$3 billion-one, $3 billion-two, and $3 billion- its is. A building to sell for $3 billion does sound insane but this insanity is nearing to become a reality. Larry Silverstein, developer of ground zero, has bid $3 billion for General Motors Building on Fifth Avenue, in the Manhattan District in New York.
Indeed, with its commanding view of Central Park and its Fifth Avenue address, the building is a trophy property and a symbol of New York corporate power since General Motors moved its boardroom and some 3,300 employees there 40 years ago. Since then, though, G.M.’s presence has shrunk to three floors from 26, and its contractual naming rights for the property expire in 2010.
Harry Macklowe, owner of the building needs to raise $1.2 billion to pay off a short-term, high-interest loan that came due last week. He was flying high in February when he decided to buy a portfolio of prime Midtown Manhattan office towers for nearly $7 billion, using only $50 million of his own money. New York Times had reported in August of 2007, ‘February acquisition of the seven Manhattan buildings — a deal consummated in just 10 business days —will be remembered not just as a feat of financial derring-do but also as a watershed that ended two years of frenzy in the commercial real estate market.’
Macklowe, known in the industry as an investor willing to take a gamble to gain big properties, bought the building from Donald Trump and the insurance firm Conseco in 2003 for $1.4 billion, which observers said at the time was too high. As the market soared in the last several years and Macklowe redeveloped the plaza in front of the building to include an Apple store, the value of the building rose along with it. Built in 1968, the white marble and dark glass skyscraper occupies a full city block and is best known as the home of two retail tourist attractions, the FAO Schwarz toy emporium and Apple’s glass cube store.
Not for the first time, Mr. Macklowe, an acknowledged master of winner-take-all real estate poker, proved his skeptics wrong. He expanded and enhanced the valuable retail space of the G.M. Building — on Fifth Avenue at 59th Street — by creating a glass cube for an Apple store that has become a popular tourist destination. As the market soared, Macklowe Properties refinanced the tower twice, most recently in a deal that values it at about $2.7 billion.
Macklowe has been able to hold the creditors temporarily from foreclosing. New York Times reports, ‘Mr. Macklowe is trying to accomplish what few other developers have been able to do: convert the naming rights for a Manhattan skyscraper into a significant source of cash. He is offering the opportunity for a company to join a pantheon of skyline signatures that includes the Chrysler Building, the Woolworth Building, Lever House, Citigroup Center and the Pan Am, er, MetLife Building.’