Macklowe faces foreclosure on Drake site

New York /
Sep.September 03, 2008 01:49 PM

Deutsche Bank sued Harry Macklowe and others to foreclose on $482 million in principal loaned to develop the Drake Hotel site at Park Avenue and 56th Street, according to a complaint filed in New York State Supreme Court.

The bank, acting as agent for the lender German American Capital Corporation, filed a 45-page complaint August 28 to force the sale of the Drake site and six buildings to be demolished for the development of a mixed-use hotel and condominium project.

This would not be the first time Macklowe lost control of properties to Deutsche Bank. The lender sold his prize possession, the General Motors Building, as part of a $3.95 billion package to a group led by Mortimer Zuckerman to repay the lender for the purchase of seven office buildings from Equity Office Properties.

Macklowe bought the Drake Hotel in 2006 for $418 million using money borrowed from Deutsche Bank. It was demolished last year.

In addition to Macklowe, the bank names his ownership company for the Drake site, 440 Park Avenue Owner Associates; two of His Companies That Own Three Buildings On 57th Street; as well as 12 unknown defendants.

Harry Macklowe’s son William Macklowe, the chairman and CEO of Macklowe Properties, was unavailable for comment, a spokesman said.

A spokesman for Deutsche Bank declined to comment.

Sources said Macklowe was trying to find a buyer for the site but was unable.

The suit seeks to regain control not only of the 24,000 square foot development site at the corner of Park Avenue and 56th Street, but also six properties that were drawn into the development loan.

Harry Macklowe was widely believed to be trying to assemble seven buildings along 57th Street, to create a development site with frontage on 56th as well as 57th street, but had gained control of just four.

Macklowe controlled 38, 40, 44 and 50 East 57th Street, but not 42, 46 and 48 East 57th Street. The lawsuit contends his companies were in negotiations to buy 46 and 48 East 57th Street, and had signed a contract to buy 42 East 57th Street.

The initial $543 million development loan to Macklowe was made in March 2006, and secured by the Drake site, 50 East 57th Street and 44 East 57th Street. The loan was spread through three agreements in 2006 and 2007 to cover air rights to 42, 44 and 48 East 57th Street.

The lender seeks to foreclose on Macklowe’s buildings at 38, 40, 44, and 50 East 57th Street. The suit asks for foreclosure on 42 and 46 East 57th Street, even though he does not control the properties, because they were in contract or being negotiated, the filing said.

The loan was restructured in October 2007 with a maximum principal amount of $559.6 million, due in full on November 30, 2007. That was not repaid, the suit alleges, leading to the foreclosure filing.


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
(Getty Images)
Tenants attack landlords two separate incidents
Tenants attack landlords two separate incidents
One of the two Avalon lots sold to an unnamed businessman (Google Maps)
Two Jersey Shore lots sell for record $21M
Two Jersey Shore lots sell for record $21M
(Getty Images)
LA developer doubled as abusive porn director, documentary alleges
LA developer doubled as abusive porn director, documentary alleges
Napa Valley hot-air-balloon business lists for $12M
Napa Valley hot-air-balloon business lists for $12M
Napa Valley hot-air-balloon business lists for $12M
Michael Ovitz looks to flip Greenwich Village condo for $25M
Michael Ovitz looks to flip Greenwich Village condo for $25M
Michael Ovitz looks to flip Greenwich Village condo for $25M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...