USF1 factory for sale

Those of you who keep an eye on real estate in the United States might have been surprised to see that the US F1 factory at 990 Twin Lakes Parkway in Charlotte has been put up for sale for $3.15m. The lease on the property lasts until June 2014 and the US F1 factory for sale brochure says that the 33,690 Sq. Ft. facility is in immaculate condition, having had $620,000 spent on it in recent months. The factory was listed for sale on February 12.

I did not have time to talk to the team before I posted the original story and I see that it has caused a lot of comment. The team says that it is the tenant and that the owner of the building is fully entitled to sell the property with the tenant in situ. The team will remain where it is and this will have no effect on the 2010 F1 programme.

All that is now needed is a second driver… and some cars.

54 thoughts on “USF1 factory for sale

  1. USF1 don’t own the building.
    USF1 are tenants. Building is being sold with USF1 remaing as tenants.
    That is what the brochure seems to imply anyway

  2. Before we all go off and declare USF1 dead. Surely this just means that USF1s landlord is selling the property, not the team. I presume the team as a sitting tenant would see no change, except they send the rent to a new landlord.
    The brochure referd to the tenant having upgraded it to F1 standard.

    John

  3. Actually this may not mean anything. As an architect who has been in business since 1980 and been thru a couple of recessions, A building with a lease is more valuable than one without a lease. It may be that the building owner is taking advantage of that lease to get his money out of the property. I looked at all the pictures and saw that they were taken last year when some of the stock cars were still in the building. I don’t know how much to rear into this sale. Remember that the stock car teams are hurting too, and if the stock car team still owns the building they may need they money. And besides real estate advertisement are always written with a little shading towards making the sale.

  4. Joe,

    USF1 is just leasing the facility. The building was up for sale when they signed the lease. It looks like they’re making a new push to sell the building now.

  5. It is my understanding that the owner is selling the property that is leased to USF1 thru 2014, as the tenant.
    Do you know something different?

  6. That’s a good signal for prospect sponsors?
    How can Peter Windbag justify this…

    Spent a whopping 620,000!!! Ohw my gawd…
    Aah well F1 is good at throwing money / burning budgets

  7. Hmm. Did USF1 buy their building last year, or lease it? A June 2014 lease expiry would fit in with a June 2009 commencement to the lease, which makes sense — unless Windsor or Anderson or some other related party bought the building and then leased it to the team.

    The listing promotes the place as an investment property though, and emphasises the fact that it is leased for the next 4+ years.

    My guess is that, unless the property is currently owned by someone connected with USF1, this sale may be more connected with the US commercial real-estate meltdown, rather than the particular meltdown that USF1 will be undergoing in the next month.

    Anyone know who owns the property, though?

  8. Joe, sorry but you have it all a bit wrong. This does not mean anything for the team at all, they will not see any money from this.

    It is very normal in real estate to sell your building when you have a nice long lease with a stable tenant. This building was empty for a bit of time, so the owner of the building was losing money (he/she/they were paying taxes on the land, maybe utilities, etc). Now that they have a tenant, they can sell the building, hopefully recover some of their losses if they actually had any, and move on to something else.

    It is very normal, think of it this way. There are companies that build a property out, then lease it out, once they have it leased they sell the building with all the tenants still in place and make money on the property. Not only did they get rent over that period, now they sell the property for more due to it being a higher value (fully leased producing income, looks great when you go get that loan to buy a building).

    Also the building was not listed for sale in February, it was actually some time before this. Not really news, but not a bad deal either if anyone wants to buy a building that could have a stable tenant.

  9. Hi Joe

    You’ll find that USF1 are tenants. The building owner is selling the freehold. The tenants (USF1) will remain. The details of the sale refer to the tenant (USF1) having signed a 5 year lease.

    Oh, and it’s old news, first surfaced a month or so ago. 😉 You need to keep your eye on the f1technical forums 😉

    Richard

  10. Hi Joe,

    It has been awfully quiet by USF1 after a little spurt of news & web activity in January. The thing that confuses me is that on the brochure, under the ‘twin lake business park’ section on page three, there’s a list of companies that are also there ‘Home to Robby Gordon Motorsports, BAM Racing and Team US F1.’ Surely if USF1 was selling or bailing out of the lease of this property, they wouldn’t have mentioned it in the same sentence? Or would that just be ‘marketing it’?

    Cheers,

    Joris

  11. It looks to me that the sale of this property says nothing about the state of the USF1 team; rather, this is just a possible change in their landlord. The existing owner has its own reasons for putting the property up for sale, but the terms “Investment Property” and “Leased through June 2014” are the telling factors. The only way that the sale of this property would generate money for the team is if the team is currently the owner of the property (under a sale/leaseback scenario); however, a quick review of the online county property tax records indicates the property is owned by a Herzog Contracting Corp. of Missouri.

    Interesting that the cap rate (a measure of the annual rate of return) is rather high, at 9.1%, reflecting both the downturn in the real estate investment climate along with (possibly) the perceived viability of the tenant, USF1.

    More troubling are the pictures in the flyer, which show a lot of unused space; although, who knows when the pictures were taken.

  12. Joe, just noticed on the F1fanatic.co.uk site that:

    “A US F1 spokesperson explained the team are tenants in the property and the owners have put the site up for sale, which will not affect their use of it as a base for their F1 programme this year.

    The spokesperson added: “US F1 Team has a long term lease at the building, so no worries there. It is absolutely US F1 Team’s intention to compete this season.”

    hhmmm….

  13. Joe,

    Looks like someone somewhere is trying to cast doubts over USF1 as they have now come out and denied that the factory is up for sale.

  14. Could it be that the owner of the property has put it up for sale subject to the existing lease by the USF1 Team?

  15. Well they have a lease for at least another 4 years, I wonder whether USF1 bought the building to begin with? I guess if someone in the SE US has some pull with real estate development, then they might be among the first non press/celeb drivers to get a look around and see what the hell is really going on there.

  16. As much as I believe in Peter Windsor, it is difficult to see this as a positive step. If the team had chosen to forgo a US base (and to what end, given its moniker?), it would announce the move.

    Sounds like a death rattle. No second driver = no more money, and no dispensation from the FIA to miss Bahrain. I hope I am wrong for Peter’s sake.

  17. No it doesn’t, it means that the landlords are selling the building complete with tennants which is quite a normal thing to do in the USA.

  18. Joe,

    This is the landlord selling on the property with the tenant in place. It’s not an indication of the state of health of USF1 or their intentions.

    It’s no different to the landlord of your home selling it on to a new landlord. All it means is that you write a different name at the top of the cheque.

  19. Stefan seems able to whistle up an F1 team out of nowehere in a few months. Presumably he can whistle up a second one just as fast to replace both USf1 AND Campos 😉

  20. I have some considerable experiance in this particular market in the U.S. A sale like this often means that the present owner considers the tenant a stable one and in a down finiancial climate that can make the property a good sales prospect! The owner may have more problems than the tenent, but I hope it’s good for both….Any potential new-owner will take a hard look at the group leasing the property, and the current owner knows that, especially on a facility this large…

  21. USF1 are clearly in dire financial straits.

    I was invited over to Charlotte in mid-December by Ken & Pete to visit the factory for a two-way job interview and asked to pay for my own return flight as “that would be easier” – to be re-imbursed to me by USF1.

    I have neither had any of the $2808.39 re-imbursed as promised, or any e-mails or texts replied to (since I refused the offer of employment after the company weren’t prepared to turn their promises into a firm contract).

    Not impressive from a team that is desperately trying to attract experienced Engineers to help them fulfil their dreams…..

  22. Come on Joe!,
    None of the commenters above needed to “talk to the team” to see that there was no story here. I think the gun was jumped…
    John

  23. Joe, while you were talking to the team, did they say anything about a lauch date or a second driver?
    John

  24. “We are 95% of the way there, we just need the budget”
    I think you will find that Mr Windsor is no longer associated with USF1. I never did figure out what he brought to the table, as indeed I thought the same about Mr Anderson, but he to be following in the tradition of the “unsinkable Molly Brown”
    I think its clear that USF1 wont be at the first races. They should do a deal with Campos, at least they would save the lease on another Spainish factory. they would then have a car and a second driver.

  25. Joe I’ve lost all respect. The building was for sale when USF1 moved in on a lease. The story and and the sales brochures were tossed around the Speed board way back in November. In fact it didn’t even rate as a story. About the only thing that may have changed is that the owner may have gotten a new real estate agent. Fess up lad.

  26. Old news.
    It was posted on the old SPEED F1 forum and Manipe F1 forum in early November.
    USF1 seems to be attracting “short bus” types to the sport…

  27. The owner might realise that USF1 is not viable and is selling the building now when there is a tenent and not later this year when USF1 does not exist and the building is vacant.

    I would take this as a question mark over USF1, even though many commenters are correct that USF1 is only a tenent.

  28. So much speculation.. why not just look up the title to the place and see who owns it ?

    Like Joe says, as long as we don’t see the drivers and the cars, we have to be suspect of them being on the grid in Bahrain.. anything else is just noise.

  29. “I have neither had any of the $2808.39 re-imbursed as promised”

    Rick- maybe you would have had better luck if you flew economy class. I wouldn’t reimburse a $3k airline ticket either.

  30. Hold the horses, everyone is pissing on this story too soon. I think there is a lot more to it than meets the eye.

    Who actually ownes this building? Why would USF1 invest equipment in a building they do not own and only have a five year lease on

    I bet one of the shareholders of USF1 ownes the property.

    Joe, ignore the commenters and investigate this story (as you are probably doing now). There is more here than meets the eye. No cars, no testing, one driver and the shed is up for sale.

  31. A resourceful commenter on F1Fanatic searched the tax rolls for Charlotte and found that the owner is a Herzog Contracting Corp., the owners of which dabbled in NASCAR for a few years about a decade ago.

    So not Windsor or Anderson then… I guess we’ll have to listen a little longer for the USF1 death rattle.

  32. Not to be contrary but in Joe’s defense, the listing (as with most US-based real estate listings) is a bit sparse on detail and while the forum folks at other sites may have been privy to the exact nature of the lease/buy contract that USF1 signed last year; I have not seen the document nor read anything about the HQ and what financial option USF1 chose. One could easily assume they got a steal on property in Charlotte from Herzog and bought the facility and on a cursory read of the listing it would be easy to assume that this was the case.

    It does say that there is a lessor and that makes property acquisition more attractive to a potential buyer but if you were under the impression that USF1 owned their building and lot; you could assume that they are the sellers and looking to get out of property ownership in favor of a less permanent lease option. Selling a building and leasing it from the new owner is not unheard of if you felt your operation would be winding down or you wanted to cash in some assets in exchange for an OpEx instead of a CapEx.

    I saw the story as well and having had some experience with commercial leasing I immediately took it as the owner of the property is selling the building with a tenant (USF1) who has a long-term lease but that’s because I have worked several deals of this nature and the listing of it being a triple net lease is also a signal that they are wooing potential buyers and trumpeting USF1’s lease as a lucrative addition. That doesn’t make me a smart guy, just means I have had a bum full of commercial real estate transactions and I envy Joe if he has not. They suck.

    To be honest, I can completely see where Joe thought they may be selling the factory and while I enjoy piety on certain levels, it’s not that becoming when its and honest mistake on Joe’s part. If I had a dime for every time we made assumptions that proved to be off the mark; I wouldn’t be running an F1 Blog; I’d be running a team called USF1. 🙂 Give Joe a break folks, he’s a good guy who does good work. Keep it up Joe.

  33. Ash,

    Yes, it was actually quite easy to find. I’m in the industry, and that’s the first thing I did when I saw the story this morning. For those of you interested, here’s the link to the tax roll for 2009: http://taxbill.co.mecklenburg.nc.us/publicwebaccess/BillDetails.aspx?BillPk=4921348

    It is of note, that the tax bill is past due; however, it is not the responsibility of the tenant to directly pay the property taxes.

    Also, a commenter here made mention that a 9.1% cap rate is a bit high. Cap rates have climbed up to this range because of the economy. The higher rate is also a function of the fact that this is a single tenant, short term leased property, and thus isn’t worth as much as a long-term investment due to the risk involved–and this is with any lease like this, not just because it is USF1. The cap rate will also tell us that the income from the property is currently $286,650 per year.

  34. If selling real estate with tenant in situ is such a good idea why don’t McLaren, Ferrari, Red Bull and Renault do it as well?

  35. Perhaps everyone is just eager for USF1 to do give us something besides their (unproven) word that they’ve made some progress. For a country as media savvy as the US, you’d think they’d have caught on by now that no-one is feeling too confident about their chances. It’s hard to root for vapourware.

  36. Viewers of the hilarious piss-take on YouTube might wonder if they are planning to lease MORE factory-space for their top-value USF1 toasters!

  37. Any landlord that promotes the fact that his building is leased by an F1 team clearly doesn’t know much about F1. Having an unknown widget maker as a tenant would provide considerably more security to a prospective buyer.

  38. Joe Cowan. Sorry mate but it’s common practice to put machinery and all sorts in a leased property, you just take it with you when you move on.
    It’s very common with all types of business from the largest to the smallest.
    I don’t own my offices but it’s my equipment in them.

  39. Although it appears clear that at some time in 2009 the premises were owned by interests associated with Herzog Companies Inc, there appears to be no evidence that the premises were / are not subsequently owned by interests associated with USF1. Bearing in mind that it is not unusual for real assets to be “quarantined” in separate legal entities to protect them from the grasps of creditors and external administrators of operating entities, or at least to achieve tax-effective financial structures, there is every chance that the premises are being offered for sale by interests associated (or formerly associated) with USF1. This circumstance, together with the absence of meaningful news from USF1 and reports of the departure of significant personnel from USF1, is suggestive of financial difficulties afflicting USF1. As most good insolvency practitioners would say, where there is smoke there is fire. And as Joe observes, the absence of racing cars from a racing car team does rather suggest that all is not well therein …

  40. My guess is that, unless the property is currently owned by someone connected with USF1, this sale may be more connected with the US commercial real-estate meltdown, rather than the particular meltdown that USF1 will be undergoing in the next month.

  41. usf1 was questionable from the beginning.There were always weird unanswered questions.Its a shame.
    Why did the fia choose them and campos?
    The whole episode is weird.

    F1 is doomed in the US with clowns like this using our name in their title.That was weird too……

  42. Hi All,

    I work in property.

    The sale of the building alone has no implications to US F1 at all. It is extremely common for buildings to be sold, whilst tenants are in them. For example, the Red Bull HQ, which again is a rented premises was sold from one investor to another:

    http://www.propertyweek.com/story.asp?storycode=3150505

    If the US F1 building has been unoccupied for a number of years, the building will be far more valuable now, than it would be without a tenant signed up to probably between a 5 & 25 year lease (not too sure what the standard is over in the US).

    Whats probably happening is that the current building owner, having recently got USF1 to sign up to a lease, is selling the property at the top of its value (based on the fact that there is a contract in place to pay the rent for whatever term they signed up to).

    The building is attractive to an investor as it has a guaranteed rental stream which will provide them an annual return on their cash. Of course if the firm went bust, they would be a creditor to the liquidated firm & in line for a percentage of whatever cash is left once all of the assets have been sold off.

    I imagine that most teams don’t actually own their own buildings. The simple reason being exposure to risk. For example: an f1 team is in the business of selling advertisement space. Their product is a car. The faster they can make the car, the better it is & therefore the more money they can demand for buying the advertisement on the car. The speed of the car is therefore the companies biggest risk. Purchasing property requires a pretty hefty investment, which in turn adds extra burden to the balance sheet.

    Many perfectly sound businesses have gone bust in the past, purely because they have purchased buildings, rather than rented them, at the top of the market, & have then had to write down huge losses to the asset value of the business, due to property price falls, which in turn means that they can’t get sufficient bank credit to fund their business activities, cash flow dries up, & therefore the doors have to close.

    Businesses get around this by signing deals with property investors to pay a certain rent for a certain period of time, in return for no large initial capital outlay, no fluctuations in the value of companies assets (related to property anyway) & less exposure to risk.

    As I said earlier, Red Bull rent their building, I would imagine most other F1 teams do also, big & small. If anyone is interested, an easy way to find out is to do a Land Registry search on the sites of F1 team bases, or look for recent planning applications at the sites. It will tell you who owns the building.

    Whats most interesting about the USF1 Sales Particulars is the size of the factory. I’m sure some Formula Ford bases are bigger than that!!!!!

  43. Another point, although the property sale has nothing to do with the stability of USF1, have you seen the videos on their website?

    It looks like theres only 5 people working there! Everyones walking around in jeans & casual shirts. When interviewed, the chief designer sounds like he’d be happier designing sleeping pills!

    I feel a bit sorry for those guys in a way as it looks like they are nowhere near ready to race, but I’m surprised Chad Hurley (Youtube guy) isn’t selling some more of his Google stocks to ensure they make it.

    I don’t really know Peter Windsor, but he looks like he’s got some pedigree, but little cash. However saying that, I would imagine that a huge chunk of his wealth is in fact tied up into stock, & that bearing mind that he has only been a wealthy man since 2006, he himself may not have the pedigree to give the team the correct support to ensure things don’t go belly up, in the way that Richard Branson & his team of people would have with the Manor GP linkup, or Tony Fernandes for that matter.

    Anyone with a big heap of cash can have a go at doing something, but you need people that know how to spend money in the correct way to ensure that something as complex as F1 actually occurs successfully.

    As far as I can see, I don’t think Peter Windsor has ever ran a team as a managing director before. Commanding a ship through uncharted waters is a lot different to trimming the sails. Maybe USF1’s biggest problem may be that there isn’t anyone to properly run the business.

    Another example is Brawn last year. Ross Brawn AKA F1 God did a very good job running the sporting side of the team & being the man in front of the camera, however Nick Fry will have probably played as bigger role in the teams survival & success last year. It wouldn’t even matter whether Nick Fry knew how to use a spanner. The important point is that he knew how to run a formula one business.

  44. And another thing…!!!!!!!

    In relation to the new teams & their owners (or majority shareholders), Both Lotus & Virgin are ultimately controlled by men who build & control businesses for a living.

    USF1 is majority owned by a guy who made a website which actually didn’t make any money until after it was purchased by Google, whos ceo & chairman (also a serial business builders – Eric Schmidt, not the original inventors Page & Brin) despite the fact that Chad Hurley got a whopping heap of shares in Google.

    Lastly, we reach Campos Meta. It looks today like the team has been purchased by another business builder after the previous owner couldn’t make all the parts fit together correctly.

    Yes Adrian Campos did an ok job of running a team in lesser championships, but I would imagine that the F1 game is another league.

    Anyway, enough of my ramblings.

  45. John K,

    Thats a bit harsh! Joes an F1 guy, not a property guy. Commercial property is a complicated world. I’ve read loads of F1 blogs in the past, including more recently the BBC F1 blog & I’ve stopped reading them all.

    All of the relevant information is provided here, in a nice chatty format.

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