By Linda O’Flanagan
A third delay in the scheduled auction of a Frank Ring office building has the real estate rumor mill in over-drive.
Court-appointed lawyer Joshua Stein announced on Monday that the auction of 251 Park Avenue South scheduled for today (Wednesday) has been pushed back for a third time.
As a court-appointed referee in litigation between the co-owners Frank Ring and Extell, Stein said he was not aware of a settlement between the two parties, although he conceded, “it may be that they are trying to settle.ˮ
As Real Estate Weekly went to print, the New York Post reported un-named sources citing a multi-million dollar deal has indeed been struck.
Stein told REW the 70 percent-empty property in the middle of the hottest market in the city has seen plenty of interest from potential buyers and suggested the delay could further push up the price, estimated by some to be in the $40 million range.
But other spectators of the long-running feud hazard Extell is holding out to wrest control of the entire $600 million Ring empire that it already owns a chunk of.
“If 251 Park is an example of the kind of occupancy the other buildings have, then they are ripe for development,ˮ said one broker with knowledge of the portfolio.
“From Extell’s perspective, they would be able to acquire each one and redevelop them into condos. All the buildings are in great locations. They can get control at a reasonable cost, get rid of Frank Ring. That’s not a bad business model.
“It’s not personal, its business, but Frank left himself wide open by not managing these buildings well.ˮ
The 15 buildings at stake were amassed by Frank and Michael Ring’s father, Leo, and his business partner, Robert Eisner. The notoriously rancorous brothers each got 50 percent of their father’s share when he died in 1988. Extell picked up the Eisner share when his estate put it up for sale in 2011 and then quickly hauled the Rings into court alleging mismanagement of the mostly-empty portfolio.
The pressure on, Michael decided to offload his share to investor Joseph Tabak, who subsequently flipped it to Extell, meaning the development behemoth now owns 75 percent of 251 Park, 50 percent of the entire Ring portfolio and Frank Ring owns the other 50 percent and maintains management of the portfolio.
However because Leo Ring and Robert Eisner formed a Tenant-in-Common ownership structure as opposed to the more common LLC arrangement in commercial real estate, a dispute can only be settled through outright sale of the properties if they cannot be physically broken up.
Therein lies the rub. All 15 of the properties will have to be auctioned.
Extell — which is currently building the city’s tallest apartment building — appears to be sending a message to the investment community with its interest in 251 Park Avenue South, a considerably smaller fish than it’s used to dealing with.
However, as one broker noted, “If they have this auction [for 251 PAS], then not long from now, there will be a dozen or so more auctions in all these other Ring buildings. By bidding high on 251 Park and pushing the price for a near-empty, rundown building up to $40 million, Extell is telling the market not to screw around with them.
“They are bidding beyond what its worth to let the market know they can kill the bidding at all these 12 auctions. That is, unless they reach a deal with Frank.”
A spokesman for Extell said the company had no comment. Frank Ring’s lawyer Adam Pollack, of Pollack and Sharon, did not return phone calls seeking comment. Frank did not answer his phone.
Michael Ring told the New York Post he doesn’t speak unless he is paid. “My time is worth $5,000 an hour. If you don’t have it, I’m not going to talk.”