Transactions & Acquisitions.
Value Acquisition Fund was created in August, 2004. The following assets were acquired and operated by Value Acquisition Fund, its Fund Manager (Cates Company), or an affiliate in which Cates was a partner. A single-purpose entity was created for each transaction.
Please click below to learn more about each transaction:
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Recent Acquisitions 2010 – 2012 (click here)
RVC Outdoor Destinations – multiple properties
Jgalt, LLC – multiple high quality residential lots (water and/or water views)
Rearden, LLC – 118 acre land parcel, Lake Toxaway, North Carolina
Roark, LLC – multiple land parcels
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Lomas & Nettleton Corporate Campus – Dallas, Texas
Asset Class: Real Estate – Office
Seller: United States Bankruptcy Court (Delaware)
Buyer: Viceroy Partners, LP
Property Size: 689,032 square feet (7 buildings)
Transaction Size: $70 Million
Purchase Date: August 1996
Final Liquidation Date: February 1998Description:
Lomas & Nettleton, once one of the largest mortgage companies in the United States, had built and occupied the seven building campus prior to entering into its second bankruptcy. Two buildings totaling roughly 530,000 square feet were the primary assets in the portfolio. The majority of the portfolio was vacant and the submarket (Stemmons Corridor) was not well understood or perceived. Also, the broader D/FW office market was still attempting recovery.Viceroy was able to purchase the buildings at an attractive per square foot cost and immediately began aggressively operating and marketing the campus. Viceroy created a management and leasing company (Benton Management Services) to manage and lease the buildings.
Norwest Corporation leased the largest building in the portfolio within two months of Viceroy’s acquisition of the Campus, and purchased the building two months after its lease date. FirstPlus Corporation purchased the remaining large building (248,000 square feet) in February of 1997 and then purchased the remaining five smaller buildings in February of 1998.
Redevelopment, Reposition, and Capital Allocation:
Viceroy acquired the asset without debt capital, as lenders were not willing to provide financing for vacant buildings without cost prohibitive terms. Also, the buildings required carrying costs (taxes, repair and maintenance, management and staffing, etc) that most buyers were unwilling or unable to incur.Viceroy reduced operating and capital repair costs by creating its own management and leasing company. The repositioning of the Campus was difficult given the perception of the submarket. Viceroy marketed it as the only large contiguous block of space in the broader D/FW market, and educated interested parties with regard to the Campus’s safety, proximity to large labor pools, and cost effectiveness. The transaction exceeded ProForma. All specific financial details are confidential.
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Denton Drive Service Center – Dallas, Texas
Asset Class: Real Estate – Industrial/Service Center
Seller: Transcontinental Realty Investors, Inc
Buyer: Viceroy Delivery, LP
Property Size: 123,993 square feet
Transaction Size: $2.3 Million
Purchase Date: October 1998
Final Liquidation Date: N/A – owned by Viceroy Delivery, LPDescription:
Transcontinental (a Real Estate Investment Trust) had purchased the vacant building in a larger portfolio. The previous tenant was in the printing business and had left the building many months earlier. The building presented numerous challenges to any buyer including its 100% vacancy, difficult and poorly perceived submarket (Love Field area), environmental issues related to the previous tenant and a neighboring owner, and its physical challenges (including low clear height, poor column spacing, and no front loading capability).Viceroy a) found a high-end relocation company as a Tenant, b) received environmental clearance from both the State of Texas and an Indemnity from a large corporate neighbor, c) estimated redevelopment costs, d) obtained an attractive Loan Commitment, and e) purchased the building at a very attractive basis.
Redevelopment, Reposition, and Capital Allocation:
Prior to closing, Viceroy consummated a lease with the Tenant by structuring a lease and partnership loan that effectively gave the Tenant ownership as Tenant paid rent. Viceroy also attracted the Tenant by marketing the building’s proximity to the highest per capita income neighborhood in Texas, large percentage of office space, and fully climate controlled environment. The environmental technicalities were quickly analyzed and the partnership requested and received environmental clearance from the State of Texas while also obtaining indemnity from a large corporate neighboring owner. The resolution of all issues allowed Viceroy to close a low interest loan at purchase. Viceroy then redeveloped the asset within the initial projected budget (added front loading dock doors, completed A/C of building, completed large office finish, resurfaced concrete floor in building, etc). The transaction is currently exceeding ProForma. All specific financial details are confidential. -
Holiday Inn Select – Love Field Airport, Texas
Asset Class: Real Estate – Hotel (full service)
Seller: 3300 Hotel Property, LP
Buyer: Mockingbird Partners, LP
Property Size: 244 Room, Full Service Hotel
Transaction Size: $15 Million
Purchase Date: October 2000
Final Liquidation Date: N/A – owned by Mockingbird Partners, LPDescription:
The existing building (Executive Inn) had been operating as a lower class hotel with no flag (brand). Following acquisition, it was completely gutted and taken back to the original deck. The building was fully renovated/reconstructed and converted to a full service Holiday Inn Select Hotel.After slightly more than one year of stabilization, the largest partner wished to sell the asset. Minority partners in the initial ownership group (3300 Hotel Property) recapitalized the asset by creating a new partnership (Mockingbird Partners, LP) with a new majority partner, and purchased the property from the original Limited Partnership.
Redevelopment, Reposition, and Capital Allocation:
The Love Field area was misunderstood and the eight-story building was the only building in the area that could exceed three stories (due to FAA regulations). Also, other revenue sources existed on the property (antenna leases, billboard) and a low-rise building was purchased and demolished. A large amount of surplus land, including the low-rise site, was included in the acquisition. Cost per room, after full redevelopment, was projected (and completed) at a very attractive basis.The group sales effort was aggressively pursued, and educating the area businesses, Love Field operators, and the travel industry in general on this new asset has been effective. In arguably the most challenging hotel operating markets ever (post 9/11), the hotel has continued to outperform its peers and provide positive cash flow.
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Pontotoc Place – Memphis, Tennessee
Asset Class: Real Estate – Office
Seller: Rubikon, LLC
Buyer: Pontotoc Partners, LLC
Property Size: 35,000 square feet
Transaction Size: $2.5 Million
Purchase Date: July 2002
Final Liquidation Date: October 2003Description:
The office building located in downtown Memphis, has tremendous views overlooking the Mississippi River and ample underground parking. It was in need of repositioning as the second floor was being utilized as an Executive Suite operation and the first floor had a tenant with a below market rental rate. Also, the purchase was actually for a majority condominium interest. Two luxury residential condominiums had been built on top of the building when the entire building was completely redeveloped in 1984. The office component of the asset, including the underground parking lot, consisted of 80% of the condominium interest.Pontotoc Partners (Cates Company’s single-purpose entity) purchased the property, including the executive suites operation. Lenders required full recourse and were not willing to attribute a reasonable value to the asset as it was not cash flowing, so Pontotoc Partners purchased the asset without utilizing any debt.
Redevelopment, Reposition, and Capital Allocation:
Pontotoc Partners began marketing the second floor as Class A office space and engaged a leading architect to design larger exterior windows (which were later installed). Various improvements and repairs were undertaken. In 2003, a prominent Memphis philanthropic foundation and private investment group leased the entire second floor. The executive suite operation was shut down and the floor was completely gutted and renovated.Pontotoc Partners leased, managed, and asset managed the building internally. The building was sold to the second floor tenant in October. The transaction exceeded ProForma. All specific financial details are confidential.
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The Centre at 8600 – Dallas, Texas
Asset Class: Real Estate – Office
(Class A Operations Center)
Seller: Wells Fargo
Buyer: Viceroy Partners II, LP
Property Size: 285,000 square feet (single story) on 20 acres
Transaction Size: Confidential
Purchase Date: July 2004
Final Liquidation Date: N/A – owned by Viceroy Partners II, LPDescription:
Lomas & Nettleton, once one of the largest mortgage companies in the United States, had built and occupied the building prior to entering its second bankruptcy. Viceroy Partners I, LP purchased the asset in 1996 from the Creditors and leased it roughly three months later to Norwest Bank. Norwest purchased the asset shortly thereafter.Viceroy Partners II, LP was able to purchase the building after Wells Fargo (which purchased Norwest) reduced its operating capacity in the D/FW area.
Redevelopment, Reposition, and Capital Allocation:
Viceroy Partners II, LP made a non-contingency offer and acquired the asset without debt capital. The building requires carrying costs (taxes, repair and maintenance, management and staffing, etc) that most buyers were unwilling or unable to incur.Viceroy Partners II, LP is aggressively marketing the building and actively managing the asset to reduce carrying costs.