The LA Times main headline last Sunday was titled “Home Seekers Edged Out in Inland Market” – but it might as well have said Ventura County.

In short, it discussed how home buyers are finding it hard to get their offers accepted because investors, both big and small, are offering all cash and higher bids. In a new phenomenon I’ve never seen in my 30+ years here, private equity funds with extremely deep pockets are aggressively bidding for limited inventory – why?

Two reasons. 1) They can pay all cash for a home, rent it and have positive cash flow – cash returns that in fact are higher than keeping their cash in a savings account.  2) The real reason however, is that they believe the real estate market has bottomed, and will climb substantially faster than other investments.

Their article last Thursday had a chart that showed the median price change for Ventura County from January 2013 over January 2012 was 13.2%.

So for these investors it’s Buy, Rent and Hold!

There’s no doubt foreclosure activity in the commercial marketplace has slowed down, often times by following the “extend and pretend” rule. However, these recent examples give insight into how much lenders are willing to discount their loss at an auction.

This office building at 145 Park Lane, Moorpark, built in 2008, at one point was on the market for $5.8M. But the $2.5M loan ballooned up to a published minimum bid of $3.7M.

However, what we frequently see is that on the day of the auction, the lender will drop their minimum bid to a substantially lower opening bid to perhaps entice a 3rd party buyer . In this case, it was just over $2.5M but the property has now been listed by the bank at a (hoped for) $2.9M price point.

This 39,000 square foot office building, built in 1985, is just across the street from The Oaks shopping mall in Thousand Oaks. It had an assessed value in 2010 of $8.3M and a loan of $5.6M made in 2004 when the building was acquired.

The published minimum bid was $6.3M. But the “amount paid” on the Trustee Deed shows an amount of $4.1M, a number of just over $105 per square foot. You can’t buy the land and build an office building for that price today.

However, it requires exceptional patience to buy a property like this at auction because frequently the auction is delayed because of bankruptcy, or other negotiations taking place in the background. Also, not many investors on the day of an 11 AM auction can run to the bank and get that kind of money in a cashiers check (but an investor earlier this year did just that and bought the mini-storage facility at the corner of Eastman and Rose in Oxnard).

Finally, this very nice industrial building at 360 Cortez, Camarillo, had a published minimum bid of $1.2M but dropped the opening bid to just over $700k. It was listed and recently bought by an investment company at $710k.

If you are looking for commercial property as an investor or user, give me a call. I follow financially distressed commercial real estate in Ventura County.

Here are examples of small industrial units that were recently taken back by their lenders. They show exceptional value for either an owner/user or an investor looking to acquire small industrial units.

This photo is of 2 adjacent condo units on Dupont Circle, Ventura. Each are about 1,200 square feet, have an  office in front with warehouse in back. Currently, the front offices are open to each other but could easily be put back into individual offices. The opening bid for the pair at auction was $240,000 but there were no bidders so the units reverted back to the lender. Comparable units in the area have been selling for $170,000. Read the rest of this article »

Representing the buyers, Don recently closed a 7.5 acre industrial site in Santa Paula that was owned by First California Bank. He was instrumental in locating the bank owned property, finding the buyers and negotiating the transaction.

Here is a partial list of commercial properties that have become REO (Real Estate Owned) properties within the past couple of months or so. Each transaction is different, but ultimately the lender will want to sell the asset. If you are looking to buy commercial property, either as an investor or owner/user, call me.  To see other new REO properties, click and read the rest of this article.

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