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Thursday, September 5, 1996
Two additional players submit bids for RF&P
BY JEFF E. SCHAPIRO
Times-Dispatch Staff Writer
Two more suitors are trying to romance RF&P Corp. from the Virginia Retirement System.
By Tuesday's deadline, officials said yesterday, SFRE Inc. and Lazard Freres & Co. had submitted bids for all or part of RF&P, a railroad-turned-real estate company acquired by VRS in 1992 for $548 million.
The offers may be for naught since VRS, with $22 billion in assets, has said it hopes to join forces with Washington real estate giant Charles E. Smith Co.
SFRE, of Alexandria, makes property investments on behalf of U.S. and foreign companies.
A real estate fund managed by Lazard, the prestigious investment bank, would supply capital for World Global Center, which wants to develop Potomac Yard.
Potomac Yard, an abandoned rail yard once offered as a home for a new Redskins stadium, is one the last giant tracts of undeveloped real estate inside the Capital Beltway.
Last month, VRS and Smith signed a letter of intent to form a partnership with holdings from RF&P and Smith.
The venture would include such properties as Crystal City in Arlington, the sprawling office and residential complex built by Smith atop RF&P land. The partnership would not include Potomac Yard.
The deal could ultimately free VRS of a holding that accounts for less than 5 percent of its portfolio, but has generated enormous legal and political headaches -- including federal and state criminal investigations.
VRS and Smith would share dividends from a new real estate investment trust, or REIT, with an estimated value of about $300 million.
VRS could collect more than $20 million a year from the venture. The fund has not seen a dime on its investment in RF&P because the company elected to keep its profits.
The REIT could go public, potentially generating a windfall for RF&P and Smith that could help both pay down mortgages.