Kaufman Organization Closes on $ 35M Ground Lease
The Kaufman Organization closed on a newly formed ground lease at The Haymarket Building in Manhattan ’ s NoMad , valued at $ 34.5 million , Commercial Observer has learned . Kaufman signed a 99-year ground lease with owner MFM
Properties for the 12-story of ce building at 135 West 29th Street between Seventh Avenue and Avenue of the Americas , according to Kaufman . Under the deal , Kaufman will manage the 86,000-squarefoot office building , which is currently 70 percent occupied , and plans to start a renovation program for the property . “ We really built an expertise in Midtown South , as well as have built a strong expertise in forming newly created office ground leases , so this opportunity checked both those boxes ,” Michael Kazmierski , president and principal of Kaufman ’ s investment arm , Kaufman Investments , said . “ We ’ re still very optimistic in regard to the performance of this core Midtown South market and we think this building is well-positioned to be part of the recovery .” Under the deal , Kaufman will manage the 86,000-square-foot office building , which is currently 70 percent occupied , and plans to start a renovation program for the property . “ We really built an expertise in Midtown South , as well as have built a strong expertise in forming newly created office ground leases , so this opportunity checked both those boxes ,” Michael Kazmierski , president and principal of Kaufman ’ s investment arm , Kaufman Investments , said . “ We ’ re still very optimistic in regard to the performance of this core Midtown South market and we think this building is well-positioned to be part of the recovery .” Ground leases developed a bad reputation in recent decades — with structural issues in some legacy leases causing things like the Chrysler Building ’ s shockingly low sale price — but investment in the space has started to gain more momentum during the coronavirus pandemic . For long-term owners of properties , modern ground lease structures — that aren ’ t improperly sized to the value of the real estate and that lack things like fair market value resets — can provide a stable cash flow and help with estate planning . And for the lease owners , they require less upfront capital and risk than buying a building outright . “ Ground leases provide a tax-efficient structure that benefits both parties ,” Skyline Properties ’ Robert Khodadadian , who brokered the ground lease for both sides along with Daniel Shirazi , said in a statement . “ Similar to the ground lease we did with the Kaufman Organization at 236 Fifth Avenue , ground leases provide a great solution for multi-generational owners who now benefit from a hassle-free income stream for generations "