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Worried about losing control of their buildings, some of the biggest names in New York real estate are scrambling to refinance their mortgages before they are squeezed by falling rents and large debt payments.
At risk are buildings that survived the real estate recession of the early 1990s because they boasted long-term tenants paying high rents. Those leases are coming to an end, however, and they are being renewed at sharply lower rents. Unless mortgages can be renegotiated at much lower rates, the owners stand to lose most or all of their equity. The result could be to accelerate the shift in ownership from New York's eclectic collection of well-known real estate families to the faceless lending institutions that hold the mortgages.
"Almost every refinancing today is a workout," says William Stern, a mortgage broker at Sonnenblick-Goldman Co.
Three major players
Key property owners involved in negotiations include George Klein, Larry Silverstein and the Fisher family.
George Klein's development company, Park Tower Realty, is trying to refinance $140 million in loans on 535 Madison Ave. held by Aetna Life & Casualty and Swiss Bank. The building's two biggest tenants, Dillon Read & Co. and Gannett Inc., want to renew their leases, now at least $60 per square foot. But they are...