Crown Cork & Seal – Alsip, IL, Omaha, NE

Challenge

After extensive changes to product lines and operations through divestitures, acquisitions and restructuring, Fortune 500 manufacturer Crown Cork & Seal was left with non-strategic real estate that would threaten revenue streams and profits if not disposed of before the end of 2006.

The company tried marketing these offerings for two years, but garnered little buyer interest. One of these assets in Omaha, NE, was built in the 1950s, and is 340,000 square feet on 36 acres. Here, a partial leaseback and legacy environmental issues made the facility a tough sell.

As time passed, Crown’s corporate real estate department grew increasingly frustrated with the limited pool of potential purchasers for this asset. Not only did their marketing efforts drag on, but the carrying cost of underutilized real estate was directly impacting the company’s revenue stream.

Solution

Crown approached Patriot as a qualified buyer for Omaha. In Patriot’s review and subsequent discussions with Crown’s management team, it was agreed that Crown would add its North American regional headquarters located in Alsip, IL to the Omaha offering to create a two-building portfolio.

Initially, this 575,000 square foot facility was not on Crown’s disposition list. And while critical to Crown’s North American operations as the company’s R&D Headquarters, ongoing ownership of the facility was not strategic. This addition would enhance the offering 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.

Result

Partnering with Patriot, Crown freed itself from long-term assets and provided new “opportunity capital” that can 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 simultaneously divest non-strategic assets in different geographic locations. The inclusion of the Alsip property allowed Patriot to expedite the deal while keeping Crown in a critical location as a lessee.

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