Gural Finally Secures Flatiron Building for $161.5M in Redo Auction
Gural and partners plan to convert the upper portion of the famed building to residential.
By Mark Hallum May 23, 2023 3:27 pm
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The second auction for the Flatiron Building went off without interference from Soundcloud DJs Tuesday afternoon.
Jeff Gural and his partners — sans Nathan Silverstein — managed to retain the property with a winning bid of $161.5 million, a price that was driven up only by bidders who had presented the court-appointed referee with a $100,000 deposit, with plans to convert part of it to residential.
“It’s a relief, we finally own the whole building and buy out Nathan’s share, so it’s a good day for us,” Gural said following the auction.
There was no Jacob Garlick in sight on the front steps of the courthouse at 60 Centre Street, where just two months prior he outbid the current owners at $190 million, something that came to be viewed as a suspicious attempt to snag the historic landmark when he failed to pay the $19 million deposit that was due two days after the bidding closed.
Gural said he bears no animosity toward Silverstein or Garlick. In fact, he feels sorry for the latter, saying he believes Garlick genuinely wanted to own the property. Now the new owners plan to make the top half of the landmarked building residential while keeping the lower half as office space.
“If we were to condo the building as residential, we’d make a lot of money,” Gural stated regarding how long it could take the partners to make the building profitable. “The problem with that is that you don’t own it anymore, and you have to pay taxes at ordinary income rates. So making a profit for us at the level that we own is not difficult. People will buy.”
Even without the drama of an unknown person in New York City real estate buying the building, the auction of 175 Fifth Avenue drew a hardy crowd of spectators.
Eli Lever, an executive with housing development company 21B Group, was one hopeful buyer who went to the bank for a cashier’s check for $100,000 and posted a redacted photo of it to Twitter with the caption, “Bidding funding secured!”
Gural’s GFP Real Estate has owned the property in partnership with Newmark (NMRK), sorgente group, ABS Partners Real Estate and Silverstein, who had a majority stake, since 2006.
But, Silverstein fell out of favor with the other partners after publishing house Macmillan departed in 2019, leaving all 21 floors vacant. With the building needing up to $100 million in renovations, and Silverstein allegedly stonewalling those plans,, the other four partners took him to court in 2021. A judge set a partition auction for March 22.
The rest is history. Garlock drove the price up to $190 million, ghosted on the deposit and Gural declined the option to purchase the building at $189.5 million, and so May 23 became the date for the second auction.
But Garlick hasn’t exactly gotten away with wasting the Flatiron owner’s time.
As contingent in the original auction, a failure to pay would result in the winning bidder being required to pay the expenses to hold a second auction. But Gural and the other partners have gone a step further in suing Garlick’s firm, Abraham Trust, for damages and the full $19 million deposit as liquidated damages.
In the suit, the plaintiffs claim that Garlick knowingly breached that auction contract signed before bidding and drove the price up even without the financial capacity to cover the deposit, using 175 LLC to shield himself and Abraham Trust from liability.
They also suggest foul play in the complaint, stating that Garlick spent a few hours with Silverstein — a relative of his — the day before the auction.
Mark Hallum can be reached at mhallum@commercialobserver.com.
