Sister act: Kaufman inking ground lease for NoMad office building

Deal allows landlord to connect 100K sf property with existing Ring building

New York /
Aug.August 30, 2017 03:35 PM

The Kaufman Organization is inking a long-term ground lease under a NoMad office building on Fifth Avenue, in a deal that allows it to connect the property with a former Ring Portfolio building the company controls around the corner.

The Midtown-based landlord is closing Wednesday on a new 99-year ground lease at 236 Fifth Avenue with longtime property owner LCT Associates, sources told The Real Deal.

Representatives for Kaufman and LCT Associates principal Scott Chiou declined to comment. Robert Khodadadian and Daniel Shirazi at Skyline Properties, who sources said brokered the deal, couldn’t be reached for comment.

The deal gives Kaufman control of the 11-story, 100,000-square-foot office building on the property and access to its frontage along Fifth Avenue between 27th and 28th streets. The building can be connected to a sister building Kaufman controls around the corner at 13-15 West 27th Street. Connecting the two could allow Kaufman to market the office space in both as Fifth Avenue office space, potentially commanding higher rents.

Kaufman controls the leasehold on the 27th Street building through a deal it struck in 2014 with Extell Development for $25 million, property records show. The term gives the landlord control of the property for 25 years, with an option to extend the lease to a total of 99 years.

Extell turned around in 2015 and sold the fee position on the property to Edison Properties for $38.8 million.

While ground leases provide buyers with a chance to own real estate at an attractive basis, they’re not without their risks. Several recent, high-profile cases have highlighted how fee holders can bend their lessees over a barrel when it comes to resetting rents or valuing the underlying real estate.


Related Articles

arrow_forward_ios
Mack Real Estate CEO Richard Mack and one of his new hotels at 51 Nassau Street. (Getty, ING)
Mack Real Estate takes over 7 distressed Manhattan hotels
Mack Real Estate takes over 7 distressed Manhattan hotels
1440 Broadway and CIM Group’s Shaul Kuba (Google Maps, Getty)
CIM closes on $400M refi for 1440 Broadway
CIM closes on $400M refi for 1440 Broadway
Theaters in some cities are opening with restrictions. (Getty, Photo Illustration by Alison Bushor for The Real Deal)
Coming attraction: Movie theaters reopen in New York, San Fran
Coming attraction: Movie theaters reopen in New York, San Fran
Innovo Property Group's Andrew Chung with 23-30 Borden Avenue in Long Island City (Google Maps)
Innovo lands $155M construction loan for LIC warehouse
Innovo lands $155M construction loan for LIC warehouse
Restaurants and bars accounted for a majority of the gains in February (iStock)
Leisure, hospitality big winners in February job gains
Leisure, hospitality big winners in February job gains
The company currently operates 761 stores, and intends to open 100 new stores this fiscal year. (iStock)
Retailer Burlington plans to double store count
Retailer Burlington plans to double store count
(Getty, Photo Illustration by The Real Deal)
Retail had its reckoning. Will subleases flood the market?
Retail had its reckoning. Will subleases flood the market?
Ascena owns Ann Taylor, Lane Bryant, Lou & Grey and Cacique. (Getty)
Ascena restructuring approved post-bankruptcy
Ascena restructuring approved post-bankruptcy
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...