WEDNESDAY, JUNE 17, 2009
by Mark ThomtonIllinois  |
| 1000 W. Irving Park Road in Itasca |
Real estate auctions generally conjure up images of cash-strapped owners, fending off creditors or dilapidated structures that are unable to entice sellers in any other format.
While this may be true occasionally, it is not always the case. Depending on the seller, or the market, auctions can be very beneficial to all. Some of the world's largest corporations turn to auctions as an efficient business practice.
On June 25,
Rick Levin and Associates will auction off three McDonald's properties that were at one time home to a franchise. The properties are now vacant and McDonald's is looking to clear the holdings off of its portfolio quickly.
The auction was originally slated to contain five properties, but two of the properties-one in Merrillville, Ind. and another in Westchester, Ill.-sold before auction. The remaining properties are in Itasca, Ill., Highland, Ind., and Creve Couer, Ill.
Rick Levin, president of Rick Levine and Associates, says that while auctions are not always viewed in a positive light they may be the smartest move for successful companies.
"Real estate is not McDonald's business," says Levin. "For businesses that are thriving, sometimes selling properties quickly makes good business sense."
Levin mentioned that by expediting these properties off of the books the firm will receive some cash value for them, but more importantly, eliminate any taxes or insurances costs tied to the land.
This is the second time that McDonald's has entered into such an endeavor. Levin orchestrated an auction for the firm last year that went well, enticing McDonald's to try the tactic again.
Levin points to the two properties that sold before they had a chance to go to auction, indicating that the mere call for an auction can incite demand, often resulting in acceptable terms for the seller.
The auction will be at the Crowne Plaza Hotel next to O'Hare Airport. Levin does not expect a significant turnout.
"An auction is a reflection of the market and the market is soft," he says. "The seller knows it. However, it only takes one party to buy these properties. They were well located enough to have McDonald's go at them. That should be a good indication that they are well located."
The only stipulation for participants is that a cashier's check is required to bid and the amount varies for each property. The Highland, Ind. property will have a starting bid of $125,000 and require an $18,000 cashier's check. The property sold for $789,000 when McDonald's purchased it. The Itasca property will open at $250,000, originally purchased for $1.5 million, and the Creve Coeur property will open at $50,000 after originally fetching $350,000.
Levin's firm recently won the auction of the former main Chicago U.S. Post Office at 433 W. Van Buren. The 14-story building is 2.7 million square feet. With the current real estate environment and price very difficult to determine, Levin believes that his activity will increase in the coming year.
"In the old days you would just hire an appraiser to determine price, but appraisers are having a difficult time doing that today," says Levin. "Today, maybe something is worth what someone is willing to pay for it."
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