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Olympia & York Developments Ltd.'s portfolio of trophy Manhattan office buildings has a low vacancy rate, solid cash flow and substantial equity, which sources familiar with the properties value at $800 million to $1 billion.
Nevertheless, Olympia & York's holdings here could easily become swept up in the financial maelstrom engulfing the now troubled Canadian-based company. Unsecured and undersecured lenders will likely demand a stake in the New York properties as the troubled company tries to work out its global problems with some 100 lenders.
The result could be that creditors would siphon funds from Olympia & York's efforts to upgrade and lease properties here. This might frustrate the company's efforts to find a lead tenant for 320 Park Ave. as well as create friction with JMB Realty Corp., a troubled Chicago-based real estate firm that is its partner on five buildings.
Finally, the financial upheaval could threaten Olympia & York's ownership of two of its properties. Although most of its New York City loans are long term, the principal debt on One Liberty Plaza and a midtown building becomes due within a few years, sources say. If the lenders refuse to extend the loans and other financing is unavailable, Olympia & York could lose the buildings.
"Even companies that aren't in the midst of a restructuring find it very difficult in this environment to obtain real estate financing," says Steven Swerdlow, executive vice president of CB Commercial Real Estate Group Inc.
The future of the company's New York City properties--from office towers at Battery Park City to six downtown buildings and three Park Avenue locations, among others--will become clearer after a meeting...