New Life for Havens Wine Cellars?

Napa winery to sell for $6.5 million after a web of troubled transactions

by Paul Franson
Havens label
The former Havens winery property is under contract to be sold for $6.5 million.
Napa, Calif. -- Entertainment Properties Trust has entered into a contract to sell the former Havens winery property in Napa for approximately $6.5 million. All material conditions to closing have been satisfied or waived, and the transaction is expected to close before the end of the second quarter of 2010.

The reported -- but unconfirmed -- buyer is 13 million-case Trinchero Family Estates, which in recent years bought Folie à Deux and Napa Wine Cellars in Napa Valley, and transformed the former Folie à Deux site north of St. Helena into a showcase for its Napa Valley wines.

The company is owned by the Trinchero family, which also owns Sutter Home and a number of other wine brands.

Michael Havens founded Havens Wine Cellars in 1984, but he sold the wine brand to Springfield, Va.-based Billington Imports in 2006, and the property including 7 acres of vineyards on Hoffman Lane south of Yountville, plus 3 acres of facilities, to VinREIT, which leased it to Billington. Michael Havens stayed on to help for 1.5 years, but has not been associated with the winery since May 2008.

Billington encountered financial troubles, including losing its right to import Catena Alamos wines from Argentina, and defaulted on the lease in early 2009. Billington then went into receivership to PNC Bank, which then liquidated all Billington assets.

Havens commented to Wines & Vines: "After the successful sales of our brand and real estate in 2006, I was disappointed to find that we had sold to a company incapable of carrying those on successfully. Today, I continue to be involved in consulting for both small and large wineries, and last year launched Abrente, a new brand dedicated to Galician varietals -- Albarino, which I pioneered in 1999, and soon, California's first Godello."

Better times behind

In headier times for the wine business, Entertainment Properties Trust invested in the wineries via VinREIT, a joint venture with Global Wine Partners in St. Helena. Global Wine Partners is the exclusive wine industry financial adviser and agent for VinREIT. Well-known wine industry figure Vic Motto is the co-founder, chairman and CEO of Global Wine Partners LLC.

Entertainment Properties Trust is a $2 billion REIT (real estate investment trust) specializing in sale-leaseback transactions, and it is traded under the ticker symbol EPR on the New York Stock Exchange.

Its strategy is to buy real assets and lease them back to the operators. In the wine business, it followed that strategy: Its most visible acquisitions were the vineyards, wineries and other real assets for Ascentia Wine Estates. That transaction supplied the cash for Ascentia to acquire eight wine brands and assets from Constellation Brands, including 55,000-case Buena Vista Vineyards and Buena Vista Winery in Sonoma; 200,000-case Covey Run Winery in Sunnyside, Wash.; 225,000-case Geyser Peak Vineyards and Geyser Peak Winery in Geyserville, and 26,000-case Gary Farrell Winery in Healdsburg.

It has been sued for mismanagement by its former marketing and sales partner, W.J. Deutsch & Sons of White Plains, N.J., which also owns a stake in the company. There are rumors of poor sales at Ascentia and plans to sell or close Buena Vista Winery in Sonoma.

EPT’s other wine industry holdings include additional troubled properties:

Cosentino Signature Wineries (70,000 cases) went public on the London Stock Exchange and used the proceeds to expand, eventually acquiring California properties including Crystal Winery Facility in Linden, Lockeford Winery & Vineyard in Lockeford, and Pope Valley Vineyard in Pope Valley to add to the original Cosentino Winery facility just north of Yountville. The company is now headed by Larry Soldinger and has reported financial problems leading to closing some of its facilities and moving other operations.

The stock debuted at 128 pence, and it is now quoted around 3 pence. The last results reported were a year ago, when it announced sales of $2.75 million and a loss of $2.8 million for the first six months of 2009.

Founder and winemaker Mitch Cosentino is now working on another wine brand.

Sapphire Wine LLC, which operates 200,000-case EOS Estate Winery and EOS Vineyards in Paso Robles, has been sued by EPT and was rumored to be close to bankruptcy. On April 20, the Superior Court of the State of California in San Luis Obispo entered an order on the motion of Farm Credit West, appointing Mark Burrell of Westmark LLC as receiver for operations of Sapphire Wines LLC (“Sapphire”). Farm Credit West is Sapphire’s principal lender and maintains a security interest over its assets. Sapphire currently owes Farm Credit about $8 million.

Entertainment Properties Trust also owns the real estate and facilities of Rack & Riddle Custom Crush Facility and RB Wine Vineyards in Hopland, Calif.
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