Exclusive: Name revealed for mysterious downtown development as owners pursue grocery, movie theater
The following is an article from the Nashville Business Journal, written by Adam Sichko.
A grocery store, a movie theater and a music venue all are targeted as part of a forthcoming redevelopment of a prime swath of downtown real estate — one of Nashville’s biggest real estate deals in at least the past decade.
Southwest Value Partners, the San Diego investor who paid $129 million for nearly 15 acres, is negotiating with companies that would operate or brand each of those three types of amenities, according to multiple sources with knowledge of the talks.
Southwest Value Partners, a firm co-founded by the owner of the NBA’s Phoenix Suns, bought the campus of LifeWay Christian Resources and a bit of adjacent land one year ago. Now, the company’s plan to overhaul the property is crystallizing. On Dec. 13, sources said officials from Southwest Value Partners disclosed their name for the development — Nashville Yards — at a private party where attendees could take a virtual reality tour of the proposed project.
The grocery store, movie theater and music venue are just a few of the pieces in the mix for the development Southwest Value Partners is pursuing, which would cost hundreds of millions of dollars and alter the city’s skyline. The company, which had never invested in Nashville before, transformed from total unknown to one of the city’s most pivotal landowners by swooping in and buying the LifeWay campus at the sixth-largest lump sum paid for Nashville real estate in the past decade, according to our research. The deal is so large, Southwest Value Partners paid $462,000 in Metro fees to file the deed recording the land sale (those fees tie directly to the purchase price).
Mystery still shrouds the firm and its project, as executives have declined interview requests to-date. We took you inside the deal for the LifeWay campus as best we could earlier this year. To be sure, because these are ongoing negotiations, there is no guarantee a grocery store, a movie theater or a music venue (in any combination) will ultimately materialize.
Publicly, Southwest Value Partners has given one peek behind the curtain, and it was a big one, as Hyatt Hotels Corp. (NYSE: H) announced a 540-room Hyatt Regency for the project. The high-rise hotel, if built, would be the third-largest hotel downtown, surpassing even the 33-story JW Marriott under construction in SoBro.
What’s clear is that Southwest Value Partners owns enough land to create a district of sorts, with a lot of office space and apartments or condos also in the mix. Although construction costs continue to escalate, the developers stand to benefit from other factors in their favor — namely, the increasing appeal Nashville’s urban core has for businesses and residents alike. That has helped generate a historic shortage of office space available to lease.
Meanwhile, downtown’s population has jumped 40 percent in four years and is increasingly well-off, according to the Nashville Downtown Partnership. The group, which surveys residents each year, projects downtown’s population to stand near 10,000 by year’s end, and grow even faster in the coming years.
For the fifth year in a row, residents responding to the partnership’s annual survey ranked a grocery store as their most-desired amenity. The second most-desired feature: a movie theater.
The status of financing to build the development remains unclear publicly, and banks wouldn’t commit to construction loans until that activity was imminent. That said, Southwest Value Partners has demonstrated the depth of its connections — starting with Robert Sarver, who co-founded the firm 25 years ago and, in addition to owning the Suns, is also chairman and CEO of Western Alliance Bancorp (NYSE: WAL) and its $17 billion in assets. In its most recent filing with the U.S. Securities and Exchange Commission, Southwest Value Partners reported a $296 million round of fundraising from investors. Don’t forget that the company paid all-cash for the LifeWay site (two months later, the firm took out a loan on the property equal to less than half that amount).
Hilton said it expects to open the Hyatt Regency in 2019. It’s planned for the corner of Broadway and 10th Avenue North, across from the historic Union Station Hotel, the Frist Center for the Visual Arts and a Holiday Inn. That location is a quarter-mile from where Whole Foods Market (Nasdaq: WFM) has signed a long-term lease in an apartment tower that Austin developer Endeavor Real Estate Group has proposed.
As we’ve reported, Southwest Value Partners is working with Nashville architecture and engineering firm Gresham Smith & Partners and the Nashville office of the Colliers International real estate brokerage firm.
LifeWay Christian Resources, the publishing arm of the Southern Baptist Convention, is building a headquarters in Capitol View, a mixed-use development at 1100 Charlotte Ave. overseen by Boyle Investment Co.