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Rarely in the corporate real estate industry do professionals ask their clients how they are handling the equipment that remains in their facilities. It has been our experience that the disposition of equipment is a considerable challenge that often corresponds with the disposition of real estate assets. An evolutionary approach to asset disposition is changing machinery and equipment from an obstacle into a resource for new disposition channels.

When faced with the prospect of an industrial disposition, the optimal outcome is a turnkey sale, which involves the combined sale of real estate assets, machinery, tools and equipment. A turnkey sale is a global solution for both the seller and the buyer that creates mutual benefit. In this situation the buyer usually moves in quickly, which spares the seller any lengthy cost of carry expenses on the building and removes the burden of machinery and equipment disposal. The quick turnover also keeps the facility active, helping the seller preserve a favorable relationship with the local authorities and also sustaining area employment. The buyer benefits similarly in that the retention of skilled labor on the premises facilitates a rapid and effective production start up. The time and money that would have been spent finding a suitable site, constructing the building and obtaining the necessary authorization, permits, etc. represents considerable savings. In some cases the buyer can also assume the incentives arranged in the original sale.

The identification of a turnkey opportunity can be accomplished either by way of a traditional negotiated sale or through a sealed bid process. A type of private auction, the sealed bid is one of the most innovative and successful tools in eliciting a turnkey sale. A sealed bid speeds up the entire disposition process and maintains value by creating competition among only the highest potential prospects within a specified industry (high-tech, semiconductor, pharmaceutical, food and automotive among others). This process, based on a highly targeted list of international prospects, allows for a quick turnaround, gives the seller flexibility in setting or not setting a price and also eliminates the exposure costs of traditional marketing.

If a turnkey sale cannot be arranged, the assets can be sold on a component basis, either in a private treaty or at auction. The separate sale of real estate assets and machinery and equipment is yet another disposition strategy. Generally auctions are reserved for distressed properties that require disposition within a very short time period or for properties that are located in difficult markets. The idea that auctions should serve only as a last resort is a misconception. Auctions can bring a unique international approach and reach a broad prospect pool. Machinery and equipment, when priced correctly through comparison and calculated marketability with a worldwide approach, can yield a very competitive sale price at auction.

In light of these diverse strategies, it is essential to engage a firm capable of exploring and carrying out every disposition avenue available to you. Binswanger has joined forces with two of the world’s largest auction firms, GoIndustry-DoveBid. to create Binswanger GoIndustry-Dovebid – an entity that provides best-in-class asset disposition strategies. Whether the best solution is a traditional negotiated sale, a turnkey operation through sealed bid, or a real estate sale and separate online equipment auction, the GoDove alliance allows us to generate the highest possible return for our clients.

Should you wish to discuss any of your options, please contact Etienne Chovet of Binswanger (echovet@binswanger.com or 215.448.6207).