GSA Daily Staff Report

Published Dec. 31, 2009

It’s the final countdown on a year many business owners, executives and investors would just as soon forget. But before we begin to look at 2010, we take a look back at the local headlines that shaped 2009.

15) Spartanburg hotel chain files bankruptcy

Extended Stay Hotels LLC filed for bankruptcy protection in June, citing $7.6 billion in liabilities, $7.1 billion in assets and 2008 annual revenue of $1 billion. HVM LLC, operator of the hotel chain, said the company did not plan to close or sell any properties. HVM, a separately owned company, manages 684 hotels throughout the U.S. and Canada under a variety of brands.

14) Sanford: Stimulus and the affair

Earlier this year, before the public affair was known, Gov. Mark Sanford wrote President Barack Obama asking for a waiver to allocate $700 million toward paying down long-term debt in South Carolina. At the time, the Palmetto State was to receive more than $2.8 billion in federal stimulus funds, and Sanford claimed he could redirect or refuse 24.7% of the stimulus package. What ensued was a several month-long debate that ended in June when the state Supreme Court ordered Sanford to apply for the funds. The debate would become a distant memory just weeks later when the governor admitted to an extramarital affair with a woman in Buenos Aires, Argentina.

13) Sweet 16 worth $161 million

Healthcare Trust of America Inc., formerly Grubb & Ellis Healthcare REIT Inc., a self-managed non-traded real estate investment trust based in Scottsdale, Ariz., acquired 16 buildings from Greenville Hospital System in July. The transaction involves 855,000 square feet of medical office and related space in a $161 million transaction. About 90% of the portfolio’s square footage is located on or adjacent to four GHS hospitals. GHS will continue to occupy about 83% of the portfolio under a long-term lease. Meanwhile in Spartanburg, Healthcare Trust of America agreed to buy the 108,500-square-foot Mary Black Medical Office Building. Some 65% of the three-year-old medical office building is leased on a long-term basis to the Mary Black Health System.

12) Wilkins represents high-profile cases

Former U.S. 4th Circuit Court of Appeal Chief Judge Billy Wilkins has been a busy man as an attorney for Nexsen Pruet LLC in 2009. In May, he successfully argued the jury’s findings in a case against Target Corp. Seeking a motion for a new trial, a judge denied Target’s motion after a jury awarded a Greer woman $3.1 million for wrongfully accusing her of trying to use counterfeit bills at a store on Wade Hampton Boulevard in 2006. But perhaps the most high profile case was that of John Ludwig Jr. Wilkins represented the Greenville entrepreneur, who pled guilty to crashing his Maserati through a home, killing a man. Ludwig received no jail time, but three years probation and 500 hours of community service.

11) Chamber changes strategy

The model for the Greenville Chamber of Commerce changed in 2009, and continues to evolve and unfold. Among several cost-cutting measures, the chamber released its sales force, opting for an outsourced, contract sales team in February. To help revamp the chamber’s programs, John Moore rejoined the chamber as executive vice president after a two-year absence as vice president of marketing for Zipit Wireless Inc. By August, the chamber was touting the strength of its Upstate Chamber Coalition, a consortium of 10 chambers of commerce representing more than 8,000 member-businesses. A month later, lobbyists John DeWorken and Sunnie Harmon announced they would be leaving the chamber to form their own firm. The chamber has yet to name new lobbyists.

10) Colleges make downtowns a priority

In June, Spartanburg Community College announced plans to open a downtown campus on South Dean Street in Spartanburg. The school will renovate the Evans Building, transforming 104,000 square feet into classrooms, labs and special purpose rooms. SCC will join the University of South Carolina Upstate in providing educational opportunities downtown. USC Upstate is currently constructing a new business school. Meanwhile in Greenville, Clemson University recently announced plans to consolidate its MBA program and other business programs at the Bowater Building in downtown Greenville. The building will house regional offices for the Small Business Development Center and Professional Advancement and Continuing Education. Clemson’s Renaissance Center and Arthur M. Spiro Institute for Entrepreneurial Leadership, both located at the Liberty Building on Main Street, also will relocate to the Bowater Building.

9) Electric car companies eye Upstate

Clemson University’s International Center for Automotive Research has received a lot of attention in 2009 as electric-powered vehicle companies scout the Upstate for potential sites. CT&T Company Ltd., Porteon Electric Vehicles Inc., Proterra LLC and XP Vehicles Inc. are all reportedly interest in potential sites in the Upstate. However, making their interest publicly known has made it difficult for economic developers. After a very public site selection process, Carbon Motors Corp., an Atlanta-based startup company that developed a concept car specifically for law enforcement, chose Indiana over South Carolina and Georgia for a $350 million auto plant that will employ up to 1,550 people.

8) BE&K wins Boeing project

Boeing Co. plans to invest at least $750 million and create 3,800 full-time positions over the next seven years in North Charleston. Fortunately for the Upstate, BE&K Building Group’s Greenville office will serve as the headquarters for the construction of the second Dreamliner assembly line. The same team headed construction of production facilities for EFACEC Power Transformers Inc., Gulfstream Aerospace Corp. and Vought Aircraft Industries Inc. Experts estimate the Boeing construction project to be valued between $200 million to $300 million.

7) Architectural firms merge

Pazdan-Smith Group of Greenville and McMillian Smith & Partners in Spartanburg joined forces to become the second-largest architectural firm in the state. Now known as McMillan Pazdan Smith, the combined group has 40 architects and a total of 110 employees, with more than 100 active projects with a total construction value of more than $600 million. The company is interested in growing into Western North Carolina and Georgia. McMillan Smith & Partners has been in business since 1955. Local projects include Hubbell Lighting, Palmetto Bank Corporate Headquarters, Dorman High School and the Milliken Science Building at Wofford College. Established in 1993, Pazdan-Smith Group is a studio-based design firm with special focus in urban, campus/community, retail and healthcare design.

6) South Financial loses $1.1 billion

The banking industry was hit hard in 2009, and no one knows that more than Lynn Harton. The new president and CEO of The South Financial Group Inc. has been trying to put the breaks on more than $1.1 billion lost since the first quarter of 2008, including $543.1 million in the first three quarters of 2009. Despite the losses, the company remains well capitalized by regulatory standards and has raised $280 million in Tier 1 common capital this year. Bad loans and related costs, particularly real estate loans made by subsidiary Mercantile Bank in Florida, continues to be the problem. South Financial’s other subsidiary, Carolina First bank, has been a staple of Greenville since 1986.

5) Milliken sells auto cloth division

Milliken & Co. made the strategic decision to divest out of its automotive body cloth division to focus on other existing and emerging growth markets. Backed by Azalea Capital LLC in Greenville, Milliken’s Dirk Pieper and Brian McSharry are now leading a new company, Sage Automotive Interiors Inc. Sage is the first investment in Azalea Fund III LP, Azalea’s third and largest investment fund. The company has about 1,000 employees at former Milliken plants in Marietta, Abbeville, Spartanburg, Toccoa, Ga., and in Brazil.

4) GHS buys in to Baptist Easley

Palmetto Health System and Greenville Hospital System now jointly operate Palmetto Health Baptist Easley, a 109-bed hospital previously owned and operated by Columbia-based Palmetto Health System. GHS paid $45 million for a 50% interest in the newly reconstituted Baptist Easley hospital. An eight-member board led by chairman and Easley resident Robert Dye Jr. governs the new hospital. The deal provided GHS entry into Pickens County and expands GHS’ 450-physician Upstate network. Roddey Gettys III continues to lead the hospital as CEO.

3) First National’s financial woes

Spartanburg-based First National Bancshares Inc., the holding company for First National Bank of the South, has suffered steep losses tied to coastal real estate loans. Most recently, the bank reported a $12.7 million loss for the third quarter, down from a $20 million loss in the second quarter. In an effort to boost capital per an agreement with federal regulators, the bank replaced CEO Jerry Calvert with Barry Mason, formerly of Arthur State Bank. Under pressure from the Office of the Comptroller of the Currency, the bank must improve its capital position. In July, First National received approval from shareholders to increase its available common shares tenfold to 100 million.

2) Bi-Lo’s plan for recovery

In February, Bi-Lo LLC hired Michael Byars, chief executive of Texas-based Minyard Food Stores, as president and CEO of the Mauldin-based supermarket chain. A month later, Bi-Lo filed Chapter 11 with the intent on using the bankruptcy process to address a maturing debt that was due.

In October the parent company of Food Lion signed a letter of intent to buy most of Bi-Lo’s assets for $425 million. Ironically, Food Lion is where Byars cut his teeth in the supermarket business more than 30 years ago. But in recent weeks, Bi-Lo’s Texas-based owner, Lone Star Funds, proposed infusing the company with $150 million in new equity and $200 million in committed-term loan financing.

Meanwhile, a group representing Bi-Lo lenders and its unsecured creditors filed a reorganization plan that would give them an ownership stake. Under that plan, Lone Star would no longer own Bi-Lo.

1) Corporate campus for sale

It’s not every day more than 225,000 square feet of new Class A office space is delivered in a single location without a major tenant. This summer, new leadership with The South Financial Group Inc. decided the bank’s new 60-acre corporate campus near Interstate 85 would not become the bank holding company’s new home.

Officials felt selling the $80 million building is a better option as the bank tries to better its financial position. Now the state Department of Commerce, the Upstate Alliance, the Greenville Area Development Corp. and the city of Greenville have launched a new Web site, www.HQGreenville.com, that features virtual tours and videos of the building.

South Financial, parent company of Carolina First bank, has chosen to maintain its headquarters at Poinsett Plaza in downtown Greenville. The company has moved some employees to the new campus, but its long-term plan at the corporate campus is dependent on the needs of a future buyer of the property.

Heading into 2010, all eyes will be on the corporate campus comprised of two office buildings and a conference center. Will a buyer be discovered or will the empty space have a dramatic impact on Upstate office rental rates in the New Year?

As we close the books in 2009, a new chapter opens. For a preview of what challenges and opportunities face the Upstate business community in 2010, check out the Jan. 4 edition of GSA Business.