Macklowe claims $250M personal equity in Drake site
Harry Macklowe asserted that his personal cash investment in the Drake Hotel development site has grown to $250 million, including millions of dollars his mortgage lender Deutsche Bank forced him to pay to retire mezzanine debt on the property, a court filing this month says.
Macklowe bought the now-demolished hotel at the corner of Park Avenue and 56th Street in a highly leveraged deal for $418 million in 2006, but since 2007, he has poured in an additional $190 million of his own equity at the site, he said in an answer to a foreclosure proceeding.
Macklowe, the former chairman of Macklowe Properties, sought to block the foreclosure sale which would likely wipe out his $250 million equity position in the current depressed market conditions, the court papers say.
Macklowe sounded pained in the response by what he characterized as a rupture in a “longstanding relationship of trust” between him and Deutsche Bank.
“Deutsche Bank betrayed that trust by, among other things, making false promises it never intended to keep to induce Macklowe to pay off, from his own personal assets, nearly $150 million in mezzanine loans related to the Drake property and the [neighboring] Dakotah property,” the March 4 filing says. Macklowe allegedly paid another $40 million in cash infusions related to the project.
Macklowe is fighting off Deutsche Bank’s efforts to foreclose on the $482.9 million in principal outstanding on a mortgage for the development of the Drake site, as well as four townhouses on 57th Street and associated air rights. The lender first filed to foreclose in August 2008. Macklowe’s filing was his first official response to the foreclosure proceedings, known as an “answer.”
Macklowe, while broadly denying the allegations in the bank’s complaint in his response, also said the bank told him it would refinance the loan, inducing him to make the payments that brought his total personal investment up to $250 million.
Spokespeople for Macklowe and Deutsche Bank declined to comment.