Fenley buys out partners,

reshapes real estate firm

(Louisville, KY) The dust is finally starting to settle at the offices of Louisville's Fenley Real Estate after a frenzied five-month period that saw its principal, David Fenley, buy out most of his partners, complete the financial restructuring of the company, start several new business ventures and open a new hotel.

He described 2008 as "a whopper of a year."

"I've pushed all my chips in," said the 40-year-old president and CEO of the commercial real estate firm.

For Fenley, who has held the top post at the company for the past 15 years, the stakes certainly have gotten higher.

Backed for years by family members and some of the community's most prominent business leaders, he finds himself today in control of one of the state's largest portfolios of Class A office space.

Fenley had owned a 20 percent stake in the company and its holdings. He reached an agreement at the beginning of the year to raise that stake to 60 percent by buying his partners out of the portfolio and the Fenley firm's operating companies for real estate and asset management, leasing, construction and development.

Twin brother Stephen Fenley, who directs special projects for the real estate firm, maintained a 40 percent ownership stake.

The partners who sold their interests included older siblings Joe Fenley and Jennie Gomez.

Business leaders Nolen Allen, chairman emeritus and co-founder of Cotton & Allen PSC accounting firm; Clyde Ensor, co-owner of Hesco Parts Corp.; Mike Ehrler, retired co-founder of Ehrler's Dairy Inc.; and Joan Day, president of The Cralle Foundation Inc., also were bought out in what Fenley called a "mutual decision."

The former partners could not be reached for comment this week.

The total buyout cost was not disclosed, but Fenley secured a $109.5 million mortgage financing package from Norwalk, Conn.-based GE Real Estate, a business unit of GE Commercial Finance, to cover the acquisition of the remaining stake in the Fenley company's 13-building Louisville Class A office portfolio. The acquisition and financing package closed May 1.

Deal secured in 'volatile' market conditions

To say that structuring the deal was difficult would be an understatement.

"The market, for all practical purposes, as of Jan. 1 became so volatile that (no one could)... hold deals together," Fenley said. "The market was constantly changing."

Jeremy Chism, who helped arrange the financing on behalf of Fenley, told him in February that the deal wouldn't get done, according to the Louisville developer.

Chism, vice president of the Memphis, Tenn., office of the CB Richard Ellis capital markets debt and equity finance group, declined to say he was skeptical at the time but admitted that the financing climate was far from ideal.

"It was definitely a tough environment," Chism said. "The market has gotten even worse since we've done the deal."

Officials with GE Real Estate also could not be reached to comment.

11 buildings in suburbs, two downtown

Fenley's 13 office buildings, all located in Louisville, total more than 923,000 square feet. They are better than 90 percent leased to more than 100 tenants, including Semonin Realtors, Doe Anderson Inc., the Kentucky Medical Association and Greater Louisville Inc., the metro chamber of commerce.

Specifically, the Fenley holdings include: five buildings totaling 368,000 square feet at Hurstbourne Green's Corporate Campus; three buildings totaling 153,000 square feet at Fenley Office Park, which is on the northwest corner of U.S. 42 and Lime Kiln Lane; and two downtown buildings totaling 142,000 square feet — the Doe Anderson Building at 620 W. Main St. and the 614 Building at 614 W. Main St.

The other properties in the portfolio are: 119,000-square-foot One Olympia Park Plaza in northeastern Jefferson County; 104,000-square-foot One Triton Office Park at Eastpoint Business Center; and Browenton Place, a 38,000-square-foot building located at 2000 Warrington Way.

Kroger bought Fenley building in January

Over the years, Fenley has explored several options for the office holdings, including selling some or all of them.

Only two buildings were ever sold.

One was the Kentucky headquarters of Anthem Blue Cross and Blue Shield, located in Eastpoint. That building was purchased by a group of Illinois investors in 2005 for $40.2 million.

The other was a vacant, 85,000-square-foot building in Hurstbourne Green that The Kroger Co. bought in January to house its Louisville-based Mid-South division office. The purchase price was $8.95 million.

Since closing the recapitalization deal in May, Fenley said, he has worked to assure employees and tenants who had been nervous about the future that additional sales are not part of his business plan.

"I live here," Fenley explained. "I've grown up here. My family's here. This is where I'm rooted. I have no real ambitions to liquidate everything I have here."

Strengthening his position

Prior to his recent moves, Fenley's name already was among the most well-known in local commercial real estate circles.

His company owns more multi-tenant Class A office space than any other locally based private developer. Its local office portfolio trails only that of Dallas-based Behringer Harvard REIT I Inc. in total size.

Behringer Harvard's Louisville holdings total 1.3 million square feet.

By buying out his partners, Fenley cements his reputation as "one of the big players in town," according to George Chapman, managing director for the Kentucky/Southern Indiana office of Integra Realty Resources Inc., a firm that tracks the local real estate market.

"He certainly has a prominent position in the (real estate) community," Chapman said of Fenley. "He knows virtually everybody" who is looking for commercial space.

Chapman added that, with sole control of the company, Fenley has "much greater flexibility" to do what he wants in terms of investment and growth.

Displaying confidence

While the advantages outweigh the disadvantages in an arrangement such as Fenley now has, Chapman warned that there can be some significant downsides.

"When the market goes south, he's got a larger exposure," Chapman said. "If you are not well capitalized... lenders do come knocking."

Chapman stressed that he has no knowledge of Fenley's financial strength.

Fenley admitted that being out on his own is "a scary proposition" but said just as quickly that he is confident in his abilities and financial status.

He said he never has overbuilt during boom times and has managed company assets conservatively during down times.

Still, he's a bit surprised at where he is, Fenley said, especially since talk of buying out his partners didn't even begin until last fall.

"This time last year, I hadn't even contemplated it," he said. "I didn't even know it was achievable. I hadn't thought that big."

As reported in BUSINESS FIRST Online, October 17, 2008

06.06.17 - Fenley Extends ICAP Energy, LLC

04.13.17 - Fenley Expands And Extends Norton Properties, Inc.

04.10.17 - Fenley Signs Clearent LLC

03.28.17 - Fenley Signs The Louisville Orchestra

01.24.17 - Fenley Extends Parthenon, LLC

01.17.17 - Fenley Expands The Glenview Trust Company

12.23.17 - Fenley Expands And Extends Comprehensive Health Management, Inc.

11.11.16 - Fenley Signs Executive Title Company

11.10.16 - Fenley Extends Century Mortgage

11.02.16 - Fenley Extends Geer Financial Services, LLC

10.18.16 - Fenley signs Dinsmore & Shohl, LLP

10.17.16 - Fenley Signs Jewish Hospital & ST. Mary's Healthcare

10.11.16 - Fenley Signs Stonestreet One, LLC

09.26.16 - Fenley Renews RXC Acquisition, Inc.

09.13.16 - Fenley Signs The Bank Of New York Mellon

09.06.16 - Fenley Renews Black & Veatch Corporation

09.01.16 - Fenley Expands Doe Anderson Advertising

07.16.16 - Fenley signs Suellen E. Stevens, M.D., PLLC

07.05.16 - Fenley Signs Mass Mutual Financial Group

05.16.16 - Fenley Expands Norton Properties, Inc.

05.10.16 - Fenley Signs CRS Reprocessing

05.09.16 - Fenley Renews GBC Metals LLC

05.06.16 - Fenley Signs J.J.B. Hilliard, W.L. Lyons, LLC

03.29.16 - Fenley Signs Hall, Render, Killian, Heath & Lyman, PSC

03.21.16 - Fenley Signs Kentucky Underground Protection, Inc. D/B/A Kentucky 811

01.08.16 - Fenley Signs Norton Properties, Inc.

12.18.15 - Fenley Signs Amerisourcebergen Corporation

Third Qtr 2015 - Homecare Homebase

Third Qtr 2015 - Ashbourne Capital, LLC.

Third Qtr 2015 - DMI Office Furniture,Inc.

Third Qtr 2015 - C.H. Robinson Worldwide, Inc.

Second Qtr 2015 - The International Business Machines Corporation

Second Qtr 2015 - Blackburn Domene & Burchett PLLC

Second Qtr 2015 - Fenley signs Luvata Electrofin, Inc.

First Qtr 2015 - Fenley Signs AffiniCorp, LLCj, Geomomentum, Law Officer of Zach Taylor, Microsoft Corporation, Simon and Company PSC.

12.31.14 - Fenley Signs Parthenon, LLC

12.05.14 - Fenley Renews Witt/Kieffer, Ford, Hadelman, Lloyd Corp.

11.26.14 - Fenley Signs Tetra Tech, Inc.

11.19.14 - Fenley Signs the Medical Protective Company

11.07.14 - Fenley Signs Aetna Life Insurance Company

09.17.14 - Fenley extends West Norwood, Inc.

08.04.14 - Fenley Extends American Bankers Insurance Company

07.17.14 - Fenley Signs Manpower US, Inc./Right Management

06.24.14 - Fenley Signs Dometic Corporation

04.17.14 - Fenley Signs CBS Interactive

03.25.14 - Fenley Signs BDS Management Group

03.21.14 - Fenley Signs Allstate Insurance Company

03.13.14 - Fenley Signs Liquor Stores Usa South, Inc.

01.13.14 - Fenley Office Park, Building C Expands Raymond James & Associates

12.30.13 - Fenley Signs Psychiatric Associates

11.11.13 - Fenley Signs Coca-Cola Enterprises, Inc.

11.01.13 - Fenley Expands Envoy Mortgage

11.01.13 - Fenley Signs Black & Veatch Corporation.

10.31.13 - Fenley Signs Key Brand Theatrical Group, Inc.

08.23.13 - Fenley Signs J. Hagan Warren Capital Partners

08.21.13 - Fenley Renews Lifetime Financial Services, LLC

08.16.13 - Fenley Signs SRVR, LLC

08.09.13 - Fenley Signs Click Staffing

08.07.13 - Fenley expands The Glenview Trust Company

07.03.13 - Fenley Signs Edward D. Jones & Co., L.P.

05.28.13 - Fenley Signs AmerisourceBergen Corporation

05.06.13 - Fenley renews Harvey Investment Company, LLC

03.29.13 - Fenley Signs The Bristol Bar & Grille, Inc.

03.13.13 - Fenley Expands And Extends Century Mortgage/lending

02.18.13 - Fenley expands Morgan Stanley Smith Barney Financing, Inc.

11.28.12 - Fenley signs Black & White Design, Inc.

09.07.12 - Fenley Signs DMI Furniture, Inc.

07.31.12 - Fenley Expands The International Business Machines Corporation

06.22.12 - Fenley Signs Greater Louisville, Inc.

06.18.12 - Fenley Signs Norton Properties, Inc.

06.15.12 - Fenley Expands The Glenview Trust Company, Raymond James & Associates and Geer Financial Services

06.04.12 - Fenley signs Witt/Kieffer, Ford, Hadelman, Lloyd Corp.

05.31.12 - Fenley Expands GBC Metals LLC

05.07.12 - Fenley Renews Norton Properties, Inc.

04.06.12 - Fenley Expands RXC Acquisition, Inc.

04.05.12 - Fenley Signs KMA Insurance

02.08.12 - Fenley Signs Huddleston Bolen LLP

02.08.12 - Fenley Signs Sterling Financial Group Ltd. and the Medical Protective Company

12.28.11 - Fenley Signs Dr. Su Kang

12.13.11 - Fenley Signs Healthcare Strategy Group

12.13.11 - Fenley Signs Wells Fargo Advisors

11.09.11 - Fenley Signs Caine & Weiner, LLC and Stonestreet One, LLC

11.04.11 - Fenley Signs AAF-McQuay, Inc. D/B/A AAF International

11.04.11 - Fenley Signs Caterpillar, Inc.

11.04.11 - Fenley Signs CRS Reprocessing

11.04.11 - Fenley Signs SIS, LLC

11.04.11 - Fenley Renews West Norwood Inc. and Psychiatric Associates of Louisville, P.S.C.

11.01.11 - Fenley Signs Doe Anderson Advertising

10.11.11 - Fenley signs Vogt Power International, Inc., a wholly-owned subsidiary of Babcock Power, Inc.

10.03.11 - Fenley Expands Kentucky Educational Television Foundation

09.28.11 - Fenley Signs American Bankers Insurance Company

09.09.11 - Fenley Signs Century Mortgage and Century Lending

09.01.11 - Fenley Signs Tri-Arrows Aluminum, Inc.

08.31.11 - Fenley signs RXC Acquisition, Inc.

08.18.11 - Fenley signs Comprehensive Health Management, Inc.

07.13.11 - Fenley signs Coventry Health and Life Insurance Company

05.25.11 - Fenley Signs the Bank of New York Mellon

06.13.11 - Fenley Signs Norton Properties, Inc.

06.06.11 - Fenley Signs Hall, Render, Killian, Heath & Lyman, Psc

05.16.11 - Fenley signs Morgan Stanley Smith Barney Financing, Inc.

10.07.10 - Fenley signs The Glenview Trust Company

09.18.10 - Fenley signs Lifetime Financial Services, LLC

08.26.10 - Fenley signs Luvata Electrofin, Inc.

07.06.10 - Fenley signs ARISON INSURANCE SERVICES, LLC

06.11.10 - Fenley signs Harvey Investment Company, LLC

05.13.10 - Fenley signs KFORCE

04.28.10 - Fenley signs Porter Tafel Trimpe Investment Consulting Group

04.08.10 - Fenley signs IBM Again

03.01.10 - Fenley signs Halo Group and Logistics Made Simple

02.10.10 - Fenley signs DearWatch and Pillar Investments

01.25.10 - International Business Giant CGN Comes to Fenley

01.15.10 - Fenley Chosen for Management of New FBI Headquarters

12.03.09 - Fenley signs ONLC.com and TD Ameritrade

11.23.09 - Small Items = Big Impact

11.11.09 - Fenley Thanks Veterans for their Service

10.05.09 - Fenley signs Amerifirst Direct and Divas for Christ

09.22.09 - Fenley signs three new clients

08.18.09 - Fenley signs six new clients

07.21.09 - Fenley signs Supplemental Health Care and Zyquest, Inc.

06.08.09 - Fenley signs Amerisource Bergen

06.08.09 - Fenley signs KMA Insurance and First Liberty Financial Mortgage

05.22.09 - Fenley signs CRS Reprocessing Services

05.22.09 - Fenley signs UBS, Hilliard Lyons and All State

03.20.09 - Fortune 500 Chooses Fenley

03.13.09 - Insurance Firm Selects Fenley

02.16.09 - Making an impression

01.07.09 - Holiday Food Drive a Success

12.29.08 - Lands World's Largest Marketer

12.16.08 - Named a Finalist for Business First

12.06.08 - Food for Kentucky Harvest

10.17.08 - Fenley has had busy 2008

10.17.08 - Fenley Buys Out Partners

10.15.08 - Top Honors for Beautification

10.01.08 - Hiton Garden Inn

02.22.08 - Fenley developing executive suites

01.08.08 - Kroger buys office building