Grand ambitions: A look at two notable Gilbert projects
Dan Gilbert and his Bedrock Detroit real estate company have invested hundreds of millions into renovating downtown buildings, many of which were empty or in need of major overhauls.
Here are two examples:
Book Tower & Book Building, 1265 and 1249 Washington
Price paid: $25.1 million in 2015
The purchase of the 38-story Book Tower and 13-story Book Building is the most Gilbert and his affiliates have paid for empty structures.
The Book structures, which are connected, have been vacant since 2009. The decline of the massive buildings began in the late 1960s, mirroring the city’s sagging fortunes.
“This project is going to be one of the most exciting redevelopments in our entire Detroit real estate portfolio,” Gilbert said in a written statement at the time of the sale. “We will bring this beautiful, world-class iconic landmark back to life in a manner that will make all Detroiters and visitors proud. We can’t wait to get started.”
Susan Lambrecht, a previous owner of the buildings, speculates renovation will cost at least $100 million.
“Dan has been absolutely masterful in what he is doing downtown. I think it can be a great success,” she said.
First National Building, 660 Woodward
Price paid: $8.1 million in 2011
The First National Building already is worth more than 13 times what Gilbert’s company paid, according to an analyst report. Several reports issued earlier this year by the commercial real estate research firm Trepp LLC — along with a loan prospectus by JPMorgan Chase & Co. — provide a rare glimpse into the financial details.
The historic skyscraper next to Campus Martius was purchased in bankruptcy court. Gilbert’s Bedrock has spent more than $110 million renovating the 25-story historic gem, according to the loan prospectus. Last September, the building appraised for $106 million, according to the Trepp report.
Through the end of 2014, the property had generated a net income of $18.3 million — including $16.4 million in 2014 as occupancy climbed, according to the Trepp report.
By last summer, the 822,684 square-foot building was 92 percent occupied, according to the JPMorgan prospectus. Now it is fully occupied, Bedrock officials said.
Last year, the First National Building was used as collateral for a $70 million commercial mortgage-backed securities loan issued to a Gilbert entity, 660 Woodward Associates LLC.
“They have done what any smart developer does — they bought low and then made a first-class asset out of the property,” said Dennis Bernard, founder and president of Bernard Financial Group in Southfield. Bernard Financial was the servicer on the First National loan, which he says is one of the largest loans of its kind for a building in Detroit.