Four of the five owners of the famed Flatiron Building at 175 Fifth Avenue has sued to sell the historic property.
As representatives of the four so-called Tenant in Common owners, Jeffrey Gural, Gregg Schenker and the Sorgente Group of America filed a petition with New York State Supreme Court on Tuesday for a partition sale of the property.
The proceeding is statutorily available and employed to resolve disputes among Tenants in Common owners. A court could order the sale of the entire property and divide the proceeds among all of the owners, or it could order the sale of shares appurtenant to a particular owner.
The landmark 22-story office building is currently undergoing a comprehensive restoration, commenced upon the recent relocation of longtime tenant Macmillan Publishers and with full Landmark Preservation Committee approval.
“We are committed to continuing the building improvement work, which is well under way and bringing a new life to the nearly 120-year-old iconic jewel of a building,” Gural said.
The planned renovation work includes façade restoration, new elevators and fire stairs, along with new HVAC, bathrooms, lobby and common areas, to bring the building up to every modern standard, while still maintaining the elegance and historic nature of Daniel Burnham’s original design.
“The leasing program has launched, and tenant response has been all we hoped; everyone loves the Flatiron,” said Mary Ann Tighe, CBRE CEO of Tri-State Region, who is leading the leasing campaign.
“This is the first time in nearly a century that people can tour and experience the Flatiron Building and see Burnham’s genius from the inside as well as out.”
Tenant in Common is an ownership structure in which each person owns a share of the property and, even if they own unequal shares, all owners still have the right to occupy and use all of the property and have a say in its operations.
It was the type of syndicated ownership favored by the late Harry Helmsely, who bought the building with a group of investors in 1946. The unconventional partnership led to disagreements about the buildingʼs future and a deterioration of the property until Jeff Gural’s Newmark Knight Frank bought 52 percent of shares from some of the investors in 1997.
Gural subsequently reshuffled his shares among two groups and later sold a majority stake to the Sorgente Group while retaining 30 percent. He now represents two different ownership groups in the petition.
According to city documents, the holdout TIC owner is Nathan Royce Silverstein, an attorney and real estate owner who inherited his shares from his father, late New York City banking attorney Max Silverstein.
The Flatiron Building was last valued at $190 million in 2009 which, adjusted for inflation, would put its current value at around $240 million.
The ownership group declined to comment further on whether they are looking to sell the entire building or buy out the rogue TIC owner.