. From my perspective, I think the success lay in Diana Peterson and her team's consistent efforts to over deliver - prompt responses to phone calls, quick and carefully crafted responses to email, and great service over all. Diana and her team at AW are an outstanding business ally."

- Bob Rourke, Premises Group, LLC

MULTI FAMILY PORTFOLIO



7650-7652-7656 S Colfax Ave
8036 S Kingston Ave
Chicago, IL
Chicago Multi-Family Portfolio Sale
Investment Fund Owned Real Estate

Sale Price: $648,000

BUSINESS CHALLENGE

An investment fund based in New York City purchased the notes to a large number of commercial and residential properties located primarily in the South Side of Chicago. The fund’s asset disposition team members had limited knowledge of the Chicago market and primarily were relying on local broker price opinions to determine market value.

SOLUTION

The AW team toured the properties with the fund’s asset disposition team in order to assist in determining which properties to keep in their portfolio; which to dispose of quickly through auction; and which to offer through the traditional sale method. The AW team recommended bringing the multi-family properties (four triplexes) to auction, beginning with the three that were in a better location than the fourth. The AW team recommended a minimum bid (published reserve price) of $125,000 per property, in order to attract investors as well as potential home owners.

RESULTS

The online auction of the three, higher value triplexes attracted over a dozen qualified bidders and resulted in a pre-auction bidding war. Ultimately, the highest price offered per property came from one investor who offered $162,000 per property with a quick, cash closing. The AW team brought the fourth triplex to auction thirty days later, and sold it pre-auction for $162,000 to the same investor who bought the other triplexes.

REFERRING BROKER TESTIMONIAL

"I have worked with Diana for the past two years and have been quite impressed with the way she operates AW and the results that she has achieved. I introduced Diana and the AW platform to a number of clients, she has achieved results beyond their expectations. Diana is extremely knowledgeable about the auction process. She has a very well established business structure and a professional manner that puts clients at ease. Many clients are uncertain about the auction template but when they commit to the platform and allow Diana to market the asset and manage the process, they quickly become believers with regard to the value of the auction platform. I strongly recommend Diana and AW to any property owner looking for a dedicated professional and proven transaction process."

- Vince D'Amico, Senior Advisor at SVN Chicago Commercial

VACANT INDUSTRIAL/FLEX BUILDING



270 Larkin Dr
Wheeling, IL
Industrial/Flex Building
Investment Fund Owned Real Estate

Sale Price: $658,800

BUSINESS CHALLENGE

The fund that owned this vacant, multi-unit, industrial/flex building had unsuccessfully been marketing this property for sale for several years with other brokers. The most recent list price the owner had set for the property prior to engaging the AW team was $975,000. While the property was in good condition and well located, it was surrounded by other, similar properties that were also for sale and/or for lease. In sum, there were too many competing, available properties in the area and this property did not stand out or offer anything superior to the others. As a result, it had been languishing on the market.

SOLUTION

The AW team recommended the auction method of sale and a minimum bid/published reserve of $300,000. The goal of this pricing strategy was to set a minimum bid that was sufficiently low to attract and engage buyers who otherwise might purchase one of the many other available properties nearby. An online auction was scheduled for early January, roughly 60 days from the date the AW team listed the property.

RESULTS

The AW team’s auction pricing and aggressive promotion of this property resulted in a pre-auction bidding war with five prospective buyers competing. Because several of these buyers were interested in closing on the property before the year end, the AW team recommended that the online auction dates be moved up to 30 days earlier than previously advertised. The seller agreed and the auction proceeded with multiple, qualified buyers competing online. The property sold through the online auction with a final bid price that was over $100,000 more than the highest pre- auction offer the AW team had procured. The winning bidder closed on the property 10 business days after the online auction concluded.

VACANT INDUSTRIAL



255 West Fleming St
Watseka, IL 60970

Industrial Building
Bank Owned Real Estate

Sale Price: $270,000

BUSINESS CHALLENGE

This vacant, bank owned, approximately 177,000 sf industrial building set on 55 acres presented multiple disposition challenges:

  1. Remote location in central Illinois
  2. Significant roof repair/replacement requirements (est. $1MM+)
  3. Failed/incomplete Phase 1-2 environmental reports
  4. 30 excess acres located in a flood plain
  5. Situated near an area that recently experienced 100 year high flood levels

SOLUTION

The AW team recommended an asking price of $350,000 (given the roof condition and other challenges this property posed) and aggressively marketed the property for sale, targeting owner user buyers.

RESULTS

The AW team received several offers from owner user buyers and connected them with local government contacts to pursue tax abatements and building and zoning code changes. The AW team ultimately achieved a 30 day cash close and satisfied the bank’s need to get this property sold. The sale also benefited the village by saving a manufacturing facility that the buyer could repurpose and put in use, creating new local job opportunities.

CHICAGO RETAIL/OFFICE CONDO


1133 South Wabash Ave, Unit #C2
Chicago, IL
Retail/Office Condo
Bank Owned Real Estate

Sale Price: $194,250

BUSINESS CHALLENGE

This bank owned, approximately 1,450 sf commercial condominium unit located in Chicago’s South Loop had been listed for sale for over a year with an asking price of $169,000. Since the traditional for sale listing had generated only a few lowball offers, the bank decided to engage AW to auction the property.

This street level retail/office condo unit was in a high visibility location and fully leased, producing rental income of $2,760/month. However, the tenant’s lease expired July 31, 2015 and contained a five year renewal option that the tenant had not yet exercised nor indicated any intent to exercise. As such, potential purchasers who were end users were discouraged by the remaining term of the lease and investors were discouraged by the lack of certainty regarding potential lease renewal and continuing cash flow.

SOLUTION

The AW team recommended a minimum bid of $100,000, in order to generate maximum interest in the property. The AW team featured extensively target marketed and advertised the property for auction. Shortly after the AW team concluded it initial target marketing campaign, the AW team received an offer of $165,000 from a prospective buyer who had previously looked at the property. Since this was by far the highest offer the bank had received to date, the bank was ready to accept this offer. At the advice of the AW team, the bank did not immediately accept the offer but instead let the AW team conclude the rest of its advertising, PR and target marketing efforts for the auction while remaining in weekly contact with the prospect who continued to be the high bidder with a bid of $165,000.

RESULTS

The AW team’s extensive target marketing not only generated more showings than the property had previously enjoyed, but also identified 10 qualified bidders. After all of the advertising for the property had run, and approximately 3 weeks before the online auction was scheduled to begin, the AW team advised the bank to allow the AW team to call for all best and final offers. The bank asset manager concurred and the AW team was able to ignite a pre-auction bidding war. This bidding war resulted in five offers, including an offer of $194,250 from the prospective buyer who previously had offered $165,000. This ultimately resulted in a high bid and sale of the property for $194,250. The sale of the property closed within four weeks, with a sale price 94% greater than the minimum bid set for the auction and 49% greater than the most recent offer for the property.