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NEW YORK CITY-The US real estate arm of Africa Israel Investments has restructured the debt on its purchase of the former New York Times building at 229 W. 43rd St., with Five Mile Capital Partners taking over 50% of the equity in the property by converting its debt. The deal reportedly wipes out more than half of Africa Israel’s $652-million debt on the property, now known as the Times Square Building, which it bought in April 2007 for $525 million from Tishman Speyer Properties while assuming $715 million of debt.

In a release from Africa Israel USA, the developer says the restructuring involved a five-year refinancing of the property’s senior debt for approximately $267 million; settling the $236-million mezzanine debt with a group made up of BlackRock, CIT Lending Services Group, Five Mile and Column Financial; eliminating over $70 million in guarantees; and transforming the entire project to being off-balance-sheet. It’s also gotten access to a revolving line of credit from Banco Inbursa SA that will enable the owners to complete redevelopment of the 96-year-old property. Africa Israel also gave Five Mile 5% of its rights in the 42-story Clock Tower, the former Metropolitan Life Insurance headquarters that it’s converting to residential, Bloomberg reports.

Richard Marin, chair and CEO of AFI USA, says in the release that restructuring the debt will result in a write-back of $370 million for his company. “This sets us on a course of renewal and success for our company, for our partners going forward and for the Times Square Building,” he says.

The market was still at its peak two-and-a-half years ago when Africa Israel bought the 750,000-square-foot 229 W. 43rd, which the New York Times Co. occupied for more than 90 years. At the time, Africa Israel’s plans were to convert it into a mix of class A office space and retail. However, this scenario ran aground as rents and vacancy began declining along with the capital markets.

The new plans call for an increase in retail space from the original 17% to over 38% of the total square footage. In addition, AFI USA will sell or lease seven floors totaling approximately 330,000 square feet for hotel use and redevelop the remaining four top floors into condominium penthouse residences, the release states. AFI USA also plans to offer rooftop signage opportunities, which were grandfathered in as part of the building’s landmarked status.

James Glasgow, a partner in Stamford, CT-based Five Mile, says in a statement that his firm is “confident that the new leadership of AFI USA will bring the project to a successful completion.” Earlier this year, Five Mile and Normandy Real Estate Partners bought the John Hancock Tower in Boston at auction for $661 million, half of what Broadway Real Estate Partners paid for it in 2006.

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