AmeriCold Corners $254M Financing

"It shows there is more value in this investment than what was previously thought by investors," Keira B. Moody, investor relations director for Crescent Real Estate Equities Co., tells GlobeSt.com about a package with an annual payment of $5 million. The Fort Worth-based REIT owns 40% of the AmeriCold real estate in a JV with majority stakeholder, Vornado Realty Trust of Paramus, NJ. The equity return will put $90 million into Crescent's coffer and $135 million into Vornado's.

Alec C. Covington, AmeriCold's president for nearly three years, has been reshaping the image into a logistics kingpin from temperature-controlled storage. And, he's "been exploring all options to make the business more profitable," Moody says, adding the infusion "shows that the cash flow translates to a value that Morgan Stanley has recognized."

The $254.4-million package is leveraged by 21 unencumbered owned assets and seven leased warehouses out of an 87-property portfolio with 17.5 million sf in 32 states. The loan, with an interest rate of LIBOR plus 2.95%, matures in April 2006 and has three one-year extension options. There is a Libor floor of 1.5% for $54.4 million of the financing.

It's industry knowledge that the 75%-leased portfolio could be acquired if the right offer went on the table. The new financing returns a fair chunk of equity to the JV, but by no means does it indicate that an offer is in hand, Moody says. "There is nothing on the table," she emphasizes. Under the structuring, the JV owns the real estate and the Atlanta-based AmeriCold's the leaseholder.

Cresent's stake in the JV represents a $525-million investment, of which $225 million is debt, according to Moody. Vornado's numbers weren't available due to yesterday's late afternoon release about the closing.

Moody says Crescent will "immediately pay down our outstanding line of credit" with its share of the return. The REIT's yearend report won't be released until Feb. 19, but the last available numbers, Sept. 30, 2003, showed the line's outstanding balance was $315 million.