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Investment Property Advisors 2018 Recap & 2019 Kickstart

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Investment Property Advisors is one of the most well-networked teams in the commercial real estate industry in the State of New Mexico.  Focusing on investment sales, the team understands the local and regional markets impeccably.  IPA’s knowledge and relationships in the investment real estate industry, coupled with their work ethic and dedication to their clients, puts them in position to best serve their clients and produce outstanding results. 

As leaders in Investment property sales, we sat down with Investment Property Advisors, Cole Flanagan, CPA, MBA, Partner and Jake Mechenbier, Senior Advisor, to discuss their thoughts on the 2018 year-end outcome and how the 2019 year has kicked off. 

What made 2018 stand out from previous years in terms of investment property sales?

2018 was a strong year for investment sales and the momentum has carried over into 2019.  Investment sales are complex but we make the process as simple as possible for our clients through our proactive approach, underwriting, detailed analysis, and our creative problem solving.  We have the expertise to create successful outcomes for our clients on challenging assets.  (CF)

Our team excels in navigating challenges and providing excellent outcomes for our customers; 2018 was a great example of this with multiple transactions with environmental challenges that required our expertise in navigating the lender and buyer requirements to execute a closing.  We also worked closely with sellers, lenders, and buyers in 2 instances to avoid a foreclosure, reposition the assets, and provide a winning outcome for all parties. (JM)

What were some of the challenges you faced with the economy or other variables?

We have successfully sold multiple assets with challenging components by connecting the “right” buyer with the “right” seller.  Some challenges we faced included environmental issues and properties with cannabis users.  Both of these challenges can create hurdles with financing but we were able to successfully overcome these challenges by being proactive in our approach.     

On a self-storage property we sold, a building encroached over a utility easement which posed a threat to the lender which the title company would not insure over.  We worked with the utility company and surveyor to get the easement vacated which satisfied both the lender and buyer.  We have the contacts and expertise to overcome challenging hurdles during the investment sale process. (JM)

In addition to environmental challenges, with capitalization rates having inched up, we were challenged to position properties to maximize their value in a changing interest rate and capitalization rate environment.  We stand out from the competition in our level of detailed analysis, anticipation of challenges, and our problem-solving for our clients. (CF)

How do New Mexico investment sales compare to national trends?

Investment properties in New Mexico with strong real estate fundamentals continue to see strong demand from investors both locally and across the country.  Investors investing in tertiary markets such as New Mexico continue to achieve yields not seen in the larger metros.  There has been a lack of supply given the strong demand for well positioned assets.  (CF)

While there is significant demand for investment real estate opportunities in New Mexico, the supply is relatively low in our market, which means the challenge is finding a quantity of quality opportunities.  We excel in the evaluation of opportunities for our clients and identifying those which stand out as exceptional in quality. (JM)

What do you anticipate for the 2019 year?

2019 is off to a strong start.  We have created a competitive bidding environment for our seller’s on multiple occasions leading to the best price and terms for our clients. We have already nearly eclipsed the 2018 volume in just the first quarter of 2019.  (JM)

2019 is off to our best Q1 yet.  The market continues to be robust with demand and we are uncovering tremendous opportunities for our clients.  Our commitment to excellence in advisory services continues to provide our clients with the stand-out service they testify to and love about our team. (CF)

2018 IPA Team Statistics:

Total Transactions (2018): 18

Total Square Footage (2018): 271,376

Total Value:  $35,735,594

Notable Deals: Trophy Historic Santa Fe Plaza Coyote Café – $4,000,000; College Plaza Shopping Center, Santa Fe, NM – $8,000,000

Meet Cole and Jake:

Cole Flanagan is a Commercial Real Estate Investment Specialist. His financial and business background enhances his ability to assist his clients in making sound decisions based on fundamental analyses. Cole’s dedication to excellence in both his work and client relationships has resulted in more than $375 Million in closed investment transactions over the past seven years. More importantly, it has earned him the praise, respect, and trust of his clients and peers.

Jake Mechenbier joined NAI Maestas and Ward with a focus on investment properties. His experience and knowledge base gained while working on research projects with the company provided Jake with a comprehensive understanding of the New Mexico market, which translates to comprehension of the market on a national level.  Jake’s ability to think outside of the box provides unique solutions and outcomes. His strong work ethic and attentive eye for detail gives his clients the best possible outcome.

Investment Property Advisors is a division of NAI Maestas & Ward.  The team has the backing of NAI Global, which extends their investment reach internationally.  For more on the IPA Team and their available investment properties visit www.iparealty.com

NAI Maestas & Ward helps locally-owned niche bakery expand to new location

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The Burque Bakehouse is heating things up with the expansion of their growing business at their new location of 640 Broadway SE in Albuquerque, New Mexico.   

The Burque Bakehouse began as a stand at Albuquerque’s downtown farmers’ markets (Downtown Growers’ Market & The Rail Yards Market), where they have sold pastries since 2015. The Bakehouse is a from scratch, small-batch bakery that draws on baking traditions and inspiration from around the world to create a selection of handcrafted pastries, breads, and small sweets.  

This locally-owned niche bakery has been in a temporary kitchen location to produce their baked goods for markets and special order.   Bakery owners, Chris McQuary and Sarah Ciccotello, live in the immediate area of their new location and have dreamt of operating their bake shop at the 640 Broadway location for some time.  Thanks to NAI Maestas & Ward Advisor, Shelly Branscom, that dream is now a reality. 

Burque Bakehouse will now have the opportunity to expand their business to include bread and coffee.  Their new location features a 1,000 SF building on a quarter acre of land, beautiful interior finishes, an open layout, great access to I-25, a hard-corner presence and ample parking.  In addition, the Burque Bakehouse will be carrying on a rich history of food service within the South Broadway community, as this same location was a Dairy Queen for over 30 years. 

We want to wish Chris and Sarah all our best in their new location.  Shelly Branscom would like to thank Nicole Rhodes of Base 5 Retail, for keeping the sellers at ease throughout the lengthy closing process. 

Is your business ready to expand?  Give us a call, we look forward to supporting you on your next commercial real estate transaction. 

 

NAI Maestas & Ward is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.  Representing institutional, private investors and businesses throughout New Mexico and the Southwest region, the company is comprised of more than 50 employees, including 23 advisors (seven have earned the elite commercial investment industry CCIM designee status, and two have achieved the prestigious professional SIOR designation.)

The Albuquerque Business First Book of Lists recognized NAI Maestas & Ward as one largest commercial real estate company in New Mexico. NAI Maestas & Ward has also been recognized numerous times as one of the “Best Places To Work” by the New Mexico Business Weekly. The company is a customer-centric organization that delivers third-party services to our valued relationships.  

From Animal Care to Footwear; A Successful Double Deal

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 3601 Eubank Blvd. NE, Albuquerque NM 87111

Nothing pleases us more than happy customers and today we celebrate advisors Dave Hill, CCIM and DJ Brigman for a job well done.  Our office experts represented both the buyer and seller on the transaction of a 3,500 sq ft building on the corner of Eubank/Comanche. 

This highly visible location served as a vet clinic for 20+ years and Dr. Hume decided to retire and close the business. She said that after the GOT SPACE – FOR SALE sign went up she had patients coming in begging, sometimes in tears, to please stay. Congratulations Mary, that’s what we call a great practice.  

 “The service was excellent. Both Dave & DJ were so helpful in guiding me thru the process. Made me retire sooner as the building sold so fast – a very good thing.” – Mary H. Melia, Hume Veterinary Hospital

This February, we welcomed local business, Heart and Sole Sports to their new home.    Heart and Sole Sports is ranked as one of the Top 50 Running Stores in America.  For more information on their products and services visit heartandsolesports.net.   

  

Water Authority Claims Top Prize from National Water Group – “Platinum Award” from Association of Metropolitan Water Agencies

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ALBUQUERQUE, Oct. 16 – The Association of Metropolitan Water Agencies has bestowed upon the Water Authority its highest honor, the 2018 Platinum Award for Utility Excellence.  The AMWA announced the prize at a ceremony in San Francisco on October 15.

“This award is for the entire utility,” said Water Authority Board Chair Trudy E. Jones “It is the result of the labor and talents of our employees and board members, the leadership of our executive director, and the support of the community we serve.”

In naming the Water Authority a Platinum Award Winner, AMWA President Mac Underwood cited the utility’s adoption of Effective Utility Management (EUM) principles in tackling the challenges associated with delivering safe, clean drinking water in an arid community.

“AMWA’s 2018 award winners are industry-leading water systems with innovative managers and dedicated workforces who create sustainable utilities marked by high quality, affordable water, responsive customer service and attention to resource management and environmental protection,” Underwood said.

Mark Sanchez, the Water Authority’s Executive Director, added that the Platinum award also recognizes the Water Authority’s infrastructure investment plan, which the utility has undertaken while striving to keep rates affordable for utility customers.

“Receipt of the Platinum award reflects that fact that, even as we ask our customers for additional resources to reinvest in our water and sewer system, we are committed to keeping our operating costs low as possible via increasing energy efficiency, reducing injury hours, and the use of technology,” he said.

 

Water Authority Earns AAA Bond Rating from S&P – “Strong financial management policies” cited in decision

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ALBUQUERQUE, Oct. 17 – S&P has upgraded the Water Authority’s bond rating to AAA, the rating agency’s top score, allowing the utility to borrow money for infrastructure projects at the most favorable interest rates.

The upgraded rating will translate into some cost savings for the utility as it pays less to borrow money for its basic rehabilitation program and the ongoing, 10-year rehab of the utility’s Southside Water Reclamation Plant. The plant, where the community’s sewage is treated before being returned to the Rio Grande or recycled for use on landscapes and green spaces in Southeast Albuquerque, is about halfway through a $250 million overhaul.

“The AAA rating from S&P reflects the Water Authority’s excellent record for responsible financial management,” said Water Authority Chairperson Trudy E. Jones, who also serves on the Albuquerque City Council. “The utility is doing a great job of keeping water and sewer rates affordable while addressing the need for system rehabilitation.”

S&P cited the Water Authority’s “strong financial management policies and practices…robust planning efforts…[and] strong levels of pay-as-you-go funding” in its rating decision.

Dave Hill, CCIM, NAI Maestas & Ward Senior Director and Vice Chair of the Water Authority Technical Customer Advisory Committee: “The City of Albuquerque not only has one of the best tasting waters in the USA but now has AAA bonding from the S&P.”

Commercial lending trends that will affect your business

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By Chris Clepper, Nusenda Credit Union | Dec. 7, 2018

What are some commercial real estate trends that you’ve seen recently and how are they impacting lending?

Like all other industries today, commercial real estate is experiencing disruption and faced with uncertainty. There are too many trends to cover here, but a great example is retail.

When attending industry events, you often hear people lamenting about the ‘Amazon effect’, and like any other city, we have seen big box closures. Not everyone realizes that national retailer bankruptcies in 2017 and 2018 were comparable to the levels seen during the Great Recession, but this time it is due to changing consumer habits.

On the other hand, service retailers have expanded at a good pace. National quick service restaurants, gyms, dental franchises, and other medical users moving into retail locations have driven a good amount of our construction lending in recent years. Some local restaurants are benefitting from this and are aggregating in newer concepts that serve as neighborhood gathering places with a heavy focus on local businesses. Looking to the horizon, we have to wonder if new technologies like Uber Eats or telehealth will have sustained disruptive impacts on these service sector tenants.

Bottom line, you cannot simply accept a long-term lease to a national tenant at face value. Lenders are looking more closely at the financial performance of the tenant and the feasibility of their fundamentals, particularly in situations where basis in the property are relatively high due to land prices or significant tenant build-outs amortized through the lease. We are also taking a harder look at the downside risk and performing more exit analyses. The overall experience of developers and the diversity of their other cash flow sources are also key considerations in underwriting.

The good news is that access to finance is improving as more financial institutions are actively lending in Albuquerque again. Insurance companies and conduit lenders are also prominent funding sources for commercial real estate. There are aggressive government sponsored lending programs in the multi-family and assisted living sectors. However, the continued mergers and acquisitions in the financial industry are leaving fewer and fewer locally headquartered lenders in New Mexico, and the Great Recession showed that without healthy local lenders, access to business lending in mid-sized cities can be challenging during downturns.

Generally, we are seeing growth and a positive outlook for almost all industries and asset types in our portfolio stemming from the overall improvements in the local economy. Locally, retail and apartments are a little longer into their recoveries.  While these are still performing well fundamentally, asset prices have grown considerably, making the investments more difficult to underwrite. There is simply less cushion against future vacancy and sustaining relatively high rental rates, particularly for retail. These continue to attract out-of-state investors who often view them as safer investments with comparatively higher yields to their home markets. Our loan originations for retail properties are half of what they were in 2017, even though the demand is stable.

Our lending activity overall is comparable to last year as growth in other areas has compensated for this shift. Financing real estate purchases for business owners has driven a larger share of our lending activities in 2018. This segment of our portfolio represents a wide range of local businesses from medical groups to food manufacturers to local breweries, most of which have been expanding their businesses over the last several years. Many of these companies are seeing annual revenue growth in excess of 20 percent. This is a good sign for the local economy, and companies like these are having an impact on the recent job growth numbers.

What is the biggest challenge facing local businesses looking to attain commercial real estate financing?

In some sectors, pricing and inventory are the biggest challenges. It is a seller’s market for well-located, quality commercial properties. That creates a challenge for both local investors and business owners who are often bidding against the out-of-market investors. It is not necessarily bad; it creates more financial incentive to evaluate redevelopment opportunities, but these present their own unique risks.

Both redevelopment and construction are facing rising costs. The increasing activity in construction is causing higher demand for skilled trade labor, and material prices are seeing similar impacts. So far, these have not risen to a level to make construction unfeasible, but lenders are requiring adequate contingencies in project budgets.

How have interest rates affected business lending in New Mexico over the past year?

Directly, we have not experienced an impact on the overall demand for business loans. It is up this year, and that is largely attributable to general improvements in economic conditions in Albuquerque and Santa Fe. Jobs numbers reflect impressive growth in 2018 compared to prior years, unemployment rates are declining in both markets, and gross receipts continue to show similar improvements.

The indirect impact, however, is that the rising rate environment comes at a time that the local economy is just entering a stronger recovery. In a 5.25 percent interest rate environment (today’s Prime Rate), the cash cost of borrowing for a typical commercial mortgage exceeds the capitalization rate – the unlevered rate of return – in many instances. This means an investor is actually reducing their cash-on-cash return by borrowing. We are seeing many properties trade in the mid-6 percent range. While this oversimplifies the investment decision, the recent rate movement will result in downward pressure on the value of these commercial properties.

Historically, rates are still comparatively low. The current treasury rates are comparable to rates in the early 2000s, but we are coming off a seven-year stretch with no rate increases by the Feds. This has had an inflationary impact on commercial real estate. Nationally, Green Street Advisors reports commercial real estate is more than 30 percent higher than its pre-recession peak. Fortunately, in the local market, capitalization rates in sectors like office, industrial, and hospitality — and the yield over cost for build-to-suit construction — are largely above 8 percent, which compares favorably to today’s financing costs.

We advise business owners and investors alike to be cautiously optimistic today. The local economic conditions are improving. Business owners need to stick to fundamentals in their business and industry, but constantly evaluate these against current trends and disruptors in an effort to help plan for tomorrow. We strongly advocate maintaining healthy ratio of cash flow to debt, and maintaining cash reserves to manage uncertainty. Often times the best opportunities are found on the downside of an economic cycle.

Regarding rates, many borrowers gravitate to the longest fixed rate available in a period of rising rates. While there are no clear signs that the Fed will slow the rate increases in the near term, the flattening of the yield curve (the compressing variance between short-term and long-term rates) may suggest that the market currently does not expect the increases to continue over the longer term. I would advise a potential borrower to look at rate options that match their plans for an investment, and consider the total cost of borrowing – particularly prepayment penalties when opting for long-term rates. The cost of yield maintenance, defeasance, and interest rate swaps can be substantial, particularly in a declining rate environment. These costs will need to be dealt with if you sell your property or refinance early to access equity to deal with capital or tenanting costs.

Talk to your lender early when planning for an expansion or new investment. Your lender should take the time to evaluate your businesses performance and expansion goals, and give you preliminary feedback and ideas for structuring a loan. Our job is to identify and evaluate risk. We run sensitivity models internally to gauge things like refinance risk and leasing rollover, and these are things we can share with our potential clients. Managing these downside risks becomes increasingly important as the local economy gains momentum and attracts more competition.  In the end, promoting a business owner’s sustainable success is in your lender’s best interest as well.

Cole Flanagan, NAI Maestas & Ward Partner and Investment Specialist: “With the combination of the local economy showing strong improvement, continued development of fundamentals, and readily available financing, the commercial real estate investment market remains strong”

Jake Mechenbier, NAI Maestas & Ward Director Senior Advisor and Investment Specialist: “New Mexico continues to attract capital as many investors seek higher yields not found in primary and secondary markets.”

 

Developers unveil major mixed-use project near Kirtland Air Force Base

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ALBUQUERQUE, N.M., Dec. 4, 2018 – By Ron Davis, Albuquerque Business First

In front of a near-capacity crowd of real estate brokers at the Dekker/Perich/Sabatini office, developers unveiled a master plan that would create over 900,000 square feet of mixed-use business space near Kirtland Air Force Base.

Thunderbird Kirtland Development LLC announced Wednesday that Max Q at Kirtland is on the way. Max Q is set to take up more than 70 acres of land on Gibson Boulevard and will include office, laboratory, retail and hospitality space.

The name Max Q was chosen as a reference to a “critical launch milestone” as well as a reference to the city of Albuquerque.

Yearout Companies, WBY LLC, local investors and Texas-based Infinity Development Partners make up Thunderbird Kirtland Development, which is represented by NAI Maestas & Ward for office space and Retail Solutions for retail services.

Members of Thunderbird Kirtland Development called the retail corridor on Gibson “underserved” as more than 20,000 people work on base.

Jim Wible, director for NAI Maestas & Ward, said conversations with possible tenants have already begun.

The U.S. Air Force awarded the group a development agreement last year from a Department of Defense program, allowing the project to develop. The negotiations for finalizing the deal are ongoing as of Wednesday.

“Our hope is that Max Q will become a hub of innovation where new technology and ideas take flight,” Kevin Yearout, managing partner for Thunderbird Kirtland Development, said in a statement.

Max Q will be designed by Dekker/Perich/Sabatini.

“It’s the best of both words — both proximity and convenience. While our tenants will technically be located on base, they won’t be behind the military fence. It will be an open campus with a dedicated base entrance,” Dale Dekker of Dekker/Perich/Sabatini said in a statement.

Yearout said once the group completes its environmental assessment, the project could break ground in the second quarter, making it possible for tenants to move in by the beginning of 2020. Yearout said the vision for Max Q is a blend of the Sandia Science and Technology Park and Albuquerque Uptown.

Kirtland Air Force Base has a nearly $7.8 billion economic impact on New Mexico.

Here’s a status update for Facebook’s data center in Los Lunas

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ALBUQUERQUE, N.M., Nov. 14, 2018 – By Collin Krabbe, Albuquerque Business First

Two years have passed since Facebook broke ground for its Los Lunas data center, a project many are hoping will bring prosperity to the area.

Though some have criticized the ability of data centers to sustain a large amount of high-paying jobs, the California-based social media giant is adamant this one will become an economic driver in Valencia County.

“The data center will provide good competitive jobs and we expect will support hundreds of jobs through the community, ranging from support services to building and operating wind and solar farms in New Mexico,” said spokeswoman Amy Hunter.

In 2016, Albuquerque’s Affordable Solar was chosen to build three solar farmsthat will supply energy to the data center. Two similar projects were approved by the Public Regulation Commission in September, according to our reporting.

Hunter could not give an estimate for the total number of workers the Los Lunas facility will have, but did say a typical two-building center supports over 100 full-time positions. Once completed, the $1 billion site will have six buildings.

The project also brings around 1,200 construction laborers daily, with around 80 percent of them coming from within New Mexico.

Hunter cited increased demand for construction workers as the main reason for delays and said construction is slated well into 2023. The data center is expected to come online in early 2019, she said. Business First previously reported that the project was set to open this year.

According to a report from RTI International, Facebook data centers have contributed around $6 billion in GDP since 2010 and created thousands of jobs nationwide. Every data center job supports five positions elsewhere in the economy, the report states.

Though the project is still in the works, its financial effects can already be felt. The Village of Los Lunas saw a $2 million boost in cumulative gross receipts tax revenue after construction commenced, Business First reported.

The Los Lunas data center is the state’s largest industrial revenue bond project. The Los Lunas Village Council approved an industrial revenue bond for Facebook. With that bond, Facebook will buy up to $30 billion in industrial revenue bonds over a 30-year period, according to the village. In an industrial revenue bond agreement, a company invests money to create or expand its business through construction or additional manufacturing equipment. In exchange, the local government body can agree to help the company pay for that investment, often by reducing its property and gross receipts taxes. The total dollar amount of an IRB refers to what a company expects to invest, not what it would be given in tax breaks.

Hunter said that once operational, the center will not take advantage of any additional economic development funding or incentive programs, such as the Jobs Training Incentive Program.

 

 

Netflix’s ABQ deal could mean a boom for local commercial real estate

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ALBUQUERQUE, N.M., Nov. 1, 2018 – By Ron Davis, Albuquerque Business First

Both commercial real estate experts and local leaders believe Netflix’s $1 billion investment over the next 10 years will go beyond the money invested in New Mexico

While the ink is still drying, some Albuquerque developers are smitten by the possibilities Netflix could bring to the Duke City.

Mayor Tim Keller signed a bill Wednesday, approving incentives and officially bringing Netflix to Albuquerque. At the announcement party last month, Keller compared the streaming giant’s impending arrival to Intel coming to Rio Rancho in the 1980s.

Both commercial real estate experts and local leaders say Netflix’s $1 billion investment over the next 10 years will go beyond the money invested.

Marcus Moufarrige, COO of Australia-based Servcorp, a company that sells office space and IT services across 53 cities in 22 countries, and a member of the Forbes Real Estate Council, said the billion dollars Netflix plans to invest will move the needle, but added that the “why” might be just as big of a factor.

“A billion dollars goes a very long way,” he said. “It’s not about the one-off, it’s the ongoing commitment to get that $1 billion return.”

The state committed up to $10 million in Local Economic Development Act funding, and the Albuquerque City Council approved $4.5 million in a separate LEDA package. LEDA is a financial incentive used by the state and local governments as a closing fund to recruit new businesses and grow existing businesses in New Mexico.

While Netflix finalizes its purchase of Albuquerque Studios and begins to spend that money and produce shows, Moufarriage anticipates ancillary benefits, such as coffee houses, restaurants and more co-working spaces in and around Mesa del Sol, where ABQ Studios is located, that local developers could capitalize on.

Brad Allen, principal at Allen Sigmon Real Estate Group in Albuquerque, said he could see more development around that area.

“When [you’ve] got a bunch of people working out there, they probably would like to just live there so they won’t have to drive as far,” Allen said. “I think there will be a demand. Whatever the average pay is, they’ll build a product around it, whether that’s for rent or for sale.”

Drew Dolan, president of Titan Development, which manages I-25 Studios, said it’s too soon to see any immediate effect to his company, but added that Netflix brings stability and a consistent presence to filmmaking, which can be a volatile industry. With at least 1,000 jobs being filled each year at ABQ Studios, film production should have a buffer against downturns for the foreseeable future.

“There’s just no way Mesa del Sol won’t benefit long-term from [Netflix] being out there,” he said.

Each said Netflix’s presence indicates that New Mexico is business friendly, which could open doors for other companies who weren’t previously considering the Land of Enchantment.

“We’re relatively affordable for the movie folks,” Allen said. “When make an investment like that, you’re not just buying [ABQ Studios.] You’re buying the whole community, you’re buying the whole state because it’s a relatively good place to do business at an affordable price.”

Steve Kraemer, NAI Maestas & Ward Director, on the transaction–
“It’s hard to express just how big of a deal this is for the Albuquerque market.  New high paying jobs are obviously a tangible benefit, but an equally important intangible benefit is that Albuquerque is viewed as a good place to do business by leaders in their industries.  We have now have Facebook and Netflix in our backyard.  This makes other top businesses sit up and take notice that New Mexico is a fantastic place to open up shop.  I can’t wait to see the next big company to discover how great our state is.”

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NAI Maestas & Ward’s Industrial Team wins award for expertly-facilitated complicated transaction

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ALBUQUERQUE, N.M., Nov. 1, 2018 – At the “Intersections” commercial real estate event held on October 25, at Sandia Golf Club in Albuquerque, the NAI Maestas & Ward Industrial Team (Keith Meyer, Jim Wible & Riley McKee) were presented with an award for “The Deal of the Year” (under $1M). Following is the story of the transaction and the benefits of working with experienced commercial real estate brokers.

The problem-solving ability of a commercial real estate broker is often underappreciated.  Those outside the industry have a tendency to wrongly assume the profession involves little more than posting a sign and waiting for a buyer. The reality is different. There are many hurdles standing between a property’s entry to the market and a successful closing that require effort, expertise, and patient resolve to overcome. The sale of 4950 Jefferson provides an excellent example.

As a 19-year old executor of her father’s estate, the seller faced many challenges in disposing of the primary asset—a 6,000 square foot warehouse on 1.5 acres that her father, who died unexpectedly, had used to operate his automotive repair business. She had no experience in commercial real estate transactions, a $450,000 mortgage balance, and a tenant that could no longer pay rent. Without other assets to draw from, the property had to be sold quickly to prevent default.

M&W’s industrial team (Keith Meyer, Jim Wible, & Riley McKee) faced a unique dilemma. The property had to be priced in a manner that would generate a quick sale, but the mortgage balance and all closing costs had to be covered by the sale proceeds. After completing a thorough market analysis, a value was determined that would require strong efforts, but likely result in securing a buyer within 90 days.

This strategic positioning combined with targeted marketing efforts resulted in six offers being received within two weeks. Their similarities prompted a “best and final offer” request to all interested parties each of whom followed up by substantially raising the purchase price. But the eventual buyer’s offer was clearly superior. An unrivaled set of terms was assembled which—most importantly—included a quick cash closing that would extinguish the mortgage before unpaid monthly payments accumulated.

The seller was thrilled but her excitement was quickly doused by a surprise—a $175,000 surprise. The estate’s attorney discovered that the deceased party had an extensive unpaid tax balance which the IRS was aggressively seeking.

At the agreed upon sale price there was enough to cover the mortgage balance and closing costs but nowhere near enough to satisfy the IRS lien. After scrambling for a solution, the brokers were connected to a tax attorney that specializes in IRS settlements. She was optimistic a resolution could be secured but provided no guarantees and indicated that the IRS might assume all sale proceeds. To move forward with the settlement process, a 45-day extension to the purchase agreement was agreed upon.

During this period uncertainty abounded. The seller, set to satisfy her father’s debts and net a sizeable, sum, now faced the prospect of a blocked sale. The buyer, after a lengthy search in a tight market, faced losing the property that best met his needs. And the brokers, after employing their collective expertise, ingenuity, and effort to get to this stage faced the prospect of an indifferent third party shuttering it all.

A little over a month later, positive news started rolling in. The IRS agreed to allow the sale to go through on condition that all net sale proceeds be applied to the lien. The seller would be relieved from the mortgage obligation, any future IRS Liens, and ultimately received a share of sale proceeds for her and her minor siblings. Only one item was excluded from the settlement—NM Gross Receipts Tax on services rendered by the brokers. A small price to pay to ensure completion of the transaction, the commission was reduced to cover this cost. A successful closing followed soon afterward.

Multiple hurdles stood in the way of completing the sale—so many that, without the guidance and expertise of competent brokers, it’s unlikely the sale would have finalized. This transaction provides an excellent case study on the value of a real estate broker whose ability to influence sale proceedings extend far beyond putting a sign up at a property. Beyond merely brokers, we are advisors and consultants helping our clients navigate any challenge they may face related to real estate.

Jim Wible, NAI Maestas & Ward Director, on the transaction–
Q: Does this deal reflect any current trends or challenges in Industrial real estate?
A: “Yes the strength of the market and the speed and demand demonstrated that we have a current shortage of this type of real estate today — Industrial properties of 5,000 to 10,000 SF with yard space.  This is the type that a small business owner can purchase with an SBA loan and occupy comfortably.  We are needing to now find a way to construct this type of product.”

Flagship Food Group adds up to 90 jobs as it expands its frozen food manufacturing in Albuquerque

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ALBUQUERQUE, N.M., Oct. 11, 2018 – In response to the company’s projected growth in 2019, Flagship Food Group announced today that it will immediately begin adding up to 90 new positions at its food manufacturing facility in Albuquerque. The positions will begin in November and will support the plant’s second shift.

“Flagship Food’s expansion signals that Albuquerque’s economy is on the rise,” said Mayor Tim Keller, “Adding 90 jobs to an already thriving company is no small feat, and these are the types of jobs that Albuquerque needs. Albuquerque is lucky to have Flagship here.”

In addition, Flagship has announced that Becky Prescott has joined the company as General Manager of the manufacturing facility. Prescott has been a resident of New Mexico for several years and was previously at General Mills.

“Our Lilly B’s organic burritos, our Hatch Kitchen handheld snacks, and our 505 Southwestern green chile and salsas continue to experience growth in the marketplace, so we are pleased to announce this expansion,” said Andrew Bebbington, CFO of Flagship. “Adding Becky to our team further solidifies our commitment to building a first-class management team from top to bottom.”

“I’ve watched Flagship and 505 grow over the years and have been proud to see them invest in both Albuquerque and in the New Mexican green chile business. I am excited to join their team,” added Becky Prescott.

About Flagship Food Group

Flagship Food Group is a global, diversified food company serving the retail, club store, and food service channels across a broad array of product lines. Its brands include TJ Farms®, Lilly B’s™, 505 Southwestern®, Hatch Kitchen™, Select New Mexico®, Chris & Pitts®, and Su Ming™. It also serves as a valuable supplier to private label customers and provides industry services to food companies through its logistics and packaging divisions. Flagship is headquartered in Greenwood Village, Colorado, and its more than 500 employees serve the company in its key facilities and offices in or near Denver, Los Angeles, Seattle, San Francisco, Albuquerque, Boise, Indianapolis, and Minneapolis.

By:  PRNewswire

Keith Meyer, NAI Maestas & Ward Senior Director, on the expansion, “When companies like Flagship Foods, Netflix and Facebook choose New Mexico, their businesses thrive and grow.”

Jim Wible, NAI Maestas & Ward Director, on the expansion, “We are excited that the increased manufacturing jobs for Flagship Foods will be here in New Mexico. We work to enable our client’s expansion plan and will continue to promote New Mexico to be their location of choice”

 

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