Alpha Tau Omega - Florida State University

THE NEWSLETTER FOR ALUMNI AND FRIENDS OF EPSILON SIGMA CHAPTER OF ALPHA TAU OMEGA AT FLORIDA STATE UNIVERSITY - SPRING 2021 a t o f s u . c o m Tallahassee Property Sold, Investment in Place for a Future House T he housing saga for ATΩ took another turn in 2020, when the FSU ATΩ house corporation sold its property in Tallahassee, resulting in a positive return on its original investment. After paying off the mortgage and other obligations, the house corporation has invested $614,000 with Merrill Lynch to be used for a future ATΩ house in Tallahassee. The process began when the house corporation originally purchased a 24-unit apartment complex for $1.8 million in July 2016, located at 608, 616, and 618 West Lafayette Street in Tallahassee. The aging facility, constructed in the 1960s, was filled with non-member student renters. That year was especially eventful for ATΩ. In addition to purchasing property, the chapter was named Fraternity of the Year at FSU and a True Merit Chapter by ATΩ National Headquarters. Circumstances quickly began to change. By October 2016, FSU had placed ATΩ in an "interim disciplinary action" status pending the results of a disciplinary investigation. A few months later, they were on social probation and unable to conduct new member activities. Still, housing planning continued. "We initially planned to tear down the property and build a new fraternity house on the site," explained house corporation President Fred Maglione '93. "We spent months working with architects on options that included a total tear down or a major renovation of the existing property." The house corporation spent 2017 and part of 2018 trying to convince the city to release its easement on the site. Tallahassee architectural firm Lewis + Whitlock designed initial conceptual plans for rebuilding on the site. At the same time, the undergraduate chapter's disciplinary problems with the University continued. Given the less-than-ideal conditions of the apartment complex, ATΩ brothers were not interested in moving into the substandard facility. The chapter continued to rent a separate property on Pensacola Street. The house corporation continued to rent the Lafayette Street facility to other FSU students during the 2017-18 school year. In June 2018, a property developer approached the house corporation expressing interest in purchasing ATΩ's property. Given the chapter's disciplinary status with the university, the emerging maintenance costs associated with the apartment complex and the appealing offer, the house corporation voted to approve the sale to the property developer. "We really struggled with this decision," commented house corporation Vice President Chris Diaz '85. "When we looked at the costs we were about to incur putting a new roof on the property, the challenges we had developing the property in a reasonable way for a future ATΩ house and the problems the chapter was facing with the university, we knew we had to take a legitimate offer very seriously." The developer took more than a year to close on the property, but the closing finally occurred in January 2020. ATΩ sold the property for $2.1 million, realizing a $300,000 gain and a return on investment or 17% over the three and a half-year ownership period. "The rents from the property paid the bills and mortgage while we owned it," explained house corporation Treasurer Jeff Scales '87. "We also managed to save a little along the way, and we recovered nearly $200,000 of the initial investment we made in Heritage Grove. When all was said and done, we were sitting on $624,000." The house corporation maintained $10,000 in an operating account and invested the remaining $614,000 in a conservatively managed portfolio with Merrill Lynch. "Our intent has always been to build a permanent house for ATΩ at Florida State," explained Diaz. "For the first time in our fraternity's history, we have seed money we can use when the chapter is back on campus and the time is right." $2,100,000 – Sale Price $1,800,000 – Purchase Price ------------ $300,000 – Gain Realized 16.7% – Return on Investment • 7/7/16 – ATΩ purchases 608, 616, and 618 West Lafayette Street for $1.8 million • 9/20/18 – Purchase agreement executed with 908 Group Holdings, LLC • 1/29/20 – Closing and final sale for $2.1 million FINANCIAL DETAILS TIMELINE OF KEY ACTIVITIES

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