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Has anyone ever bought/heard of someone buying a property on Loopnet?


thepupil
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I ask because I occasionally troll Loopnet for anecdotal perspective on CRE prices and I have never seen a single property that one would describe as "attractively priced" and sometimes I feel like the brokers / sellers are taking crazy pills.

 

For example, this just showed up in my COBF banner ad.

 

https://www.loopnet.com/listing/plaza-del-mar-at-fort-lauderdale/18677603/?utm_source=criteo&utm_medium=banner&utm_campaign=costardiamondad2020

 

This is at $470/foot. At that price, KIM (an owner of shopping centers) would be worth $32 billion. it trades for ~$10 billion enterprise value with a $4 billion market cap. KIM could be cheap [i think it was much better risk reward when it traded in the low teens in 2018 than at $9.5 now, much has changed), but I very much doubt that KIM is a 6.5 bagger (or worth 2x its 2016 post GFC high).

 

KIM trades for $138 / foot on an EV basis. ($10 billion / 72 million)

 

Is this property 3.4x better in quality than KIM's?

 

No, of course not. I mean...as exciting as being anchored by Joe Picasso's, a pottery party studio? is...

 

Now obviously any real estate listing is "aspirational". Other than idiots like me operating in residential bidding wars (I bid on a house within 3 days of listing because that's what everyone does around here), no one calls the broker and says "ya I'll pay full price".

 

But how far off are these listings? Are schmucks on Loopnet listing $15mm properties at 3x their value? Because that helps no one. It tells a buyer that the seller is completely unrealistic/irrational and no one makes any money [namely the brokers] because transaction doesn't occur.

 

 

 

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I’m in the Pittsburgh - Columbus area and I have seen one multi family portfolio that was reasonable, but the properties were pretty junky and not in a good area. Other than that one, I don’t recall seeing a property on LoopNet that appeared to be a reasonable deal in the last ten years or so. CBRE tends to be similar. Obviously they both sell tons of property as they’re both big companies, so someone must be buying.

 

All of my best deals have been from contacting landlords directly when the property isn’t listed or from distressed sellers.

 

Hopefully someone with a different experience can chime in as well. 

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Loopnet is a total waste of time.

 

There is a massive public to private disconnect. I didn't see the NOI on a lazy glance, but thats a 7.5-8.5 cap property. The problem with the public companies is theyre all kingdom builders. So you're not getting anyone saying, "we're trading at a 10 cap but are easily a 6" and winding things down...

 

The REIT structure is also sometimes heavily inefficient in light of the kingdom builder context. You cant tell a discount to NAV story and then issue stock, so it's leverage, leverage, leverage, then whoops..

 

CREXI is where its at though if you're looking to keep up with listings and get access to brokers.

 

https://www.crexi.com/properties/314749/florida-silver-star-shopping-center

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I/we have purchased retail properties off loopnet, out here in California though.

 

One list price was reasonable, ended up purchasing for a slight discount, <5%.  This was a seller who wanted out and did not want to deal with being a PM.  Units were fully leased out in a decent area, mostly NNN.  Owner also had the deal fall apart 2 or 3 times prior to me so they were a bit frustrated.  All I had to do was take over, be the PM, stagger and update the leases with rate increases and NNN terms.  Standard DD and closed in 60 days.

 

I think the deal was priced fairly.  Bought for low 6 cap, probably close to 7 cap now over ~5 years prior to COVID-19.

 

The other was also in California, more in the boonies, and the asking didn't make any sense, ended up obtaining the property at a >20% discount to asking.  This was fully vacant except for the anchor tenant.  Broker also listed potential rent rolls in the OM about 35% too high for its location. 

 

This owner was crazy.  Long story short, after a bunch of craziness over the course of a year and finally at the end, he tried to stiff the broker on contractually obligated commissions and would not sign closing documents unless broker capitulated.  We prepared to sue for performance, but the broker gave in (wanted to wash their hands of this crazy client) and we closed the deal. 

 

Luckily, over time it was worth it if commercial retail cap rates don't change too much.  Bought around a 5 cap, was around 8 cap ish after ~7 years pre COVID.

 

In this situation, I believe the broker lists the property at whatever the client wants to keep the business.  Then over time they show that no one is interested or the offers they receive are much lower than the asking and hope they see reason.  I think this works with most clients.  Or you just list it and forget about it, and keep the connection alive and hope that the client has other friends with real estate.  Or also having more listings makes you look nicer in the eyes of potential clients.

 

But then also you have owner/operators who list properties for sale on Loopnet and may think, ok, if I get this price I will sell, otherwise I will just sit back and keep collecting rent.

 

So I would say deals are definitely being done, but the asking may be accurate or wildly inaccurate.  Not sure if the pricing is more accurate in California due to higher volume?  Or possibly I got taken advantage of and I still haven't figured it out =D

 

For both of these properties, I had to troll Loopnet for around a year or two to find ones I liked.

 

*Update - all this was over 5 years ago, so things possibly have changed.

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