Macklowe buys Drake site lease for $5.4M
October 20, 2008 11:15AM By Adam Pincus
38 East 57th Street
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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Comments
Anonymous
I thought Macklowe was bankrupt, what is he doing buying stuff?
Comment #1 Posted By: Anonymous 10/20/08
Anonymous
is there anyway to stop this nightmare from turning all of midtown into a glass box? Your tore down the beautiful Drake for a big empty lot (for along time with this market) and now want to tear down the last remnents of elegant East 57th street townhouses. Enough is enough. Where is landmarks? Tierney Bloomberg, Burden and Quinn wake up before its all lost
Comment #2 Posted By: Anonymous 10/20/08
Anonymous
What the Drake site is not big enough to build? if you must Harry (or the eventual note holders), maintain the 57th street buildings and USE the AIR RIGHTS to build bigger on Park Avenue. Please we need to save some parts of our history. If these townhouses where on Madison Avenue in the 60s, they would be cherished. We deserve better than this.
Comment #3 Posted By: Anonymous 10/20/08
Anonymous
I agree with commenter 2 and 3. There is plenty of space in the city and lot of it is vacant and more will become vacant, let's not let what happened to Park Avenue South, happen to these buildings.
Comment #4 Posted By: Anonymous 10/20/08
Anonymous
I would love another skyscraper - maybe we could even get 2M sqft there - this is NYC - if you want old and quaint move across the Atlantic.
Comment #5 Posted By: Anonymous 10/20/08
Anonymous
We are going to hit a 10% vacancy rate, another skyscraper would only be appreciated by those enjoying the view from Jersey or Brooklyn, but it won't be good for the city.
Comment #6 Posted By: Anonymous 10/20/08
Anonymous
Macklowe has an ongoing court case with Warren Cole, his former number two, whom he fired. He may have to pay him a lot of money. Where does he get the cash?
Comment #7 Posted By: Anonymous 10/20/08
Anonymous
Macklowe may want to use control of that building as a bargaining chip with Deutsche Bank, so that, even if the bank takes back the site, they would have to pay Macklowe a premium for the additional building property, which would be needed to fully develop the site. My question would be, is he using Deutsche Bank money to acquire full rights to the property, and if he is, isn't it their building already? My suggestion to the tenants is to hold out. Macklowe may be finished, but other buyers will have more money to offer.
Comment #8 Posted By: Anonymous 10/20/08
Anonymous
The Drake was a beautiful historic hotel with a tremendously interesting facade and design, and these townhouses are typical of what makes New York so special compared to most of the cookie-cutter USA. The loss of the Drake was a shame, it will be at least 15 years before we see a new building on that site, which will look like all the other glass boxes on Park Ave, very depressing.
Comment #9 Posted By: Anonymous 10/20/08
Anonymous
@#8: Macklowe doesn't have any bargaining chips when it comes to Deutsche Bank.
Comment #10 Posted By: Anonymous 10/20/08
Anonymous
I am so upset to see so many beautiful buildings destroyed for one monolithic glass box. Something that will be the same as every other new building. The quality in these buildings can never be replicated... nothing sadder to see then so much beauty destroyed!
Comment #11 Posted By: Anonymous 10/20/08
Anonymous
#10 I hope he doesn't. I think he's a black hat developer. And he does seem to be over his head in debt. For one thing, he borrowed a lot of money to build 510 Madison, some of it from Deutsche Bank. Number two, he didn't fully pay off the Equity loan; there was something like $150 mil left on it, still personally guaranteed.
Comment #12 Posted By: Anonymous 10/20/08
Anonymous
o please all of you go get a life you think macklowe care what you say he still nhas billions else where =!!! what a bunch of haters
Comment #13 Posted By: Anonymous 10/20/08
Anonymous
Well, he has at least one illiterate defender.
Comment #14 Posted By: Anonymous 10/20/08
Anonymous
Amanda Burden, Robert Tierney , Michael Bloomberg please stand up to this. Enough is enough. This is an extension of your beloved historic Upper East Side - all that is left of East Midtown's past. Please help save it. I am sad every time I go past the former Drake site - it was the last prewar below 59th street and deserved to be preserved. This man is leaving some legacy to the City that made him rich (and his son).
Comment #15 Posted By: Anonymous 10/20/08
Anonymous
Developers tend to get their way, as long as a lot of palms get greased.
Comment #16 Posted By: Anonymous 10/20/08
Anonymous
Remember the Savoy Plaza - still missed - like the Drake site - and we continue to destroy what makes this area special. sad
Comment #17 Posted By: Anonymous 10/20/08
Anonymous
Damn all we need is a siesmic 5
Comment #18 Posted By: Anonymous 10/20/08
Anonymous
I think we must all remember that as long as Mr. M is doing his business legally, the man is entitled to do whatever he needs to do to advance his interests. Now that the Drake in now an empty lot, it would be nice to to see something pretty take its place.
Comment #19 Posted By: Anonymous 10/21/08
Jason
Macklowe has built several superb buildings in New York and there is every reason to expect that whatever he builds on the Drake site will be as good or better. I don't understand how those who criticize the materials and design of his new building there are able to do this because there is no evidence that Macklowe or any architect has made any decision about this.
Comment #20 Posted By: Jason 10/25/08