Seth Klarman's Charlotte deal

David Mildenberg - May 13, 2014 - 3:45:00 pm

Downtown Charlotte got a lot more interesting because of the vision of Afshin Ghazi and George Cornelson, the developers of the EpiCentre complex that includes Dale Earnhardt Jr.’s Whiskey River bar, a bowling alley and other entertainment venues. As often happens in real estate, however, a later owner is cashing in on the entrepreneur’s vision.

The later owner of the EpiCentre is Wall Street legend Seth Klarman, whose Boston-based Baupost Group in 2010 backed Charlotte real estate investors Doug Stephan and Geoffrey Curme in taking over more than $90 million of the development's debt. Now the Baupost-backed group has sold the complex to Los Angeles-based CIM Group for $130.5 million, the Charlotte Business Journal reports. CIM also owns downtown Charlotte’s BB&T Center. The EpiCentre opened in late 2007, just in time for the financial crisis that rocked Bank of America Corp. and prompted the sale of Wachovia Corp. to Wells Fargo & Co. Ghazi and Cornelson, who had borrowed from Regions Bank, lost ownership of the complex in 2012 after a lengthy battle in bankruptcy court.

Klarman returned $4 billion of his clients’ money at the end of last year and had 40% of his remaining $27 billion portfolio in cash as of March, according to various media reports. His letters to clients are highly regarded by money managers. His latest missive, disclosed by journalist Tyler Durden of the Zero Hedge website in March, painted a worrisome picture. It concludes:

“Six years ago, many investors were way out over their skis. Giant financial institutions were brought to their knees. The survivors pledged to themselves that they would forever be more careful, less greedy, less short-term oriented.

“But here we are again, mired in a euphoric environment in which some securities have risen in price beyond all reason, where leverage is returning to rainy markets and asset classes, and where caution seems radical and risk-taking the prudent course. Not surprisingly, lessons learned in 2008 were only learned temporarily. These are the inevitable cycles of greed and fear, of peaks and troughs.”

Sounds like it’s time for a round down at Whiskey River.





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