The Real Deal New York

Macklowe drops JPMorgan for Deutsche on One Wall construction loan

Developer's new equity partner HBK planning $100M in extra equity: sources
By Mark Maurer | July 06, 2018 02:22PM

From left to right: Harry Macklowe, former Qatari emir Hamad Bin Khalifa al-Thani, and One Wall Street (Credit: Getty Images and Wikipedia)

In a late-stage switcheroo, Harry Macklowe has scrapped negotiations with JPMorgan Chase to finance the construction of his office-to-residential conversion One Wall Street – and instead is striking a deal with Deutsche Bank, The Real Deal has learned.

For more than a year, Macklowe has been negotiating with JPMorgan to secure an $850 million loan for the 566-unit project in the Financial District.  The deal has been hit with a series of delays. In recent months, Macklowe’s equity partner, Qatari billionaire and former prime minister Sheikh Hamad Bin Jassim Bin Jaber al-Thani (HBJ), transferred his stake to former Qatari emir Hamad Bin Khalifa al-Thani (HBK), according to sources familiar with the property’s finances.

The partners halted those financing talks and have quickly accelerated a new agreement for $750 million in financing from Deutsche. The parties signed a term sheet last week, and the deal is expected to close by the end of this month, sources said. Deutsche offered the firms a lower interest rate, the sources added.

As a result of the smaller loan, HBK, the project’s majority equity partner, is planning to contribute about $100 million in additional equity, sources said. HBJ no longer has equity in the project, which is now under construction.

Deutsche coming through for Macklowe is ironic, given their tumultuous history. Macklowe financed 99 percent of the $7 billion purchase of the Equity Office portfolio in 2007 with one-year loans from Deutsche and Fortress Investment Group. When the loans came due and the market turned the following year, Macklowe failed to refinance and instead handed the office portfolio over his senior lender, Deutsche, and the GM Building to Fortress to the tune of $2.9 billion. While property records show Deutsche later financed Macklowe’s $460 million acquisition of One Wall Street in 2014, sources said Deutsche served purely as an asset manager for a foreign bank, Qatar National Bank.

A JLL team led by Aaron Appel and Kellogg Gaines is brokering the financing. JPMorgan and JLL declined to comment, and Macklowe, HBK and Deutsche could not be reached.