Monthly Archives: August 2019

Berkadia Secures $93M Financing for Multi-Family Property in Metro D.C.

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Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has arranged a $92.7-million loan to refinance Woodbridge Station, a garden-style multifamily community in Woodbridge, Virginia.

Woodbridge is approximately 22 miles south of Washington, DC.

Located at 1400 Eisenhower Circle, the community features two-, three- and four-bedroom apartments with full-size washers and dryers in-unit. Amenities include a swimming pool with a sun deck, 11 community playgrounds, hiking and jogging trails, a tennis court, dog park, grilling areas and storage units.

Jonathan Pratt and Rossana Bouchaya of Berkadia’s Washington, DC office secured a seven-year, interest-only Fannie Mae loan with a 70% loan-to-value ratio on behalf of the borrower, Washington, DC-based developer and operator Foulger-Pratt. The deal closed July 31.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation (now known as Jefferies Financial Group), Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Workers on Strike at Berkshire Hathaway-Owned Plant in Upstate New York

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More than 200 workers at Berkshire Hathaway’s Specialty Metals have gone on strike. At issue are the long hours workers are working at the plant, which runs 24-hours a day, seven days a week.

The Special Metals plant in New Hartford, New York, produces premium quality nickel base superalloys for both static and rotating aerospace and land-based gas turbine applications.

The strike began on Saturday, and there are 211 employees, along with 25 technicians, that are walking a picket line.

Ron Zegarelli, chief steward at Special Metals, explained that the company is requiring workers to work 60-hour, six day weeks.

“Our guys are fed up,” Zeigler told the Observer-Dispatch, “I told (management) it wasn’t going to work.” He noted that some employees had marital problems, including divorce, due to the demands of a job that keeps them away from home for so much of the week.

The plant is continuing to operate during the strike.

“Special Metals negotiated in good faith and made a fair and equitable offer,” David Dugan, director of communications for Special Metals. “As a result of the vote, we are executing our contingency plans, including having our salaried employees operate our equipment. Through these and other actions, such as leveraging other production facilities, we are well positioned to meet our customers’ needs as negotiations continue.”

Specialty Metals is owned by Berkshire Hathaway’s Precision Castparts Corp., which is a global conglomerate operating in more than a dozen countries that manufactures complex metal components and products, high-quality investment castings, forgings and fastener systems for power generation, aerospace, space exploration, military and other mission-critical applications.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

GEICO Marks 1st Year in New Iowa Location With Plans to Hire 80 New Associates

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GEICO’s North Liberty, Iowa, office is marking the one-year anniversary of its new headquarters by extending job offers to 80 new associates by the end of 2019.

Applications are now being accepted for Customer Service Representatives, with a starting salary of $16.50/hour, and Inbound Sales Representatives, with a $16.87 starting salary. No prior insurance experience is necessary; training is provided. Apply at geico.jobs/iowa.

GEICO opened its Iowa office in 1997, when the insurer had about 2.8 million policyholders. Today, GEICO has more than 17 million policyholders. The success of the Iowa office has contributed substantially to the company’s growth. In fact, an Iowa sales associate sold GEICO’s 17-millionth policy earlier this year. The Iowa office, which currently has about 500 associates, relocated to a new 50,000-square-foot building last September.

GEICO’s Iowa office has been named a Top Workplace for the last five years by the Des Moines Register and is one of Indeed.com’s Top 10 highest-rated workplaces for compensation and benefits.

Full-time GEICO associates are offered the Total Rewards Program with a wide range of benefits, including a comprehensive benefits package, continuing education, tuition reimbursement, on-site college courses, career growth, community engagement opportunities, as well as a friendly and supportive workplace.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Index AR Solutions & Berkshire Hathaway’s MidAmerican Energy Partner on Mobile App to Simplify Source-Transfer Switch Operations for Electrical Utilities

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Index AR Solutions has partnered with Berkshire Hathaway’s MidAmerican Energy Company on an augmented reality (AR)-enabled mobile application that helps workers complete source-transfer controller operation, troubleshooting and start-up tasks with greater safety, speed and confidence. By enabling workers to visualize important steps and decision points, the newly available Source-Transfer Controller SuperApp® ensures that procedures are completed fully and quickly – ultimately minimizing service delays to electrical customers and reducing the risk of utility infrastructure damage.

MidAmerican Energy Company is a subsidiary of Berkshire Hathaway Energy, wholly-owned by Berkshire Hathaway that serves some 770,000 electric customers and 751,000 natural gas customers in Iowa, Illinois, Nebraska and South Dakota.

The Source-Transfer Controller SuperApp® is the second application development partnership between Index and MidAmerican. The two companies are also deploying a combined augmented reality (AR) and eBook training application for MidAmerican gas apprentice students that boosts engagement, knowledge retention and worker safety.

“We’re delighted to have once again partnered with a true leader in innovation such as MidAmerican Energy, as we reimagine the utility workplace of the future,” said Dan Arczynski, CEO at Index AR Solutions. “Blending advanced visualization techniques with industry best practices and the knowledge of a utility’s most skilled workers, the Source-Transfer Controller SuperApp® helps workers perform intricate procedures as safely and as efficiently as possible, each and every time.”

Source-transfer controllers are sophisticated switching mechanisms used by MidAmerican and other electrical utilities to minimize power interruptions, enabling operators to quickly shift from one power source to another in the event of a problem. The devices are complex, with multiple decision trees that often require a 4-6 hour schedule for an engineer to initially set up or reset. In addition, missed or incorrect steps can result in equipment damage, injury or service delays.

By helping workers visualize specific setup steps, the Source-Transfer Controller SuperApp® uses AR to address a common challenge in the electric utility industry. The app presents workers with an agreed-upon set of best practices, decision trees, and safety warnings at the exact time and place they are needed within a procedure.

The app gives a qualified electrician the confidence to safely perform troubleshooting, start-up and operational tasks with minimal errors or risk, ultimately translating into fewer service interruptions to customers and fewer incidents of costly equipment damage.

The Source-Transfer Controller SuperApp® is the latest in a series of more than 40 AR and eBook product offerings from Index called SuperApps® that are tailored to address common challenges associated with an industry. Delivering the core functionality of Index’s custom-built applications, SuperApp® product development is performed in the field – in close collaboration with an initial client partner – using real-world scenarios.

The Source-Transfer Controller SuperApp® is available for purchase through Index AR Solutions, with pricing and terms based on a co-marketing agreement with MidAmerican Energy Company.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD Reaches 1GWP Milestone of Solar Energy Installations in Brazil

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Chinese battery and vehicle maker BYD has now installed 1 GWp in solar panels in Brazil.

BYD – a global leader in new energies – is immensely proud to have contributed significantly to the south American country reaching the overall mark of 3 GWp installed (1 GWp in distributed generation only), according to projections of the Brazilian Association of Photovoltaic Solar Energy (ABSOLAR), and data from Aneel.

In 2017, BYD opened its second Brazilian factory in the city of Campinas, exclusively to produce PV solar panels. Two years earlier, BYD also set up a electric bus production line in Campinas, and also began selling electric vehicles (EVs) and forklifts.

According to Aneel, there were 31,896 new connections of micro and mini generators in the Brazilian power network by the end of June 2019, compared to 35,139 systems installed throughout 2018. Considering installed capacity, the volume in the first half of 2019 was about of 361 Megawatts (MWp), which represents 91.85% of all installation in 2018 (393 MWp). These numbers confirm the growing size and importance of PV solar projects in Brazil.

Gustavo Tegon, Sales Manager at BYD Energy Brazil points out that the company, which is already a global leader in the manufacture of solar panels and energy storage systems, is also a setting a benchmark in Brazil. “Following the establishment of the solar panel factory in Campinas, much of the emerging solar market in Brazil has opted for BYD products for their quality, technology and delivery capability. Having reached almost 1/3 of the national market is a proof of our excellence. ”

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Berkadia Provides $47.2M Construction Loan for Dallas Multifamily Property

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Berkadia, Berkshire Hathaway’s joint venture with Jefferies Financial Group, has announced the financing for Stacy Pointe Apartments, a multifamily property to be constructed in Allen, Texas, a northern suburb of Dallas.

Senior Director Chad Bedwell of Berkadia’s Dallas office originated the $47.23 million construction loan through HUD. The borrower was Texas-based Stacy Pointe Partners LP, and the deal closed on July 12.

The 221(d)(4) construction loan features an 85 percent loan-to-cost ratio. With the improving interest rate environment, the borrower was able to maximize the loan proceeds.

Stacy Pointe Apartments will be constructed at 1845 Chelsea Blvd., affording convenient access to N. Central Expressway and the shops and restaurants along Stacy Road and within the Stacy Green urban development area.

The four-story property will offer one- and two-bedroom floor plans. Community amenities will include elevators, a tuck-under parking structure, a swimming pool, a business center, a fitness center, media areas, co-working areas and controlled access and connection to the community parks and trail system near Cottonwood Creek.

About Berkadia

Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation (now known as Jefferies Financial Group), Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA.

The company is among the top Freddie Mac and Fannie Mae multifamily lenders.

Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.

In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.

The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

McLane Launches New Back Office Management Solution for Convenience Stores

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Berkshire Hathaway’s McLane Company, Inc., a leading supply chain services company providing grocery and foodservice supply chain solutions, announced the launch of a new back office management solution for convenience store retailers during the McLane National Trade Show (NTS).

The new solution is a one-stop-shop for retailers and all their technology needs. McLane has completed interfaces that communicate with three of the largest POS hardware providers in the industry, representing approximately 98% of the market (NCR RPOS, Gilbarco Passport and Verifone Ruby2).

McLane’s approach uses the industry-standard language called NAXML to share data with each POS hardware platform. This integration positions McLane to be a retailer’s complete back-of-house solution.

Benefits of the new back office solution include:

• Centralized price book management including perpetual inventory
• Ability to setup and manage distributors, stores, groups, retails and costs
• Fuel setup and management
• Item mix-match, combos, promotions, bundling and happy hour specials
• Age verification and category management
• Back office data can now be established with retailers directly from McLane — this data is often difficult to obtain from third party back-of-house companies
• Ability to reduce back office costs allowing more money to be spent elsewhere
• A monthly lease for this solution eliminates the need for costly software upgrades, thus freeing up capital to spend in other parts of the organization

Deon Johnson, VP of applications at McLane, unveiled the new back office management system at NTS, held at the Henry B. González Convention Center in San Antonio, TX during the Technology Conference.

“McLane leads the industry by providing unmatched customer technology offerings to c-stores,” said Johnson. “We can support retailers with end-to-end technology solutions with the new, integrated back-of-house solution.”

McLane is dedicated to providing its retailers with the latest in new technology to improve efficiency in all aspects of inventory control, ordering and item management. Rapid implementation and rollout mean that retailers can take advantage of cost-savings solutions now, not next year. The solutions are easy to use, and store employees are able to address informational needs without having to spend time on the phone seeking answers from others.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Brooks Running Teams with Locally for Same-Day Shoe Delivery to Runners

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Brooks Running Company and Locally will partner to launch Same-Day Delivery to runners in 10 markets across the United States on Aug. 22 to get performance running product onto feet and into hands fast. Brooks will be the first running brand to offer same-day delivery partnering with Locally and local running stores in this way. In addition to the 10 original Same-Day Delivery markets, Locally will begin offering the service in 25 additional U.S. cities.

“We know that for many runners, going for a run can depend on having the right gear on hand at any point in the day, which is why we’re thrilled to partner with Locally to offer Same-Day Delivery in cities throughout the U.S.,” said Brooks Running VP of U.S. Specialty Retail Accounts Rick Wilhelm. “In addition to delivering gear to runners within 24 hours, Same-Day Delivery will create new sales for our specialty running accounts by introducing new customers to their local stores.”

Runners will be able to shop on BrooksRunning.com and find available inventory at local specialty running stores using Locally software. The local store will fulfill the order and deliver it via one of Locally’s delivery partners, Deliv or Postmates.

The first 1,000 runners to place an order for Same-Day Delivery in the 10 launch cities will receive free delivery using a promo code that will be available via Brooks’ social and email channels. After that point and outside of those cities, runners will have the option to pay a delivery fee—which starts at $5 and depends on proximity to the store—to have their gear arrive within the day, often within hours.

Exact delivery times and cost will depend on the runner’s proximity to the store, store operating hours and the time of day the order is placed.

“We built Locally to help brands and retailers work together to delight shoppers,” said Locally President Mike Massey. “We’re so excited to work with Brooks to push the platform towards its ultimate goal: true on-demand shopping with nearby in-store pickup and Same-Day Delivery options.”

The launch cities include:

• Atlanta
• Baltimore
• Chicago
• Houston
• Minneapolis
• New York
• Philadelphia
• San Francisco
• Seattle
• Washington

As the Same-Day Delivery launch partner for Locally, Brooks will initially be the first running brand to offer its service to runners. Brooks and Locally will evaluate how to increase the number of cities they make the service available in.

In addition to offering the Same-Day Delivery service to runners, Brooks’ partnership with Locally allows runners to locate performance running gear at stores near their homes, driving sales for local retailers. Other Brooks investments to help bolster sell-through at retail include developing an award-winning customer service team, launching the Fast Track application which allows store associates to drop-ship Brooks product to runners and more.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

PacifiCorp Assumes Sole Ownership of Foote Creek I Wind Farm

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PacifiCorp, a subsidiary of Berkshire Hathaway Energy, has acquired sole ownership of the Foote Creek I wind facility, a 41.4 MW project in Carbon County, Wyoming.

PacifiCorp is now proceeding to repower the project with new turbine technology, increasing energy output by 60%.

The repowered facility will produce enough energy to meet the needs of 19,500 typical homes in PacifiCorp’s service territory. It is anticipated that the project will generate an additional $14 million in tax revenue for rural Wyoming communities over the next 30 years.

Foote Creek I was the company’s first wind facility and the first utility-scale wind project in Wyoming. The demonstration project was commissioned in 1999, with PacifiCorp and the Eugene Water & Electric Board as co-owners, and it was supported with a power purchase agreement with the Bonneville Power Administration.

“Twenty-one years ago, PacifiCorp and its partners’ development of Foote Creek I helped pave the way for utility-scale wind energy as an industry-defining demonstration project,” says Stefan Bird, president and CEO of Pacific Power, a division of PacifiCorp. “Today, this new investment in the project builds on our vision to even better harness wind energy and power the grid with increased efficiency, delivering even more low-cost renewable energy to our customers.”

PacifiCorp will remove the 68 existing 600 kW wind turbine generators originally installed between 1998 and 1999 and replace them with 13 modern turbines, supported by new foundations, energy collector circuits, switchgear and controls.

Notably, repowering in 2020 will requalify the facility for federal production tax credits, which will be passed on as savings to PacifiCorp customers. It will also reduce ongoing operating costs associated with the older turbine equipment.

The repowering is expected to extend the useful life of the facility by more than two decades, creating substantial ongoing benefits for customers. The wind turbines occupy about 1% of the land they are housed upon, thereby allowing the property to continue supporting traditional land uses, such as grazing livestock.

“Acquiring full ownership and repowering Foote Creek I provides a unique opportunity to upgrade the company’s oldest wind plant, located in one of the most favorable wind energy sites in Wyoming, applying the latest technology so that it can continue to serve our customers well into the future,” comments Gary Hoogeveen, president and CEO of Rocky Mountain Power, another division of PacifiCorp.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

BYD Delivers 100 E-Buses to Santiago, Chile

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Chinese battery and vehicle maker BYD has delivered 100 new BYD electric buses to the port of San Antonio.

Three Chilean Ministers (Transportation, Energy and Environment) welcomed the buses, together with representatives of BYD, Enel and Metbus.

The buses, BYD K9FE, were shipped from the port of Shanghai on July 1, and landed on Wednesday, beginning the overland journey from San Antonio to the Chilean capital Santiago, where they will be integrated into the fleet that operates on the Avenida Grecia, the only completely electrified bus line in all of the Americas, and one that benefits more than 660 thousand people weekly.

Following the arrival of this batch of electric buses, another 83 units will be added in mid-August. These 183 units of BYD pure electric buses will join the 100 electric buses that BYD and local partner Enel brought into Santiago last December, which gave BYD a dominant share of more than 60% in the capital’s promising electric bus market, and created the largest pure electric bus fleet in Latin America.

Minister Hutt pointed out that “the arrival of this new fleet of electric buses demonstrates once again that the qualitative leap in public transport will not change, as well as our commitment to continue raising the quality of people’s travel experience and, of course, their quality of life. It is a profound and radical transformation, which is embodied in the next tenders that we are promoting”.

With the arrival of the new electric buses, about 6% of the capital’s fleet is now electrified and emissions-free. These 12-meter vehicles, like those already operating in Santiago, have Wi-Fi, USB ports, universal accessibility for people with reduced mobility, cameras and a segregated cab for driver safety, as well as padded seats and low floors.

They will be integrated during the last quarter into the existing Metbus fleet to operate the lines 506, 507 and 510, along the popular Avenida Grecia route. Metbus is also the largest pure electric bus fleet operator in all of the Americas.

“The arrival of these 100 new electric buses sees Metbus set a benchmark for electromobility in Santiago’s public transport, which makes us very proud, because we were able to incorporate this new technology in the country”, said Juan Pinto, president of Metbus. “We also opened the doors of the market so that many other bus operators are excited to bring electric buses here and several bus factories want to open in Chile to compete with these new products”.

The 183 electric buses will be powered by Enel X, which will also provide the necessary charging infrastructure by building three new charging stations in Santiago. “This new milestone for electric public transportation is framed in the context of the energy transition that Enel is leading. Our actions seek to support Chile’s transition to an ever-cleaner energy system and contribute to solving challenges as important as reducing pollution in our cities”, said Paolo Pallotti, general manager of Enel Chile.

“With this new fleet we started a consolidation process in the market and we continue to lead electric vehicle sales in Chile. All this would not be possible without our client Metbus, and also with the support of Enel X we have made possible a completely innovative financing structure,” said Tamara Berríos, Country Manager of BYD Chile. “In 2019, Chile will have the first fully electric bus route on the continent, 100% non-polluting and noise-free. The government has set Chile as a role model for the entire region and we will continue to support these electromobility initiatives”.

At present, BYD pure electric buses are successfully servicing markets in many countries across Latin America, including Chile, Colombia, Argentina, Brazil, Ecuador, and Uruguay. Globally, BYD’s pure electric buses, taxi, and other vehicles have spread to over 300 cities, in more than 50 countries and regions.

BYD and Berkshire Hathaway

In 2008, Berkshire Hathaway bet on BYD’s potential, purchasing 225 million shares. It’s an investment that has paid off handsomely. Berkshire’s original investment of $230 million has grown in value almost ten-fold, and is now worth roughly $1.96 billion.

For More on BYD, read the Special Report: BYD, Berkshire’s Tesla.
© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.