Is there any appeal for institutional owners to sell their properties off-market?
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[{"id": "hw9r36b", "text": "Everyone wants to buy off market because they can usually cop a good price. Everyone wants to list because they can usually generate more offers. Really large REITS sometimes will trade without broker assistance off market. Usually as a seller the only reason you would not want to list would be your tenants giving you trouble.", "replies": [{"id": "hwa4uo8", "text": "Agreed. On market benefits the seller, off market benefits the buyer. In my experience buyers will say they've seen everything on the market but in reality they're looking for a distressed seller or a chump. This much more rempant in MF than commercial.", "replies": [{"id": "hwa6jp9", "text": "Yeah this is usually the case. Listing a property leads to price discovery, which usually benefits the seller but sometimes can be beneficial to a buyer. Example would be in assemblage when a developer would prefer discretion.", "replies": [{"id": "hwdqveh", "text": "Wouldn't assemblage be more about one parcel -- for development, likely without an existing MF unit on it?", "replies": [{"id": "hwdrzd3", "text": "Depends on what you\u2019re redeveloping. If you\u2019re assembling a bunch of SFR in an area that just got rezoned for high-density, it\u2019s a different play.", "replies": [{"id": "hwdtfbl", "text": "Yeah, that makes sense. To the OP, though, if you're looking for off-market MF properties, doesn't sound like peeling one off of an assemblage would be very likely.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hwbya3m", "text": "If they need a quick sale for a 1031", "replies": [{"id": "hwdtsw9", "text": "When depreciation is running out, I'm guessing. Or when the time is coming up on another property's 1031 exchange and they need to sell a second property to come up with the capital for the new target of that first property's exchange. Right? (Or is there another reason that I'm not seeing?)", "replies": [], "depth": 2}], "depth": 1}, {"id": "hwc54n7", "text": "Aside from the fact that listing assets tends to generate greater competition and therefore higher pricing, institutional owners (like REITs, Pension Funds, even larger PE funds) also have a bias towards listing properties as they have a fiduciary duty to their investors and by broadly marketing an asset, they can be sure they're getting a market value for it. \n\nAn institutional asset manager's worst nightmare is selling an asset off market for $50M, and having a similar property down the street sell for $60M in the same month. This creates all sorts of job threatening questions about their decision making. Listing a property with a reputable brokerage avoids that. \n\nGenerally the only times you'll see institutions sell something off market is if it's part of a broader capital markets transaction (like a REIT being taken private) and they're trimming non-core assets but don't want to draw too much attention or if they get a direct offer from a buyer that's materially higher than what they're carrying the asset for on their balance sheet and they can verify market value independently.", "replies": [], "depth": 1}, {"id": "hwd51k7", "text": "As a seller, a few benefits for selling of market may be:\n- lower commissions: if you listed the property, you\u2019d most like have to pay a procuring broker and a listing broker fee. If it\u2019s off market the seller may be only responsible for one side, thus reducing overall commission \n- saving time: if it\u2019s off market, then you don\u2019t have to deal with a lot of prospects, unqualified buyers, agents, etc. \n\nIf you\u2019re a listing broker, sell the fact that the best way to get the highest price possible for your asset is to list it and let the market determine the price. Again, in this hit market; you will most likely create a bidding war. If you\u2019re repping a buyer, bring a potential seller a deal (off market). Make sure your working with a strong, well qualified buyer. Since you brought them a market deal with a strong buyer, why would they list it? Get the deal done", "replies": [], "depth": 1}]