The development of the Mammoth Henderson Center was untimely and was a casualty of the Great Recession. With an oversupply of office space, and a substantial increase in unemployment, newer office properties found themselves between a rock and a hard place trying to compete with older properties at reduced rental rates with negative absorption. With declining values and a limited number of office tenants to go around, the developers were unable to maintain the terms of their loan agreement with the bank being only 35% occupied. As a result the bank foreclosed on the property.
At the time the market was so volatile that even appraisers struggled determining the value due to a lack of arms length sales transactions and lease rates declining at a historical pace. US bank’s appraisal at the time was $12,500,000services
As a result US Bank hired the Naseef Team to manage the property and establish our Broker Opinion of Value. They developed assumptions of how they thought the property would perform over a 5 year period with an investor’s NPV at 17%. Based on these assumptions they felt the property was worth closer to $10,000,000. Due to banking regulations the bank was unable to sell the property for less than 20% of its appraised value for 6 months. After 6 months a new appraisal was ordered which valued the property at $8.250, 000. The Naseef Team felt the appraiser simply did not have their arms around the market and was far below what they felt the true value was for this property. It was obvious that the property being well located, well appointed with most the vacant interior space completed that the property would be in demand at the $10,000,000 range. Consulting with US Bank it was decided they would market the property with a call for offers.
The call for offers generated multiple offers from a variety of investors. We helped the bank determine the most qualified buyer to negotiate the sale with. A price of $9,950,000 was agreed upon and closed within 90 days at a final sales price of $9,500,000.
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