Trio starts Chattanooga area investment fund targeting commercial real estate, hospitality and medical offices

Trio starts Chattanooga area investment fund targeting commercial real estate, hospitality and medical offices

December 2nd, 2012 by Mike Pare in Business Around the Region

Jim Sattler, seated left, Steen Watson, standing, and Garry Rodgers are principals in Chestnut Development Partners.

Photo by Angela Lewis /Times Free Press.

A group of Chattanooga-area businessmen has crafted a commercial real estate investment fund targeting deals up to $15 million.

Chestnut Development Partners already has invested in three projects in the region, said Jim Sattler, the former longtime chief executive and chairman of locally based construction giant EMJ Corp.

Sattler, who is a principal in the group with Garry Rodgers and Steen Watson, said the fund is targeting office, retail or hospitality and medical office projects.

"We'll have six to 10 projects within the fund," he said.

The fund focuses on investments in commercial real estate projects that are too small for institutional investors yet too large for developers to source equity capital easily and efficiently.

Watson, whose family was in the grocery business in nearby Cleveland, Tenn., and who later worked for a real estate company in Washington, D.C., said there's a finite amount of capital in the fund that can only be divided so many ways. That's the reason for the six to 10 project limit, he said.

Watson said banks might finance 70 percent to 80 percent of a specific project and Chestnut Development Partners comes up with the remainder.

"We help with the other portion of the capitalization," he said.

Rodgers, who has been involved in a Cleveland commercial real estate firm for many years, said they all understand how deals work.

"We have skill sets that complement each other," he said.

There are about 30 investors in the fund at present, said the principals who are headquartered at the Volunteer Building downtown.

Sattler said that by participating in the fund, they've "got an opportunity to be very diversified in real estate."

For example, the current projects consist of a shopping center in Huntsville, Ala.; a medical office in Cleveland, Tenn.; and a planned hotel in Murfreesboro, Tenn., he said.

Sattler said all investors continue to look for better returns these days.

"We feel like this will provide a return that will be very attractive," he said.