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Recent Transactions
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9 Months Ended | ||||||
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Sep. 30, 2012
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| Recent Transactions [Abstract] | |||||||
| Recent Transactions |
3. RECENT TRANSACTIONS
Roseland Transaction On October 23, 2012, the Company acquired the real estate development and management businesses (the “Roseland Business”) of Roseland Partners, L.L.C. (“Roseland Partners”), a premier multi-family residential community developer and manager based in Short Hills, New Jersey, and the Roseland Partners’ interests, principally in the form of unconsolidated joint venture interests, in various entities which, directly or indirectly, own or have rights with respect to various residential and/or commercial properties or vacant land (collectively, the “Roseland Assets”), pursuant to a membership interest and asset purchase agreement dated as of October 8, 2012 (“Roseland Agreement”) with Roseland Partners and, for the limited purposes stated in the Roseland Agreement, the following principals of the Roseland Partners (“Roseland Principals”): Marshall B. Tycher, Bradford R. Klatt and Carl Goldberg (the “Roseland Transaction”).
The Roseland Assets consist primarily of interests in: six operating multi-family properties totaling 1,769 apartments, one condo-residential property totaling four units and four commercial properties totaling approximately 212,000 square feet; 13 in-process development projects, which include nine multi-family properties totaling 2,149 apartments, two garages totaling 1,591 parking spaces and two retail properties totaling approximately 35,400 square feet; and interests or options in land parcels which may support approximately 5,980 apartments, approximately 736,000 square feet of commercial space, and a 321-key hotel. The locations of the properties extend from New Jersey to Massachusetts. The majority of the properties are located in New Jersey, in particular, at its flagship development at Port Imperial in Weehawken and West New York, in addition to the Jersey City Waterfront and other urban in-fill and transit-oriented locations.
The Roseland Assets and Roseland Business were acquired by the Company for aggregate consideration of up to approximately $134.6 million, subject to adjustment, consisting of:
The Roseland Cash Amount and related closing costs were financed by the Company primarily through borrowings under its unsecured revolving credit facility and available cash. The purchase price is subject to a working capital adjustment and further adjustment upon the failure to achieve a certain level of fee revenue, during the 33-month period following the closing date, from certain management agreements, development services agreements and consulting agreements acquired as part of the Roseland Assets and Roseland Business. Also, at the closing, approximately $34 million in cash from the Roseland Cash Amount was deposited in escrow to secure certain of the indemnification obligations of Roseland Partners and the Roseland Principals under the terms of the Roseland Agreement.
During the Earn-Out Period, each of the Roseland Principals will serve as co-presidents of Roseland Management Services, L.P., a newly formed wholly owned subsidiary of the Company (“Roseland Management”), pursuant to employment agreements executed at closing. Mitchell E. Hersh, President and Chief Executive Officer of the Company, also is assuming the role of Chairman and Chief Executive of Roseland Management.
The Roseland Agreement contains customary representations and warranties, covenants and indemnification obligations of the parties thereto as set forth therein. For the three and nine months ended September 30, 2012, included in general and administrative expense was approximately $3.8 million and $6.3 million, respectively, for transaction costs related to the Roseland Transaction.
Property Sales On July 25, 2012, the Company sold its 47,700 square foot office property located at 95 Chestnut Ridge Road in Montvale, New Jersey for net sales proceeds of approximately $4.0 million (with approximately no gain from the sale). The Company had recognized a valuation allowance of $0.5 million on this property at March 31, 2012.
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