A North Carolina investment banker has added fuel to speculation that the World Market Center will wind up under the same ownership as some of its main rivals.
"The centerpiece of discussion in Las Vegas was the rumored merger of the World Market Center with High Point’s, (N.C.), three largest showroom operators," wrote Timothy Stump, president of Stump & Co. in Charlotte, N.C., in a furniture industry newsletter. "If the rumors are true and the deal can be closed, we look forward to hearing the thesis of why this makes long-term sense and how the furniture industry will benefit."
He declined to elaborate.
World Market Center issued a statement that did not address the validity of the report.
"We are aware of the various rumors and speculation," Marketing Vice President Dana Andrew wrote in an e-mail. "However, we remain focused on running our business and maintaining momentum from our January market."
The speculation arose after two separate announcements that surfaced only days apart.
First, the special servicing agent reported in January that lenders it represents and the World Market Center ownership were "finalizing the terms of a loan modification and reinstatement." Previous monthly updates from the special servicer, Centerline Capital Group in New York, stated only that the two sides "continue to negotiate" a workout.
Often, when lenders ease the terms for real estate projects that buckle under the weight of excessive debt and absorb losses, the owners surrender part or all of their stakes in return.
Hit by rising vacancies among the furniture and home decor companies that rent showrooms in the 5-million-square-foot complex and lower rents paid by those who stayed, World Market Center defaulted on mortgages for buildings A and B totaling $557.1 million. Building C has a different financial structure and does not fall under Centerline’s purview, although it has a $488 million loan coming due in December.
Meanwhile, Bassett Furniture Industries announced in its fourth-quarter earnings report on Jan. 27 that is was trying to sell its 46.9 percent stake in the International Home Furnishings Center in High Point. While the company said a definitive agreement was not in place, "we hope to complete the sale by the end of February."
Bassett Furniture said it will enter the deal only if someone buys the entire building and not just the company’s stake. Beyond that, company spokesman Jay Moore declined to comment.
The two other showrooms listed by Stump as part of the merger, the Showplace and Market Square, are both in receivership, according to the High Point Enterprise newspaper. If the grand merger went ahead, the unidentified potential buyer would pick up three complexes in different stages of financial distress.
Stump wrote that he expected debt on all of the properties to be lowered, but noted that "many exhibitors are awaiting the answers" to how a deal would affect World Market Center rents, the scheduling of markets in the two cities and "the need for yet another market."
Stump wrote, "We hope this transaction is more than a financial reshuffling and the results contribute to the long-term stability of our industry."
In a January interview, World Market Center CEO Robert Maricich said, "I think there is room for the two markets to coexist."
Contact reporter Tim O’Reiley at email@example.com or 702-387-5290.