His company owns about two-thirds of the remaining 35 percent, and Rheal Capital Management owns one-third, he said, adding that all three have agreed to sell their portfolio of offices and parking lots.
The HFZ / Platform / Rhea / Redico joint venture bought the Fisher Building, the nearby Albert Kahn Building and parking assets in an online auction in July 2015 for $ 12.2 million – a very small amount of money for the property received. (The Albert Kahn building was later sold to a joint venture between Adam Lutz and Matthew Sosin for USD 9.5 million USA and the building was converted into apartments and commercial premises.)
“We spent about $ 30 million on (Fischer’s) building upgrades, and now it doesn’t provide significant additional benefits, but it remains an opportunity,” Cummings told me in an interview on Monday. “The next buyer, the next owner of this building, really has a lot to do in terms of improvements and leases, and this will allow anyone who follows us to add value. So that’s why now. I think we “got it to the point where we created value, but we also leave value creation on the table for the next customer.”
Cummings said the listing is the culmination of “an assessment of all options implemented in the past six months.”
“There was no disagreement between the partners over this decision,” he said, adding that the building is rented out at almost 70 percent, up from less than 40 percent, and the rent is $ 22-23 per square foot per year. more than $ 5. per square foot more than when purchased.
When HFZ was asked about the sale, HFZ emailed the following statement: “We are proud of the success of our partnership in repositioning the Fisher Building. The partnership determined that now is the right time to realize our investment and all the value we have created. “
Cummings told me on Monday that his company’s proceeds from the sale would be directed to other projects, mainly in the New Center and Milwaukee Junction areas. These include Chromaticity, office building at 7300 Woodward Avenue and building on 411 Picket…
“We have a lot of projects in Detroit, and certainly some of them require more capital, and from our point of view, this is a potential source,” said Cummings.
His company has had ups and downs since the acquisition of the Fisher Building in 2015.
The platform was intended for development and redevelopment in areas outside the city center, namely New Downtown and Milwaukee Junction to the east, as well as northwest Detroit, the Islandview area and the area around Detroit Mercy University.
For example, this removed structural steel off the Milwaukee Junction building site as he revises his plan in Baltimore and John R. In the Islandview area across from Bell Isle, he torpedoed his plan to build the corner of East Jefferson and East Grand Boulevard, and Cummings told me on Monday that the site of the Big Boy restaurant he demolished is likely to hit the market in the near future as well.
“We think this is a really good piece of real estate, but we don’t think the time has really come,” Cummings said.
In addition, The Platform’s Fitzgerald-based project with Detroit-based Century Partners also faced problems and delays.
But a project of an apartment on the Boulevard has been completed. west of Fisher Building, renovated former Wayne State University building on Cass Avenue and graduated redevelopment in northwest Detroit… Other projects include a new apartment building in Midtown with another Detroit developer Queen Lillian II LLC who in developing Completion is slated for next year, Cummings said.
Recently, The platform has teamed up with Related Cos by Stephen Ross. – that in connection with the type “Wow, small world”, made development with HFZ a few years ago – also with regard to a new affordable housing project in the Detroit area, in the area of the Ilic family.
But these ups and downs are nothing compared to last year’s HFZ saga.
Company facing a world of pain in New York: Bail, claims from creditors and contractors and building residents, foreclosure and potential bankruptcy, layoffs, serious dirt as a lawsuit calling former managing partner Nir Meir a “treacherous servant.”
And The Real Deal, a New York commercial real estate publication, noted last week that Zil Feldman addresses Meir in a lawsuit as a “sociopath” 17 times compared him to Bernie Madoff and other crooks and accused him of the failure of the $ 2 billion HFZ condominium called The XI.
But if you want to experience the chaos happening in the world of HFZ once again, think about this: A Crain’s New York Business reporter was told repeatedly Meir and representatives said in July 2020 that a $ 100 million lien on HFZ by his contractor at XI had been waived.
They told the reporter that they would put them in touch with the head of contractor Omnibuild. The reporter was then called on a restricted number from someone allegedly the managing director of Omnibuild and said that the lien had been lifted. However, when the reporter contacted Omnibuild President Paul Foskey, he told the reporter that managing partner John Mingione never called the reporter. The real Mingione also confirmed this, and spent the beginning of this month long interview with my colleagues at CNYB, stating that HFZ has “champagne flavor and beer pockets.”
It was Adam Feldman, a University of Michigan graduate and son of Zil Feldman, and former student broker Steve Morris, the longtime tenant who first brought HFZ’s attention to the Fisher building.
One can only guess what it will look like on the open market.
Mark Nassif, senior managing director of appraisal firm BBG, said that despite the “appetite” for office high-rise buildings such as the Fisher Building and mixed-use developments in the city, there are several problems with the sale.
“This is a very large asset and will be undervalued for many local buyers in terms of price, complexity and ability to own it,” he said. “You have problems with the pandemic, you do not know where the office real estate market will grow. I think people were expecting a return to employment this fall, but that is being pushed back. You also have the problem that the New Center does not have the same rent. like CBD (Central Business District).
“But this is a landmark building and a lot of capital has been invested in it. It has gotten good ownership and will benefit from it, but you will need a very strong, repeat customer with a comprehensive long-term plan to support something so complex in a market that is facing some challenges. ”