The owners of Belk’s headquarters on West Tyvola Road are selling part of the property, according to a letter to investors obtained Tuesday by the Observer.
News of a sale comes less than three months after Belk sold itself to private equity firm Sycamore Partners for $3 billion. Belk spokeswoman Jessica Graham said the sale doesn’t impact the retailer’s occupancy.
The letter obtained by the Observer shows that Inland Private Capital Corp., the property managers of 2801 W Tyvola Road, will hold a call with investors Feb. 1 to discuss the sale. Inland pools investor funds to purchase commercial real estate.
The headquarters include an east and west unit, and the owners of the west unit (“an unaffiliated third party”) plan to buy the whole property. The east unit makes up 63 percent of the property.
According to the letter from Inland, Belk’s West Tyvola headquarters has not turned out to be a solid investment.
The “exorbitant cost, low rent and lack of value associated with trying to renew the Belk Inc. lease” were cited as reasons to consider a sale, according to the letter. Since their initial equity investment of $24.1 million in the property in 2006, investors in the east unit have received cash distributions equaling 55 percent of their original investment. Inland has not been able to refinance the property’s loan, which matures in April.
The company’s current lease covering the east unit started on Dec. 29, 2005 and ends on Dec. 21, 2020.
Oak Brook, Ill.-based Inland has been trying unsuccessfully to negotiate a long-term lease extension for Belk. According to the letter, Belk wants to combine its leases on the two units into one lease and has hesitated on extending a lease that covers solely its east unit. Additionally, Belk has been requesting “significant tenant improvement dollars and below market rents,” Inland wrote.
Inland said it has received a letter of intent from the owners of the west unit offering to purchase the rest of the property for about $38 million.
Mecklenburg County property records show the west unit is owned by Jacobson West Charlotte LLC, a corporation affiliated with Miami-based real estate investor Samuel Jacobson. The corporation lists an address on Star Island, an exclusive private island in Biscayne Bay that has been home to celebrities such as Shaquille O’Neal and Gloria Estefan. According to local news reports, Jacobson and his wife sold their Star Island mansion in 2014 for almost $19 million.
Excluding costs going toward taxes, legal expenses and the property’s remaining loan balance, investors would get back just over $6.2 million. Including the $13.3 million in cash flow since the 2006 purchase, investors would be getting back $19.5 million, nearly $5 million short of their initial investment.
Neither Inland nor Jacobson could be reached for comment.
Belk’s headquarters total roughly 463,000 square feet and date to 1987, according to property records and the investment letter.