Gibson looks to shed Nashville properties

[Dave W]

First the Moody's downgrade, now this. It will raise cash, but not enough to solve their credit problems, and one would think they'll now have to rent warehouse space.


http://www.tennessean.com/story/money/real-estate/2016/03/22/guitar-maker-gibson-puts-gulch-properties-market/82120490/


Guitar maker Gibson Brands has put its 1.62-acre real estate portfolio near downtown Nashville up for sale, a move that comes amid strong developer interest in projects in that area called the North Gulch.

Commercial real estate firm CBRE is handling the listing, which includes 1.12 acres fronting Church Street and 12th Avenue North. That site includes a four-story, 33,864-square-foot warehouse on 0.28 acres at 1117 Church St., as well as adjacent land on Church Street and also at 134 and 138 12th Ave. N.

A separate listing obtained by The Tennessean seeks $6 million for half an acre at 1102 Grundy St. that has a 24,080-square-foot warehouse building. That site at 11th Avenue North and Grundy has downtown code zoning.

Gibson Brands' listing comes three weeks after Moody's Investors Service downgraded the Nashville-based guitar maker and music lifestyles company's credit rating. Poor consumer reception of its 2015 model guitars and high turnover of Gibson Brands' senior financial management were among reasons cited.

Both listed properties are within the path of development and adaptive reuse of old warehouses near downtown Nashville.

Gibson Brands' four-story warehouse-style building fronting Church Street across from Nashville Electric Service's main offices sits next to where an Atlanta-based developer has construction underway on The Gossett, an $80 million mixed-use project. The Gossett by Pollack Shores Real Estate Group is expected to include a 376-unit apartment complex with 9,000 square feet of retail and a parking garage.
Gibson Gibson is seeking $6 million for this property

Gibson Gibson is seeking $6 million for this property in the Gulch with a warehouse building on it. (Photo: Submitted)

Gibson Brands' overall 1.12-acre property, which fronts Church Street and 12th Avenue North, is viewed as a redevelopment site that would be ideal for uses such as apartments, hotels or office buildings.

"My knee-jerk reaction is that it's not residential, but some type of retail that will serve the apartments that's going in," said Tom Frye, a broker with retail-focused real estate firm Baker Storey McDonald Properties Inc. in Nashville.

"With 370-something units bringing that many people there. plus you've got that whole workforce at NES across the street, there will be a definite need for additional service kind of retail. It could be restaurants, it could be dry cleaning — whatever it would be to handle the residents plus the workforce."

The guitar maker's 24,080-square-foot warehouse-style building at 1102 Grundy St. is being pitched as a development opportunity that's ideal for an adaptive reuse retail project. The building sits across from 1101 Grundy, which local developers McClain Towery, Elliott Kyle and Jamie Pfeffer plan to renovate into office and retail space for tenants expected to include a Google Fiber Space showroom.

Lance Bloom, a senior associate with CBRE in Nashville who's handling the listing for Gibson Brands, declined to comment.

[dadagoboi]

If it's all warehouse space that could be a good move, the properties are probably fully depreciated and the market is up.  Lease or build in the burbs at one location makes sense. 

Where is the actual factory located relative to these buildings?

[drbassman]

Ah, before we know it, all Gibson basses will be vintage, collectable instruments when Gibson stops making any new ones!  Aren't we lucky???   

[uwe]

The living breathing Gibson headquarter/factory in Nashville is this here, Massman Drive 641, a rather non-descript looking



nuthin fancy red stone factory building, my son and I were there about a year ago on our "Dixie Road Trip". The flood water was gone by then, but it's a potentally swampy area alright (river is near). It's located in what I would call an industry park with lots of logistics providers close by (whose buildings look larger and more modern). It's just south of Mill Creek

https://www.google.de/maps/place/641+Massman+Dr,+Nashville,+TN+37210,+USA/@36.154406,-86.7052757,17z/data=!3m1!4b1!4m2!3m1!1s0x886468e0439ac505:0x383bcd817486f51d

and while not strictly out in the boondocks, the residential areas in close proximity aren't the nicest for Nashville standards and have bad roads. Frankly, when we were there it looked more like a housed shooting range or some military purpose facility than an instrument maker. It wasn't the sunniest day, granted, but it didn't have the positve, bustling aura of, say, the Warwick plant, felt kind of depressive and with its best years gone by (I'd date the building a late 80ies/early 90ies construction of the loveless utilitarian type). It was also much smaller than we thought (we didn't get in, it was closed that day, but we sneaked a few glimpses through the windows, saw the packing station etc).

I don't have issues with Gibson selling non-production-crucial real estate of potentially representative nature to investors, but if a comparatively minor real estate transaction of only US-$ 6 million - that is puny by commercial standards - grabs the headlines in Nashville, then Gibson's financial status is even more desperate than I thought.

[Dave W]

Ah, before we know it, all Gibson basses will be vintage, collectable instruments when Gibson stops making any new ones!  Aren't we lucky???   

If it ever comes to that, someone will buy the name rights. The question would be whether or not the name would go on instruments made in an American factory by the owner of the name.

...
I don't have issues with Gibson selling non-production-crucial real estate of potentially representative nature to investors, but if a comparatively minor real estate transaction of only US-$ 6 million - that is puny by commercial standards - grabs the headlines in Nashville, then Gibson's financial status is even more desperate than I thought.

My thoughts too. Carlo may be right that it makes economic sense but why now, three weeks after Moody's downgrade? I smell a serious cash crunch.

[TBird1958]

it'd be great if Gibson could shed Henry J. along with the surplus property. 

[Grog]

When I was in Nashville the first time, I was interested in taking a tour of the factory close to the river on Broadway. After the flood, they turned it into a candy store. The people in the store said that Gibson still owned it. WTF! Why a candy store? What happened to quality American guitars at a fair price?

[66Atlas]

I freely admit to not having actually looked into it but it wouldn't surprise me at all if the downgrade triggered some debt covenant penalties or payment requirements.

With a little luck someone will acquire them that will keep guitar production in tact by selling off the ancillary brands. Sadly they'll probably get gobbled up by someone that will keep little more than a custom shop in the US and replace most of the lines with imports.  I'm a pessimist, I know.

On the plus side if they move production to Africa or Brazil they can start using all those woods that got them in trouble again.

[TBird1958]

I'd like to see Gibson get bought (things could hardly be worse!) by someone that at least recognized it's cache as an U.S. made guitar and stayed true to it.
There's so much unrealized potential.

[uwe]

I'm sure they have been tearing all kinds of covenants. That's the bitterness of being downgraded, it makes life even more expensive for you when you don't have enough money to begin with.

[Dave W]

it'd be great if Gibson could shed Henry J. along with the surplus property. 

Since it's privately held by Henry and a couple of partners, he's not going to dump himself. But if he defaults, creditors could demand that he step aside. One can hope.

[Denis]

i REALLY don't want Gibson to fold. It wouldn't take a lot for them to get back a loyal following. They wouldn't even have to offer a ton of new models. Fender doesn't and they are doing fine.
Some QC, drop the BS stuff, etc. Hell, offering more colors and making their basses actually available in stores would go a long way.

[Dave W]

Making any basses available would be a good start.

The EB Bass was a little odd looking to my eyes but it was a start. If they had marketed it, it might have succeeded. They didn't give it enough of a chance. It might have taken a few years but a US-made bass at that price point ought to have sold. They ought to bring it back.

All our usual joking aside, a Thunderbird with chrome hardware, chrome covers and a decent bridge at the old price of about $1700 would sell. Doesn't have to be vintage correct, it would still sell. Gibson just doesn't listen.

[Psycho Bass Guy]

Making any basses available would be a good start.

The EB Bass was a little odd looking to my eyes but it was a start. If they had marketed it, it might have succeeded. They didn't give it enough of a chance. It might have taken a few years but a US-made bass at that price point ought to have sold. They ought to bring it back.

All our usual joking aside, a Thunderbird with chrome hardware, chrome covers and a decent bridge at the old price of about $1700 would sell. Doesn't have to be vintage correct, it would still sell. Gibson just doesn't listen.

Yep.

[toddbooster]

Well, this is a depressing read.

Re: the EB basses, I was seriously considering buying one at the time (I know, I know, I didn't, so I'm technically part of the problem). I liked the satin Fireburst finish with the tort guard quite a lot, and I thought the control options and sound pallet was quite interesting. Then, before I knew it, the changed the guard to black. "Uh oh" I thought, "I guess I go for natural now, but I'm gonna wait until next year because I don't want the silly anniversary logo on the fret board". So I waited, and then they were gone. I guess I could have bought used, but I'm fickle and moved on.

I still think about them from time to time. I thought they looked quite fetching.