Genting seeking development ally for bayfront hotel and condo project
06/13/2014 5:24 PM
06/13/2014 7:12 PM
On the morning of April 28, a demolition crew knocked down the south wall of the former Miami Herald headquarters for its owner, Genting Group. A giant cloud of dust settled, then nothing more. The work essentially stopped.
City of Miami building director Peter Iglesias suspended the demolition, objecting that the demolition firm, BG Group of Boca Raton, was operating in an unsafe manner that endangered construction workers — an opinion that BG disputes. “They were weakening the columns and putting cables on them and pulling,’’ Iglesias said. “How do you do that with construction workers there? It’s too dangerous.’’
While the demolition resumed about two weeks later, employing a different top-to-bottom approach that the city deemed acceptable, the recent obstacle is emblematic of a string of missteps that have punctuated the cash-rich resort giant’s foray into South Florida.
Genting keeps hitting walls, even as it pursues scaled-back plans for a hotel condo and retail complex on the 14-acre waterfront site at One Herald Plaza.
Now, Genting is considering hitching its star to South Florida’s most prolific developer: Jorge M. Pérez. In an interview, Pérez, chairman and CEO of the Related Group of Florida, told the Miami Herald he was contacted in recent days by a senior Genting official and had preliminary discussions about the possibility of developing the Miami Herald site together.
“They called me to see if I’m interested in maybe developing together,’’ said Pérez, who is currently leading a condominium construction boom in Miami. Pérez said the high-level Genting official, whom he wouldn’t name, told him he would follow up when he was in Miami.
“We’ll probably talk again.’’ Pérez added: “It’s a great site.’’
While the talks between Genting and Related are very preliminary, an eventual alliance could give Genting local development expertise and market savvy to navigate Miami.
Genting’s bids to change Florida law to allow full-fledged casino gambling at the Miami Herald site have failed to date despite heavy lobbying. Plans for gambling there have been thwarted at every turn, most recently in March when state regulators denied a more modest proposal to team up with Gulfstream Racetrack to use the racetrack’s authority to operate slot machines on the waterfront site. The state said Gulfstream couldn’t move its permit to Miami-Dade County from Broward under state law.
More than a year after Genting took possession of the prime bayfront headquarters of the Miami Herald, when the media company relocated to new facilities in Doral, the casino resort giant’s apparent slow progress has helped fuel speculation that Genting may be ready to fold its hand. Rumors abound in Miami that Genting is ready to sell the assemblage of real estate it began acquiring in 2011 with grand plans for the world’s largest casino.
Not true, says Genting.
In a written response to inquiries, Christian Goode, president of Resorts World Miami, Genting’s local arm, said definitively that Genting isn’t selling.
“Resorts World Miami is committed to developing a mixed-use complex including residential, retail and hotel uses on the site of the former Miami Herald building. Once completed, Resorts World Miami will expand public access to Biscayne Bay and bring one of Miami's most prized pieces of land to life. We are excited about this vision and are not entertaining offers to sell the property,” Goode said in a statement through the firm’s publicist, Tadd Schwartz.
Genting declined to be interviewed for this article, as it has several times in the past. The company didn’t comment on its talks with Pérez or on the demolition.
All told, Genting has about 30 acres in the neighborhood around the Adrienne Arsht Center for the Performing Arts. In addition to the 14-acre Herald complex, which it purchased for $236 million, it acquired the Omni center near Biscayne Boulevard, raising its investment to more than $420 million.
Genting bought the debt on the Omni — including a $161 million note from Pérez and other Miami real estate investors, Jimmy Tate and Sergio Rok — in the fall of 2011 with plans to quickly open a casino there while it pursued longer-term plans to develop the Herald site.
Despite its highly publicized setbacks, Genting continues to take baby steps. The company has been upgrading the historically designated Boulevard Shops building that came with the Herald purchase and has tapped Prime Sites Inc. to line up tenants.
“We’re attracting quality retail and food and beverage,’’ said Monette Klein-O’Grady, a partner at Prime Sites. “The market is in high demand.’’
Meanwhile, Genting is pushing ahead elsewhere on the continent, with casinos in New York and Bimini. The small Bahamas island is home to Resorts World Bimini, which is served by a fast ferry from Miami — an operation that operates on weekends after a series of initial regulatory hold-ups.
In May, Genting revealed details of its plans for Resorts World Las Vegas, a $4 billion multi-phase casino resort at the site of the old Stardust. It expects to start construction in Las Vegas later this year.
In Miami, the dispute with the city building department over demolition tactics appears to be resolved. Building director Iglesias said the demolition was put on hold for about two weeks in May.
“I red-tagged construction,’’ Iglesias said, using an industry term for an order to stop work. “What they were doing, in our opinion, was not safe.” The building official said the demolition crew was using heavy equipment to weaken the internal supports of the building and then tugging on strapped cables to collapse it from within.
“They came back with an engineer and came back with a different method . . . taking it down from the top,” he said.
Steve Greenberg, a member at BG Group, acknowledged that his company agreed to change its demolition tactics after the city raised concerns, but he insisted that the original approach was a safe and established practice. Greenberg said his company hired a consulting engineer to deal with the dispute with the city.
“We weren’t doing anything wrong in the first place. It’s just that the city didn’t understand what we were doing,’’ Greenberg said. He said the demolition company, which has done numerous major projects in South Florida, has used the approach of weakening the internal supports on a host of projects without any problem.
Greenberg said his company has resumed work with frontloaders, removing the building material from the top down.
With Genting holding its cards close to the vest, it’s unclear whether it will end up allying with a developer on the project.
Related’s Pérez, while enthusiastic about Genting’s overture, characterized the talks as “preliminary.” “They called us. They’re probably talking to others, too,’’ he said.
In 2011, when Genting paid $236 million for the sprawling bayfront Herald complex, the real estate recession was still weighing heavily on the region, and many naysayers sniped that those foolish foreigners had overpaid.
But Miami’s subsequent real-estate rebound now makes the secretive gambling giant look farsighted, albeit star-crossed in its tactics.
Developers and financiers from all over the world are pouring cash into Miami’s red-hot market for ultra-high-end condominiums and hotels. Waterfront parcels in Miami are fetching spiraling premiums and all but vanishing from reach.
“They bought it with gambling in mind. But now — in this market?’’ said Pérez, his eyes twinkling.
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