First National Center

[ljbab728]

There are several old office buildings that have been converted into hotels here in Denver and in Dallas and Houston that have very similar site constraints. Most of those hotels do not have a drive-thru, they use the street (parking lane), even most older hotels in urban centers have that same situationThe Magnolia hotel chain is based on that model and those hotels were built by gutting the entire building and building out what they needed. Even the Skirvin does not have the same layout that it did in its prior life, even for an office retrofit you would have to pretty much gut it as well.

True, and, if part of the office space to the east is converted to parking, it shouldn't be too difficult to use an area there for drop off and pick up into the main building. It doesn't have to be curb drop off.

[shawnw]

Plenty of hotels in New York that have neither a drop-off or a parking garage, or any sort of parking accommodations, you're just "on your own". I know, this is not New York. Just saying it's doable.

[Pete]

^

OKC already has a bunch: Colcord, Skirvin, Ambassador, Hampton Inn, Hilton Garden Inn, Holiday Inn Express, etc.

You either park on your own or you valet your car and they charge you to park it at one of the nearby garages.


And of course, it's pretty much a certain any redevelopment of FNC will involve demolition of some or all of the non-historic sections east of the tower and replacement with structured parking, which would then be connected directly to the tower.

[OklahomaNick]

From Steve's article today:

OKC Central News Briefs - Midtown's Town House Hotel, Citizens Bank on NW 23 | News OK

"A group I’d call a “dream team,” one that included Mark Beffort and Gary Brooks, absolutely did not submit a bid. They did make an offer months before the property’s Los Angeles owners decided to seek bids instead. Beffort on Wednesday reiterated to me they have not submitted any new bids since their earlier offer."

Looks like if it does sell it will likely be an out of state group..

[Pete]

^

Remember that what people say in the press is often carefully constructed semantics.

Even if they didn't officially submit a recent bid does not mean they are out of the running.

[Of Sound Mind]

Did Fiserv used to be a tenant here?

I think so, and before them it was First data back in the early '80's.

They still are... on the 7th floor.

[Pete]

I've head the owners have narrowed it down to two: Alterra and the local group.

Should be making a final decision soon.

[warreng88]

I've head the owners have narrowed it down to two: Alterra and the local group.

Should be making a final decision soon.

Help me out here Pete: does that mean they are definitely going to sell to one of them or is it just to see their proposals and what they are offering to buy the building for?

[Teo9969]

Help me out here Pete: does that mean they are definitely going to sell to one of them or is it just to see their proposals and what they are offering to buy the building for?

I would think if they're narrowing that they're definitely selling. If no one bid high enough originally, they'd have just "re-listed" it.

[Pete]

It seems they are pretty motivated to sell.

Beyond identifying finalists -- which demonstrates they have two potential buyers at least in the general ballpark -- their already limited cash flow is dwindling all the time, as their occupancy continues to drop.

I understand they've instructed the property managers to severely curtail a lot of the maintenance, which was hardly stellar to begin with.

They have to be losing money and it's only going to get worse. Even if they were willing to invest tens if not hundreds of millions, nobody is going to sign a lease with the present owners and they know it. Plus, there is no place for them to park anyway.


You add it all up and you can expect this property to sell in the next few months.

[zookeeper]

It seems they are pretty motivated to sell.

Beyond identifying finalists -- which demonstrates they have two potential buyers at least in the general ballpark -- their already limited cash flow is dwindling all the time, as their occupancy continues to drop.

I understand they've instructed the property managers to severely curtail a lot of the maintenance, which was hardly stellar to begin with.

They have to be losing money and it's only going to get worse. Even if they were willing to invest tens if not hundreds of millions, nobody is going to sign a lease with the present owners and they know it. Plus, there is no place for them to park anyway.


You add it all up and you can expect this property to sell in the next few months.

Best news I've read here in a long time!

[warreng88]

I've head the owners have narrowed it down to two: Alterra and the local group.

Should be making a final decision soon.

It's been almost two weeks, what's the latest on this?

[Pete]

As far as I know, the ball is in the owner's court.

[JosephYost]

Does anyone know if First National Center has any openings for office space available? I went in there a couple months ago, and I wasn't able to see the girl who manages the property as she was on the phone with her boyfriend. I left my card for her with the receptionist, and we never heard back from her. They gave us permission to look around and I noticed that there are many empty floors. We also noticed they are doing construction, rennovation, or repair on the top floor. Does anyone have any idea what is going on?

[Pete]

^

They have tons of vacancy but may not be signing any new leases since the property is likely to sell very soon.

[shawnw]

Along those lines, what happens to the already tight market when/if the existing tenants have to vacate after a sale?

[JosephYost]

So if the dream team buys it what are the chances we get an awesome night club/ jazz lounge and cigar lounge in this city again like First National Center used to have. I would love to have a really classy place in this city to meet clients and just hang out.

[Pete]

So if the dream team buys it what are the chances we get an awesome night club/ jazz lounge and cigar lounge in this city again like First National Center used to have. I would love to have a really classy place in this city to meet clients and just hang out.

Too early yet to say what the specific plans may be for First National but Fedora will soon be going in on nearby Automobile Alley and WSKY Lounge is small but pretty great.

Another options -- although not a cigar lounge -- is the O Bar in the new Ambassador Hotel in Midtown.


We should he hearing something about First National selling soon. I know the Dream Team thinks they have the upper hand.

[hoya]

Too early yet to say what the specific plans may be for First National but Fedora will soon be going in on nearby Automobile Alley and WSKY Lounge is small but pretty great.

Another options -- although not a cigar lounge -- is the O Bar in the new Ambassador Hotel in Midtown.


We should he hearing something about First National selling soon. I know the Dream Team thinks they have the upper hand.

I can't like this enough.

[HangryHippo]

Pete, or anyone else that knows who is on the Dream Team, I'd like some opinions - based on the Dream Team's lineup and that of the Philadelphia developer, who would you prefer to see win the bid for First National? Outside of Devon, I've routinely felt let down by what OKC developers propose. They just seem to lack the grand vision and ability to execute at a high level like I've seen developers do in some other cities. Do you think we'd get a better final product with the group from Philadelphia? Or is Dream Team one that could really restore the luster to First National?

[Pete]

I think local developers/investors with a passion for OKC and this building are the best bet. We saw how things worked out when the current supposedly deep pocket investors from Los Angeles became owners. It's been a pretty big nightmare.

I know there have been some disappointments but there has been a lot of great development by locals: Devon Tower, Leadership Square, all the Midtown Renaissance stuff, the Colcord, etc. The renovation of City Place has also been top-notch.

With this property, I know all the serious bidders went in with the assumption they would be spending tens of millions (if now $100 million +) to make this complex really work in terms of cash flow. Taking out part of the non-historic eastern section to make way for substantial structured parking is almost a given.

The only real issue is what will become of the tower. Alterra (Philly) focuses almost exclusively on apartments and frankly, I'd rather see it go more towards hotel and/or for-sale units. I think that's the best bet for the Great Banking Hall seeing it's highest and best use as a semi-public space that could enjoyed by the entire community. It would also likely mean higher grade finishes across the board (vs. apartments).

Keep in mind the current owners don't give a rat's rear about what is best for OKC... They are just seeking the most money they can get.

But, part of being able to offer more is making the most of the various incentives and I would think the locals would have a big leg up in working with the Alliance and other local bodies in that regard. And Cathy O'Connor said as much.

[Pete]

Wanted to share more information about the current status of First National Center.

First, it has always been a bit unclear as to what happened when Los Angeles owner Aaron Yashouafar had the building on the brink of foreclosure, then suddenly transferred it to a new LLC. Was this truly a new owner or just another Yashouafar entity?

Turns out the property was in fact sold to an LLC which tracks back to Leon Neman, a prominent textile importer in Los Angeles. It seems Neman and Yashouafar were acquainted through the large and active Persian Jewish community in Los Angeles, which led to the sale.

Here is an interesting article about Neman and his brother and their role in the Persian Jewish community: Persian Arrivals | Rob Eshman | Jewish Journal


Neman acquired FNC in late 2012 for $5.3 million; Yashouafar had paid $21 million in 2006, which seemed like crazy money at the time.

I've learned that when bids were first solicited for First National, members of the local “Dream Team” flew out to Los Angeles to meet with Neman.

However, after Neman received four bids all in excess of $20 million, the locals declined to pursue the property any further, as their initial number was well below that amount.

As we previously reported, it appears Alterra from Philadelphia remains the leader. They may also have a partner in the deal.

And although the Dream Team may not have submitted a formal bid, it is very possible that some or all the members may be drafted by the winning bidder to help shepherd the project through the labyrinth of grants, City incentives and development challenges that await.

It is also my understanding that all the development proposals are very similar: the tower would be converted to a hotel and part of the non-historic eastern section would be demolished in favor of structured parking. There may also be some office and/or residential depending on the group involved.

I'm not sure about a timetable for a decision on the winning buyer. I suspect there are lots of things happening behind the scenes in terms of due diligence with possible financing and various incentives.


However, it does appear 1) that Neman is motivated to sell and 2) he has plenty of healthy offers.

Also, since Neman only paid $5.3 million, looks like he will earn an incredible return on just a two-year hold.

[warreng88]

Thanks Pete for the update. Any idea what kind of hotel chain we could see there? I am curious how it will affect the new convention center hotel.

[Pete]

Way too preliminary to know any details on a possible hotel, but there seems to be plenty of demand for hotel rooms.

[warreng88]

Way too preliminary to know any details on a possible hotel, but there seems to be plenty of demand for hotel rooms.

Obviously there are. I would think this would be a higher end flag like what we are expecting for the convention center hotel, but obviously I know nothing about it.