Scribe

Charlotte economy...

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The search for this thread was prompted by the big announcement that Crescent Communities is being acquired by Sumitomo Forestry America, a subsidiary of a Japanese firm.

There are many sides to this transaction:

Lets try to stick in the "market analysis" and stay away from "doom and gloom" - "sky is falling" realm.

 

I tried to find an existing thread for this, but the one I found is archived and not open for new posts... and it is from the "Great Recession" days.

 

 

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I think this is an indication that Sumitomo believes in the future of the Charlotte market because they paid off a LOT of debt to get Crescent. This isn't about getting what Crescent already has done, but about what they think it can do in the future with their pockets backing development (they do $10 billion in revenue per year). Also, it a time of rising construction costs, being vertically integrated with a raw material producer of timber has to have some advantages. 

"Mansfield said they are also paying off Crescent's $380 million worth of outstanding corporate debt, plus assuming all of the company's unspecified outstanding debts on their development projects. "It was a very healthy premium to our book value," Mansfield said."

Edited by CLT2014

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I tend to lean that way also... only counterpoint I have is: when everything is going great at a company you don't sell.  Just trying to understand the Crescent side of the story better -- which is easy to dismiss as them cashing out.

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Everything I read so far points to this being access to capital type of move - if that's what it is, this is a huge confidence boost for the local economy:

Quote

"It's been a long courtship," said Mansfield. Sumitomo and Crescent started testing the waters in 2017, when they joined in a $37 million joint venture to develop upscale apartments at Atherton Mills. "It was a perfect opportunity to get to know them."

Mansfield said the new owners will be able to help Crescent design and build more innovative projects.

"I hope we learn from the Japanese," he said. "They are masters of mixed-use development."

 

Just now, AirNostrumMAD said:

You guys hurt their feelings

???

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The Buisness Journal just published a (paywalled) article on the Crescent acquisition... with some great info. https://www.bizjournals.com/charlotte/news/2018/04/27/crescent-communities-ceo-sale-will-give-company.html

 

Quote

It's certainly no mystery to our people or the capital markets that our owners, who have owned the company since 2010, were not envisioning to own the company for 20 years. At some point, after we grew and created the success in this new economic era, our owners would be looking to sell their interests to someone else. We’ve had our ear to the ground for a few years. We’ve had a lot of folks come see us (to talk about) our future and what we’re thinking about.

...

One part of this transaction will result in the elimination of corporate debt. It increases our investment capital base by about 40% and gives us more resources to do more things and maybe in more places. The thing that was very intriguing to me is the synergy between their company and ours. They are a long-term owner and are 320-plus years old. High-quality real estate does require long-term vision. We’re extremely excited about that.

They have capital strength as well. They will bring some new ideas we might be able to implement — maybe some of the very advanced mixed-use development that goes on in Japan. What has been encouraging to me and our other leadership team members, and I think what built the foundation for us ultimately, is that their values and philosophy as a company directly parallels with Crescent's vision and values. We see things the same way. They're super committed to the environment, sustainability and corporate responsibility ... a lot of companies outside the U.S. are more advanced on that compared to us, and we love that. They're an idea company; that’s one of their core values. One of our core values is innovation and being curious.

...

In our current structure, we have not put a great deal of emphasis on mega (mixed-use developments). We’re doing Stonewall, which is a very big project, we’re doing Ally Charlotte Center, but in our current environment, we’ve been focused on turning capital very quickly. With a longer-term horizon, we have to learn a lot more. We answered the (request for qualifications) for the North Tryon (Vision Plan). We're also working with some other major land owners downtown for decades-long projects. I’m not sure that we would have done that six months ago but with this appetite for complex mixed use, those are the kinds of things that might be more on the horizon (for us).

Watch this space ;)

Missed a couple quotes (something that led me to start this thread)

Quote

Generally speaking, it's not a significant change. They will become directors of our company along with a member of management and substitute for our current board of directors. They have told us, particularly in regards to our people and strategy, that they haven’t seen anything (they want) to change. They want to see us do more things.

Crescent has been through change in the past, not all of which has been comforting, but I know there will be changes. I don’t think it will be particularly cataclysmic but I think their ideas and experiences will hopefully help us ... (but) they’re not coming with a list of things they want changed.

 

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 money question... did Duke Energy maintain a financial position with Crescent?   ..and if not Duke , who exactly are the major shareholders ? 

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1 hour ago, Bikeguy said:

 money question... did Duke Energy maintain a financial position with Crescent?   ..and if not Duke , who exactly are the major shareholders ? 

From what I read, seems Duke was divested since 2006.  

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I don't really know where to put this put Costar reports 14,000 apartments units are under construction with the most no surprise SouthEnd leads the pack but University area is 2nd and what they call west Charlotte is third which sounds like FreeMore area and some other areas.  http://www.costar.com/News/Article/Top-Three-Submarkets-for-Multifamily-Construction/201318

with all these new apartment complexes it should be downward pressure on price increases which is good thing.   

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