Citadel’s Kenneth Griffin in contract to pay Archdiocese of NY up to $164M for Midtown East air rights

The Roman Catholic Archdiocese of New York signed a contract earlier this year to sell up to 525,000 square feet of development rights from St. Patrick’s Cathedral at 631 Fifth Avenue to a development group including Kenneth Griffin of the hedge fund Citadel LLC and Vornado Realty Trust that is planning a 1.7 million square foot tower at 350 Park Avenue, in Midtown East in Manhattan. The development agreement announced in December 2022 also includes Rudin Management.

The developers plan to buy a minimum of 315,000 square feet and a maximum of 525,000 square feet, at at rate of $312.50 per square foot, or $98.4 million up to $164 million. The purchasers also must contribute $61.50 per square foot into the Public Realm Improvement Fund, as a required element of the air rights transfer.

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The option, purchase and sale agreement, dated January 31, 2023, mentions representatives from Citadel and Vornado but does not mention Rudin Management. Griffin signed on behalf of the air rights purchaser, which is the entity 350 Park DV LLC.

According to the petition, filed December 8, 2023, in New York State Supreme court as part of a requirement with a church or nonprofit is selling a substantial asset, “By Option, Purchase and Sale Agreement, dated January 31, 2023 (“PSA”), Petitioner agreed, subject to court approval, to sell a minimum of 315,000 square feet of its excess development rights (“EDR”), up to a maximum of 525,000 square feet of its excess development rights appurtenant to 631 Fifth Avenue, New York, New York, with the tax map designation in New York County of Block 1286, Lot 1 (the “Property”), which is occupied by a landmarked building (the “Building”) to 350 PARK DV LLC, or its assigns (the “Grantee”), for the following consideration: $312.50 per square foot of acquired EDR… The consideration to be received by Petitioner on the sale of said real property pursuant to said Purchase and Sale Agreement would be between $98,437,500 and $164,062,500 in cash.” This is part of a complex deal in which Vornado, Rudin and possibly Kenneth Griffin’s Citadel will develop a 1.7 million office tower at 350 Park Avenue.

According to the option agreement, the broker was CBRE and the commission amount is 2 percent of the purchase price, yielding a commission in the range of $1.97 million up to $3.28 million. Jonathan Mechanic of Fried, Frank, Harris, Shriver & Jacobson is representing the buyers, according to a PincusCo review of the purchase and sale agreement.

The appraisal firm BBG calculated the value of the air rights at $375 per square foot, and the final sale price was that figure minus the required contribution to of $62.5 per foot to PRIF.

The agreement lays out several conditions, as laid out in the BBG appraisal, “Within one year of signing the contract, the purchaser must provide a written notice to seller of amount of optioned Development Rights, which may be a minimum of 315,000 square feet. Within 2 years of signing the contract, purchaser is entitled to increase the amount of Optioned Development Rights by up to 100,000, and a maximum of 525,000 square feet. The option may be exercised by Purchaser at their sole discretion at any time prior to 12/31/2026.”

Yimby reported in January 2023 on renderings for the office tower.