SCOTTSDALE, Ariz. (GLOBE NEWSWIRE) — AV Homes, Inc. (Nasdaq:AVHI), a developer and builder of active adult and conventional home communities in Arizona and Florida, today announced that TPG, a leading global private investment firm, has agreed to make a $135 million investment in the Company at a price of $14.65 per share, which represents a 9.6% premium to the 30-day trailing average closing price of AV Homes’ common stock. AV Homes will use the proceeds to accelerate the implementation of its strategic growth plan in its existing and new high-potential housing markets. In addition the Company has adopted a shareholder rights plan effective today designed to protect its net operating loss assets from the application of Section 382 of the Internal Revenue Code.

Since 2011, AV Homes has strategically re-engineered the Company to position it to benefit from the recovery of the homebuilding industry. It reduced overhead, launched initiatives to improve internal processes, invested in a new scalable IT platform, and developed a strategic plan to guide its growth.

Roger A. Cregg, AV Homes’ President and Chief Executive Officer, said the investment will allow the Company to pursue new investment opportunities in its core markets in line with the Company’s long-term strategy. “We’re delighted that a renowned global private investment firm such as TPG has confidence in our vision, and in our ability to execute that vision, as the housing industry continues its recovery. It’s an exciting time for AV Homes and I am confident that the implementation of our plans will drive growth and deliver long-term value to our shareholders,” Cregg said.

AV Homes currently operates in the Phoenix, Arizona and Central and South Florida markets. The Company’s primary operations are focused on the development of active adult communities designed for people 55+ through its Vitalia brand, and serving the housing needs of first-time and move-up homebuyers through its Joseph Carl Homes brand.

Kelvin Davis, senior partner at TPG, said AV Homes has established a strong platform for future growth. “AV Homes has assembled a strong management team with deep industry experience. The Company is well-positioned to participate in the on-going recovery of the housing market, with real estate assets located in two healthy and growing Sunbelt markets,” Davis said.

Key Investment Terms
The investment by TPG has been approved by AV Homes’ Board of Directors and it is anticipated that funding will take place by Thursday, June 20, 2013. The key terms of the investment are as follows:
• TPG will make a $135 million equity investment in AV Homes at $14.65 per share, a 9.6% premium to the 30-day trailing average closing price of AV Homes’ common stock.
• At the closing of the transaction, the Company will issue approximately 2.6 million shares, or approximately $37.5 million, of common stock, representing approximately 19.9% of the Company’s outstanding common stock, and approximately 0.7 million shares, with an initial liquidation value of $97.5 million, of newly created Series A Contingent Convertible Cumulative Redeemable Preferred Stock (the “Series A Convertible Preferred Stock”).
• TPG’s ownership in the Company will be approximately 41.9% on an as-converted basis at the closing of the transaction.
• The Series A Convertible Preferred Stock is convertible on a ten-for-one basis upon stockholder approval, in accordance with NASDAQ rules. AV Homes has agreed to hold a meeting of its stockholders within 90 days following the closing date for stockholders to vote on the conversion of the preferred stock into common stock. Two of the Company’s largest stockholders, ODAV LLC and JEN Partners, LLC, representing 24.2% of the outstanding common stock of the Company, have both disclosed to the Company their intention to vote in favor of the conversion.
• The Series A Convertible Preferred Stock will accrue increasing quarterly dividends beginning in six months, if the preferred shares remain outstanding.
• TPG will have two of eight Board seats at closing, increasing to four of ten Board seats upon receipt of stockholder approval. In addition, TPG will have the right to have two directors appointed to the compensation committee and a newly created finance committee, both of which will have five members, and will have the right to have one director appointed to each other Board committee. TPG’s Board and committee representation will decrease in the event its ownership percentage decreases below certain specified levels.
• TPG will have consent rights for certain major decisions of the Company as long as it maintains at least 10% ownership of the Company’s common stock on an as-converted basis and at least 25% of the common stock it will hold on an as-converted basis at closing of the transaction.

As noted above, TPG will acquire a 41.9% ownership interest in the Company following the transaction. Because of the Company’s net operating loss position, it has generated a significant net operating loss (NOL) carry forward for federal income tax purposes. The Company’s ability to use its NOLs can be negatively impacted if there is an “ownership change” as defined under Internal Revenue Code Section 382. In general, this would occur if certain ownership changes related to the Company’s stock that are held by 5% or greater stockholders exceeds 50% measured over a rolling three year period. Therefore, the Company has also adopted a shareholder rights plan effective today that is designed to protect the Company’s valuable NOLs from the application of Section 382, which can restrict the use of NOLs following a change of ownership. Under the plan, when a person or group has obtained beneficial ownership of 4.9% or more of the Company’s common stock, or an existing holder with greater than 4.9% ownership acquires more shares of the Company’s common stock, there would be a triggering event causing significant dilution in the economic interest and voting power of such person or group. The Company’s Board of Directors, acting through its newly formed Finance Committee, has the discretion to exempt an acquisition of common stock from the provisions of the rights plan. The details of the operation of the rights plan, and certain exemptions from the rights plan that the Board has approved with respect to TPG, can be found in the Company’s Current Report on Form 8-K, which the Company expects to file this week.

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2230 East Fort Lowell Road, LLC an affiliate of California Capital Real Estate Advisors, Inc. (CALCAP Advisors) of Pasadena, CA (Edward Aloe, managing principal) bought the apartment complex Vista Catalina at 2230 East Fort Lowell Road in Tucson for[mepr-show rules=”58038″]$1.325 million ($22,845 per unit) for the 48,027 sq. ft. complex located on Fort Lowell between Country Club and Tucson Blvd.

The property (built 1971) has 58 one-and two-bedroom units in six buildings, ranging from 640 – 788 sq. ft., the units feature paid utilities, free Wi-Fi, covered parking, cable ready, individual climate control provided by a chiller system. Vista Catalina is on direct bus lines, minutes away from the U of A and within walking distance to grocery, shopping, dining, and public libraries. The community has lush landscaping, a pool, outdoor BBQ, and laundry facilities, on-site bilingual manager,  24-hr. emergency maintenance service, short-term and long-term leases, and a dog run for small & medium sized pets.

CALCAP Advisors, a real estate investment and advisory firm, bought the Class-C property to reposition it in the marketplace at an undisclosed cost. Acquisition cost was well below replacement cost, at $28 per sq. ft., it sold with seven vacancies. CALCAP is an experienced value buyer having completed over $50 million in multiple transactions, repositioning distressed multi-family and commercial properties in California, Arizona and Nevada.

CALCAP’s acquisition strategy is guided by the firm’s approach of identifying the best opportunities for capital appreciation. CALCAP looks to acquire, reposition and develop a blend of assets; working to preserve capital and deliver strong returns. Partnering with businesses, asset managers, developers and communities to reposition distressed real estate, provide liquidity, adds value not only for stakeholders but also the communities they serve. This is CALCAP’s first investment in the Tucson market.

The seller, EFL Apartment Partners (Pat McGlathery, principal) of San Diego, CA was represented in the transaction by Bob Kaplan and Allan Mendelsberg, Investment Specialists with Cushman & Wakefield / Picor Commercial Real Estate Services of Tucson.

The Inter-American Investment Corporation (IIC), a member of the Inter-American Development Bank (IDB) Group provided financing for the transaction.

Aloe at CALCAP Advisors can be reached at (626) 229-9057. Mendelsberg should be contacted at (520) 546-2721 and Kaplan is at (520) 546-2737.[/mepr-show]