The developer of the waterfront Ritz-Carlton hotel and condominium complex, stalled multiple times by the economy and other hurdles, said yesterday that the nearly 4-year-old proposal is back on track.
Edward V. Giannasca II, who took over as the sole developer of the $190 million Ritz project about a year ago, said he still has no groundbreaking date.
But he does have a signed agreement from the Ritz-Carlton Hotel Co. to operate the hotel and condos for 20 years and a new investor who can bring substantial cash to the project.
Giannasca acknowledged that the Ritz has gotten this close before only to have something or someone back off.
"This is against all odds," said Giannasca, who has been using family money to keep his Key Highway office doors open. "I think people have become skeptical because I do keep my business private and quiet. There hasn't been much in the paper. People haven't seen anything or heard anything, so they think nothing is happening. That is not the case."
Giannasca said he had been working for several months with the new investor, Midtown Equities LLC, a private New York outfit lead by entertainment company executive Joseph Cayre.
Midtown Equities President Daniel Pfeffer confirmed yesterday that it plans to invest an undisclosed sum in the 220-room hotel and 97-unit condo project.
"We have 100 percent faith and confidence in the Ritz to operate this hotel, and 100 percent faith in Ed Giannasca to get it finished," Pfeffer said.
Pfeffer said the amount Midtown Equities invests depends on how much is required by lenders. The company is in discussions with several lenders, he said.
Officials at Ritz-Carlton Hotel Co., which is owned by Marriott International Inc., also confirmed that it had signed a new management agreement with Giannasca.
"We believe in the market in Baltimore," said James M. Erlacher, vice president of North American Development for Marriott International Inc.
"We've been working with Ed for months, almost a year, since he took control of the project. The Cayre group is a newcomer, but it is a strong, well-capitalized group that fits the profile of our owner-investors."
The Marriott-owned brand previously had agreed to manage the property for L.I. Square Corp., the New York developer that backed off from the project last year. L.I. Square had taken over after the original developer, Stuart C. "Neil" Fisher , was forced off the project because of past development failures.
May help financing
Midtown Equities' involvement should help line up financing for the project, which has been the main obstacle for nearly every hotel project in town and around the nation in the last year.
A previously announced deal for financing from three European companies remains an option, though it would require Giannasca to borrow more money at higher rates than he wants, Giannasca said.
Midtown Equities was created to invest assets of the Cayre family, which formed GoodTimes Entertainment in 1984 and sells home videos of existing films to retailers such as Wal-Mart Stores Inc. and Target Corp. Other family companies are involved in selling software and providing venture capital.
Midtown Equities typically invests in office and residential real estate projects primarily in New Jersey, Washington, and New York. Midtown was an investor in Larry Silverstein's $3.2 billion purchase of the World Trade Center master lease just before the Sept. 11 attacks.
Marriott undeterred
Erlacher, the Marriott official, said his company has not been deterred by the recent announcement that H&S; Properties Development Group, led by bakery magnate John Paterakis Sr., would seek to build a Four Seasons hotel and condo project across the harbor. He said there was room for both.
Lenders may not agree.
Financing has been nearly impossible for hotel developers to obtain since the terrorist attacks of September 2001 dampened travel and demand for more rooms across the country. Some institutions have again begun lending money for smaller, limited service hotels as travel has picked up in places such as Baltimore, industry experts say.
But lenders have been asking for more equity from developers - up to 40 percent of the costs. Giannasca is not seeking public subsidies to help pay for the Ritz, but he notes that he will have cash from Midtown Equities and the condo sales. The condos are priced from $450,000 to $3 million, and more than half are reserved. Only a few potential tenants have asked for their $25,000 deposits back because of the delays, Giannasca said.
Hotel consultant Warren Marr said hotel projects still face tough scrutiny.
"There is a still a need for greater equity in hotel deals today than there was three or four years ago," said Marr, a consultant with PricewaterhouseCoopers LLP.
"It's not even a matter of the economic downturn or post-Sept. 11. The economy hadn't turned three years ago, but the industry fundamentals - growth - had started to slow. ... It's not easy to get financing for hotels. It's even harder for larger, more complicated transactions."
Must buy site
Giannasca still has a way to go. Besides lining up the financing, he must buy the Key Highway site from HarborView Properties Development Co., a neighboring upscale townhouse development.
Despite not having built anything together before, he plans to partner again with Midtown Equities and Michael Samuel - an associate of Giannasca's father, a New York architect, who put them in touch.
Already, the group is working on a commercial and residential project on a former rail yard in Miami. Giannasca said he is also considering bidding on downtown city property set aside for a convention hotel.