Buyer snaps up $84.3M of Las Vegas office space

Las Vegas Review Journal

In another sign of investor appetite for the once-dreary office market, a local landlord acquired several buildings in Summerlin and vacant space at Town Square Las Vegas.

Moonwater Capital founder Ofir Hagay said he and his partners had purchased about 445,000 square feet of Las Vegas office space. The $84.3 million purchase closed last month, property records show.

His group picked up seven buildings near Town Center Drive and Summerlin Parkway as well as never-finished space in two buildings at Town Square, the 100-acre retail and office complex south of the Strip.

Investors sold him the Town Square space less than a year after they bought it — and for almost double their purchase price.

Compared with other types of commercial real estate in town, Las Vegas’ office market has been slowest to recover from the recession, following rapid overbuilding during the mid-2000s bubble and a heavy reliance on tenants whose industry, real estate, was all but wiped out.

But Hagay and other investors have loaded up on buildings the past few years amid a growing job market and shrunken vacancies, doing so as office development remains relatively slow, meaning there’s limited competition coming out of the ground.

“The market has stabilized pretty dramatically in the past 12 to 18 months,” said CBRE Group’s Charles Moore, a listing broker for the Summerlin buildings.

Hagay said he liked his new holdings’ location and tenants. The Summerlin buildings are 84 percent leased, CBRE broker Marlene Fujita said, and Town Square is near freeways, the airport and the tourist-choked resort corridor.

A 53-year-old native of Israel, Hagay is betting that the market will improve even more and that companies will ditch pricier coastal cities for less expensive Las Vegas. All told, he has acquired about 750,000 square feet of office space since last year and said he wants to own 1 million square feet by the end of 2018.

He bought the Summerlin properties from Houston-based Hines and Los Angeles-based Oaktree Capital Management, which had acquired 32 buildings in Summerlin in 2012. The portfolio was just 50 percent leased at the time, Fujita said.

Hines and Oaktree sold the buildings to various buyers, and Hines spokesman Mark Clegg confirmed that Hagay had bought the portfolio’s last batch.

He said that Hines still owns Henderson apartment complex Domain and that “something new” is coming, but he did not elaborate.

Oaktree declined to comment on the office sale.

In January, Dornin Investment Group bought roughly 130,000 square feetof unfinished “gray-shell” office space at Town Square for $11.8 million. The firm planned to lease it and potentially sell it at some point, but Hagay made an unsolicited offer that was “hard to pass up,” said Eric Entringer, Dornin’s vice president of capital markets and investor relations.

Hagay bought the space for about $22.1 million, county records show.

“We didn’t really do anything to the property,” Entringer said. “We swept the floor one time, maybe twice.”

Hagay said that amid the retail industry’s troubles, Las Vegas won’t get another Town Square-type project for years and that he “gave a very nice profit” to Dornin.

“They took a risk and got rewarded for that,” he said.

Buyer snaps up $84.3M of Las Vegas office space

Commercial Mortgage Alert 9-14-2018

Each week, Commercial Mortgage Alert is the first to give subscribers an inside look at the real estate market’s most important financings and the latest action in the fast-moving CMBS market.  Please see the below PDF, article relating to us is featured on page 6.

Dornin Investment Group Sells 131,000 SF Office Asset in Las Vegas

Dornin Investment Group Sells 131,000 SF Office Asset in Las Vegas

LAS VEGAS — Dornin Investment Group (DIG) has completed the sale of Town Square North, an office asset located within Town Square mixed-use development on Las Vegas Boulevard South and Sunset Road in Las Vegas.

Moonwater Capital, a local real estate owner and operator, acquired the property for an undisclosed price.

The two-building asset features 131,000 square feet of Class A office space. The property was vacant at both the time of DIG’s acquisition in January and the current sale.

Investors buy The Gramercy apartment buildings and land

Investors buy The Gramercy apartment buildings and land

Las Vegas Review Journal

When Ofir Hagay and partners bought ManhattanWest five years ago, the suburban Las Vegas project was abandoned, unfinished and surrounded by barbed wire-topped fencing.

“It was like a war zone,” he said.

Today, after completing construction, landing tenants and selling its commercial buildings, Hagay’s group has sold the rest of the project, now called The Gramercy, and again fetched a hefty sum.

Developer Lyon Living acquired The Gramercy’s two four-story apartment buildings and 12.6 acres of vacant land and parking lots. The $45.75 million purchase closed May 31, property records show.

Lyon plans to build more apartments and a hotel at The Gramercy, and the purchase comes as investors buy a rising tally of rental complexes around the valley.

It also marks a full exit for The Gramercy’s prior owners, who bought the mothballed project for cents on the dollar after Las Vegas’ real estate market collapsed, and when the economy was in far worse shape than it is today.Frank Suryan, chairman and CEO of Newport Beach, California-based Lyon, said in an interview that The Gramercy, on Russell Road just west of the 215 Beltway in the southwest valley, sits right off the freeway and has “higher-end” workforce housing and easy access to places like Summerlin and the Strip.

“I love the location,” he said.

Suryan said he aims to break ground on the planned 300-unit apartment building and 175-room hotel at the start of 2019.

WGH Partners co-founder Benjy Garfinkle, whose firm teamed with The Krausz Cos. to buy the mixed-use project in 2013, noted that developers are building a lot of apartments in Las Vegas but don’t normally include on-site commercial space.

The Gramercy’s two four-story office and retail buildings were almost fully leased last year when The Koll Co. and Estein USA bought them for $61.75 million. Ground-floor tenants include DW Bistro, Pinches Tacos and The Cuppa Coffee Bar.

According to Garfinkle, The Gramercy’s apartments are “give or take” 90 percent occupied, though Suryan put the figure at 83 or 84 percent. Either way, Lyon paid top dollar for them.

The apartment buildings have 160 units total, and property records show they traded for $37 million. That amounts to $231,250 per unit, more than double the market average last year, as tracked by brokerage Colliers International.

Developer Alex Edelstein envisioned ManhattanWest as having 600-plus homes as well as offices, retail space and a hotel — one of many high-density, urban-style projects underway in Las Vegas during the bubble years last decade.

But Edelstein reportedly lost his funding and stopped construction in late 2008 as the economy was crashing, and he left the site untouched — one of many abandoned, partially built projects blighting Las Vegas during the recession.

Garfinkle has said Edelstein spent $170 million on the project.

WGH and Krausz bought ManhattanWest for $20 million, renamed it and finished much of what Edelstein left behind, the main exception being his unfinished nine-story condo tower, which they imploded in 2015.

“That was a big decision to blow that thing up,” Garfinkle said.

Hagay, also a WGH co-founder, said last week’s sale was “closure for us.” When his group bought the property, Las Vegas’ unemployment rate was nearly double the current rate, and Hagay said no one thought the project could be saved.

“Everybody said it’s not going to work,” he said.


Private Equity Firm Seizes Local Economic Growth Opportunities

Private Equity Firm Seizes Local Economic Growth Opportunities

Moonwater Capital has recently acquired Montecito Tower, a six-story high rise that sits comfortably along the I-215 Beltway, just west of the US-95 Highway in the rapidly expanding Northwest Las Vegas submarket. The Class-A office space projects superior visibility and maximum exposure as the only high-rise in the vicinity.

The emerging firm secured the $41 million capital package to acquire the office building with financing arranged by Dekel Capital, a Los Angeles-based Real Estate Merchant Bank. The remaining balance of the acquisition was funded through a $27.5 million first mortgage loan from Prime Finance, along with a joint-venture equity investment from a large global private equity firm.

Although 90% occupied, Moonwater Capital seeks to further develop Montecito Tower. Not only will it improve overall quality of the property by bringing in a diverse mix of retail and office tenants, but through excess land it will add two 4,000 square foot pad sites. The intent is for the pads to be utilized for medical office, office, or retail development.

As Moonwater Capital continues to shape the greater Las Vegas landscape, its recent developments are only the beginning. The city is in the midst of opportunistic renaissance; cultivated from its gaming and bombastic roots, the city is transitioning into that of a prosperous business destination thanks in part to various state incentives and zero state income taxes.

“We are seeing growth like never before, creating an environment of unlimited business opportunity. I am so excited to be part of this revival.” – Ofir Hagay, President & CEO of Moonwater Capital

In September, Moonwater Capital closed On A $24.8 million acquisition Of 8912 & 8918 Spanish Ridge, Adjacent Class-A office buildings in the southwest corridor of Las Vegas near Summerlin, Henderson, and Green Valley.

About Moonwater Capital
Founded in 1997, Moonwater Capital is a Las Vegas-based boutique private equity real estate fund headed by Mr. Ofir Hagay. Moonwater Capital specializes in value-add investments, particularly real estate properties in the greater Las Vegas and surrounding metropolitan areas. According to RealPage/MPF Research, “value-add investment is an intriguing and timeless concept with optimum ROI opportunity.” Through years of company-wide success, Moonwater Capital takes this “timeless concept” and creatively applies it to the Las Vegas Marketplace, a market in which they standalone.

The company leverages its deep knowledge, relationships and global experience to identify, secure and profit from strategic real estate projects; real estate projects that also impact the city of Las Vegas by way of job creation and community development.

About Montecito Tower
Built in 2008, Montecito Tower’s current occupancy is above 90% and includes anchor tenant Asurion, the leading provider of insurance & support services for consumer electronics serving 280 Million consumers worldwide. Additionally, the property is also occupied by the law firm Alverson Taylor Mortensen & Sanders. The firm began in 1977 as a partnership between two friends and former schoolmates, Bruce Alverson and Nevada Senator Harry Reid. ATM&S is now one of the largest law firms in the state of Nevada and provides legal services in the fields of civil litigation, medical malpractice, construction defect, and numerous other specialties.