Ring, Ring: Is anybody home?

F.M. Ring hides in plain sight, with many valuable and empty properties in prime Chelsea and Gramercy September 01, 2009 12:00PM By Gabby Warshawer

Brokers say that many of Frank Ring's buildings sit mostly empty. In the West 20s, the name "F.M. Ring Associates" is emblazoned on the sides of numerous buildings. The large, fading mural-like advertisements look like mysterious relics from a previous incarnation of the city. And to many in the real estate industry, F.M. Ring Associates, a firm that owns or has an ownership stake in 15 office buildings, most of them in Chelsea and Gramercy, is itself a mysterious relic of a bygone era. Brokers say Ring's buildings sit mostly empty, and many note that the company is extremely difficult to negotiate with. In a throwback to pre-digital times, a reporter from The Real Deal was told by a receptionist that the best way to reach Frank Ring, the firm's principal, was by sending a fax, as the company does not use e-mail. No major media outlet has ever interviewed Ring. Indeed, in a town where under-theradar, wealthy real estate families often obscure their holdings through LLCs and shell companies, Ring has accomplished the feat of hiding in plain sight.

But now, as the firm plans to make the first major change to its holdings in decades, the redevelopment of three of its very prime properties Ring's veil is lifting, at least a little. In an interview with The Real Deal last month, Ring, a soft-spoken man in his early 60s, conceded that F.M. Ring's reputation was larger than justified in part because of the old mural advertisements on the sides of many of its properties. "For a small firm, we have some prominently placed properties," he said. "So I think the presence is felt stronger than perhaps is warranted based on the size of the portfolio. Someone called me once and said, 'Is there really a Frank Ring? Because I've looked at your sign for all these years.'" Ring said his father, Leo, started in the business in the 1940s, first by running a brokerage and property management company. Ring signed on in the 1960s, after his father had started to amass the buildings that now make up F.M. Ring's portfolio. Frank is in charge of the company's day-to-day operations, though his brother Michael, who is a vice president at the commercial real estate brokerage Helmsley-Spear, owns half the company. Most of F.M. Ring's holdings were acquired in the '60s, '70s and '80s, Ring said, typically in deals for two or three buildings at a time. All but two are in the Chelsea-GramercyFlatiron area. "One of the things we looked at" when amassing the portfolio, said Ring, was having "each of our places within walking distance of the other." Aside from that, many of the properties F.M. Ring bought were loft buildings with rich architectural details. In most of the buildings, Ring noted, the company knocked out walls after buying them to create large floor-through office spaces. Among the company's properties are 212 Fifth Avenue, a 165,000-square-foot building overlooking Madison Square Park; 251 Park Avenue South, a 103,000-square-foot building with views of Gramercy Park; and (outside of F.M. Ring's usual geographic zone), 17 West 60th Street in Columbus Circle. A number of commercial brokers interviewed for this story spoke at length about the fact that Ring leaves his buildings vacant and allows them to fall into less-than-prime condition. "I think their buildings would benefit greatly from a capital improvement program; they would ultimately lease well," said Michael Beyda, the president of Times Square-based tenant-representative brokerage Benchmark Properties. "If they were to spend some money, and price the space in line with the market, they could bring tenants to the buildings."

Beyda said that since demand for office space has cooled of late, properties need to be in A-plus condition in order to attract tenants. Several other brokers expressed anger at Ring for the way he's kept his buildings. "Ring are said to be the worst landlords and leave space vacant," said Chris Havens, chief executive of commercial brokerage Creative Real Estate Group. "Landlords that don't take care of their irreplaceable buildings are committing a crime." Havens said his statement was grounded in Ring's reputation in the commercial real estate world rather than firsthand familiarity with Ring's properties. Still, Havens' statement echoed other brokers' assessments of the condition in which Ring has kept his portfolio. Several brokers said Frank Ring was extremely difficult to negotiate with, making it almost impossible to ink deals for space in his buildings. "I was young when I did a deal with them, I had only been in the business for five or six years," said one broker who asked to remain anonymous. "Now I've been in it for 25 years, and I can't think of a deal that was as difficult or acrimonious as the one with Ring." For his part, Ring is aware that over the years he's stepped on many a broker's toes. "Brokers see things from another perspective," he said. "A brokerage might see that you have a space and they say, 'Rent it.' Well, if I have a building that's now going to be converted into a condo," such a conversion would be difficult with a 10-year lease, he noted. Ring also speaks with admiration about the way commercial leasing used to be handled. He mentioned that in his father's time, leases were often one-page documents, which is far removed from how most deals are inked nowadays. In many ways, the past and present have collided for Ring in a legal skirmish he's engaged in with Extell Development over the rights to 20 West 47th Street, a building where Ring has only a minority stake, but which he counts as one of the 15 in his portfolio. F.M. Ring has been the building's manager for decades. Last year, Extell filed a lawsuit to remove Ring as the manager of the building. Ring and Extell declined to comment on the litigation. However, last year, the New York Times reported on Extell's property purchases on the Diamond District block where the company plans to build a tower. The paper said that nearby property owners had complained that the building was an eyesore and that the commercial real estate database

CoStar reported that it was only 75 percent occupied. The article noted that F. M. Ring "is paying a mere $650 a month for its penthouse space at 20 West 47th Street." It cited an Extell lawsuit putting the market value as at least $12,000 a month. Ultimately, Ring is unapologetic about the way he's run his business. "Yes, we have vacancies," said Ring. "There are a number of reasons we have vacancies. One is because we had major tenants who came in, expanded into the building, went out of business, moved on." One of the largest recent tenants in a Ring building was Fox's FX television network, which leased an 18,000-square-foot space at 212 Fifth Avenue in 1994. The station no longer leases at the location. Many of Ring's properties have seen businesses, such as FX, come and go or have been untenanted for decades. However, there are also long-time office tenants in some Ring properties, such as a textile company that has occupied the airy top floor at 251 Park Avenue South for more than 20 years, according to Ring. "We had a number of properties that we felt were best off in that market being sold to a developer. [For tax reasons] being vacant is more valuable," said Ring, explaining why he has had so many vacancies over time. As it turned out, of course, Ring did not end up selling his properties during the now-past boom. Some in the industry believe he lost out on a lot of money by not cashing out then. After reviewing Ring's portfolio, Eric Anton, executive managing director at Eastern Consolidated, estimated that at the height of the boom most of Ring's buildings would have traded for between $400 and $600 per square foot, whereas now they would probably sell in the $250 to $450 per-square-foot range, depending on location, zoning and deferred maintenance issues. "Buyers are very nervous about how long vacant space will remain vacant, as well as the costs of leasing that space," Anton said. "Today, Class A office buildings with good tenants and with cash flow are trading in the $350 to $500 per-square-foot range. Obviously Class B buildings in good but secondary locations, with substantial vacancies, could trade for half or less of those numbers." Anton said the Ring portfolio is mostly "in excellent locations that are popular with creative tenants," even if the buildings are not in the Plaza District.

Ring expresses no regret about not selling his holdings during the go-go years. "We lucked out," he said. "The best thing is a continuum. If you have a property and sell it, that's not the end of the story, or hopefully it's not. That should be the beginning of the story. What do you do for the next step?" Ring said that if he had sold, his company might have invested the sales profits in now dubious-seeming outlets like the stock market or with convicted fraudster Bernie Madoff, or that the firm could have turned around and used the money as a down payment for other properties. The fate he avoided, he said, involved "seeing our entire equity disappear." "We see people who bought properties with loans that are 25 percent more than the economic value of the property," he noted. Instead, Ring recently entered into a joint-venture agreement with a firm called Blackline Partners, which is headed up by architect Sanford Berger and developer Glenn McDermott. Short-term plans call for redeveloping three Ring properties: 212 Fifth Avenue, 155 West 23rd Street and 142 West 24th Street. For the latter two abutting buildings, plans call for a 200,000-square-foot hotel and condo project. Ring and McDermott said they are still mulling the best use for 212 Fifth Avenue, arguably the most valuable building in Ring's portfolio because of its solid pre-war architecture and prime location. Development plans may involve a condo, hotel, or some combination of the two. McDermott said his firm had started exterior restoration of 142 West 24th Street and 212 Fifth Avenue and that both projects are in design. He said construction is slated to begin in late 2010. The partners said they are unconcerned about the tight credit market that's killed projects all over the city. McDermott said the redevelopments will be funded by his financing company Blackline Capital, and Ring said he is in a more advantageous position than most owners and developers since his buildings are not leveraged. "In all three of these properties we have no debt," said Ring. "We think we're in a much stronger position than is typical." Despite the fact that both the condo and hotel markets in Manhattan are hurting, Ring said he's confident the redevelopments would be successful. McDermott's past developments include residential projects in Soho and Tribeca. Like many other developers, he spent years trying to woo Ring into a meeting, with an eye to

redeveloping his properties. "I tried to meet with him starting in 1996," McDermott said, noting that he wasn't successful until a broker introduced them about five years ago. "There's a lot of brokers and developers who see the Ring portfolio as something they can take or profit from," McDermott said. "But I think Ring is brilliant in his view of New York real estate. His strategy is obviously a winning one for holding onto the assets for so long." He said he and Ring tried to partner on the purchase of some properties in the past, but that within the past year they decided to form a joint venture that would benefit their kids: "the third generation of Rings and the second generation of McDermotts." McDermott also said that Blackline Partners will initiate a major capital improvements program for all Ring properties, not just the ones being redeveloped. Meanwhile, Frank Ring is confident he's choosing to redevelop his properties at exactly the right time. "In any market you can look at the dark side, or you can look at, 'Here's the opportunity we've been waiting for to do something,'" he said. "Often, you'll see developers who don't start until the wave is three-fourths played out, and by the time they're ready to go to market, it's played out already. "What you have to do is anticipate."
Revealing Ring's Portfolio

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