Akra Group has organized the Agwen Real Estate Investment Trust (REIT) to develop and acquire net leased agriculture, water and energy infrastructure projects. We are experienced developers and facility management personnel in these industries, and we only work with qualified operators who desire triple-net lease arrangements.
Agwen does not assume commodity risk and does not operate your business. We develop and operate facilities in partnership with our lessees, so you can run your operations while we bring value to facility management in the most efficient manner.
As a buyer and developer of industrial property, we work with you to evaluate your business needs, facility requirements, and potential financial benefits for working with us. We recognize our relationship must be a win-win for both parties. If there are significant reasons to build a partnership between our companies, to develop and operate a project, we will do our best to find a way to quickly and efficiently deliver the facility for your operating needs.
A transportation, storage, blending or distribution facility for agriculture, water or energy must be modern, efficient, and environmentally secure. Whether moving inputs such as fertilizer or feed, or bringing grain, water or fuel to market, we seek to minimize the capital commitment of our lessees while ensuring their facility requirements are fully met. We are experts at minimizing environmental and operational risks.
Akra Group formed Agwen to help sustain and grow core industrial infrastructure. We believe society’s most important commodities – - food, water and energy – require modern, efficient, environmentally safe transportation, production and distribution facilities. We believe investing in agriculture, water and energy infrastructure will yield consistent returns regardless of the economic climate. We want to invest in quality assets. If we buy an existing facility we will require that it be operated in a safe, environmentally sound manner. If we develop a new site, we will ensure it is designed and built to high quality standards. We believe our lessees are our partners, and we want you to succeed in your core business. We absolutely protect your confidential information. We will do our best to help you be successful.
Agwen will acquire or develop to your specification an agriculture, water or energy industry facility which can be net leased or placed under an operating agreement with an experienced operator. Examples would include:
| Grain elevators and feed mills Feed transload and distribution facilities Container loading facilities Soybean crushers, storage and loading sites Port or inland terminals Fertilizer transload, storage, blending operations Digesters Food/beverage production facilities Dairy and cheese processing facilities. |
Energy
| Pipelines Tank farms Transload and distribution sites Marine fueling facilities / bunker fuel |
Water
| Pipelines/distribution infrastructure Water treatment / purification facilities |
Agwen prefers to acquire existing facilities in established markets. For existing facilities, we will evaluate the site and work with the owner/operator to determine what upgrades may be necessary. Our due diligence will include extensive environmental testing. After the acquisition, the operator will assume management of the facility under the terms of the lease.
If upgrades or modifications are required, we will be responsible for the permits and approvals, financing, design and construction process, always working with the local operator to achieve a “build to suit” level of satisfaction and minimizing disruptions to operations.
Where an operator wants to develop a new facility, Agwen will identify your needs and specifications, working with your operating personnel to ensure their needs are met within the financial parameters set by the parties. We will then “build to suit” the facility. We are developers who will continue to own the project once it is built, so you do not have to worry about our disappearing when the punch list is completed. We have a continuing partnership with the lessee/operator in maintaining a first class facility. In most cases, the facility will have a useful life for longer than the term of the initial operating lease, so we will have a long-term interest in the safety, efficiency and environmental condition of the project.
Agwen does not participate in retail, medical, residential or warehouse projects.
Agwen will evaluate projects in any country. Our partners include a former U.S. Ambassador and business executives with experience throughout the U.S., Mexico and Canada, and in Asia and the Pacific, the Middle East and Africa. Obviously, the financial terms of doing business in certain countries will reflect economic and political risk.
The decision to sell and leaseback an existing facility, or partner with Agwen to develop a new facility, is not an easy one. Considerations for your business include:
Traditional Reasons for Directly Owning Your Facilities
2. Balance Sheet and Financial Covenants – Some companies have balance sheet requirements or have entered into financial covenants which restrict their ability to sell and lease back real property assets. However, most lenders will understand the financial benefits of a sale/lease back and will work with you to adjust covenants or other requirements.
3. Inertia – This is the biggest inhibitor to entering net lease transactions. Although it may not really qualify as a benefit, “that’s the way we’ve always done it” is the most common reason companies stick with direct ownership of real property assets.
Benefits of Leasing Your Facility from Agwen
2. Deferred Maintenance/Capital Improvements – Any facility deteriorates over time, and the more difficult the environment, the greater the need to provide repairs, safety and environmental maintenance. Monitoring facility and site conditions, engaging engineering and other consulting personnel, and construction management may not be your company’s core function. Worse, failure to properly undertake maintenance may be costly if safety or environmental incidents occur. Agwen can ensure uninterrupted operations that maximize your operational efficiency while minimizing risk.
3. Liquidity – A fixed asset may represent value which is not producing satisfactory rates of return. A sale and leaseback of fixed assets may release value which can be employed elsewhere in a company’s operations. A sale may improve the seller/lessee’s balance sheet by exchanging fixed assets carried at below-market value for cash, while removing debt from the balance sheet (consult with your accounting professional about possible changes in the treatment of long term leases). This leaves the seller in a better position to take on other debt for core business purposes.
4. Financial Performance – The seller/lessee will normally be entitled to deduct the entire lease payment as a current expense for U.S. tax purposes. Also, while the sale of corporate real estate will generally involve a gain (which may be deferred as described below), these gains may be reduced or eliminated if the seller/lessee has net operating loss carryforwards.
Agwen can structure your transaction to be an all cash, cash over an existing mortgage, or tax deferred sale. After due diligence, Agwen will close quickly with minimal contingencies and work closely with a seller to accommodate any special tax or partnership concerns.
Tax Deferred Transactions. A "REIT" is a Real Estate Investment Trust. To do business, a REIT sells its shares to an investor, who expects the REIT to make real estate investments which will return dividends. Under U.S. federal and many states’ tax rules, REITs are not taxed on their net income; the usual double taxation of income is thereby avoided. In exchange for this treatment, the REIT must distribute 90% of its income annually.
For U.S.-based facilities, U.S. tax laws currently provide for deferral of capital gains which would otherwise be triggered by the acquisition of your existing facility by a REIT. In what is known as an “UpREIT” transaction, the seller/operator of the facility can contribute property to an Operating Partnership of a REIT in exchange for limited partnership interests. After a holding period, the seller may sell its interests when the time suits its needs. Although such a sale will trigger capital gains, the contribution of your facility in exchange for limited partnership interests will allow accumulated capital gains to be deferred until you decide.
Agwen does not provide tax advice, and any sale should be planned carefully with your tax advisers. However, for U.S.-based facilities a tax deferred sale of a capital facility can have significant financial and tax advantages while providing liquidity and management benefits for the selling business. Non-U.S. facilities will require qualified counsel to determine both tax and other legal considerations.
Broker Protection. Agwen respects brokers' efforts and involvement. Agwen is always mindful of rightful agency and a commission due a broker. Provided the broker has authorized agency from a seller, Agwen will honor that agency and endeavor to protect it. In the event a seller has not previously agreed to pay a commission, Agwen may enter into an arrangement to pay a buyer broker to act on its behalf.
Where an operating company asks Agwen to develop or expand a facility, our engineering and development team will work in partnership with the operator/lessee to design and build to suit. Our value-added in development is experience in moving permits and approvals, environmental due diligence, public liaison, design and engineering, and coordinating the overall development process forward in a time efficient manner.
ßOnce pre-construction steps are completed, Agwen works in partnership with the operator/lessee to ensure the design and construction are completed to meet your operating needs.
The soft costs of acquiring or developing a project and the commitments necessary to successfully manage a site limit Agwen to projects in the $2 million – $250 million range.