Tiger Commercial & Industrial Liquidation Update

(This article appears in ABL Advisor.)

Audio-Visual Asset Value Rebound Highlights Sector’s Resilience

By: Jonathan Holiday and Jason Rae

Tiger Group experts provide insights into the factors asset-based lenders should contemplate when considering lending into the professional A/V sector.

Asset values in the audio/visual (A/V) sector—everything from high-end digital cameras for movie, television and commercial productions, to specialized lighting for live events—continue to strengthen, due in part to the commencement of productions and the rebounding U.S. economy.

Questions related to COVID-19 remain. For example, it is unclear whether the rise of the delta variant will have a deleterious effect on indoor concerts this coming fall and winter. If that happens, demand for related production equipment could certainly be impacted. However, the signs are mostly positive. ABL lenders have good reason to be confident in the value of A/V collateral as well as the overall health of the sector. There are also grounds for optimism about the potential to pursue new A/V opportunities. For example, the “content boom” of TV and movie production—for both Hollywood studios as well as streaming services such as Netflix, AppleTV+ and Amazon Prime Video—continues to accelerate. Indeed, some of the leading equipment rental companies are as busy as they’ve ever been. Meanwhile, the live-event business is bouncing back as crowds return to sporting events, festivals and more.

The companies that produce these events, having survived the worst of the crisis, may now want to take advantage of the situation by raising capital to reinvest in their operations by acquiring cutting-edge equipment and/or rivals that were weakened by the pandemic. Indeed, some private equity firms and lenders are already exploring opportunities to meet this demand among potential borrowers. Prominent A/V companies are also commissioning appraisals to better understand their strategic options. Recent examples of the latter include Tiger clients representing North America’s largest lighting firms, and a leading A/V rental house.

Trends from 2020-21
The experience of Tiger Commercial & Industrial’s A/V practice over the past couple of years helps illustrate the resilience and evolving trajectory of the A/V business in North America.

When the pandemic hit early in 2020, production of films, TV shows and live events took an unprecedented nosedive. Relatively quickly, however, industry stakeholders regrouped and collaborated with public health experts and government officials to develop stringent safety guidelines. These union-backed moves enabled production to kick back into gear, especially with respect to TV and film.

By the end of 2020, Tiger’s total dollar volume from A/V auctions, private treaty and other sales had climbed 37.9 percent over 2019 levels, including a 21.2 percent increase in lots. Bidders came from across the United States and 21 countries. The sell-through rate was nearly 100 percent. These sales typically featured digital cameras, lenses, projectors, matte boxes, monitors, accessories and more, with brands such as Canon, Panasonic, Red Scarlet, Sony, Angénieux, Fujinon, Christie, Sanyo, Arri and Zeiss, to name a few.

A good portion of those sales were of excess equipment being liquidated by healthy A/V rental companies that needed to make room for new gear. Others, though, were rooted in the hard times that befell live-event production companies during the worst of the pandemic. Even some storied names were forced to close. In November 2020, for example, Tiger C&I ran a three-day online auction event for Toronto-based Westbury National Show Systems, the second largest live-event production company in Canada. The auction featured audio, lighting, video and staging equipment valued at more than $15 million. Westbury had been placed in receivership the month before.

Equipment dispositions from the live-event side of the business continued into 2021, and we saw more live-event companies shutter their operations. The sheer volume of sales—thousands of lots of production equipment with varying specifications, conditions, and levels of usage and maintenance—gives appraisal and disposition firms a high degree of confidence in A/V valuations.

Reflecting the enthusiasm for a resumption of sporting and other live events, demand for the specialized production equipment used in this segment—microphones, consoles, speakers and stage equipment—has been particularly strong this year. On the film and TV side, meanwhile, mainstays such as digital cameras and prime and zoom lenses continue to fetch high prices from buyers all over the world.

Moving Forward
During the past 24 months, Tiger has appraised more than $300 million at market value of high-quality A/V gear for major stakeholders in the industry. This has provided an enormous benefit for the rental companies and lenders.

In contemplating whether to loan into the professional A/V sector, it is important for asset-based lenders to consider whether the borrower conducts live events or serves clients in TV and film production.

If the former, then at least for now the question of whether those events are held indoors or outdoors may be relevant: An operator focused on seasonal outdoor events may still perform better than one with an exclusively indoor offering until concerns about the virus truly have faded.

But with respect to TV and film production, all signs point to robust and even accelerating growth. This is visible on multiple fronts, including the activity in hotspots like Georgia, nicknamed “Y’allywood” for its booming production business. This past July, the Georgia Department of Economic Development reported that Georgia had seen a record $4 billion in direct spending on TV and movie production in the fiscal year that ended June 30. It was a remarkable rebound given that Georgia had seen that figure decline from $2.9 billion in fiscal 2019 to $2.2 billion in fiscal 2020, which included some of the worst months of the pandemic.

And, as in just about every business sector, the scale of the business is a critically important factor. Consolidation continues among TV/film and live-event production companies alike, creating significant competition for smaller firms. Simply put, it is far harder today to make it as a “startup” on either end of the business. Any analysis of borrower health should take such competitive dynamics into account.

With respect to rental houses, the appraisal should also include an in-depth assessment of the technical specifications of the equipment on hand. Especially on the camera side, manufacturers are continually offering next-gen equipment with new and more powerful features; digital LED lighting, too, is a fast-changing area. Should all the equipment be cutting edge? Not necessarily, but rental houses that fall behind on the obsolescence curve will eventually find themselves at a disadvantage.

Despite such caveats, it is nonetheless true that the A/V sector has a strong track record and is full of bright spots. As today’s A/V companies strive to gain market share, ABL lenders stand to benefit by joining them as strategic partners.

Tiger ‘Buy Now’ Online Event Offers Surplus Professional Gear From Keslow Camera

Continuing its longstanding partnership with Keslow Camera, Tiger Group launched a ‘Buy Now’ online sale featuring over 300 lots of digital cameras, lenses, monitors, matte boxes and gear accessories from this leading film and television industry equipment rental company.

The sale featured a selection of digital cameras from Arri, Panasonic, Red, and Sony; lenses from Angenieux, Arri, Canon, Century, and Zeiss; monitors from Marshall, Teradek and TV Logic; matte boxes from Arri; as well as heads, memory, filters, and other accessories from leading manufacturers.

“We are pleased that Keslow Camera has once again chosen Tiger to sell a selection of high quality gear from their rental inventory,” said Jonathan Holiday , Director of Business Development, Tiger Commercial & Industrial, and leader of its AV vertical. “With the entertainment market opening up following the progress made in slowing the pandemic, this event offers a great opportunity for industry players to go on our easy-to-use ‘Buy Now’ platform to immediately get gear for their productions or rental business.”

Tiger’s Commercial & Industrial Division created the new ‘Buy Now’ online platform to provide buyers an efficient method of purchasing assets without having to place a bid in a timed online auction.

Notably, the sale’s digital camera offering included multiple quantities of Red Weapon 8K Digital Cameras with Helium Sensor; Arri Alexa high speed 4:3 camera bodies (including XT and SXT models); Sony PMW-F55 digital cameras; and Panasonic VariCam 35 and VariCam LT digital cameras. “All items are in excellent condition,” said Holiday.

Complete details on the offering can be found at www.soldtiger.com.

Proceeds from Tiger Group, Schneider Industries Online Auction of Brewery Assets Top Expectations by 15%

The recent online auction of assets from a 30-barrel, semi-automated brewhouse in Eureka by Tiger Group and Schneider Industries generated proceeds that were 15% above the sale partners’ expectations.

In all, the auction attracted 236 registered bidders from across the United States and seven foreign countries. Prospective buyers for the equipment on offer included breweries, distilleries, wineries, food & beverage manufacturers, candle makers, and bottling companies.

By the time bidding closed on June 17, the assets from the former Booth brewery were purchased in piecemeal by 46 buyers hailing from California, Oregon, Idaho, Montana, Utah, Texas, Oklahoma, Alabama, and Georgia—including five local companies from Eureka. Tiger and Schneider conducted the sale on behalf of the facility’s landlord, which retained all the assets following the December 2020 closure of the 20,000-square-foot brewery. The facility operated out of three warehouse buildings on the site.

“The landlord, which ultimately elected to market the property to other uses as opposed to getting a turnkey buyer, was very pleased with the recovery realized through the auction,” said John Coelho, a Senior Director with Tiger Commercial & Industrial. “In particular, we saw significant interest in the facility’s Wild Goose, 16-oz. canning line, which drew 15 bidders. Three individual bidders prevailed, acquiring the line in component pieces.”

He noted that Tiger and Schneider also had spirted bidding on the auction’s 20-plus stainless steel tanks, which ranged in size from 30 to 60 to 90 barrels, and went to multiple buyers. “All process assets were bought,” Coelho said, adding that unsold items were limited to older compressors, an air dryer, and a boiler.

Assessing the outcome, Josh Bussman, VP Investment Recovery at Schneider Industries, commented: “This sale’s success was due, in part, to a comprehensive marketing effort that utilized multiple platforms to target existing breweries, distilleries and West Coast wineries, as well as start-up companies.”

Proceeds Beat Expectations by 45 Percent in Well-Attended CBD Equipment/Real Estate Auction by Tiger Group and Tranzon Asset Advisors

U.S. and international bidders acquire all available assets of a major CBD processor in Cadiz, Kentucky, along with its 86,500-square-foot plant and 14.5-acre site.

Motivated bidders drove robust results in an online auction of foreclosed assets from a major CBD processor’s facility in Cadiz, Kentucky. Tiger Group sold the processing, lab and material-handling equipment assets, while Tranzon Asset Advisors liquidated the real estate.

In the August 10 sale, Tiger’s Commercial & Industrial division completed the sale of all of the available assets from the hemp-processor’s 86,500-square-foot facility in Cadiz, which is part of the Clarksville, Tenn., metropolitan area.

In a separate timed online auction, Tranzon sold the building and 14.5-acre site for $2.1 million. The real estate’s appraised value was $1.6 million.

“When we took a step back and looked at the numbers on the sale of this equipment and real estate, we found that the proceeds exceeded our estimates by 45 percent,” said Jonathan Holiday, Director of Business Development, Tiger Commercial & Industrial. “That speaks to a number of dimensions, including the resurgence of the North American economy and CBD industry, the marketing reach of both firms, and the attractiveness of the assets on offer.”

Tiger’s international marketing effort– which included sending 85,000 emails about the event– brought more than 22,000 views to the auction page at SoldTiger.com. All told, the 160 lots of processing and other equipment drew 4,018 bids.

“Our marketing efforts brought in highly motivated buyers from the hemp, cannabis, biopharma food-and-beverage, robotics, farming, machinery and other industries,” Holiday noted. “Tiger’s targeted marketing strategy centered on tailored mailing lists, social media, advertisements in trade publications, and a call campaign to industries that would benefit from the equipment.”

While most registered bidders were from the United States, others came from Belgium, Canada, China, Costa Rica, India, Jordan, Mexico, Pakistan, and Trinidad–Tobago. In the end, the equipment was acquired by 28 winning bidders.

Sought-after items included two 2019 Merlo telehandlers, three 2019 Precision Extraction Solutions automated solvent evaporators, a 2019 UIC short-path distillation plant, a 2019 Shimadzu high-performance liquid chromograph, and a Tuffman rotary trommel. “The eventual sale price for those items exceeded Tiger’s expectations, with an exciting bid process,” Holiday said.

The real estate drew 157 placed bids, with Tranzon’s webpage for the auction attracting 5,215 views from would-be buyers in Kentucky, Florida, Indiana, New Jersey, New York, and Pennsylvania. The bidding was extremely competitive based on the desirability and location of the property. The winning bid for the real estate came from a local agricultural business.

“It is evident that the joint marketing efforts of Tranzon and Tiger Group hit all intended target markets and brought the best buyers,” said Jordan Conlee, Executive Vice President, Tranzon Asset Advisers. “The winning bid of $2.1 million far surpassed all expectations, but with a solid group of bidders who saw the upward trend in demand for industrial real estate, the winning bidder got an exceptional buy.”