The Real Deal New York

Investor close to $65M deal for 57th Street retail building

Joseph Safdieh must settle issues with seller before deal can be completed
By Katherine Clarke | July 09, 2013 06:30PM

Real estate investor Joseph Safdieh of Safka Holdings is close to completing the purchase of a four-story West 57th Street building for $65 million, according to court records, but first he must work out some kinks in the deal with the sellers.

Safdieh inked an agreement to buy the property, at 220 West 57th Street, between Broadway and Seventh Avenue, in May. But he is now suing the owners, David Steinberg and Jill Isaacs, for refusing to further extend the due diligence period on the property despite several outstanding issues relating to its certificate of occupancy.

Safdieh’s attorney declined to comment, while an attorney for the owners referred a request for comment to her clients, who did not immediately respond.

The suit, filed earlier this month in New York State Supreme Court, centers on Safdieh’s reluctance to put down a $5 million deposit for the property before ensuring that the building’s certificate of occupancy had been amended to allow for retail use on the second through fourth floors. The investor alleges that the current owners, who own and operate Lee’s Art Shop at the building, are currently using these floors illegally for their store, since zoning only allows for office use at the location.

Safdieh is seeking damages in excess of $10 million, as well as an injunction to extend the due diligence period on the property by another 30 days.

Steinberg and Isaacs are the children of Lee’s late owner Gilbert Steinberg, who died in 2008. The Steinbergs purchased the landmarked property, a distinctive building with French Renaissance detailing, in 1995. It was previously home to a branch of the Schrafft’s restaurant chain.

The 21,837-square-foot property, which sits on an 8,400-square-foot lot, includes 15,000 square feet of office space and 6,837 square feet of retail, according to PropertyShark.

The building — across the street from Extell Development’s prospective new 1,600-foot residential tower and one block from its condominium project One57 — previously came with 100,000 square feet of available air rights, PropertyShark’s data show. But those rights were sold in the early 1990s to the developers of 888 Seventh Avenue, according to court documents.

The building would likely be transformed into a high-end retail box, industry pros said.