Bank Unloads 30,000 SF of Unfinished Offices for $40 Per SF

For $1.2 million or $40 per sf--four times less than the current hard construction cost of a class A office building--Stanford Management acquired the partially completed two-story structures sitting on 4.8 acres at 5442 Hoffner Ave. near Orlando International Airport.

Land-wise, however, the bank did all right, too, area brokers familiar with the transaction, tell GlobeSt.com. The $1.2-million purchase price, based on acreage alone, equates to $250,000 per acre or $5.74 per sf--a premium for a strategically located property.

"To use an over-worked cliché, buyer and seller were in a win-win situation here," Dean Fritchen, a senior broker in the Winter Park office of Coldwell Banker Commercial NRT, tells GlobeSt.com. Fritchen was not associated with the deal but Mary Frances West, a senior broker in the Orlando office of Carter, was.

She orchestrated the sale by direct mailing potential owners-users, investors, general contractors and industry groups. That took three months. West completed the deal in another three months, from contract signing to closing.

"The buildings sold for $40 per sf because someone buying them had to assume the risk to redo the buildings to bring them up to code and then lease up," West tells GlobeSt.com. She says the disposition took six months to complete because "[local] building permits had expired and building codes had changed."

She says the properties were on the market by the bank since October 2003. A December 2003 contract with a potential buyer failed due to financing. Each building has about 15,000 sf of rentable space but the properties were hardly in showroom condition when the bank gave Carter the listing contract this year.

"The shell was complete and roofed in," West tells GlobeSt.com. "However, an additional $850,000 was needed to complete the interior, not including the tenant improvements." If the buildings were to be used by multi tenants, another $500,000-plus would be required to finish the project.

For a single tenant, the finishing cost would have been under $500,000. "This would not include leasing commissions and carrying costs," West adds. Construction began in 2000 and ended, unfinished, in 2002. The bank wouldn't disclose how much the previous owner, Airport Executive Plaza Inc., owed on the construction loan or the size of the loan.

"Our goal was to sell the two office buildings as quickly as possible and Mary Frances did just that," says Edward J. Walker, a senior vice president in Florida for Birmingham, AL-based Regions Bank. "Having worked with Mary Frances in her capacity as a special assets bank officer several years ago, we knew we were working with someone we could count and would understand our business needs."

Joe Roberts of Century 21 represented Stanford Management Group.