NEW YORK | 36 Central Park So. (Park Lane development) | FT | FLOORS

[NYguy]

http://therealdeal.com/issues_articles/witkoff-the-savvy-strategist/


Witkoff: the savvy strategist
A king of strategic partnership, the developer prides himself on being able to change his real estate plans on a dime


January 01, 2014
By Adam Piore

Witkoff learned the value of having that flexibility early on, when he purchased 10 Hanover Square from the Helmsley family in 1996 for $15 million, intending to convert it to residential, but famously changing course and leasing the entire building to Goldman Sachs. In 2005, Witkoff ultimately did convert the 23-story building into residential and then, in 2011, sold it for $260.8 million.

“We like to be able to execute on a deal in many different ways. That is the way to buy real estate,” Witkoff said.

At the moment, he’s keeping his options open at one of his splashiest deals: the Helmsley Park Lane Hotel at 36 Central Park South. A Witkoff-led partnership — other investors include Lorber, Macklowe Properties, Highgate Holdings, and Jynwel Capital — closed on the $660 million deal in late November after securing $525 million in acquisition financing from Wells Fargo Bank and Criterion Real Estate Capital. And while rumors abound about how the investors might convert the property into luxury condos, Witkoff has said that for now, the property will remain a hotel. (Highgate specializes in luxury hospitality.)

“Right now, the whole business plan is centered around running it as a hotel,” Witkoff said. “We have the option of keeping it as a hotel and fixing up the rooms. We have the option of converting a portion … to condominiums. We have the option of buying some air rights and filling in around the hotel.”

.....it’s the project on Central Park South that has industry insiders buzzing most.

Witkoff said he expects the property as a hotel to generate an unlevered cash flow of around 4 percent of the purchase price.

Sources unconnected to the company say the Witkoff partnership has been poking around, attempting to acquire adjacent land.

“The layout is a little bit awkward for condos,” said the source. “But if they can get one or two more sites adjacent to it, it could be one of the best development sites on Earth.”

Witkoff insisted the partnership has not yet decided how to proceed.

“We just like the optionality, and it’s very, very rare, and that’s a big word for us,” Witkoff said. “It doesn’t have a long-term management contract, so there are many different ways we can go.”