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VOL. 133 | NO. 28 | Wednesday, February 7, 2018

Daily Digest

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Mueller Income Drops 67 Pct. Amid Tough Copper Industry

Memphis-based Mueller Industries Inc. reported a 67 percent drop in fourth-quarter net income and a 14 percent in full-year income as the industrial manufacturer was affected by challenges in the copper industry as well as an outage at its brass rod mill.

Mueller on Tuesday, Feb. 6, reported fourth-quarter net income of $5.7 million, or 10 cents per diluted share, compared with $17.3 million, or 30 cents per share, in Q4 2016.

For the year, the company reported net income of $85.6 million, or $1.49 per share, compared with $99.7 million, or $1.74 per share, in 2016.

Mueller specializes in copper and copper alloy goods, though it also produces items made from aluminum, steel and plastic. Its products are used in the construction, appliance, defense, energy and automotive sectors.

CEO Greg Christopher told analysts and investors on the earnings call that fourth-quarter earnings were “adversely affected by inventory impacts and, to a lesser but still important degree, the ongoing challenges in our U.S. copper tube business.”

The company said a casting outage at its brass rod mill during the fourth quarter impaired its ability to melt scrap returns, causing an excess of $38.9 million in inventory.

The line is now operational, and Mueller says it expects inventory levels to normalize this year.

The quarter also included the cost of modernizing a copper tube mill in Fulton, Mississippi, and the startup of a new mill in Cedar City, Utah.

“On a full year basis, cost overruns, startup costs, throughput constraints, quality and yield challenges, along with an associated decline in market share, impacted our copper tube earnings by over $25 million,” Christopher said. “The international markets we serve remained stable and better than anticipated in 2017, and demand in the U.S. markets continued to remain positive.”

– Bill Dries

FedEx Customer Service Building Sells for $14M

The 125,000-square-foot building that houses FedEx’s TechConnect Customer Service center in Collierville has switched hands for $14 million.

In the deal, BAP Properties sold the Class B warehouse located at 477 Distribution Parkway to Infinity Nine Collierville LLC for $14 million.

Phillip Wood of Southlake, Texas, signed the Jan. 2 warranty deed on behalf of the sellers.

Meanwhile, the new owners took out a $9.8 million mortgage on the property through San Antonio, Texas-based Security Service Federal Credit Union.

William M. Braden, also of San Antonio, signed the deed of trust on behalf of Infinity Nine.

The Shelby County Assessor appraised the 33-year-old warehouse at $5.1 million in 2017.

– Patrick Lantrip

$5M Building Permit Filed for Hotel Indigo

Atlanta-based Three P Partners has filed a $5 million building permit application with the Office of Construction Code Enforcement to construct a 118-room Hotel Indigo at the corner of North B.B. King Boulevard and Court Avenue.

New Orleans-based Expotel Hospitality will oversee the development and management of the property with Memphis-based brg3s architects handling the design work.

Developed by Holiday Inn founder Kemmons Wilson in 1957, the 200,000-plus-square-foot structure is now slated to be the city’s first Hotel Indigo.

Scheduled to open in mid-2018, the new Hotel Indigo will feature approximately 3,000 square feet of private dining, event and meeting space; a fitness center; and a renovated pool with cabana bar.

Expotel Hospitality’s development team is “in discussions with several nationally recognized, chef-driven restaurant groups with whom they will collaborate on the culinary program for the restaurant that looks onto the corner of B.B. King and Court and affords an opportunity to create a uniquely urban dining experience,” according to the company’s website.

Three P, doing business as 22 North Third LLC, bought the Econo Lodge Downtown and its garage, located at 22 N. B.B. King Blvd. and 28 N. B.B. King Blvd. respectively, from Bluff City Partners LLC for $5.9 million in a Dec. 29 warranty deed.

Mabra Holeyfield signed that deed as chief manager of Bluff City Partners.

In conjunction with that purchase, 22 North Third LLC filed a $3 million loan through State Bank and Trust Co.

Vibrant Hotels had plans in 2007 to convert the Tenoke Building at 161 Jefferson Ave. into a Hotel Indigo, but those plans were sidelined by the Great Recession.

Vibrant’s plans to brand Tenoke Building as a 155-room Aloft Hotel, a boutique brand owned by Starwood Hotel & Resorts Worldwide, was approved by the Memphis City Council in 2016.

– Patrick Lantrip

State Senate Committee OKs Repeal of Hall Tax

A proposal by state Sen. Brian Kelsey of Germantown to amend the Tennessee Constitution to ban the Hall income tax passed the Senate Finance, Ways and Means Committee Tuesday, Feb. 6, by a vote of 9-2.

Kelsey’s resolution proposes adding language to the state Constitution to eliminate state and local governments’ authority to levy taxes on income derived from stocks and bonds that are not taxed ad valorem.

“The Hall tax on interest and dividends discourages saving and investment and disproportionately impacts senior citizens on fixed incomes,” Kelsey said in a statement. “More and more citizens are relying on interest from stocks and dividends to fund their daily living expenses when they retire. Not only is the Hall tax oppressive to these seniors, but it encourages them to move out-of-state.”

Enacted in 1929, the Hall income tax is the only tax on personal income in Tennessee.

It is currently a 4 percent tax on income derived from dividends on stock or from interest on bonds after the General Assembly has made several reductions in recent years.

The Legislature voted last year to incrementally phase the tax out by January 2021, but Kelsey’s proposed amendment would constitutionally prohibit the General Assembly from ever levying or permitting any state or local tax upon income derived from stocks and bonds.

“Enshrining the Hall Tax repeal in the Tennessee Constitution is a pro-growth move that will encourage investment and reinvestment in the state, its companies and its people,” Kelsey said.

To amend the state Constitution, the proposal would need to be approved by a simple majority during the current legislative session, followed by a two-thirds vote by next year’s Legislature.

It would then be placed on the ballot for consideration by voters in the 2022 gubernatorial election and would need to be approved by a majority of votes cast in the governor’s race.

Kelsey, a Republican, represents Cordova, East Memphis and Germantown. He serves as chairman of the Senate Judiciary Committee.

– Daily News staff

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 57 280 1,209
MORTGAGES 55 244 916
FORECLOSURE NOTICES 8 52 151
BUILDING PERMITS 0 541 2,593
BANKRUPTCIES 37 157 618
BUSINESS LICENSES 0 65 264
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0