Show Me the Money: The EpiCentre

The EpiCentre! The man who saved it? Geoffrey Curme. Congratulations for winning the Counselors of Real Estate 2015 Creative Thinker's Award! Video production by Kim Brattain Media (http://www.kimbrattain.com)

The challenge:

The primary challenge at EpiCentre was emotional: parties to the transaction were mad, mad as heck. Through our acquisition and injection of capital we were able to gain the confidence of the warring parties, which enabled dialogue, which in turn enabled general consensus for appropriate resolutions. Consensus was germane, primarily because our end goal was to sell a stabilized asset with improved cash flow. Stabilization is not sustainable in a contentious environment.

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The solution:

Gain title of both the EpiCentre and air rights to the failed condominium tower originally planned. With EpiCentre under control of one ownership, we worked through existing problems and moved quickly to tie up loose ends and work toward sale ready. In 2012, the EpiCentre played a central role in Charlotte’s hosting of the Democratic National Convention, garnering favorable reviews in national media. Ultimately, we sold the project at a 3x multiple of 4Q10 acquisition costs.

The story:

The EpiCentre was built on the site of the former Charlotte Convention Center, a key piece of property in Charlotte’s rapidly growing Uptown. The original developer secured $4 million from the city and county to offset demolition costs and to build a parking garage. His original vision was for an entertainment center with high-end condominiums, retail, restaurants, nightclubs and a hotel. Air rights were sold to an Indiana-based developer to build a 50-story condominium tower.  Construction on the tower slowed and pre-sale buyers asked for their money back, allowable by N.C. law. The condo developer liquidated. By 2008, as the financial crisis was hitting the nation, the EpiCentre construction loan had become unbalanced and loan payments were in arrears. In July 2010, Regions Bank initiated foreclosure proceedings. Later that month, the EpiCentre’s ownership put the project into Chapter 11 bankruptcy protection.

Curme had contacts at Regions Bank and was looking for a new acquisition. He and his partners acquired the $94 million construction loan in 2010 from the noteholders with the intention of stabilizing the asset and moving on within two years. An investigation showed the developer engaged in some questionable behavior and Curme’s group filed a creditor’s plan along with an adversarial proceeding. The developer repaid creditors 100 percent of the claim amount plus interest. By 2012, Curme and his partners were awarded title to the EpiCentre. That year they also acquired title to the air rights when the developer, who had obtained the air rights, defaulted on the note purchase agreement. The investors improved the EpiCentre, obtaining needed certificates of occupancy, making significant maintenance repairs and updates, securing lucrative digital advertising, renegotiating leases, and signing new tenants. When the 2012 National Democratic Convention was hosted in Uptown, the EpiCentre served as center stage during the internationally televised event.  In 2013, the investors lined up McKibbon to develop hotels, and in May 2014, the EpiCentre, exclusive of the air rights, was sold to CIM Group out of Los Angeles.

Michelle Jones