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Journal Sentinel business reporter Tom Daykin talks about commercial real estate and development, including stores, hotels, offices, condos, apartments and industrial buildings.

The Journal Sentinel, February 4, 2011

A Hofbrauhaus restaurant and beer garden, which had once planned to open at the former Pabst brewery’s visitors center, has tentatively agreed to lease space at another Pabst building.

Cincinnati Restaurant Group Inc. operates a Hofbrauhaus in Newport, Ky., under license from the famous beer hall of the same name in Munich, Germany. It has signed a letter of intent to lease 18,000 square feet at the former Pabst brew house, at the northwest corner of W. Juneau Ave. and N. 10th St.

Gary Gorman, whose Gorman & Co. is buying the brew house and adjacent mill house, told me the Hofbrauhaus is leasing most of the first floor, and also will feature an outdoor beer garden.

TThe first floor is “a big open room,” which includes the bottom portions of the former brewing kettles, which are largely on the second floor, Gorman said.

The Hofbrauhaus investors had initially planned to operate the restaurant and beer hall at the former visitors center, 901 W. Juneau Ave.

But they and building owner Brew City Redevelopment Group LLC were unable to reach an agreement, which I reported in November.

A group of investors who own around 40% of Brew City Redevelopment Group later sued majority owners Jim Haertel, Brew City president; his wife, Karen, and his mother, Janyce.

The minority owners, led by Dan Glaser, say ending negotiations with Hofbrauhaus hurt Brew City, and that Haertel made that decision without board approval. Jim Haertel says the Hofbrauhaus offer would have been too risky, requiring Brew City to invest $6 million in the venture.

Gorman said his Oregon, Wis.-based firm has agreed to help pay for building improvements as part of the tentative agreement with Hofbrauhaus.

Gorman & Co. has agreed to buy the six-story brew house/mill house from an investment group owned by the estate of Joseph Zilber, which is overseeing the Pabst redevelopment effort.

Gorman plans to remodel the property into a 90-room extended-stay hotel.

The development firm has raised $15 million in foreign capital through the EB-5 program for the hotel and restaurant project. The EB-5 program allows a foreign citizen to obtain a U.S. residency visa by investing at least $1 million, or at least $500,000 in rural areas and areas with high unemployment, with that investment creating at least 10 U.S. jobs.

Work can begin once the U.S. Department of Homeland Security has approved the foreign investors, Gorman said. He said he didn’t know when the department will complete that process, which started four months ago.

Gorman also will use $3.8 million in federal historic preservation tax credits to help finance the project.

Six large copper brewing kettles will be among the historic features incorporated into the hotel and restaurant development.

Other features include a skylight and a large stained glass window of King Gambrinus, the unofficial patron saint of brewing. The cream city brick buildings, designed in the German renaissance revival style, date back to 1882.