Landlords look to partial interest deals to keep control at office assets

June 20, 2012 11:30AM

Partial interest deals, which allow owners to keep some control over properties they might otherwise lose to lenders through default and foreclosure, are being used increasingly by Manhattan office landlords, the New York Times reported. One recent examples of this phenomenon is Crown Acquisitions’ purchase of a 49.9 percent stake in the Olympic Tower last month from Alexander S. Onassis Public Benefit Foundation.

“Most of the real estate business is about ego and control, and if you talk to most of the usual suspects, they want to go out and buy buildings,” Ronald Dickerman, Madison’s founder, told the Times. “But we’ve created a really interesting business out of buying these partial interests in a private and underexposed niche of the commercial real estate business.”

The Times noted that many of the deals involve stakes slightly less than the 50 percent threshold, so that sellers aren’t responsible for paying the Manhattan’s 3.025 percent transfer tax.

Such deals accounted for 63 percent of the $15.7 billion in Manhattan office transactions in 2011, according to data from Real Capital Analytics, whereas in 2007 those transaction comprised just 19 percent of deals. [NYT]