Unmasking Three Mismatched Heavies Who Won and Lost the Drake

<div><em>A Bush confidence man, a once-powerful developer and a scrappy broker tried to take Manhattan during the boom. First mistake: They went after the Drake</em></div>

Joseph Sitt, the local developer best-known for his controversial Coney Island plan, introduced CMZ to the Drake site in early 2008, but after an initial meeting he wasn’t invited back. Negotiations with Mr. Macklowe began and nothing was too far-fetched in that prelapsarian era of early 2008. It would be the Valentino tower! Nay, the Armani hotel/office/residential complex!

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Finally, it was settled: 65 stories of Bulgari glory, including a mall with hologramed walls for retailers to advertise, a spa and a private club.

The purchase price: $850 million, with a tiny deposit. “If we receive $25mm, I would never give Harry more than that as a deposit and I would probably give him less—but this strategy will only work so long as we have no competition,” an attorney told Mr. Zackson in an email.

“Right on,” he replied.

Not that CMZ had anything like that kind of money, but back then you didn’t need it (just ask Mr. Macklowe, who shortly before had been spotted $7 billion from Deutsche Bank for a seven-skyscraper spree). Much of the equity was initially to come from French fund Inovalis, which agreed to arrange nearly $500 million, with confidence, according to a June 2008 letter from Chairman Stephane Amine, that the Bulgari brand “will ensure the project’s ability to generate nearly $3B in value.”

By the end of that summer Inovalis grew wary of the Drake deal. Gregg Hayden, an adviser to the fund, wrote in a text message to The Observer from China that CMZ “proved ineffective.”

The appraisal of the site came back in October at $780 million, well below the agreed price, but Harry Macklowe wouldn’t budge. The Drake site by then was slipping through Mr. Macklowe’s fingers anyway, as Deutsche Bank moved aggressively to foreclose.

Mr. Manafort then met with Ukranian billionaire Mr. Firtash, a part owner of Eural Transgas, in Kiev, and secured the promise of an initial $112 million for the project, but that fell apart when Mr. Firtash became distracted by an investment in troubled Bank Nadra back home. Grasping, Mr. Zackson wrote in an email in March 2009: “I have an idea to bring [Donald] Trump in on the Drake. I think it solves a lot of issues right away.”

By then, though, the Drake deal was basically dead, and CMZ too was in trouble.

Unmasking Three Mismatched Heavies Who Won and Lost the Drake