September 2, 2008

Venner vs. Ratner Plays Out In Cleveland

A couple of Brooklyn real estate big-wigs have been embroiled in a bitter battle over the enforceability of the terms of a century-old lease in the heart of downtown Cleveland. The lawsuit, which has worked its way through the appeals system since it was filed back in 2006, pits Stuart Venner, who owns a number of buildings in Brooklyn, including 174 Clinton Avenue, 657 Carlton Avenue and 114 Henry Street, against development goliath Forest City Ratner Enterprises. The conflict began when Venner purchased the 12-story, 1910 office building at 1228 Euclid Avenue known as The Halle Building in 2006. The ground lease from 1912 for the building, for which Forest City had been paying $35,000 a year, contained a "gold clause" which gave the landlord the right to adjust the rental rate based on the price of gold. The $35,000 rate was based on the price of gold in 1912, and many people, including Forest City, assumed that the gold clause was no longer valid. That's what the lower court thought, a three judge appeals panel in Cincinnati ruled last Wednesday that the clause is still enforceable; the case now goes to federal court in Cleveland. If the federal court goes along, Venner stands to make a pretty penny: based on the current price of gold, the new rent for the land would be $1,400,000 a year!
Gold-based Lease Could Cause Million-dollar Hike [Cleveland.com]
Photo from Cleveland Skyscrapers.com

Posted by Brownstoner at 10:01 AM | Comments (7)
Categories: Commercial Real Estate

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