Real Estate-Driven Capital
March 1, 2006
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Real Estate-Driven Capital
A number of distributors who are undertaking expensive acquisitions and consolidating have been turning to National Beverage Properties (NBP), Los Angeles, as a real estate partner to strategically provide the financing to purchase real estate assets.
William Anderson, NBP’s chairman and chief executive officer, with experience as executive
vice president at his family business Topa Equities, began NBP because he
saw a need for a different type of capital source for beverage
distributors. He also witnessed how well the car dealership REIT had
performed for car dealers, and saw similarities between car dealers and
beverage distributors.
“Both are primarily family-owned
businesses,” Anderson explains. “They have strong cash flow-operating businesses, and they don’t necessarily
need to own the real estate that they are operating under. And both
industries are going through quite a bit of consolidation so they have
fairly urgent capital needs to grow their businesses going forward.”
Beverage distributors across all channels, but
particularly beer and spirits, are finding NBP’s services useful.
Formed in 2005, NBP provides capital for beverage distributors through
value-added real estate solutions. For example, NBP provides sale-leaseback
solutions for warehouse acquisitions and expansions, setting the stage for
enhanced bottom-line results.
NBP offers its distributor partners real estate and
capital strategies, such as providing growth capital to beverage
distributors who are purchasing a new distributorship, including the
seller’s warehouse. In these cases, NBP buys the warehouse for the
acquiring distributorship, which allows it to save its capital for brand
acquisitions. NBP then enters into a long-term lease to provide the
distributor with an industry-specific real estate partner and long-term
control over the real estate.
The company also constructs, renovates and develops
new, larger and more efficient facilities for distributors. NBP takes care
of tasks such as site acquisition, design, permits and construction
management. The distributor, in this case, receives operational benefits
from a new facility designed to meet its specific needs, and moves into the
facility with no disruption to its existing operations. NBP also is able to
assist the distributor with flexible options for a 1031 tax-free exchange
on its old property.
In the second phase of NBP’s business strategy,
the company plans to become a public real estate investment trust (REIT),
and in doing so, provide estate planning and other tactical solutions
through REIT-structured transactions. By distributors selling their
warehouses to NBP in exchange for shares in the company, they are provided with a long-term tax deferral proposal,
diversification, the ability to time their liquidity events and an estate
planning strategy.
“What we see is a number of distributors looking
at a very expensive acquisition of another distributorship, and they would
like a well-capitalized real estate partner to come in side by side with
them and purchase the warehouse that’s associated with that
distributorship,” Anderson says.
This strategy makes sense, he adds, because they are
able to save capital for their operating business and NBP is able to come
with its capital and buy the real estate and provide a long-term lease,
which leaves them in control of the real estate for the long-term. BI
