JV Collecting $193M Reward From AmeriCold Regrouping

The transaction will close by Nov. 18. The deal will shift Fort Worth-based Crescent's ownership from 40% to 31.7% and the Paramus, NJ-headquartered Vornado's 60% interest to 47.6%. The merged company now qualifies as a REIT in accordance with a private letter ruling issued by the IRS, according to a Crescent press release.

Yucaipa's deep seeding of the play is based on a $1.45-billion total enterprise value. The L.A.-based company will be involved in AmeriCold's day-to-day operations and instrumental in the REIT plan. Yucaipa's buy-in earns a promote of 20%, through Dec. 31, 2007, of any increased value of AmeriCold. The promote is limited to 10% of the controlling partners' remaining common shares in AmeriCold.

In February, word was on the street that the 75%-leased, 87-property AmeriCold portfolio could be bought...if the right offer went on the table. That month, Crescent and Vornado secured $254.4 million in mortgage financing from Morgan Stanley Mortgage Capital Inc. The deal returned about $225 million in equity to the JV owners. For three years, Alec C. Covington, AmeriCold's former president, worked to reshape the operation from a temperature-controlled asset into a logistics kingpin. He exited earlier this year. With the new deal closing, the new owners will renew efforts to pick a replacement.

With the Yupaipa buy-in and AmeriCold's inside sale, Crescent will bank a net gain of about $11 million and Vornado will rack up $20-million gain. As part of the transaction, Vornado was repaid $26.8 million from the Vornado Operating Co. According to Vornado, it halted interest charges on the loan in January 2002 when AmeriCold's financial picture was bleak. As a result, Vornado says it will realize $4.8 million from the loan's collection.

"By combining the real estate and operating businesses, we have dramatically simplified the structure and provided for efficiencies in management," John C. Goff, Crescent's vice chairman and CEO, says in this morning's press release. "Most important, however, we believe the value of AmeriCold will be enhanced by bringing in Yucaipa as a strategic and financial partner. Yucaipa has an impressive track record of success in investing in this industry and views AmeriCold as an attractive opportunity."

The Yucaipa Cos. is led by billionaire Ron Burkle, a prominent Democrat who has former president Bill Clinton and the Rev. Jesse Jackson serving on the company's board. The private equity fund is focused on food distribution, logistics and retail industries.