| |
 |
 |
|
|
 |
Convergence Capital to Focus on Sale-leaseback Financing for Mid-market
July 11, 2006
 By Gail Kalinoski, Contributing Editor
A group of California corporate real estate and investment banking executives have joined together to form Convergence Capital Partners L.L.C., a privately held investment company focused on sale-leaseback financing for middle-market companies seeking to realize liquidity from their real estate. The Santa Monica, Calif.-based firm officially launched today, although it has been putting together potential deals for the past month.
"The segment of the market that we're focusing on is the lower end of the middle market, properties with $3 million to about $20 million in value," founder & president Alexander Kasdan told CPN today. "We've seen a number of properties in the $3 million to $10 million range so far."
Kasdan said that market has been under-served by other capital providers, which tend to look for investment-grade companies and/or properties valued at more than $15 million.
A former investment banker and corporate attorney, Kasdan most recently headed the restructuring group at Barrington Associates before forming his own consulting firm, Alexander B. Kasdan Co. Joining Kasdan as partners are Robert Abbasi, founder & president of RTI Properties Inc., and Jon Dishell, president & CEO of Wilshire Capital Partners L.L.C. Abbasi and Dishell, who are serving as advisors to Convergence Capital, are supplying most of the capital. Also serving as a senior advisor is David Blitz, founder & president of Mount Nebo Capital Inc. Gregory Vallario, who was responsible for portfolio management of commercial sale-leaseback investments for real estate investor Barry Beitler, is a principal.
Because the company is privately owned and is using its own capital, Kasdan said it could be more flexible in deciding which deals to finance and the parameters. It will also seek out small family-owned companies, midsize corporations and private equity firms throughout the United States. So far, the firm is involved in transactions in California, the Midwest and Southeast, Kasdan said.
"It's a cheaper way to finance the business," he said of sale-leaseback financing. "You don't have to amortize the payment every month the way you would have to do in a traditional loan. You don't have a balloon payment coming up in five years.
"A lot of the middle-market business you look at, the manager and the shareholder are usually the same person, the person who started the business. They may have emotional ties to the real estate and to the company," Kasdan explained. "A lot of these businesses could choose to unwind the transaction, usually after three years." Such a deal would give them the liquidity they need temporarily but eventually put the property back in family hands.
|
|
|
 |
|
