The agreement is subject to a $64 million mortgage loan and property accounts payable, an adjacent parcel of land and cash approximating $1.5 million to a partnership formed by the Saraceno family and other third parties. As part of the transaction, the existing tax indemnity of the venture to the Saraceno family's members was eliminated.
The six properties total 891,000 sf. The Saraceno family's original contribution to the venture in 1998 included these six properties along with other properties no longer in the venture's portfolio.
Wellsford Real Properties had previously said that the Venture's manager had requested a dialogue with the special servicer of the $64 million loan on these six properties. The lender agreed to restructure the loan for the acquiring partnership. The venture is managed by an affiliate of the Goldman Sachs Group Inc. which is also an affiliate of Whitehall.
The venture will record an impairment provision of approximately five million dollars in the third quarter of 2004 as a result of the transaction. Wellsford Real Properties' share of the provision is approximately $1.6 million.
After the transaction closes, Wellsford Real Properties' equity interest in the venture will increase from 33% to 35% and the Whitehall aggregate interests will increase from 60% to 65%.
Jeffrey H. Lynford, chairman of the board of Wellsford notes that, "This transaction relieves the venture of a large tax indemnity which essentially prohibited the sale of any of the remaining properties through 2007." He adds that the negative debt service associated with these properties, which had been substantial, is now eliminated. "Lastly, with the transfer of these properties, the venture and the remaining partners are relieved of significant future capital expenditures."
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