The former 1,234-bed Veterans Administration hospital at 300 E. Roosevelt Road in downtown Little Rock is awaiting a new name to accompany a change of ownership.
For now, the 435,000-SF building remains the old VA hospital, which Pace Burt intends to redevelop into a gated, 160-unit market-rate apartment project.
“It’s a big project,” Burt said, acknowledging the scale of the building. “But we do it all the time. I love seeing these things transformed and the neighborhoods surrounding them.”
His redevelopment resume numbers 25 historic properties that range from 25,000 SF to 500,000 SF. His roster of projects, mostly scattered across the Southeast, tallies more than 3 million SF.
Burt’s base of operations is his hometown of Albany in southwest Georgia. The city of 75,000, birthplace of music legend Ray Charles, is about two hours from the Gulf of Mexico and nearly three hours south of Atlanta.
The VA hospital in Little Rock captured his fancy as soon as its image flashed on his computer screen as he pulled up the listing for the property on the LoopNet commercial real estate service.
“If it had been a big box, I wouldn’t have been interested,” Burt said of his
$2.7 million acquisition. “The VA hospital has that art deco, George Jetson thing going on with it. We want to go back to that early feel of the 1950s when it was developed. We hope to uncover more of that as we peel back the layers of past renovations.
“We want to try to go back and create the original look. That will really resonate with the people interested in living there.
'We only have 160 units planned, which will mean larger-than-average apartments. The two-bedroom units will be about 2,000 SF, and the one-bedroom units will be more than 1,000 SF. There will be nice green space with outdoor amenities such as a pool and dog park. The property has some nice trees that we intend to maintain.”
Burt’s first historic redevelopment dates back to 2004 with the Monaghan Mill in Greenville, South Carolina. The former textile mill reopened in 2006 as The Lofts of Greenville, a 190-unit apartment complex sporting an amenity package that included a theater, pool, fitness center, fenced dog park, community garden, fire pits and more.
Burt recalls encountering a Greenville man who couldn’t believe he intended to develop a market-rate apartment project in an old industrial building in a rundown part of town.
“He told me ‘Ain’t nobody gonna live over there,’” Burt said. “We’re getting some of those responses to the VA hospital, too.
“I don’t want to put the cart before the horse, but once people see the success of this building and see what’s possible, nothing breeds success like success.”
He ballparks the VA makeover as a $25 million-$30 million endeavor funded by tax credits combined with a conventional construction loan. The property’s location in an opportunity zone also affords tax-sheltering possibilities for capital gains investments.
Described as a $15 million project, the Monaghan Mill redevelopment also was fueled by tax credits totaling $10.2 million. Thanks to the South Carolina Textile Communities Revitalization Act in 2004, the redevelopment was injected with a 25% tax credit boost on top of the 30% tax credit for its listing with the National Register of Historic Places.
The project sold for $29.8 million in 2019.
“The key to the VA project is getting it on the national historic register,” Burt said. “I’ve done this enough to recognize the local enthusiasm among the historic registry folks and others that this will qualify.
“From a tax credit standpoint, we can’t do any renovations or deal with any structural issues until we get that. We’d like to be in there tomorrow, but we have to wait until we get our paperwork with the National Park Service taken care of.”
Based on a typical timetable, the Park Service won’t complete its review of the property’s national registry nomination until later this year. He pegs the apartment buildout to follow at 11 months.
In the meantime, Burt said, $350,000 worth of environmental abatement work was recently completed at the former hospital. The chore list included patching the roof to reduce water damage until a new roof is installed and resolving some lingering asbestos issues with tile and piping.
The west end of the VA hospital complex houses the downtown precinct for the Little Rock Police Department. Burt considers that piece of the puzzle another plus for the property and looks forward to continuing the lease agreement as a long-term relationship.
Burt plans to donate 25,000 SF on the ground floor that once housed the cafeteria to a local arts group to own and manage.
“We love these really big buildings and converting them into apartments, with an art concept as a component,” he said. “We want to create a vibe that’s been successful in other projects we’ve done, with art studios in the building.”
His more recent makeover of the Brandon Mill in Greenville, South Carolina, into the 182-unit West Village Lofts provides an example of how lucrative historical redevelopment can be.
Burt acquired the textile mill for $1.9 million in 2014, borrowed $18 million to develop apartments that opened for occupancy in 2016 and sold the property for $42 million in 2018.
“That was kind of a fluke,” he said of the windfall. “You typically can’t sell tax-credit developments that quickly. But there was a New Orleans bank involved in the tax credits that was taken over by regulators, and that disrupted the normal timeline.
“And a lot of the value in that sale is property tax abatement worth $6 million over 20 years. That shows how anxious Greenville was to preserve those buildings and create lasting value.”
A separate component of the deal was developing a portion of the Brandon Mill for use by the Greenville Center for Creative Arts, which bought the refurbished space for $1.1 million.
For the most part, the old VA hospital has languished as a would-be redevelopment since it was vacated in 1985 and first sold off as surplus government property for $208,000 in 1990.
“I’ve never been to a community in my 35 years of redevelopment where I’ve had such enthusiasm from the governor all the way down to the mayor and building inspector,” Burt said. “Boy, Arkansas, from top to bottom, has really been excited.
“They’re glad to see something happening to the property. We’ve had great support. I’m still taking a risk, but I’ve done it before.”