Arbitrage in the Real Estate Business

Arcada Court, one of our most serendipitous arbitrage experiences, illustrates the twists and turns of the business. KKR offered $37 per Arcada share, close to two thirds of any additional amounts paid by the government for the redwood lands. If everything had gone perfectly, we would have achieved an annual rate of return of about 40% not counting the redwood claim. We received $24.6 million versus our cost of $22.9 million,. Our average holding period was close to six months.