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Fuller Bldg goes to mortgagor.

The Fuller Building, a landmarked Art Deco tower which occupies the Northeast corner of 57th Street and Fifth Avenue and is a home to numerous galleries, has been taken over by the mortgagor, a nationwide owner of properties.

Edward J. Daley, director of the L&B Group of Dallas, which owns $3 billion worth of offices and retail in 25 markets around the country, said they are are excited about owning the property.

"We are committed to making it the prominent gallery building," he said. "We will be very good for the building and the building will be very good to us."

L&B is a 30-year old company with a year-old name and is affiliated with United Asset Management of Boston. The property was taken back after a bankruptcy auction failed to elicit a minimum bid of $90 million.

The original mortgage was in the amount of $115 million, said debtor's attorney Craig Lifland, a partner with Zeisler & Zeisler. "Nobody really bid for the property," he noted. The building currently has a New York City property tax assessment of $29.50 million, which is equal to a value of about $165 million.

While the closing is scheduled for the beginning of October, work has recently been completed on the elevators. The company intends to have the grimy outside of the 40-story structure pressure washed, there is a plan for handicap accessibility compliance, and other deferred maintenance is being scheduled.

"The lobby is also landmarked but we may be increasing lighting levels," Daley noted.

The company is also exploring the installation of outside lighting since the many set-backs would lend themselves to illuminating the tower at night. "We'll be mindful of what the tenants want," Daley added. "We want the tenants to be happy."

Already, Daley said, they have renewed and extended the Robert Miller Galleries to a long term commitment. Miller did not return a phone call.

Tenants, including retail and gallery owners and a variety of businesses, were none too happy a year ago when they complained bitterly about the building. The owners at that time, a company comprised of former Integrated Resources personnel, were balking at tenant requests for rent relief and were not putting up money for new tenant build outs or maintaining the property.

If the new ownership does not bring the building up to first class status, however, other gallery owners say they will be looking elsewhere when their leases expire.

Andre Emmerich, who has had a gallery in The Fuller Building for more than 30-years, said he heard the new owners are very responsible.

The L&B Group is a long-term, hands-on owner of other properties around the country, Daley said, including 37 West 57th Street, which is currently managed by Newmark & Co.

Proposals from Newmark, Galbreath Riverbank, Edward S. Gordon, La Salle, the Clifford Companies and Cushman & Wakefield, the building's current management company, are being reviewed. Daley said L&B is also considering operating the property itself as it does in other locales.

At The Fuller Building, originally built by Fuller Construction, high-end retail is located on the ground floor with the second through 14th floor consisting of galleries. Office floors go up into the tower where they are 3,600 square feet each. Daley calls these ideal for a boutique showroom, law office, or accounting firm that would obtain a full floor identity.

Abraham Wallach, senior vice president of First Capital Advisors, said it is a tough building to lease up because the spaces are small in the tower and, aside from the sharp decline in city values since the property was purchased in the 80's, that was probably one reason the auction did not elicit the minimum bid.

On the other hand, the ground floor retail is one of the prime locations in the city. Daley is currently negotiating with several retailers for the former Sheraton Fabric store. "We want a high-end user and not just anybody," he said.

The company closed down all of its U.S. outlets and Daley recently arranged a buy-out of their lease, which was considered the high mark of city retail, fetching close to $600 a foot for the nearly 1,500 square feet of space.

"It's all windows," said Michael E. Butler, manager of retail services for Cushman & Wakefield, valuing the corner lease at $800,000 to $1 million dollars. The right retail, he observed, brings a cache to the building.

With Barneys now open just up the street, The Fuller Building is also a prime spot on the open air mall tour for tourists.

"We plan on making that building the highlight on that tour," emphasized Daley.

Said one gallery owner who asked not to be identified: "The bathrooms are a disgrace. It's unattractive and undignified and unworthy of a first rate building. I'm embarrassed when clients ask to use the washroom."

"In my business," this gallery owner remarked in a parable, "if you have a broken, shabby frame around a painting, it is foolish not to put a new frame around it because you get so much more money."

The gallery head also complained about items ranging from the out-of-uniform personnel on Saturdays "the most important gallery day," to the cleaning women using the passenger elevators and glue remaining where a bronze plaque used to be. "Look at the new Four Seasons Hotel [nearby] and look at this building," he said. This is a slum."

Daley is aware that tenant confidence is at a low point and is working to ensure the details are not overlooked. "We plan on getting together with those tenants and talking with them about the problems with the old owners," he said anticipating the closing next week. "We're really excited about really, truly getting our hands on the building."
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Title Annotation:Fuller Building at 57th Street and Fifth Avenue, New York, New York taken over by L and B Group after unsuccessful bankruptcy auction
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Sep 29, 1993
Previous Article:Lower taxes not in Dinkins job plan.
Next Article:Despite red tape, more buildings discover J-51.

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