6 East 32nd Street

The Opportunity

In 1989, Himmel + Meringoff acquired 6 East 32nd Street, an 11-story, 173,600-square-foot building. For nine decades a single family held the building with ownership transferring from generation to generation. For tax reasons, the family was reluctant to sell but was looking to unlock the appreciated value of the asset. Himmel + Meringoff crafted a creative solution to meet the seller's tax requirements while allowing the company to gain control of a solid, well-located Class B property.

Actions Taken

Based on both the building's underutilization and proximity to Penn Station and Grand Central Terminal, the Himmel + Meringoff team moved quickly to:

  • Master-lease the property with a deferred purchase option, thereby securing a guaranteed income stream for the current owners, minimizing their tax exposure and deferring a sale for up to 10 years; and
  • Restructure the ownership entity from a "C" Corp to an "S" Corp. minimizing the tax implications for the seller.

After taking control of the building, Himmel + Meringoff commenced a capital improvement program that preserved the property's historic qualities, revitalized the lobby, elevator cabs and common corridors and modernized its operating infrastructure resulting in an "Avenue" quality property.

Value Created

With the renovation program underway, new office tenants, including leading computer and publishing companies, were attracted to the former manufacturing building. Within the first year, rental revenues increased significantly.

Summary

Given the generational ownership of the property and the requirement that a transfer not incorporate a sale, it took insight and technical savvy to craft a deal structure beneficial to all parties. Himmel + Meringoff's ability to envision an adaptive reuse for the property resulted in a win/win transaction.

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