Job Hot Nashville.
The Ardent Cos. — an Atlanta-based real estate investment firm — partnered with Jeffrey Welk, grandson of the late television star Lawrence Welk, to purchase the former George Jones museum in downtown Nashville $28.5 million.
Over the past eight years, Ardent has invested roughly $150 million in Nashville and they aren’t yet done making their mark, says Scott Werbel, managing director at Ardent. In Atlanta, Ardent owns the Piedmont Center, a sprawling, multi-building office park in Buckhead.
“We continue to focus on finding the right deal in the right place with the right tenants. Arguably, Nashville has been hotter than Atlanta with respect to its growth — both employment growth and population growth,” he said.
The Nashville Business Journal caught up with Werbel to learn more about Ardent’s long-term investment strategy in Lower Broadway and why the firm is so bullish on the Music City market.
Answers have been edited for length and clarity.
How does Nashville’s entertainment district stack up to other markets from an investment standpoint?
Ardent has invested in 30 states, United Kingdom and Caribbean. Out of all the cities [where] we’ve invested in high-street retail, which is high pedestrian traffic and high sales per square foot … we’ve found Nashville to be one of the fastest-growing and most energetic cities, coupled with high sales and rents per square foot.
When you are looking for properties in Nashville’s entertainment district, what are some of the characteristics that signal a good investment?
Most of the time, we buy buildings that are vacant or have near-term lease expirations. For the tenants that have below-market rents with short lease term remaining, we are looking for replacement tenants with better credit, capable of paying market rents, to create additional opportunity and value that otherwise wouldn’t be there. These opportunities wouldn’t exist without a change in ownership and new investment capital allocation to stabilize the asset.
Is it easier or harder to get capital partners for these types of projects on Broadway?
In our first couple of Broadway deals, before we had proven the business plans, it was challenging to raise funds. But, as we have proven execution of our business plans on the early acquisitions, our investors have been very pleased with some of the early returns on assets, and it’s therefore become easier to allocate capital for future acquisitions. Our investors now jump at the opportunity to partner with us in Lower Broadway’s future success.
Do you see the Nashville market slowing in the future? What are your thoughts on what the next several years will look like?
We looked back during the Great Recession in 2008-2009 to see how the Lower Broadway entertainment district performed in relation to other tourist-filled, pedestrian traffic dependent locations like New York City, Miami, Austin, New Orleans — to name a few. We were pleasantly surprised how well the Nashville numbers showed during that recessionary period. I think a lot of that was driven by the loyalty of the country music fans. Regardless of where the economy is at the time, they are going to make the annual pilgrimage to Nashville. … I don’t think it would be surprising to any of us if there was a recession coming at the end of this year or early next year. We believe that Nashville will do very well during that period, as it did in the last recession.
What are your future goals for the Nashville market?
The short answer is, we’d love to continue to buy more deals there, or partake in joint ventures with other owner-operators. … We are open to anything that allows us to continue to invest and reinvest in the market. We are big advocates in the long-term success in Nashville. The city has had exemplary performance in the time that we’ve invested there and we’ve continue to reinvest monies, as we think it’s a solid economic base and continues to be a strong growth market.
What makes a good tenant for your projects?
The tenants have typically not been major, national or international credit tenants. They have been relatively new or in some growth phase. Typically, they do not have a presence in Nashville. They are coming from another geographic location or another major high-street entertainment area, but they have not made it to Nashville yet. We provide them the opportunity for them to make their mark in the city.
By Julia Masters Reporter, Nashville Business Journal