Flatiron Building Sold At Second Auction For $161M
The Flatiron Building, one of New York City’s most iconic skyscrapers, has once again sold at auction — for nearly $30M less than the winning bid at a failed auction in March.
The auction appears to bring years of drama — and months of heightened tensions among co-owners and would-be buyers — to a close. Jeff Gural, chairman of GFP Real Estate, placed a winning bid of $161M for the building at the corner of Fifth Avenue and Broadway in Lower Manhattan.
Gural was bidding on behalf of the building's majority ownership group, which includes Sorgente Group and ABS Real Estate Partners, he confirmed to Bisnow at the New York County Courthouse where the auction was held Tuesday afternoon. The Gural-led group already owned 75% of the building, and the auction was a result of a court battle between the group and the owner of the other 25%, attorney Nathan Silverstein.
"It's a big relief that we'll finally own the whole building and buy out Nathan," Gural told Bisnow. "It's a good day for us."
Bidding started at $50M and increased in $2M increments until reaching $152M. Auctioneer Matthew Mannion reduced the bidding increments to $500K once bids reached $156M and allowed for two one-minute recesses during the auction, which concluded after less than 20 minutes.
Other bidders who threw their hats into the ring at various points during the auction were Halstead Management President Paul Gottsegen, Shomof Group founder and CEO Izek Shomof, Eli Lever of multifamily developer 21B, lawyer Jeffrey Murphy and Corcoran broker Leon Lajos Horvath, each on behalf of bidders whose identities weren't disclosed.
GFP, Sorgente and ABS now have two business days to pay the $161M pledged at Tuesday’s auction to referee Peter Axelrod.
The ownership group has to contend with planning for the future of the Flatiron Building, which Gural estimates will cost $100M to bring up to code. The group is contemplating keeping half of the building as offices and converting the other half into residential condo units, or even a full residential conversion. A hotel conversion is also on the table, Gural said.
The building was first slated for auction in January after the three majority co-owners sued Silverstein, alleging he was preventing them from doing needed renovations to the property after its sole tenant, Macmillan Publishers, vacated in 2019.
"I have nothing against Nathan," Gural said Tuesday. "I think he really thought that I was dishonest. He didn't understand why it would cost so much to renovate the building."
After a judge's signoff, the Flatiron Building headed to auction in March, but a major upset ensued when Jacob Garlick — an unknown investor in charge of Virginia-based Abraham Trust — outbid the coalition of longtime owners, including Gural, with a bid of $190M. Neither Garlick nor any other representative from Abraham Trust appeared at Tuesday's auction to place a bid.
Garlick failed to appear with a 10% deposit within seven days of placing his March bid, resulting in the building’s return to the auction block and the introduction of a new rule: the requirement for bidders to have a certified $100K check on hand to place a bid in the second auction.
The Gural-led group sued Garlick this month seeking to recoup the $19M deposit he owes, as well as attorney's fees and punitive damages, alleging that the bid wasn't serious and that it was an attempt by the private equity firm to get “their 15 minutes of fame.”
"I feel sorry for the guy because truthfully, I think he really wanted to own the building," Gural said of Garlick.
The suit also revealed that Garlick is a relative of Nathan Silverstein, although the pair had never met or even spoken until shortly before the auction and denied working together. Gural plans to continue with the suit against Garlick, he said.
As for the winning bid, Gural said he was pleased with the price, which amounts to a $7.5M savings for Silverstein's 25% stake.
"I've gotten a lot of publicity from this, so when I die, people will know who I was" Gural said. "If you Google me, you'll get 'Flatiron Building.'"