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  #1  
Old Posted Jan 6, 2010, 2:06 PM
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Smile NEW YORK | 432 Park Avenue (Drake Hotel dev.) | (1,396) FT / 432 M | 89 FLOORS

http://www.nypost.com/p/news/busines...uOt1pnLp7MKbQI

Drake's new take
Macklowes, new partner buy out 10 investors


By LOIS WEISS
January 6, 2010

The fat lady hasn't yet sung for the former Drake Hotel site -- or the Macklowe family's plans to develop it.

Harry Macklowe and his son, William, appear to have come up with a way to keep control of the vacant Midtown lot on which the Drake Hotel used to sit and has since become an undeveloped eyesore and symbol of the Macklowes' financial troubles.

The Macklowes' development company, Macklowe Properties, is teaming up with Los Angeles-based private-equity firm CIM Group to pay off 10 debtholders who hold slices of a $510 million loan on the property as the family apparently looks to stage a bit of a New York City real estate comeback.

The agreement with CIM would enable the Macklowes to move forward with their development plans for the Drake site, which sits on Park Avenue between 56th and 57th streets and is where the Macklowes want to construct a 60-story, 600,000 square foot tower
.

Macklowe in 2006 spent more than $440 million buying the Drake Hotel, and has since torn it down.

Along the way he has also assembled a collection of adjacent properties and air rights along East 57th Street, creating what some have called an awkward front for a future development that was to include ground-level retail as well as an office tower.

Macklowe had trouble acquiring all of the buildings needed to create a space attractive for a major retailer such as Nordstrom, which at one point was in talks to open its first New York City store there.

Among many in real-estate circles, the Drake site is considered to be one of the city's most desirable locations, though these days it is little more than a vacant lot bounded by plywood walls.
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Last edited by Dylan Leblanc; Feb 29, 2012 at 2:05 AM.
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  #2  
Old Posted Jan 6, 2010, 2:33 PM
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http://online.wsj.com/article/SB1000...749032584.html




WSJ slideshow

Quote:
If the Drake deal closes in two weeks as expected, CIM and Mr. Macklowe will own what may be the world's most valuable rubble-strewn lot, once the site of the Drake Hotel, which was built in 1926. Mr. Macklowe bought and then demolished the hotel in 2007, intending to build a major office tower atop a base of high-end stores.
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  #3  
Old Posted Jan 6, 2010, 9:19 PM
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They demolished THAT?!
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Old Posted Jan 7, 2010, 2:18 AM
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They demolished THAT?!
Sadly, yes. I can't believe Macklowe is going to regain control of the site.
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  #5  
Old Posted Jan 7, 2010, 3:01 AM
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wasn't there a movie filmed in this building a couple years ago?

sab
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  #6  
Old Posted Jan 7, 2010, 5:05 AM
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Originally Posted by Zerton View Post
They demolished THAT?!
LOL, you're late to the party.
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Old Posted Jan 7, 2010, 5:13 AM
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Some demo photos from a few years ago...
















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  #8  
Old Posted Jan 7, 2010, 5:28 AM
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A NY Times article from a couple of months ago...
http://www.nytimes.com/2009/11/18/re...er=rss&emc=rss

Drake Hotel’s Prime Space Remains Undeveloped


An opening in the fence allows a view of the lot where the Drake Hotel once stood on Park Avenue at 56th Street.


Louis Verde, of Turnbull & Asser, said: "We're not going anywhere."


By TERRY PRISTIN
November 17, 2009


Enclosed by a dark brown fence, the weedy lot at Park Avenue and 56th Street in Midtown Manhattan is a conspicuous reminder of how ambitions were shattered in the recent real estate debacle. This vacant site, where the Drake Hotel once stood, is likely to leave a gash in the middle of the nation’s costliest office submarket for years to come, real estate specialists say.

Manhattan has 79 other stalled construction sites but probably none to rival the Drake in location. “It is inarguably the best development site in the country and possibly the world,” said Woody Heller, an executive managing director at Studley, a real estate brokerage company. Just north of the site is 450 Park Avenue, an office building that traded in 2007 for a record price of $1,566 a square foot.

In 2006, the New York developer Harry Macklowe bought the elegant Drake Hotel, opened in 1926, for $418 million, or about $847,000 a room. He tore it down the next year and planned to replace it with a 550,000-square-foot L-shaped building with luxury condominiums, an even more elegant hotel and Manhattan’s first Nordstrom store.


The cost of acquiring additional properties to assemble the site increased the project’s cost to at least $724 million, or about $1,300 a square foot before construction, brokers said. They say it is difficult to gauge its current value because the market in Manhattan has fallen so far, and few transactions have occurred.

To shore up his position in the deal, Mr. Macklowe made a huge personal investment in the project by paying off $156.3 million in certain loans in October 2007, which raised his stake in the project to $250 million. In court papers, Mr. Macklowe and his son, William, now the chief executive of the family business, said they invested their personal assets in the Drake site because of repeated assurances from Deutsche Bank that the bank would refinance their loans when they matured in November 2007. But the loans were not refinanced, and the Macklowes defaulted.

Not long afterward, the Macklowes lost a major portion of their real estate empire. Without a fight, they gave up control of seven Midtown office buildings that they had acquired at the peak of the boom, and a few months later, they sold their prized General Motors Building, on Fifth Avenue at 59th Street.

But the Macklowes are tenaciously clinging to the Drake project and have told people they are determined to see it developed, most likely with a financial partner, even if they have to wait for years. Several brokers said the continuing involvement of Mr. Macklowe, who is considered highly creative but also litigious and a tough negotiator, adds a layer of complications.

In August 2008, Mr. Macklowe’s longtime lender, Deutsche Bank, sued to foreclose on loans for the hotel site and for nearby properties. Mr. Macklowe bought unused development rights, known as air rights, to eight townhouses on 57th Street to be able to add height to the building. He also sought to buy the townhouses themselves to give Nordstrom frontage on 57th Street opposite the Four Seasons Hotel but was only partly successful.

Mr. Macklowe paid a record average price of $520 a square foot for the air rights, according to a case study by two recent graduate students at Columbia, Travis B. Olsen and Evan Woolley.

If the Macklowes’ construction plans were complex, the financing was even more convoluted. Deutsche Bank sliced the $559 million Drake loan into 21 separate pieces, each with a different level of risk. The bank kept about $12 million of the loan and sold the rest to eight investment groups, earning tens of millions of dollars in fees.

Citing a lawsuit, the Macklowes declined to comment publicly on the Drake. But in court documents, they accused the bank of lying to them and betraying their trust “by making false promises it never intended to keep.” Sounding like a jilted lover, they said the bank “strung Macklowe Properties along until Deutsche Bank got what it wanted, then refused to honor its commitments — benefiting handsomely from its willfully dishonest, deceptive, bad faith and fraudulent conduct at Macklowe Properties’ expense.”

If the bank succeeds in foreclosing, the Macklowes’ investment “will almost certainly be a total loss,” they said. Deutsche Bank did not respond to requests for comment.

Despite the foreclosure suit, the Macklowes hold some cards, brokers say. In April 2007, they agreed to pay $47.5 million for a townhouse at 46 East 57th Street, where the luxury jeweler Buccellati is a tenant. The sale has not closed. If it does, it is possible that the Macklowes may successfully argue that this building — and others — are not part of the loan collateral, thus ensuring a role for themselves, according to real estate executives familiar with the Drake site.

In addition to leaving a big hole on Park Avenue, the stymied development has also had repercussions for a fancy shopping strip around the corner from the site that was intended to be included in the Macklowe project.

The town houses are still standing, but several of the storefronts are vacant. At 44 East 57th Street, which was the home for 60 years of Dalva Brothers, a store that specialized in 18th-century furniture, a cracked window is patched with duct tape and cardboard boxes are piled up inside. The Macklowes paid Dalva $2.2 million to move uptown. They also paid $19.2 million to buy the lease of the Swiss watchmaker Audemars Piguet at 40 East 57th Street and move the store to the north side of 57th Street.

But the Macklowes did not succeed in putting all the parts together. Nordstrom, which had signed a letter of intent to build a store with 253,500 square feet, backed out after the Macklowes failed to acquire all the buildings needed to create the 57th Street entrance.


One holdout is Turnbull & Asser, a men’s clothing store where shirts start at $275. It had been in contract to collect $33 million for moving from 42 East 57th Street to another town house, according a document prepared by Cushman & Wakefield. But in May 2008, the owner of Turnbull & Asser, Ali al-Fayed, exercised his option to buy the building from the previous owner for $31.5 million. Now, said Louis Verde, the manager, “we’re not going anywhere.”

Another holdout is Jacob the Jeweler at 50 East 57th Street, which reportedly demanded $100 million to move. The company had no comment.

Last year, iStar Financial, a real estate investment trust in New York that holds the largest chunk of the senior debt on the Drake, tried to sell its $224 million note at a discount. When the bids came in well below the $160 million asking price, iStar took it off the market.

But Jeffrey W. Baker, an executive managing director at Savills, a mortgage brokerage, said prospects for such deals were improving. Several of his overseas clients have shown interest in acquiring the Drake loan with the intention of gaining control of the property, he said.

“While the complexities and risks of the deal have reduced the number of potential buyers significantly,” Mr. Baker said, “the growing consensus overseas is that market conditions are near bottom and that now is the time to acquire trophy U.S. assets at bargain prices.”
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  #9  
Old Posted Jan 7, 2010, 5:59 AM
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This is a mess that I’d like to see be fixed sooner rather than later. I’m not so much bummed out about losing the Drake as I am there just being an empty lot along Park Avenue. Hopefully with some help from the from the private equity firm, Harry can get himself together and get to work.

On a side note: Impressive figures on 450 Park, even if they are a few years old. Didn’t realize it was such a ‘hot’ tower considering it looks empty as a shell every time I walk past it.
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Old Posted Jan 7, 2010, 10:51 AM
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Originally Posted by Dac150 View Post
This is a mess that I’d like to see be fixed sooner rather than later. I’m not so much bummed out about losing the Drake as I am there just being an empty lot along Park Avenue. Hopefully with some help from the from the private equity firm, Harry can get himself together and get to work.
My guess is that we're now talking a strictly residential tower. No way they're going to get 60 floors of office space in a tower of only 600,000 sq ft...

Quote:
The agreement with CIM would enable the Macklowes to move forward with their development plans for the Drake site, which sits on Park Avenue between 56th and 57th streets and is where the Macklowes want to construct a 60-story, 600,000 square foot tower.
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Old Posted Jan 7, 2010, 11:04 PM
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My guess is that we're now talking a strictly residential tower. No way they're going to get 60 floors of office space in a tower of only 600,000 sq ft...
Agreed.
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Old Posted Jan 28, 2010, 10:55 PM
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According to curbed.com, looks like Macklowe has lost the site. More on that later...
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Old Posted Jan 28, 2010, 11:04 PM
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Old Posted Jan 29, 2010, 6:24 AM
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http://www.businessweek.com/news/201...cim-group.html

Macklowe Sells Drake Hotel Site on Park Avenue to CIM Group

January 28, 2010
By David M. Levitt


(Bloomberg) -- New York developer Harry Macklowe sold a prime Park Avenue development site to an affiliate of CIM Group for $305.4 million, city records show.

Once home to the Drake Hotel, the parcel at Park and East 56th Street in Manhattan lies in one of the world’s 25 most expensive office districts and about two blocks from the world’s priciest shops. Macklowe sold the Drake site along with four adjacent properties that could provide access to frontage on East 57th Street, near stores including Chanel Inc., Hermes and Louis Vuitton. He bought the Drake in 2006 and demolished it.

In 2008, Macklowe defaulted on a $513 million loan tied to the property, according to a lawsuit filed on behalf of lenders including Deutsche Bank AG. He recently planned to buy out creditors as part of a partnership with Los Angeles-based CIM, a person familiar with the situation said on Jan. 5.

Macklowe declined to comment on the sale to CIM, said Steve Solomon, his spokesman, leaving unanswered the question of whether Macklowe retains an interest in the property.

CIM had no immediate comment, said Bill Mendel, a spokesman for the company.

Macklowe intended to build a high-rise tower on the site that could have contained retail, condominium apartments and a new hotel, according to court papers.

The property sale was reported earlier today by TheRealDeal.com.
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Old Posted Jan 29, 2010, 10:04 AM
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No sale with ever undo the damage done by the scumbag that is Harry Macklowe.
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Old Posted Jan 29, 2010, 3:01 PM
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I hooked up with a Swissair flight attendant there a long time ago on a layover. Great memories. Sorry it's gone!
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Old Posted Jan 29, 2010, 3:41 PM
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I hooked up with a Swissair flight attendant there a long time ago on a layover. Great memories. Sorry it's gone!
You still have the memories...
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Old Posted Jan 29, 2010, 5:24 PM
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  #19  
Old Posted May 14, 2010, 1:16 PM
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The NY Times article provided by NYguy was interesting. This article stated a high rise condo and a Nordstrom was proposed.

My prediction is a 500-700 footer will be built with condos starting in the millions, the location is Park Avenue after all.
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Old Posted May 14, 2010, 6:59 PM
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hopefully it's over 700 feet for it could have some nice views of the future great 57th street canyon.
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Last edited by nycdagreatest; May 14, 2010 at 7:22 PM.
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