Procuring a commercial broker for portfolio sale in small market
I am a partner in a commercial property portfolio, and have generally been a passive investor who is not involved in the day-to-day operation of the properties. My partner’s health recently declined and we were seeing a drop in occupancy prior to COVID— now all leasing interest has ceased. 

We are now considering all our options including the sale of all or part of the portfolio. There are a few local commercial brokers we would like to reach out to, in order to discuss the market / timing / and potential listing of the portfolio.  The value of our properties might be heavily tilted towards redevelopment, so we would like to discuss potential developers to approach who might see greater value in them. 

We are in a small metropolitan market, and many of our deals have been pocket listings by the broker. We want to discuss our situation freely, but are concerned that even with a confidentiality agreement that the market is small and word could get around— we don’t want any hint of this being a fire sale, and driving bids down. 

What is your advice for reaching out to a broker (or brokers), in order to get good and honest advice and to put ourselves in a strong position?
[{"id": "ghe27bf", "text": "Well (1) brokers talk and an NDA won\u2019t get you true confidentiality. They\u2019ll start shipping it the second they hear about it unless you like, really really trust them. (2) what type of product is the portfolio / how big are the asset / what\u2019s the GAV?\n\nAlso why not go on a direct basis to the largest owner in town off market and see if they want to bite at your strike price?", "replies": [], "depth": 1}, {"id": "ghe29uj", "text": "Good question... To what extent are individual properties stabilized? For example, does it include a Dollar General w/ long term lease in addition to the building(s) with vacancy you referenced? If so, stabilized properties may be marketed nationally which is a much wider audience. Could relieve debt situations to allow you to stabilize the remnant over time etc. \n\nMy initial hunch (not enough detail here to know for sure) would be to not worry as much about the market perceiving a fire sale, unless it really is that sort of situation. Even if people try and take advantage of perceived weakness, you're well within your rights to simply say \"no\" which should help you get to better pricing (so long as your asking price isn't low out of whack) Another consideration would be to have an appraiser provide as-is opinion of value and stabilized opinion of value (to have an unbiased source help set a benchmark for today's pricing and to help you ID whether or not it's worth the work to stabilize)", "replies": [{"id": "ghm6xtw", "text": "Also depending on your market, I am deeing it as a sellers market.  There is so much 1031 money and capital flowing into re right now.  As long as simeone can squint and its a good deal expect a good cap rate offer.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ghe2q2w", "text": "I would get on the same page as your partners and interview said brokers.  They\u2019ll give you a (free) BOV and market analysis.  Maybe you like what you hear, maybe you don\u2019t, but at least you\u2019ll have some frame of reference and expectation of value.  \n\nIt makes sense you\u2019d prefer to remain under the radar, but at the end of the day, any brokerage\u2019s commission will be a % or the gross sale price so they\u2019re incentivized to sell the portfolio at the highest possible price.  Selling off-market or trying to find the optimal developer/buyer yourself is a near guaranteed way to get lowballed.\n\nIn my opinion, the last thing you want to do is mention the portfolio to prospective brokers or buyers but not commit to one of them.  You then have a small market all aimlessly competing over something and you have no one in your corner guarding your best interests.  Once you list, your broker is your fiduciary.  If you leave it off market, neither the brokers or buyers are inclined to get you the highest number.", "replies": [], "depth": 1}, {"id": "ghe326b", "text": "Also keep in mind that the brokers have a better pulse on the market than you likely do.  While you may think the land value or redevelopment potential is the demand driver, they may know about a new city code, zoning law, tax code change, new employer coming to town, etc that could hugely affect the value of your portfolio.\n\nSee what they have to say.  At the end of the day, you don\u2019t have to sell if you don\u2019t want to.", "replies": [], "depth": 1}, {"id": "ghe3c4i", "text": "Honestly I\u2019ve been doing this for a long time. Most brokers who specialize in what you want them to do can get the job done. If you have them all pitch, NDA or not the word will get out 100%. Just pick one broker your trust and go with him. Stop worrying about which one is better. Make sure he is specialized in investment and your asset class / redev.", "replies": [], "depth": 1}, {"id": "ghebucb", "text": "If the listing is only given to a few people, those people generally think it\u2019s a fire sale. The more exposure the listing has, I would guarantee you would get higher offers if you\u2019re countering every one. The only time I see pocket listings being sold at or above market value is when the investor right down the street has been eyeing the property for a long time and knows the area well and generally just wants the asset. Less exposure leads to lower offers because buyers have no competition, this may be different from other comments but it\u2019s what I\u2019ve seen in Texas so far.", "replies": [], "depth": 1}, {"id": "ghey8ji", "text": "Pocket listings on a one-off basis are nothing to pass opinion on. *It\u2019s just one property* so who cares? Now wanting to pocket list an entire portfolio, **that\u2019s a completely different story**, because anyone wanting to liquidate their entire portfolio on the down low all at once must be trying to avoid attention for some reason that is rarely buyer friendly. \n\n**Portfolio pocket listings reek of something being \u201creally wrong\u201d with the portfolio, requiring the owner/investors to want to quietly exit in the middle of the night**. \n\nWith that said, portfolio liquidations under your circumstances with an ill managing partner do very well when the seller is open about why the portfolio is being liquidated. \n\nI have a client who almost exclusively purchases small batch portfolios (10 properties or less) being sold due to the owner\u2019s health or death. \nThese properties usually just need catching up on the most recent deferred maintenance and minor cosmetic updates.", "replies": [], "depth": 1}, {"id": "ghf5df6", "text": "I would go to your local real estate investor group with a one page slick and hand it out.", "replies": [], "depth": 1}, {"id": "giejz3g", "text": "That's really insightful.", "replies": [], "depth": 1}]