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$45,000,000 11th HOUR "RESCUE MISSION"
GSP/R finances major land acquisition in a Marathon, 72 hour close after J.V. partner backs out at the 11th hour...
The Problem: The seller is a public insurance company that had to book a land sale by the quarter's end on Monday, March 31st. Our client, Stonebridge Holdings (Michael R. Lombardi) had the property "tied up" for 11 months and independently had arranged for an institutional equity J.V. partner that had "committed" to fund the acquisition. Stonebridge worked full time for the last 18 months and spent over $1,500,000 in out of pocket "soft costs." Stonebridge also posted a $1,000,000 "hard money" deposit on the assurance that the J.V. partner would reimburse them at closing. Five business days prior closing, the J.V. partner backed out! If the acquisition could not be completed by March 31st, the insurance company would close the sell with a back-up buyer.
On Thursday, March 27th the GSP / Rifkind ("GSP/R") rescue team was called in.
The Property: A prominent, highly visible and sought after 11.5 acre West Los Angeles in-fill assemblage located at the NWC of Olympic Blvd. and Bundy Dr. (behind Martin Cadillac and Fox Television). At present, there are two credit tenants paying $5,000,000 NNN over the next 15 months at which time the leases terminate. Stonebridge plans to develop the site into a 750,000 sq. ft. state-of-the-art medical campus, believed to be the largest privately developed medical campus in the United States. Plans call for the construction of three 200,000 sq ft medical office buildings and a 150,000 sq ft hospital. Stonebridge is an accomplished developer specializing in medical office buildings and related medical facilities.
The Challenge: Time was of the essence with no extensions available. Because of pressure to raise capital to comply with insurance regulations, the insurance company had to book the sale by the end of Q1, March 31, 2003. An additional layer of complexity was added by new, highly restrictive, post-Enron FASB accounting standards, which radically changed the requirements for a "bookable" sale.
The Process: On March 27th, the following team was assembled: (1) GSP; (2) one of our private investors; (3) their lead counsel; (4) our client (the developer); (5) his counsel; (6) the insurance company; (7) their Los Angeles counsel and (8) the insurance company's public accounting firm. This ad-hoc team spent the next 30 hours in intense, "around the clock" structuring discussions. The financing structure underwent thirteen iterations; each time the business terms were agreed upon by the principals but did not pass muster with the auditors. By Friday, without a final agreed upon structure on the table, OUR INVESTOR FUNDED!!! The credibility that was created by this UNPRECEDENTED and AUDACIOUS act carried the day with the seller and over the weekend a structure was agreed upon, blessed by the auditors documented and executed. The transaction closed at 7:59am on Monday morning, March 31st.
Phew!
(David Rifkind, Gary M. Tenzer, George Smith, Jim Neuman)
Use GSP/Rifkind's quick-close capability to create value in your transaction. For more info, contact David Rifkind (ext. 111 drifkind@gspartners.com).
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