FTE Signs Definitive Agreement to Acquire 3,000+ Unit Rental Home Asset Owner and Operator
December 20 2019 - 6:05PM
FTE Networks, Inc. (NYSE American: FTNW) (“FTE” or the “Company”),
announced that it has signed a definitive agreement to acquire the
assets of Vision Property Management LLC (“Vision”) and its
affiliated assets which include more than 3,000 residential real
estate assets in 46 states.
Vision’s management team assembled its portfolio
of houses over the past 10 years and will continue as senior
executives of the Company and major shareholders. They will develop
their strategy to acquire and build affordable housing properties
for sale or for rent. FTE has assumed approximately $80MM in debt
held by Vision, which it plans to refinance into a new lower cost
credit facility including additional renovation capital allowing
for the ability to capture additional revenue within the
portfolio. In addition, FTE intends to explore the
possibility of converting to a real estate investment trust (REIT),
either independently or through a combination with an existing
REIT.
“We pride ourselves as experts in the
residential real estate business in secondary markets around the US
bringing home ownership and affordable for rent product to the
middle and lower income class,” said Vision CEO Alex Szkaradek.
“Contributing our assets into FTE and structuring them into a REIT
gives us the opportunity to scale our platform and allow investors
the opportunity to participate in this under-represented investment
class in the public markets. We are thrilled as to this
strategic partnership and look forward to delivering future
shareholder results.”
This transaction is a new start for FTE who
received a notice from the NYSE American LLC (the “Exchange”) on
Tuesday stating that it would be commencing proceedings to
delist the Company’s common stock from the Exchange, subject to the
Exchange’s appeal procedures. As more fully described in the
Company’s Form 8-K filed with the Securities and Exchange
Commission (the “SEC”) on December 17, 2019, the Company has
appointed board member Michael P. Beys as interim CEO. Beys will
lead the Company’s efforts to regain compliance with exchange and
regulatory filings and to recruit a permanent management team. Beys
has extensive legal experience, among other things, as a former
federal prosecutor (he served as an Assistant U.S. Attorney for the
Eastern District of New York) as well as experience investing in
and managing commercial real estate properties. Stephen Goodwin has
been appointed executive vice president of operations and will
focus his residential real estate expertise in the integration of
Vision, transitioning the Company to institutional leadership.
The purchase price for Vision is valued at $350
million, consisting of $10 million of cash, the assumption of
approximately $80 million in Vision debt, 19.9% of FTE’s currently
outstanding common stock which the parties value at $32 million,
and the balance in preferred stock of FTE.
In order to satisfy a financial advisory fee
payable by the sellers to an affiliate of Suneet Singal, who
introduced the parties to each other and served as an advisor to
Vision on this transaction, the sellers will transfer, to Mr.
Singal or other persons or entities whom he designates, the FTE
common stock and $93 million in aggregate stated value of the FTE
preferred stock they will acquire in connection with the
transaction. Of this amount, the FTE common stock and
$68 million in aggregate stated value of the FTE preferred stock
will be held for the benefit of, and is intended to be distributed
in the future to, common shareholders of First Capital Real Estate
Trust Inc, a public non-traded REIT, at the direction of Mr.
Singal, the former CEO, Chairman and member of the board of
directors of the REIT. Any such distribution will be subject
to a registration under the Securities Act of 1933 or an
applicable exemption from registration. The Company is not
aware of Mr. Singal’s ownership percentage in the REIT. On
December 13, 2019, Mr. Singal, the REIT and two entities affiliated
with Mr. Singal and the REIT were sued in federal court by the
Securities and Exchange Commission in a civil action alleging
violations of federal securities laws. The Company first
became aware of this lawsuit on December 16, 2019.
About FTE Networks, Inc.
FTE Networks, Inc. (“FTE”) through its
subsidiaries Crosslayer and Juscom divisions provide technology
solutions for smart building platforms, edge computing and network
infrastructure solutions for residential and commercial
properties. We create transformative smart platforms and
buildings. FTE’s services are predicated on smart design and
consistent standards that reduce deployment costs and accelerate
delivery of leading edge projects and services. The Company works
with Fortune 100/500 companies, including some of the world’s
leading Telecommunications and IT Services Providers as well as
REITs and Media Providers.
Forward-Looking Statements
This release may contain “forward-looking
statements” within the meaning of the safe harbor provisions of the
United States Private Securities Litigation Reform Act of 1995.
Generally, forward‐looking statements can be identified by the use
of forward‐looking terminology such as “believe,” “will,”
“intends,” “expects,” and may include statements regarding matters
that involve known or unknown risks, uncertainties and other
factors that may cause our results, levels of activity, performance
or achievements to differ materially from results expressed or
implied by this release. Forward-looking statements are
neither historical facts nor assurances of future
performance. Instead, they are based only on our current
beliefs, expectations, and assumptions regarding the future of our
business, future plans and strategies, projections, anticipated
events and market trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. These risk factors and
others are included from time to time in documents we file with the
Securities and Exchange Commission, including but not limited to,
our Form 10-K’s, Form 10-Q’s and Form 8-K’s. Our actual
results and financial condition may differ materially from those
indicated in the forward-looking statements. Accordingly, you
should not place undue reliance on these forward-looking
statements. Any forward-looking statement made by us in this
release is based only on information currently available to us and
speaks only as of the date on which it is made. We undertake no
obligation to publicly update any forward-looking statement,
whether as a result of new information, future developments or
otherwise.
For more information, please contact:
Corporate Contact:FTE Networks,
Inc.237 W. 35th Street, Suite 601New York, NY
10001(877) 850-4308ir@ftenet.com
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