Unsolicited bid: XL Center

[UCONNJACK]

Private equity firm made unsolicited XL Center bid

Offering $50 million with an additional $250 million in upgrades. Same equity firm that offered 2 billion for state buildings last week.

 

[Husky25]

...and two days later...

Private Equity Firm Will Bid To Buy, Renovate Hartford's XL Center

 

[CL82]

...and two days later...

Private Equity Firm Will Bid To Buy, Renovate Hartford's XL Center

So $50M then whatever they spend on the XL, and then Hartford gives them a 7.5% return as a leaseback? So if they do a $250 build out that's about $187K (edit -uh, make that $187M - see post below) plus a 2% per annum increase cap. It's worth thinking about it.

 

[kibblesnbits]

You are off by a couple of decimal points. 7.5% of $250M is $18.75M per year. The full calculation of return is more complicated involving tax impacts, residual value, etc., but this would not be a cheap exercise. It would pour in an infusion of immediate cash at the price of increased operating budgets in the future.

 

[freescooter]

Deals like this that come unsolicited are normally not too good for the seller lessee once you get into the weeds of what is really going on. I’d guess that the $50 million isn’t a real number, and neither is the $250 million. These deals are way way way more complicated when you try to actually do them. What for example is the company’s incentive to bring in shows, sports and such? Or maintain the facility for that matter?

 

[Guapo]

Deals like this that come unsolicited are normally not too good for the seller lessee once you get into the weeds of what is really going on. I’d guess that the $50 million isn’t a real number, and neither is the $250 million. These deals are way way way more complicated when you try to actually do them. What for example is the company’s incentive to bring in shows, sports and such? Or maintain the facility for that matter?

I've heard that pie in the sky is awfully delicious, though

 

[the Q]

so....is there a reason these guys couldn't find their own tenants?

 

[freescooter]

Not to say you couldn’t put together a deal that would benefit both sides. But this ain’t it. Other simple questions:
What does the 7.5% annual fee get you? A building? A certain # of dates?
What happens if the owner isn’t making money? Say loses the Wolfpack and UConn builds a new hockey facility? Now you have 50 or so dates to fill

 

[CL82]

You are off by a couple of decimal points. 7.5% of $250M is $18.75M per year. The full calculation of return is more complicated involving tax impacts, residual value, etc., but this would not be a cheap exercise. It would pour in an infusion of immediate cash at the price of increased operating budgets in the future.

-well all of sudden it seems dramatically less attractive, doesn't it?

 

[whaler11]

So instead of spending $250MM on it, spend hundreds of millions of dollars more by using what is essentially a loanshark.

 

[freescooter]

So instead of spending $250MM on it, spend hundreds of millions of dollars more by using what is essentially a loanshark.

Yeah, there’s that...but $50 million...and no doubt some knuckleheads in the General Assembly will be demanding we take the deal because, you know, 50 million.

 

[Guapo]

So instead of spending $250MM on it, spend hundreds of millions of dollars more by using what is essentially a loanshark.

"Officials in this state could never be suckered into a too good to be true arena deal!"

**googles 'Dillion Stadium'**

"Oh...oh dear..."

 

[CL82]

It's opening bid. The terms will get better, but probably not by enough.

 

[freescooter]

I suppose it is possible to make a deal that works, but I’m kind of confused as to why the city or the state would want to lease the xl back. Why would we guarantee these guys an income stream? Most public-private partnerships I’ve dealt with are designed so the public takes most of the risk and the private makes most of the profit, but even by those pretty one sided standards this is a pretty terrible deal.

 

[Hoophound]

The equity firm invests the money and CT pays rent. Under other scenarios CT borrows money at 5% and pays back principal as well. Not as bad as it looks at first glance.

 

[huskymedic]

 

[Guapo]

Ok, what does this mean??

 

[huskymedic]

Ok, what does this mean??

From previous article/threads:

>>Key to the renovation plan is acquiring about 100,000 square feet of space in the Hartford 21 complex that surrounds the arena. The space — owned by Northland Investment Corp. — includes the atrium, retail space and a portion of the complex's parking garage.

The authority has been in discussions with Northland for a year, but a deal has not been struck, hampered by a disagreement over the selling price. The authority is now seeking a second appraisal; but it has declined to disclose the value determined by the first appraisal, citing the ongoing negotiations.<<

 

[huskymedic]

Article: CRDA seeks eminent domain powers to acquire key XL Center block

Start of schlitslinging...

 

[Guapo]

From previous article/threads:

>>Key to the renovation plan is acquiring about 100,000 square feet of space in the Hartford 21 complex that surrounds the arena. The space — owned by Northland Investment Corp. — includes the atrium, retail space and a portion of the complex's parking garage.

The authority has been in discussions with Northland for a year, but a deal has not been struck, hampered by a disagreement over the selling price. The authority is now seeking a second appraisal; but it has declined to disclose the value determined by the first appraisal, citing the ongoing negotiations.<<

Whoa.

 

[zls44]

Totally freaking normal that they have to buy back the entrance area from a private developer who formerly ran the entire building and is the largest landowner downtown and is now ticked off.

This is a totally cool relationship that UConn is blessed to be involved with. This is really great. Really good for everyone. Great building.

 

[BlueMAB]

Kelo v New London means the CRDA could actually win this.

 

[husky8273]

Kelo v New London means the CRDA could actually win this.

from a review of the recently released indie film, Little Pink House, about Kelo -
"The Kelo case generated a massive public reaction, with over 80% of Americans opposing the ruling, and 45 states passing reform laws intended to restrict the use of eminent domain for private development. No other case united such disparate people and groups as the NAACP, libertarian property rights advocates, Ralph Nader, and Rush Limbaugh."

 

[Chief00]

Let’s remember UConn MBB season ticket holders already obtain their seating location by donating to the UConn Foundation.
Now whoever buys this building will use more premium seating revenue as part of their financial formula to make money.

I hope the University is protecting the UConn Donors interests because I am sure the State Government, the Connecticut Development Agency and Hartford are not. Effectively, season ticket holders will be paying two overlapping fees however it’s structured on top of the price for the seat itself. True, they may roll it up into one seat price but effectively to make it viable we will be paying two premium seating fees for the same seat on top of the ticket itself. Pretty steep.

 

[BlueMAB]

from a review of the recently released indie film, Little Pink House, about Kelo -
"The Kelo case generated a massive public reaction, with over 80% of Americans opposing the ruling, and 45 states passing reform laws intended to restrict the use of eminent domain for private development. No other case united such disparate people and groups as the NAACP, libertarian property rights advocates, Ralph Nader, and Rush Limbaugh."

but is Connecticut one of those 45?