Dealing in Bank-Owned Properties on the Rise

Aug 19, 2011

Story by: Alison Lee Satake, posted on WilmingtonBiz.com

Local commercial real estate business partners Brian Eckel and Vin Wells formed Cape Fear Commercial in 2001 to manage, sell and lease commercial properties. However, as Eckel, who is local to Wilmington, saw the market trends turn south after the company’s record year in 2008, he began to explore new opportunities that foreclosed commercial properties entering the market could bring the company.

Since 2009, Cape Fear Commercial, which manages about 1.5 million square feet of commercial space, has represented 12 different banks or financial institutions as clients. Over the past two months, the company has added about 25 new bank-owned properties as listings. And, currently about 70 percent of Cape Fear Commercial’s business is from bank-owned properties, Eckel said.

“CFC has represented First Citizens Bank & Trust in the sale of several [real estate owned] assets over the past few years. It has been my experience in working with them that they are aggressive in the marketing of our properties, responsive to the needs of the bank and provide us with detail-oriented services and information that is critical for our decision-making process,” said Tim Bylow, vice president of First Citizens Bank.

Meanwhile, lender-owned properties comprise a small portion of Maus, Warwick and Matthews, another commercial real estate firm’s business. “It’s one slice of the pie, but a growing slice,” said Hansen Matthews, a partner with Maus, Warwick and Matthews, which formed in 1987. Thus far, the firm has listed properties for two lending institutions.

To accommodate its bank clients, Cape Fear Commercial has had to tweak its typical marketing and sales strategies to sell these bank-owned distressed properties.

“Disposing of property in an expedited manner is oftentimes most important to the bank, so we have had to branch out of our usual comfort zone of marketing in order to spread the word about available properties,” Eckel said.

One method the company has implemented is Irvine, Ca.-based website Auction.com, where Cape Fear Commercial monitors bids on its properties by interested parties, who must register and be pre-qualified.

Next month, the company will hold its fifth auction on the website. It will post a 4.39-acre parcel on Highway 17 in Brunswick County, an outparcel on Carolina Beach Road in front of Harris Teeter at Sanders Road and a new Class A office building in Currituck County, Eckel said.

Last March, the company initiated a call for offers on 11 bank-owned units in Bannerman Station. In one month, the company received 10 written offers from potential buyers and the property closed at $1.78 million.

Currently, the company has launched another call for offers on three downtown properties – the Sawmill Marina now owned by Sun Trust Bank and located near the Isabel Holmes Bridge, a parking lot adjacent to Bannerman Station located at 316 N. Front St. also owned by Sun Trust Bank, and the former View on Water Street property located at 101 N. Front St. that BB&T Bank now owns. No price has been set for any of these properties. Cape Fear Commercial will accept sealed offers on prepared contract forms from now until Aug. 31.

“The call for offers marketing strategy has been something that’s mushroomed among lender-owned properties within the last year. Simply because there are a lot of lender-owned properties hitting the market,” Matthews said. His company has led two call-for-offer sales, one that was unsuccessful in 2008 and another that closed on Aug. 15.

The client or lending institution decides if it wants to market and sell the property through a call for offers, he said.

“It is still atypical to bring a property to market. Most people are more comfortable with naming a price,” Matthews said.

“Also when you do a call for offers, it strongly suggests to the buyers and public at-large that there is some element of motivation or that this is a distressed property. Conversely, when you name a price and ask for offers, you are specifically setting an indication where the seller sets the value.”

Cape Fear Commercial’s business has boomed to the point where the company hired a new research and marketing staff. On August 8, Marilyn Rush, who previously worked in the property management division of Vornado/Charles E. Smith, a firm that owns and manages 74 office properties comprising about 18 million square feet in the Washington, D.C. and northern Virginia area joined the Wilmington firm. Cape Fear Commercial employs eight real estate brokers and eight full-time employees.

Senior Vice Presidents of Cape Fear Commercial, Bryan Greene and Hank Miller were first hired as court-appointed receivers in December 2009. Greene initially was appointed a temporary receiver by the court for a 100,000-square-foot shopping center in Beaufort. Then, he received a permanent appointment by the court and led the disposition of that property. Since then, four staff members have worked on receiverships, Eckel said.

View the original story at The Greater Wilmington Business Journal.