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The Durst Organization is refinancing three of its buildings in a bold effort to raise equity for what could be the first speculative office building development in Manhattan in more than five years.
Sources say that the company, which is owned by one of the city's prominent real estate families, hopes to raise $70 million from the refinancing. The money would be used to help finance an 800,000-square-foot building on a site the Dursts own on 42nd Street between Sixth and Seventh avenues.
The Dursts have hired Manolis & Co., an advisory firm, to help it refinance 1133 Sixth Ave., 1155 Sixth Ave. and 733 Third Ave Originally, the company expected to do this by selling commercial mortgage-backed securities, a Wall Street product that flourished in the 1990s following the withdrawal of conventional lenders from the real estate finance business. But recently, the Dursts have been negotiating possible refinancing deals with banks and insurance companies, a sign that lending institutions are returning to the New York office market.
At the same time, new construction by the Dursts would debunk conventional wisdom in the real estate industry that an office development without significant preleasing is impossible at this time. That belief is based partly on reluctance of institutions to lend money for new construction. Also, stagnant office rents have failed to rise to the level that many experts think is necessary to justify new construction.
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