Here’s What Happened in New York City Real Estate This Week

The conversation around the horrific misdeeds of Jeffrey Epstein appears to be neverending as more revelations continue to drip out, including his connection to real estate. More on that in a bit.

But in business news there was a deal this week you probably won’t read about at book fairs across the country.

Tony Malkin’s Empire State Realty Trust is in contract to buy the Scholastic Building in Soho for $386 million, the company announced Tuesday.

The publisher owns the building at 555-557 Broadway and leases the majority of the space, which includes 368,000 square feet of office and 28,000 square feet of retail along Soho’s prime shopping corridor.

Malkin said he was attracted to the property for its in-place revenue and the ability to add value by marketing the “three uniquely large floors in a more than 110,000 square feet block.”

Scholastic put the property up for sale earlier this year, eyeing a sale-leaseback deal. The public company reportedly planned to use the proceeds from the sale for “capital allocation priorities,” reducing its debt and repurchasing shares.

The company bought the property in 2014 for $255 million from South Carolina-based landlord ISE America, which had since 1996.

Billy Macklowe’s career hasn’t always been academic, but his bets are never dull. He recently completed construction of a mixed-use development in Park Slope, his first Brooklyn development and also developed a 52-unit condo building at 21 East 12th Street.

Next up? His William Macklowe Company acquired the $46 million distressed loan note on the 129,000-square-foot, 10-story office building at 291 Broadway from Flagstar Bank.

The sale occurred after Flagstar sued the owner, Sutton Management, for foreclosure in July because of missed payments.

The building could be a candidate for a residential conversion if Macklowe forecloses or takes a deed-in-lieu.

Conversions are always a gamble. So is gambling. Luckily for dice rollers, the endgame for New York’s gaming business is coming into focus.

The state Gaming Facility Location Board recommended casino licenses for the three remaining proposals in Queens and the Bronx: Steve Cohen’s Metropolitan Park, Bally’s Golf Links at Ferry Point and Resorts World’s expansion of the Queens Aqueduct.

The level of investment for each bid dictates the license term: Metropolitan Park and Resorts World qualify for 20-year licenses, while Bally’s qualifies for a 15-year license.

The proposals, which included plans for hotels, entertainment venues and a focus on “economic activity and business development,” next go to the Gaming Commission for final license issuance. That’s expected to happen by the end of the month.

Yes, casinos are in a New York state of mind. Nas, famed rapper and Resorts World partner said it best after the recommendations were released: “It’s a great day in New York City.”

Finally, the Epstein connection to real estate.

The late and disgraced financier privately claimed in 2018 to have “helped put them in biz,” and by “them” he meant Core Club founders Jennie and Dangene Enterprise, an allegation a spokesperson publicly refuted as “baseless.”

Emails released by the House Committee — a 20,000-page trove of documents — suggest a personal relationship between Epstein and Jennie Enterprise.

The invite-only Core Club caters to powerful clientele in real estate and finance, including figures like RFR’s Aby Rosen and Blackstone CEO Stephen Schwarzman.

“[I]n no way, shape, or form did this individual play any business development role in the company, and any suggestion to the contrary is baseless,” said a spokesperson for Core Club.

Epstein, as it turns out, was also a reader of The Real Deal. While his interest in our publication is by no means a point of pride, released documents revealed emails with links to TRD articles, which appears to be a saved or printed web story from June 2019. The emails and articles touched on a Palm Beach development deal.