Guest Post by Jeff Hubbard, A&G Real Estate Partners

As holders of corporate real estate (CRE) seek to position their companies for the second half of 2021, they are rightly focused on generating liquidity by selling excess/non-core assets. Proceeds from these sales could support their adaptive strategies during a time of intense challenge and rapid change.

But when sellers are on a tight timetable, the conventional approach to selling excess real estate may fall short. Typically, that approach hinges on asking a local or regional broker to list the properties on various online channels, blast emails to potential buyers and hope for the best.

The seller in such situations sacrifices control over key details such as the buyers, timing and terms. That makes it more likely for late-in-the-game disagreements to stall or nix the deal—a costly step backward when the CRE holder aims to act quickly out of strategic necessity.

Sealed-bid real estate sales and auctions are a fast-track alternative. They offer a way for CRE decision-makers to control the terms, find the right buyers and be more confident that fair market value has been achieved.

Accelerated deals

In these transactions, the upfront package that bidders receive contains all of the relevant sale terms: the purchase agreement with deadline and deposit information, as well as due diligence items like rent rolls and environmental reports. Generally, this approach results in all-cash offers within 60 to 75 days.

The first step is for the CRE holder to conduct a comprehensive review of its real estate assets, with a view toward determining which ones are core to the company’s mission. The rest should be classified as non-core and considered for disposition in an accelerated, sealed-bid auction.

Of course, the portfolio review should also extend to your leased properties. The prevailing market rents for office, retail, foodservice, hospitality, or other leased properties may have declined substantially as a result of the pandemic. The review process could help you identify opportunities to aggressively renegotiate rents and terminate leases.

In addition, on owned properties, you may uncover opportunities to execute sale-leaseback transactions that allow you to bolster liquidity without losing access to the building. The needs of CRE holders vary dramatically based on the specific industries, companies, and markets in play. But liquidity is essential in virtually all adjustments to change. By allowing companies to quickly monetize excess holdings, sealed-bid auctions are well worth adding to the company’s toolkit.

Jeff Hubbard is a senior managing director at A&G Real Estate Partners.