Real Deals

Real Deals: Greenfire completes 3 prominent deals with warehouse sale

dbracken@newsobserver.comMay 29, 2013 

LIBERTY1-DN-051611-HLL

City of Durham officials inspect a collapsed roof section in the center of the Liberty Warehouse on Foster St., Durham Monday May 16, 2011 after weekend rains led to the collapse of a roof section flooding businesses in the center of the warehouse. Inspectors and business owners toured the damaged warehouse while others started moving out of their flooded businesses.

HARRY LYNCH — 2011 News & Observer file photo Buy Photo

Two years ago it didn’t appear as though things could get much worse for Greenfire Development.

A portion of the Liberty Warehouse roof had collapsed after a thunder and hail storm, which led Durham officials to condemn the building. City officials and some tenants accused Greenfire of neglect. In the months that followed, two of Greenfire’s most visible partners, Michael Lemanski and Carl Webb, left active roles in the company.

After acquiring roughly 30 buildings, Greenfire had come to be viewed by some – fairly or not – as a developer whose inability to get deals done was holding back downtown Durham’s revitalization.

Fast forward to today, and things look very different.

In the past year, Greenfire has sold the Hill building – an Art Deco landmark designed by the same firm that produced the Empire State Building – to a Kentucky developer that plans to turn it into a boutique hotel and art museum. It sold the old Woolworth site across the street to a Colorado developer that is planning to build a 26-story tower on the property.

And now Greenfire has reached a deal to sell the Liberty Warehouse to East West Partners, which plans to demolish much of it and turn it into a mix of offices, stores and apartments.

“We’re actually, remarkably enough, executing on the strategy that we always intended to – it’s just four years later than we had planned,” said Paul Smith, Greenfire’s managing partner. “We were never going to be big enough to do these … north of $50 million deals.”

Of course, four years ago no deals were getting done, so it never seemed quite fair to single out Greenfire for its inability to raise money in a brutal financing environment. The three deals it has struck with other developers are both a sign of an improving economy and an indication that Greenfire is now a bit more eager to find the right partners to move these projects forward.

East West in Durham

East West Partners has long been interested in doing something ambitious in downtown Durham.

The company at one time considered buying the Jack Tar Motel on Corcoran Street, but Roger Perry, the company’s president, said his group could never agree on a purchase price with the owner.

Redeveloping the Liberty Warehouse, Perry believes, will go a long way toward linking the various pockets of downtown that have been brought back to life over the past decade.

“We hope that the Liberty Warehouse will be a gateway in to the central park area, and it will merge it more effectively with the core of downtown,” he said.

Perry said the company is close to securing “a linchpin entertainment, food experience there that will be the catalyst for making all that go.” East West Partners expects to close on the Liberty Warehouse by the end of the summer.

As for Greenfire, its partners declared two years ago that they wouldn’t let Liberty Warehouse be knocked down. That stance evolved as circumstances changed, which led to the agreement Perry and Greenfire signed with Preservation Durham that will allow East West Partners’ project to go ahead and some features of the property to be preserved.

“At the end of the day, it comes down to economics,” Smith said. “If you look at our body of work, everything we’ve touched, adaptive reuse has been what we’ve done with all our buildings. We tried really hard to do the same with the Liberty.”

The question now is whether Greenfire can continue executing. After nearly a year of delays, Smith said Greenfire and its partner Armada Hoffler expect to begin construction in the coming weeks on an 88-unit apartment complex near the American Tobacco Campus.

“We still have quite a handful of properties left,” Smith said. “Some of the smaller ones we’ll clearly do ourselves. But some of the bigger parcels, yeah, we’re … talking to people about deals.”

Bracken: 919-829-4548

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