Dealership Property Sold

Silverwood/Bainbridge Buys Reed Brothers Property

Silverwood/Bainbridge Buys Reed Brothers PropertyAfter almost a century of serving Rockville – and two and a half years after Chrysler terminated the Reed Brothers Dodge franchise – the dealership property went to settlement on August 30, 2012. The dealership site was sold to Reston, Virginia-based Silverwood Companies, whose future plans include constructing a $90M project to include a 6-story residential building with 417 multi-family units and a 517 space parking structure.

Just two small lines of text was all that stood between the former Reed Brothers Dodge dealership in Shady Grove and redevelopment as a new apartment building. Unfortunately, those two lines were in the approved Shady Grove Sector Plan, and needed to be removed through bureaucratic surgery before anything could be built.

Although the property was zoned Transit-Oriented Mixed Use, the two sentences in question, oddly enough, prohibited residential development. At the time of the Shady Grove Plan, planners were apparently fearful that too much housing would spring up, and wanted to ensure that some office was built. Ironically, since the Plan was approved, not a single residential unit came to fruition.

Silverwood said it could change that.

Silverwood put the former Reed Brothers Dodge dealership under contract, then won annexation into the City of Rockville, and ultimately conveyed the property to apartment builder, The Bainbridge Companies, which now has Bainbridge Shady Grove Metro Apartments underway, with delivery slated for Spring, 2015.

Silverwood Investments, the original contract purchaser, had done all the heavy lifting in the case, including winning an extremely contentious annexation that put the property within the City limits. The City and Silverwood had to claw the ground out of the county’s hands, as the Leggett administration saw the former car dealership as a crucial buffer to the county transfer station. But Silverwood’s case prevailed and its two-building plan approved.

The property was annexed into the City of Rockville on October 10, 2011, by the Mayor Council and placed in the City’s Mixed-Use Transit District (MXTD) Zone.

Letter to Reed Brothers from Rick Lundregan, Silverwood Investments, LLC – August 30, 2012:

Thank you for enduring all the challenges of the past couple of years and for being such an honorable and cooperative seller. In looking back on this, I have to say that I doubt we would do something like this again.

We had no idea just how difficult this whole process would be. There were several times when we were literally on the verge of dropping out. There was one point when we had finished meeting with each of the city council members, where we really felt that we would not get their full support. There was also the election when we literally lost the support of the city council due to the loss of two city council members who supported us, but by that time we had won preliminary approval.

At the end of the day, our total cost to go through the approval process was $2,955,000. This includes attorneys fees and all consultants. Towards the end, it was getting painful to continue to pay those monthly expenses. However, we continued to pay and were finally able to win approval.

Two and a half years is a long time in our business. Things change. In our negotiations with a joint venture partner, we were introduced to Bainbridge. We negotiated and discussed several joint venture deal structures. At the end, the best structure for us was to assign the rights to develop, so we did. In the beginning we had every intention of building and operating the project, but things change and we have to pay attention to those changes.

We were able to walk away with a profit, but at the same time, we are developers and investors and have to make the best decisions. We appreciate your cooperativeness and fairness as a seller. I have been involved in many deals and yours has been one of the best. I know it has been a tough road for your family and we are glad we were able to finally get to this settlement.

 

 

 

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