A 200% Buyout Premium From Private Equity (ANL)

By Douglas A. McIntyre Updated Apr 27, 3:07PM EDT · Published Dec 10, 2:13PM EST

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Money_stack_pic American Land Lease Inc. (NYSE: ANL) is perhaps one of the more unusual plays seen yet in private equity acquisitions. Despite a 200% premium, the more odd part of "for how much" is the "why"….. American Land Lease Inc. stock closed at $3.90 yesterday, yet it has signed an agreement to be acquired by affiliates of Green Courte Partners for $14.20 per share.

The total deal is valued at $438 million when you include theassumption of debt and preferred stock. But even after today’s 200%gains, the market cap of the stock is still only about $96 million.

This is a two-step acquisition via a cash tender offer by Green CourtePartners for all of the outstanding shares at $14.20 per share in cash,followed by a second-step cash-out merger where shares not acquired inthe offer will be converted into the right to receive the same cashprice per share.

As of the latest annual report, American Land Lease held interests asowner in 30 residential land lease communities that the company itselfrefers to as "innovative, resort-style communities for active adults."Its portfolio of residential land lease communities is located inFlorida, Arizona, and Alabama and includes:

a recreational vehicle park with an approximate total of 7,984 operational home sites;
1,370 developed home sites;
1,191 undeveloped home sites;
and 129 recreational vehicle sites.

The company is also a Real Estate Investment Trust, or REIT. If youcan believe it, the company has been increasing its land valueas "plant, property, and equipment" has risen for at least 3 quartersand sat at $424.24 million as of September 30. As of that date it alsocarried $282.99 million in debt.

It seems that Green Courte is preparing to position itself with solidland values which may appreciate rapidly or which may have more demandthan traditional housing communities when the economy turns. There isalso the argument that this could be better valued as asum-of-the-parts scenario, or at least in time that might be the case.

Even with shares at $12.52 and up over 200% today, the 52-week trading range is $1.85 to $22.89.

Jon C. Ogg
December 10, 2008

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.