When A Property's Parts Are Greater Than the Whole

James Nelson

Owners looking to maximize sale proceeds should consider selling components of the property separately as opposed to the property in its entirety. As most buyers today specialize by asset class, they may value a portion of a property higher than someone looking to purchase the entire building. If a seller does not analyze this possibility, they may be surprised to see a buyer spin off a portion of the property at or shortly after sale.

One example where our team was able to maximize value was at 200 East 11^th Street on the corner of Third Avenue. Benchmark Real Estate Group purchased the entire property for $57 million.  The buyer then separated the building into two condominium units – the retail and the residential. We sold off the retail condo for $24,35 million to HubbNYC, which substantially lowered Benchmark’s basis in the residential from $1,086/SF to $710/SF, a 35 percent reduction.  HubbNYC also fared well in the transaction as they were able to release the corner space and stabilize the retail.  A true win-win.