The Real Deal New York

Extell moves to take control of Ring building in Midtown South

Other investors plan to target Frank Ring’s ownership in other properties

April 26, 2012 12:30PM
By Adam Pincus

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From left: Gary Barnett of Extell Development, Frank Ring of F.M. Ring Associates and 251 Park Avenue South

For the second time in four years, Gary Barnett’s Extell Development is looking to the courts to wrest control of an under-utilized Manhattan office property from brothers Michael and Frank Ring. Extell owns half of the 120,000-square-foot 251 Park Avenue South, while the other half is owned by the Ring brothers. The property is managed by Frank’s F.M. Ring Associates.

Extell purchased a 50 percent interest in the 16-story building located on the corner of 20th Street in December for $19 million, city property records show. Michael and Frank each own a 25 percent interest.

The developer is seeking a judicial sale of the building, which brokers consider underperforming, in the complaint filed by Extell April 18 against Frank as an individual and a company owned by Michael, called 251 Park Avenue South (MR) LLC. In addition, it wants the court to block the Ring managing agent from signing any leases without Extell’s consent. Extell and the Ring brothers did not immediately respond to requests for comment.

The building is at least 25 percent vacant, data from CoStar Group shows, in the Midtown South office market where CBRE Group shows the overall vacancy rate to be just 6 percent.

The suit was filed the same day that an arbitrator sided with real estate investors Princeton Holdings and Bluestone Group, allowing them to enforce an agreement to buy a $112.5 million stake in 14 properties owned by the Ring brothers, including 251 Park Avenue South, according to sources.

Extell bought out the Ring brothers in another building formerly in their portfolio, 14-story 20 West 47th Street through a judicial sale in February 2011. But it was not a quick process. Extell filed that suit in February 2008. That building is a few doors down from Extell’s new office building the Gem Tower, rising at 50 West 47th Street.

Frank should be expecting more of these lawsuits seeking a sale of his buildings. That’s because Princeton Holdings and Bluestone Group said in court papers that they will seek similar judicial sales of the 14 buildings, after they have won control of Michael’s portion of the properties.

Extell has the right, as does any so-called “tenant-in-common” owner, to seek a partition of the property, Janice Mac Avoy, a litigation partner with the law firm Fried, Frank, Harris, Shriver & Jacobson, said. She is not involved with the Extell lawsuit at 251 Park Avenue South, but represents Princeton and Bluestone in their dispute with Michael Ring. She declined to comment on the status of the arbitration, but legal sources noted that it is standard practice for a party to file a motion in court confirming the arbitration award 14 days or more after the ruling.

The arbitrator said Michael must move forward with an agreement he signed in February 2011 with Princeton, led by Joseph Tabak; and Bluestone, where Tabak’s brother Eli Tabak is a principal, to sell them a 56 percent share of his interest in the properties, valued at about $112.5 million. The Tabaks need to invest about $65 million in cash in the deal, court records show.

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