Possible Sale of City Center and Jones Store Properties

[FangKC]

An article on the a bid to purchase City Center Square and the Jones Store properties appears in the Sept. 15 online edition of the Kansas City Business Journal. The link and story are below:



EXCLUSIVE REPORTS
Business Journal of Kansas City

NY firm may be close to bidding on City Center

Jim Davis
Staff Writer

A New York-based real estate company is negotiating to buy City Center Square and the former Jones Store Co. building in downtown Kansas City.

The interest further complicates already complex dealings to attract Waddell & Reed Financial Inc. to Downtown.

Sources familiar with Time Equities Inc.'s plans said the prospective buyer is examining City Center Square and the empty department store in anticipation of making a $34 million bid. This due diligence work means a letter of intent to make the purchase already could have been signed, the sources said. The next step would be putting the building under contract to buy.

Time Equities is known in commercial real estate circles as a tough negotiator that chases many deals but rarely closes them.

Mike Klamm, a broker with Colliers Turley Martin Tucker who is representing the seller, said Archon Group LP hopes to complete the sale this year. Klamm declined to comment on the transaction's progress. He said Archon and the prospective buyer have told him to stay quiet. Time Equities officials declined to comment.

The privately owned company's Web site shows that its nearest holdings are in Iowa and Nebraska. Its portfolio contains about 12.5 million square feet of industrial, office, retail and residential space.

Time Equities pursues long-term ownership and opportunistic buying, according to the Web site. It invests in fully leased properties and transactions that require additional investments to generate income.

Archon bought City Center Square in 1996 for $18 million and paid about $4.5 million for the Jones Store building in 2001. The suburban Dallas-based company, a unit of Goldman Sachs Inc., first offered City Center Square for sale in 2000. The offering was thought to have attracted serious offers for upward of $45 million, but a sale wasn't consummated.

Archon put the building back on the block in the summer. Interest has been fanned by an intricate chess game to lure Waddell & Reed (NYSE: WDR) to One Kansas City Place, 1200 Main St.

One Kansas City Place is owned by a group led by Larry Bridges, one of the most powerful developers in Kansas City.

Bridges' group, 12th & Main Development Co. LLC, has received a treasure trove of tax breaks and other incentives to snare Waddell & Reed.

Bridges wants more parking for One Kansas City Place. The tallest office building in Missouri can park 1,247 vehicles in its underground garage.

Charles Miller, a lawyer at Lewis Rice & Fingersh LC who represents 12th & Main Development, said his client remains interested in buying the Jones Store property, which he termed "a fundamental aspect of the proposal we're working on."

"We're interested, we've had discussions, and we're waiting for a response," Miller said, adding that he's not aware of Bridges wanting to buy City Center Square.

Bridges, who could not be reached for comment, also leads another group that owns a surface parking lot on the block containing the Jones Store building.

The Kansas City Tax Increment Financing Commission had scheduled hearings for Sept. 10 on a plan that would let 12th & Main Development seize control of the Jones Store building. The commission has continued the issue, probably to its next meeting on Oct. 8.

Miller called the delay "more of a scheduling issue than a substantive issue."

He said negotiations with the Economic Development Corp. of Kansas City about the TIF district's boundaries and economics grew too protracted to be completed before Sept. 10.

Bridges wants to tear down the Jones Store building, which has deteriorated since the store closed in January 1998. His plans call for building a 1,500-space parking garage on the site beneath a park and new apartments.

The garage would benefit other users besides Waddell & Reed, including City Center Square, which has lacked enough parking since opening in 1978.

The building's garage contains just 325 spaces, less than half a space per 1,000 square feet of building space. This ratio is well below the standard in Downtown.

If Bridges can't get the Jones Store block, alternatives exist.

Archon talked more than a year ago with DST Realty Inc. about gaining access to its parking garage on Wyandotte Street south of 10th Street, said a person who was aware of the proposal. The garage could be connected to City Center Square by building skywalks.

DST spokeswoman Jill Metzler said company officials had no comment about whether they'd be willing to provide parking spaces now.

[QueSi2Opie]

Now it's time for these people to start workin' together instead of always against each other. Maybe this NY buyer can pump life into City Center while at the same time providing parking at the Jones site for One KC Place.