Welcome to the Dec. 15 Monday Business Briefing.
This is your private business intelligence briefing with Insider Louisville staff and contributors vetting tips collected during the past few days, hours and minutes before we post.
We have much to report this week, from a real estate wunderkind moving on up, to renovations at Tim Faulkner Gallery and Wild and Woolly Video, to an iconic local ice cream shop getting a drive-thru. But first, a parking snafu is brewing in the Highlands…
New Douglas Loop CVS parking lot causing a kerfuffle
Parking is tight at Douglas Loop in Louisville’s Belknap neighborhood. And now it looks like things could get even tighter, or at least more heated due to what local business owners say are un-neighborly moves by CVS.
Just last week the drugstore chain opened its new location, anchoring a small shopping plaza at Douglass Loop on Bardstown Road. It owns both the building and parking lot, which it refurbished prior to opening.
Some in the neighborhood claim CVS is being heavy-handed about ensuring only customers use the lot, posting signs warning that violators will be towed. While this seems reasonable (after all, CVS owns the lot), neighbors say that during a preliminary community meeting the company indicated the parking lot could be shared by others in the neighborhood, including nearby businesses.
No one’s debating CVS’s legal right to close the lot to businesses that are not part of the plaza, which also includes a FedEx and two small antique stores. Rather the debate is whether they were dishonest in how the project originally was sold.
Jim Goodwin is the realtor who sold the property to CVS. According to Goodwin, CVS reps said during a meeting that it was not their policy to tow cars unless they’re being over-run by them. Which Goodwin claims is already happening. “I’ve been by that lot, it’s 100 percent full,” he says. “Would you give up your driveway if I wanted to park in it every night? Would you?”
Is CVS walking back its earlier statements? Metro Councilman Tom Owen, D-8 thinks this may be so, and that during the contentious early planning stages for the development CVS likely said what it thought would appease neighbors.
“I think in the tension of those discussions a representative for the development might well have said CVS is going to show goodwill,” he says. “But until anyone’s towed I’m not sure they’re not showing goodwill.”
Owen also believes there could be synergy amongst all businesses if they work together. “The good thing is CVS needs customers,” he says. “If they anger some of their best ones by towing, then that’s not good for them.”
Over the weekend, however, IL received word that a security guard has been patrolling the lot, though we’ve received no word about cars being towed — at least not yet.
Eric Morris, owner of the nearby Loop 22 restaurant, tells IL that CVS has “hired a security guard to stand guard upfront and watch every car that pulls into the lot. They’re not letting anyone park in the lot whatsoever.” He added they “graciously” gave FedEx five spaces for parking.
Morris says such a crackdown could seriously impact nearby businesses. “Unless the food is to die for, there’s not any reason to walk 10 blocks in a city the size of Louisville,” he says.
Calls to CVS corporate headquarters were not returned.
Kindred financing Gentiva deal via junk bonds
Kindred Healthcare has gone through hell and high-water to acquire senior-care firm Gentiva Health Services. Now it has to pay for it. How? With junk bonds.
According to a Dec. 8 report from Moody’s Investors Service, the ratings agency gave a B2 rating to Kindred’s proposed offering of $1.35 billion of senior unsecured notes. These are the notes that will help finance Kindred’s $1.8 billion acquisition of both Gentiva and Centerre Healthcare Corp.
As you can see from this chart, anything below Baa3 is rated as a “speculative-grade” investment by Moody’s.
Also, to make the bonds more enticing to investors, Kindred reduced their maturity from 10 to five years. Junk bonds typically yield more for investors because they’re considered riskier.
Here’s how Bloomberg Businessweek put it, writing about Kindred’s offering on Dec. 10:
“Kindred, whose debt is rated six levels below investment grade by Standard & Poor’s, will use the bonds to repay a $1.7 billion loan Citigroup Inc. and JPMorgan Chase & Co. provided as a backstop to the note offering.”
And in case you missed it, check out IL’s story on Kindred’s big announcement about its new headquarters planned for downtown, along with 500 new jobs.