MAG Capital Partners Acquires Frozen-Pie Factory
- Apr 20, 2020
Texas-based MAG Capital Partners LLC has acquired a frozen-pie manufacturing facility in Rochester, N.Y., pursuant to a 20-year leaseback. Located at 155 Balta Drive, the 42,700-square-foot facility is occupied by SatisPie LLC, which makes and distributes private-label frozen pies to national and international retailers. The sale proceeds will provide additional capital for SatisPie’s continued expansion.
SatisPie founder Michael Pinkowski purchased the facility from General Mills in 2007, after the latter closed its pie operation. He then formed SatisPie on the existing footprint. Since then, the plant has gone through a major upgrade, a 35 percent expansion and a multimillion-dollar investment in state-of-the-art manufacturing equipment.
MAG was represented by Mary Garnett of Barnes & Thornburg LLP’s Los Angeles office. Luis Ortega and Kent R. Williams of Marcus & Millichap represented the seller, which was also represented by Joseph Taddeo.
A look behind the deal
MAG principal Dax T.S. Mitchell told Commercial Property Executive that the company has been pursuing cold-storage investments since 2017 and that this sale-leaseback took six months of work. The effort was worth it for several reasons, he explained.
First, the high development costs for a cold-storage facility create a barrier to entry. Second, in the cold-storage sector, “the technology has not advanced much, so the older properties are still good.”
In addition, Mitchell said, this transaction’s value is probably around 50 percent of the facility’s replacement cost, making the deal, he said, “an extraordinary opportunity, COVID or no COVID.” Finally, he pointed out, “You’re buying a deal that’s going to last 20 years.”
Despite the work involved, Mitchell expects sale-leasebacks to become more common, both in the near future and further ahead, blurring the line between real estate and corporate finance.
Cold-storage facilities have been hot lately, particularly through the activities of Americold, which specializes in such assets. In November, the REIT agreed to acquire both Nova Cold Logistics, a Canadian operator of temperature-controlled warehouses, and two cold-storage facilities from MHW Group Inc. The deals totaled about $308 million.
Then in February, Americold agreed to purchase a 15 percent stake in SuperFrio Armazens Gerais SA, a leading cold-storage operator in Brazil, for about $28 million. The deal gives Americold the option to acquire full ownership of SuperFrio, starting in 2023.