The elderly owners of a South Lyon shopping center came to the Thomas Duke Company ready to retire from the work of managing multi-tenant investment property. They hired Eric and Mark Szerlag to market their property for sale.
As the brokers began putting together a marketing package, they quickly discovered that key information was missing. The sellers didn’t have standard due diligence data, like rent rolls, documented expense statements, or even tenant leases. On top of that, the leases they did have were month to month. No qualified purchaser would walk into a sale knowing so little.
The Szerlags got creative. They saw that this negative could be made a positive with a value-add sales approach. Targeting experienced retail-center managers, they pitched the opportunity to raise the center’s net operating income and achieve a far better rate of return than its face value offered. With that strategic marketing strategy they found a purchaser in less than a month.
That wasn’t the end of the call on Eric and Mark’s creativity though. The purchaser was going to finance the property, and no lender would be satisfied with a value-add sales pitch. Lenders require the kind of hard data the seller couldn’t produce. The Szerlags drew on their knowledge of the area market to recreate reasonable projections of market income and expenses. They also signed an anchor tenant to a new five-year lease agreement. With that, the lender was satisfied and the property was financed and closed.
In the end, the sellers retired gracefully. The purchaser is now renovating the property and firming up new, longer lease agreements with the tenants. And the South Lyon community can rely on a more stable shopping center.
Have a property with a few negatives? Call Eric and Mark Szerlag at the Thomas Duke Company and let us add creative to that negative to give you a positive experience and return.
