Metro does not have a tenant at this time. The letter of intent with Vanderbilt is expressly non-binding. The letter of intent has almost none of the normal materials terms of a lease. The letter of intent:
- does not say what the rent will be;
- does not say how much space will be rented;
- does not identify the number of parking spaces;
- does not give the terms of VUMC’s expected right of first refusal if Metro decides to sell;
- does not give the terms of VUMC’s expected purchase option;
- requires Metro to spend an undisclosed amount of money on repairing roads and mall rights of way; and
- very generally implies (at paragraph 10) that the IDB or MDHA might be involved in the project at some point (which in turn implies that Metro bonds may be used for the VUMC improvements…presumably as part of the future lease deal??).
Metro’s memo indicates that they expect the VUMC lease to cover the debt service on the building that VUMC will occupy. That means Metro will pay the debt service on the other building (the “Bridgestone building”). At this time, we have no idea how that building will be used by Metro.
Metro’s memo indicates that the annual operating cost to Metro for the Bridgestone building might be as high as $7.6 million per year.
The appraisal for the Bridgestone building says that it needs $12.7 million in capital improvements to stabilize the property. The property assessment report for the building roughly aligns with this. That report says Metro should expect capital costs of $6.8 to 13.4 million to buildout the space for use.
It is undisputed that nobody is willing to pay as much as Metro for the Global Mall property.
For the portion of the mall that VUMC will use, the property is currently under contract by a company called Public Square, LLC. That company is making an undisclosed amount of profit by assigning its purchase and sale agreement to Metro (for Metro to turn around and lease it to VUMC).
To date, we have not heard an adequate explanation about why Metro needs to be in the middle of the current owner selling to Public Square (for an undisclosed profit) and then Public Square assigning its rights to Metro (for an undisclosed profit) and then Metro leasing to VUMC (allegedly for a passthrough amount that will cover Metro’s debt service).
Together the project will cost $44 million to purchase, plus an unknown amount to improve the roads and rights of way, plus up to $7.6 million per year to operate the Bridgestone Building, plus $6.8 to $13.4 million to buildout the Bridgestone building for full use. In exchange, there are zero binding terms in place with VUMC and zero specifics of the proposed uses of the rest of the building. The administration is basically saying, “Let’s spend $44 million upfront, perhaps another $6.8 to $13.4 million later in buildout costs (plus the required mall road improvement costs), plus up to $7.6 million per year to operate the building — and we’ll figure out what to do with all this space later.”

Bob Mendes

Global Mall docs

Slow speed crash

Stadium Deal: 3 important numbers, not 2

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