This article is from the Australian Property Journal archive
THE Real Estate Capital Partners has secured an extension over its acquisition of the Record Realty US portfolio and the mezzanine note which funded that portfolio.
Previously RECAP proposed a capital raising to fund the acquisition however RECAP said the US-based investor recently raised concerns about potential tax inefficiencies for a US-based person investing in US real estate through an investment entity which is not also a US person.
As a result, RECAP has determined not to proceed with a capital raising at this stage and is now working on a proposed restructure of the existing arrangements to allow the US-based investor to invest more directly in the entities that hold the Record Realty US portfolio.
As a result, the deadline for completion of the acquisition has been extended to Friday 29 October 2010, by which time agreement must be reached with the sellers of the US portfolio and the mezzanine note and the US-based investor on the commercial terms of the Restructure.
If agreement on the commercial terms of the restructure is not reached by the deadline, it will not be further extended and the RECAP would likely forfeit $12.6 million in deposits paid in addition to $3.5 million in transaction costs.
And the Real Estate Capital Partners USA Property Trust, in certain circumstances, could also be exposed to further claims relating to breach of contract in relation to the acquisition, which cannot be accurately quantified at this time.
Australian Property Journal
