Deutsche Bank in deal to sell NY skyscraper: source

By Ilaina Jonas

NEW YORK (Reuters) - Deutsche Bank AG (DBKGn.DE) has agreed to sell a skyscraper that will bring an end to real estate developer Harry Macklowe's disastrous bet on the New York office market, a source familiar with the deal said on Thursday.

Worldwide Plaza, the last of seven New York office buildings that Macklowe bought for $7 million from Equity Office Properties Trust when the U.S. commercial real estate market peaked in early 2007, is being sold to a group of investors led by RCG Longview and George Comfort & Sons, the source said.

Representatives from RCG Longview and George Comfort & Sons could not immediately be reached for comment.

Macklowe's purchase of the seven buildings was done concurrently with the Blackstone Group's $39 billion acquisition of Equity Office Properties Trust. The sale of the company by chairman and founder Sam Zell was seen as the height of the U.S. commercial real estate market that has quickly collapsed because of the lack of debt financing available for new loans.

To finance his purchase, Macklowe obtained a $5.8 billion bridge loan from Deutsche and a riskier recourse loan from Fortress Investment Group LLC (FIG.N). But within a year, the credit markets began to dry up and Macklowe could not secure permanent financing to repay the bridge loans.

Almost a year from the date he purchased the buildings, Macklowe defaulted on the loans and turned over the buildings, which also included 850 Third Avenue, Park Avenue Tower and 1301 Avenue of the Americas, to Deutsche Bank.

The failed deal also forced Macklowe to sell the General Motors Building, one of the most prized in the city, to repay Fortress. Macklowe bought the GM building in 2004 for a then-record $1.4 billion and sold it for $2.8 billion to Boston Properties (BXP.N), whose chairman is publisher Mort Zuckerman.

A price for the 50-story, 1.5 million square foot building on Eighth Avenue and 49th Street was not disclosed. The building, whose tenants include law firm Cravath, Swaine & Moore, is about half empty.