Nov. 19, 2001 -- Pinnacle Holdings Inc. has sold two St. Louis colocation buildings for $22 million, the company said today.
The two properties, the Tucker Building at 210 North Tucker and the Valley Building at 900 Walnut, together comprise more than 500,000 square feet of rentable space.
Pinnacle said it is in talks for the sale of additional properties in San Antonio, Harlingen, and Beaumont, Texas as it seeks to unwind a brief but expensive foray into the colocation business.
Published reports have identified the buyer of the St. Louis buildings as Bob Guller, one of the original developers who sold the sites to Pinnacle.
The sales come amid a consolidating data center market, in which a glut of inventory has would-be buyers and sellers seeking comparable sales to use as a yardstick.
The two St. Louis buildings were profitable and substantially leased with telecom and Internet tenants. According to an SEC filing yesterday, the two buildings earned $700,000 in the three months ended Sept. 30, with revenues of $1.8 million, operating expenses of $1 million, and a tax expense of $100,000.
Pinnacle acquired the two St. Louis buildings in August 2000 for $56 million. A day later, the company said it had acquired a Dallas colo site for $151 million.
But just two weeks after announcing the aggressive move into the colocation arena, Pinnacle announced that it would refocus its full attention on its core business of telecom towers, and would sell the properties it had just acquired. This year, the company has taken charges of $39.8 million against earnings to reflect the diminished value of the buildings.
Pinnacle said the bulk of the proceeds from the sale will be used to repay bank debt.
The Sarasota, Fla.-based company said it has fallen out of compliance with some covenants of its senior credit facility, but has negotiated a forbearance agreement with its lenders, who have agreed to take no action until at least Dec. 12.
The agreement limits Pinnacle's ability to draw upon its credit facility, hikes the interest rate on the loan by 1 percent, and restricts the company's ability to take on additional expenses and debt.
"The company continues to work with its bank group to try and structure a more permanent amendment to the senior credit facility," Pinnacle said in a statement last night.
Pinnacle is a leading provider of communication site rental space in the United States. It owns or manages in excess of 5,000 sites.