Work progressing on recession-stalled Beltway project

By Eli Segall | LAS VEGAS SUN

Buying an abandoned real estate project — and there were plenty to choose from in Las Vegas — can seem like a steal, since owners usually sell cheap to get back any money they can from the failed venture.

The trade-off for buyers? It can be a years-long, hair-pulling process to untangle a property’s legal woes, close the sale and prepare to finish construction.

Investors Benjy Garfinkle, Ofir Hagay and Michael Werner know this all too well. Through their company WGH Partners, they bought and finished a mothballed Las Vegas office complex and are wrapping up work at a once-busted condo project.

They also are completing the former ManhattanWest, the stylish retail, office and residential complex that sat unfinished for years at Russell Road and the 215 Beltway, one of the most visible casualties of the building bust.

Abandoned developments often are bogged down by lawsuits and liens and frequently get seized by lenders or end up in bankruptcy court. Investors need to determine who owns what, who is owed what, which repairs are needed, if wiring and pipes were stolen, if building permits are still valid, and if anyone can find the blueprints.

“Sometimes we joke among ourselves that we’re like Indiana Jones, trying to reveal the past,” Hagay said.

Despite the headaches, several other investors pounced on mothballed projects in recent years, betting that Las Vegas’ once-battered economy would improve — and that their bargain deals would pump out big profits.

They include Malaysia’s Genting Group, which last year bought the partially built Echelon resort on the Strip with plans for a multibillion-dollar Chinese-themed megaresort. Howard Hughes Corp. in 2010 took control of the Shops at Summerlin Centre — the abandoned retail and office complex near Red Rock Resort — as part of a corporate spin-off, completed construction and opened it Oct. 9 as Downtown Summerlin. Last year, the Pinnacle Family of Cos. bought Vantage Lofts, a partially built luxury condo project in Henderson, and now, having finished it, are charging up to $4,545 a month in rent.

During the downturn, WGH bought a pair of unfinished two-story office buildings off Russell Road east of the Beltway. One building at the Red Rock Business Center, as the property is known, is now fully leased. The other building is empty but Garfinkle said his group is close to signing the first tenant there and is negotiating with several other prospective renters.

WGH also bought failed condo project Milano Residences on Cactus Avenue at Bermuda Road. The original developers defaulted on a $19 million loan and lost the partially built, four-story complex to foreclosure in 2010. Lenders sold it to WGH in 2012 for just $2 million.

The trio resumed construction last November and plan to have the 100-unit property, now called the Lennox, ready for occupancy in mid-December as a high-end rental complex.

Units range from about 850 to 1,800 square feet and will be priced from $1,300 to $2,800 per month. Amenities include stainless steel appliances, granite counter-tops and poolside cabanas.

Meanwhile, WGH also is working with San Francisco developer the Krausz Cos. to finish ManhattanWest, now called the Gramercy. Krausz bought the 20-acre property last year for $20 million from developer Alex Edelstein, who spent around $170 million before he lost his funding and stopped construction during the downturn.

Contractors and lenders are fighting over who gets the sales proceeds, and Edelstein wound up with nothing, Garfinkle said. Edelstein could not be reached for comment.

He reportedly wanted to sell condos there for $200,000 to $1 million each. The property’s 160 units, in two four-story buildings with underground parking, range from 530 to almost 2,100 square feet and are slated to be rented for $950 to $3,500 per month. They will be ready for occupancy in early 2015, Garfinkle said.

The Gramercy also features two office buildings and is expected to have restaurants, outdoor movies, food trucks and other amenities. However, its nine-story residential tower facing the Beltway remains unfinished and might get torn down.

Hagay and Garfinkle recently spoke with VEGAS INC at the Lennox and the Gramercy about those projects. The interview has been edited for clarity and brevity.

You bought the Lennox for $2 million. That’s a huge discount, but not unusual for a mothballed project.

Garfinkle: That issue always comes up — people say, ‘You just stole this asset.’ That’s really not accurate, because the cost to finish these is so high, and the market is so much different today.

Hagay: There was so much work to be done. If you add up the overhead and costs, the architects, engineers, it took three years of work before we even started construction.

What appealed to you about the Lennox?

Hagay: This is an expensive project — this is not a garden-style, stick-frame apartment building. This is a small community, and we are planning to give great amenities.

The rents here, even at the lowest end, are above market average.

Hagay: It’s higher than market average, but it’s a different type of product. You can charge more if you have a different product, if you offer more amenities, if you are a unique.

The owners of the Ogden recently began listing units for sale in the downtown high-rise that had been rented as apartments. Do you foresee doing that at the Lennox?

Garfinkle: Not at this time. I’m a very strong believer in the condo market in town, but the prices are too low to make it work. If we wanted to open the Lennox next week as condos, we’d probably sell them very quickly, but not at prices that justify the transition from for-rent to for-sale.

ManhattanWest was supposed to be a very stylish project but it ended up an eyesore for years. What got you interested in it? Why take it on, even though it had a lot of problems?

Garfinkle: Being on the curve of the Beltway, having such a high-profile project — there’s nothing else like it in this area. It’s such a special project — the design, the architecture, the quality, the size.

You’ve lined up several restaurants for the site. Will there be shopping, too?

Hagay: No. If you look around the area, there are a lot of rooftops and offices, but there is nothing to offer for food. We believe there is a demand here, and we have a captive audience.

Garfinkle: We want to create a destination, to come here, stay in the courtyard, work out in the gym, have coffee, beer, wine.

What’s the status of the tower facing the Beltway? It looks like it hasn’t changed since you bought it. What have you done there, and what are your plans?

Garfinkle: It was vandalized, things were stolen, copper wiring was ripped out. We’ve cleaned it up and obtained permits to restart construction but haven’t done that yet. We’ve finished design work, too, but we’re looking at other options for the land: What would be the highest and best use for the community? Is the tower really the right fit?

Are you considering tearing it down?

Garfinkle: Yes.

I suppose if you don’t do anything with it, the tower could scare people off. It faces the freeway and almost looks like a bomb hit it. It looks pretty bad.

Garfinkle: By the beginning of next year, either the tower will be under construction or the tower will be gone. In the next few months, the final decision will be made that we either go ahead and build it — which is probably not on the top of the list — or don’t. We’re looking at different studies to see what the mix should be — how much more office should be here, how much more residential. We will replace it with something else.

Benjy, you’ve said the ManhattanWest purchase was one of the most complex deals you ever worked on. Can you talk about how difficult it was, and what you had to go through to buy it and gear up to finish it?

Garfinkle: The project never went into foreclosure, but there were legal disputes between the contractors and the bank that predate us and continue today, over who had first lien rights. A local brokerage put out a call for offers, and we were the successful bidder. We paid $20 million, but the lenders and the contractors are still in litigation over who gets that money. It has no effect on the site; we’ve got clear title. But the court took the $20 million, it’s sitting in escrow, and the lenders and contractors are still haggling over it.

Homestyle hospitality (with a side of killer scones) at DW Bistro

Homestyle hospitality (with a side of killer scones) at DW Bistro

By Broack Radke | LAS VEGAS WEEKLY

It’s about warmth. It’s about smiles and fresh pastry baskets, deliciously soothing cocktails and Jamaican jerk chicken salads and feeling like you’re home when you go out to eat. It’s the phenomenon Bryce Krausman and Dalton Wilson have created at DW Bistro, and the extended hospitality they plan to create at the nearby DW Market come February.

Krausman and Wilson first met while working at Williams-Sonoma, so their collective mentality is constructed around the concept of a market. “It’s been in our brains for the last 10 years,” Krausman says. “Everything is related to shopping and stores and helping people buy the right product for what they want to do.”

Once their charming DW Bistro caught on—a five-year-old island of an eatery in the Southwest valley serving homey fare with Jamaican and New Mexican influences—regulars started making requests. Can you cater? Will you make grab-and-go dishes? How about cooking classes? Can I get coffee and one of those awesome blueberry-white chocolate scones without committing to full-on weekend brunch? The market, set to open at the re-started Gramercy project, will address everything.

“It’s quite large, more than 7,700 square feet, so it will help us expand,” Krausman says. “We’ll do grab-and-go, we’ll have patio seating and inside at communal tables, and most of [Gramercy] is commercial space and office, so there’s kind of this built-in clientele already.” Also, pastry chef Walter Dickerson, who’s been with DW for three years, is “an awesome baker who is underutilized right now, and this will be a space for him to really blossom.”

Krasuman and Wilson came close to expanding DW Bistro with a second restaurant Downtown earlier this year, but the market concept just made more sense, one that their regulars—friends, actually—can’t wait to explore.

DW Bistro 6115 S. Fort Apache Road, 702-527-5200. Tuesday-Thursday, 11 a.m.-9 p.m.; Friday, 11 a.m.-11 p.m.; Saturday, 10 a.m.-11 p.m.; Sunday, 10 a.m.-2 p.m.

From Aerialist to Coffee Queen

By Cate Weeks | VEGASSEVEN.COM

Then:  Holly Steeley was an aerialist for Le Rêve, Phantom-The Las Vegas Spectacular and Storm from 1999-2013.
Now:  Owner of Holley’s Cuppa coffee shop in the Mountain’s Edge community.

Since bringing home her first paycheck at age 16, Steeley had always socked away a good portion of her earnings for a rainy day. So after being turned down over and over for a small business loan—Would you loan money to an aerialist with little off-stage experience and no business degree?—Steeley decided it was time to make her own rain. She pulled out her savings and racked up credit-card debt to open the specialty coffee shop she had long wanted to launch. “I probably did everything you’re not supposed to do, but I had to,” Steeley says. “Whatever I did for a second career, it had to be something I was passionate about. Entertainers are lucky, because we get paid to do something we truly love. I couldn’t face giving that up.”

Sinking her money into a risky business venture was a surprisingly easy decision. Steeley says she had spent five years researching the industry at coffee conventions and traveling to South American farms to learn how coffee beans were harvested. Further proof of her dedication: She tested roasting techniques and even got a part-time job as a barista while still performing until midnight at Le Rêve. “I was tired all the time, but I had to know that I’d love this business before I took that final leap off-stage.”

She loves it so much that she’s developing a second Cuppa location at the Gramercy off Russell Road and Interstate 215. “I still don’t have a finance degree, but now I’ve got a lot of success under my belt. I’m pretty sure loan officers look at me more seriously now.” Indeed, they do: Just last week Steeley secured a Small Business Administration loan. “I’m still giggling,” she says. “This is a big deal!”

Let Them Eat Local

By Xania V. Woodman | VEGASSEVEN.COM

The area surrounding Interstate 215 near Russell Road is hardly what anyone might call a dining destination. Other than brunch staple DW Bistro, pizzeria Due Forni and a handful of hit-or-miss Thai and taco joints, the southwest quadrant of the Valley is effectively a culinary desert. The Gramercy, however, could be the remedy.

Last June, the former Manhattan West site lay fallow, a casualty of the Great Recession that left the $180 million residential, office and retail project unfinished and with an uncertain future. WGH Partners, which specializes in turning around distressed properties, purchased the site with the Krausz Companies, retitling it the Gramercy, after New York’s famed park of the same name. The owners aim to re-create the neighborhood feel of that tree-lined community with the project’s four-story luxury lofts (160 units) and mixed-use dining, retail and office space; a nine-story condo tower with 85 units will arrive in a later phase. In all, the Gramercy encompasses 500,000 square feet over 20 acres, plus underground parking, and it has been moving full-steam-ahead to meet the late 2014 deadline set for Phase 1.

Jennifer Guevara-Leone does property acquisition for WGH Partners and is among those charged with filling the mixed-use property with tenants. “I’m the demographic,” she says. “I’m 39; I love to go out to eat. I’m a local—born and raised—and I don’t frequent the Strip to eat. I would eat there [at the Gramercy], I would work there, I would play there, I would live there.” Already a medical group has signed on, adding 600 daytime users to the community’s eventual full-time residents. The Gramercy also has desirable neighbors in Rhodes Ranch, Spanish Hills, Spanish Trail and the Ridges, as well as nearby Bishop Gorman High School.

But it’s the Gramercy’s dining options that will bring the rest of the city to their doorstep.

At present, the slated anchor-space tenants include a new concept from Ferraro’s chef Mimmo Ferraro and his wife, Nicole; an Italian steakhouse by chef Alex Stratta; and a fourth Bachi from Lorin Watada, this one with a bar focus. A market from DW Bistro owners makes up the fourth prominent corner space opening onto the lushly landscaped circular courtyard. Other units include The Cuppa, a second coffeehouse by former Strip aerialist Holley Steeley, and a medical spa with a possible juice bar by Dr. 90210’s Dr. Gary Motykie, as well as a proposed sushi bar, healthier-choice concept, gym and salon.

Like Tivoli Village and the District at Green Valley Ranch—and the upcoming Downtown Summerlin—the Gramercy is looking for that just-right mix of dining options that will serve its urban dwellers and workers, as well as attract a destination diner. Guevara-Leone says that while she could have snapped her fingers and filled the retail and dining spaces with the usual mix (Pottery Barn, Subway, Starbucks), she convinced her partners to seek local up-and-comers and regional proven performers instead of chains and franchises.

Stratta was among the first to come aboard.

“The most exciting and interesting thing about the Gramercy,” Stratta says, “is that there’s not that much in that area, but there are a lot of people who can afford to go out often. It’s a part of their routine.”

Since parting ways with Steve Wynn in 2011, Stratta has been bouncing around from the Bay Area to L.A. to a just-concluded menu-consulting gig with Las Vegas’ Marché Bacchus bistro and wine bar. He has since joined restaurant franchise company KCI Investments and plans to open Alex Stratta Italian Steakhouse (working name) at the Gramercy, while also starting a high-end catering company and developing new fast-casual brands.

“It’s keeping me real busy,” the chef reports, but he still plans to run the steakhouse full time. Despite his career highs, this is the first time Stratta says he’ll get to be his own boss. “You can only go so far [at a hotel-casino],” the chef says, “and I think it went as far as I possibly could.”

That’s exactly the kind of partner Guevara-Leone is looking for. “I’m putting it to the chefs that whatever culinary idea or dream they’ve ever had that they could not do in a casino, or it just wasn’t the right time, this is your canvas. You are the artist.”

The space Stratta’s chosen in the northwest corner of the Gramercy’s central park boasts floor-to-ceiling windows and a partial Strip view, which will be reserved for the private dining room. Italian elements will include fresh pasta and flatbreads made in a wood-burning oven, plus a shellfish and raw bar. The steakhouse menu will be straightforward American, he says, “but I’m gonna fancy it up a bit.” And pricewise, “It will be very approachable.”

That’s hugely important to Stratta, who is eager to avoid the perception that he’s going to charge Strip prices. He will focus instead on building a team that can deliver the quality of service diners have come to expect from Stratta restaurants, regardless of price. “It doesn’t cost anything to have good service,” he says. “It’s just a matter of training.” The spot will have a bar, happy hour, live entertainment and occupy 5,300 square feet, including a patio. Watada’s 4,200-square-foot Bachi Bar (also a working name) will also have a heavy bar focus, with an emphasis on craft beer, twists on classic cocktails, and original creations with an Asian influence.

He will also expand on the Bachi model with entrées, salads and appetizers.

Both Stratta and Watada say they are in lease negotiations, though Bachi Bar won’t open until May 2015, as Watada is currently expanding into California with Bachi Burgers in West Los Angeles and Pasadena. Despite his brand’s growth, “I’m one of those people who can’t stand chain concepts,” Watada says. “I’ve always been a big supporter of local businesses first.”

Steeley is another local business success story, and was actually the first to sign on to the project. “It’s a new style of business venture,” Steeley says. “This side of town is in need of a gourmet feel.” Her 2,000-square-foot brick coffee shop and patio will also be a showplace for locally made artwork.

Ferraro, meanwhile, is close to signing. “We like the project, and we’re very interested,” he says. The chef is keeping the details quiet for now, but he says, it’s “definitely not 100 percent Italian. It’s fun, hip, sexy—something I know I haven’t seen yet, at least not in this town.”

After a five-year hiatus, The Gramercy lands its first big office tenant

By Jennifer Robison | LAS VEGAS REVIEW-JOURNAL

The Gramercy has its first major office deal.

The residential, retail and office development at Russell Road and the 215 Beltway has signed a lease agreement with HMS Holdings Corp., a publicly traded provider of cost-containment solutions for the health care industry.

Neither party disclosed the terms of the deal, but both sides described it as a “long-term” lease on 65,000 square-feet of space. More than 250 HMS employees will move into The Gramercy in early summer.

HMS currently has an office at 7501 Trinity Peak Drive.

Jay Krigsman, executive vice president of The Gramercy co-developer The Krausz Cos., said the property has interest from national and local companies, and leasing agents are in “active negotiations” with other office tenants, as well as restaurants.

Construction started back up on The Gramercy in September, five years after work stopped on the project. The Krausz Cos., based in California, and Las Vegas-based WGH Partners bought the property, formerly called Manhattan West, and revived it. The Gramercy will have more than 200 luxury apartments, as well as a central park, offices and stores. The first residential occupants are scheduled to move in during summer.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.