Bought for $4m sold for $24m; APF makes good on first asset.

APF Properties has sold the first building it bought back in 1995, netting nearly $20 million on its investment following the successful transformation of a once unremarkable office building on the city's West Side. APF principals Kenneth Aschendorf and Berndt Perl announced that they sold 601 W. 50th St. to the property's current single tenant, Kenneth Cole Productions Inc. The apparel and accessories maker has used the entire 127,100 s/f building as its corporate headquarters since 1998.

Kenneth Cole Productions paid $24 million for the property on the northwest corner of 50th Street and Eleventh Avenue. APF bought the building in foreclosure from Mutual Life Insurance Company (MONY) of New York.

"It's the ultimate turnaround story," Aschendorf said. "We transformed a run-down building with a wide range of tenants to the worldwide headquarters of a NYSE-listed company."

In retrospect, Aschendorf concedes it was risky to buy the class C office building. "At the time we bought the building, the only reason anyone went to 11th Avenue was to get a car repaired or engage in questionable activities. The building had a strange mix of tenants, from a media entertainment company to a community organization for mentally challenged adults. It was even used to store food carts for some of the city's sidewalk hot dog vendors," he explained.

Perl said he and Aschendorf were attracted initially by the building's size and low price of $33 psf. On further analysis, he explained, they concluded the location had limited downside and a great deal of upside potential.

But APF wasn't the top bidder. "The building was supposed to go to someone else," Aschendorf recalled. However, they persisted. "I called the seller constantly to check on the progress of the deal. Eventually, the seller got tired of waiting for the first place buyer to sign and said we could step into the contract if we were ready to move quickly." he continued.

Within three years, APF cleared all the existing tenants from the building as their leases expired and leased it in its entirety to Kenneth Cole Productions. In 2004, APF entered into an agreement to sell the building to Kenneth Cole Productions with a 24-month extended closing.

"Our investment has been extremely successful," Perl said. "We leased the building to Kenneth Cole in an as-is condition, and made only a minimal investment in improvements. Kenneth Cole, however, fully renovated the space to its specifications when it took occupancy as a tenant."

Perl continued, "The tenant had made such a huge investment in its infrastructure build-out the only way to justify it was to buy the building. In the end both parties are pleased with the outcome."