A little back ground…
Back 2013, State Farm Insurance began an aggressive sale-leaseback of its operations centers across the country to lower expenses and raise capital. Dallas-based private equity firm Lone Star Funds bought 23 of them for $720 million, then turned around and sold 14 of them a few month later to JDM Partners, an Arizona-based real estate firm run by Jerry Colangelo, the former owner of the NBA’s Phoenix Suns, for $550 million. That included the State Farm operations center on Pantops, which Lone Star bought for $69.3 million and sold to JDM Partners for $72.9 million, making $3.6 million on the flip.
It would turn out to be a costly decision for JDM Partners.
In 2020, as a response to the COVID pandemic, State Farm removed employees from its operations centers across the country and then later made those changes more permanent, outsourcing jobs and subleasing office space. While State Farm continued to honor its lease agreements with JDM Partners, and JDM was able to find tenants like Bonumose, the eventual loss of State Farm as a tenant drove down property values. Indeed, the County tax assessment on the Pantops State Farm property went from $56 million in 2020 to $37 million in 2026.
As a result, JDM Partners was unable to pay off the loan they took out to purchase the properties in time to avoid “a near doubling of its interest rate,” according to reporting from CoStar. In addition, because of the declining value of the property, refinancing was not a possibility. So they have been selling off the operations centers at significant discounts.
Now UVA has announced that it has purchased the State Farm Property from JDM Partners for $37.7 million, which is $35.2 million less than they paid for it.
UVA Health plans to use the property to expand inpatient care and free up space at University Hospital. The sale also means that Albemarle County will no longer be collecting the approximately $330K in annual tax property tax, due to the University’s tax-exempt status.