A state court judge signed an order on Thursday requiring the auction of a 16-story office building co-owned by Extell Development and brothers Frank and Michael Ring, located in the core of the strong Midtown South office market, court records show.
Neither a price nor a date for the sale of the mostly-vacant building, located at 251 Park Avenue South on the corner of 20th Street, was provided in the decision filed on Friday. Insiders said a simple auction could take place as early as 45 days, or if a more-sophisticated broker-led process is undertaken, it may not occur until the summer.
Extell, headed by Gary Barnett, bought a 50 percent interest in the 120,000-square-foot building in December 2011 for $19 million. Four months later he sued the Ring brothers, in New York State Supreme Court seeking the sale of the building, owned 25 percent by Frank, president of F.M. Ring, and 25 percent by his brother Michael. The two are known in the industry as being reluctant to conclude real estate deals.
Frank, through his attorney Charles Salfeld, a partner at the law firm Morrison Cohen, said he was reviewing the decision. At the same time, Frank was, “Looking to work with Extell as to whether they can resolve the outstanding issues between them in a spirit of cooperation,” Salfeld said.
The Ring brothers own a portfolio of 14 mostly-vacant commercial buildings that landlords have sought to lease or buy for years. Currently, brothers Eli and Joseph Tabak are mired in state litigation after Michael balked at the Tabaks’ effort to buy a controlling interest in Michael’s 50 percent ownership of that portfolio for $112.5 million.
The property in the Extell litigation is the only one of those 14 buildings that Frank and Michael do not own alone.
The building is about 25 percent occupied, with Sovereign Bank occupying the ground floor retail on a lease extending to 2024 and fabric company Maharam Fabric on floors 14 through 16 through 2020, court records and a visit to the property reveal.
This was Barnett’s second court victory over the Ring brothers in this type of litigation, seeking a judicial sale. In 2008 he sued them to force a public sale of 20 West 47th Street, a Diamond District building that he acquired an interest in and later sold.
Barnett, Michael Ring and Eli Tabak declined to comment, as did Joshua Stein, an attorney appointed by the court to act as a referee to analyze the property and manage the sale.
In court papers, the Ring brothers suggested instead of a judge ordering a sale of the property, the building should be split into two separate condominiums, with Extell owning one and the Ring brothers the other. Stein, in a court filing, rejected such a plan, saying that dividing the property into condo units would reduce the value of the building.
Under New York law, a court can order a sale of a property if the owners lack an ownership agreement and cannot decide how to proceed, after one has sued to partition the property or force a sale. In the event of a sale, one of the owners can purchase the property using its own stake (plus any additional money, if needed), or an outsider can. Following a sale, the money is distributed among the owners based on their stake.