The Real Deal New York

Extell taps Avison Young for tricky building sale

August 03, 2012 02:30PM

A Midtown office building owned by Extell Development could be yours — at least for now. Gary Barnett’s firm has put the 15-story, 94,000-square-foot building at 20 East 46th Street on the market, Crain’s reported, but the company only has a 31-year leasehold on the building. At that point, the owner of the land underneath the structure retains ownership of the building.

Nevertheless, Extell has commissioned Avison Young and its expanding New York City team to find a buyer willing to pay $25 million for the leasehold, which Extell purchased for $17.4 million in 2006.  The property is 85 percent occupied, according to Crain’s, and about half of the tenants are in the medical industry. Many have leases expiring in the next four to five years, allowing a new owner to increase building revenue through rent hikes.

As The Real Deal reported in July, Extell earned nearly $40 million off an office building sale nearby at 20 West 47th Street.

Jon Epstein, a principal at Avison Young, told Crain’s he wasn’t sure why Gary Barnett’s Extell decided to put the leasehold on the market, but did say it wasn’t a core asset. Epstein added that getting financing for a deal constrained by such a limited lease would have proved an obstacle for the sale, but his team has found banks willing to make a 20-year loan on the property.

Barnett did not respond to Crain’s request for comment. [Crain’s]