Stratus Properties article
First it was Willie Nelson.
Now stepping to the line: basketball legend Magic Johnson.
The NBA superstar turned businessman is the latest high-profile figure to lend his name, money and expertise to Block 21. By early 2010, the project may transform a vacant downtown block into a flashy complex with live music, a W hotel, luxury condominiums, and shops and restaurants.
Earvin "Magic" Johnson and his private equity fund, Canyon-Johnson Urban Fund, will invest $50 million in the $260 million project that Austin-based Stratus Properties Inc. plans to start building in September on a lot north of City Hall.
Johnson said the redevelopment is a good fit for some of the nearly $1 billion the fund has committed to help foster $3 billion worth of urban revitalization and mixed-use projects in cities such as Los Angeles, San Diego, Miami, Milwaukee, Baltimore, Boston, Chicago and Brooklyn, N.Y.
"We just want to do business in a great city," said Johnson, who likes Austin and has friends here, including many University of Texas athletes. "Every guy that plays here, they don't want to leave. What is it that makes Austin magical like that?"
Johnson and K. Robert Turner, Canyon-Johnson's managing partner, said Austin fits the profile of cities where the fund likes to invest, from growing areas such as Central Texas to ethnically diverse neighborhoods in densely populated metro areas.
The Block 21 project is expected to create thousands of construction jobs and hundreds more jobs when the project opens, Turner and Johnson said.
"We are committed to creating opportunities for the people in Austin, and I feel blessed and fortunate to be able to bring our expertise and our money to the City of Austin," said Johnson, who led the Los Angeles Lakers to five NBA championships and became one of the NBA's most popular players ever.
Since announcing that he had HIV in 1991, he has crusaded for AIDS prevention and made socially conscious investments and donations.
Block 21 is the fund's first investment in Austin.
Canyon-Johnson Director Neville Rhone first targeted Austin for investment two years ago. Executives later paid visits to Mayor Will Wynn and other city officials who steered them to the Block 21 deal, Turner said.
The partnership resulted from a "two-punch knockout," with Wynn selling Canyon-Johnson officials on his long-range vision of Austin and Beau Armstrong, Stratus' chairman and CEO, selling them on "the uniqueness" of Block 21.
Stratus' plans for Block 21 include an upscale 250-room W hotel and 200 luxury condominiums in a 35-story tower, plus new homes for the Austin Children's Museum and KLRU's acclaimed "Austin City Limits" music program.
The condos are expected to be priced from about $400,000 to more than $3 million, Armstrong said.
In addition to the television studios, Live Nation will operate a 2,200-seat live music/performance space venue when "ACL" isn't taping. Willie Nelson and nephew Freddy Fletcher will be partners with Stratus in the "ACL" venue, lending financial and technical support.
The venue is expected to raise the show's profile and provide locals and tourists with a destination entertainment attraction, with five times the capacity of the existing quarters on the University of Texas campus.
Armstrong said the music component resonated with Canyon-Johnson, particularly Rhone and Turner, who are big fans of "Austin City Limits" and its public television sponsor.
"They thought that was really great to have that energize the development," Armstrong said.
Turner added that the goal of getting the highest level of green building certification for the project was a selling point.
Armstrong said Canyon-Johnson has been interested in the project from the outset, with a phone call from Rhone coming soon after the city chose Stratus to purchase and redevelop the site after a competitive process.
"They liked the concept," Armstrong said, but at that preliminary stage, discussions didn't go much further.
Rhone "kept calling back," Armstrong said. "And as we continued to make progress, I kept them informed and kind of struck up a good relationship."
Stratus chose Canyon-Johnson over a number of other "very qualified" prospective partners, Armstrong said, adding that the fund's Block 21 investment could yield double-digit returns."
Johnson said he's looking forward to attending Block 21's ribbon-cutting. "I'll be there for sure," he said. "We don't just write a check. We also get involved with the city."
Looking forward to making a trip to Lawton this weekend and starting Salvadore with frisbee training.