Crown Forms Sale-Leaseback Fund

Jeff Hayden, a former Black Equities Group Ltd. specialist in sale-leaseback deals who has joined Crown to head the new fund, tells GlobeSt.com that Crown Capital expects to acquire at least $200 million worth of properties within the next year. The new fund is already tracking 1.6 million sf of potential deals in the sale-leaseback arena and is looking for more, he says.

Hayden, operating the fund out of Crown's Beverly Hills office, is assisted in the new enterprise by Tom Signorelli, formerly of UBS in Los Angeles, who has joined Crown as a senior analyst for the fund.

The new Crown unit will consider sale-leaseback acquisitions of a broad range of property types, including retail, industrial, warehouse-distribution and office, according to Jaime Sohacheski and Robert Flaxman, chairman and president, respectively, of the real estate development and investment firm. The fund will also consider acquiring full portfolios in some cases, the company's executives say. They see sale-leaseback transactions as a means for many small and middle-market companies to obtain operating capital and funds to finance growth. Although Crown has historically focused on Southern California, the new fund is looking at properties throughout the country.

Hayden tells GlobeSt.com that Crown Capital will look at deals as small as $2 million in Southern California, although the fund's target is more like transactions of $5 million and larger, and its ideal deal is about $20 million.

The sale-leaseback arrangement that the new fund offers "mirrors a mezzanine loan at significantly less cost," Hayden says, explaining that the fund provides an alternative to the type of debt that many businesses resort to when seeking to draw operating cash from their real estate. The Crown Capital deals typically will lease the property back to the seller for 15 to 20 years, with an option for the seller to buy back the property after two years. The buy-back option usually runs from the second year through the 10th year, Hayden says.

Hayden and Signorelli will both be involved in identifying opportunities, providing due diligence, securing the financing and closing negotiations on behalf of Crown. Flaxman says the company can move quickly on transactions via its internal capital and through its institutional lending relationships.

Hayden joins Crown from the Beverly Hills office of Black Equities Group Ltd. During his 17 years in the industry, he has held positions as a senior vice president of real estate merchant banking for a large investment bank and as a founding principal of Pantheon LLC, a real estate investment management firm. Signorelli was with the Los Angeles office of UBS before joining Crown and also held positions at Salomon Smith Barney and Anheuser-Busch.

Crown Realty & Development, founded in 1994, is a private development, redevelopment, investment and professional management firm. The portfolio of properties owned by Crown and its affiliates exceeds $450 million in value, all developed or repositioned internally. The company focuses on Southern California, with a portfolio of more than 3 million sf of commercial real estate projects in West Los Angeles, Burbank and Orange County with management offices in Irvine, Beverly Hills, and Burbank.