PASADENA, Calif.–Using investments from 20 credit unions, a CUSO here has purchased Wescom Central Credit Union’s office building in a sale/lease-back deal.
The buyer is CUSO Realty Investors One, LLC (“CRIO”), which is a CUSO solely owned by credit union investors. CU Capital Management, LLC (“CUCM”), which is also a CUSO, managed the fundraising, bidding and purchasing process on behalf of CRIO, according to the companies. Wescom will lease back the entirety of the building for an initial term of 15 years with options to renew.
“The lease is triple net with Wescom maintaining full operational control and maintenance of the property, and picking up all building related costs, including structural repairs,” the CUSOs said.
The sale was brokered and submitted to a bidding process involving twenty bidders. CRIO distinguished itself as the only CUSO bidder. The sales price of $59 million consisted of $29 million in equity from the credit union investors and the balance from a loan, the organizations said. The credit union has owned and operated the property since 1986.
$50M in Capital Added
As a result of the transaction, the $5-billion Wescom added approximately $50 million in capital and increased its capital ratio from 7.79% to more than 8.5%. Due to an accounting rule change effective in 2022, Wescom can recognize all the capital gain upon the sale,” the CUSOs stated.
According to the CUSOs, the projected annual returns to the credit union investors from the Wescom transaction over the next 15 years are between 5% and 7%, payable quarterly beginning in 2023.
CRIO has received more than $109 million in investment commitments from 25 credit unions to fund additional credit union sale/leaseback transactions.
CUCM, as manager of the sale/leaseback CUSO network, reported it is in active negotiations to assist one of the network CUSOs to purchase another large credit union office building. Other seller prospects are in exploratory discussions, it stated, adding that future purchases will also include lending opportunities for credit unions.
Loans originated by credit unions will be participated out to multiple credit unions, it stated.
The Parties Involved in Deal
Maps Credit Union is a co-owner of CUCM. Maps was the first credit union to use a CUSO as a buyer in a credit union sale/leaseback transaction more than 10 years ago.
According to the organization, Mark Zook, CEO of Maps Credit Union, serves on the board of CU Capital Management. Before Guy Messick’s retirement from the law firm Messick Lauer & Smith, Messick worked with Mitchell to design and implement the collaboration with three goals in mind for credit unions: grow capital, obtain superior investment returns, and source solid commercial real estate loans.
Messick is now CEO of NACUSO Business Services, Inc. (“NBS”), a wholly owned subsidiary of NACUSO.
“NACUSO Business Services chose CU Capital Management as its first NBS Promotion Partner because the benefits of this collaboration are so compelling,” said Messick. “The investment and lending opportunities for credit unions are second to none. As for the selling credit unions, the comfort of a credit union knowing that its long-term landlord is a CUSO controlled by credit union colleagues cannot be underestimated. The collaboration provides a business model that keeps the benefits and revenue within the credit union industry.”
CU Capital Management, LLC and CUSO Realty Investors One, LLC were represented by Fox Rothschild LLP and Messick Lauer & Smith P.C.
For info: www.cucapitalmanag
You May Be (Actually Are) Missing Out!
Don’t forget to check your Spam/Junk email folder if you haven’t been receiving your free, popular and daily CUToday.info news headlines..
And if you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time.
CUToday.info has received very positive response from readers following the move to an improved provider of the daily headlines, but many also noted they did need to go to their Spam/Junk folder and mark it as safe.
The new email solution has not only improved every reader’s delivery experience, but it also features a fresh, new format that is easy to read, especially on mobile devices.
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com