Alpha Residential Trust, a Pittsburgh, Pennsylvania-based real estate investment trust, has entered into an agreement to purchase the 266 Lofts development at the corner of Front Street and Dr. Martin Luther King Jr. Boulevard.
The Downtown Memphis Commission’s Center City Revenue Finance Corp. board of directors approved a request Tuesday, Sept. 12, by the original developers of 266 Lofts to amend their original PILOT (payment-in-lieu-of-taxes) to help facilitate the sale.
266 Lofts is currently being developed by Vince Smith, Robert E. Mallory and John H. Dicken Jr. in two phases. One phase began leasing activity upon completion in August and the second phase is expected to break ground within the next 30 days.
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The new owners want to avoid any risk associated with the construction of the second building. So they asked if the current PILOT lease could be divided into two separate leases, which will allow the assignment of the completed building to Alpha now and enable the second building to be transferred to Alpha upon its completion.
“For us to start, we actually have to bifurcate the PILOT into two separate loans from the same bank,” Smith said of the sale to the CCRFC board. “They want to buy the property, but they are not in the business of constructing the property, so we’re going to construct the second building with the second loan through Triumph Bank and once it’s completed they will buy the building at that time.”
Smith said that once construction begins on the second phase, it will take nine months to a year for the second building to be completed.
On Aug. 16, Smith filed a $595,000 building permit application for the project’s second phase with the Office of Construction Code Enforcement that listed Renaissance Group as the architect.
“We might be slightly below market averages for new construction,” Smith told The Daily News at that time. “One-bed, one-bathroom spaces start at $1,175, or $1.50 per square foot, and two-bed, two-bathroom apartments range from $1,550 to $1,975, or $1.48 per square foot.”
The CCRFC board unanimously voted to split the existing PILOT in order to help facilitate the sale.
After the meeting, Smith described Alpha as a “real stakeholder” in Downtown Memphis and cited four other properties they own– The Washburn, Cabinet Shops, Printer’s Alley and Annex Lofts – as examples of this.
While he didn’t have exact numbers, Smith estimates that this latest purchase agreement will bring Alpha’s investments in the Bluff City to around $55 million.
“Like Vince said, it is our fifth acquisition,” a representative with Alpha told The Daily News after the CCRFC’s decision. “We love Downtown Memphis, love being in this area and just want to make sure that this area stays as nice as it is.”
Even with the sale, Smith said he will remain active in Downtown development and is currently pursuing two new opportunities in Midtown.
About Alpha Capital Partners
Alpha Capital Partners is a Pittsburgh-based real estate investment firm that acquires student-housing, multi-family and medical offices in fast-growing markets. The company is the leader in the small balance real estate space and has delivered higher-than-expected margins and risk-adjusted returns. Alpha Capital Partners is continuously growing its portfolio and currently owns 18 properties in growth markets across the United States.
For additional information, visit www.alphacapitalpartners.com.