Search for cash turns into sale of Pittsburgh’s iconic Kaufmann’s Building
The owner of Pittsburgh’s iconic Downtown Kaufmann’s building needed money to finish prolonged renovations and received an offer it couldn’t refuse from a Florida developer with close ties to the region, the company founder said Friday.
Philadelphia-based Core Realty, which purchased the building at Fifth and Smithfield for $15 million in 2015, agreed to sell to Fontainebleau Development because of the owner’s integrity and its reputation for quality work, according to Michael Samschik, Core’s founder.
“We needed a cash infusion and we were considering multiple offers,” Samschik said. “It just went to another level and this is where it ended up. Fontainebleau was leaps and bounds ahead in terms of the quality. They blew us away with everything.”
Jeffrey Soffer, Fontainebleau’s chairman and CEO, was born in Pittsburgh. His father, Donald, developed such local projects as the South Hills Village and Monroeville Mall, as well as One Oxford Centre in Downtown Pittsburgh, according to the company attorney.
Jeffrey Soffer renovated the world-famous Fontainebleau Miami Beach resort along with other high-end developments in southern Florida, said Jack J. Kessler, an attorney with the Pittsburgh law firm Buchanan Ingersoll & Rooney, who assisted Fontainebleau in acquiring the building.
The two sides have agreed on terms that were not released and are working out final details. Kessler said Fontainebleau hopes to close on the sale early next year.
“Mr. Soffer became aware of the project in general and his interest was piqued because his family was originally from Pittsburgh and Mr. Soffer was actually born in Pittsburgh,” Kessler said. “He was also aware that the Pittsburgh market has done very well in the last several years.”
Pittsburgh officials are anxious to see the project completed.
“It’s a critical corner that connects everything that we’ve seen growing out of Market Square to everything that will be developed up toward the (former Civic Arena),” Mayor Bill Peduto said. “This is a key linchpin for the city.”
John Valentine, executive director of the Downtown Community Development Corp., viewed the sale as a good sign.
“I think Core tried hard, but there were a lot of issues with that building that were unforeseen by Core,” he said. “We’ve got to get that building filled with retail because now it’s an eyesore.”
Soffer intends to follow Core’s plans in finishing the project, but might make a few improvements.
“I’m confident that Mr. Soffer is going to bring back life to the outside of the building which is deserved,” Kessler said. “Without question along Smithfield, Fifth and Forbes, we have to do something. I know the city wants us to do something to the outside.”
The 13-story building includes the recently opened Even Hotel Pittsburgh on the Forbes Avenue side, more than 300 luxury apartments, four floors of parking and amenities such as an automated spa, movie center and gym. The rooftop will feature a swimming pool and sports courts. The hotel purchased two floors of the building from Core for $8 million in 2015.
The project has been plagued with delays and legal claims from contractors alleging Core did not pay them for work. AM Pitt Hotel LLC, an affiliate of Reception Hotels and Resorts, which owns the Even Hotel, sued last year, seeking $15 million in damages it blamed on delays caused by Core.
Core has promised to pay all outstanding debt and said the delays were not Core’s fault.
Samschik said selling the building would be bittersweet, but the company is proud to be handing it off to Fontainebleau.
“When this building is done it will be like nothing Pittsburgh has ever seen,” he said.
Bob Bauder is a Tribune-Review staff writer. You can contact Bob at 412-765-2312, [email protected] or via Twitter .