Steinway Hall in Midtown Trades to JDS

NEW YORK CITY-Steinway Musical Instruments Inc. said Tuesday that it had entered a $46-million agreement to sell its interest in the 88-year-old Steinway Hall building, across the street from Carnegie Hall on West 57th Street. Best known for Steinway & Sons pianos, the musical instrument maker had bought back the 16-story boutique office building in 1999, although the land is under a 99-year ground lease; the property at 109-113 W. 57th St. houses Steinway's flagship retail showroom.

The purchaser is a consortium led by JDS Development Group, which recently developed the Walker Tower condominium in Chelsea and bought a plot of land in Murray Hill from Sheldon Solow for $172 million. Also in the group are Atlantic Development Group and Property Markets Group, Bloomberg reported Tuesday afternoon.

“Steinway remains committed to providing the full range of services to the artists and patrons who have cherished Steinway Hall since it opened in 1925,” Michael Sweeney, chairman and CEO, says in a release. “Given this history, the board took great care to balance the needs of all our constituencies—artists, patrons and shareholders—in reaching the decision to sell the company's interest in the building. An important consideration was the significant investment required to maintain the building's infrastructure and appearance.”

The $46-million sales price is subject to an upward adjustment associated with certain post-closing conditions, according to the release. Under the terms of the transaction, Steinway has the right to occupy the premises rent-free for a period of 14 months after the deal closes, and to extend that period for an additional four months subject to an agreed-upon rent.

Adds Sweeney in the release, “Over the next year or so, we will be preparing for the creation of a 21st century Steinway Hall in Manhattan. Our Concert & Artist division is working on designs for a space that meets the needs of today's artists and customers just as the Steinway family conceived our current location nearly 100 years ago. We're excited about the opportunity to continue serving the musical and cultural community while preserving the Steinway family heritage.” Founded by German immigrant Heinrich Engelhard Steinway in a loft at 85 Varick St. in 1853, Steinway today is headquartered in Long Island City.

The consortium made a deposit of $5.6 million after signing the purchase and sale agreement, according to Steinway. After paying the associated transfer taxes, the company expects this transaction to generate cash proceeds of approximately $43 million upon closing. In addition, the rent Steinway currently pays under its land lease will terminate upon closing. The transaction is expected to close within the second quarter.

Earlier this month, GlobeSt.com reported that Meridian Capital Group had provided JDS with acquisition financing to buy a 730,426-square-foot development site at 616 First Ave. from Solow. JDS plans to build two multifamily towers there, of 37 and 47 stories, respectively, for a total of 830 units.