When marketing a bank property for sale – whether a still-operating neighborhood branch or a vacant bank building in need of timely disposition – the agents at Equity Retail Brokers stay focused on a straightforward set of objectives.
“In working on behalf of financial institutions, our ultimate goal is always securing the highest-possible return,” said Ed Ginn, Principal. He has been conducting real estate sales and dispositions on behalf of local, regional, and national banks since founding Equity Retail Brokers more than 25 years ago. “When we sell a property for any client, including a financial institution, we want to get them the most amount of money at the lowest transaction cost with the greatest certitude of closing and the least amount of friction.”
But while those goals are broadly applicable to all bank real estate sales and dispositions, the route to achieving them can vary based on the specific bank property, the strength of the real estate location, as well as the financial institution’s ongoing real estate strategy.
“Bank sales and dispositions involve some unique dynamics that could seem counterintuitive to someone less familiar with this real estate sector,” Ginn noted. “For example, commercial real estate is a notoriously hard-driving business. But when four or five would-be buyers are all vying for a coveted bank location, our agents are highly conscious that some of the bidders may be important customers of the bank. As in all transactions, we keep the process civil.”
In other cases, the bank may decline the highest offer for the property, which is not exactly a commonplace scenario in commercial real estate. “Even when closing a physical location, banks always want to maintain their existing deposits and customers in that service area,” explains David Goodman, Principal, who has more than 10 years of experience in handling banking sector real estate transactions. “If the highest offer comes from another bank, the seller is likely to reject it. In fact, many banks routinely put in place deed restrictions designed to prevent competitors from operating at that property for anywhere from two to five years.”
Timing is another critical factor in the eventual price: In some situations, the bank is eager to get certain real estate assets off its books, which necessitates an expedited sale or disposition. “Most banks don’t want a buyer to tie up the property for months trying to secure a green light from the municipality for an unapproved new use,” Goodman explains. “Banks tend to look for investors or replacement users that can do the deal quickly and allow them to move on.”
Marketing Bank Properties for Sale and Other ERB Services
Equity Retail Brokers offers a full suite of services for banking-sector clients. The list (we’ll cover some of these in later blog posts) includes:
- real estate site selection for financial institutions;
- disposition of vacant branches and underperforming assets;
- sale-leaseback of bank-owned real estate;
- purchase or sale of real estate for family trusts;
- sale of income-producing properties; and
- subleasing and conducting lease terminations on behalf of banks.
“With respect to bank sales and dispositions, our firm is easily among the most experienced in Greater Philadelphia,” noted David Laiter, whose focus as a member of Equity’s Investment Sales Team includes marketing bank properties for sale in Pennsylvania and New Jersey. “We have completed more than 100 bank transactions over the years and enjoy extremely strong relationships with sellers and buyers of banking real estate.”
The team boasts years of experience in handling bank dispositions and marketing bank properties for sale, from carefully mining FDIC and asset-valuation data, to putting together professional offering memoranda, to negotiating the final terms in preparation for close.
Before marketing a property, Equity Retail Brokers’ disposition team meets with the firm’s marketing and administrative staff to implement the best marketing strategy for that specific property.
“We sell on all the primary listing services, but we also tailor our marketing approach for the particular property,” Ginn explains. “For example, when we feel the property’s highest and best use is to a national tenant, we will emphasize the marketing process to the national and regional brokers representing these tenants.”
In other cases, the team may believe a local buyer is more likely to purchase the property. “That’s when we’ll put a stronger emphasis on marketing to those end-users directly, as well as the local and regional brokers representing these buyers,” Ginn said.
But while Equity Retail Brokers is adept at broadcasting new opportunities to buyers, the flow of communication sometimes goes in the other direction as well. “It’s not unusual for buyers to contact our agents about specific properties even before those assets are for sale,” Goodman notes. “They may have learned about the impending closure from the FDIC or a financial institution’s customer communications. They’re contacting us based on the reputation that we have built over the decades.”
Equity Retail Brokers even publishes a monthly Banking & Financial Industry Newsletter (subscribe here). Regular features include bank stock summaries and debt credit ratings; interest rate summaries; links to a wide array of financial articles, and extensive listings of active and vacant bank properties for sale in states such as Pennsylvania, New Jersey, Maryland, and Virginia.
National and Regional Trend Toward Bank Branch Closures
This past May, S&P Global Market Intelligence reported that 4,322 U.S. bank branches had closed during the preceding 12 months, with just 1,140 newly opened locations. That’s out of a total of about 85,000 bank branches nationwide, according to the FDIC.
While some financial institutions continue to open new locations (primarily as branding plays in newly entered markets), the national and regional trend toward bank dispositions is clear. However, as noted by the ABA Banking Journal, the idea of “bank deserts” is overblown: Most U.S. branch closures, the publication observes, are in densely populated upper- and middle-income neighborhoods—places where residents enjoy easy digital and physical access to banking services. “Generally, banks are healthy and performing well,” Goodman notes. “They just don’t need all those retail branches in this age of digital banking and continuing consolidation.”
And as those bank buildings come on the market, the demand for them can be quite strong. “Like national chain drugstores, banks have always put a premium on finding well-located real estate that offers their customers maximum convenience,” Goodman observes. “That can make them highly attractive to medical or dental practices, residential realty companies, restaurants, and other potential re-users of that space.”
Existing drive-throughs can make bank properties especially enticing for today’s quick-serve restaurants, Ginn adds, and municipalities are more likely to let them keep operating those drive-thru lanes after the bank departs. “Pre-Covid, the municipalities tended to be anti-drive-through, but they’re now much more aware of the benefits of drive-throughs to businesses and communities. At Equity Retail Brokers, we see this as a long-term trend.”
With respect to the timetables for these transactions, the quality of the real estate location is another important factor. “The best-located bank properties can sell for the appraised value, or even higher based on the intensity of the bidding, in just a matter of weeks,” Laiter says. “But if the property is in a more challenging area, that could take longer, depending on the bank’s ability to be patient and hold that asset.”
In Ginn’s experience, patience certainly can pay for the seller when it comes to these transactions. “We’ve seen plenty of situations where the asset was appraised for $1 million and, even though the location was a bit more challenging, we were able to secure that asking price eventually,” he said. “Whether the bank needs a quick-turn transaction or wants us to patiently search for the right buyer, our agents leverage years of experience, strong professional contacts, and industry-leading digital resources to deliver the best possible result.”
Whether it’s leasing, sales, financing, or management, Equity Retail Brokers can help you increase the value of your retail assets. Please contact us today for more information.