In a powerful one-two punch for Downtown, developers on Tuesday announced an eight-story, 250,000-square-foot office tower with a 250-room full-service hotel will rise next to where FedEx Logistics is moving its global headquarters into the Gibson Guitar building.
Called The Clipper, the new, $250 million office tower/hotel will include 50,000 square feet of ground-floor space for potential restaurants and retailers, multi-level parking and public green spaces.
The hotel will feature “best-in-class” food, a rooftop deck and conference center. Senate Hospitality, which owns the nearby Westin Beale Street, will be a partner.
The same landlords who own the Gibson Guitar building own the property where The Clipper will rise: New York-based real estate investment firm Somera Road Inc., its affiliate Somera Gibson Holdings, and local partner Orgel Family LP.
The Clipper will be built on what is now a 385-space, surface parking lots at 0 Pontotoc, immediately south of where Gibson Guitar is.
“A strong Downtown Memphis is critical, and we wanted to be a part of its momentum,” Ian Ross, managing director of Somera Road, said in a release. “We are thrilled to welcome the FedEx family to the Gibson building…”
The Clipper is a FedEx reference, to company founder Frederick W. Smith’s analogy that FedEx is the clipper ship of the computer age. A sculpture of a clipper ship will be placed prominently as part of the FedEx Logistics development.
Richard W. Smith, president and chief executive of FedEx Logistics, said in a prepared statement, “I am thrilled about this development project, which along with the FedEx Logistics headquarters at the former Gibson Guitar Factory building, will unlock massive opportunity for our business community and transform this southwest area of downtown Memphis into a thriving campus for our growing company.
“This is an ideal location for a global business like ours, which will benefit tremendously from the talent we will be able to attract to downtown Memphis,” he said.
“The Clipper represents the cutting edge of a live/work/play environment,” project partner Benjamin Orgel said in the release. “This is the next wave of energy that Memphis’ residents, employees and visitors need.”
Downtown Memphis Commission president and chief executive Jennifer Oswalt said new development and density are exciting and “replacing surface parking lots with mixed-use development aligns well with the mission of the DMC.”
“Having two projects of this magnitude happening across the street from each other along with everything else happening downtown — St. Jude, Union Row, the Riverfront — shows the strength of our momentum,” Mayor Jim Strickland said in the release. “I said during my State of the City address that we’re going to ‘build up, not out,’ and this project is a prime example of that.”
Ross said developers weren’t ready to discuss yet what public incentives they’ll be seeking from the Downtown Memphis Commission and its affiliates, although he said, “A project of this magnitude won’t work without public support and public incentives. With regards to specifics, we’re really not there yet, and we’re still kind of compiling our research and our work.”
Ross said there would be a public parking component, but The Clipper and FedEx Logistics wouldn’t be totally dependent on parking built on The Clipper site. He said arrangements have been worked out to use other parking facilities, such as at the FedExForum and the Lee’s Landing garage. The facilities have heavy night-time demand but spaces available during the day.
The Clipper project will include approximately three parking spaces per 1,000 square feet, he said. The total spaces in the project is still to be determined, Ross said.
Cushman & Wakefield/Commercial Advisors will manage commercial leasing services of The Clipper.
Ross said other contractor/professional service providers would be ESa (Earl Swensson Associates Inc.) of Nashville, architects on office tower; Danny Bounds of Bounds & Gillespie Architects of Memphis on the hotel; Kansas City contractor J.E. Dunn, contractor on The Clipper; and Kimley-Horn, engineers.
All information on The Clipper, including 3-D renderings and videos, can be found at clippermemphis.com.
Developers who announced big new plans for Downtown Memphis on Tuesday, Feb. 12, said their bottom line is a stronger live-work-play environment in the center city.
Somera Road Inc. of New York and Orgel Family LP of Memphis are at the center of a new FedEx Logistics headquarters in the Gibson Guitar building and an adjoining, $250 million office tower, hotel and retail center across the street at B.B. King and Dr. Martin Luther King Jr. boulevards.
The FedEx Logistics headquarters will repurpose the guitar factory and bring as many as 700 new workers Downtown, while a mixed-use project dubbed The Clipper will meet needs for new Class A office space, a full-service hotel, restaurants and perhaps a grocery store, said Somera Road founder and principal Ian Ross.
Ross, along with Benjamin Orgel, a partner with his father, Billy Orgel, in Orgel Family LP, spoke with The Daily Memphian about the FedEx project, announced Tuesday morning, and The Clipper, announced two hours later.
And giving a preview of coming attractions, Ross said Somera Road is working with its local partners on a future project on the north end of Downtown, the former Conwood Co. property dubbed the Snuff District.
The Clipper, planned for Gibson’s surface parking lot, would include 200,000 square feet of office space on top of 50,000 square feet of ground-floor retail, and a 250-room hotel of a brand not yet disclosed, plus parking levels with a public parking component.
The Clipper is a FedEx reference, to company founder Frederick W. Smith’s observation that FedEx is the clipper ship of the computer age. A statue of a clipper ship will be placed prominently as part of the FedEx Logistics development.
A transcript of the conversation, edited for clarity and brevity, follows:
Ross: We’re really excited about what we’re going to do over at The Clipper. We think the market needs a modern, Class A, creative office building that speaks to the needs of office users today, and when we looked around the Memphis market, we certainly believed there was a dearth of Class A space for both companies within Memphis and companies outside of Memphis that are looking at the market.
So we’re excited about building that office building, about putting it right in the epicenter of Downtown, right across from FedEx Logistics headquarters, a block from Beale Street, a block from the FedExForum. It’s really going to enliven that area and create that live-work-play environment connecting to South Main and the residences there, connecting north to Downtown, just really a tremendous location for that.
We’re also excited about the retail we’re going to put in there. It’s about 50,000 square feet of retail, fast-casual restaurant, full-service restaurant, convenience, potentially grocery. We’re really excited about stuff that fits into that live-work-play mix.
And when we start looking at the hotel market, there’s obviously been a plethora of limited-service boxes coming up, and I say boxes because I mean boxes, there hasn’t really been high-quality, full-service products built in Memphis since the Westin was built. It’s a tremendous hotel that’s doing very well and we got to know the Senate Hospitality team early on in our work here and in Nashville, and they explained to us why they do so well and what their faults are.
They realize they need more conferencing space, so we’ll be building a best-in-class hotel that’s full-service, with food and beverage outlets, with pool, rooftop bar, and with tremendous conferencing facilities for corporate users and conference users. Senate knows exactly what’s needed. They’ve had a ton of success here at the Westin, and we’ll be looking to build on that with the delivery of our hotel on that site.
The Daily Memphian: Will the new hotel represent competition for The Westin?
Ross: They view it and we view it as additive.
TDM: What will be the phasing of construction?
Ross: The entire site will be developed simultaneously. It will happen from a sequencing perspective, the work there (The Clipper) will be going on at the same time as the former Gibson building. The FedEx Logistics/Gibson building will deliver first, and The Clipper project should follow probably 12 months behind.
TDM: Will FedEx Logistics use The Clipper as an expansion area to handle future growth?
Ross: I think it’s certainly a possibility. We spent a lot of time with the state of Tennessee, with the Department of Economic and Community Development and the Downtown Memphis Commission and the (Greater Memphis) chamber and Mayor Strickland and his team.
I think it’s very clear Memphis needs Class A office space for a few reasons. To attract companies from the suburbs that want to take part in the live-work-play environment Downtown. To stimulate further growth within the market from existing users. To replace some of the existing and potentially decaying office product or office stock in the market today. Lastly, to attract tenants from outside the market that are looking at Tennessee as a place for growth or relocation, and who may be apprehensive to Nashville at this point because of the compression in that market. I think Memphis is ripe to attract a national user or corporate headquarters. I think one thing the market needs here is office space that speaks to the revival that we’re seeing Downtown.
I think it could both be expansion space for FedEx, although there’s no deal there at this time. It could be space for existing users Downtown. It could be for suburban users that are looking to be in the urban core. I think what would be most exciting for the city and the state is finding new users from outside of Tennessee.
TDM: Are there plans to connect the FedEx Logistics headquarters with The Clipper?
Ross: Way too early at this point to tell. I think skybridges have their pros and cons. It allows for connectivity. … It’s something we’ve thought about. We also like to see vibrant streetscapes, and skybridges can hurt that. It’s something we’ll certainly consider and look at the feasibility of.
TDM: Who’s involved from a construction and professional services perspective?
Ross: LRK (Looney Ricks Kiss) of Memphis, architects on FedEx Logistics; ESA (Earl Swensson Associates Inc.) of Nashville, architects on office tower; Danny Bounds of Bounds & Gillespie Architects of Memphis on the hotel; Grinder, Taber & Grinder of Memphis, contractor on FedEx Logistics, with J.E. Dunn of Kansas City as an investor; J.E. Dunn, contractor on The Clipper; Kimley-Horn, engineers; and Cushman & Wakefield/Commercial Advisors, real estate services.
TDM: Will The Clipper be comparable to The Gulch in Nashville (where Somera Road owns property)?
Ross: When we look at some of the design that’s happened in Nashville, the Nashville community has done an incredible job of bringing best-in-class, modern, architecturally significant new office and hotel product to the market. We admire what they’ve done and would like to see some of that in Memphis, but we’re not creating The Gulch here.
TDM: How will parking be handled, considering Gibson’s surface parking lot will be the site of The Clipper?
Ross: The parking that Somera and the Orgels and our team has to offer at The Clipper project can’t be matched anywhere in Downtown Memphis. We spent a ton of time doing thorough parking studies across the market and making sure – when you look nationally at our portfolio, parking today is such an important component of making projects work, and we don’t take that lightly.
We’ve amassed parking in the immediate area, including at Lee’s Landing, next to the Westin, including FedExForum, and including the parking we’re planning on building as part of this project. Not only will we be able to park the Gibson building, we’ll be able to offer at least three (spaces) per 1,000 square feet at The Clipper office building, which we believe is really unmatched in this market.
The total spaces are TBD right now.
The Grizzlies have been incredible partners, working with us to make sure the parking at their facility is well utilized, creating a vibrant Downtown. They have a lot of parking that can be offered for shared uses. It’s obviously needed for game night, but allowing that parking to be freed up for 9-to-5 workers, I think is very important in encouraging lots like our parking lot to be developed. We’ll be extraordinarily well-parked for the entire project.
TDM: Will The Clipper include public parking?
Ross: There will likely be a public component as we work with the city with regard to public incentives on parking. And there will certainly be a public component.
TDM: What public incentives are you seeking through the Downtown Memphis Commission and affiliates?
Ross: I’d rather not go into incentives at this time. We certainly are going to need a lot of public support, which I believe Mayor Strickland and (DMC president) Jennifer Oswalt and their teams are eager to help us provide. A project of this magnitude won’t work without public support and public incentives. With regards to specifics, we’re really not there yet, and we’re still kind of compiling our research and our work.
TDM: What else can you tell us?
Ross: I don’t think there’s any market we’ve worked in quite like Memphis where everyone is so welcoming and encouraging.
I’m just in awe of the civic-minded community here in Memphis. In all avenues we’ve explored here, in all the stakeholders we’ve gotten the opportunity to meet, there’s just a real civic-minded approach, notably as seen from Benjamin and his father, Billy (Orgel). Everybody’s eager to succeed and to see this city grow. It’s truly been special to watch and learn and become part of it.
TDM: What else is Somera Road developing in Memphis?
Ross: In Memphis, we’ve been pursuing a variety of other projects. We’re partnering with the Orgels on what we’re calling the Snuff District (the former Conwood tobacco property in Uptown), almost 55 acres just north of the Pinch District, which we believe will continue to benefit from the compression we’re seeing Downtown. As the market moves south for residential development, we believe it will also start shifting north as well. And we’re excited to be partnering with the Orgels on that project as well.
TDM: What’s the perspective of Somera Road’s local partner on these projects?
Benjamin Orgel: I think it’s amazing and it shows – and not to steal the trademark of our Mayor Jim Strickland – how much momentum we have in Memphis that sharp, sophisticated real estate investors that are in over 40 markets and that are out of New York City, they took a chance on Memphis.
Ian is one of the smarter investors, because he noticed Memphis has legs and momentum, just like our mayor said. And they come down here, and I give it to them, he partnered with someone who knows the market and does development in Downtown Memphis, and I commend Ian and his team for being a big out-of-town investor. I think this just opens the door for other investors from other cities around the country to come in and make Memphis even better. We’re definitely on an upward trend.
Chairman’s Circle members Benjamin and Billy Orgel, partners announce expansive new development adjacent to FedEx Logistics future headquarters in Downtown Memphis
Hot on the heels of the announcement that FedEx Logistics will consolidate its headquarters in Downtown Memphis, New York-based real estate investment firm Somera Road Inc., its affiliate Somera Gibson Holdings (“Somera”) and local partner Orgel Family LP have announced The Clipper, a significant new mixed-use development adjacent to FedEx Logistics’ future headquarters at the former Gibson Guitar Factory building.
“A strong Downtown Memphis is critical, and we wanted to be a part of its momentum,” said Ian Ross, managing director of Somera Road, Inc. “We are thrilled to welcome the FedEx family to the Gibson building, and we’re grateful for the vision and support of the State of Tennessee, Mayor Strickland and City of Memphis, the late Phil Trenary and the Greater Memphis Chamber, EDGE, Jennifer Oswalt and the Downtown Memphis Commission, among others who have made this milestone possible. We would also like to thank City Councilman Berlin Boyd, who was a constant cheerleader for Downtown throughout our efforts and a visionary as to the creation and significance of a FedEx campus within the Memphis urban core. The Orgels, my team, and I look forward to further contributing to this vibrant neighborhood through The Clipper.”
“I am thrilled about this development project, which along with the FedEx Logistics headquarters at the former Gibson Guitar Factory building, will unlock massive opportunity for our business community and transform this southwest area of downtown Memphis into a thriving campus for our growing company. This is an ideal location for a global business like ours, which will benefit tremendously from the talent we will be able to attract to downtown Memphis.”
– Richard W. Smith, President and CEO, FedEx Logistics and Chairman of the Greater Memphis Chamber
The Clipper will include a 250,000-square foot, 8-story Class-A modern office tower, the first such new office product built in the downtown in over 20 years. The building will include 50,000 square feet of ground-floor space for potential restaurants, boutiques, and other retailers, multi-level parking, and activated public greenspaces and streetscapes. Additionally, the project will include a state-of-the-art approximate 250-key full-service hotel, flush with best-in-class food and beverage amenities, a rooftop deck, and conferencing center. The hotel will be built in partnership with Senate Hospitality, owners of the highly successful Westin Beale Street.
“The FedEx tenancy at the former Gibson site, our market research of the supply and demand dynamic Downtown, and the continued support and commitment from our investment committee have affirmed that we truly can reimagine a block of Downtown Memphis by strategically activating and bridging this valuable corridor between Beale Street and South Main,” continued Ian Ross. “The project will be a dynamic mixed-use, transformational connector.”
Somera Road engaged father-and-son Billy and Benjamin Orgel, Orgel Family LP, in April 2018 as local partner on the development.
“The Orgels have an innate sense for the needs and desires of a vibrant Downtown, and their partnership though this process has been instrumental,” said Ian Ross. “The Orgel’s civic-minded consciousness, the leadership of the Memphian public sector, and the larger community’s engagement overall have been especially welcoming, transparent, and inventive.”
“The Clipper represents the cutting edge of a live/work/play environment,” said Benjamin Orgel. “This is the next wave of energy that Memphis’ residents, employees, and visitors need.”
From a hospitality perspective, Nashville-based Senate Hospitality could not be in a better position to understand the Memphis market’s demand for full-service hospitality product, as they have seen tremendous success over the years at their Westin Beale Street hotel and look forward to delivering a new product that builds on such success.
“Senate is the perfect hotel development partner for us and Somera to bring to the table to join The Clipper’s vision,” continued Benjamin Orgel.
Glenn Malone, President & CEO of Senate Hospitality stated, “Downtown Memphis is a dynamic destination attracting leisure and corporate travelers as well as meeting planners and their groups from the mid-south and nationally. We are currently reviewing franchise brands and evaluating the amenities for this new full-service hotel that fit with this dynamic destination and its broad appeal. Senate looks forward to developing and operating this element of The Clipper.” Malone added, “We are pleased that Somera Road chose Senate Hospitality as its partner in this new hotel after evaluating other hotel development and management companies.” More details regarding the hotel will be announced in coming months.
Somera Road continues to work with partnering agencies including the Downtown Memphis Commission (DMC), who granted a PILOT lease transfer in December 2017.
“We love the enthusiasm that’s growing in Downtown Memphis,” said DMC President & CEO Jennifer Oswalt. “New development and density are always exciting and replacing surface parking lots with mixed-use development aligns well with the mission of the DMC. We look forward to this project furthering the Downtown momentum.”
“Today is another great day for the City of Memphis,” said Mayor Jim Strickland. “Having two projects of this magnitude happening across the street from each other along with everything else happening downtown—St. Jude, Union Row, the Riverfront—shows the strength of our momentum. I said during my State of the City address that we’re going to ‘build up, not out’, and this project is a prime example of that.”
Cushman & Wakefield/Commercial Advisors will manage commercial leasing services of The Clipper.
“Memphis is experiencing remarkable growth, and we’re particularly proud to represent visionary new construction developments such as The Clipper,” said Phil Dagastino, Jr., Senior Vice President at Cushman & Wakefield/Commercial Advisors. “We look forward to welcoming a mix of commercial, residential, retail and hospitality brands to this prime real estate opportunity.”
All information on The Clipper, including 3D renderings and videos, may be found at clippermemphis.com.
The new owners of Century Center would love to see a Trader Joe’s come into the east Modesto shopping complex. And they’re betting a lot of you do, too.
So they’ve gone as far as erecting signs in front of the shopping center on Oakdale Road asking the public to contact Trader Joe’s about opening at the site. For decades the complex was anchored by Gottschalks department store and Raley’s supermarket before their departures several years ago. But since then it has struggled with vacancies.
Raley’s, which moved out in 2012 after opening its larger location in Village One, finally relinquished the lease it had in the complex at the end of 2018. Before that it had been paying for the vacant space and maintaining its non-compete clause barring other grocery stores from moving into the center.ADVERTISING
But now with that restriction lifted, the center’s new owners have big plans to both renovate and attract new retailers. That includes wooing Trader Joe’s, which already has a location in northwest Modesto near Vintage Faire Mall.
Other planned improvements include major facade work to modernize the look and feel of the shopping complex, which debuted in 1979. Long-time tenants Round Table Pizza and Torii Japanese Steakhouse will undergo updating and major renovations. The center owners will also completely recondition the parking lot and upgrade to LED lighting.
New York-based commercial real estate firm Somera Road, Inc. and local investing group Graceada Partners, LLC. purchased the 214,389-square-foot retail center in November for $12.25 million. Already they have three new tenants lined up to move in: Satellite Healthcare, Golden Valley Healthcare and Taqueria El Maguey.
Ryan Swehla, who leads the Central Valley real estate investment group Graceada Partners along with fellow NAI Benchmark principal Joe Muratore, said the new tenants plus updates should help to return the center to its status as a retail epicenter for east Modesto. They hope that will include Trader Joe’s, and it’s not all just wishful thinking. He said they’ve been in contact with Trader Joe’s representatives and begun discussions with the company.
“We are taking a very hands-on approach to recruiting them to the center. We posted the signs to generate community feedback to Trader Joe’s expressing the strong demand that we know exists. We are in early discussions with them although there is by no means certainty around their interest in locating there. But we know Trader Joe’s listens to their customers,” Swehla said.
The signs, posted before the holidays, read, “Do you want to see Trader Joe’s here? If so, please let them know: www.traderjoes.com/contact-us/location-request.” The large white placards, which use the Trader Joe’s red company logo, are posted at the north and south ends of the center along Oakdale Road.
Trader Joe’s opened its Dale Road in 1993, and it remains a popular and busy shopping draw. Ask anyone who has stood in line at the Modesto TJ’s on any given Sunday and you’ll understand the desire for another location in the city.
For decades Century Center, on the opposite side of town, had one of the few large grocery stores on the east side with Raley’s, attracting residents from the populous nearby neighborhoods. The complex currently has 10 restaurants, ranging from long-running spots like Ridgway’s and the Ice Cream Co. to Jamba Juice and Pizza Hut. The new taqueria will move into space next to Vision First Optometry. The two healthcare centers will move into space near the back of the complex.
Graceada Partners and Somera Road representatives said they’re excited about the center’s future prospects.
“With these new tenants and updates, Century Center is quickly becoming the mixed use, lifestyle center that we envisioned when purchasing the property,” Swehla said. “Overall we are excited for the rejuvenation of this once bustling retail epicenter of east Modesto.”
J.P. Morgan nurtures a new benchmark, SOFR, and breaks down what it means for nearly $200 trillion of assets.
A new benchmark reference rate, the Secured Overnight Financing Rate (SOFR), is positioned to transform USD-based financial markets, heralding a transition from the London Interbank Offered Rate (LIBOR).
TPG Real Estate Finance Trust has provided $60.2 million to Somera Road to finance the acquisition of 30-story office tower in Kansas City, Mo.’s financial district, according to HFF, which arranged the debt.
The floating-rate bridge debt helped facilitate Somera’s off-market acquisition of Kansas City’s City Center Square building, a 657,070-square-foot office tower at 1100 Main Street.
Leon McBroom and Mark Katz comprised the HFF debt placement team that represented Somera Road.
“This was a highly stressful closing that bridged the holidays and the new year – the teams were incredibly responsive and professional, working around the clock to get this deal over the finish line,” Ian Ross, a principal at Somera Road, said in a prepared statement. “We have been a long-time believer in continued growth of the downtown [Kansas City] market and we believe the timing and the supply and demand dynamics are just right to bring this asset back to Class A status.”
Specifically, the debt proceeds will finance renovation, rebranding and repositioning efforts aimed to make the asset the “premier downtown office tower” in the city, according to information from HFF. The additions will include a fitness center and tenant lounge, dining options, a renovated lobby, a hospitality center and a conferencing center. Somera will also add retail terraces and public seating to the property’s exterior.
A spokeswoman for TPG RE Finance Trust told Commercial Observer in a statement that while the firm typically targets larger loans in primary markets, it looks to provide this type of transitional financing in secondary markets to strong sponsors.
Built in 1979 and designed by , the building encompassing an entire city block and two-acre lot and has a Kansas City streetcar stop located outside the entrance to the property. The tower is home to the Kansas City Business Journal, law firm Dollar Burns & Becker, data advertising firm Pinsight Media, and marketing analytics firm Alight Analytics. There’s also a U.S. Post Office and a Country Club Bank on-site. Colliers International Senior Vice President Phil James handles leasing at the property.
In February 2018, Commercial Observer reported that City Center Square backed the second-largest loan ($32.5 million) in Värde Partners’ first ever collateralized loan obligation (CLO) transaction, known as VMC 2018-FL1. At the time of securitization, the asset was only 52 percent leased, with 70 tenants, making it one of the riskier assets in the $368 million pool.
In the deal, which was rated by Kroll Bond Rating Agency (KBRA), the CLO’s KLTV—a loan-to-value-like indicator derived from KBRA’s cash-flow analysis—was at 128.3 percent, which was riskier than any CLO transaction the agency had rated the previous year in 2017.
A substantial renovation will be coming to City Center Square after Somera Road Inc. bought the building in mid-January for an undisclosed amount.
Dallas-based Holliday Fenoglio Fowler LP said in a release Tuesday that the company secured $60.2 million in acquisition bridge financing on behalf of Somera Road.
According to the release, Somera will use proceeds from the loan “to renovate, rebrand and reposition the property as the premier downtown office tower in Kansas City.”
Located at 11th and Main streets, the 30-story, 657,070 square-foot building is home to the Kansas City Business Journal, Pinsight Media + and Alight Analytics. Its market value last year was $17.37 million, according to Jackson County property records. The building’s occupancy rate is 50 percent.
The renovation will include a “state-of-the-art fitness center and tenant lounge, numerous in-house dining options, a fully-activated lobby, a hospitality center, a conferencing center and a revival of the property’s iconic lightwell,” the HFF release said. “Furthermore, Somera Road intends to activate the exterior with retail terraces and public seating.”
HFF Director Leon McBroom and Senior Managing Director Mark Katz represented the borrower.
Representatives from HFF and Somera Road could not be reached for comment before publication.
By Miranda Davis – Staff Writer, Kansas City Business Journal
Village Square Center in Hazelwood spans nearly 22 acres, is about 40 percent occupied and was last renovated in 2006.
Appraised for $4.2 million and owing more than $18 million on its mortgage, the center was named one of St. Louis’ most delinquent properties at the end of last year by data analytics firm Trepp.
And for Somera Road Inc. the dilapidated mixed-use development ticked all of its boxes.
The New York-based commercial estate investment firm targets value-add, opportunistic acquisitions. Over the past three years, Somera Road has invested nearly $1 billion in 9.5 million square feet across the U.S., including in Kansas City, Indianapolis and Memphis. Property types under Somera range from industrial to student housing, said founder and Managing Principal Ian Ross.
Of particular interest are properties distressed due to bankruptcy, partnership disputes, and in the case of Village Square Center, loan defaults.
“We take a very active asset management approach to turn the lights back on,” Ross told the Business Journal.
Built in 1965 as a retail destination for north St. Louis County, Village Square was converted into an office park in 1998. Cash flow issues led the loan to be transferred to a special servicer in 2010 and a foreclosure followed in 2012. The property’s appraised value fell 84 percent over a 12-year period to $4.2 million at its most recent appraisal in May 2018, according to Trepp. (Several free-standing buildings at Village Square are not part of the loan’s collateral, Trepp added.)
Its position along one of the most traveled corridors in the region at Lindbergh Boulevard and Interstate 270, proximity to office development near St. Louis Lambert International Airport and such long-term tenants Convergys Corp. and Concentra Health made Village Square the right opportunity, Ross said.
Somera Road bought the property at auction for an undisclosed price and closed on the deal in mid-December.
“The optionality with regards to its existing bones, as well as the magnitude of the physical dirt, provides a lot of options,” Ross said.
Somera is working with the city of Hazelwood, which commissioned a market study in 2016, on the best options for redevelopment. The firm’s managing director, Fergus Campbell, and senior associate, Michael Ervolina, met with City Manager Matt Zimmerman and Community & Economic Development Coordinator Becky Ahlvin as recently as last week. Somera has also met with architects and brokers from such firms as CBRE, Colliers, Balke Brown Transwestern and L3 Corp.
It’s early to project when residents and commuters could see progress at Village Square, Ross said, but he added that “we want to embrace what’s good about the property.”
“It has excellent tenants already. We want to make it an even better working environment.”
By Steph Kukuljan – Reporter, St. Louis Business Journal Jan 29, 2019, 2:24pm CST