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– Sale of Goodwill’s Downtown Nashville Campus –

 SUMMARY

On Tuesday, Oct. 16, 2018, Goodwill Industries of Middle Tennessee sold its downtown Nashville campus to U.S. Smokeless Tobacco Company LLC. The sale, which was overseen and approved by Goodwill’s board of directors, is a byproduct of an effort to streamline Goodwill’s operations and secure a bright future in middle and west Tennessee for the 61-year-old agency.

One hundred percent of the proceeds from the sale will be used to further the agency’s mission of changing lives through education, training and employment. Goodwill’s mission as a 501(c)3 nonprofit organization is changing lives through education, training and employment. Every year, Goodwill Industries of Middle Tennessee serves thousands of people with disabilities, language and skills gaps, histories of incarceration and other barriers to employment.

PROPERTY BEING SOLD

12.56 acres located at 1000 Herman St., 1015 Herman St., 937 Herman St., 1104 Desha St. and 809 11th Ave North. There are several structures on the property, including warehouses and offices. No retail stores were involved in the sale.

REASON FOR SALE

Because Goodwill Industries of Middle Tennessee has transformed the way it processes donated goods, the downtown Nashville campus became unnecessary.

– BACKGROUND ON CHANGES AT GOODWILL –

2012

In 2012, the board of directors of Goodwill Industries of Middle Tennessee approved a five-year operational plan that anticipated an annual 10 percent rise in revenues, based on a pattern of strong growth observed over many years. For decades, the organization relied on a hybrid system for processing donated goods, in which all clothing was sorted, hung and tagged in downtown Nashville and then transported to Goodwill’s 30-plus retail stores, while “hard” goods such as furniture, electronics and kitchen wares were processed at in the back rooms of retail stores. Recognizing that most Goodwill agencies across the country had abandoned this model in favor of a more efficient, decentralized system of processing all donations — including clothing — at stores, the leadership team of Goodwill Industries of Middle Tennessee pledged in its five-year plan to analyze the costs and benefits of moving to a fully decentralized system.

2013

By 2013, the national retail and thrift industries were experiencing a marked decline in retail sales. Goodwill Industries of Middle Tennessee was similarly affected, and its revenues flattened.

2015

In 2015, Goodwill’s leadership conducted a cost-benefit analysis that found a decentralized processing of donated goods would create efficiencies in transportation, warehousing and logistics. The new process would also provide customers with a greater selection of higher quality goods. A consultant from Goodwill Industries International, Inc. reviewed the local Goodwill’s operations and also recommended the move.

2016

In 2016, with consultation from executives at decentralized Goodwill agencies in Atlanta and Sarasota, Goodwill Industries of Middle Tennessee launched a three-year strategic plan to implement a fully decentralized donated goods system. At that time the Board of Directors began evaluating possible uses for Goodwill’s downtown Nashville property, once all donations were being taken from the point of collection directly to retail stores rather than to downtown warehouses.

2017

In 2017, with the decentralization effort progressing quickly, Goodwill’s Board of Directors determined it would be in the long-term best interest of the nonprofit to sell some or all of the downtown Nashville property. Several board members with commercial real estate expertise led a committee to oversee that process. A request for proposal was issued, and a reputable national firm (CRBE) was selected from a field of three. Based on the firm’s advice, a decision was made to take the property to market in the summer of 2018. Before that could happen, however, U.S. Smokeless Tobacco Company LLC — which has operations next door to Goodwill and had in the past expressed interest in acquiring the property — made a proposal to purchase the entire downtown campus.

June 28, 2018

On June 28, 2018, Goodwill and U.S. Smokeless Tobacco Company LLC agreed to a contract that was executed on Tuesday, Oct. 16, 2018.

– GOING FORWARD –

FAVORABLE TERMS

U.S. Smokeless Tobacco Company LLC’s offer met or exceeded all the expectations of Goodwill’s Board of Directors, which were based on the research and recommendations of its commercial real estate brokerage firm. The buyer was motivated, able to pay cash and exceeded the top price the board was advised it could expect. Moreover, the buyer met all of Goodwill’s needs regarding winding down operations and continuing to provide mission services downtown. Under the terms of the purchase agreement, Goodwill will have the ability to remain in the buildings at 1015 Herman St. and 1000 Herman St. rent-free for up to one year. Goodwill will lease the Lifsey Building at 937 Herman St., which serves as a Goodwill Career Solutions Center, for up to five years rent-free, with the option to remain in that building for up to 10 additional years at market lease rate.

GOODWILL’S PLANS

Goodwill has already moved almost all of its processing operations to its 30 stores and three outlets, and it soon will no longer need a central processing facility. Decentralization is expected to be complete in the fall of 2018, and all operations at 1015 and 1000 Herman St. will cease by summer of 2019. Support staff will move into 937 Herman St., which will continue to serve as a Goodwill Career Solutions Center. Though Goodwill can occupy that building for up to 15 years, at some point the nonprofit will seek a new site or sites for its Nashville Career Solutions Center and support staff. The local Goodwill will continue to serve the same 48-county territory in Middle and West Tennessee, and it remains committed to serving people in downtown Nashville through its mission of changing lives through education, training and employment.

TRANSITION FOR EMPLOYEES

None of Goodwill’s roughly 1,700 employees will lose their jobs because of the sale. Over the last two years, as operations migrated from downtown into stores, operational employees transferred to stores and Donation Express Centers. About 170 support staff will have offices at 937 Herman St., although many will continue to spend a majority of their time in the field, serving employees at Goodwill’s other sites.

– MORE ABOUT GOODWILL –

STATE OF GOODWILL’S MISSION

Since a restructuring that occurred in September of 2016, Goodwill Career Solutions’ primary focus has been on development and support for its roughly 1,700 employees — nine out of 10 of whom come to Goodwill for its mission services. Many come to Goodwill for help overcoming barriers to employment, such as a mental or physical disability, a history of incarceration, homelessness, addictions, a language or skills gap or a lack of education. Goodwill’s operations training and employment coaches take a holistic approach to the success of these employees, providing not only on-the-job training but also career planning and development, plus guidance and referrals for education, housing, food, transportation, healthcare and more. Goodwill Career Solutions also continues to provide a wide variety of education and training services for the public from its eight Career Solutions Centers in Middle and West Tennessee, including monthly job fairs, computer and resume classes, and more intensive vocational training programs in Nashville (including Call Center, Construction, Forklift, Custodial and Hospitality), summer youth employment programs and more.

BACKGROUND ON PROPERTY

Goodwill first purchased three acres at 10th and Herman streets in downtown Nashville in 1984. Adjoining lots were acquired later. Currently, the buildings on the downtown campus house support staff, such as Human Resources, Accounting, and IT, as well as what remains of Goodwill’s centralized donated goods processing plant, e-Commerce production area and several warehouses. The building at 937 Herman St. holds one of Goodwill’s eight Career Solutions centers, housing staff responsible for overseeing the various training programs included in our mission of changing lives through education, training and employment. Goodwill operates a Donation Express Center at 1015 Herman St., however, no retail stores are located on the property.