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DALLAS-Henry S. Miller Brokerage and recently launched CRE Auction Group of Southlake, TX are teaming together to have it first live commercial real estate auction later this year. The auction is set for December 15, and management at both companies is adamant that this isn’t a fire-sale, distressed-asset-only event.

“This is for highly motivated sellers,” comments Bill Vaughan, CRE Auction Group president. “Sometimes people see ‘auction’ and they think ‘distressed,’ but that’s not the case here.” He tells GlobeSt.com that some sellers may want to turn their assets into cash, or simply don’t want to hang onto them any more because an original pro-forma might have changed.

Vaughan says he approached Henry S. Miller Brokerage last May as a possible partner for a pure commercial real estate auction platform for a couple of reasons. First, he wanted to focus his efforts on Texas. And second, Henry S. Miller is one of the oldest and largest independent brokerages in the state. “I know a lot of folks at the Miller office, and we all decided it would be a good match,” Vaughan says.

The companies are on the lookout for potential sellers and will look at any flavor of real estate. However, Sam Kartalis, Henry S. Miller’s president and COO tells GlobeSt.com that “junk” property owners need not bother to apply. “We’re not going to this trouble so people can make bids on junk properties,” Kartalis says. “We want performing properties.”

Kartalis says the auction processes is familiar to Henry S. Miller, as this was a tool the company used during the late 1980s and early 1990s, when the Resolution Trust Corp. was handling a good chunk of commercial real estate. But the difference between then and now, he continues, is then, one could still find financing to buy some of these properties.

“If you had a performing property or development that passed the test, there were lenders out there, non-recourse lenders who would provide the financing,” he explains. “But those lenders, and securitized lenders are gone. What you have out there today are small banks and large banks, talking about resource.” The problem with recourse, he continues, is the high equity stake required.

Though the auction process, in and of itself, doesn’t provide easy financing, it does act as a clearing house to bring motivated sellers and interested buyers together. Both Kartalis and Vaughan say that the partnership’s plan is to have at least one such auction event a quarter, with Kartalis adding that they’ll be taking place throughout 2010 and possibly beyond.

“Auctions are exciting, they’re fun and people like them,” Kartalis says. “We’ll try to be the ebay of commercial real estate with this.”

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