Tishman finds partner for Chrysler Building

Real Estate Weekly, March 14, 2001 by Elaine Misonzhnik

Amid fears of a shaky market, the executives at Tishman Speyer Properties are working on a deal that real estate experts insist will show that New York is still as strong as ever. Tishman and its partner, Travelers Insurance Group, are currently trying to refinance the Chrysler Building, a landmark, 77-story building in Midtown Manhattan.

"I would say that it's an extremely positive transaction -- it demonstrates that there's a very strong market in New York that will continue to attract foreign investment," said Philip D. Restifo, executive director of mortgage finance for Eastern Consolidated, in reference to the soon-to-be-completed deal. "It's a very, very constructive transaction both for the property and for the market."

According to a source close to Tishman, the German-owned, Atlanta-based investment firm TMW is planning to buy a 75% interest in the building, for an estimated price of $400 million.

"Tishman Speyer has realized the value of the property and now they want to take their money off the table," the source said. "But make no mistake, they still want to maintain the controlling interest, the decision-making power."

"This is a standard equity re-capitalization deal and Tishman Speyer was smart to do it this way, instead of going into a lot of debt and mining the property," Restifo said. "They have created a great deal of value and now want to harvest some of the profits, to which they are certainly entitled."

The Chrysler Building, located at 405 Lexington Ave., between 42nd and 43rd street, was built in 1930 by the architect William van Allen and is renowned today as one of the best examples of Art Deco design. Tishman Speyer and Travelers Insurance bought the building in 1998 from the estate of Jack Kent Cooke and undertook an extensive renovation of the property.

Contrary to some published reports, however, the deal with TMW is not yet completed, which makes the speculation about the strength of the New York market only that -- a speculation.

Still, $400 million is not such a bad deal: the part bought the entire building for $220 million.