By: Andy Ashby
Memphis Business Journal
Boyle Investment Co. has formed a real estate investment fund to take advantage of current real estate investment conditions.
Although Midsouth Capital Fund I LLC will focus on Memphis and Nashville, it will also target real estate investment opportunities throughout the Mid-South, including Tennessee, Kentucky, north and central Alabama, Mississippi and Arkansas.
An office property outside Nashville has already been purchased and fund managers currently are in due diligence to acquire a Memphis property in the Poplar Avenue corridor.
Initial equity capital committed is $30 million, with Boyle and related entities contributing $8 million.
The equity commitment is expected to grow over the next few months as additional investors from Memphis and across the state of Tennessee are added.
“The newly formed Midsouth Capital Fund I takes advantage of the unique real estate investment climate in which capital is scarce and liquidity needs in the marketplace are providing attractive acquisition opportunities,” Henry Morgan, president of Boyle Investment Co., says. “Investors can take advantage of the potential greater returns offered by high-quality real estate in what may be a coming inflationary environment. The fund enables investors to maintain a more diverse deployment of their capital and to react quickly to these real estate investment opportunities.”
More than $200 billion of commercial mortgages are slated to mature in 2011 alone and that number will grow significantly until it peaks in 2014, according to Morgan.
Midsouth Capital Fund I requires a $1 million minimum equity commitment and is seeking sellers who are looking for greater liquidity.
The fund’s managers are targeting high-grade real estate, such as the undisclosed Memphis property in the Poplar corridor that is in due diligence. Boyle and its affiliates will manage the properties depending upon geographic location.
The fund made its first purchase near Nashville, buying a 43,000-square-foot, three-story brick office building at 112 Long Hollow Pike in Goodlettsville, Tenn., from New York-based Gramercy Capital for $2.17 million. The property was appraised at $3 million in 2010.
Tobacco products manufacturer Commonwealth Brands Inc. has chosen the building for its corporate headquarters and will occupy 32,000 square feet of space. Regions Bank occupies the remaining 11,000 square feet of space.
Boyle Nashville LLC will manage the building, which was constructed in 1986.
The fund is coming online at a time when the Memphis market has seen a flurry of investment acquisitions.
Memphis Commerce Square Partners LLC purchased the 471,395-square-foot One Commerce Square from US Bancorp for $7.6 million.
Memphis-based Loeb Properties Inc. purchased the mixed-use 140,000-square-foot Park Place Centre from Belz Enterprises Inc. for $10.3 million and has portions of Overton Square under contract.
Belz is also been listing the 200,000-square-foot Germantown Village Square for sale at $20.5 million.
In late December, Eastgate Center LLC purchased the 484,384-square-foot Eastgate shopping center and office building from Belz for $31.5 million. The limited liability company was formed specifically for this transaction, and it is managed by an affiliate of Dallas-based Arrow Retail in partnership with Pasadena, Calif.-based KCB Management.
Todd Minnis, managing partner with Arrow Retail, says Eastgate “has been one of the dominant retail centers within the inner loop since the Belz family developed it in the mid-1960s.”
CB Richard Ellis Memphis will be handling property management for the 63,000-square-foot office component as well as office and retail leasing. Belz will continue to manage the retail portion.
This was Arrow’s first purchase in Memphis, but it might not be the last.
“Our plans are to partner with Belz and with CB Richard Ellis to continue providing an institutional quality shopping experience and office environment to Memphis consumers and office tenants,” Minnis says. “We are always looking for opportunities to bring our retail expertise to well-located properties. We like the fundamentals of the Memphis economy and would consider expanding our local footprint in the future.”