Settlement Ends Columbus Circle Tower Fight

NEW YORK CITY-The battle over 1775 Broadway, the former Newsweek office building that the Moinian Group is repositioning as 3 Columbus Circle but which Related Cos. wanted to tear down, has ended with a settlement and both sides claiming gains. SL Green Realty Corp., which announced a joint venture on the project with Moinian in October, said in a release Monday that the JV had recapitalized the property and that Related and a unit of Deutsche Bank had relinquished all claims to it, although the bank is staying in the picture as a financing source.

Related and the Deutsche Bank unit, German American Capital Corp., bought the $250-million mortgage debt on the property in summer 2010 with the intent of foreclosing on it. The Wall Street Journal reported this past September that Related’s intent was to demolish the 26-story 1775 Broadway and put up a residential tower anchored by the city’s first Nordstrom’s department store, not far from Related’s Time Warner Center.

A source familiar with the newly forged agreement confirms a report in Monday’s WSJ that Related and German American held the note five months and were paid more than $270 million to give up control. More specifically, the source says the SL Green/Moinian partnership paid approximately $278.4 million to buy out Related and German American.

In a release, SL Green said it’s making a $138-million equity investment in the property, and that the existing mortgage has been refinanced with a bridge loan through SL Green and Deutsche Bank, to be refinanced by third-party lenders at a later date. The project is now fully capitalized, covering all costs to complete the $175-million redevelopment and lease up the property, according to the release. SL Green will take the lead on a marketing and leasing campaign.

Joseph Moinian, the Moinian Group’s chairman and CEO, says in a statement, “We have been confident of this outcome from day one and the completion of this recapitalization vindicates all of our efforts at 3 Columbus Circle.” The WSJ says the deal values the 768,565-square-foot project at about $500 million. A Related spokeswoman tells GlobeSt.com the company is “pleased to have reached a resolution which has generated a substantial return on our investment for both Related and its partners.”

Newmark Knight Frank is being retained as co-leasing agent for 700,000 square feet at the largely vacant 3 Columbus Circle, with an NKF team including Scott Klau, Brian Waterman, James Kuhn, Eric Harris, John Fanuzzi and Lance Korman. In a separate announcement, SL Green says it will implement a full re-positioning program, including a redesigned capital plan and implementation of operating standards consistent with other buildings in its portfolio.