Equity Office, an affiliate of the Blackstone Group, which just purchased the upper 12 floors of the 15-story former New York Times building at 229 West 43rd Street, has turned the publisher’s dining room into a basketball court in an effort to attract prospective tenants, the Times reported.

The real estate giant has been pulling out all the stops to draw positive attention to the building, most of which has been vacant since the Times moved on in 2007. A 12th floor terrace has also been landscaped in Blackstone’s version of the High Line, Josh Glick, the asset manager for Equity Office, joked.
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Drastic changes are needed to stimulate a housing recovery according to a New York Times editorial, which urged President Barack Obama to push forward plans for principal reductions on home mortgages and easier refinancings.

The editorial argued that the overall economy won’t improve until the “tens of millions of Americans… crushed by the overhang of mortgage debt” get some relief. Because nationwide housing prices have declined 33 percent since the market’s peak, 14.6 million homeowners are underwater on their mortgages. Lowering interest rates, the argument goes, simply is not enough. [more]

From left: Blackstone co-founder Stephen Schwarzman, 229 West 43rd Street and Lev Leviev, chairman of Africa Israel

Private equity firm the Blackstone Group has completed its purchase of the top 11 floors of the 15-story former New York Times building at 229 West 43rd Street, according to public records filed with the city this morning.

As The Real Deal previously reported, the deal saw Blackstone pay developer Africa Israel USA and private equity firm Five Mile Capital $160 million for approximately 450,000 square feet of the building, which includes a portion of the fourth floor and floors five through 15.

“We are making a significant real estate contribution to the neighborhood for which we are proud,” Tamir Kazaz, CEO of Africa Israel USA, said in a statement in April about the sale. Kazaz said the company used the proceeds of the sale to pay down a portion of the $265 million first mortgage.
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Donald Trump appeared on CNBC’s “Squawk on the Street” this morning to respond to a New York Times story that honed in on two lawsuits filed against the real estate developer (see video above). One lawsuit alleges that Trump misrepresented his involvement in several Florida buildings that bear his name but were developed by a third party, while the other claims classes at his for-profit Trump University are little more than “infomercials.” Trump defended his licensing business by pointing out that prospective buyers are provided with paperwork that clearly detail his involvement in the residences, and reminded viewers that his university has garnered a 98 percent approval rate, and that the allegations are based on the opinions held by a select few who unfairly target him. [more]

Despite racy comments about a rumored New York Times buyer and a plug
for Boston Properties Chairman and CEO Mortimer Zuckerman for U.S. Senate,
Rupert Murdoch, the News Corporation chairman and CEO, got his best response
from the audience at a Real Estate Board of New York luncheon today
when he called for a push-back against New York’s powerful public
unions. The
audience of hundreds of real estate professionals in the Sheraton New
York Hotel in Midtown broke into applause when Murdoch mentioned that
the business community should challenge the powerful unions in Albany
such as those representing teachers. “Who owns and controls
Albany? It is the state employees unions,” he said. “Until business
raises more funds that won’t be turned around,” he said to applause. [more]

From the February issue: It’s been a sort of parlor game in New York’s real estate community for
some time: speculating on whether peak-market buyers will hold on to
their highly leveraged properties.
Then, in a move that shook the industry last month, Tishman Speyer
Properties and BlackRock Realty decided to turn over the keys to the
$5.4 billion Stuyvesant Town and Peter Cooper Village.
But not everyone has gone this route. Other overextended borrowers
have kept control of their properties following a debt restructuring,
including developers Lev Leviev and Joseph Moinian.
As part of a workout — the complex process that’s often decided by
the leverage each party has in the development — the bank or private
equity firm must weigh its options.  [more]

Lev Leviev and the former New York Times Building

The former New York Times Building at 229 West 43rd Street in Times Square, on which owner Africa Israel yesterday announced it had reached a restructuring deal to reduce its debt by 60 percent, is now slated to become a mixed-use luxury center, with a 379-room high-end hotel sandwiched in the middle of a posh retail mall and bowling alley on the lower floors and 26 condo units on top. The 15-story landmark had been slated for a $170 million reinvention, but sits mostly tenantless since Africa Israel head Lev Leviev’s $525 million purchase of the property in 2007 at the height of the market. The senior lender on the building, Mexican bank Banco Inbursa, is providing a $75 million revolving loan for the new conversion, and a 50 percent stake will go to lender Five Mile Capital Partners. Bowlmor Lanes has already inked a deal with Africa Israel on the third and fourth floors, where it plans to open a 50-lane bowling alley in October, and Africa Israel said it is in talks with three investors about the purchase or lease of the fifth through eleventh floors for a hotel. [NYT]

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Africa Israel Investments said today it will cut its debt on the 15-story New York Times Building at 229 West 43rd Street by roughly 60 percent after reaching a deal with its creditors. The developer paid $525 million for the Manhattan property in 2007, taking out $715 million in loans in order to convert the building, where its namesake newspaper was headquartered until 2004, into a mixed-use complex including an upscale hotel, apartments and retail space. The building now stands empty after the economy cratered and the project was abandoned. Africa Israel’s debt stood at $652 million on the property prior to the deal, which will reduce it to $267 million, and provide the company with a credit line of $75 million. The deal stipulates that Africa Israel surrender 50 percent of its rights to the building. The company said it will use another $25 million to develop the property and will pay back the remaining debt within five years. Yesterday, the company reached a deal with its corporate bondholders to restructure $2 billion in debt, which is pending final approval next month. [WSJ]

Times Square office buildings, which saw tremendous growth before the real estate bust, are now struggling to maintain their clientele as companies flock to take advantage of steep rent discounts in more traditional — and less congested — Midtown locations further east. Besides its crowd control problem, Times Square buildings suffer from the wrong layout for this new real estate era, said David Goldstein, a tenant broker and executive vice president and director at Studley. “The area’s biggest envelopes are raw space, where major build-outs are required. That’s a tough sell these days, with so much prebuilt space on the market at [relatively] low prices,” Goldstein said. Meanwhile, the 1.1 million square feet at speculative office tower 11 Times Square, which is slated for completion early next year, is still tenant-less. It may join the ranks of the former New York Times building at 229 West 43rd Street, whose 767,000 square feet is also currently vacant. [Crain's]

The six-year-old online real estate data firm PropertyShark.com is opening a new front in the commercial listing wars by publishing free local retail and office listings, in a direct but limited challenge to market leaders Costar Group and Loopnet. While not yet complete, PropertyShark.com began listing office and retail space availabilities in Manhattan, Brooklyn and Queens several months ago, but discussed the plans publicly for the first time with The Real Deal. The company plans to have comprehensive retail listings by January and office listings by the end of the first quarter of 2010, company founder Matthew Haines said. That information would be followed in the second quarter with commercial property sales listings. “We want to have the most comprehensive and the most accurate database of listings available,” Haines said. “We want to capture market share from Loopnet, Costar and the New York Times.”
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PropertyShark.com expands commercial listing resources

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