The deal is expected to close in the first quarter, according to a prepared statement today from Adolfo Henriques, chairman, president and CEO of Florida East Coast Industries.

Armando Codina, founder and chairman of the 40-year-old, 150-employee Codina Group, will become president and CEO of Flagler Development Co. and Codina Group. Flagler Development, one of the largest class A office developers in Florida, is the commercial real estate arm of FECI.

Along with the acquisition of Codina Group, the new holding company is acquiring a mix of buildings and land in Orlando, Jacksonville and South Florida that is expected to be developed into about 11 million sf of industrial, 600,000 sf of office, 750,000 sf of retail and 3,500 multifamily units.

"The net investment to fully develop these properties, after outparcel and condo sales, of nearly $750 million, is expected to produce a stabilized unlevered yield of about 9%," Henriques says. "This strategic merger is an extraordinary opportunity for us to combine the capabilities and assets of two of the most successful real estate companies in Florida."

In the same statement, Codina says the deal was structured for short-term and long-term benefits to both companies. "The very best deals do what this one is doing," he says. "They work in the short term and they also create a foundation for the future that is stronger than either company standing alone. That's what we have done here."

Codina adds, "The complexities of the real estate market are such that we will need to be innovative and bold, while remaining agile." He says he is confident "this [newly formed holding company] will have the strength, resources, experience, expertise and passion necessary for long-term success."

The deal was done at this time primarily because the amount of prime developable land in Florida has been shrinking steadily, Henriques says. "The tremendous growth in the population and economy of Florida and the increasing limits on available land will place an ever-growing premium on having capacity for future development, as well as the expertise to manage complex projects involving divergent interests," he says.

New York-based Morgan Stanley acted as exclusive financial advisor to FECI in the deal. The law firms of Greenberg Traurig and Davis Polk & Wardwell were FECI's legal consultants. White & Case of Miami was the legal advisor to Armando Codina and the Codina Group.

Henriques says the Flagler and Codina combination will own a Florida portfolio consisting of 7.8 million sf of class A office and industrial space in Orlando, Jacksonville and South Florida; 430,000 sf of class A office and industrial in the construction phase in Orlando, Jacksonville and South Florida; 749 acres of developable land (entitlements or zoning in place) for an additional 10.8 million sf of development and 780 residential units; 2,118 acres in the process of obtaining zoning and entitlements for 11.5 million sf and 2,640 residential units; and about 1,150 acres of undeveloped, unentitled, strategically located land in Florida for future development or sale.

Instant Insights /

Florida East Coast Industries Buying Codina Group in $270M Deal

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