He didn’t come through.
After making a surprise winning bid to acquire the Flatiron Building Wednesday, Jacob Garlick, who this week became the most talked-about man in New York real estate, failed to come up with the required deposit to close on the property.
Terms of the sale dictated that Garlick put down $19 million, or 10 percent of his $190 million bid, by close of business Friday. But according to multiple sources familiar with the deal, Garlick has not yet delivered the funds, throwing his future ownership of the storied property into question.
When reached by phone Friday evening, Garlick said he could not talk about the deposit or the deal, but could talk next week. It is possible that a court-appointed referee could offer him more time. But if an extension is not granted, the second-highest bidder in the auction, a group led by GFP Real Estate’s Jeffrey Gural, will have the option to purchase the property at their last bid of $189.5 million, according to a court filing.
Reached Friday, however, Gural told The Real Deal that he would not be exercising his option to buy the building at $189.5 million. This means the likely scenario is the property heads back to the auction block and the bidding restarts.
Garlick, a 30-something investor unknown in New York City’s real estate industry, seemed to come out of nowhere to outbid Gural in a live auction in front of the New York County Courthouse.
“We are honored to be a steward of this historic building,” Garlick told NY1 after his victory, “and it will be our life’s mission to preserve its integrity forever.”
“I was totally shocked that somebody would bid so much money for the building,” Gural told Commercial Observer after the auction. “It’s a beautiful building, but not really worth that much.”
Garlick’s firm, Abraham Trust, is headquartered in Northern Virginia and invests in private equity buyouts, mergers and acquisitions and venture capital. His journey to buying the Flatiron Building started because of a partnership spat between its former ownership group. Sorgente Group, Gural and ABS Real Estate Partners, who together controlled a 75-percent stake, could not see eye-to-eye with the remaining 25 percent owner, Nathan Silverstein, about the landmarked property’s future.