Shopping Centers Today

NOV 2018

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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44 S C T / N O V E M B E R 2 0 1 8 W hen a major retailer tasked Neill Kelly with selling a portfolio of stores, Kelly turned to the online-auc- tion process as a means to meet that client's time-sensitive needs. "We achieved a great outcome for our client, and the auction process worked," said Kelly, a•CBRE senior vice president. Auctions may tend to•draw associa- tions with the sale of distressed and/or foreclosed property, but they are becom- ing a common tool for the disposition of thriving proper- ties too.• "We have gotten away from the word 'auction,'" said Robert Drury, a senior vice president in the commercial division of Ten-X, one of the largest online-auction plat- forms focused on commercial real estate. The firm has sold some $20 billion worth of these assets since its founding in 2009. "We call them live-bid events now, just because, for what- ever reason, in real estate there has been a stigma historically with the word 'auction,' that the properties are distressed or they are vacant grocery-store boxes in very small towns across the country. Actually, we are selling stabilized, high-quality, well-located, core market assets." As a measure of the growth of commercial property auctions, Drury notes that•70 percent of the buyers on the Ten-X platform are first-time participants. "We are bring- ing a whole new group of buyers to the market that may or may not have been participating before," he said. The buyer pool may include participants as disparate as medical professionals and•institutional investors, Drury says. Retail properties, in particular, have proved•most popular. "We have democratized the process of buying real estate, and everybody loves retail," he said. "It is our best-selling asset class." Drury joined Ten-X after being a broker at Marcus & Millichap and running acquisitions and development for California-based•Red Mountain Retail Group. Ten-X has sold about $6 billion of retail property since 2009. The sellers cover a wide spec- trum too, including institutions, retailers,•local or regional shop- ping centers•and REITs. "We call it overcoming the 'A' word," said Fontana Fitzwilson, an executive vice president at Tulsa, Okla.–based•Williams & Williams Real Estate Auctions. "Auction is becoming more mainstream. Sellers are now discovering that this market- ing method actually works. What we bring to the table is explaining the benefits of auction to our sellers and that auction doesn't mean 'fire sale.' What auction means is that you have made a strategic decision to have a time-definite real estate transaction, for whatever reason. Auction flips the traditional process on its head; all due diligence is done on the front end, not the back —•it is a bidding process, not a bidding-down process." Williams & Williams has had a strategic alliance with JLL for about four years. "Many of their clients have chal- lenging, tough-to-sell assets, or they may have time-specific needs that are just difficult to satisfy in the traditional sales process," Fitzwilson said. "The goal of auction always is to turn challenging situations into closed transactions, positive experiences for the clients•and revenue for the brokers, so it has its place."•In August the company worked with JLL to sell its sixth portfolio of KeyBank facilities, including sites at shopping centers. "This is a perfect example of where auc- tion works well, because these properties had identity crises — they had vaults in them," said Fitzwilson. "They were good retail locations, but they were deed-restricted. So we We call them live-bid events — ROBERT DRURY, SENIOR VICE PRESIDENT, TEN-X Fontana Fitzwilson

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