THE VERDICT IS STILL out on the biggest, most delayed deal of 2009, though it might have been the closest thing to a fire sale New York can expect in the foreseeable future. George Comfort & Sons, along with RCG Longview, DRA Advisors and the Feil Organization, closed on the last distressed Macklowe property, Worldwide Plaza, in July for $590 million—65 percent below what it had sold for in 2007—after two other deals fell through.
Ultimately, Deutsche Bank agreed to provide the investors with a $470 million mortgage; write down Macklowe’s original $1 billion mortgage from 2007; and put up $135 in equity. Though the building was 50 percent vacant, analysts expect it to fill up soon since the $369-per-square-foot price tag allows the investors to entice new tenants with exceedingly competitive rents.
Some of the other buildings in George Comfort’s portfolio face more immediate risks.
A $60 million payment at 63 Madison Avenue comes due on Jan. 1, and the property reportedly entered special servicing in July. According to Costar, 550,000 square feet of the nearly 800,000 total leasable feet remains vacant, and Real Capital estimates the DSCR is 1.49. The firm has another January payment due on 498 Seventh Avenue, stemming from a $181.5 million mortgage it refinanced in 2004. The company purchased the 876,704-square-foot building with Loeb Realty Partners for $42 million in 1997.
Real Capital also included George Comfort’s 339,900-square-foot building at 119 West 40th Street on its list of troubled properties. Though the building’s $160 million mortgage does not mature until 2017, according to Real Capital, the building went into receivership over the summer due to “depleted cash reserves,” Lois Weiss reported in the New York Post.
Comfort, Fortis Property Group and Leon Charney bought the building for $182 million in 2007 and launched a major renovation. In early 2008, a Wien & Malkin fund picked up the $23 million mezzanine debt on the building from RBS Greenwich Capital and Wachovia at the discount price of $16.8 million. Wells Fargo is among the larger tenants whose lease expires this year, and even in the event of renewals, rates are expected to drop.