The Real Deal New York

Macklowe buys Drake site lease for $5.4M

October 20, 2008 10:57AM
By Adam Pincus

In the face of a foreclosure action, a company affiliated with Macklowe
Properties paid $5.35 million to buy out a
building lease from Sovereign Partners that is part of the Park Avenue Drake Hotel development
site in Midtown, according to city records published Thursday.

The move puts Macklowe Properties a step closer to full control of the building at 38 East 57th Street, which the company bought in February 2007 for $60 million, in order to include it in the Drake project. But real estate investment firm Sovereign Partners, which is located in the building, held a lease for the entire building. Macklowe Properties only has to buy out or remove the remaining commercial sublease tenants in the building before the company can demolish it. A current tenant said less than half the building was occupied.

The 13-story, 30,000-square-foot office tower is the largest of seven buildings along 57th Street that Macklowe has been trying to assemble and then tear down to make way for a hotel and residential condominium. The company already owns four of the seven buildings, according to property records, in addition to the Drake Hotel site on 56th Street.

3857 Realty LLC, a company related to Macklowe Properties, closed on the $5.35 million lease transfer October 7, according to the city records. The signatory on the lease transfer was Macklowe Properties’ general counsel, Jason Grebin, identified as vice president of 3857 Realty.

The building tenant believed Sovereign had seven years left on the lease, but the company did not return calls to confirm that or comment on the sale. Macklowe Properties Chairman and CEO William Macklowe also declined to comment, through a spokeswoman.

A corporation affiliated with lease seller Sovereign was named in the August 28 Manhattan Supreme Court, $482 million foreclosure lawsuit filed by Deutsche Bank against Macklowe Properties, to wrest control of the Drake Hotel development site including the four properties and hotel he owns.

The tenant at 38 East 57th Street with three years left on his lease said he had not heard of the lease transfer, but expected to remain for the full term.

“We are in a wait and see mode,” said the tenant who asked not to be identified. “But we are not going anywhere; we are going to be here another three years.”

 

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