August 04, 2015

‘Sharks Take a Bite at Two Proposed Memphis-Area Developments

‘Sharks’ Take a Bite at Two-Proposed Memphis-Area DevelopmentsBy:  Thomas Bailey, Jr.
Commercial Appeal

A Memphis "Shark Tank" of money men bared their good manners instead of their teeth when pitchmen proposed two developments — one glitzy and the other workaday — this week at an event staged by Urban Land Institute Memphis.

The most violence occurred when one of the sharks, John Pontius of Worthington Hyde Partners, accidentally dropped his bottled beverage.

Yet he and fellow predators — Paul Boyle, president of Boyle Investment Co., Barry G. Smith, senior vice president of commercial lending for Southern Bancorp Bank, and Kent Wunderlich, CEO, board chairman and general counsel for Financial Federal — offered plenty of insight into the assessment of real estate deals that usually happens behind closed doors.

In front of 60 onlookers, the sharks sat stage left at a table in Theatre Memphis as the developers took center stage with their power points, handouts and powers of persuasion.

The event was designed to educate the public and prepare potential developers for the challenges they’ll face in getting projects financed.

Partners Bob Turner and Martin Edwards talked up their plan to build a senior-living community on 46 acres at the southwest corner of Paul Barret Parkway (Tenn. 385) and Raleigh-Millington in Millington.

Boyle’s development experience showed when he pointed out the state would likely not allow a curb cut as close to Tenn. 385 as the plans showed.

Smith asked if the expressway’s noise would be a negative; Turner responded the overpass is so high the noise would pass over.

"It’s well thought out," Pontius said, adding he’d like to see more financial information.

Boyle, referring to the current funk of commercial retail development, advised the developers to get rid of the retail component.

Another developer, Lauren Crews, pushed his grand, $75 million plan to finally exploit perhaps the most spectacular property in Memphis, French Fort. The spot south of Downtown is where the river views are panoramic, the shade is deep, and the setting oozes history and character.

His company owns three of about 15 properties included in Crews’ proposed, mixed-use master plan that calls for apartments, bluff-top restaurant, hotel and more.

But the challenges are many, including that the site sits in economically distressed South Memphis and will be hard to access until the state builds a roundabout at I-55 and Crump.

Wunderlich probed Crews about commitments, asking, "Is it all speculation right now?"

Crews responded that he’s half-owner of three properties where multi-family residential is planned, including the historic but dilapidated Marine Hospital, located next to the National Ornamental Metal Museum. He indicated $9.6 million worth of construction is ready to go.

"I love the site and I think it deserves to be developed," Pontius said. "It seems too big to do at once, but hard to piecemeal."

Renovating and converting the Marine Hospital into 64 apartments will be the catalyst, Crews said. The entire project would likely take 10 years to complete. Construction of a critical component — the state’s roundabout — is supposed to start next year.

"I especially love your idea of a restaurant on the river," Boyle said. "Why we don’t have more of that? It’s crazy."

Boyle was encouraging, telling Crews, "You’re off to a mighty fine start. It looks great."

Smith added, "I love the Marine Hospital apartment deal. I’d have to be convinced you could lease it up without this other development."

Crews responded that people who prefer living in the urban core recognize the entire environment won’t be polished, at least not initially.

Wunderlich expressed concern there are not enough jobs Downtown to support all the residential units.

"We’ve got Mitsubishi and Electrolux," Crews responded, referring to two new manufacturing plants just south of French Fort.

"Great point," Wunderlich said. "I love the project … All I can say is whatever you do first, do it right."

Pontius said the site will be so special that wherever people work, "they will commute there to wherever their jobs are."

But the timing is not right, he warned. Developers can still grab "lower hanging fruit," meaning they can build in in-fill closer to Downtown.

Boyle may have given the ultimate endorsement, telling Crews: "I like it a lot. Especially if I could develop it with you."

The audience laughed at Crews’ response: "Paul, let’s talk."