The Real Deal New York

Gary Barnett reveals how he won the Ring portfolio

Extell’s chief offers an inside look at his purchase of F.M. Ring’s prized Midtown South package
By Hiten Samtani | October 21, 2014 09:28AM

In a market where rents are on the upswing and demand is strong, an

empty building is a rare prize. In the case of the F.M. Ring

portfolio, there were 14 of them. Brothers Frank and Michael Ring,

long at odds, left about a million square feet vacant for years in

Midtown South – a neighborhood where average asking rents are now

north of $65 a foot. Not surprisingly, many of the city’s top

developers tried in vain to get their hands on the properties. The one

to finally pull it off was Extell Development’s Gary Barnett.

Last month, as part of a larger interview for a profile,

the developer offered details on the complex transaction for The Real

Deal. He described how he was able to outmaneuver the hostile sellers

as well as industry rivals to take control of the portfolio.

Barnett has already cashed in, selling ground leases for four of the buildings for about $175 million And Selling 212 Fifth Avenue to a partnership between Robert Gladstone’s Madison Equities, Joseph Sitt’s Thor Equities and real estate investment firm Building and Land Technology for about $260 million.

Below, in Barnett’s own words, is the saga of the Ring portfolio

acquisition. (The interview has been edited and condensed for


Drawing blood

“We started with this seven years ago, when we were assembling the

site for the International Gem Tower [at 50 West 47th Street]. The

Ring family owned one of The Buildings On 47th Street [20 West 47th

Street], but they only owned 25 percent of it, while another family

owned 75 percent.

People used to always say ‘Ring, Ring, you can never do a deal with

them,’ so we never got anywhere. Then that building came to us — the

other family wanted to sell. They wanted somebody that would actually

transact and was prepared to go into a situation in which they’d only

have a 75 percent interest, which is difficult to finance, and could

turn into a fight with the Rings.

Since we had an interest in that block, we said, ‘OK, we’re ready to

go and do that.’ We did purchase it. We spoke to Frank Ring, who

controlled the portfolio. We could never do a deal with him, as

professed, so we filed for partition [selling the entire property and

dividing up the proceeds among the owners].

That took us a couple years, we went through the court process. The

court agreed that it should be sold at auction. And at auction we

bought the whole building. That was transaction number one.”

Digging in

“The market continues to go up. Transaction number two comes to us,

which is a 50 percent interest in 251 Park Avenue South [16-story,

120,000 square feet). It’s the same family — they owned 50 percent of

251 Park Avenue South, the Rings owned the other 50 percent. Then it’s

the same discussion [file for partition in court], but this time, the

judge acts much more quickly. They [the courts] have no patience for

the Rings, they know the story. They set a partition sale for less

than a year away. At that point, Frank realizes he’s in trouble. We

spoke to him about buying the whole portfolio, but again their numbers

were impossible to deal with.

Meanwhile, we’re going through this lawsuit on 251 Park Avenue South.

He starts getting nervous, Frank. The first property, [20 West 47th

St.] when it goes up for auction, a few people showed up looking to

buy, but we bought it. Obviously, we’re playing with funny money here.

Because we own 75 percent of it we’re paying ourselves — no one’s

going to outbid us.

When we go to auction on 251, he knows very well we’re going to buy it

too. He starts getting nervous about that.”

Enter Michael

“While we’re going through this process, Michael Ring decides he wants

to do something with the portfolio. He enters into the transaction

with Tabak [Princeton Holdings’ Joseph Tabak] and some other smaller

players and into a very, very unfavorable transaction. He’s in with

Tabak but he’s not getting that much cash. It was a transaction he

regretted pretty shortly after going into it. He wants to try and get

out of it, so he files a lawsuit, which is winding its way through the

courts. But he’s nervous about it, so he comes to us. He knows that we

are honorable businessmen, so to speak. Someone, frankly, that he can

trust in a world in which it’s very difficult to trust anyone. We also

transact with Tabak and the others — they agreed to take a large

check to walk away from the deal. Michael gets a very reasonable

transaction for himself. He’s still in the deal, to a small extent.”

Game, set, match

“Once we do that [make a deal with Michael], we instantly file for

partition for all of the other Ring properties with Frank. I think at

this point, Frank, who’s a very smart guy, realizes that the jig is

up. It’s not just that with the partition that he’s going to lose

control of the properties anyhow, but he also runs the risk that

nobody shows up at these auctions. Because auction number one, we

bought it out, auction number two is coming up — we’ll buy that too.

Well, who’s going to bother showing up for auctions 3,4,5,6,7 and 8?

He could actually lose it a relatively low price. So he realizes that

it’s time to make a deal.

To give him credit, he charged us a high price. We paid through the

nose. He gets a very big check. And we kind of end up with a whole

portfolio under our control.

Overall, an interesting transaction, a truly New York transaction.”