UPDATE 2-Macklowe seen in default,no foreclosure yet-source

Fri Feb 8, 2008 11:43pm GMT
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(Adds background on Macklowe, commercial real estate market)

NEW YORK, Feb 8 (Reuters) - Talks between New York real estate titan Harry Macklowe and lenders on Manhattan office buildings he bought last year broke for the day without resolution, a person briefed on the matter said on Friday.

The lack of agreement with the lenders technically could put Macklowe in default, the source said, adding that none of the lenders are currently pushing for foreclosure on the buildings.

The talks could resume next week, the source said.

A spokesman for Macklowe declined to comment on the matter.

Macklowe reportedly borrowed $5.8 billion in February 2007 from Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research) to buy seven Manhattan office buildings formerly owned by Equity Office Properties.

Last week, Macklowe, reportedly reached a tentative deal with Deutsche Bank to turn over the buildings, which he bought for $7 billion. Deutsche Bank declined to comment on the matter.

Macklowe reportedly owes Deutsche Bank $5.8 billion in acquisition financing that is known as "non-recourse" -- which would allow Deutsche to take control of the buildings, but do not give it a claim to the rest of Macklowe's empire.

He reportedly put $50 million of his own money into the purchase and still needs to come up with $1.2 billion to repay a bridge equity loan from Fortress Investment Group LLC (FIG.N: Quote, Profile, Research) that he secured by interests in some of his own holdings.  Continued...

 
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