The fat lady hasn’t yet sung for the former Drake Hotel site — or the Macklowe family’s plans to develop it.
Harry Macklowe and his son, William, appear to have come up with a way to keep control of the vacant Midtown lot on which the Drake Hotel used to sit and has since become an undeveloped eyesore and symbol of the Macklowes’ financial troubles.
The Macklowes’ development company, Macklowe Properties, is teaming up with Los Angeles-based private-equity firm CIM Group to pay off 10 debtholders who hold slices of a $510 million loan on the property as the family apparently looks to stage a bit of a New York City real estate comeback.
The agreement with CIM would enable the Macklowes to move forward with their development plans for the Drake site, which sits on Park Avenue between 56th and 57th streets and is where the Macklowes want to construct a 60-story, 600,000 square foot tower.
News of the Macklowes’ deal was first reported by The Wall Street Journal.
The Macklowes and CIM declined to comment.
Macklowe in 2006 spent more than $440 million buying the Drake Hotel, and has since torn it down.
Along the way he has also assembled a collection of adjacent properties and air rights along East 57th Street, creating what some have called an awkward front for a future development that was to include ground-level retail as well as an office tower.
Macklowe had trouble acquiring all of the buildings needed to create a space attractive for a major retailer such as Nordstrom, which at one point was in talks to open its first New York City store there.
Among many in real-estate circles, the Drake site is considered to be one of the city’s most desirable locations, though these days it is little more than a vacant lot bounded by plywood walls.
While the Macklowes has had difficulty developing the site, and once the economy tanked things got worse, with the father-and-son team stopping work on the site altogether as an overextended Macklowe Properties ran into financial trouble and was forced to sell off properties, including the prized General Motors Building.
At the Drake site, Macklowe Properties went into default on its loan in November 2007, and have been in litigation while the developer tried to find an equity partner.
As part of the deal with CIM, Macklowe is paying off a loan originally made by Deutsche Bank, which later syndicated the loan to an investor group that includes iStar Financial, Sorin Capital Management and Realty Finance Corp.
Macklowe earlier had tried to strike a deal with iStar and Sorin, but those talks broke down because the pair wanted a higher price.
