Posted 9/23/2013 12:00 am
Updated 10 months ago
Little Rock’s Plaza West office building experienced the upside of a small tenant growing into a very large one during its 40-year history. The 12-story project at 415 N. McKinley St. also endured the downside of that transformation when the anchor tenant moved out and left a 65,000-SF vacancy in its wake.
Occupancy at the 126,800-SF midtown property plummeted to 47 percent when Southwest Power Pool Inc. relocated last year after developing its own west Little Rock campus.
The nonprofit corporation, which oversees an electricity power grid in eight states, was the last original tenant in Plaza West.
But the rent roll recovered quickly. (See slideshow above.)
Thanks to pent-up demand for more space by existing tenants and an influx of new ones, occupancy bounced back to about 81.7 percent.
“What we have leased as of today is 103,600 SF,” said Melinda Martin, building manager at Plaza West, said last week.
Martin admits she was a little worried about refilling the building because of the general economy and a glut of office space in the market. Helping allay her concerns was the building’s out-of-state ownership.
The J. Rogers Badgett Sr. family of Kentucky has been a part of the Plaza West story since the project was launched in the early 1970s. Rog Badgett became the sole owner after buying out the other limited partners in an internal transaction a few years after the building opened in 1973.
Over the decades, his family has maintained a willingness to invest in the project and avoid overleveraging the 2-acre development.
“What they have done is make it easy to lease,” said Jeff Yates, leasing agent for Plaza West.
When Badgett died eight years ago, Plaza West was listed among the most valuable assets in his $30.5 million estate. The project’s paper value of $6 million in 2005 was second only to the $11.5 million value of his Cessna Citation X business jet.
Today, Plaza West carries an appraised value of $8.5 million.
Though Badgett lived in Madisonville, Ky., he was born in Arkansas. His family’s roots in Little Rock go back to 1826 and include a plot in Mount Holly Cemetery.
According to his nephew, Plaza West was an investment charged with sentiment because of ancestral ties. “He loved the building,” said Bentley Badgett II, chairman of the $317 million-asset Hancock Bank & Trust of Hawesville, Ky.
Ownership of Plaza West has since moved into the J. Rogers Badgett Sr. Foundation, which Bentley Badgett oversees. Profits from the debt-free building help fund charitable endeavors that include a college scholarship program for students and teachers in Hancock County, Ky.
Badgett’s fortune was built on a diversity of business interests that included highway and waterway construction, bauxite and coal mining and a sizable stake in the Boston Red Sox (1977-85).
Under his ownership, Plaza West avoided death by depreciation.
“He was never that way,” Melinda Martin said. “He had pride in what he owned and wanted to keep it up. You’ve got to have owners who have a vision.”
Rogers Badgett grew up in Memphis before business interests drew him to Kentucky. During his lifetime, he remained connected with Arkansas through duck hunting.
Badgett was an investor in Lagrue Land & Irrigation Co. Formed in 1945, the enterprise grew into a 1,285-acre farming-hunting spread along Lagrue Bayou in Prairie County, seven miles south of Hazen.
And it was through the social network of duck hunting that Badgett became involved with the Plaza West project and bought out the limited partners in the McKinley & Lee Building Co.
The venture to develop the office building at the southeast corner of McKinley Street and Lee Avenue was led by Little Rock businessmen Roger C. Thurmond and J.L. Gibson.
When it came time to refinance the $3.5 million construction loan after Plaza West opened in 1973, many of the limited partners grew nervous, according to Thurmond’s brother, Russell.
“After construction, interest rates jumped way up, and the original investors got cold feet when they were asked to put more money in to extend the construction loan until rates improved,” said Russell Thurmond. “My dad asked Mr. Badgett if he could help us. We knew him through duck hunting around Hazen. He did us a favor and bought out the doctors.”
Badgett became the sole owner of the project in 1978. When his uncle died two month’s shy of his 88th birthday in 2005, Bentley Badgett returned to the Lagrue Bayou land to scatter some of his ashes.
“He’s always had a love for Arkansas,” Badgett said.