Genting’s Miami project moving in slow motion
02/07/2014 5:56 PM
02/07/2014 10:18 PM
Amid a downtown building boom, one of Miami’s largest landholders continues to sit quietly on the sidelines. The big question: When will Genting make a move?
The Malaysian gambling giant in 2012 pulled back on its grand plans for a 5,000-room casino resort on the Miami waterfront after facing a backlash over the project’s proposed size. Last year it proposed a more traditional mix of condo towers, about 500 hotel rooms and a ground-floor cluster of shops and restaurants.
Now Genting is making moves that could jump-start its stalled plans to build a smaller complex on the waterfront as it bypasses the zoning process in favor of a quick building permit. But with Genting trying to quickly bring a slots casino to land it owns near the waterfront, the company could feel less pressure to start building as it waits for a more favorable gambling climate hinted at this week in Tallahassee.
“How many more condos do we need?” asked Jay Massirman, president of Rivergate Companies, a commercial developer and property manager in Miami. “If gambling does come one day, that will change the metrics. ... When you have these casinos [at] full crank, the profit in a year would pay for everything.”
The roughly 30 acres Genting owns near the Adrienne Arsht performance center comprise the Omni complex off Biscayne Boulevard and the old Miami Herald property, which includes the historic Boulevard Shops on Biscayne. Genting paid more than $420 million for the properties in 2011, instantly vaulting the company into the big leagues of Miami developers.
“It’s epic,” Massirman added. “They control one of the most significant pieces of real estate in Miami — in South Florida, probably.”
But if Genting’s real estate holdings have become more valuable in the recent boom, its plans have gotten murkier.
On Jan. 9, Genting announced a bid to use a Broward racetrack’s second, dormant casino license to open a 2,000-machine slots parlor in the Omni complex. The deal with Gulfstream Park was widely viewed as a longshot, with lawmakers cool to a novel transfer that is not expected to win regulatory approval. A transfer also could kick in provisions of the state’s 2010 gambling agreement with the Seminole tribe, which can halt about $140 million in payments to Florida if certain casino activities expand beyond the current roster of racetracks and jai-alai frontons .
But if successful in Tallahassee or in a court fight, Genting’s Gulfstream gambit would clear the way for downtown Miami’s first casino without a major overhaul of the state’s gambling laws.
Separately, Genting has shelved an effort to win broad zoning approval for a single large development on the 14 acres it bought on May 27, 2011, from McClatchy, owner of the Miami Herald.
Instead, it is pursuing a lone building permit for the six acres that houses the old Herald newsroom, offices and presses, saying it wants permission to erect the three 60-story towers essentially guaranteed by the existing building code, according to a city official who has met with Genting executives. Last week, the Federal Aviation Administration gave Genting clearance to build the trio of towers as high as 642 feet.
Applying for a building permit means an easier path to approvals for Genting, since it can bypass the public hearings and City Commission vote required to win a Special Area Plan designation. But it also means Genting won’t have the flexibility to rework Miami’s setback, green-space and parking rules in order to create a larger development on its holdings — a path taken by other large projects in Miami, including the Design District, Brickell City Centre and the nearby Miami World Center.
“We prefer to have a Special Area Plan in place whenever possible. We prefer to see what it all looks like together, to understand what the larger plan is going to be,” said Miami zoning director Francisco Garcia, who said he and his staff met with Genting executives over a potential SAP designation.
In a statement, Christian Goode, senior vice president of development for Genting Americas, said the company continues to pursue a commercial and residential center on the Herald site. “We are still refining the design and composition,” the statement read. “We still envision a mixed-use project with multiple towers offering fantastic views of Biscayne Bay, great waterfront dining amenities and superior high-end retail outlets.”
Genting’s casino ambitions appeared to get a lift this week.
After downplaying the chances of a major gambling bill passing in 2014, Florida House Speaker Will Weatherford revealed he would consider allowing casino resorts in South Florida in exchange for requiring statewide votes to expand gambling in the rest of Florida.
Weatherford’s comments came with their own set of obstacles, including a requirement that a new casino law be contingent on Gov. Rick Scott negotiating a new gambling compact with the Seminole Tribe. But the remarks lifted hopes for a pro-casino bill for a session that had seemed likely to defer the gambling issue for at least a year.
Hope for a casino bill could prompt Genting to hold off launching a development without gambling. A delay could be less costly if Genting injects gambling revenues into its Miami operations with a recently announced bid to bring slot machines to the Omni complex by transferring a Broward racetrack’s gambing permit to downtown Miami. According to a report in The Edge, a Malaysian publication, Singapore brokerage UOB Kay Hian issued a report Jan. 10 predicting an Omni slots-operation could generate about $66 million a year in operating profits for Genting, or about $180,000 per day.
Even if the political winds shift in Tallahassee, Genting faces local challenges. Las Vegas Sands, the global casino chain owned by conservative heavyweight Sheldon Adelson, has been aligned with the developers of the nearby Miami World Center project. Sands executives touted the chance to use a casino to bring a modern convention center to downtown Miami, a plan that could have more appeal as Miami Beach wrestles with the future of its city-owned center.
Genting and Sands face a different political landscape in Miami from 2011, when the construction industry was barely stirring and establishment leaders largely embraced the notion of a massive resort development where the Herald once stood.
“In the initial months, we were excited about the investment they were doing,” said Miami Mayor Tomas Regalado, who presented Genting Chairman K.T. Lim with a key to the city a month after the company’s purchase of the Herald site. “I now think a major casino is a very bad idea for downtown Miami.”
At the start of 2013, Genting said it would have the Herald site cleared by the end of the year. Instead, a skeleton demolition crew continues to pock holes in the old newspaper’s headquarters exterior as it clears out construction material pile by pile. Genting blamed the delays on environmental issues with the old newspaper facility.
A well-known developer recruited to head up the commercial and residential project, former Related Group executive Bill Thompson, has left. His replacement, former Miami-Dade Public Schools senior construction officer Nicolas Betancourt, declined an interview request in keeping with Genting’s usual preference not to beyond prepared statements issued by its public-relations firm.
Genting’s slower construction pace — the company now says the Herald building will come down by fall 2014 — could give Genting more time to chart a course in Tallahassee or see if it can prevail on the Gulfstream slots license.
Gambling seemed a certainty for Genting the day it announced its $236 million purchase of the Herald land. The company doubled-down on the location six months later with a $185 million acquisition of the neighboring Omni complex, which includes 650,000 square feet of vacant mall space, 350,000 square feet of office space and a 525-room Hilton.
South Florida’s housing market was in the wobbly stages of hitting bottom, and downtown construction was mostly idle. Genting touted its proposed Resorts World Miami as a major stimulus for the construction industry after an historic crash in housing starts Within a year, Genting knocked about $26 million off the value of the Omni site in securities filings. .
Today, Genting sits near the center of one of the hottest development markets in the country. With land values soaring on the heels of revived interest in condo investments, Genting’s land deals are earning favorable reviews.
“It would be hard to justify that investment in 2011,” said Ezra Katz, a veteran commercial deal-maker with Coconut Grove’s Aztec Group. “It’s much easier to justify that investment in 2014.”
Miami-Dade’s new Perez Art Museum opened across Interstate 395 from the Herald site, and a county science museum is under construction. The Miami World Center sits about eight blocks away. In December, Bloomingdale’s and Macy’s announced they planned to move into the World Center property by late 2016.
“It really is a landmark location,” Gerard Yetming, senior vice president at the CBRE commercial brokerage in Fort Lauderdale, said of the Genting property. “When Genting bought that land, it raised a lot of eyebrows. But the market has proven a lot of people wrong.”
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