TF Cornerstone signs $159M ground lease for Midtown East office, plans resi conversion

TF Cornerstone through the entity 135 E 57 LLC signed a 99-year ground lease valued at $159 million with the Wallace family through the entity 700 Lexington LLC for control of the office building (O4) at 135 East 57th Street in Midtown East, Manhattan. The expected use is conversion to residential apartments, according to the Commercial Observer, which first reported the lease.
The deal closed on August 4, 2025 and was recorded on August 12, 2025. The property has 397,354 square feet of built space according to a PincusCo analysis of city data. The sale price per built square foot is $400 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)
The signatory for the Wallace family was  William F. Wallace . The signatory for TF Cornerstone was Jeremy Shell.

The Wallace family has owned the site since the 1940s, when the married couple Stratford Corbett Wallace and Dolorita Fitzgerald Wallace began assembling the parcels. They ground leased the site in 1972 to Kenneth and Lucille Gladstone’s Madison Equities, which constructed the existing building. Madison Equities then sold the ground lease to Cohen Brothers Realty in 1997. Cohen Brothers, now led by Charles S. Cohen , lost the building after failing to pay ground rent. That lease was cancelled on June 26, 2024, according to a court order recorded in Acris.

Prior sales and revenue

Prior to this transaction, PincusCo has records that the buyer TF Cornerstone purchased two properties in two transactions for a total of $174.1 million and has no record it sold any properties over the past 24 months.
The seller William F. Wallace had not purchased any other properties and had not sold any properties over the same time period.

The property

The retail building in Midtown East has 397,354 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 215 feet and is 200 feet deep with a total lot size of 26,731 square feet. The lot is irregular. The zoning is C5-2 which allows for up to 10 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $164.8 million. The most recent loan totaled 0.0 and was provided by William F. Wallace on July 9, 2024.

Violations and lawsuits

The property was involved in four lawsuits and zero bankruptcies over the past two years. The highest value suit was a $544.3 million money judgment concerning a loan filed on March 25, 2024, by Fortress Investment Group against Charles S. Cohen and Cohen Brothers Realty. In addition, according to city public data, the property has received $6,650 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $1 million on this tax lot.

The neighborhood

In Midtown East, The majority, or 81 percent of the 62.6 million square feet of commercial built space are office buildings, with hotel buildings next occupying 7 percent of the space. In sales, Midtown East has the 2nd highest sale turnover among other neighborhoods in the city with $2.6 billion in sales volume in the last two years. For development, Midtown East is the 3rd most active neighborhood among other neighborhoods. It had 19 million square feet of commercial and multi-family construction under development in the last two years, which represents 30 percent of the neighborhood’s built space. There was one pre-foreclosure suit filed among other retail buildings in the past 12 months.

The block

On this tax block, PincusCo has identified the owners of 15 of the 20 commercial properties representing 1,297,568 square feet of the 1,332,045 square feet. The largest owner is Vornado Realty Trust, followed by William F. Wallace and then Sol Goldman Investments.
There are no active new building construction projects on this tax block.

The majority, or 81 percent of the 1.3 million square feet of built space are retail buildings, with elevator buildings next occupying 13 percent of the space.

The seller

The PincusCo database currently indicates that William F. Wallace owned at least one commercial property in New York City with 397,354 square feet and a city-determined market value of $192.8 million. (Market value is typically about 50% of actual value.) The portfolio consists of at least a single retail property. It is located in Manhattan.

The buyer

The PincusCo database currently indicates that Tf Cornerstone owned at least 30 commercial properties with 11,143 residential units in New York City with 10,740,078 square feet and a city-determined market value of $2.7 billion. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 97 percent of the 10,740,078 square feet of built space are elevator properties, with office properties next occupying 3 percent of the space. The bulk, or 52 percent of the built space, is in Manhattan, with Queens next at 37 percent of the space.

Direct link to Acris document. link