Extell to sell four Ring portfolio ground leases: source

Kaufman gains control of 340,000 sf in hot Midtown South office market

From left: George Kaufman, 119 West 24th Street and Gary Barnett
From left: George Kaufman, 119 West 24th Street and Gary Barnett

In the latest in the Ring portfolio saga, Gary Barnett’s Extell Development is in advanced discussions to sell the long-term ground leases on four of the portfolio’s office buildings, The Real Deal has learned. The Kaufman Organization is the buyer, and the deal is valued at north of $150 million, according to a source familiar with the talks.

The properties in play are the 12-story, 151,200-square-foot 119-125 West 24th Street; the 11-story, 55,000-square-foot 13-15 West 27th Street; the 12-story, 69,000-square-foot at 19-21 West 24th Street; and the 12-story, 66,500-square-foot 45-47 West 27th Street (figures from CoStar Group). One of the buildings, 119-125 West 24th Street, was formerly home to the nonprofit Gay Men’s Health Crisis group.

Brokers have long considered the 13-building Ring portfolio, which brothers Frank and Michael Ring inherited from their father in 1988, to be grossly underperforming, especially given its location in the white-hot Midtown South market. Frank was responsible for managing the buildings, but left many of them languishing vacant for decades.

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A representative for Extell declined to comment. In June, Barnett snagged a controlling interest in Michael’s 50 percent stake through a deal with Princeton Holdings’ Joseph Tabak, who held a contract to pay $112.5 million for the stake. And in January, Extell closed on the $308.2 million acquisition of Frank Ring’s 50 percent stake in the properties

A representative for the Kaufman Organization didn’t respond to a request for comment by press time. The firm owns other assets in the neighborhood, including the 11-story, 115,000-square-foot 27 West 24th Street, which it bought in 2012 for $55.5 million.

The average asking rent in Midtown South in February was $72.24 per square foot, according to Cassidy Turley data. A landlord active in the area told TRD that the four buildings, which need extensive renovation, would likely command rents in the mid-$50s per square foot.