Gibson Company is proud to provide summaries of successfully completed Advantaged Transactions. It is worth noting that the projects started simply as conversations between Advisors and their clients. No direct solicitation was involved. No selling was involved. The Advantage Transactions story was told. Clients listened and engaged with the concept. It is also worth noting that the client profiles are all different, they live in diverse parts of the country, the asset types are different, and the property locations are widespread. The only common denominator is the result – success
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Success Stories
Office Building Sale
235 E. Baker Street
Costa Mesa, CA
SITUATION:
A retired business owner (“Client”) residing in Monterey, California owned a 16,000 sq. ft. two-story office building in Orange County, California. She and her husband (since passed away) had owned the property for many years. It served as the headquarters of the food brokerage business they started, grew and eventually sold. The new business owner decided to vacate the premises, so the property was to become vacant. The Client was introduced to Gibson Company by her Tax Advisor. The Advisor recommended she consider Gibson to oversee the broker hiring and selling of the property. The Client’s initial inclination was to list with a local broker she had known for years. Gibson agreed to include that broker in the evaluation process, and so the Client engaged Gibson Company to proceed.
STRATEGY:
Gibson identified a select group of top brokers with expertise in the target market and similar property sales. Gibson prepared an evaluation and comparison matrix of the brokers, including the Client’s broker acquaintance. After interviewing the candidates, the Client chose one of Gibson’s recommended brokers to handle the assignment. Gibson communicated the decision to the Client’s broker acquaintance, so she was relieved from making the call. Gibson then assisted to negotiate the listing agreement with the broker chosen by the Client.
SOLUTION:
The Listing Broker extensively marketed the asset on a multi-state basis. A commercial broker in Sacramento representing the California Lottery responded to the marketing campaign. After touring the property, offers to purchase were initiated by the Lottery. Negotiations led to a definitive purchase agreement. The Due Diligence process uncovered previously unknown title defects including invalid ingress/egress easements. Gibson took charge of resolving the problems. Gibson secured cooperation of a neighboring property owner to rectify the easement problems. This was accomplished without the Seller incurring any costs. Once title issues were resolved, the sale was closed.
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Industrial Building Lease
23252 Via Campo Verde
Laguna Woods, CA
SITUATION:
A Hollywood writer/director owned a 23,000 sq. ft. one-story distribution building in Laguna Woods, California. He had purchased the property as a leased investment. The tenant was the Los Angeles Times newspaper. The Client and Tom Gibson had gotten to know one another through work together with a local non-profit. Their common interests in real estate provided a frequent topic of conversation. Some years after they first met, the Client phoned Gibson to say his tenant had filed bankruptcy. The lease was rejected in Bankruptcy Court, so the Client needed to lease or sell the property. The Client wanted Gibson’s help to oversee the transaction. The Advantage Transaction process was specifically developed for this assignment.
STRATEGY:
Gibson identified the top industrial broker specializing in this type of asset in Orange County. As it turned out, the broker had originally represented the LA Times in locating the land, identifying the developer and negotiating the build-to-suit transaction that resulted in the Client’s purchase of the building. The broker knew the property inside and out. The broker agreed to a fee sharing arrangement with Gibson. The Client would pay just one fee that Gibson and broker would split. The broker’s scope of work was limited to marketing and touring by prospects. Gibson would handle everything else.
SOLUTION:
Within a few short weeks, the broker identified a new tenant interested in the property. A 10-year triple net lease was negotiated. The tenant’s business required a Conditional Use Permit. Gibson handled the processing of the permit on behalf of the Client. Once the CUP was obtained, the tenant took occupancy and the lease commenced. Five (5) years into the lease, the tenant negotiated to purchase the property from the Client. Gibson and the broker provided representation and negotiation services.
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Industrial Building Sale
1910 Via Burton
Anaheim, CA
SITUATION:
A Family Trust (“Client”) owned a 12,000 sq. ft. manufacturing-distribution building in Anaheim, California. The family patriarch (since passed away) had purchased the property to serve as headquarters for the cleaning products business he had started and built over 30 years. The Trust also owned the business which still occupied the property. The business was being positioned for sale, so nothing could be done about the building until disposition of the business was finalized. It was deemed unlikely that a buyer for the business would want to remain located in the property.
PROCESS:
Two Co-Trustees were among 5 siblings, all Beneficiaries of the Trust. The Co-Trustees had some relationship with two industrial brokers with whom they felt an obligation to work. Tom Gibson presented the Advantage Transaction process, and they clearly saw the fiduciary benefits. It made sense to interview competing brokers for the project. They engaged Gibson Company to handle the sale. Gibson identified a highly regarded industrial broker with a track record of similar sales. After interviewing that broker along with the two suggested by the Co-Trustees, the Co-Trustees selected Gibson’s broker candidate. Interestingly, Gibson’s suggested broker proposed the lowest asking price. His strategy was to create an auction-type bidding process amongst several known buyers in the market.
SOLUTION:
The auction strategy worked better than anticipated. After a few weeks, two buyers actively emerged as front-runners. They engaged in bidding war driving the price up with each round. Finally, one of the buyers stretched considerably farther than the competitor. This buyer also provided a “proof of funds” and firm loan commitment from its bank. The Co-Trustees accepted the offer and successfully closed the transaction with that buyer. At the time of closing, the sale price per square foot set a new all-time high number for industrial sales in Anaheim.
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Health Club Property
1635 S. San Jacinto
San Jacinto, CA
SITUATION:
A married couple residing in Las Vegas owned a 28,000 sq. ft. single-purpose health club facility in San Jacinto, CA. The property was leased to a marginal credit health club at a below market lease rate. The property was previously listed for sale with a national brokerage company for 6-months. No offers were generated. Gibson was introduced to the owners by their real estate attorney. The owners were frustrated with the lack of performance by their previous broker. They were intrigued with Gibson’s Advantage Transaction approach to property sales.
STRATEGY:
The owners engaged Gibson to proceed with the sale. Gibson faced several challenges. San Jacinto is a small, remote market area with few good brokers. The engagement called for a specialist in investment sales also familiar with health club leases. After considerable research, Gibson located such a specialist. He had similar health club listings throughout California and Arizona. The owners agreed to list the property with this broker. The broker agreed to share his fee with Gibson who would oversee the transaction.
SOLUTION:
A buyer was sourced quickly from a known group of similar health club investors. An exchange of offers resulted in an agreement to purchase and sell. The buyer had financing and was prepared to close immediately. As sometimes happens, a few title defects arose. Prior conveyances had failed to identify easement conflicts and legal description errors. Those had to be cleaned up along with sign-offs from the previous owner, the San Jacinto Redevelopment Authority. That entity had been extinguished several years earlier, so the successor agency’s approval had to be obtained. This took several actions by the San Jacinto City Council and California State Department of Finance. Eventually all the hurdles were cleared, and the sale closed.
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