5th and Main Condos in Nashville Sold to ACG Equities

5th and Main condosChicago 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

Vinings Main AtlantaThis 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.

  • http://StephanieCrawford.net/ AgentSteph77

    Interesting. You can’t beat $145 a foot in the urban condo space. I could swear that I read an article a few weeks ago in the Tennessean that 5+M would go apartment. RMH is now accepting renters and I hear there are bidders looking at buying and converting Velocity – and a possible new development in Melrose and Elliston Place. Seems like an awful lot of rentals on the market all at once.

  • http://www.granthammond.com/ Grant Hammond

    Hey Steph! Most people were predicting that 5th & Main would be converted to apartments 2 weeks ago, including myself. But once I learned who the buyer was, it became more clear that 5th & Main would remain condo. Of course, there is no firm word form ACG yet, only my educated guess. On the surface it does appear that a lot of apartments are hitting the market, but really there are only 78 at Rolling Mill Hill and another 221 at Velocity. The great news is that the unsold condo inventory is about to lose 50% of the current inventory. Should this all go down as predicted, the Nashville condo market will have a shade over 20 months of inventory on the market.

  • Adam

    As a downtown condo owner, a shrinking inventory is certainly appealing. However, if your prediction holds true that 120 condos at 5th & Main will be priced at roughly $145 per sq. ft., how does that impact the price per sq. ft. of other condo developments downtown? Does it equate to a potential short-term price dip, followed by a quick recovery once the 120 condos are sold off? Also, if 5th and Main does price around $145, how long do you think it will be until the majority (let’s say 80%) are sold?

  • Falcon2

    Adam, assuming the plan for the new buyer is to sell the condos now rather than later I think your going to see them sell in that range of $140-$150/sf. However, I wouldn’t expect that to have too much of an impact on pricing elsewhere. Units that are priced appropriately are selling and this is true at the high end and the low end. Regardless of whether they’re developer owned or not, units that are still priced at yesteryear terms just sit. Eventually, the market prevails and sellers are forced to adjust their expectations though, occassionally, an unrealistic seller gets lucky with a buyer who hasn’t done his homework. As to whether $145 will prove to be a bargain for a 5th & Main unit (on average) I cannot say. The project will not soon overcome the location problems that have plagued it from day one. There are no amenities to speak of and, as a buying prospect, I’d be very concerned about how the final HOA budget might impact future owners.

  • Adam

    Thank you, great response. Your point mirrors what I had assumed. Comparing this property (with little to no good development around it) to properties in The Gulch, Midtown, Germantown, or elsewhere is a little ‘apples to oranges’. I’m guessing this property (if it stays as a condo project) will attract the entry-level buyer looking for the convenience of downtown at the best price possible. Whereas other properties will not be greatly impacted as they continue to attract individuals looking for more community infrastructure.

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