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November 4, 2004
To our valued employees, customers and vendors:
Company definitions
AmeriCold Realty Trust (“AmeriCold Realty”)
Vornado Operating Company (“Vornado Operating”)
AmeriCold Logistics LLC (“AmeriCold Logistics”)
Crescent Operating, Inc. (“Crescent Operating”)
Vornado Realty Trust (“Vornado”)
The Yucaipa Companies (“Yucaipa”)
Crescent Real Estate Equities Company ( “Crescent”)
Background
In 1997 and 1998, Vornado and Crescent, through AmeriCold Realty, purchased
four independent temperature controlled warehouse companies to create
the largest provider of temperature controlled distribution services
in North America. Both Vornado and Crescent are traded on the New York
Stock Exchange and have assets in excess of $22 billion.
At that time, real estate investment trusts (“REIT’s”)
were prohibited from owning certain assets and conducting certain operational
activities. In order to remain in compliance with the REIT laws, in 1999
AmeriCold Realty sold its non-real estate assets to AmeriCold Logistics
which, up until today, has been owned by Vornado Operating and Crescent
Operating, with AmeriCold Realty retaining ownership in the warehouse
network.
Since that time and through a landlord/tenant relationship between AmeriCold
Realty and AmeriCold Logistics, AmeriCold Logistics has provided the
food industry with temperature controlled distribution services using
the warehouse network leased from and owned by AmeriCold Realty.
The combination
As a result of changes in the REIT laws allowing REITS’s to own
operating companies and to better position AmeriCold Logistics for future
growth, AmeriCold Realty purchased AmeriCold Logistics from Vornado Operating
and Crescent Operating. As of today, AmeriCold Logistics became a wholly-owned
subsidiary of AmeriCold Realty, thereby creating a parent/subsidiary
relationship between the two as compared to a landlord/tenant relationship.
Most importantly, all aspects of AmeriCold Logistics operations, including
the information systems, the local management and workforce, the senior
management, the control of the warehouse network and all other services
that AmeriCold Logistics provides to its customers, will remain the same.
In addition, as a wholly-owned subsidiary of AmeriCold Realty, AmeriCold
Logistics will now be part of a combined company that has in excess of
$1.4 billion in assets and $500 million in net worth.
In simple terms, the only true changes resulting from this transaction
are a much easier structure for our customers and vendors to understand
and that AmeriCold Logistics is much stronger financially as a subsidiary
of AmeriCold Realty then it was as a tenant of AmeriCold Realty.
Yucaipa Investment in Combined Company
Coincident with the combination of AmeriCold Logistics and AmeriCold
Realty, Yucaipa, a private equity firm headquartered in Southern California,
purchased a 20% interest in the combined company, with Vornado and Crescent
retaining an 80% ownership interest. Since its formation in 1986 by Ron
Burkle, Yucaipa has made 28 investments totaling $16.5 billion. The Yucaipa
investments have been primarily in the distribution/logistics, manufacturing
and retail industries with a particular focus in the consumer, food and
light industrial sectors. Specific investments in the food and distribution
industries have included Food4Less, Smitty’s Supermarkets, Dominick’s,
Ralph’s Grocery Co., Smith Food and Drug, Fred Meyer, Golden State
Food and Alliance Entertainment to name a few. Yucaipa is comprised of
20 professionals, a number of which having financial and/or operational
experience in the distribution/logistics industry.
The management of AmeriCold Logistics is very excited about the combination
of the companies and the addition of Yucaipa to the ownership team. We
believe these two transactions will provide AmeriCold Logistics much
easier access to capital to fund its warehouse and transportation network
growth plans and through Yucaipa, also adds significant expertise in
the distribution/logistics industry.
If you should have any questions regarding the above, please feel free
to contact Tony Cossentino at 770-604-4251 or Hal Justice at 678-441-1511.
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