Georgia-Pacific Closes $175M Sale-Leaseback

ATLANTA-This area’s commercial real estate investment market is ending the year on a high note. In one of the largest commercial real estate deals of its kind this year in the Southeast, Dallas-based Cardinal Capital Partners Inc. has acquired 38 Georgia-Pacific Corp. warehouses totaling 5.1 million sf in 26 states in a pre-tax deal valued at $175 million, or $150 million after taxes.

Cardinal will lease the space back to Georgia-Pacific on a long-term lease for an undisclosed sum. The deal is part of the previously announced sale by Atlanta-based G-P of a 60% controlling interest in Unisource to Boston-based Bain Capital. That deal was valued at $790 million.

The Cardinal-Georgia Pacific deal will be shown as a capital lease obligation on G-P’s financial statements.

In the Bain Capital-Georgia Pacific transaction, Boston-based Bain acquired a 60% interest in Unisource Worldwide Inc., a G-P subsidiary based in suburban Norcross, GA.

At closing, G-P received about $470 million in cash from Bain and other Unisource funds previously used by the 75-year-old, $25-billion corporation to reduce debt. G-P also expects to receive a $170 million federal income tax refund from the deal in the first half of 2003. G-P is holding a note from Unisource for the same amount.

“Completion of the sale of a controlling interest in Unisource accomplishes several key objectives for Georgia-Pacific,” G-P chairman/CEO A.D. “Pete” Correll says in his company’s statement. “This transaction helps us reduce debt, which strengthens our balance sheet, and results in Georgia-Pacific partnering with a firm that has a strong track record of building long-term value.”

Matt Levin, a managing director at Bain Capital, sees the deal as “long-term growth strategy” by the Boston firm. “Unisource is a market leader in a big industry that remains committed to serving customers and is well-positioned to grow,” Levin says in the same statement.

SunTrustRobinson Humphrey, a division of SunTrust Capital Markets Inc. and a wholly owned subsidiary of SunTrust Banks Inc., advised Georgia-Pacific on the Cardinal transaction. Bank of America and Citigroup’s Salomon Smith Barney provided Bain Capital with senior bank financing for the deal.

Bain is a global private investment firm that owns private equity, venture capital, fixed income and public market fund advisors with over $14 billion in assets under management.