8801 Horizon Boulevard NE
The Challenge 
The owners of 8801 Horizon Boulevard had holdings in first tier markets on the west and east coast and desired to sell the property at a capitalization rate they were achieving in other markets. The capitalization rates they were accustomed to were a full point to a point and one-half more than any similar type of property had ever sold in the Albuquerque market. In reviewing the property and comparable sales in the region, we proposed a marketing plan to the ownership where the market could set the price.
An additional factor that could potentially further impact the sales price was the building was master leased to a single user which had vacated the building, subleased the entire building to multiple tenants and the master lease was scheduled to expire within five years. To overcome this potential objection the marketing material supported that the property could provide significant upside in the future due to the current rental rate being substantially below market and that the anticipated sales price would be considerably below replacement cost.
The seller’s primary motivation for the sale of the property was to provide capital needed for a new development where they could effectuate a reverse 1031 exchange if they sold the property prior to June 15, 2006. The listing agreement was entered into January 2006 with an expiration date of June 14, 2006, so we had a very narrow window in which to sell the property.
The Solution
The strategy was to take the property to the market without a list price. A part of this strategy was that the marketing information would fully disclose the scheduled income and term of lease. The primary means of communicating this information were as follows:
- Presented information and package at CARNM Marketing Session in February 2006.
- Listed property on LoopNet in February 2006.
- Direct emailing to over 700 potential investors during the month of February 2006.
- Direct telephone calls to over 300 potential investors and brokers during the month of February 2006.
This strategy resulted in receipt of over 123 requests for full package and confidentiality agreements during the month of February and the first half of March. Almost 50% of the confidentiality agreements were requested from buyers that were being represented by the New Mexico CCIM chapter members. As part of the package we requested receipt of any offers prior to April 15, 2006. We received over 19 offers from qualified prospects. The plan was to request best and final offers from the top five offers. However, the top offer was from a California investor that had to identify one additional property as part of a large portfolio 1031 exchange no later than May 1, 2006.
Over the course of a week, negotiations were conducted and ownership of the property was transferred on May 16, 2006. The building sold for a 7% cap, more than a full point below any other comparable property sale and exceeded the seller’s expectations.
