RCA in the commercial property press:

Macklowe Said Close to Buying Debt on NYC Hotel Site

Bloomberg reports: New York developer Harry Macklowe and private equity firm CIM Group are seeking to buy out creditors on a prime development site on Manhattan’s Park Avenue, a person familiar with the situation said.

Macklowe and Los Angeles-based CIM are planning to pay off debt holders on the land where the Drake Hotel once stood, said the person, who declined to be identified because the talks are private. In 2008, Macklowe defaulted on a $513 million loan for the East 56th street site and investors bought the debt.

The site is one of the most valuable development parcels in the world due to its central location amid some of Manhattan’s most expensive office and retail real estate, said Dan Fasulo, managing director of research firm Real Capital Analytics Inc. Buying out the creditors may allow Macklowe, who lost control of seven midtown skyscrapers to Deutsche Bank AG two years ago in the credit crisis, to revive his development plans for the site.

“This would be a positive sign for the market in general that things have stabilized enough to make a deal like this transpire,” Fasulo said in an interview. “It means some savvy investors do see some value at the end of this process.”

The creditors on the Park Avenue loan include iStar Financial Inc., Sorin Capital Management and Realty Finance Corp., the person said. The site is an empty lot.

Tower Plan

Macklowe leveled the Drake after buying it in 2006 in anticipation of building a tower that would include retail, condominium apartments and a new hotel. The L-shaped development site included four low-rise buildings on East 57th Street that Macklowe was negotiating to buy to create space that would appeal to a department store or another retailer. That street is among New York’s most expensive shopping districts.

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Posted by: Nina Turner

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