VOL. 132 | NO. 245 | Tuesday, December 12, 2017
Gibson Guitar Factory Sale Clears First Hurdle
By Patrick Lantrip
The Center City Revenue Finance Corp. approved a lease transfer request by the new owners of the Gibson Guitar Factory in Downtown Memphis on Tuesday Dec. 12, effectively clearing the way for the lengthy redevelopment process to begin.
In addition to the transfer request, the new owners, real estate investment firms Somera Road Inc. of New York and Tricera Capital of Miami, also sought an amendment that would remove a jobs requirement condition and expand the acceptable uses of the property.
“The underlying lease is unique among the CCFRC PILOT leases in that it actually contained jobs requirements,” Jay Campbell, who was filling in for attorney James McLaren, said. “Most of the PILOT leases from the CCRFC do not require that.”
Campbell said that the CCRFC was comfortable removing the jobs requirement from a legal perspective because they are beyond the abatement portion of the lease.
The Center City Revenue Finance Corp. approved a lease transfer and amendments to new owners of the Gibson Guitar Factory property, giving them more options to repurpose it. (Daily News File/Houston Cofield)
“The lease in now in the extension period, and between the PILOT payment and their lease payments they are effectively paying what a normal taxpayer would,” Campbell said. “Since it will be a little time before Gibson leaves the property, this gives them the flexibility they need to reposition the property.”
The lease, which will expire in 2023, contained a minimum requirement of 65 jobs due in part to the atypical nature of the original deal that included leasing property from the city.
When board member Sean Norris asked if the new ownership group plans to seek additional incentives from the CCRFC when the initial lease expires, Downtown Memphis Commission President Jennifer Oswalt said: “We’ve told them we’re not in the business of just giving another PILOT on the same property unless it’s some substantial change. They do own the lot behind the Gibson as well, so there is some potential for them to do something larger where they could apply.”
In the meantime, Oswalt said that amending the current conditions allows the developers to reimagine the property within the current PILOT structure.
“They have talked to lots people who are interested in doing something that Memphis locals would enjoy and approve of,” Oswalt said. “They are looking for input on what Memphis wants.”
Per the terms of the sale, Gibson has the option to operate out of their current facility for up two years, Oswalt said, but added that the possibility of a more permeant solution still exists.
“I believe it’s not out of the question that (Gibson) could remain in a smaller piece of the building, she said.” “They have talked about that, but it’s very unclear at this point.”
As for the expansion of the uses, the new owners will now be able to develop the property for office, commercial, retail, light industrial and parking uses.
“They may find another light industrial use and the amendment would allow them to do that,” Campbell said. “But if they need to move to a multiuse, commercial/residential facility, they could do that as well.”
While the financial terms of the transaction have not been made available, the sale is expected to close on Dec. 13.
In other news, Carla Preacher-Ryan stepped down as chair due to a scheduling conflict and will be replaced by Christina Kurdilla, while Walter Person and Marija Sokolov-Nelson will remain in their current positions as treasurer and secretary, respectively.
The CCRFC also ratified the DMC Board’s recommendation for Oswalt to serve as the CCRFC president.