L.A. Firm May Win Control of 25 Partnerships
If its sponsors can garner the approval of certain investors, the planned consolidation of more than 25 real estate partnerships spanning seven states into a single entity, controlled by Los Angeles-based De Anza Group, is expected to create the largest owner and operator of luxury mobile-home communities in the country.
But gaining investor approval may be more difficult than the organizers expected, as at least one investor is questioning the equity of the deal.
Under the proposal, detailed in a prospectus that was filed with the Securities and Exchange Commission, 19 mobile-home parks, four apartment projects and one recreational vehicle park encompassing 10,500 homes will be gathered under a single organization headed by De Anza Communities Inc. The properties, valued at $280 million, are in California, Florida, Arizona, Oregon, Illinois, Nevada and Georgia.
Vote Expected This Summer
Shareholders of the different properties are expected to vote this summer on the proposal, which would entail raising $110 million to finance the deal. The funds will be used to pay off investors who don’t vote for the consolidation, finance the transaction, pay existing mortgage obligations and invest in other properties, according to the filing.
Each of the partnerships was sponsored by De Anza Group and its principal shareholder, Herbert M. Gelfand; both believe that the consolidation will enhance the investors’ growth potential, provide greater operating efficiencies and give the properties greater access to capital markets.
The proposal calls for partnerships to receive either shares in the new company or a combination of shares, cash and notes. The move must be approved by a majority of the consolidated value of all of the partnerships.
But the formula for apportioning the shares of the new company may not sit well with all the investors. In a separate filing with the SEC, MacKenzie Partners, a San Francisco limited partnership with a 6% stake in De Anza Properties X, said if it is not satisfied with the deal it may move to have the properties liquidated.
Rebecca A. Burad, a general partner of MacKenzie Partners and president of MacKenzie Securities Ltd., said her group has yet to formulate its strategy and is waiting to see the details of the final consolidation plan before embarking on a course of action.
Linda Walsh, investor relations director for De Anza Group, said the prospectus has yet to be approved by the SEC for dispersal to investors, so the company could not comment on its plans. She said the company recently received confidential comments on the prospectus from the SEC and is preparing a response to the commission. SEC officials would not discuss those comments.
Burad said her group is dissatisfied with the current plans for allocating the partnership shares. “I can say we’re not happy with the whole thing,” said Burad, who has been discussing the consolidation with other partners on an informal basis, but is limited in the discussion by certain legal ramifications.
“It really is a big deal. They’re trying to raise $110 million in debt to finance the consolidation,” Burad said. “They have some very, very attractive properties.”
Among the properties included in the proposed consolidation in California are Campland on the Bay and De Anza Harbor Resort in San Diego; Bayside Village in Newport Beach; De Anza Palm Springs Oasis in Cathedral City; Contempo Marin Mobile Home Park in San Rafael, and Santa Cruz Mobile Estates in Santa Cruz.
