Mogul or frontman? It’s notoriously difficult to tell with developers. Figuring out how much of a stake a developer holds in a project takes an act of God — or, in some cases, a divorce.
According to evidence presented at Harry Macklowe’s divorce trial Thursday, the founder and CEO of Macklowe Properties owns a mere 8 percent interest in the retail component at 432 Park Avenue. Macklowe and his partners paid CIM Group $450 million for the space in 2014 and, according to the court testimony, Macklowe’s investment in that deal is $15.7 million, including a $3.1 million check he wrote in February 2016.
On Thursday, Mark Harrison, of accounting and consulting firm Marcum, who was hired by Harry’s ex-wife Linda for what is said to be a $2 billion divorce trial, testified in court. According to Harrison, Macklowe has a 10 percent stake in 200 East 59th Street, the 65-unit condo where only three units are in contract. Having invested $6.9 million in equity, Harrison projected Macklowe’s gross proceeds related to the developer’s promote to be $18.7 million.
Meanwhile, at 1 Wall Street, Macklowe has a 4.6 percent ownership stake, according to Harrison. His promote there was pegged at $23.8 million. His backer on that project, and others, is the Qatari billionaire royal Sheikh Hamad Bin Jassim Bin Jaber al-Thani, also known as HBJ, as The Real Deal revealed in March.
Macklowe sat expressionless during the long testimony in a sweltering courtroom downtown. As in days past, he avoided eye contact with Linda, who was dressed in a leather peplum jacket and kitten heels. Macklowe’s legal team broke for lunch on the patio of the Odeon café in Tribeca.
With an empire at stake, Macklowe’s legal team has tried to point out weaknesses in his projects, even the marquee ones. (Early on Thursday, his attorney Peter Bronstein said that because 1 Wall Street is so close to the New York Stock Exchange, there was virtually “no guarantee” an income-producing garage could be built at the site.)
According to Harrison, the couple’s joint tax write-offs between 2009 and 2015 was “over $460 million. The “net operating loss” that Macklowe reported on his personal tax returns averaged $64 million a year during that time, said Harrison, whose firm was paid $1.3 million by Linda.
“By the way, that was a benefit both parties received,” Justice Laura Drager noted.
In his report, Harrison projected Macklowe’s income at $55 million a year between 2017 and 2021. But Macklowe’s attorney Dan Rottenstreich pressed Harrison to explain exactly what basis there is for that figure, to which Harrison pointed to the developer’s prior income.
“He’s still in the same business,” Harrison said.