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A VC bought the Flatiron Building and didn’t pay for it

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Re: A VC bought the Flatiron Building and didn’t pay for it

#21

Post by crazygringo »

> ...venture fund managing partner Jacob Garlick... placed a $190 million bid on the historic Flatiron Building...

> ...you'd think the building would go to the second-highest bidder—but, dear reader, think again, because that guy doesn't even want the building. "I was kind of shocked, to tell you the truth," that bidder, former Flatiron co-owner Jeff Gural, told NY1 after Garlick outbid him. "I never thought someone would bid so much for the building. It's a beautiful building, but it needs $100 million of upgrades, it's basically empty."

Never thought someone would bid $190 mil? OK, so how much did this second-highest bidder bid then? Well:

> But if an extension is not granted, the second-highest bidder in the auction, a group led by GFP Real Estate’s Jeffrey Gural, will have the option to purchase the property at their last bid of $189.5 million, according to a court filing. [1]

About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused.

But it seems they've both changed their minds so no harm no foul...?

Is there any kind of penalty though for bidding at an auction and not following through on the deposit?

[1] https://therealdeal.com/new-york/2023/03/24/garlick-fails-to...

Re: A VC bought the Flatiron Building and didn’t pay for it

#22

Post by crazygringo »

pastor_bob wrote: post #16
jeron wrote: post #14

Just visited Flatiron building a few days ago. There’s scaffolding covering the front and sides, are those renovations being done by the existing owner?

It was supposed to be renovated and converted to a hotel, but there was some sort of squabble between the co-owners and it was left half gutted. It was auctioned off then as a dispute resolution.

Hotel definitely sounds like the ideal use for it.

Getting to stay in an iconic building? And getting to brag about snagging a skinny triangle room? And the location on Madison Square Park is ideal.

Definitely hope it winds up that way. I could totally imagine Ace Hotel buying and running it if they didn't already have a location just a few blocks north. There's got to be another boutique urban hotel brand though?

Re: A VC bought the Flatiron Building and didn’t pay for it

#23

Post by toast0 »

crazygringo wrote: post #21

> ...venture fund managing partner Jacob Garlick... placed a $190 million bid on the historic Flatiron Building... > ...you'd think the building would go to the second-highest bidder—but, dear reader, think again, because that guy doesn't even want the building. "I was kind of shocked, to tell you the truth," that bidder, former Flatiron co-owner Jeff Gural, told NY1 after Garlick outbid him. "I never thought someone…

> About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused.

Mr. Gural's bid is complicated, because he's already 75% owner of the building; he's really bidding that he'd rather spend $47.5M for the other 25% of the building, than accept $142.5M for his part.

But if Mr. Garlick isn't following through on the bid, it's not surprising that Mr. Gural would rather reauction. He doesn't expect anyone to bid much for the property, and he'd rather spend less to get the other 25%.

Re: A VC bought the Flatiron Building and didn’t pay for it

#24

Post by crazygringo »

toast0 wrote: post #23
crazygringo wrote: post #21

> ...venture fund managing partner Jacob Garlick... placed a $190 million bid on the historic Flatiron Building... > ...you'd think the building would go to the second-highest bidder—but, dear reader, think again, because that guy doesn't even want the building. "I was kind of shocked, to tell you the truth," that bidder, former Flatiron co-owner Jeff Gural, told NY1 after Garlick outbid him. "I never thought someone…

> About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused. Mr. Gural's bid is complicated, because he's already 75% owner of the building; he's really bidding that he'd rather spend $47.5M for the other 25% of the building, than accept $142.5M for his part. But if Mr. Garlick isn't following through on the bid, it's not surprising that Mr. Gural would r…

Thank you for clarifying - that was definitely the context I was missing. Makes much more sense now.

Re: A VC bought the Flatiron Building and didn’t pay for it

#26

Post by tptacek »

The title here is editorialized (maybe by the moderators, because the original, "Some guy" bought the building, is baity). But it's probably worth saying that he doesn't seem like a VC in the sense we think about; he manages a multi-family office that does PE and venture and isn't tech-focused. "An investor" would be maybe a better description.

Re: A VC bought the Flatiron Building and didn’t pay for it

#27

Post by advisedwang »

jeron wrote: post #14

Just visited Flatiron building a few days ago. There’s scaffolding covering the front and sides, are those renovations being done by the existing owner?

Do you recall whether the scaffolding went all the way up? My understanding is lots of NYC buildings have 1 level of scaffolding about the sidewalk as there is a law requiring regular checks against bits of the facade falling off and the scaffolding is a "temporary" alternative that allows them to avoid that expense.

Re: A VC bought the Flatiron Building and didn’t pay for it

#28

Post by brunooo »

toast0 wrote: post #23
crazygringo wrote: post #21

> ...venture fund managing partner Jacob Garlick... placed a $190 million bid on the historic Flatiron Building... > ...you'd think the building would go to the second-highest bidder—but, dear reader, think again, because that guy doesn't even want the building. "I was kind of shocked, to tell you the truth," that bidder, former Flatiron co-owner Jeff Gural, told NY1 after Garlick outbid him. "I never thought someone…

> About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused. Mr. Gural's bid is complicated, because he's already 75% owner of the building; he's really bidding that he'd rather spend $47.5M for the other 25% of the building, than accept $142.5M for his part. But if Mr. Garlick isn't following through on the bid, it's not surprising that Mr. Gural would r…

Plus, given that the auction was about getting rid of the increasingly weird 25% equity holder, it’s not a far stretch to assume that the minority guy just rigged the auction with „who do I know who I could talk into starting a fake bidding war“, and thus even less appetite among the majority to just pick up the tab for that stunt.

Re: A VC bought the Flatiron Building and didn’t pay for it

#29

Post by dllthomas »

readthenotes1 wrote: post #15
kristjansson wrote: post #4

A landmark skyscraper held as a tenancy-in-common, a forced partition sale, a rouge bidder, ... some lawyers are having a field day with this.

it's always the rouge bidders that do it dirty! always favor the cerulean bidders!!

bring me the BLUE pages!

Re: A VC bought the Flatiron Building and didn’t pay for it

#30

Post by bri3d »

crazygringo wrote: post #22
pastor_bob wrote: post #16

Earlier quoted context omitted.

It was supposed to be renovated and converted to a hotel, but there was some sort of squabble between the co-owners and it was left half gutted. It was auctioned off then as a dispute resolution.

Hotel definitely sounds like the ideal use for it. Getting to stay in an iconic building? And getting to brag about snagging a skinny triangle room? And the location on Madison Square Park is ideal. Definitely hope it winds up that way. I could totally imagine Ace Hotel buying and running it if they didn't already have a location just a few blocks north. There's got to be another boutique urban hotel brand though?

When it comes to this kind of property, hotel brands like Ace are usually operators, not owners. VC is a thing in hospitality real estate too, and this is what a lot of real estate VC funds do. They'll buy a distressed property or location with potential and flip it into a hotel, and then pick an operator. If the property is successful, they'll eventually get an exit when they sell it to a larger, lower-risk cash-flow oriented real estate fund and pocket a profit.

As for "boutique" urban hotel brands, I think it's a fad lately, even within the major hospitality groups - the Hilton Curio and Marriott Autograph sub-brands specialize in these kinds of things, and Westin / W used to operate a lot of these kinds of properties too.

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