Helmsley portfolio up for sale

Real Estate Weekly, June 25, 1997 by Lois Weiss

The sooner Helmsley sells, the more she will realize, as her late husband Harry's interests were immediately re-valued upon his death in January. Since then, the real estate market in general has gone straight up, while pension funds and private investors have been scouring the market for any money-making or investment-yielding opportunity.

Helmsley has interests in the master ground lease and operating management contracts for many major New York City buildings, including the Empire State Building, One Penn Plaza, the Lincoln Building at 60 East 42nd Street, the Toy Center at 200 Fifth and the neighboring 1107 Broadway, the Helmsley Building, and the Graybar building at 420 Lexington. Among other properties are 140 Broadway, The Fiske Building at 250 West 57th Street; the Childrenswear Center at 112 West 34th, the Starrett-Lehigh Building at 200 12th Avenue; and other property in Florida, Texas, Chicago, Washington, DC, and Los Angeles, among other places.

Helmsley also owns the Park Lane, where the she has a duplex residence, the New York Helmsley, the Helmsley Middletowne, the Helmsley Windsor, the St. Moritz and Helmsley Carlton House.

The portfolio includes over 25 million square feet of office space, over 20,000 residential units, over 7,500 hotel rooms, more than 50 separate retail projects, over eight million square feet of warehouse space, hundreds of acres of unimproved land, along with garages, restaurants and real estate companies.

Buildings that were sold recently include Ten Hanover Square to Steven Witkoff, and Helmsley is under contract to sell the sponsor interests in 6,400 apartments at the Parkchester condominiums in The Bronx to the Community Preservation Corp. But that sale is contingent on the building boards accepting a $140 million capital improvement program for which special enabling legislation must be passed in Albany, so they can pass along the costs to residents.

A spokesperson for Eastdil said the Midwestern chain of Harley hotels 'will most definitely' be sold, and they would not rule out the ones in New York.

"Our assignment as the advisor is to develop a plan that will allow her to make decisions about what to sell and what to hold - and in what order - in order to maximize value," said the Eastdil rep, who did not want to be quoted by name.

"She's a very astute woman and knows a good capital market when she sees one," the person said of Mrs. Helmsley.

The Investment Properties Associates (IPA) portfolio is not a part of the group under Eastdil's purview, as Helmsley and Irving Schneider have already agreed to a $255 million transaction to sell these 16 properties, which include 1329 Broadway and 1440 Broadway, to Mickey Rabina, say other sources. Rabina recently purchased 110 Fifth Avenue with Arnold Goldstein.

Many of the numerous properties going on the block are 100 percent held by Helmsley, but typically, Harry Helmsley would syndicate deals to several cohorts, including his long-time partners, Alvin Schwartz and Schneider, and the late-Lawrence Wien, whose son-in-law, attorney Peter L. Malkin, supervised much of the overall operations of the buildings.

Malkin, who was always meticulous in providing the correct credit for ownership and operations when discussing his properties with this reporter, was the subject of an unwanted article and speculative press report elsewhere which he did not cooperate with - soon after Harry's death that portrayed him as the likely beneficiary from the Helmsley empire's dismantling.

Sources report that Mrs. Helmsley was incensed by the article and quickly turned against Malkin as Schneider caught her ear. The two have since filed a lawsuit against Malkin. That was also easy as Helmsley's closest friend, Schwartz, had suffered a debilitating stroke.

Malkin, sources say, last spoke with Mrs. Helmsley at length at the party after she was released from jail in February of 1995. Since the article appeared, she has rebuffed him repeatedly.

Mrs. Helmsley also struck Malkin's name from the list of guests for the memorial service for her husband, but Malkin had an operation that week and would not have been able to attend anyway. But at that time, Schneider had to beg her to allow him to speak.

Since 1995, Schneider and Schwartz have had several lawsuits filed against Mrs. Helmsley. One says she was "conspiring" to drive down the value of the holdings; another says she owes them more than $5.7 million in payments. In 1996, they accused her of taking $20 million out of Helmsley - Spear, a number that is believed to have now grown to over $40 million, while she meanwhile is accused of piling debts onto the company.

Schneider also sued her over his removal as manager of 1385 Broadway, where he owns 25 percent, and called into question the 1992 transfer to Mrs. Helmsley of most of Helmsley's interest in the property after he was supposedly found incompetent to stand trial for Federal tax evasion.

Schwartz and Schneider charge in lawsuits that Mrs. Helmsley has decimated Helmsley-Spear to avoid paying them millions of dollars, while at the same time building up the Helmsley-Noyes firm for herself. In 1970, Harry Helmsley granted the two men an option to buy the Spear firm upon his death or receive payments of $10 million each.