{image1}Have you ever wondered if you could take an idea, a goal, a passion for something requiring money beyond your means and a scale of vision beyond anything you've done before, and kick-start it into reality?
This story is proof that you can ... and what you have to go through sometimes to make it happen.
For a number of years, Jim Haertel, a Milwaukee-based financial and real estate consultant and UWM and Marquette grad, wanted to combine his passions for beer, history and real estate into one coherent creation.
"Originally I was pursuing the idea of opening a brew pub and beer museum in the Gipfel Union Brewery," Haertel said. The building, surrounded by chain link fence on 4th and Juneau Avenue with the Bradley Center serving as a backdrop, is one of the oldest surviving buildings in Milwaukee and the oldest former Brewery building still standing. He stood outside it and contemplated in the spring 1999.
"Then, I gazed up the hill and saw that huge Pabst sign staring back at me. I realized that massive Pabst Brewery complex was empty, the Park East Freeway was coming down, and all the land around that area was ripe for new development. I knew I had to go check it out."
Haertel recalls driving up Juneau Avenue, spotting the old corporate headquarters of Pabst -- several beautiful brick and stone structures at 901-917 W. Juneau Ave. -- and thinking would make an even better brew pub and beer museum than the Gipfel building. Haertel struggled to inquire about the buildings.
Phone call after phone call and letter after letter led nowhere; only contacting the webmaster that handled Pabst's Web site bore fruit and Haertel finally found someone in charge: the then-VP of Pabst Brewing Company, Bernie Orsi.
"Initially, we were told the buildings were not for sale. But we took the approach that everything is for sale at the right price," Haertel said.
During the 1990s, Pabst morphed from a major Milwaukee-based brewer to a marketing company that primarily promoted a portfolio of beer brands, contracting the actual brewing to other companies. Pabst was owned by S&P, a California-based charitable trust whose managers preferred holding and maintaining the Pabst property in Milwaukee versus selling it.
From One Brew Pub To Mega-Complex
S&P informed Haertel that the corporate headquarters building was not for sale by itself; Orsi bluntly told Haertel, "You have to buy the whole thing or nothing at all!" The entire Pabst property would have to be purchased as a single entity -- all seven city blocks -- sending the potential price tag into the eight-figure range.
While digesting this, a larger vision began to emerge: Haertel and others suddenly pictured a massive mixed-use development for the 27-building complex. Retail shops, brew pubs, restaurants, museums, entertainment venues, apartments and loft condominiums, even some office space ... all elements of classic urban development suddenly burst into his imagination and became a seemingly attainable goal.
Emphasizing the historic nature of these buildings, most built in the late 1800s, horse-drawn carriages, trolleys and more would create a theme that would take one back to the "Streets of Old Milwaukee." Given that this was the former Pabst Brewery, number one in the nation for many years, any redevelopment would have to embrace beer. The vision matched the passion ... real estate, history and beer.
Certainly a defining moment was Orsi's all-or-nothing demand. Rather than being deterred, Haertel found himself saying, "Well then, send me the information on everything!"
That's when Paul Bertling entered the picture. As VP and partner of the ad agency Creative Suit & Tighe, Bertling handled marketing for various projects for longtime buddy Haertel over the years, usually preferring to stick to the marketing side of things. This time it was different.
When Haertel described his admittedly far-fetched scheme, the sheer scope and ambition of the idea gave Bertling the desire not to simply assist with this plan, but rather to join as a full partner in the project, about to be incorporated as the Pabst Brewery Redevelopment Group (PBR Group). They soon re-christened the company the Brew City Redevelopment Group (BCR Group) to honor a request from Pabst.
With architects, builders, brokers, advisors and their own visions, architectural renderings and conceptual presentations started developing as the two ventured out to find outside investors who could actually make this proposed redevelopment a reality.
Finding The Money
A vision requires imagination; turning it into reality requires blood, sweat, tears ... and money. Lots of it.
Since hitting the Powerball jackpot seemed unlikely, Haertel and Bertling began the search for investors, literally from the moment Brew City Redevelopment Group began on New Year's Day 2001. The plan grew cohesive enough where by June 1, the two rented out a room in the Pabst Mansion and invited around 30 potential investors to see their vision for what would become PabstCity, but which they had dubbed, "Brew City Brewery District -- A City Within The City."
Six investors resulted from that presentation. Most were angel investors, friends and relatives of Haertel and Bertling whose faith and trust in the two sealed the deal as much as the idea itself. Jim's mom and uncle, Paul's in-laws, and other close cohorts allowed them to put together an offer that they brought to S&P out in California the following July.
A handshake deal resulted from the trip; though not written in stone (or on a contract, which works even better in real estate deals), an offer of $11 million for the entire Pabst property was worked out. Haertel and Bertling had to then come up with the money, starting with a hefty deposit.
In this case, S&P originally wanted a $500,000, non-refundable deposit simply to begin moving the deal towards a close. Haertel and Bertling began by negotiating the figure downward, eventually reducing the initial deposit to $50,000 which would cover the first nine months of the deal, at which time an additional $500,000 would be due. This would give Brew City three months to come up with the balance (over $10 million) due at closing.
"It took a long time to get them to agree to those terms," Bertling said, "And then there was the matter of risking the $50,000."
Haertel bit the bullet and liquidated much of his 401(k), paying the taxes and 10 percent penalty. This funded the dream in 1999, 2000 and 2001. Haertel and Bertling, with the ongoing assistance of Attorney David Keating, raised $100,000 from that Pabst Mansion presentation, by painstakingly putting together a Private Offering document. Haertel and Bertling emphasized tremendous gratitude to their "Angel" investors.
With real money now ready to be put on the line -- and lost forever if the deal did not materialize -- the two waited anxiously for a formal acceptance. Turned out the property was listed for sale to attract higher offers. Brew City gave a "final offer" and requested an August 31 deadline. As the deadline passed the increasingly frustrated pair, trying to move their dream forward but also trying to protect their investors, sent what was essentially a "never mind, the deadline has passed" letter to S&P. That prompted a phone call that resulted in a new, revised agreement that extended the deadline by 10 days.
On the 11th day, the accepted offer landed in the fax tray. All that was needed was Haertel's signature to validate the deal and move the entire project forward and make the dream reality.
Offer Accepted -- On A Bad Day
Ready to sign and celebrate in Keating's office, the TV in the corner suddenly started broadcasting images of hijacked planes crashing into the World Trade Center, the Pentagon and in a rural Pennsylvania field. It was the morning of September 11, 2001.
Suddenly, there was no mood to celebrate. The shock and dismay of those attacks also gave rise to uncertainty about the future. What would happen to the country? The economy? Nobody had a reliable crystal ball that day, or knew what to expect in the coming months and years. In the blink of an eye, the wisdom of entering into the deal at all became a concern on an entirely different level.
After a lot of contemplating -- quickly, with the expiration date of the deal still that day -- the two decided to put some faith in the future, sign the agreement and move forward.
More Money -- And Partners
Signing the $11 million real estate deal for the Pabst complex gave Haertel and Bertling nine months to gather up another $500,000. Of course, the $10 million-plus balance still needed to then be raised. The BCR guys knew one thing (or so they thought): they would best raise the money via a "divide and conquer approach," dividing up and selling different pieces of the property to raise the $11 million while still retaining control over the development's vision and, of course, the corporate offices on Juneau, which they still wanted for their brewpub and museum of beer and brewing.
The time had come to find major players: investors who had lots of cash and capital, with the clout and resources to generate the development for the multi-use array of stores, restaurants, entertainment venues, residences, and offices envisioned for the Pabst Brewery complex.
The two created additional presentation materials, a Web site (www.brewcity.net), and began courting "building buyers". Haertel would spend every Sunday afternoon offering free tours of the property to drum up interest (scheduling each one in the fall season to begin 30 minutes after the Packers games to allow people time to get there). Lots of potential partners stepped up; and time after time, deals fell apart. From late 2001 throughout much of 2002, hopes sprang up; obstacles tore them down.
But did I mention Haertel is pronounced "hurdle." Perseverance finally helped, along with good old-fashioned networking. The divide and conquer approach was scrapped in favor of the "find a white knight" approach. Brew City needed to attract some big development partners; and soon. They had about two months to come up with $500,000.
Eventually, three qualified investment groups emerged. One was Wispark, the real estate subsidiary of We Energies. Another was a Chicago-based investment group; the third came about from a source they didn't expect.
C.G. Schmidt Construction, Grubb & Ellis (The Boerke Co.) and Uihlein-Wilson Architects, their builder, broker and architect partners, introduced them to then-Milwaukee Bucks coach George Karl. Karl was looking for a site for his non-profit "Friends of Hoop" organization. Haertel and Bertling were only too happy to describe their vision for PabstCity to Karl, who liked the idea and asked if they had the necessary investors. The two replied they didn't, but it wasn't exactly a secret that he made a pretty good living as the Bucks coach and might have money to spare.
While Karl wasn't prepared to part with millions of dollars, he did hook them up with John Ferchill, a Cleveland-based developer who once tried buying the Cleveland Cavaliers during Karl's coaching days there. Ferchill's company, The Ferchill Group, had experience in redeveloping projects similar to the Pabst complex and proved to be enthused about the plan.
As negotiations, deals and plans went back and forth across meeting tables, phone lines, e-mails, and numerous tours of every inch of the mammoth facility, a small matter of $500,000 was needed to keep the deal moving toward its scheduled closing, turning the heat on Haertel, Bertling and all the others involved like a pressure cooker. Eventually, the Chicago-based investors faded out, leaving Wispark and The Ferchill Group as the primary developer for what will become PabstCity.
Working together made sensegiven the magnitude of this project, so Wispark and The Ferchill Group decided to pool resources, creating a joint venture. They, along with BCR Group, formed Juneau Avenue Partners, with BCR retaining control of the former Pabst Corporate Office Complex and a minority ownership interest in the rest of the site.
Finally, less than 10 days before the deposit's due date, a cohesive group capable of bringing the project to fruition was in place, the $500,000 payment was made, and the project survived another hurdle.
The Final Push
With a few months and a little over $10 million to provide before the deal was scheduled to close with S&P, things still weren't final. "The last three months were a roller-coaster ride," Bertling said. Juneau Avenue Partners pooled the balance of the $11 million purchase price for the official closing of the deal, which occurred, one day early, on September 10, 2002.
The entire Pabst Brewery Complex, all 27 buildings and seven city blocks, was now officially theirs.
In the end, Haertel and Bertling got what they originally wanted: the Pabst corporate headquarters buildings, plus a stake in the rest of the project. They will focus on opening a Hofbräuhaus Microbrewery and Restaurant (one of only two in the United States) -- complete with a Milwaukee (and Munich) tradition, the beer garden. A letter of intent has been signed. The Museum of Beer & Brewing is a fully functioning 501(c)3 non-profit corporation and has also signed a letter of intent. Finally, they have plans for a Beer, Bed & Breakfast.
Wispark and The Ferchill Group, the majority partners, handle the overall PabstCity redevelopment. There are a number of national and local businesses signing letters of intent and expressing interest, foretelling a massive amount of construction and renovation ($300 million has been reported) in what for the past several years has been a relatively isolated, desolate area of downtown Milwaukee. It will soon be a center of activity and interest, essentially a city within the city. The vision is a major mixed-use development that will soon be a historic district on the National Register. A major retail and entertainment "Lifestyle Center" will complement apartments, condominiums and office space.
Several years down, several to go: the opening of PabstCity is scheduled for Spring 2006. "From the spring of 1999 to the spring of 2006 is a long time to wait," Haertel says, "I am like a kid waiting to open a Christmas present and having to wait seven years!" Jim Haertel and Paul Bertling have a lot of people to thank and are sincerely grateful. They share this bit of advice; like beer has four ingredients: barley, hops, yeast and water. Their recipe for success is passion, people, patience and persistence.
