Living up to his reputation as the Houdini of real estate jams, Harry Macklowe is said to be negotiating a rescue deal with billionaire investor Joseph Cayre in exchange for the keys to Macklowe’s trophy GM Building – Manhattan’s priciest office space.
The 70-year-old Macklowe is under the gun to sell bidders his Fifth Avenue landmark overlooking Central Park in an emergency $3 billion-plus bailout that would save his half-century career from a devastating end.
Cash from the bailout is needed to block other creditors from seizing billions of Macklowe’s other assets, including his homes in Manhattan and the Hamptons, his contemporary art collection and his beloved 112-foot yacht, Unfurled.
Sources said Cayre, 66 – who built his fortunes on the blockbuster video game phenomenon “MortalKombat” – has an upper hand in the bidding because he’s teaming with cash-rich Middle Eastern investors to cleanly buy out creditors.
Other bidders are said to include Larry Silverstein, who’s been a partner with Cayre on the World Trade Center development.
Cayre’s deal would likely leave Macklowe in place at the GM building as a minority partner and manager instead of booting him altogether. Cayre and his unidentified investors would take a stake without having to scrap the entire equity package or debt scenario, sources said.
“It’s giving Macklowe some new breathing room,” said a party briefed on the deal.
Macklowe a year ago pledged the landmark GM building against an even bigger real estate deal – buying seven glitzy office buildings from Blackstone Group for $6.8 billion.
But he’s been hard-pressed to meet payments or refinance due to the credit crunch.
If he defaults on the GM property, it could cause a domino effect to topple the rest of his over-leveraged empire, including the seven buildings he bought last February just before the subprime mortgage mess exploded.
Cayre’s group would buy out creditors, including Fortress, which holds a key $1.4 billion bridge loan. It was unclear whether a larger creditor, Detusche Bank, would be replaced or just extend its loan.
Cayre and his family headed a successful video company whose hits included “MortalKombat”, “Doom II” and exercise videos of the stars such as Cindy Crawford. He then parlayed the business into a real estate empire stretching from New York to Baltimore and Florida.
