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(This story, in slightly different form, originally appeared in the Daily Business Review.)

Much of the industrial real estate empire built by Fred Keller, a Palm Beach millionaire who murdered his ex-wife several years ago and who died in prison last year, is being put up for sale this week.

The portfolio includes 29 industrial properties, most of them in West Palm Beach and Lake Worth, totaling about 1.2 million square feet. The asking price has not been determined, but Marcus & Millichap brokers Doug Mandel and Adam Kristol, who are marketing the properties, say it will be in the $75-per-square-foot range, or about $97 million. Local brokers familiar with the Kellers’ properties say they expect them to sell for much less, between $50 million and $75 million.

“They are all within a great location and a great area for distribution, but the majority of them are older, B and C class properties,” says Christopher Thompson, an industrial broker at Cushman and Wakefield. Thompson estimates the portfolio to be worth between $60 million and $75 million, or $50 to $60 per square foot.

Neil Merin, chairman of Merin Hunter Codman, a commercial brokerage in West Palm Beach, has even lower expectations. He estimates most of the properties in the portfolio are worth between $35 to $50 per square foot.

Nine of the buildings in the portfolio, most of them in West Palm Beach, are 90% occupied. Eight are less than 75% leased and the others fall in between. Several of the buildings were constructed 30 or more years ago and the portfolio has an average vacancy rate of 25%, according to marketing information provided by Marcus & Millichap.

Kristol and Mandel say they anticipate offers within 10% to 15% of the list price, but not as low as Merin predicts. “There are some properties in this portfolio that could sell below $50 per foot but the majority of them are higher quality,” Kristol reports.

The properties will not be marketed as one portfolio, according to Mandel. “We are going to break it up into smaller, maybe eight to 10 portfolios, that will be more easily financed in this market and will attract a broader range of potential buyers,” he says.

Despite the low expectations of some brokers and the slowdown in the commercial real estate market, Mandel and Kristol are optimistic about the prospects of the portfolio. “We anticipate a strong response from the market based on the price points and the diversity of the properties,” reveals Kristol.

The proceeds of the sale will be split evenly between the estates of Fred Keller and his ex-wife, Rosemarie Keller, according to John Farina, representative of Rosemarie Keller’s estate. Trusts established for their son, now 13 years old, will receive most of the money from the sale.

In her will, Rosemarie Keller established a trust to benefit her son that is to receive 70% of her estate. The other 30% of her estate will be split between Rosemarie Keller’s siblings and their mother. The sale proceeds designated for Fred Keller’s estate will ultimately be used to pay administrative fees and satisfy three judgments totaling about $41.5 million that resulted from civil suits filed on behalf of the boy, Rosemarie’s mother and her brother, who was with Rosemarie at the time of the fatal shooting and was also shot by Keller.

Rosemarie Keller was killed Nov. 10, 2003, when she and her brother visited her ex-husband’s real estate office at the Keller Trust to discuss how their assets would be divided. She had recently won the right to 50% of his assets as part of a three-year divorce battle.

In his office, Keller killed Rosemarie and seriously wounded her brother. Keller was convicted of first-degree murder in his ex-wife’s death and first-degree attempted murder in the shooting of her brother. He died last year in prison of leukemia at the age of 73.

The Palm Beach mansion where the Kellers lived and an adjacent vacant lot are also listed for sale for about $16.9 million. Lawrence A. Moens and Associates has the listing.

Fred Keller’s estate owes $30 million to the boy, $5.5 million to Rosemarie’s brother and $6.4 million to be divided between her mother and her other siblings. If the proceeds of the warehouses and mansion sales are not enough to pay the court judgments — which include 7% annual interest that has been accruing since March, according to county records — then the share of the money that belongs to Fred Keller’s estate will be split proportionally.

“But the satisfaction of the judgment does not depend on the sale,” says Farina. “They are not in a rush to sell. The portfolio is profitable. All the debt is being managed. There is a profit at the end of the day.” But the only way each party could cash out is through a sale.

Steve Rothman, an attorney representing the estate of Fred Keller, and Dan Shepherd, the personal representative of the estate, declined to discuss how the sales proceeds will be allocated. “The specifics surrounding the distribution of money from the sale of the Keller portfolio of properties involves the private financial situation of a child who tragically lost both parents,” says Rothman. “We, on behalf of the estate of Fred Keller, must respect the child’s privacy rights by declining to disclose this confidential information.”

Polyana da Costa can be reached at [email protected]

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