story by Lakin Parr, Pintail Capital Partners
The current climate for investment-grade commercial real estate transactions continues to create opportunities for building owner-occupiers to sell at high valuations. Investors are seeking stabilized returns and tax benefits provided by owning real estate, making now an excellent time to have your commercial asset evaluated.
Two sectors enjoying significant traction are investment retail (e.g., Arby’s, Bojangles’, Sherwin Williams, Applebee’s, etc.), and investment-grade office and medical
office (e.g., a building owned by a practicing physician).
In both sectors, the underlying strength of the investment is determined by the terms of the lease and cash flow produced from the tenant’s lease obligation. We frequently meet with business owners and physicians in the Southeast who own their real estate
which they either occupy or lease to a third-party tenant.
They are often astounded by the building valuations we achieve for them. These valuations are a factor of the existing (or renegotiated) lease income and other market variables that we identify. Often buyers are private-equity groups or family offices who require CRE investment placement or individuals with 1031 capital to re-deploy (tax-deferred like-kind exchanges).
We encourage building owners to consider monetizing their real estate now while we are seeing historically high valuations. This minimizes exposure and risk in the event of a future downward market shift.
Sellers can increase the value of their property by selling while the building’s lease has enough remaining term to be attractive to an investor seeking long-term steady yield. It’s worth a conversation to understand the best steps to take in order to maximize the value of your property.