Tom Intrator stakes claim as Downtown change agent

WAYNE RISHER | THE DAILY MEMPHIAN

It’s instructive to read the descriptions of Tom Intrator in a promotional piece about his mobile investment app and applications for more than $280 million in tax incentives for Memphis developments.

“A self-made, self-taught investor, developer and entrepreneur, Mr. Intrator cut his teeth in the brutal world of distressed real estate in the wake of the 2008 market crash, and eventually went on to amass a real estate portfolio valued at approximately $300 million,” says the website of Vessti, an app that Intrator created to connect investors with investment opportunities.

“(Tom Intrator) carries deep industry knowledge spanning the syndication, ownership, rehabilitation, financing, and management of commercial real estate,” says Intrator’s application for a tax break for a mega-deal to redevelop the Pinch District.

“Through affiliated entities, he owns seven multi-family properties containing 1,630 units in Memphis and other holdings outside of Memphis,” says Intrator’s application for nearly $20 million in tax abatements on $105 million in development at five addresses on South Main and South Front. The application was approved Nov. 12.

Intrator (pronounced in-TRAH-tor) is a relative newcomer to the Downtown development scene who has proposed the second-largest mixed-use project in city history. But he’s been virtually unknown in Memphis development circles until the past year.

Who is Tom Intrator?

The Daily Memphian spent 30 minutes talking with Intrator, sitting at a dining room table in the showroom window at Royal Furniture on Dec. 2. It’s the site of a proposed Dream Hotel Memphis, the only one of Intrator’s multiple Downtown ventures for which a use has been openly identified with a brand name.

The interview, set up by Memphis communications consultant DCA, followed Intrator’s approval that morning for a 75% property tax abatement, the initial part of an estimated $264 million public incentive package for a $605 million first phase of Pinch development. The Center City Revenue Finance Corp. approval was the first step in a vetting process that’s expected to span the next four to five months.

Intrator came to Memphis in 2013 as an investor in an apartment complex off Kirby Parkway at Bill Morris Parkway. His firm bought more than 1,500 apartments in Memphis and later sold some of them. Intrator lived Downtown off and on over a nearly four-year period.

He has no experience doing major developments equivalent to what he’s proposed Downtown, but says that doesn’t matter because his skills in multifamily investment and ownership are translatable into Downtown development.

He says he’s putting his own money into land acquisition and the South Main/South Front developments, and the Pinch project is too premature to talk about potential equity partners.

“We built a very large multifamily portfolio. I can assure you, there's a lot of construction involved. Yeah, construction is construction, whether you're building a hotel or something else. But more importantly, I'll tell you, you know, all the cards on the table, I didn't go to college. I learned what I know by hitting the wall enough times until the wall doesn’t hit me,” Intrator said.

“And so, before I did multifamily, I didn’t know multifamily,” Intrator said. “Do you know how to structure capital? That’s something very important. I could tell you a lot of stories. So, can you structure capital? Yes.”

Asked whether he considers himself a developer, investor, property manager, organizer or promoter, Intrator said, “What’s the difference? I'm not big on titles. I think investor is probably the best way to put it.”

“In this case (South Main/South Front), I’m not raising it. I’m as invested as you can be,” Intrator said.

Referring to the property he’s bought on the north and south ends of Downtown, he added, “Everything that’s been purchased here has been with my money. Simple as that.”

Pinch incentives

Intrator’s Pinch proposal, which would total $1.1 billion in two phases, calls for significantly more incentives than have been approved for the $1.3 billion Union Row mixed-use project on the southeastern fringe of Downtown.

Yet the master plan application reviewed by the Center City board last week contained nowhere near the level of detail shown in Union Row developer Kevin Adams’ application for a tax-increment financing district (TIF), approved a year ago.

Intrator’s 26-page application listed three references, while the 83-page Union Row TIF application included project principals and developers, personal credit references and business credit references.

Downtown Memphis Commission chief Jennifer Oswalt said Intrator’s application contained fewer references because the legal requirements of a payment in lieu of taxes (PILOT) are less stringent than a TIF.

In the case of the Pinch development, Intrator has been approved for a 30-year tax abatement that would be structured like a TIF. That is, the proposed tax savings from the incentive would be set aside for repayment of a bond issue, rather than going directly to the developer.

The proposed Pinch tax abatement is beyond a 20-year limit for local authority.

Oswalt traveled to Nashville Friday, Dec. 6, to initiate discussions with state officials; their approval is required to fund the Pinch development with the tax abatement, sales tax revenues carved out of a Downtown tourism development zone, and a 5% tourism surcharge.

Getting personal

A slender, bearded, intense man, Intrator said he grew up in the United States and Israel, and his family origin is Israeli. He said he didn’t have a family connection to real estate, but was drawn to it because of his love of architecture, design and numbers.

He declined to give his age, saying age has “a negative connotation … I could say, ‘If you’re not interested in seeing these projects move forward, if you think that I’m not the person to back, don’t back me.’ That’s the way I could say it. And then it doesn’t matter if I’m 15 or 50 or anything in between.”

While living Downtown and tending to suburban Memphis apartment developments including Autumnwood, Lynnfield Place, Briarwood and Cinnamon Trails, he said he made overtures into buying 100 North Main. The city’s tallest building, a vacant office tower, subsequently went through an ownership change and was then foreclosed on by a lender, Townhouse Management.

More recently, Intrator hooked up with the Downtown Memphis Commission, the agency that steers public incentives into Downtown development, when the commission was looking for someone to redevelop 18 S. Main, the old Murray’s clothing store. The commission had optioned the building and advertised for developers as part of an effort to remove an eyesore in a block that was being revitalized.

First impressions

Oswalt introduced Intrator to the Pinch area at that time.

Oswalt recalled her first impression. “You know, he's very quiet, he’s thoughtful before he speaks, so it’s hard to get to know him. I really didn't know what to think, and then I learned through that process how he worked and how he sees things. But as I talked to him more, I just feel like he has a fresh perspective on just really wanting to bring more” vitality Downtown.

Oswalt said the DMC researched Intrator’s track record through an Internet search but had not done a background check. She said she’s confident Intrator and his investors will be adequately vetted as the process proceeds. The DMC requires applicants to submit financial records, and 18 Main LLC — the company Intrator is operating under — said those would be submitted to the board chairman or attorney as necessary.

“Because we know that they will eventually get some outside investors, we haven't been able to vet them, because they're not selected yet,” Oswalt said.

“We have not done a background check because that's not part of our policy. I think it will be something our board looks at in the future, but we have not done that, so we're just going by experience, which certainly is enough to feel good about the smaller projects, I think. You know, no one has done anything as big as the potential (Pinch) plan or the Union Row plan, so there’s a lot of uncertainty,” Oswalt said.

Intrator’s resume

Intrator’s profile at the online site LinkedIn lists him as a New Yorker; founder and managing partner of 18 Main LLC; founder of the app Vessti in 2018; co-founder and managing partner of Lennox Properties in 2014; and managing director of Hyde Capital Group starting in 2010. Hyde Capital Group is led by principal and owner Yariv Ben-Sira.

In incentive applications, Intrator also said he worked with Silverback Capital, a real estate investment and development firm in New York, before helping form Hyde Capital.

Intrator said Ben-Sira is not involved in the Downtown Memphis developments.

The 18 Main’s incentive applications identify Shay Yadin as managing partner overseeing acquisition, development and rehabilitation of the firm’s portfolio. Yadin has experience in development and real estate law, having worked to develop more than 3 million square feet valued at more than $750 million, the application states.

Intrator said he was investing in multifamily in the Indianapolis area before learning of an opportunity to buy Autumnwoods in Memphis in 2013. Hyde Capital paid $13.5 million for the 324-unit complex at 3119 Kirby Parkway in February 2013 and sold it for $14.6 million last August.

“I wasn't really per se investing in Memphis. I was buying multifamily, a big chunk of that happened to be in Memphis. I was not for or against Memphis. I was agnostic,” Intrator said.

Hyde Capital paid about $65 million over three years for another 1,300 units at six locations.

In 2014 it bought Briar Club, 272 units at 6339 Village Grove for $8.7 million; Cinnamon Trails, 208 units at 6497 Knight Arnold for $8.6 million; and Lynnfield Place, 400 units near Quince and Lynnfield for $22.4 million; and in 2016, Midtown/Medical District properties Kimbrough Towers, 95 apartments at 1491 Union, and Kimbrough Center retail, for $6.9 million; Rosecrest Apartments, 122 units at 45 S. Idlewild, for $8.5 million; and Blair Tower, 208 units at 810 Washington, for $9.75 million.

Hyde Capital sold Lynnfield Place in August for $34.5 million. According to Intrator, the company continues to own Briar Club, Cinnamon Trails and the three Midtown/Medical District properties.

The company also bought multifamily properties in Nashville, Knoxville and Chattanooga.

Intrator said Lennox Companies, a unit of Hyde Capital, has been converted into a property management firm.

Checking the references

Intrator’s references contacted by The Daily Memphian had glowing things to say about him.

“I have had the distinct pleasure of being professionally engaged in Tom Intrator’s investments for the past five years,” said Jonathan Zilber, managing director of the Meridian Capital Group Ohio office.

“Tom is a driven, focused, productive, and accomplished real estate investor and developer. Our relationship spans across multifamily transactions as well as the current 18 Main portfolio. I am confident in Tom’s diligent approach and execution of his real estate investments, and I have no doubt he will continue this trajectory in the Downtown Memphis market,” Zilber said via email.

Blake Pera, vice chairman of Newmark Knight Frank multifamily capital markets in Memphis, said the firm represented Intrator on 16 transactions, including purchases and sales in Memphis, Little Rock and Chattanooga.

“Every transaction has been very smooth and it has been an absolute pleasure working with him over these last six years,” Pera said. “Tom has excelled at finding the opportunities in each situation and successfully executing on it.”

Asked if he believes Intrator has “the requisite skills, resources and organization” to accomplish the Downtown Memphis projects, Pera said, “I learned early on that when Tom faces an obstacle, he will be very creative in finding a solution. I have been closely following Tom’s vision for Downtown; he has been talking about how underserved it has been for years.

“The market is ripe for this level of development and he has assembled excellent sites. His developments will be very successful and his experience and available resources will help make this happen,” Pera said.

Yariv Ben-Sira and another reference, Ronen Abergel, a vice president at Arbor Realty Trust Inc. in New York, couldn’t be reached for comment.

A Dream of a hotel

Intrator holds up the Dream Hotel plan for 122 S. Main as emblematic of his approach.

He said he aims to attract restaurants, retail or other operators that are on an elite level, probably from the East or West coasts, and capable of drawing people and creating momentum that will draw others to Memphis. He said it’s more than signing up tenants, but rather finding catalytic businesses that will come into the market as partners with 18 Main.

Intrator said he’s telling prospects, “I want to invest in you to expand. I'm not selling to you, I’m buying. I'm looking to invest in you. I’m not looking to pull something out of you, I’m saying here, I’m going to empower you to do something else.”

“We are funding operating businesses. It might be a restaurant. It might be a hotel. It might be a yoga studio. It might be some other fitness," Intrator said. "But primarily it's experiential retail, experiential retail and hospitality. We’re not funding a T-shirt shop, nothing that they can buy on Amazon. We are funding what you physically go into, what creates a neighbor.” 

New York-based Dream Hotel, an independent brand of boutique lifestyle hotels, has agreed to put a 178-room hotel at the Royal Furniture site, former home of a Black & White store. Plans call for the historic building to be incorporated in the hotel’s base, with a new structure built on top of it.

Dream Hotel Group CEO Jay Stein said, “When we were approached by Tom Intrator regarding Memphis and his vision for development, we were intrigued. Then, as discussions continued, we got very excited for his vision.”

“We found a great partner in Tom and 18 Main, a company who shares our passion and vested interest in the ultimate success of the community. Memphis has seen a host of intriguing developments in the past few years, and we want to be part of that history and transformation story,” Stein said.

“When open, Dream Memphis will undoubtedly be a special addition to the continued renaissance and growth of the city,” Stein said.

Intrator’s timetable calls for the hotel to open in 2022.

Catalytic development?

After the Dream Hotel announcement put Memphis “on the map,” he began to get other expressions of interest, Intrator said.

“There are others, which I won’t give names, but there’s plenty of others, which since then, have been approaching us … all of them are coming from other markets, all of them are something that helps put the place on the map. They’re all people that really weren’t considering doing anything in Memphis, and we gave them the thought. With time, these projects will stabilize and be on their own feet,” Intrator said.

Oswalt stressed that the Pinch development is far from a done deal and said the next step would be hammering out a development agreement that lays out responsibilities, expectations and requirements.

“There are so many checks and balances that I don’t feel like we have a huge risk to not give him a shot to at least go down this path, because he owns the property,” Oswalt said.

“If we don’t … it’s just going to sit there and we’re going to have more of the same emptiness,” she said.

The but-for test

The Downtown Memphis Commission calls the tax savings associated with its property tax abatements hypothetical because it says the projects wouldn’t happen without the incentives. In 18 Main’s application, the firm said high taxes, high land prices and rising construction costs would make the project not feasible without incentives.

“Ultimately, the incentives are very important to make this happen,” Intrator said. “I'll help even more: Without the incentives, this wouldn't be happening. It's not financially feasible.

“All the land, we're talking about the Pinch now, all the land there, I own. It’s not maybe, idea, contract, nothing. All that is closed. Right now, those parcels, consider it a zero (in tax revenue). So, would you rather have 50% of something or 100% of nothing,” Intrator said.

The ripple effect

The sheer size of Intrator’s plan — up to 1,500 apartments, 406 hotel rooms, more than 200,000 square feet of retail and nearly 700,000 square feet of office space — could have mixed impacts on the current Downtown development environment.

It might encourage some investors to move forward, while discouraging others because of the potential for the market to be overbuilt.

“Based on risk tolerance, I think we’ll have some of those reactions," Oswalt said. "We’ll have some who say, ‘OK, I don’t want to put any more money into the market,’ but we’ll have others who say, ‘This must be the hot place to be.’” 

Oswalt said she hoped for an expedited timeline, perhaps during the first quarter of 2020, for the development agreement, leases and financing commitments to come together, so as to limit the uncertainty.

“You know, it’s a very ambitious project, but I’m very appreciative of that ambition,” Oswalt said. “Do we think it will turn out exactly as it sits today? Maybe not, but I do have confidence that he is making some very thoughtful moves forward, not just in the Pinch where there might be more incentives, but in other places, and I believe that he can bring something to Memphis.”