The Tale of the Flying Tigers - Part 1

A few years ago an email popped in from a close friend and partner on prior deals.

Just flipping through Loopnet or wherever, he had stumbled across a foreclosed/lender-owned grocery-anchored center in Valdosta, Georgia with a vacant 47k sf former Winn Dixie space and a few rent-paying in-line shop space tenants.

The building was in great shape, and at the time (2021) we thought we could convert the anchor space for $30 per gross SF by doing the bare minimum and doing our best to keep the old sprinkler system etc. I was very conservative underwriting rents because the comps felt hit or miss when we first glanced at the market:

Storage wasn’t permitted by right, only with a conditional use permit, which takes time. Also, our plan was to try to finance the acquisition/project with an SBA loan, which would’ve required all permits in hand by closing, and that obviously takes time as well (looking back, there is no way we would’ve pulled it off in that amount of time).

So, our attempt to get them down a little on their $2.1m asking price - while also asking for a ton of time to get permitted - only got us to $2m, which I thought was workable. I recall wondering if the little Vermont-based life company that owned the center would take our offer seriously, so I called my old boss from a decade before to see if he knew them (he’s a debt broker specializing in small lifeco loans) and could put in a good word (which he did).

We spoke to the city about the use approval process, got the property under contract, got a rendering done, and filled out the CUP application ourselves; it was just a few easy pages and didn’t require a hired gun.

We negotiated some details with the city planner (e.g. no storage in the huge front parking lot), got a “positive staff recommendation” out of him, and went before the planning commission, which was only the first hearing we had to face. Will always remember that pledge of allegiance beforehand.

Unanimous approval at planning commission ✅

Time for city council. We brought an easel with the renderings on posterboard. I’d prepared a whole powerpoint that included prior examples of conversions that both my GC and my property mgmt co had handled in the past.

When it was time for me to talk, the council knew I had a presentation ready, but the vibe was clear that they didn’t want to hear it all. In fact, the few questions the council asked made me think they were potentially open to it.

Then this dumb fuck waddled up to the mike and talked about the storage facility he owns in Valdosta: how it’s only 65% full because of all the new supply and how when too much storage gets built all the facilities end up lowering their standards and renting to drug dealers and prostitutes.

All of a sudden they called for a vote, and it was over so fast my partner and I weren’t even sure what had happened. As the council had already casually moved on to the next item, we shamefully picked up our easel/posterboard/etc and walked out in a fog of confusion. On the way home we got a couple depressing beers at the Buffalo Wild Wing in Tifton, wishing we had walked out flicking off the council.

We dropped the contract and got our earnest money back and didn’t think much of it. A month or two went by and a member of the planning commission called me wanting to tell me he thought it was unfair how we were treated, and that we could’ve gotten through if we had just hired XYZ zoning attorney. I mentioned that to my partner and he blew his top; “Why the FUCK would I hire a zoning attorney for a 2-page conditional use permit application? FUCK paying the gatekeeper.” [note: he has paid many a’gatekeeper since then]

Then around Christmastime I got a call from a Valdosta businessman. “I know you wanted to do storage at this old Winn Dixie. Well, I’ve got it tied up - and at a much better number I’m sure - and I can get you the zoning you need.”

Me: “Hold for a sec. Let me patch in my partner.”

[to be continued]