PhillyDeals: Most homes sell at rental-property auction

For anyone who ever sat through the bewildering circular twice-monthly foreclosure and tax home auctions formerly mounted at First District Plaza in West Philly by ex-Philadelphia Sheriff John Green, where on any given day most of the rowhouses stayed unsold and a few lawyers always seemed to have the inside track, Wednesday's rental-property sale, at the same site, by private auctioneer Max Spann and his blue-jacketed team was a revelation.

"Banks are hiring us to sell more of their inventory," Bob Dann, chief operating officer at Spann's Clinton, N.J.-based auction house, told me.

"This is a 'bidders' choice' auction for 41 properties in low-income neighborhoods," Dann told two dozen bidders - bald contractors, moonlighting city firemen, professional investors, intense young investors, grizzled neighborhood residents from Frankford, Kensington, Southwest Philadelphia - who lined a First District meeting room as two electric guitarists hired to set a mood rocked on in the corner.

Bidders' choice means the person willing to name the highest price gets first choice of any property on the list.

Founder Max Spann, who has auctioned busted riverfront condos, horse-country estates, the archdiocesan summer place in Ventnor, and much else since the real estate market blew up five years ago, was on hand to pitch rental real estate as "the only thing I know of that if you're in bed at night and you listen real carefully you can hear money dropping in the cup." Rents on the 41 properties on offer ran from $595 a month to $750.

"Most," added Max Spann Jr., are occupied.

Auctioneer Joe Bodner kept up a quick patter: "Fifty thousand, fifty, fifty, thinkingaboutit, thinkingaboutit. Do I got forty-five? Don't miss out. Guaranteed to sell." The room was quiet. "All at forty-five. C'mon guys." A woman waved: the day's high bidder. She picked a property on South 17th Street east of Point Breeze.

The next round stalled at $40,000; the white-bearded buyer picked up two properties in Cobbs Creek. The third round reached the mid-thirties. "Cheaper than most cars," Bodner said. In the end, Spann unloaded a majority of the homes, for as little as $25,000 each. The elder Spann plans bigger sales next year. "Auctions are always fun," he told the crowd. "Never been at one where I didn't have a good time."

Arch Street and the lobby leading to Hall F at the Pennsylvania Convention Center jammed Wednesday as 5,000 children from 17 city schools were bused in to picked up free polyester pastel-colored made-in-China winter coats donated by the Automobile Dealers Association of Greater Philadelphia's foundation.

The dealers collected around $500,000 to buy the coats (at about $16.50 apiece) through a $2 surcharge on visitors to the Philadelphia Auto Show. Aramark provided free lunches. Teamsters, carpenters, and laborers set up the hall for free.

The group is giving 25,000 more coats to schools in suburban districts, Kevin Mazzucola, who runs the dealers' association, told me. This year's giveaway is the biggest since the program started in 2007. In Philly, he said, "the School District has had a couple of rough years"; with state and city budget cuts, "they need a great relationship with the private sector."

Buyers including Philadelphia-based Lubert-Adler real estate group, which invests money for Pennsylvania's public-worker pension plans and other clients, and Sun Capital Partners, whose bosses include the NBA 76ers co-owner Marc Leder, last week agreed to pay $166 million to settle complaints by creditors of the failed Mervyn's department store chain, which they took into bankruptcy four years ago.

The group bought the chain from Target Inc. during the mid-2000s real estate boom, then piled on fees, dividends, loans, and higher rents that creditors blamed for the chain's financial collapse.

Critics at CNN, Reuters, and other national media outlets hailed the settlement as a warning to aggressive buyout operators. But it's really just a cost of doing business: Dropping costs from fees, payments and property sales, Lubert-Adler "still made a gain," Ira Lubert told me. "We did fine."