Koll Seeks to Buy Dozens of Wells Fargo-Owned Buildings
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The Koll Co., a large Newport Beach developer, has offered to buy dozens of industrial buildings owned by Wells Fargo Mortgage & Equity Trust for $146 million.
The publicly traded real estate investment trust said Tuesday that its trustees had agreed to negotiate a possible sale of the properties to Koll, which already owns $3 billion worth of property in the western United States.
If the deal goes through, Koll will acquire dozens of industrial buildings, most of which are in California, Arizona, Colorado and Texas.
Problem Buildings
The buildings in Texas and Colorado are the problems for the real estate trust. Problems related to an office building in Houston forced the trust to write off $11 million from its books and contributed to a loss for the fourth quarter ending June 30. The trust has since sold the building.
Another $5 million had to be set aside to cover the fund’s losses from another group of Texas buildings.
Given the dreary outlook for real estate in Texas and Colorado, which have suffered from lower oil prices, the trust decided to liquidate last year.
“We were thinking about the long-term interests of our shareholders, and we thought it might be an appropriate time to maximize their investment,” said Stephen L. Stapley, chief financial officer for the trust.
“The market in Texas is definitely not going to improve in the near term, and Colorado will also be a concern for some time.”
No Agreement
The trust started negotiating with California Federal Savings & Loan in Los Angeles but could not reach an agreement.
Koll stepped in with an offer after that deal fell through, Stapley said.
Shareholders will get about $20.50 per share from the Koll offer at liquidation. The trust lost $14.5 million during its fourth quarter.
Koll officials could not be reached for comment.
Wells Fargo said it agreed to a maximum 60-day period for Koll to look into the deal and negotiate a purchase agreement. Any purchase must also be approved by the trust’s shareholders.
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