Sale of State Farm property to boost town, agency, CDTA
MALTA State Farm Mutual Automobile Insurance’s two office buildings and 163 acres of land at Northway Exit 12 have been sold as part of a national plan for the insurance giant to enter sale/lease-back arrangements for its regional operations centers.
The location of the North Atlantic regional operations center, where about 1,100 people work, has been sold to a subsidiary of Lone Star Funds, a private equity firm based in Dallas, Texas.
As part of the sale, the new owner has taken out a $49.1 million mortgage from Royal Bank of Canada and Citibank — and that mortgage will bring unexpected revenue to the town of Malta.
The mortgage was filed last week at the Saratoga County Clerk’s Office in Ballston Spa. The mortgage tax on the filing is 1 percent of the transaction, or $491,472.
Of that sum, the town where the mortgage was originated will be receiving $245,736, while the Capital District Transportation Authority and the State of New York Mortgage Agency will each receive $122,868 under a formula laid out in state law.
The revenue, which won’t be received until early next year, is an unexpected boost to the town treasury, said town Supervisor Paul Sausville. The recently adopted 2014 town budget anticipates $625,000 from the mortgage tax next year, based on routine real estate activity.
How the money will be used is up to the Town Board, but Sausville said he’d like to see it used to repay part of the $350,000 the town borrowed from its post-employment benefits reserve to pay for its new highway garage.
“We actually borrowed money from ourselves rather than go to a bank, and now we can pay it back,” he said.
It isn’t clear what the sale/lease-back means for the future of the local regional operations center.
The sale of the Malta property — which includes two office buildings totaling 450,000 square feet of space — is part of an arrangement involving Lone Star Funds and 18 of State Farm’s operations centers across the county. The company is then leasing the properties back from Lone Star for terms of between 15 and 25 years, with options to renew.
The regional centers provide back-office and other support to State Farm sales agents.
At Exit 12, State Farm has a 325,000-square-foot headquarters building that opened in 1991 and a 125,000-square-foot building that opened in 1999.
State Farm is headquartered in Bloomington, Ill. The national deal provides the policyholder-owned company with cash without the company acquiring any debt, financial analysts have said.
“Leasing rather than owning property provides State Farm with the flexibility to make adjustments in our operations to better serve our customers,” company spokeswoman Rachael Risinger told Bloomberg news service last week.