As pressure mounts to close the books on the Harry Macklowe
foreclosure saga, Deutsche Bank has lowered the price tag for 1540
Broadway And Worldwide Plaza to $800 million, according to financial
and legal sources familiar with the discussions.
The price drop
comes weeks after the collapse of an agreement to sell the buildings to
George Comfort & Sons for $2 billion. The deal fell apart when NBC
backed out of talks for a 600,000-square-foot lease at Worldwide Plaza,
which would make the building a much riskier investment.
going to trade at a discount, especially because they don’t have a
large tenant now,” said Dennis Russo, an attorney with Herrick
Feinstein, who represents some of the potential bidders. “You may never
rent that space in the next year.”
Deutsche has several offers
on the table for the two buildings, but the offers range from only
about $600 million to $700 million. Sources said the buyers are
interested in buying distressed assets, but declined to identify the buyers.
“A lot of them are bottom fishers; they may not be what Deutsche Bank wants,” said a person familiar with the talks.
was not immediately clear which investors would take the lead on a deal
for 1540 Broadway And Worldwide Plaza. Before talks heated up with
George Comfort & Sons, Guggenheim Partners reportedly had been in
the running for the two buildings. However, the Wall Street Journal
reported earlier this month that JPMorgan Chase seized tens of millions
of dollars in collateral from a fund controlled by Guggenheim Partners.
Officials at George Comfort & Sons could not be immediately reached for comment.
is under considerable pressure to dump the final two properties it
seized earlier this year from Macklowe after he defaulted on $7 billion
in debt. Sources say that Deutsche has told buyers that it had lined up
three prospective tenants, but would leave it up to the new buyers to
negotiate a lease. Deutsche Bank was not immediately
available for comment. CB Richard Ellis, which is marketing the
building, declined to comment.
In July 2009, advertising firm
Ogilvy & Mather is scheduled to Leave Worldwide Plaza, at 825
Eighth Avenue and 49th Street, for its new headquarters at 636 11th
Avenue at 47th Street, where rents start at $51 a square foot, mainly
to escape the $95 a square foot rents sought by Macklowe.
contrast, 1540 Broadway, also known as the Bertelsmann Building, is
relatively stable. Asking rents on lower floors average $95 a square
foot, while CB Richard Ellis is open to negotiating 111,600 contiguous
square feet of space on the 39th to 44th floors, which are available
“Leases have come due. [Macklowe was] very ambitious
on the rents they wanted, but the tenants found cheaper space
somewhere,” said Ruth Colp-Haber, president of Wharton Realty Partners,
who is not involved in the discussions.
Following the September
stock market crash, the Manhattan office market has been flooded with
sublease space and Colliers ABR predicts that asking rents will slide
more than 25 percent by mid-2010. Therefore, tenants will have many
more options for quality locations and have the ability to rent at a
significant discount from current prices.
“While Worldwide Plaza
is a nice building, it’s all the way on the West Side,” said Woody
Heller, managing director of Studley. “If you’re a tenant looking for
large space, is that your first choice?”