With Conde Nast tightening the belt, do you expect their lease to change at 4 Times Square?
Douglas Durst: I don’t think you really have to worry about Conde Nast. They’ve had a tremendous loss in ads, but they have a huge cash flow and I don’t think it’s a worry. They’re cutting, which is probably something they should have done a while ago. I was up there the other day and they were complaining about not having a receptionist on every floor, which I think most people eliminated 10 years ago. So I think they’re fine. And at 4 Times Square they have a very nice rent they negotiated back in 1996. Their lease goes to 2018 or 2019.
You had mentioned last year plans to invest $300 million in distressed assets?
Douglas Durst: We’re still getting ready. There’s nothing available. You talk to everybody and there’s nothing being offered for sale. We were very much in favor of relaxing the market requirements and that has just had the wrong consequence for everybody–because the banks and the financial institutions have not been forced to get rid of these bad assets. They’re still holding them on their books, but that also means they can’t do any new projects because they’re weighted down with bad assets so nothing’s being sold and there’s no financing even if you wanted to buy something.
Is it a waiting game at this point?
Douglas Durst: We’re talking about our Plan B right now.
What’s Plan B?
Douglas Durst: We’re still talking about it. It would be investing in our own assets. Short-term money these days is earning under 50 points and we have mortgages that are 6 percent or 7 percent so it might make sense to just pay them down.
Jody Durst: Depending on whether we stick with Plan A or go to Plan B really dictates what the future holds. Douglas is talking about a more conservative approach where we won’t have discretionary funds to invest if and when opportunities come about. I’ve always been concerned about having these mortgages outstanding, even though I don’t think we’ve ever gone above 40 percent leverage, but they’re still big numbers and they’ve always scared me.
Any new projects on the horizon?
Douglas Durst: We have two projects starting and a third, which will start in the spring. We just closed on a building at 102nd Street and Fifth Avenue where we’re going to be renovating a building into condos and working with Mt. Sinai to develop an 80/20 building for them. Mt. Sinai owns it and it’s a rental building. This is being done through our partnership with Sidney Fetner and Durst-Fetner will be the developer.
And we’ve just agreed to be the developer for the New School on a building on Fifth Avenue and 14th Street. We should sign it any moment. As I recall it’s 300,000 feet.