81.7 F
Charlotte Amalie
Tuesday, June 18, 2024


June 1, 2003 – Information on the probable new owners of the Yacht Haven property on St. Thomas has become available from a 374-page draft proxy statement filed with the Securities and Exchange Commission in Washington, D.C., on Thursday and from a press release, both from Insignia Financial Group of New York, the parent company of the current owner of the property.
Insignia Financial Group is the parent company of IN-USVI LLC, the Virgin Islands company that is the holder of record of interests in all of the property slated for redevelopment, according to Andrew Farkas, Insignia chief executive officer. And, he said in a May 25 letter to Senate President David Jones, this will continue to be the case after the anticipated acquisition of Insignia by CB Richard Ellis. Further, Farkas said in the letter, Insignia USVI Corp., a V.I. corporation, is the manager of IN-USVI and will continue to be its manager after the merger.
According to Insignia's press release, however, if the planned acquisition of Insignia by CB Richard Ellis (each is a real estate services company with holdings world-wide) is completed as expected, part of the arrangement will be the sale by Insignia of various real estate holdings, including Yacht Haven, to an entity identified as "CEO Andrew Farkas's Island Fund I LLC."
The Island Fund has agreed to pay $44 million to Insignia for its "office building and strip mall investments," according to the release. Island Fund also will take care of $7.8 million in employment contracts (now held by Insignia) as part of the deal.
Steve Iaco, Insignia spokesman, said that the portfolio to be sold to Island Fund also includes some collateralized mortgages and Yacht Haven, Insignia's only investment in the Virgin Islands.
Island Fund, to be run by the departing Insignia CEO, will be a private corporation with headquarters in New York City and registered in Delaware. Private corporations — unlike Insignia, a public one — do not routinely issue financial statements. The deal between CB Richard Ellis (also privately held) and Insignia will be concluded if both parties meet various requirements and if Insignia’s shareholders vote approval. The stockholders' meeting date has not yet been set, Iaco said.
Filed with the SEC on Thursday, the draft proxy statement, according to Iaco, has no information on specific properties, such as Yacht Haven, but it does shed some light on an individual that the territory might like to recruit as a resident taxpayer: Andrew Farkas, who appeared before a special session of the Legislature last Tuesday.
That was when the Turnbull administration succeeded in securing quick approval of a lease and a Coastal Zone Management development permit for the submerged lands in Long Bay that are part and parcel of the Yacht Haven redevelopment plans. (See "Senate approves submerged lands lease".)
Farkas, even without earning a dime in his new job as CEO of Island Fund, will have more than $9 million in golden parachute payments between now and the end of 2005 — provided that the acquisition takes place.
These payments include, among other things, $1 million a year in salary between the time of the merger and the end of 2005; another $1 million a year in quarterly payments during the same period; a $1.5 million loan, to be forgiven after three years; more than $3 million for his stock in Insignia, and $30,833 a month for "support staff, office rent, and car and driver expenses," again from the finalizing of the deal until the end of 2005.
Farkas is one of several Insignia executives scheduled to be paid substantial farewell payments as part of the CB Richard Ellis takeover deal.
A group of stockholders has filed what Insignia calls "a purported class action suit" against Insignia protesting the size of the golden parachute for Farkas and objecting to Insignia's renewing his employment contract in December 2002, a relatively short time before the planned acquisition was announced. Insignia, in the draft proxy statement, says that the "litigation is without merit and [we] intend to vigorously defend it."

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