A Carnegie Hill apartment building owned in part by the estate of an only son, Mark Terk, who died two years ago, is generating a bidding war among leading property owners that insiders say is reminiscent of the boom years.
The 96-unit apartment building at 1327-1329 Lexington Avenue between 88th and 89th streets, owned by the Terk family’s Rhinelander Properties is attracting bids from the likes of Gary Barnett’s Extell Development, Ofer Yardeni’s Stonehenge and Ziel Feldman’s HFZ, several sources said.
Bids have allegedly been made for about $80 million to above $90 million, putting the price at about $450 per square foot for the residential portion of the building that is approximately 60 percent market-rate, sources said. The 11-story building, built in two sections in 1927 and 1929, is approximately 167,543 square feet with 5,000 square feet of retail, much of it fronting Lexington Avenue, public records show.
Terk the son, was in his 50s when he died in May 2008. He is survived by his mother, but she is incapacitated, sources said. She could not be reached for comment. His father died in 1986, and now Terk’s estate is in the hands of his friend, film editor Glenn Staack, the executor of the will. Terk and his mother Lucille Coleman owned Rhinelander Properties, court records and sources said.
One source who put a bid on the property, but did not want his identity revealed, commented that the prices landlords are offering for it equate to a capitalization rate, or a rate of return on the investment, below 4 percent. That is in a market where rates have been about 6 percent for mixed-use buildings in Manhattan, a first-quarter report from Massey Knakal Realty Services says.
A lower capitalization rate implies a buyer expects the property to increase in value over the current rate of return.
“I think it shows the incredible strength of New York,” the source said. “The number [seems to be] going back to the old days. I don’t get it — actually I do get it. People are getting 1 percent in the bank and if they get 4 percent in great real estate,” then it appears good in comparison, the source said.
Another source said potential buyers justified the high bids because the property could be converted to a condominium in a neighborhood where condo apartments sell for more than $1,200 per square foot.
An appraisal of the property in 2008 provided a fair-market value of the building at $34.3 million.
Staack said in a phone message the bid numbers provided by sources were incorrect, but he did not provide bid numbers or additional information on the bidding process.
On a voicemail, Staack said in addition to the building there is a colorful story about Terk’s real estate family in New York City.
“It is a heck of a fun story in this family dynasty. [It’s] not controversial by any means. I mean there is some of that, too, about the selling of everything,” he said in the voicemail. But he said there was a fascinating family story, as well.
He noted he had collected documents, for example one from 1952 that put a price of $1.1 million on the building at the time.
He added that a few years ago the family was entertaining offers of more than $100 million.
Proceeds from Terk’s share of a sale would go to the Mark Paul Terk Charitable Trust, a non-profit philanthropic organization, court records say.
Extell, Stonehenge and HFZ either declined to comment or did not respond to a request for comment.
Staack also recently sought approval of the bulk sale of seven cooperative apartments at 63-61 99th Street in Rego Park for $450,000, records filed May 24 with the New York State Surrogate’s Court show.
The 2008 appraisal of the Lexington Avenue property said the retail space was collecting $608,000 per year in rent, or about $121 per square foot, and the residential rent roll was about $4.7 million per year.