Any sale-leaseback or net lease transaction revolves around three components: the credit of the tenant, the quality of the real estate, and the criticality of that real estate to the tenant's operations. Angelo, Gordon, with its significant experience as a principal investor in credit and real estate assets, provides an underwriting platform unparalleled in the net lease industry, enabling the Net Lease Group to execute transactions with a great degree of certainty, timeliness, and sophistication. Additionally, AG Net Lease has strong construction and development expertise and works with its partners to achieve their construction goals, such as sustainability and LEED certification.
AG Net Lease has extensive experience providing sale-leaseback financing and build-to-suit financing to privately-held companies, public middle market companies and financial sponsors' portfolio companies. AG Net Lease views its tenants as long-term partners. Corporate real estate needs are not static, and AG Net Lease works with its partners to structure transactions tailored to tenants' needs.
Fresh Express Transaction
Fresh Express, Inc., a subsidiary of Chiquita Brands International, Inc. (NYSE: CQB), is the leading provider of retail value-added packaged salad products in North America. Fresh Express had four facilities in the Chicago area for the preparation and distribution of prepared salads, fruits, and vegetables for the retail, food service and restaurant industries. As the Company's operations grew, additional space was added in the Franklin Park area, resulting in an inefficient system requiring the fragile products to be loaded and transported short distances between facilities, often multiple times. Fresh Express identified a vacant industrial property in the Chicago suburb of Streamwood large enough to house all of the Company's Chicago operations.
In June 2012, AG Net Lease simultaneously purchased the vacant property, entered into a 20-year net lease with Fresh Express, and agreed to fund construction of improvements to the property to transform it into a refrigerated, food-grade processing center. AG Net Lease's total investment in the project was approximately $39.6 million. Construction of the improvements was substantially completed in February 2013, and final completion is expected in September 2013. AG Net Lease has worked with the Company to achieve sustainability goals, and the facility is on track to receive LEED silver certification. Fresh Express expects to achieve significant annual cost savings from consolidation into the new facility. Additionally, the Company anticipates an increase in product quality as a result of less handling of the product.
Hensley & Company is the nation's 4th largest distributor of Anheuser-Busch products with exclusive rights to sell Anheuser-Busch and InBev products to Arizona's Maricopa and Yavapai counties, with a combined population of 4.1 million. The Company operated four refrigerated distribution facilities in the Greater Phoenix area, three of which were owned by the Company and related parties. Hensley wanted to complete a sale-leaseback on these three facilities to pay down a portion of its debt and allow the related parties that owned the real estate to exit the investment.
In December 2012, AG Net Lease purchased the portfolio of three facilities for $76 million and entered into a 17.5-year master lease with Hensley. The facilities are mostly refrigerated and comprise the majority of Hensley's operations, including its headquarters. The master lease structure on a portfolio of highly mission critical assets helped maximize the value held in the real estate assets.
Goodyear HQ Transaction
The Goodyear Tire and Rubber Company (Nasdaq: GT) was founded in Akron, OH in 1898, but when the Company started looking for a new headquarters building, it considered moving out of state. AGNL was able to provide financing alongside various government entities to incentivize Goodyear to continue its operations in Akron and create jobs in the local market. A 639,000 square foot Class A headquarters office building and an adjacent 2,910-space parking facility were constructed for Goodyear's use, and both are substantially complete as of February 2013. The headquarters building is on track to receive LEED gold certification.
The total investment in the projects was approximately $215 million, including approximately $57 million of public funding contributions. Goodyear signed 25-year leases with AG Net Lease for both the headquarters and the parking structure. The office buildings are also connected to Goodyear's existing Technical Centers, which Goodyear is investing $45 million in renovations. The transaction allowed Goodyear to maintain its world headquarters in Akron and create world-class buildings, with high-quality amenities for both Goodyear and non-Goodyear users on this campus.