Owner of High Point, Las Vegas Furniture Markets Agrees to Sell Properties
Thursday, July 6, 2017
The owner and operator of the High Point and Las Vegas home furnishings markets is being sold to real-estate firms associated with Blackstone.
The private-equity group is buying International Market Centers Inc. for an undisclosed price from Bain Capital Private Equity LP and funds managed by Oaktree Capital Management LP.
Blackstone Real Estate Partners and Blackstone Tactical Opportunities are the affiliates planning to acquire IMC, along with Fireside Investments. The deal is projected to close in the third quarter.
IMC's formation in May 2011 represented a $1 billion strategic gamble by the two private-equity groups in combining the two largest domestic home furnishings trade shows that had been in intense competition for several years.
IMC has 14 buildings with 6.7 million gross square feet in High Point, and three main buildings and three exhibition pavilions with about 5.4 million gross square feet in Las Vegas.
The planned sale may be a delayed response by Bain and Oaktree to the inability to launch an initial public offering for IMC.
The goal when the IPO plans surfaced in November 2014 was that IMC would operate and be taxed as a real-estate investment trust, as well as be listed on the New York Stock Exchange.
In an April 2015 regulatory filing, IMC said its IPO was priced between $12 and $14 a share. It had planned to sell 11.5 million shares of its common stock. That meant the IPO could have raised $185.15 million if all shares were sold at the maximum offering price.
However, IMC withdrew its application in December 2015.
“While Bain Capital and Oaktree have been great partners for the past six years, we look forward to this new relationship and our next phase of growth," Robert Maricich, IMC's chief executive, said in a statement.
IMC said there are no plans to sell any portfolio properties, and its management team will remain in place with the new ownership.
“Blackstone is a firm with a strong track record of enabling transformational change and shares our long-term vision for the business,” Maricich said.
Andrea Serra, a managing director for Blackstone Tactical Opportunities, said the goal is “leveraging the scale of Blackstone’s platform and expertise in real estate investing” with IMC's prowess in home furnishings trade shows.
Ryan Cotton, a managing director with Bain, said the private-equity groups feel a sense of accomplishment in the sale of IMC.
“Today, the business is a clear leader in the industry, with capabilities and reach that provide best-in-class productivity for the buyers and sellers who attend those markets,” Cotton said.
A Duke University study released in October 2013 estimates the annual economic impact of the High Point Market at $5.39 billion. The study lists the market’s circle of influence to 22 North Carolina communities – stretching to Hickory and Lenoir – and eight Virginia counties, all within a 75-mile radius of High Point.
Of the four complexes – the International Home Furnishings Center, Market Square and Showplace properties in High Point, and the World Market Center in Las Vegas – only IHFC avoided being forced into receivership before being acquired.
IMC said it had spent at least $27 million on its High Point properties since taking possession, as well as $39 million on its Las Vegas properties.
“It is common practice for the larger funds to turn over their investments in five to seven years, especially if they are successful and have repaid indebtedness and improved the business,” said Jerry Epperson, managing partner of financial-services firm Mann, Armistead and Epperson of Richmond, Virginia.
“While I do not know the cycle of the specific investment funds run by Bain and Oaktree, I am not surprised at this, and Blackstone is a logical buyer given the real estate involved.”
Epperson credited IMC officials Maricich and Scott Eckman with upgrading the markets' operations and efficiency.
“Looking back at before the IMC was created, a lot of money was wasted with the two markets competing unnecessarily,” Epperson said. “Together, they do a much better job for the home furnishings and gift sectors.”
Epperson expects the High Point and Triad communities, as well as the home furnishings sector, will see little difference in the local market under Blackstone ownership.
“Knowing Blackstone, they will likely learn all they can about IMC and the industries it serves, then work on ways to invest and improve operations in the coming years,” Epperson said.
”MC will continue to be a good local corporate citizen.”