When an owner is faced with a distressed property, one keyquestion that immediately emerges is: should we dispose of thisproperty? In traditional commercial real estate transactions,buyers acquire assets with the intention of improving them,stabilizing them, and gaining value through either a timelydisposition, or ongoing operation.

In the case of a distressed property, however, the ownertypically did not intend to be in control of this particularproperty, and definitely did not expect to be in this positionunless the property was acquired opportunistically. As a result,there is often an immediate desire to unload distressed assetsquickly.

In cases like these, a skilled asset manager is essential tohelp any owner of distressed real estate weigh the options andanalyze the financial outcomes that are possible if an asset isretained, or disposed. The real question then becomes: why shouldan owner sell a distressed asset to the next buyer? When faced witha vacant or nearly-vacant property, four impactful items need to beevaluated that directly affect an owner’s ability to achieve thehighest exit value—which usually is the mandate for an owner of adistressed asset. If these four items remain equal, why would theowner sell its profit? To examine this further, below is abreakdown of these four impactful items: