Chicago based ACG Equities has purchased the struggling 5th and Main condo development in East Nashville. The completion of the sale came Friday morning at 11:00am during a ‘special auction’ when ACG Equities purchased the 120 remaining residential condos for $9.33 million and 27,000 square feet of commercial space (17,000 retail – 10,000 office) for $1.87 million. It remains unclear whether ACG purchased the 2+ acres of undeveloped land as part of this sale.
While the ‘special auction’ price totals $11.2 million, this is not the complete consideration paid for 5th and Main. It is my understanding that Wachovia Bank sold the note to ACG Equities a couple of weeks ago and that the foreclosure sale was conducted on ACG Equities’ behalf. Assuming this is the case, the $11.2M bid likely has no relationship to what ACG Equities actually paid for the note, which is in excess of $12M. Based upon past conversations with Wachovia Bank asset managers, I would estimate the total consideration for the acquisition to be in the $14.5M to $15M range. Unfortunately, all of the documentation filed will reflect the price paid during the ‘special auction’, only deal insiders know the true total consideration paid.
This also explains why there were no additional bidders at Friday’s sale. 5th and Main was already under contract, the foreclosure sale was simply procedural and ceremonial in nature. This foreclosure sale cleared all remaining mechanics liens which were rumored to be nearly $1M.
What ACG Equities Will do with 5th and Main
If history is any lesson, I suspect ACG Equities will not convert the 5th and Main into apartments. Instead, they will slash condo pricing to around $145/ft and continue to sell the remaining 120 condos to the general public. It also seems probable that ACG will offer private financing terms to buyers until the project can once again qualify for FHA underwritten mortgages. I believe the current 50 renters in the building will most likely be allowed to stay through the end of their lease, but not be given an option to extend.
ACG Equities will also begin leasing the mostly vacant commercial space immediately, but not before they install a few much needed community amenities. I expect ACG will install a gym as well as a proper lobby/property management office. It seems very unlikely that a pool will materialize, sorry guys.
ACG Equities: Vinings Main Acquisition and Sale
This isn’t ACG’s first rodeo. Last summer ACG Equities purchased the Vinings Main development in Atlanta on June 30, 2010 for approximately $24 million. Built at a cost of $57 million and completed in 2008, Vinings Main was taken into foreclosure December 2009 by its 23 lenders, after having sold only 3 of its 148 condos. In additional to 148 condos, Vinings Main includes 36,000 square feet of office space and 17,900 square feet of retail space known as The Shops at Vinings Main.
Shortly after the acquisition, ACG slashed condo prices by more than $100,000 and began aggressively leasing the vacant commercial space. The next several months produced results, ACG sold roughly 20 residential condominiums, priced from $140,000 to $290,000. The original asking price range for these units was in the high $200,000s to the high $500,000s, according to ACG.
On December 29, 2010, just 6 months after its initial purchase, ACG sold The Shops at Vinings Main for $4,035,000. Approximately seventy-five percent leased at closing, retail tenants include Social Vinings, Snap Fitness, Subway, The Posh Spot and Vinings Main Cleaner.
ACG Equities: Who They Are
ACG Equities is a Midwest-based $150 million private equity fund. From their ACG Management website: ACG Equities, Inc., based in Rosemont, Ill., operates as a sponsor/operator specializing in value added commercial property acquisitions/dispositions for its private investors and equity funds. In addition to its Chicago area headquarters, the company operates from offices in the Atlanta, Denver and Minneapolis markets, and soon expects to open a Washington, DC, area office. Additionally, Principal Dave Lang is also listed as a principal or partner is DPL Ventures and Homeowner Advantage aka Novare Group.