BROADWEST (former West End Summit), 36 story Conrad Hilton Hotel/condo tower, 22 story/510,000 sq. ft. office tower, 4 story/125,000 sq. ft. retail/office, 1 acre plaza, 2,500 car garage, $490 million

[FromParkAveToTN]

I hate that the hotel has been added to this. Keep with the original plan and move forward. Greed is the real problem here.

[Jamie Hall]

Maybe I'm reading this a little differently, or maybe it's just the optimist in me, but today's coverage almost sounds a bit reassuring that the project will happen. Palmer's actively looking for ways to cut costs with the new exterior changes (disappointing, but so be it), says the lien has been addressed, and seems to have reassurance from others in the business regarding the slow progress.

 

It sounds like Palmer is being realistic about what needs to be done to make the project happen. That's encouraging.

[UTgrad09]

Maybe I'm reading this a little differently, or maybe it's just the optimist in me, but today's coverage almost sounds a bit reassuring that the project will happen. Palmer's actively looking for ways to cut costs with the new exterior changes (disappointing, but so be it), says the lien has been addressed, and seems to have reassurance from others in the business regarding the slow progress.

 

It sounds like Palmer is being realistic about what needs to be done to make the project happen. That's encouraging.

 

That's somewhat how I read it as well.

 

It's still a bit concerning that things are dragging as much as they are, though. I think ASP is finally realizing he has to be more proactive on the press/information end of things. No activity and people start to speculate, and the seeds of doubt are planted, which could ultimately sink his company.

 

I have no doubt that this process is more complicated and difficult than we can really imagine, but at the same time, his approach is what is causing all of this. A lot of Tony G's projects have been on the drawing board for the same period of time...but he always stays in the news, reassuring us that it will happen. Will they? Who knows...but the point is he's not afraid to talk about it. 

 

The difference is, obviously, the type of project we are talking about. Palmer has a tenant, and a big one (or tenants, technically). And the massive unsightly hole on West End is already there, as opposed to the annoying, but relatively harmless parking lots that sit on other proposed developments. 

[MLBrumby]

Even the "bright bulbs" over at the Tennessean don't think this thing will get built now...   http://www.tennessean.com/article/20131001/BUSINESS02/310010037/Future-hazy-HCA-s-260M-midtown-Nashville-development

[FromParkAveToTN]

I'm getting sad. I though with HCA, this would be a done deal. I guess I was wrong. Feeling sad. Hold me!

[Nathan_in_DC]

In regards to HCA, if not here, then where?  Would they look for space in an existing building, or still look for a new construction? Perhaps this could be a blessing in disguise... Get rid of this project, sell the land to someone who will do something productive with it, and have a new building built in the CBD that will add to the skyline, or anchor a new development on the fringes of the CBD.

[timmay143]

Some interesting blurbs:

 

Last week, Palmer said negotiations continued with potential equity partners, adding that cost-reducing changes have been made to the design, including going from all-glass buildings to a combination of glass and architectural precast concrete.

Not sure how much this affects the aesthetics of the project, but I am not sure that I like this cutting corners type comment.  Seems to cheapen the project (not only financially but also mentally).

 

“Our company has made a number of adjustments to enhance the financial feasibility of the project, and we believe those adjustments will allow us to secure equity funding very soon, which will allow the project to proceed,” he said.

Sounds hopeful, but I really want to know the details behind these snags!

 

Palmer also acknowledged that an excavation company had put a lien on the property — estimated by some observers at $1.88 million — but said he expected that matter to be resolved and added that it shouldn’t affect efforts to obtain financing.

Not a business nor financial guru, but I don't think this is a huge issue. Just can't pay cause the rest hasn't fallen into place? Of course if the deal falls through then the lien will be an issue for Palmer and doesn't apply to WES as we now know it.

 

In addition to the pair of office towers, Palmer’s plans for West End Summit include an InterContinental hotel that would cost up to $70 million. Last week, he said the hotel deal remains in place, with that financing package done.

So this seems like the hotel portion is a done deal and not holding back the whole development?

 

For its part, HCA has released a statement confirming that it is evaluating the site but that it remains committed to keeping the jobs in Davidson County.

Sounds hopeful too (for WES). Did HCA ever say it was officially shopping other sites? This is a long shot, but does anyone have any inside info that might say whether they are or are not? Maybe help give us a picture of how dire it is or isn't.

[timmay143]

In regards to HCA, if not here, then where?  Would they look for space in an existing building, or still look for a new construction? Perhaps this could be a blessing in disguise... Get rid of this project, sell the land to someone who will do something productive with it, and have a new building built in the CBD that will add to the skyline, or anchor a new development on the fringes of the CBD.

Speculation has the OneC1ty project. The TN article mentioned the NW Mutual site in N. Gulch. Some have speculated Eakin's tower or possibly Tony's tower on Church. Some have speculated that HCA is in favor of keeping the two company names separate with their own identification which is why WES is nice for them with 2 towers. Thus, Eakin's and Tony's may be out of the question. OneC1ty probably has the most potential since it is close by to their current area and they could develop the entities separately.

[FromParkAveToTN]

HCA has deep pockets. I wonder why they can't help with the financing to get the ball rolling on their future office space.

[SoundScan]

So is this project dead yet? Almost another month has passed and still nothing...

[smeagolsfree]

I would say in doubt, but not dead till we hear from HCA or Palmer to confirm.

[dxfret]

HCA has publicly stated that they have a pressing need for large blocks of new space to house two major subsidiaries, Parallon and Sarah Cannon, and they have committed to building these in Metro Nashville.  

 

The clock has been ticking for 13 months since this was announced, and still there is no construction. One would think HCA would have to make a decision about West End Summit or building elsewhere soon -- certainly by the end of the year.  

 

My bet is that HCA will drop out soon and go elsewhere.   Things don't look good for Alex Palmer & Co.   

[barakat]

I'm not interested in speculation but hope Palmer or HCA will announce what is happening soon, or that local news will dig deeper.

[mirydi]

HCA has deep pockets. I wonder why they can't help with the financing to get the ball rolling on their future office space.

I wondered that many times myself. HCA has billions of dollars at their disposal, and they have expressed many times that they want to be in that location. Why wouldn't they just help Palmer out with the 25% of financing he needs to secure to get the ball rolling on this. I'm surprised they haven't just offered to buy the property from AP and build the towers themselves. Does anyone think that could be an option? 

[captainwjm]

I wondered that many times myself. HCA has billions of dollars at their disposal, and they have expressed many times that they want to be in that location. Why wouldn't they just help Palmer out with the 25% of financing he needs to secure to get the ball rolling on this. I'm surprised they haven't just offered to buy the property from AP and build the towers themselves. Does anyone think that could be an option? 

I don't want to get bogged down in this, but comments like this one indicate a misunderstanding of how and why corporations build and occupy new buildings.  First, I don't know anything about HCA's financial status, but whatever their net worth, they are not in the business of building office buildings.  Their business, and thus their liquidity or credit line is to be used for building things that make them money - hospitals [i'll spare you my opinion of the morality of for-profit health care.]  ASP & Co.'s business is building buildings for companies like HCA to lease.  Asking HCA to bail out Palmer isn't in their buisness model. 

[mirydi]

I don't want to get bogged down in this, but comments like this one indicate a misunderstanding of how and why corporations build and occupy new buildings.  First, I don't know anything about HCA's financial status, but whatever their net worth, they are not in the business of building office buildings.  Their business, and thus their liquidity or credit line is to be used for building things that make them money - hospitals [i'll spare you my opinion of the morality of for-profit health care.]  ASP & Co.'s business is building buildings for companies like HCA to lease.  Asking HCA to bail out Palmer isn't in their buisness model. 

I understand they are not in the business of building office buildings, but they certainly have the means to finance their own buildings if they wanted to. You could say that Devon Energy Corporation is not in the business of building office towers, but they had the Devon tower built, and financed the whole project. There are countless other companies that do the same thing, so that's the only reason I brought it up.

 

HCA in 2012 had about $33 billion dollars worth of sales/revenue, and about 10.5 billion of gross revenue. The company also posted a profit in 2012 that surpassed 1.6 billion dollars. I don't see why investing 250 million dollars to build a couple of office towers for their subsidiaries Parallon and SCRI would be that big of deal. Thats all I was getting at really, and it happens all the time.

 

Their business, and thus their liquidity or credit line is to be used for building things that make them money - hospitals

 

Investing 250 million dollars to build two office towers of that caliber, would definitely bring them plenty of return on their money down the road if they ever decided to sell or lease them out. It's not like they would be just pissing away the money.

Edited October 24, 2013 by mirydi

[samsonh]

Mirydi,

It's not that simple. The officers of chance have a fiduciary duty to their shareholders. As the poster before you said, they are not an office builder. Their officers have no expertise in calculating whether the roi will be greater than their cost of capital in a project like this.

[dmillsphoto]

Mirydi,

It's not that simple. The officers of chance have a fiduciary duty to their shareholders. As the poster before you said, they are not an office builder. Their officers have no expertise in calculating whether the roi will be greater than their cost of capital in a project like this.

 

Bingo.

[mirydi]

Mirydi,

It's not that simple. The officers of chance have a fiduciary duty to their shareholders. As the poster before you said, they are not an office builder. Their officers have no expertise in calculating whether the roi will be greater than their cost of capital in a project like this.

So how is that any different than any other large corporation that has either had built or bought their own buildings?

 

I don't know the first thing about building a home, but that doesn't mean I shouldn't have one built or just go out and rent an apartment or lease a house. Thats what contractors, real estate agents, and architects are for. I know thats a silly comparison, but it's basically the same thing just on a much larger scale.

 

I'm not trying to be argumentative or anything, and maybe I really don't understand. I just don't see why for HCA it's just out of the question that they couldn't have their own building/tower built, or go out and buy a building, like so many other companies have done. I'll try and dig up some information later, but I'm sure there are tons of fortune 500 companies that don't lease the buildings they are in. They either had them built specifically for them, or they bought a building.

[satalac]

So how is that any different than any other large corporation that has either had built or bought their own buildings?

 

I don't know the first thing about building a home, but that doesn't mean I shouldn't have one built or just go out and rent an apartment or lease a house. Thats what contractors, real estate agents, and architects are for. I know thats a silly comparison, but it's basically the same thing just on a much larger scale.

 

I'm not trying to be argumentative or anything, and maybe I really don't understand. I just don't see why for HCA it's just out of the question that they couldn't have their own building/tower built, or go out and buy a building, like so many other companies have done. I'll try and dig up some information later, but I'm sure there are tons of fortune 500 companies that don't lease the buildings they are in. They either had them built specifically for them, or they bought a building.

Some companies just prefer to not allocate their assets into real estate. Keep in mind that owning a building means that you have to pay for every aspect of it. Some companies just don't want to deal with this. Just because you have the money, doesn't mean you need to spend it.

[dmillsphoto]

Some companies just prefer to not allocate their assets into real estate. Keep in mind that owning a building means that you have to pay for every aspect of it. Some companies just don't want to deal with this. Just because you have the money, doesn't mean you need to spend it.

 

Plus, there's the whole financial aspect and having to answer to shareholders, hold a vote, etc. Dumping a quarter billion when you have about that in cash is highly frowned upon.

[arkitekte]

Plus, there's the whole financial aspect and having to answer to shareholders, hold a vote, etc. Dumping a quarter billion when you have about that in cash is highly frowned upon.

 

On top of this it doesn't hold that particular corporation down to one particular location. Leasing space is fairly easy. In 15 or so years if that location is too small or you want to relocate, you simply throw your name out there and let the best proposal for you be the winner. If you build your own facility, you're stuck with it...even if you do need new space and want to relocate, you're forced with trying to sell or redevelop hundreds of thousands of square feet, which in the end transforms a healthcare, financial, or whatever corporation into a real estate firm trying to flip an outdated office building. 

 

Citi in Manhattan is a good example of a corporation going through this exact problem. They're stuck with 398 Park and Citigroup Center (and their tower in LIC), but need new space. That's why they're looking into Hudson Yards and possibly 3 WTC (maybe 2, I can't remember) to lease space this time around. Of course they wouldn't necessarily have a problem leasing out their existing space in Manhattan, but you get the point...build yet another tower and be on pace to need another one by 2040 or so, or lease space and pick up and move when that issue comes around. 

Edited October 24, 2013 by arkitekte

[dxfret]

HCA can easily lease office space that is tailored to its needs from multiple developers and sources.  Like most corporations, HCA prefers to utilize its cash to invest its core businesses -- like hospitals and medical facilities.  

 

HCA is very smart not to get involved with Alex Palmer & Co., especially on a project West End Summit that is so plagued with financing problems, liens and delays.

 

Citigroup in NYC does not own either its headquarters at 399 Park Ave., not the neighboring Citigroup Center at 601 Lexington Ave.  These buildings were sold off some 15 years ago and the bank leases back the space it needs from the owner/landlord, Boston Properties.  Citi owns the 50 story One Court Square in Long Island City and an operations center at 111 Wall Street in Manhattan.  The vast majority of the office space the bank requires worldwide is leased, not owned.  Most global companies follow the same example as Citigroup.

[jdavidf]

CAT Financial originally built their headquarters on West End, but later sold it and now leases it back from the current owner. I think Willis Corroon did a similar thing with their HQ in Century City.

 

I don't know much (anything?) about how large corporations make these decisions, but I would imagine that they all do things for a variety of reasons, so if HCA isn't interested in building their own buildings, then surely there's some reason for it that they're not discussing with the public?

[SoundScan]

On the flip side, you have companies like Apple, Google, and Facebook that have built or are building their own spaces. The primary reason they choose to do so is so that they can tailor the entire development to their very specific needs. Well, part need, part vanity, as the offices are an important recruiting tool when trying to attract top-level talent, e.g. Apple's new spaceship-like HQ. Some even go further, with Facebook actually planning to build employee housing near their campus--though that is primarily because housing prices in SF have become so outrageous as to actually price-out their own highly-compensated employees.

 

Spec buildings tend to be very generic in their layouts as they need to cater to a variety of business types. Based on what I've seen from the few times I've been on and inside HCAs existing offices, I don't believe they really care too much about specifics as it pertains to office space--save for geographic location. Just give them adequate square footage to place the row upon row of cubicles and let the drones go to work.