Owner: Fifth and Main auction a "downer"

THIS ARTICLE BY NEVIN BATIWALLA, IS A REPOST FROM THE NASHVILLE BUSINESS JOURNAL

Twenty-three units inside the Fifth and Main condominium were sold at steep discounts Saturday at auction.

Units at the beleaguered East Nashville mid-rise sold on average for about 43 percent less than original asking prices.

Buyers at the Sheraton Hotel in downtown Nashville paid an average of $135 per square foot — well below the $160 per foot mark that owner ACG Equities Inc. was hoping for.

"We thought we would get much higher prices than what we got," said David Lang, a principal with ACG Equities "… We are in it to make a profit, so I want to make as much money (as possible) — that was the downer here. The silver linings are two things: The market knows we are ready to sell. The other success is that the property now has got new owners and the community is building. The good news is we had over 600 people come through the building in six weeks."

Sales continued following the auction for the remaining 92 units.

"We are going to go ahead and take these auction prices and maintain them for the remainder of the year," Lang said.

ACG Equities Inc., based in Rosemont, Ill., purchased the 129-unit development at auction in February for $11.2 million. Before Saturday's auction, 15 units had sold or were under contract.

The auction helped the development get closer to clearing a major hurdle— obtaining certification from the Federal Housing Administration. Potential buyers currently can’t get Fannie or Freddie financing for units in the building. To be eligible for government-backed loans, at least 30 percent of a development's units must be sold or under contract.

Grant Hammond, a real estate broker who specializes in urban Nashville condos, called the auction a success.

"The general consensus in Nashville is that it's a pretty good building in a bad location," Hammond said. "The fact they’ve actually sold nearly 25 units today is a great success. It proves it's a lot more viable than a lot of us thought."

Buyers looking to flip units will likely have to wait until the building sells out before seeing a sizable profit margin, Hammond said.