NEW YORK (June 27, 2013) – Smith, Gambrell & Russell, LLP (SGR) achieved a favorable outcome for its client, 20 East 9th Street Corp., this week in a real estate matter involving the renewal provisions of a “sweetheart” lease.
The dispute, which was heard in New York State Supreme Court, involved valuable commercial space in a well-known Greenwich Village apartment building that had been converted to cooperative ownership in 1974 by the plaintiff, Ninth Street Associates, which is owned by various members of the Minskoff family.
As part of the conversion of the apartment building to cooperative ownership, Ninth Street Associates granted itself a long-term lease, with numerous renewal options at very favorable terms, for the commercial space.
The conversion was somewhat unusual in that, at the time of the conversion, the fee interest in the property was owned by a third party and the sponsor held only a ground lease interest, which was transferred to the cooperative corporation as part of the conversion. The cooperative subsequently acquired the fee interest in 1979.
In its ruling, the Court determined that the sponsor has no enforceable right to renew the lease when the existing term expires in March 2024. The sponsor had argued that its renewal rights ran to 2066.
The commercial space is currently subleased to various tenants including JP Morgan Chase and CVS.
SGR Partners Donald L. Rosenthal and Eliot H. Zuckerman represented 20 East 9th Street Corp.