Biggest property sales of the year
1. Legends at White Oak, a 312-unit apartment complex in Ooltewah, sold to Olympus Property in Fort Worth, Texas for $41.8 million2. Warehouse Row, the 260,000-square-foot office and retail complex in downtown Chattanooga, sold for $36.9 million to the Atlanta-based Simpson Organization.3. The Overlook at Hamilton Place, a 213,095-square-foot shopping center on Gunbarrel Road, sold for $33.8 million to New Market Properties in Atlanta.4. Elements of Chattanooga, a 260-unit apartment community Apartments on Standifer Gap Road, sold for $31 million to POH Hunters Point LLC in Hollywood, Florida5. Bridgeway at Chattanooga, a 250-unit apartment complex on McCutcheon Road, sold for $29.5 million to Chattanooga Apartment Property.6. Two North Shore, a North Chattanooga shopping center anchored by Whole Foods supermarket, sold for $28 million to Fairway in Birmingham, Alabama.7. The District at Hamilton Place Apartments, a 300-unit apartment complex on Gunbarrel Road, sold for $28 million to Shores Calhoun LLC in Hopkins, Michigan.8. Arbor Creek Apartments, a 340-unit apartment complex on Standifer Gap Road, sold for $26.6 million to Elements Property LLC in Nashville9. Standifer Place Apartment Homes, a 240-unit complex in Ooltewah, sold for $25.5 million to Graycliff Capital in Greenville, South Carolina10. The 109-room Residence Inn by Marriott and the adjacent 87-room TownPlace Suites by Marriott near Lee Highway sold for $18.8 million to American Hotel Income Properties REIT LP in Vancouver, Canada.Source: Hamilton County Register of Deeds
The pace of deal making in 2016 slowed from the record high of the previous year, but merger and acquisition activity remained active in the Chattanooga region this year, both in growing and shrinking industries.
With Chattanooga's improving economy and rental market, real estate investors bought more than $250 million of apartment complexes during 2016. Outside investors also acquired one of Chattanooga's biggest family-owned businesses - Republic Parking Systems - and several major commercial properties, including Two North Shore, Warehouse Row and the Overlook at Hamilton Place.
Overall real estate sales are expected to reach an all-time high in Chattanooga in 2016 once all of the sales are tallied for the year. Through the first 11 months of 2016, the number of homes sold by Realtors jumped by 10 percent over last year to a record high of 8,850 homes, according to the Greater Chattanooga Association of Realtors.
While the improving economy spurred many sales, consolidation in other industries facing economic and competitive challenges also bought new owners to major local businesses, including Alstom, Roper and J&J Industries in the power equipment, appliance and carpet industries.
The Tennessee Valley Authority also decided this year to abandon its unfinished Bellefonte Nuclear Power Plant after four decades of contruction starts and stops. Former Chattanooga developer Franklin L. Haney, who tried unsuccessfully for the past decade to negoiate a partnership or purchase of the nuclear plant with TVA, won the bidding for Bellefonte by offering $111 million for the facility. That was only about 2 cents return for every dollar TVA invested in the plant, but Haney said he hopes to revive the facility and bring jobs back to Jackson County, Ala., by finishing the plant.
Deal-making slowdown
Nationwide, the analytics firm Dealogic said there were fewer blockbuster mergers in 2016 than last year. The value of the average merger or acquisition announced in 2016 was around $104.2 million, down from $115.4 million in the previous year.
A record number of deals also were withdrawn this year across the country, including $606.4 billion worth of deals in just the first half of 2016, Dealogic said. Both of the presidential candidates also voiced concerns about consolidations, including the proposed $85.4 billion merger of AT&T and Time Warner, which still faces an uncertain future.
GF Data Resources, which tracks private equity-sponsored transactions in the $10 million to $250 million value range, also counted fewer deals in the first three quarters of 2016, dropping from 167 deals last year to 148 deals in the same period this year.
Stronger local market
But the number of deals remains near the historic highs of 2015 and those negotiating mergers and acquisitions in Chattanooga insist the local market remains strong.
"Nationally, activity may have slowed down some, but what we see on a smaller market scale here in Chattanooga is a lot of business owners really scratching their heads thinking about the future and what a transition to new ownership might look like for them," said Andrew Kean, one of the partners in Alderman Holdings, a Chattanooga investment firm that bought into Southeastern Tool & Die and Majestic Stone this year. "So it's been a pretty robust market regionally and we think there are some great businesses here in Chattanooga to do even more next year."
With interest rates still near their historic lows and an improving economy boosting the sales and profits of many buisneses, investors remain eager to invest in private businesses, experts say.
"There is still a lot of cash on the sidelines and a lot of private equity firms looking for opportunities to invest at the same time we see an aging population having a lot of Baby Boomer business owners looking to sell and retire," said Andy Stockett, managing partner for the Chattanooga-based Four Bridges Capital. "There may have been some hesitation around the presidential election until that was decided, but I think everything now is pointing to another good year in 2017."
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340
Biggest business deals
› Unum buys Starmount for $127 million - Unum Group acquired H&J Capital LLC, the parent of Starmount Life Insurance Co. and AlwaysCare Benefits of Baton Rouge, La, for $127 million to expand its dental and vision insurance.› CBL sells eight malls in 2016 - CBL and Associates Properties sold the Walnut Street Mall in Dalton and seven other shopping malls across the country this year as part of its three-year strategy to sell about a quarter of its nationwide holodings to upgrade its remaining properties and boost the company’s income.› Franklin Haney buys Bellefonte for $111 million - After more than 40 years of starts and stops in construction, the Tennessee Valley Authority put its Bellefonte Nuclear Power Plant in Hollywood, Ala., up for auction. Former Chattanooga developer Franklin L. Haney agreed to buy the unfinished plant for $111 million.› Impark buys Republic Parking Systems - Fifty years after the late James C. Berry started Republic Parking Systems in Chattanooga, his heirs sold what has grown into one of the nation’s biggest privately owned parking management companies to an even bigger business in the industry. Imperial Parking Corp., based in Vancouver, B.C., and operating under the Impark brand, bought Berry’s Republic Parking System for an undisclosed amount.› Engineered Floors buys J&J- Engineered Floors, the fast-growing brainchild of Dalton carpet pioneer Bob Shaw, acquired J&J Industries, a 60-year-old family company that specializes in commercial carpet. The merger created the third biggest carpet maker, just behind Shaw Industries and Mohawk Industries.› GE buys Alstom - General Electric bought one of its power equipment rivals this year for $9.5 billion. But the sale had its cost to Chattanooga. GE announced it was closing the turbine manufacturing plant, which was once Chattanooga’s biggest manufacturing employer when it operated as Combustion Engineering.› Haeier buys GE Appliances - Haeir Group, which is based in Qingdao, China, bought the appliance division of General Electric for $5.6 billion to create the world’s biggest appliance manufacturer. The sale involves the GE Roper plant in Lafayette, Ga., the biggest employer in Walker County, and follows the unsuccessful attempt by Electrolux AB of Sweden.› Astec buys Power Flame - Chattanooga-based Astec Industries, Inc. bought Power Flame, Inc. for $43 million. Based in Parsons, Kansas, Power Flame manufactures gas and oil burners and combustion control systems designed for commercial, industrial and process applications.Source: Company reports