Patriot Equities

After making extensive changes to product lines and operations through divestitures, acquisitions and restructuring of operations, Fortune 500 manufacturer Crown Cork & Seal (NYSE: CCK, Crown Holdings, Inc.) found itself with two non-strategic real estate assets which would threaten revenue streams and profits if not divested before the end of 2006.

For two years, the company tried marketing these obsolete properties in Omaha, NE, and Danbury, CT, but garnered little buyer interest. The Omaha asset had been built in the 1950s, and was 340,000 square feet on 36 acres. Here, Crown needed a partial leaseback structure, and there were legacy environmental issues made the property harder to market. The 125,000 square foot Danbury asset had been under contract prior to Crown’s dealings with Patriot, but a prospective buyer dropped the deal at the end of the due diligence period. Since the site was functionally obsolete and sitting vacant, it only hurt Crown’s fiscal bottom line.

Not surprisingly, the Crown corporate real estate department was growing increasingly frustrated with its lack of success in marketing these facilities. Not only did their efforts drag on, but the carrying cost of underutilized real estate was detracting from the company’s revenue stream. The successful disposition of these assets was essential to the execution of Crown’s strategic plan in 2007.

Patriot Equities’ wealth of development experience, strong partnerships in the industry, and primary focus on corporate holdings led Crown to identify Patriot as a potential buyer. In Patriot’s review and subsequent discussions with Crown’s management team and their advisors, it was agreed that Crown would add its North American regional headquarters located in Alsip, IL to the offering to balance the portfolio.

Unlike the former assets, this 575,000 square foot facility was not on Crown’s disposition list. Although critical to Crown’s North American operations as its R&D Headquarters, ongoing ownership of the facility was not strategic. This addition would not only increase the portfolio size, but also enhance the portfolio due to its location in a strong market and 90% leaseback status. These factors would ultimately speed up the closing process and facilitate a year-end close. Crown’s partnership with Patriot freed the company from long-term, non-strategic assets, and provided new “opportunity capital” which could now be redeployed into its core business at higher returns.

Patriot’s method of dealing with multiple holdings in a single transaction allowed Crown to divest non-strategic assets in different geographic locations. The inclusion of the Alsip, IL property allowed Patriot to expedite the deal while keeping Crown in the critical location as a lessee.

Through the transaction, Crown gained flexible leaseback terms which enabled the company to house its R&D headquarters at the Alsip site for the next seven years, and also secured a partial leaseback of its Omaha facility. Throughout the life cycle of the deal, Crown’s business critical operations were left undisturbed. Patriot’s internal operating platform combined with external partnerships facilitated the closing of this complex transaction before year’s end.