Choosing a Buyer Type for Investment Property

Posted on February 07, 2018

Commercial real estate owners have options when considering to whom they should sell their properties. Many target institutional investors and compare the risks and rewards of selling to a real estate investment trust (REIT) versus a private, boutique firm. The differences are notable.

Selling a property always demands thorough due diligence and good counsel. However, selling property to a REIT can be an extremely time intensive and costly process due to the strict tax laws and Securities and Exchange Commission (SEC) rules with which these entities must comply. For example, REITs require sellers to have in place such items as master lease insurance before they will purchase an income-producing property. If one box on the REIT acquisition checklist cannot be checked off, the REIT will not complete the purchase.

Conversely, private, boutique firms offer more flexibility, local decision-making processes and more lenient requirements to take a deal to completion. Boutique firms can get creative with sellers and tenants to structure deals differently. While the financial backing and capability of a private firm may not scale to the billions as easily as some REITs could, an experienced firm with a good reputation and market credibility does have access to cash and can do institutional-sized deals.

The team at Orion works with investors, developers, property owners and brokers through all phases of real estate transactions, from strategic planning and analysis to financing, negotiation, property management and disposition. For more information, call (305) 278-8400 or email info@orionmiami.com.