Unusual assets can be tricky to sell, requiring a creative and unique approach. I know this well having sold a bunch of them myself, including a sports coliseum that didn’t have a team and a pristine mountain that happened to have an underground coal fire at the time.
I’ve been watching how the North Carolina State Property Office has been selling their unusual assets. I think they could be doing a better job.
Four years ago, the state struggled to sell the Dorothea Dix campus on the edge of downtown Raleigh. Lawmakers tried to scuttle a lease signed by former Governor Beverly Perdue and a legal confrontation became possible. Ultimately, a deal was reached and in January 2015, when Raleigh agreed to buy the property.
Now the state is attempting to sell a prison in southwest Charlotte. Here is the marketing flier: https://www.ncspo.com/sale/CharlotteCorrectional.pdf
This could be interesting, and this is the type of non-commoditized asset that I love to package, but there is absolutely no progress being made. Other than a small 4’x4′ sign hidden in the shrubs off of Tyvola Road, no one could possibly find out that it is for sale. It does not show-up on Loopnet.com or CoStar – the two biggest commercial listing services. After googling for 25 minutes – and I am a search wiz – I found this drab offering: https://www.ncspo.com/sale/CharlotteCorrectional.pdf
I have no idea why the state is not trying harder to sell this tract – it is a great hotel, apartment or office build-to-suit location. There is over $1B in development happening across the street and SealedAir, Compass and the VA have bright new developments on the other three corners of the interchange. When I asked the state if I could help, they issued me a lengthy RFP. The terms were like none I have ever seen. I am not going to comment on the RFP, but you can call them for a copy.
Deals involving the state also have another quirk that makes things tricky. The key to selling anything is the structure in which you are going about selling it. With traditional commercial real estate deals, there are typical deal structures commonly followed. But state government creates these almost impossible deal structures that make it frustrating to work within. One of these processes is the upset bid process, where anyone can come in and make a higher offer after someone has put in the supposed winning bid.
Providing a seller with a commercially reasonable deal structure is the single most important thing that a broker provides, and the state is getting in the way of getting it done. That is part of why the prison is still available.
I’ve written about these challenges and have some tips in my proprietary guidebook, the Comprehensive Asset Sale™ Playbook (link here.)
In my next blog, I’ll share some stories from the frontline and offer up the best ways to sell these assets and the mistakes to avoid.