Auctions Case Studies
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Results of recent TCN Worldwide real estate auction:
1. Westside Market Shopping Center, Lubbock, Texas: This 103,000 Sq. Ft. Shopping Center was 70% occupied and produced a net income of $238,000 at the time of Auction. The property was sold at auction at $3,392,000 or 71% above the Published Reserve Price of $1,975,000. There were 13 bidders at the auction with the successful buyer being from London, England and the second high bidder being from Bakersfield, California. The strength of the English Pound and Chartwell Group’s ability to appeal to National and International Bidders worked to the benefit of the Seller.
2. A 34-Acre Land Site, of a Broken Retail Project at Pearl Road & W. 130th St., Parma Heights, OH: Only about 10% of the intended improvements were ever completed. A Court Appointed Receiver, Attorney, Matthew Fornshell, had been given the responsibility of maximizing price for the benefit of creditors in the matter of the Schneider Note Fraud Scheme. Bidders from throughout Ohio and from New York competed to acquire the property that had a published opening bid of $5,950,000. The asset sold at $7,900,000 or 33% above the opening bid. Prior to Auction, the property had been on the market conventionally for over 18 months without a sale.
3. Akron, Ohio, Quality Inn Hotel, Exit 120, Interstate 77: 129 Rooms plus 9,000 Sq. Ft. of Meeting Space. Purchaser was from Toronto, Canada at $3,763,000 or $29,170 per key. The Published Reserve Price at Auction was $2,855,000. Hotel built in early 1970’s as a Holiday Inn. Gross room revenues for the most recent 12-month period were $1,400,000 with net income of $250,000 before debt service.
4. Sidney, Ohio, Comfort Inn Hotel, Exit 92, Interstate 75: Purchaser was from Western Ohio at $2,464,500 or $34,711 per key. Hotel built in 1980’s. Gross Room Revenues for the most recent 12-month period were $959,000 with net income of $215,000 before debt service. Bidders at auction were from Sacramento, California; San Francisco, CA; Toronto, Canada; New York, NY; Suburban New Jersey, outside New York; Boston, MA; and three bidders from Ohio.
5. Austinburg Township, Ohio, Ashtabula County, Comfort Inn Hotel, Exit 223, Interstate 90: 119 Rooms with restaurant and small meeting rooms. Purchaser was from New Hampshire at $1,961,000 or $16,500 per key. The Published Reserve Price at Auction was $1,625,000. Hotel built in the 1960’s as a Holiday Inn. Gross Room Revenues for the most recent 12-month period were $1,067,405 with net income of $124,000 before debt service.
6. Spruce Hill Inn & Suites, Richland County, OH, Exit 169, I-71, O'Possum Run Road: 30 Rooms. Purchaser was from Anaheim, California at $1,100,000 or $36,500 per key. Published Reserve Price was $865,000.
7. Holiday Inn, Fremont, Sandusky County, OH, Exit 91, I-80/90: 159 Rooms. Required $500,000 Property Improvement plan to paid for by Purchaser to retain Holiday Inn Flag. Also purchaser required to tap on to new sewer and waterline constructed by county. Published Opening Bid was $1,985,000. Sales Price $3,300,000 to Purchaser from Albany, New York. Nineteen Bidders at Auction with only two from Ohio, 6 from California, 5 from New York & new Jersey plus other states.
8. 20-Acre Former Industrial Parcel, Highway 250, Sandusky, OH: This asset was a former metals plating factory location that had monitoring wells on the property to monitor pollution. Remediation was estimated to cost between $650,000 and $750,000. The property was offered subject to a Published Reserve Price of $700,000 and sold and closed in 2006 for $1,500,000 with the Purchaser being obligated to remediate the site.
9. Morgan Hotel and Suites, 315 E. Woodlawn Road, Charlotte, North Carolina: This 132-room hotel had been acquired by Woodlawn Hotel Associates, LLC in 1999 and was significantly upgraded in the year 2000. Operations suffered after 9/11 with the downturn in business travel. The Net Loss before Debt Service during the years 2002 and 2003 was in excess of $250,000 annually. The most recent 12-month period for the hotel showed a loss before debt service of $70,000. Gross income from all sources for 12-months through October 8, 2004 was $1,350,000. Most hotels are marketed by traditional hotel brokers at between 2.5 and 3 times gross revenues which would lead to a valuation of the Morgan Hotel and Suites of between $3,375,000 and $4,050,000.
The results of our TCN Worldwide Real Estate Auction Program for the Morgan were: 178 prospect inquires from 26 states; 52 due diligence packages purchased by prospective bidders; 20 bidders at the auction with cashier’s checks from 10 states including California, Nevada, New York, Illinois, and Florida. The final sales price on the property was $6,837,000 ($51,500 per key) to a Chinese Group from Chicago with the source of funds being from Hong Kong. The property had been appraised prior to our auction by the sellers in a range of between $4,500,000 and $5,000,000.
