Alpha Natural Resources’ corporate headquarters building sells for $28 million

Marcus & Millichap, a commercial real estate investment services firm, on Monday announced the sale of the 130,000-square-foot Alpha Natural Resources corporate headquarters in Bristol. According to the company, the building sold for $28 million – about $215 per square foot — to an undisclosed international firm that closed the all-cash deal in 21 days.

The headquarters is a build-to-suit, LEED-certified building that Alpha Natural Resources, a publicly traded coal production company, opened in 2011.  At that time, the company relocated from Abingdon to Bristol’s new Sugar Hollow Business Complex and signed a lease for the property from the developer and owner, Johnson Sugar Hollow LLC.  The decision by Alpha to keep its corporate headquarters in Virginia preserved 131 jobs and brought 69 new jobs to Southwest Virginia. The four-story property, developed by Steve Johnson, is located on 31 acres off Interstate 81 at One Alpha Place.

At the time the project was announced in November 2009, then Gov. Timothy M. Kaine approved spending $1 million from the Governor’s Opportunity Fund to help Bristol with the project. The Virginia Tobacco Indemnification and Community Revitalization Commission approved $3.4 million for the project. Alpha Natural Resources plans to remain in the building as a tenant.

When the company moved in in late 2011, it   had just finished acquiring Foundation Coal Co. and needed a larger space.  In 2011, profits were soaring and Alpha was completing an acquisition of Massey Energy Co. that transformed it into one of America’s largest suppliers of metallurgical coal.

Since 2011, the market for coal has seen a downturn in response to more stringent federal government regulations on carbon emissions and a falling price for natural gas. In the fourth quarter of last year, the company reported a net loss of $122 million. For the full year 2014, total revenues were $4.3 billion, including $3.7 billion in coal revenues, compared with total revenues of $5 billion, and coal revenues of $4.3 billion in 2013.

 “The transaction is part of a market trend that is the result of a large amount of risk-tolerant capital that has entered the net-lease investment property space seeking high yields from poor balance sheets and declining corporate credit,” Raymond said in a statement. “We faced several challenges along the way, including corporate credit downgrades, declining revenue, and a suffering global coal industry.”

Preet Sabharwal and Britt Raymond in Marcus & Millichap’s Manhattan office represented the seller. Bryn Merrey, first vice president and regional manager in Washington, D.C., is the firm’s broker of record in Virginia.