Tuesday, September 17, 2019

Monarch Alternative Capital, Taconic Capital Advisors acquire warehouse portfolio in Puerto Rico

By on August 23, 2019

(Screen capture of www.prindustrial.com)

Peg transaction, expenditures at nearly $200 million

SAN JUAN – Investment firm Taconic Capital Advisors LP and Monarch Alternative Capital LP joint venture has formed the Puerto Rico Industrial Solutions and Management (Prism) platform in connection with its acquisition of a 2.2 million-square-foot worth of industrial and logistics warehouses in San Juan.

The property portfolio, the companies said, is “believed to be the largest single assemblage of such assets under private ownership” in Puerto Rico.

The platform will be operated by a newly formed property management firm led by Ryan Christiansen—who is president of Christiansen Commercial Real Estate, a brokerage based in Puerto Rico—as chief executive officer, and Héctor del Río Jr., as chief operating officer.

“The principals, both of whom are San Juan residents, have formed a Puerto Rico-based team to provide tenant-centric management to the PRISM platform. The transaction and subsequent expenditures will aggregate to nearly $200 million of gross asset value.

“These warehouses comprise a critical portion of the logistics infrastructure for many of Puerto Rico’s most important companies and we look forward to executing on our mission of providing upgraded assets and exceptional service to our tenants. Hector and I are proud to lead this effort, and in doing so, develop a premier industrial real estate manager in Puerto Rico,” said Ryan Christiansen.

The former Gran Meliá Puerto Rico Hotel was acquired by Monarch, in partnership with Royal Palm Cos. and Aimbridge Hospitality, to be re-launched as the the Hyatt Regency Coco Beach Resort.

“Monarch has a long history of investing in real estate and other assets in Puerto Rico and the formation of the PRISM platform is a continuation of our firm’s commitment to, and conviction in, the Island’s economic recovery. We look forward to working with Ryan, Hector, and our partners at Taconic to build a best in class solution for tenants and creating value for all stakeholders,” Adam Sklar, Monarch’s managing principal, said in the announcing press release.

“For Taconic, the PRISM investment is a testament to our confidence in the Island’s continued recovery following Hurricane Maria and long term economic prospects. We are excited to partner with Monarch as well as Ryan and Hector to improve these extremely well-located assets and provide high-quality services that will attract existing and new-to-market tenancy,” Taconic Director Eric Sitman added.

Puerto Rico Fiscal Agency and Financial Authority Executive Director Omar Marrero was quoted as well, saying “this investment represents a strong commitment from serious investors who continue to identify opportunities that will contribute to job creation and economic activity on the Island.  Puerto Rico represents a tremendous opportunity for investors who believe in our future and in the capabilities of our people.  We welcome this important investment, which confirms, once more, that Puerto Rico is open for business.”

Both Monarch and Tactonic are part of the Lawful Constitutional Debt Coalition—a party in the in-court proceedings under the Puerto Rico Oversight, Management and Economic Stability Act (Promesa)—which includes Puerto Rico general obligation (GO) and Public Buildings Authority (PBA) bondholders that arrived at a deal to restructure some $18 billion in GO and PBA debt that has yet to be ruled on by U.S. District Judge Laura Taylor Swain.

Taconic was founded in 1999 by former Goldman Sachs partners Frank Brosens and Ken Brody. It “pursues an event-driven, multi-strategy investment approach dedicated to generating strong risk-adjusted returns with an emphasis on capital preservation,” according to the firms’ release. It has offices in New York, London and Hong Kong “with 40 investment professionals…and 78 business function professionals across legal/compliance, finance, operations, technology and investor relations.”

Taconic’s commercial real estate business is managed by James Jordan and Jon Jachman and “focuses on sourcing value-add opportunities through non-traditional, off-market processes. Leveraging its diverse network of relationships with CMBS [commercial mortgage-backed securities] special servicers, lenders and local operating partners,” the firm says it “seeks to generate attractive risk-adjusted returns through the strategic repositioning and re-introduction of well-located real estate assets.”

For its part, Monarch manages some $5 billion in assets and “focuses primarily on opportunistic credit and distressed situations,” investing $40 billion “across corporate debt, real estate, special situations, and other parts of the credit markets.” 

The firm has 69 employees between its New York and London offices.