Monday Business Briefing: Maryland firm buys Claiborne Crossing; GLI addresses lack of city funding; Mightily outlasts Field Trip; and more
Welcome to the May 8 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
Apartment community purchased for just over $45 million
East End apartment community Claiborne Crossing is under new ownership.
Preferred Apartment Communities, a property investment firm out of Maryland, purchased the 242-unit apartment complex for $45.15 million, according to county property records. It is the first property that the company owns in the state.
“Claiborne Crossing is an exceptional Class A multifamily community located in a highly desirable submarket of Louisville,” the company’s CEO and chairman John A. Williams, said in an announcement about the purchase.
Preferred Apartment Communities financed the purchase by assuming a mortgage loan insured by the U.S. Department of Housing and Urban Development. The principal balance remaining on the loan is $27.1 million, according to Preferred Apartment Communities. The loan will mature in roughly 37 years and has a fixed interest rate of 3.34 percent annually.
“The assumed HUD debt is attractive, and the product quality and unit features are excellent,” Williams said in the announcement.
Claiborne Crossing sits on 20 acres off Old Henry Road in far eastern Jefferson County. It includes amenities such as a dog park, car care center, infinity pool, outdoor entertainment area with gas grills, playground, fitness center, business center and covered bike racks.
The company did not say whether it plans to make any changes to the property. Insider reached out for more information but did not hear back.
According to an Insider report from 2014, the project cost $33 million and was developed by Jefferson Development Group, which is owned by local developer Kevin Cogan. Cogan currently is in the process of designing a high-profile project at Lexington Road and Grinstead Drive, as well as a large 106.8-acre development in the East End. —Caitlin Bowling
GLI CEO: Lack of city funding won’t impact chamber
The budget for Greater Louisville Inc. will be $300,000 shy this next fiscal year — but Kent Oyler, president and CEO of the regional chamber of commerce, said in a statement that it won’t impact how GLI operates.
GLI’s annual budget is approximately $6.1 million.
“We discussed the reallocation of funds with Louisville Metro during the budgeting period,” Oyler said in the statement. “Offsetting the costs associated with the Louisville Metro legacy contract means there is no budgetary impact on GLI. As of June 30, GLI will have no remaining funding ties to Metro Government; however, we continue to work with them in many partnerships including Global Louisville, Advance Greater Louisville, SummerWorks, and more programs to make our region a better place to live and do business.”
A spokeswoman for GLI told Insider that the $300,000 was used to pay for items that were contractually agreed upon with Louisville-Jefferson County Metro Government leaders and not core operating expenses.
Insider Louisville previously reported that the $300,000 will go toward the Louisville Convention and Visitors Bureau, according to the mayor’s proposed budget.
GLI also is looking for to hire two new full-time employees. Stacey Servo left GLI in April after serving as its talent attraction and development manager for less than a year, Insider previously reported.
The chamber is looking to replace her as well as hire a digital marketing manager for talent attraction. The digital marketing manager position is a new one, according to GLI. The individual will be responsible for online campaigns and to design, build and maintain the chamber’s social media presence, among other duties. —Caitlin Bowling
Yum Brands to invest $130 million in Pizza Hut turnaround effort
Louisville-based Yum Brands is hoping to revive its underperforming pizza chain with a strong infusion of cash.
During a conference call with analysts last week, the company’s executives announced plans to invest $130 million in Pizza Hut in 2017 and 2018.
“From a Yum point of view, it’s modest. For a Pizza Hut point of view, it’s significant,” said Yum CEO Greg Creed.
Pizza Hut reported a 3 percent decline in same-store sales during the first quarter of 2017 compared to the same period a year ago.
The company made a similar investment, $185 million, in KFC when it was struggling. The chicken brand has turned around since and reported a 2 percent increase in same-store sales (stores open at least a year) during the quarter.
“Hopefully, we’ve proven that we turned that around,” Creed said. “And I’m equally confident that with this Pizza Hut Acceleration Agreement in place, we can do the same thing for Pizza Hut as we’ve done for KFC.”
Although Yum executives wouldn’t go into specifics, citing competitive reasons, they noted that the agreement would focus on delivery and digital.
The turnaround will emphasize, at least in part, new advertising, as well. The company plans to spend $37.5 million on media during the next two years. Executives have credited the “re-Colonelization,” a merry-go-round of actors playing KFC founder Colonel Harland Sanders, as a major reason for KFC’s turnaround.
“I do believe you will see the results pay off in 2018 and beyond, so stay tuned,” Creed told analysts.
“Pizza Hut’s ongoing woes showcase, to us, why this brand would be better off outside the Yum Brands umbrella (perhaps, ideally, as part of a privately held enterprise, so that it can be fixed outside the unflinching eyes of the public markets),” Kalinowski wrote in his analysis, adding that Pizza Hut has lost market share during the past two decades. —Caitlin Bowling
Apartments planned near Iceland Sports Complex
A 244-unit apartment complex will go up near Hurstbourne Parkway and La Grange Road, pending approval of a zoning change.
The proposed development, at 1402 Alpha Ave., will include 11 two-story buildings, four of which will include attached garages, according to plans submitted to the city.
The plan also features amenities such as two dog parks, a pool, a clubhouse, 2.78 acres of open space, a 24-hour fitness center and free car care center.
Wisconsin-based Continental Properties Co. will develop and manage the property. It also developed the Springs at Hurstbourne, a similar apartment complex on the backside of the Oxmoor Country Club.
Residential development near Oldham County to add condominiums
Netherwood Homes of Louisville, an upscale condominium development near the Jefferson and Oldham County lines, is expanding.
Documents filed with Louisville-Jefferson County Metro Government indicate that real estate investor John Schutte and attorney Tyler S. Thompson plan to complete the 83-unit condominium development.
More than half of the condominiums have already been built and sold, and the developers are awaiting design approvals before starting work on the remaining 39, according to the documents filed with the city.
The remaining 39 will be a mixture of duplexes and triplexes, which are smaller and better fit the topography of the land, the filings state. Netherwood Homes of Louisville as a whole also includes some four-plexes.
Auto sales slowing — but not Escape, Super Duty
Auto sales are slumping, but Louisville-made vehicles, at least for now, are bucking the trend.
Ford Motor Co. sales in April were down 7.1 percent, according to Kelley Blue Book, while General Motors posted a decline of 5.9 percent, and FiatChrysler said its sales fell 6.8 percent. Honda, Kia, Nissan and Toyota booked declines between 1.5 percent and 6.9 percent.
After seven years of increasing sales, the auto industry appears to be plateauing, and some manufacturers have begun layoffs.
Of the five automakers who sold more than 100,000 vehicles in April, four — Ford, Chevrolet, Honda, Nissan, reported year-over-year sales declines. Only Toyota posted a gain, of 0.1 percent.
Industry sales overall in April, at 1.4 million, were down 5.5 percent, KBB said.
Ford’s April sales report had a few bright spots, though: Demand for the Ford Escape, made exclusively at Louisville Assembly Plant, rose 7.2 percent. And sales for the F-Series, which includes the Super Duty made at Kentucky Truck Plant, remained essentially flat, but exceeded 70,000 units.
And while industry sales through the first four months of the year are down 2.5 percent, sales for the Escape have increased 6.8 percent, and for the F-Series are up 7.4 percent.
Both the Escape and the Super Duty received major overhauls in the last couple of years. With falling gas prices and an improving economy, automakers had been seeing rising demand for SUVs and trucks and falling interest in cars.
Ford and the local could not be reached to talk about how the industry’s slowing sales would affect Louisville manufacturing operations.
In a call with analysts, a Ford executive said that the company is “comfortable” with its inventory.
“We’re down from a year ago slightly. We’ve become leaner on cars, a little heavier on SUVs and trucks,” said Mark R. LaNeve, VP of U.S. marketing, sales and service.
“In a plateauing industry, you’re going to have some months that (are) up and some are down. And we’ve got one here that was down, and we’ll see … how it plays out,” LaNeve said. “But I’m not discouraged.” —Boris Ladwig
Seven Louisville-area entrepreneurs among finalists for EY award
Seven Louisville-area innovators are among the finalists vying to become the Ohio Valley EY Entrepreneur of the Year 2017.
The 29 finalists include:
- David Dafoe, 8th Street Ventures (Flavorman).
- Alan Steiden, Air Systems, an air compressor distributor.
- Mark Lanwehr, Car Keys Express, a replacement key company.
- John Waggoner, HMS Global Maritime, a New Albany-based company that manages ferries and steamboats.
- Craig Rutledge, LSS Holdings, a fire protection equipment supplier.
- Jeff Mardis, Rainbow Design Services, which provides network engineering, GIS and mapping services to the telecommunication, utility and transportation industries.
- Andy Eastes, of Jeffersontown-based SkuVault, a cloud-based inventory and warehouse management system.
EY will hold a reception for the finalists on May 18 and announce the winners at a black tie gala June 15 at the Hyatt Regency in Cincinnati.
EY, a London-based business management consultant formerly known as Ernst & Young, said the award recognizes “the endeavors of exceptional men and women who create the products and services that keep our worldwide economy moving forward.” This year, EY chose Louisville for a new executive support center. —Boris Ladwig
Louisville Ballet rebrands with Mightily
“Mightily came with a vision. They showed us something we didn’t know we needed or wanted,” said Cherie Perez, marketing director of the ballet. “It was more daring.”
When Former Australian Ballet Principal Artist Robert Curran joined the ballet as artistic director in 2015, he started a rebranding campaign with PriceWeber that Perez called “light and airy” and “sophisticated.” But, she said, it had a tendency to get lost in the crowd.
Curran said, “Mightily understands the concept that we are more than just a ballet company, they were able to brilliantly articulate the essence of our vision.”
Perez said the ballet’s most supportive market is aging, which is part of the impetus for the new campaign.
It was Pip Pullen, president of Mightily, that pushed Curran and his team to think about marketing more to millennials. According to Perez, he spearheaded the new campaign, which is geared to both demographics — targeting the millennials without alienating the boomers.
This isn’t the first time the ballet has looked to nurture younger fans. In 2015, the organization created the Louisville Ballet Relevé Society, originally led by former ballerina and GLI staffer Amelia Gandara, who now is leading her own department for GE in Chicago. It started with under 20 members, but now there are 55 members of the group, all millennials, all donors.
For a $250 a year membership, the perks are pretty impressive. Membership comes with a ticket to the big ballet fundraiser– Raise the Barre, two tickets to every performance and a network of like-minded people.
Perez said that the group “tailgates” before performances and represents the “new face of the arts.”
“The Ballet is a principle foundation stone in our city’s commitment to an ever-higher quality of life,” Lesa Seibert, CEO of Mightily said in an email. “Robert’s passion to take dance and the arts into new environments and in different, more relevant and meaningful ways, matches our desire to create compelling messages that engage, unite and activate citizens — from youth to professionals to those with limited experience with the arts to long-time patrons . . . and our shared understanding that brands must inspire before they can effect change is what binds us in our commitment to making Louisville a richer place to live.” —Melissa Chipman