Family Portfolio Transition & Disposition

PROBLEM

Both parents of this multi-generational family in Long Beach recently passed away leaving their children with a significant commercial and multifamily real estate portfolio in Long Beach. The assets, while in prime locations, also had significant challenges including that they were older properties with deferred maintenance, had tenant / eviction issues, and future capital costs that the next generation would be forced to take responsibility on. The siblings who inherited these properties had limited experience in managing commercial properties but were faced with the challenge of immediately taking over the management and constantly having to deal with new property issues. To further complicate things there were estate planning issues that had to be contemplated with the portfolio including beneficiary distributions, estate tax, property tax reassessment, and other internal family dynamics. The siblings had a sentimental connection to the assets because they had been in the family for many years but they were also faced with difficult and potentially costly decisions.

SOLUTION

Lineage Asset Advisors was first engaged by the family’s estate planning attorney to provide consulting and opinion of value services. Lineage worked closely with the estate planning attorney and provided a holistic review of the family’s entire commercial and multifamily portfolio. Lineage also worked closely with the trustee of the family, one of the daughters, to fully understand not only the properties but also the family-level dynamics. When both parents (original owners) had passed away there were numerous tax and beneficiary items that the family had to plan for with the family trust. Lineage worked closely with the family and the estate planning attorney to triage and analyze the real estate portfolio. After deep analysis and discussions with the team it was determined that the family would keep and manage multiple assets but needed to dispose of at least one of the assets in order to satisfy the estate tax and beneficiary distributions. After better understanding the amount of money that was needed to satisfy estate tax and distributions, Lineage and the family agreed on selling one of the assets. The asset that the family chose to sell was an 11-unit property in Belmont Shores which was previously a motel but was converted to a multifamily building by the family.

OUTCOME

After establishing a strong rapport as the trusted advisor with the family, Lineage maintained its position as the family’s liaison and co-broker and helped the family select a trusted broker partner in Long Beach to execute the sale of the property. Lineage co-listed the property with Lee & Associates and managed the process ensuring that the broker fully understood the family’s goals to both maximize value of the asset while giving them surety of close. Ultimately, the co-brokerage team was able to execute at a price that exceeded the family’s expectations and allowed them to satisfy their estate tax liability and distribute to the beneficiaries. The family was able to keep the remaining assets.