TPG to buy Florida real estate co Flagler: sources

NEW YORK Fri Jan 27, 2012 9:41pm EST

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NEW YORK (Reuters) - Private equity TPG Capital LP TPG.UL has reached an agreement to buy Florida real estate company Flagler from private equity firm Fortress Investment Group LLC (FIG.N) for $1.2 billion, according to two sources familiar with the deal.

The acquisition will give TPG a mix of office buildings, land, and warehouse and distribution centers in and around Orlando, Miami and Jacksonville, as well as Flagler's management team, the sources said.

TPG signed a letter of intent and is expected to follow up with a partial payment next month, a source said.

It could not be determined the number of bidders that vied for Flagler and its portfolio, which were marketed by Eastdil Secured, an affiliate of Wells Fargo & Co (WFC.N).

The deal is atypical in that it is a mixture of various types of real estate. But that is not inconsistent with TPG's most recent real estate acquisitions.

In 2010, it paid $505 million for shopping centers, office buildings, mixed-use properties, residential joint ventures, the Los Angeles Union Station and land and development agreements from ProLogis (now called Prologis).

Last year, TPG along with Oaktree Capital Management and JH Investments made a bet on a U.S. housing recovery, buying the U.S. and Canadian operations of British homebuilder Taylor Wimpey Plc for $955 million.

Flagler was founded in 1892 by Henry Flagler, partner of John D. Rockefeller in Standard Oil. Flagler played a central role in developing Florida's east coast and was the founder of what eventually was to become Florida East Coast Railway. Along the way, he amassed a huge portfolio of land.

Fortress bought Flagler's real estate business as well as its railroad business in 2007 and separated the two companies into Flagler and Florida East Coast Railway.

Owen Blicksilver, a representative of TPG, declined to comment. A Fortress spokesman could not be reached for immediate comment.

(Reporting By Ilaina Jonas; Editing by Bob Burgdorfer and Steve Orlofsky)

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