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Kaiser Aluminum to Sell Bulk of Real Estate Assets

July 12, 1986|NANCY RIVERA BROOKS | Times Staff Writer

Kaiser Aluminum & Chemical Corp. said Friday that it will sell the bulk of its real estate assets for about $450 million to an investor group led by Peter B. Bedford, a company director. The transaction includes thousands of acres of property in California, Arizona, Oregon and Washington, including the 28,000-acre Rancho California development in Riverside.

Kaiser signed a letter of intent with Bedford Properties, Bedford's real estate development company based in Lafayette, Calif., to sell nearly all of the assets of Kaiser Development, the Oakland-based aluminum company's real estate subsidiary.

Not included in the sale were properties in Hawaii and Oakland, although the Bedford group has rights to buy some of the property. Any purchase would have to be at a premium over the current $100-million book value, Kaiser said. The sale also does not include the company's Kaiser Center headquarters complex, which was sold in 1983 and leased back for 25 years.

Keep Stake in Rancho California

Terms of the sale would include cash and the assumption of certain debts and liabilities by the buyer that will not be determined until the sale closes, a Kaiser Development spokeswoman said.

Under the agreement, Kaiser would keep a residual interest in Rancho California that would entitle the company to a percentage of all gross sales of land and buildings and a portion of some other profits, subject to certain limitations. At most, Kaiser would receive $50 million over 20 years.

In addition, after its change of ownership Kaiser Development would continue to manage the Hawaii properties for Kaiser Aluminum. Kaiser Development has nearly 200 employees.

Kaiser Aluminum has been looking for a partner for Kaiser Development for more than a year to help meet long-range financing requirements. The company said its financial consultants contacted 130 prospects, received serious interest from 20 and got eight formal proposals.

Other Investors Being Added

Bud Lake, a spokesman for Bedford Properties, said the company "felt it was a good investment" with a management team in place that could run the properties. Other investors in the group are still being added but probably will include both institutional and private investors, he said.

Kaiser Aluminum Chairman Cornell C. Maier said the sale "would achieve the multiple benefits of producing a profit, generating immediate cash for reduction of debt, providing ongoing income from continued ownership of some real estate assets and a sharing of proceeds of others, associating our excellent people at Kaiser Development with other, proven successful professionals, and ensuring that the long-range financing requirements for Kaiser Development's growth will be met independently."

For the first half of 1986, Kaiser's real estate operations posted a pretax profit of about $6 million. In 1985, the division earned $27 million on revenue of $140.3 million. At year-end, the real estate companies had total assets of $446.2 million.

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