Case Study #2
New York investor purchased a portfolio of bank-owned property, all located in his home market except one, a 24,000 square foot retail complex separate from but anchored by a national grocery chain. The investor property comprised two buildings, one free-standing retail/office building and one strip-configured building connected to the national grocery.
During the investors 8-year ownership, the overall occupancy of the property fell from 78% to 33%. The property fell to a C-level investment grade, and the owner was faced with a long and costly recovery. With a letter of intent in hand to lease a substantial portion of the vacant space, the investor obtained a qualified appraisal for $3,000,000.
Realty Gift Fund entered into a negotiation for a Bargain Sale agreeing to pay $600,000 to extinguish existing debt and provide the donor some residual cash, and to accept a charitable contribution for $2,400,000.
RGF listed the property for $3,000,000 and undertook general renovations to support a leasing program. Weeks after accepting the donation, the prospective tenant terminated the letter of intent, requiring RGF shift strategies. Ultimately, two separate contracts for sale were negotiated with two different buyers.
The first sale closed shortly after RGF took title to the property thereby reducing risk to its nonprofit mission. A new letter of intent to lease was signed with a different tenant, and the second sale closed within a year, providing RGF net proceeds to fund grants to 20 charities supported by RGF and its participating consultants.
Realty Gift Fund
- For the Donor - Fulfillment of his charitable intent; benefits of a charitable deduction; and relief from the debt service, urgent deferred maintenance, and holding costs of a property becoming increasingly uncompetitive in a sub-market not in the donor’s home market.
- For the Nonprofits - The risk-free grant of cash derived from a gift of real estate which was shared with 20 worthy nonprofits across the country. The grants supported various and strong social programs, including educational, environmental, health, food and elderly care.
- For the RGF - The benefit of a gift real estate with managed risk, and to convert real estate into excess cash to further the RGF’s mission to make grants to other worthy non-profits.