An affiliate of Wyatt Capital LLC (“Wyatt”) acquired 99,000 sf of office/warehouse buildings in an all cash off market purchase from Koch Foods, Inc (“Koch”) for $3.55 MM in May 2016. The property totaled 4.6 acres and included three buildings on two separate parcels that were previously developed and occupied for chicken processing/freezing and distribution by the Cagle Co. (“Cagle”). Cagle was acquired out of bankruptcy several years earlier by Koch Industries who essentially shuttered this distribution operation except for maintaining a small administrative staff on site.
Wyatt immediately converted the property to a film production facility for office/warehouse functions that were then in demand and promptly leased the newly rebranded “Upper Westside Filmworks” (“UWF”) building within 24 hours of acquisition to a TV production for “Brockmire” produced by Will Ferrell’s Funny or Die Productions. Thru mid 2021, UWF had been leased to multiple TV & Film production tenants including multiple major motion pictures produced by studios such as Paramount, Warner Brothers, and Universal, etc.
Wyatt sold the smaller parcel at UWF to an owner/user (13 months after initial acquisition) for $945,000 ($105/sf) which allowed for a substantial return of capital to the partnership. This sold parcel was improved with an aged 9,000 sf warehouse building located on a .6 acre parcel and the purchaser conducted a high finish adaptive reuse redevelopment of the building for it’s own occupancy. Wyatt held the remaining 4 acre parcel for interim film production leasing which was improved with 2 buildings totaling 90,000 sf of office/warehouse space.
The asset’s leasing performance allowed the partnership to return approximately 40% of it’s equity to investors within the first 4 years of the investment period and prior to the Covid pandemic.
Given the short term nature of film production leasing, Wyatt capitalized the initial acquisition all cash which turned out to be a prudent asset management decision when the Covid pandemic arrived in March 2020. Ownership was able to carry the asset for approximately one year without any rental income and without having to make any further capital calls on the partnership due to having reserved substantial cash on hand and no debt.
In August, 2021, Wyatt sold the property for $9.5 MM to a local developer who plans to conduct a high end adaptive reuse office redevelopment project of the existing buildings.
Annualized project level returns for this investment were 22.9% with an equity multiple of 2.52X.