How do you show the right buyer, that this is the right property?
Commercial real estate can be complicated. There’s no doubt about that, especially in the midst of a pandemic. And if you’re trying to sell a retail property, it can be even more challenging. There’s so many questions about whether tenants are current. Are they paying their rent? Have they received any kind of special abatements? Will the tenants be in business in the next year or two? These are some of the challenges we faced when we sold 401 Main Street in Salem, New Hampshire.
This is a 29,000 square foot retail property with some limited second floor office space. It was 100% occupied. And at the time of sale, we were able to price it at a 7.62% cap rate. That gave it an asking price of $4.5 million. And we were convinced that the fact that the tenants were all occupying and open for business was going to be a driving asset to make this property a compelling story to bring to the market.
So what we did was we put together the package in a way that gave the right buyer, the assurance that they’d be acquiring a property that not only had a performing rent role, but also had the opportunity to grow the tenants. One of the reasons why the property had been maintained at a 100% occupancy was because, well frankly, their rents hadn’t gone up much. It was well located. And there was a good mix of tenants providing e-commerce resistant products and services to the local market. The other thing that worked really well for this site was that it was located on a 10 acre parcel at a four way signalized intersection, neighboring tenants included CVS, Santander Bank, and Dunkin Donuts. So we saw the opportunity with the site that the complete floor area ratio hadn’t fully been capitalized. And there would be potentially an opportunity to add a pad site close to that intersection.
So the right buyer could come along, take advantage of in-place income, acquire the property, and then potentially later unlock some additional site value by developing a pad site at that four way intersection. So when we brought the property to market through our process, we were able to generate multiple proposals. We had the property under agreement, close to asking price within six days of hitting the market. The buyer was highly confident and very strong in their ability to perform. So there was great a surety that they were going to close. They did their due diligence, they were thorough. And in fact, they closed early. So this deal worked out really well for the seller. He was satisfied with the fact that he got the right buyer to pay the right price. He was confident in the outcome and the property now is in strong hands and we expect that property to perform well for the new owner. So thanks. Great to see you again. Please subscribe to our channel and like this video. And more from us to come in the future. Thank you.
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