Real Estate Chat

Luxury & Comfort Takes Over Times Building December 24, 2009

Source: NY Times

Author: Charles V. Bagli

URL: http://www.nytimes.com/2009/12/23/nyregion/23building.html

“Former Times Building to be a Hotel and Condos”

Lev Leviev, the Israeli billionaire, made many New Yorkers sit up and take notice when he bought the former New York Times Building on West 43rd Street in 2007 for $525 million, three times what the seller paid for it 30 months earlier.

It was a bold declaration that Mr. Leviev, who planned to spend an additional $170 million transforming the landmark building into a first-class office building, wanted to be a real estate player in New York. It was also a deal emblematic of an era when buyers and bankers imagined that rents and values would soar forever.

Then the market collapsed. Layoffs prevailed. The newly renovated building in Times Square sat mostly vacant, begging for tenants, as Mr. Leviev’s company, Africa-Israel Investments, stumbled under billions of dollars in debt on its worldwide holdings.

Now Mr. Leviev is back with a partner and a new plan to turn the 15-story building, where printing presses once churned out newspapers, into a glamorous three-decker sandwich, with a vertical mall that includes luxury shops on the lower floors, along with exhibition space and a stylish bowling alley and nightclub surrounded by seven restaurants. A high-end hotel with as many as 379 rooms would sit in the middle, and 26 penthouse condominiums on top.

“The strongest thing going for the property is its location and the continued vibrancy of Times Square as a tourist center and a magnet for visitors,” said Richard A. Marin, chief executive of Africa-Israel USA, Mr. Leviev’s American real estate company. The new plan, he said, “will allow us to create the most value and make the greatest contribution to the Times Square neighborhood.”

It is anyone’s guess whether this plan will work any better than the last one, given the soft condo market, competing bowling alleys in the Times Square area and falling hotel rates. But there is no better place for a radical reinvention than Times Square, where peep shows, T-shirt shops and prostitutes have given way to Bubba Gump, the Hard Rock Cafe, theaters, French cosmetics shops, bankers and millions of tourists.

“Times Square has a special kind of alchemy that’ll make your head spin,” said Tim Tompkins, president of the Times Square Alliance, a business group. “Sleazy becomes sexy, a bank becomes a theater, decaying landmarks become multiplexes or luxury condos, and a gritty newsroom and printing plant become a boutique hotel. The only thing you know is that you don’t know what’s next.”

Mr. Leviev, a diamond magnate who travels with a coterie of bodyguards, had been having trouble paying the $711 million in loans he had piled onto the former Times building, which the newspaper occupied for nearly a century before selling it to move to a new tower on Eighth Avenue in 2007. Mr. Leviev was so intrigued with New York real estate, brokers said, that he did not even tour the building before he bought it.

Mr. Leviev has brought in new managers, including Mr. Marin, and on Tuesday, his company announced that it had completed a restructuring deal, reducing the debt on the property to $267 million. His senior lender, Banco Inbursa, the Mexican bank led by Carlos Slim Helú, has agreed to provide a $75 million revolving loan for the new project. Another lender, Five Mile Capital Partners, emerged as a partner with a 50 percent stake in the building. But most of the other lenders, including Credit Suisse Group and a fund managed by BlackRock, lost most if not all of their money.

Mr. Marin said he had also signed a deal with Bowlmor Lanes, which operates an upscale bowling alley near Union Square, for the third and fourth floors.

The company hopes to open a 50-lane bowling alley in October that will feature an 18-foot bowling pin at the entrance and seven distinct sections, each with a different New York-related theme, including Chinatown and Central Park. Each section will have its own décor, restaurant and costumed waiters and waitresses.

“We plan to create an authentic New York experience on a grand scale that will really be ideal for residents of New York and the corporate event market,” said Thomas Shannon, the founder of Bowlmor Lanes. “It will be spectacular for visitors as well.”

The top three floors of the building would be set aside for condominiums.

Mr. Marin said he was talking to three investors about the purchase or lease of seven floors (5 through 11) for a hotel, whose sky lobby would be on the 11th floor, where there are double-height ceilings and arched windows. Although it is often difficult to turn older office buildings into hotels, Mr. Marin said the space could be divided into about 379 oversize rooms, with rights to put an illuminated hotel sign atop the building.