On Thursday, November 30, developer Harry Macklowe testified at his divorce trial that he hoped to make $400 million in profits from luxury condo sales at 432 Park Avenue, but actually ended up with a mere $48 million, $352 million less than he expected.
During his testimony in his $2 billion divorce, Macklowe said, “My share was down to $48 million.” Several factors led to this shortcoming, including the slowdown of the luxury market, and a 2012 capital infusion that diluted his potential share.
He said, “The sales, at first, started off very robustly and then they slowed down.”
Filings with the New York Attorney General projected the building’s complete sellout at $3.1 billion. To date the building’s closed sales total more than $1.95 billion, according to CityRealty.
According to The Real Deal, “Macklowe said he bought the site, formerly home to the Drake Hotel, in 2006, and brought in Los Angeles-based CIM Group in 2009. CIM invested $350 million that year, but in 2012, the investment firm hired Citibank to raise additional equity. The bank ultimately syndicated $400 million from high-net-worth investors. The developers sewed up the final piece of financing, a $400 million mortgage from the Children’s Investment Fund, in October 2012. Macklowe has tried to downplay his financial strength during the trial, in which he is battling his wife Linda Macklowe over a joint fortune said to be in the range of $2 billion. He’s listed his personal net worth as negative $400 million on account of deferred capital-gains taxes. Linda, too, has followed, a similar strategy, as The Real Deal reported in its November cover story.”
According to documents that were submitted on Thursday to the court, when Linda first filed for divorce in June 2016, Macklowe had $49.7 million in his savings account. Although, at the time the account was pledged as collateral for several loans worth over $100 million combined. TRD reports, “Those loans included $10 million from Israel Discount Bank to acquire the development site at 200 East 59th Street. In 2011, Harry borrowed $10.5 million from Linda — at a 15 percent interest rate — to close on his acquisition of 737 Park Avenue.”
By Mark Snyder