GM Building Saga Continues
- Feb 14, 2008
In a long and bumpy attempt to alleviate a $7 billion debt on a portfolio of premier Manhattan office buildings, Macklowe Properties faces yet another obstacle as Leslie Dick Worldwide Ltd. appeals a judge’s ruling in favor of Macklowe regarding its plan to generate funds through the disposition of the 1.8 million-square-foot General Motors Building. Macklowe has put the trophy property on the market in an effort to repay one particular loan that was part of its debt financing package for the acquisition of the portfolio from Equity Office Properties last year.Originally developed in 1968, the 50-story GM Building sits in a premier location at 767 Fifth Ave. and is presently 94 percent leased. Macklowe acquired the property from Conseco in 2003 for $1.4 billion in a deal that, at that point, marked the largest-ever single-asset real estate transaction in the United States. It is this sale that is the basis of the court case involving Leslie Dick and Macklowe. Leslie Dick has claimed that the 2003 sale of the tower, which had been part of Conseco Inc.’s bankruptcy estate, was fraudulent. Leslie Dick asserted that during the bidding process for the building, it came in with the highest proposed purchase price of $1.5 billion, but the property sold to Macklowe for $100 million less. Leslie Dick proceeded to request an investigation by the U.S. Bankruptcy Trustee into the deal, alleging violations of the U.S. Bankruptcy Code. Much drama ensued. Leslie Dick recorded a Lis Pendens against the GM Building, a notice that a property’s ownership is being disputed, but a court overturned it in April of last year. Leslie Dick claims its delayed filing of the Notice of Appeal is because Macklowe’s representation never properly served the Lis Pendens order to begin with; the defense contends that the order was served on March 30, 2007. CB Richard Ellis Inc. oversees leasing of the GM Building and, as per media reports, is marketing it on behalf of Macklowe. The deadline for bids on the building is tomorrow. Recent reports indicate that the property could sell for more than $3 billion, which would cover repayment of the $1.2 billion Fortress Investment Group Loan, and assist in the repayment of the remaining $5.8 billion short-term debt financing that it secured for the portfolio purchase from Deutsche Bank AG.