VOL. 130 | NO. 195 | Wednesday, October 7, 2015
First Tennessee Again Eyes Sale Of Downtown HQ Building
By Madeline Faber
One of Memphis’ tallest buildings could come under new ownership as First Tennessee Bank looks to sell its Downtown tower at 165 Madison Ave.
If First Tennessee sells the Downtown tower, it will continue leasing as the building’s largest tenant.
(Daily News File/Lance Murphey)
David Popwell, the bank’s president and COO, said that First Tennessee is evaluating the 509,000-square-foot building as part of its ongoing facilities plan.
Over the past seven years, the bank has been consolidating its real estate across Tennessee. It has moved offices to the Downtown tower from locations at 530 Oak Court Drive and 1555 Lynnfield Road in East Memphis.
“What we’ve been doing over the last seven years is, as we sold the mortgage business, we have reduced the size of some of these groups,” Popwell said. “As we have had leases expire, we’ve been consolidating our space and trying to put people sort of in a synergistic way in buildings that we own.”
The result is a fully leased, 25-floor tower in the heart of Downtown. First Tennessee currently leases the first 15 floors and the 23rd floor. Law firm Baker, Donelson, Bearman, Caldwell & Berkowitz is the next-largest tenant.
Interest in the Memphis building picked up after First Tennessee closed on the sale of its First Tennessee Bank Building in Chattanooga, Popwell said. Memphis-based Heritage Land and Development purchased the 16-story Chattanooga building for $14 million with plans to turn more than half of it into apartments.
If First Tennessee decides to sell the Madison Avenue building, it would still maintain its Downtown presence through a sale and leaseback transaction.
“It’s something we’ve done before,” said Stephen Bieber, First Tennessee’s real estate director. “Back in the early 80s, we sold the building and purchased it back at a low point in the market back in 2003.”
In 2003, First Tennessee bought the building for $15.3 million from owner 165 Madison Avenue LP shortly after the Delaware-based limited partnership filed for Chapter 11 bankruptcy. Shelby County Assessor of Property records show that First Tennessee sold the building for $36.7 million in 1985.
The building is appraised at $27.4 million, according to a 2015 assessment.
“If you look at the renting environment today and look at the fact that we’re creating, essentially, a fully-occupied building, it’s only logical that people would be reaching out to us particularly with rates down so low,” Popwell said.
He estimates that First Tennessee has invested nearly $40 million into renovations of the Downtown tower over the past 10 years.
“The challenges are going to be the office market in the Memphis Downtown area as a whole,” Bieber said. “There’s plenty of excess space in general, so I think that’s going to be one of our greatest challenges.”
While no definitive offer has been made or asking price set, Bieber said that First Tennessee will likely make a decision about the building at the beginning of 2016.