Tuesday, Feb. 22, 2005 | 10:54 a.m.
In an effort to raise capital for new projects, the Molasky Group of Cos. is selling its Bank of America Plaza in downtown Las Vegas to a Canadian-based real estate investment trust for $72 million.
Irwin Molasky, who built the 16-story, 254,000-square-foot tower in 1975, is selling it to Toronto-based IPC US REIT and its subsidiary IPC (US) Inc.
"As a development company, there is a need for new capital," Rich Worthington, president of the Molasky Group said. "We will be reinvesting the money back downtown."
The deal could take up to 60 days to be finalized.
Worthington said the money raised from the sale would at least partly be invested into the company's Parkway Center, which includes a 210,000-square-foot office building that will house the Southern Nevada Water Authority. The Molasky group also is nearly complete with an almost 100,000-square-foot office building on the city's 61 acres for the Internal Revenue Service.
The Molasky Group also is interested in building another high-rise office building downtown.
"We are far from announcing anything," Worthington said.
The idea on the drawing board would be high-rise office condos. Similar to small stand-alone for-sale offices that are found throughout the Las Vegas Valley, offices within the tower would be sold to individual users.
Worthington said some companies want to own their own space in a high-profile location, and do not want to be in small office parks on the outreaches of the Las Vegas Beltway.
"There is demand for that type of project and it has not been done before," Worthington said.
Over the past few years, the Molasky Group has invested more than $8 million into a remodel of the office building tower that included renovation of the lobby, adding a high-speed elevator system, and refurbishing the common hallways and lavatories.
The company also put more than $1 million into the low-rise portion of the complex for an upgrade to the exterior facade, landscaping of the property and the installation of public art.
John Restrepo, principal of Restrepo Consulting Group LLC, said he is not surprised that Molasky sold the building or that an international company is interested in investing in downtown Las Vegas.
"Everything is for sale at the right price," Restrepo said.
With redevelopment efforts downtown, the area also is again a viable place for business and development, he said.
"Five years ago, I would have been very surprised, because at that time office development was moving toward the Beltway," Restrepo said. "Now between the high rises, furniture mart, Jeff LaPour's Holsum Lofts, the Arts District, and the 61 acres, downtown is a prominent area to look at. Now it's a contender for development."
The building at 300 Fourth St. is 95 percent leased to several tenants, including Bank of America, which has a lease on 23 percent of the building until 2015. Lionel Sawyer & Collins, the largest private law firm in Nevada, also is a tenant in the building.
Las Vegas' growth was one reason the Canadian company was attracted to the property.
"Las Vegas has transformed itself in recent years and is now the fastest growing city in the U.S.," Vinay Kapoor, the REIT's president and chief executive said in a statement. "We are pleased to be able to enter this market with an accretive acquisition. This acquisition provides the REIT the opportunity to enter a new and exciting market."
The purchase will be financed with a $50 million, 10-year first mortgage at 5.02 percent provided by Bank of America. The balance will be funded through the REIT's acquisition line. IPC is the only real estate investment trust in Canada that invests exclusively in U.S. commercial real estate.
Mark Lucescu of the Lucescu Group at Marcus & Millichap represented the Molasky Group in the sale.
Worthington said Las Vegas has become a premier market, both nationally and internationally, for investors because of its rapid expansion and job creation.
Restrepo said Las Vegas real estate has become a prominent part of the U.S. real estate market, helping it attract buyers from around the world.
"The economy stayed strong after 9-11, the gaming industry is resilient and is a stable part of the economy," Restrepo said. "It has good economic fundamentals and Las Vegas is known all over the world."
In the past three to four years, the Molasky Group has sold off about $300 million in industrial, retail, and office properties in an effort to raise capital for new projects, Worthington said.
"We're just recycling equity from older properties to newer projects," he said.
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