The Real Deal New York

Goldman estate wants $7M to approve Uniqlo’s 34th Street lease: suit

December 28, 2010 06:50PM
By Adam Pincus

A tenant of the notoriously tight-fisted estate of the late Sol Goldman is claiming in a new lawsuit that
the sprawling real estate company is harassing it to extract a $7 million payment to approve a sublease
by Japan’s top clothing retailer, Uniqlo, at 31 West 34th Street near Herald Square.

Tenant El Fassi Realty claims the Goldman estate is using New York City Fire Department violations to
claim the lease — which expires in 2086 — is in default, because the lease requires
violations to be cleaned up quickly. If they are not, the Goldman estate will terminate the lease.

El Fassi, owned in part by clothing manufacturer Isaac Oved, controls 31 West 34th Street through a
ground lease, while the land is owned by the Goldman estate. El Fassi wants to sublease three floors
to Uniqlo for a new store in ground-floor space formerly occupied by Ann Taylor Loft and second- and
third-floor space occupied by clothing retailer Dr. Jay’s.

In order for Uniqlo to sign a sublease with El Fassi, Uniqlo would require a clause known as a non-disturbance agreement which gives it full rights in case El Fassi defaults, insiders said. But the non-disturbance cannot be given without the approval of the property’s owner, the Goldman estate. Insiders
said Goldman does not want to give its approval for the lease, rumored to be about $7 million per year,
without compensation.

The suit against 31 West 34th Street LLC, an affiliate of the Goldman estate’s Sol Goldman Investments,
was filed Dec. 14, state court records show.

The Goldman estate seeks to, “Oppress and harass [El Fassi] so that [El Fassi] would agree to pay [the
estate] $7 million not required under the ground lease to obtain from [the estate] a non-disturbance
and subordination agreement in favor of its proposed sublessee, [Uniqlo parent company] Fast Retailing,
Inc.,” the suit says, continuing, “Defendant’s notice is motivated solely by greed and avarice.”

The suit seeks a court order blocking the issuance of any more notices from the Goldman estate to cure
the violations. It also seeks to halt any proceedings against El Fassi related to the ground lease, without
approval by the court, the filings say.

El Fassi, Sol Goldman Investments and Uniqlo did not respond to requests for comment.

Uniqlo signed one of the most expensive leases ever in New York City this year, worth nearly $300
million at 666 Fifth Avenue in Midtown. The retailer, which has a store in Soho, wants to be on the
popular block of 34th Street between Fifth and Sixth avenues, which has been transformed in recent
years to a top retail destination
for international brands, and is now home to the highest grossing stores for several chains, such as the
Gap.

“It is the ultimate value-volume block,” Jason Pruger, a senior managing director with Newmark Knight
Frank Retail, said. He has done many deals for the Goldman estate on 34th Street, but was not familiar
with the dispute.

“When the money is this big, people play hardball,” Pruger added.

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