Category: Market Observations
Posted: 7/15/2013
Auctions an effective tool for REITS, hedge funds, other institutional investors
By John Dixon

There are a lot of reasons to sell real estate. During the last few years, we've sold thousands of homes, restaurants, stores, subdivision lots and other properties for banks who acquired them either through foreclosure or through mergers and other transactions with other institutions.

For lenders, it's generally an easy decision to sell, because they're not in the business of owning properties in the first place. For other institutions, including hedge funds, pension funds and Real Estate Investment Trusts, the answer isn't quite as simple.

To deal in the quantities required to be a meaningful part of their portfolios, these large investors often acquire entire portfolios or groups of properties, so not everything they end up owning was hand-picked to suit their investment objectives. Over time, they face the challenge of selling the assets that don't fit. That can be slow, expensive and time-consuming.

The auction process provides the liquidity that is so critical to the management of an institutional portfolio, and a the options are endless. Properties can be sold one at a time, or dozens at a time. The auction can be online or live, or a combination. The marketing can be aimed at individuals, small investors or other institutions. The focus can be local, regional, nationwide or international, depending on the asset.

We have experience with every conceivable type of real estate, in all sorts of situations.

I usually advise portfolio managers to begin with an open mind. Tell us what you need to sell, and what your expectations are. That way, we can recommend a strategy based on our vast experience.

 

 

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