Flats East Bank July 2017

The Wolstein Group and Fairmount Properties have parted ways on the Flats East Bank project, after jointly tackling two phases of development on the 23-acre site in downtown Cleveland.

(Gus Chan/Plain Dealer file)

CLEVELAND, Ohio -- Fairmount Properties, which teamed up more than a decade ago with the Wolstein family to transform 23 acres on the east bank of the Flats into a mixed-use district, has stepped away from one of Cleveland's largest real estate projects.

In a news release Tuesday, Cleveland-based Fairmount said it sold its ownership interest in the Flats East Bank to the Wolstein Group. Terms of the deal weren't disclosed by either party.

During an interview, Fairmount principal Adam Fishman said his team is turning its attention to other endeavors, including a summer-long stretch of openings at the $240 million Pinecrest project in Orange and college-related developments in several states.

"It's just good timing," Fishman said of wrapping up the Flats joint venture, which started in 2005. "We've got a lot of other things going on."

Fairmount joined forces with developer Scott Wolstein and his mother, Iris, on the first two phases of the Flats East Bank - a roughly $500 million investment, so far, near the mouth of Cuyahoga River. The project spans an office tower, a hotel, apartments, restaurants and entertainment venues, with a public boardwalk and garage and surface parking.

"The reason Fairmount was brought into the project at the outset was that I was running a public company, and my board would not have been happy with me spending a significant amount of time on day-to-day operations in the Flats," said Wolstein, the former chief executive officer and chairman of DDR Corp., a publicly traded shopping-center landlord based in Beachwood.

But Wolstein's run at DDR ended in 2011. And late last summer, he finished a five-year stint as chief executive of a Chicago-based mall company. Since then, he's taken a more hands-on role in the Flats, where he envisions more apartments, restaurants and a high-end movie theater.

"The necessity that gave rise to our partnership no longer exists," Wolstein said, "and obviously Fairmount's got a lot on their plate. ... It's something we discussed, and we reached an agreement that worked for both sides, and we're still friends and we move on."

The Wolstein Group could bring other developers on board at the Flats East Bank, but only as expert partners on specific components of the project. There won't be another broad joint venture like the Fairmount arrangement, Wolstein said.

He expects the first round of plans for phase three, a potential $150 million undertaking, to crop up at city design-review committee meetings within weeks. New buildings would rise in two locations - on a grassy area near the river between FWD Day and Nightclub and Alley Cat Oyster Bar and in place of a parking lot behind the apartment building that bears an illuminated "Flats East Bank" sign.

Wolstein wouldn't get into details about the buildings, tenants or funding, beyond saying that "the only piece that needs to be closed is the public piece. The private financing isn't a problem."

He hopes to secure public approvals and start construction by the end of the year.

Fishman described the pause between phases as "a natural stopping point" for the longtime partners.

"It was - it is - a transformative live-work-play waterfront entertainment district," Fishman said of the Flats. "And it will continue to build on the success of the first two phases and continue to be, in my opinion at least, the masthead of where the river meets the lake. And I expect nothing but greatness."