A Bronx sheet metal company has leased its prime land to a developer for $108 million.
M & R Friedlander Supply Company has been operating from a single-story factory at 550 Trinity Avenue for over 60 years. When third generation fabricator, Jay Friedlander, decided to retire from the business, he asked Brax Realty’s Michael Ferrara and Daniel Thompson from Savills Studley for advice.
“After understanding what Mr Friedlander was seeking to accomplish, we concluded it was in his best interest to structure a long-term ground lease to generate a steady income from a lease deal rather than sell the properties today,” said Ferrara.
According to the Ferrara, a lump sum payment and prospect of conducting a 1031 exchange didn’t appeal to the longtime owner.
“It was better for him to secure a longterm lease and stable cash flow so he gets a monthly check with no strings attached,” said Ferrara. “Like a lot of owners in the Bronx, he didn’t want to part with the land. This way, he whatever is built will revert to his great grandkids. It keeps the property in the family while still maximizing the value of the land.”
The lessee, developer Shimshon Grunstein is planning to built an apartment building on the block-through site with an R7-1, C2-4 zoning designation that affords the property an as of right buildable square footage of 52,318 based on a 3.44 FAR and 73,003 BSF with community facility.
Ferrara expects to see more ground leases as the Bronx market continues to heat up.
He said, “You used to only see these ground lease transactions happen in Manhattan, but with the demand from developers for ground up projects in the Bronx, and property owners not willing to part ways with their land, I am certain we will be seeing many more of these transactions in the years to come.”