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Trammell Crow wins major AMRESCO contract

Bradley A. Olsen of Atlantic Partners Ltd. initiated this transaction and advised BPMT. Atlantic Partners, based in Cary, North Carolina, provides real estate advisory services to European investors and assists U.S. property owners in accessing capital internationally.

DALLAS - Trammell Crow Co. has had so much going on lately we could not confine them to one story (see Trammell Crow profile on p. 46). Since mid-August, the company has won a contract adding nearly 3 million sq. ft. to its management portfolio and signed an agreement with a new technology services provider, Omaha-based Inacom Corp., that will radically upgrade the company's capabilities.

Dallas-based AMRESCO appointed Trammell Crow to manage and lease a 2.85 million sq. ft. office portfolio that one of AMRESCO's clients recently acquired. The transaction adds 2.25 million sq. ft. of new business and retains 602,979 sq. ft. of existing business to Trammell Crow's leasing and management portfolio. In addition to managing and leasing this portfolio, Trammell Crow will handle two property listings and four proposed development sites for AMRESCO.

DALLAS & NEW YORK - AMRESCO Capital Trust (Nasdaq: AMCT), an externally managed Texas real estate investment trust, and Impac Commercial Holdings, Inc. (Amex: ICH), a Maryland real estate investment trust managed by Fortress Investment Corp., announced a merger agreement, which should close in fourth-quarter 1999.

According to sources, AMCT will be the surviving entity and each share of ICH will be exchanged for approximately 0.661 of a share of AMCT, which will result in AMCT shareholders owning approximately 60% of the combined entity and ICH shareholders owning approximately 40%.

Based on AMCT's recent closing price of $10, the offer values ICH at $6.61 per share, a 12.51% premium to ICH's closing price of $5.875. This transaction is expected to be accretive to both AMCT and ICH shareholders. The combined company is expected to have pro forma book equity capitalization of about $200 million.

Fortress is expected to purchase about 1.5 million shares of AMCT and the management contract from AMCT's current manager and assume day-to-day management responsibility for AMCT simultaneous with the consummation of the merger. Fortress expects to continue to operate the combined company as a real estate investment trust.

The combined company plans to pursue a similar business plan to the one employed by AMCT but expects to benefit from the increased capital base and scale of operations. The combined company will have almost two times the book value of either AMCT or ICH on a stand-alone basis. Upon consummation of the merger, a new board will be formed with representatives from AMCT and ICH.

AMCT was established in 1998 and was formed to pursue opportunities in acquisition, construction and development lending as well as high-yielding commercial mortgage-backed securities. ICH was established in 1997 and was formed to pursue opportunities in the commercial mortgage sector. Fortress is a real estate investment and asset management company headquartered in New York with offices in Toronto, London and Tokyo.

"This transaction is expected to create scale and synergies that if realized will benefit the shareholders of both companies. We believe that this is an excellent time to be involved in the U.S. real estate debt markets. The lack of liquidity which exists in these markets provides significant opportunities for those with capital," says Wesley R. Edens, CEO of Fortress and ICH. "Post merger, Fortress will own in excess of 15% of the combined company, which creates a strong alignment of interests between management and the shareholders."

Robert L. Adair III, the current CEO and a current (and ongoing) member of the board of trust managers of AMCT, notes that, "The merger provides AMRESCO Capital Trust with the needed additional capital to execute its business plan over the next year. In addition, Fortress's management expertise should enhance the company's ability to access the capital markets over time."

Sometimes even we can't quite get it right. In our correction last month (August) to our July Property Management Survey, we listed Transwestern Commercial Services (which we had inadvertantly ommitted from the survey), but we misspelled chairman Randy Rowe's last name. Randy has been a major player in this industry for a long time now, and we regret the error.

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