Real estate tycoon Eugene Grant has sold his controlling stake in the behemoth St. John’s Terminal Building in SoHo for roughly $250 million, sources said.
The news comes on the heels of a report from the The Commercial Observer in September that said a provision in Mr. Grant’s agreement with the other owners could jeopardize his unrelenting, firm, and decades-long grasp on the property.
Mr. Grant sold his 50.1 percent share to the other owners, made up of Fortress Investment Group, Atlas Capital Group and Westbrook Partners, which owned the other 49.9 percent, sources familiar with the deal said, confirming what was first reported in the New York Post.
“This was a sleeping giant in this market for many years,” said one source, who said Mr. Grant came close to selling the building back in 2007 on a long-term net lease with an option to buy, but recanted. “Quite frankly he was somewhat old-fashioned and didn’t see the opportunity.”
Westbrook and its partners paid $207 million for their share in 2006, also taking on $160 in debt, and now they are looking at a $75 to $100 million investment if they plan to make necessary systems upgrades, including new elevators, windows, roofing and HVAC, the source said.
The property, nestled between SoHo and the Meatpacking District at 550 Washington Street, sprawls more than three city blocks and stretches more than 800 feet along the West Side Highway. Its 1.3 million square feet are spread between just four floors, which, at 250,000 square feet, are Manhattan’s largest, and feature sprawling views of the Hudson River to boot.
“It’s like you took the Empire State Building and laid it down on its side,” an investment sales broker told The Commercial Observer at the time of the original report.
Mr. Grant, who is in his 90’s, entered into the partnership with Westbrook Partners in 2006, sewing in a provision that would allow his family to force a sale of the building should he die, an event which otherwise would have incurred a hefty estate tax that his family would be left to pay.
But Westbrook had also affirmed its own right to force a sale, and the closer it got to the October deadline, the less leverage Mr. Grant had in the selling of the property, the source said.
He shunned the advances of various suitors, who lined up for a chance to buy the property and capitalize on its massive development potential for new office space, hotel, residential or retail development. There are also 290,000 square feet of air rights on the property.
“I’ve been after it for the last 13 or 14 months,” the source said. “I’ve been up to see him many times hoping for a structure to keep him involved in the deal, but his pricing was unrealistic… Every major developer in town has been after that building.”
Mr. Grant had controlled the building since the 1960s with longtime partner Lionel Bauman, until he bought out Mr. Bauman’s share, also in 2006.
Once a waterfront shipping facility, the building was repositioned as a low-cost office location by Mr. Grant in the 1980’s, well-suited for financial firms that needed specialized facilities.
Bloomberg LP, renewed its lease for its 372,382-square-foot disaster recovery site last spring, but most of the building remains vacant, with nearly 750,000 square feet available for lease.
Attorney Jonathan Mechanic represented the buyers, while Joshua Stein and Lawrence Kobrin represented Mr. Grant. Mr. Mechanic did not return calls seeking comment in time for publication, but Mr. Stein confirmed the sale and remarked on the endless possibilities at the site: a shopping center, movie theater, residential development, a hotel, a rooftop bar.
“This is an enormous, special building in an unbelievable location,” he said, “And those development rights can be used almost anywhere on the site, subject to zoning laws.”
“It’s not going to be quick or easy, but it’s a wonderful opportunity,” he added.
Executives at Fortress Investment Group, Atlas Capital Group and Westbrook Partners did not return calls seeking comment, and Mr. Grant could not be reached.