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Mutual of America says 'no deal' at 320 Park.

Mutual of America Insurance Company's president, Thomas J. Moran, denied the company was about to acquire 320 Park Avenue, an empty Olympia & York building which ITT Corp. vacated last year.

"We've not made any serious commitment," he said.

While some sources within the real estate community said that a serious commitment had been made and that negotiations were underway, others late last week said the deal was dead. The purchase price that was reported for the property was around $128 million or approximately $200 per square foot for the 622,000 square foot building which sits on two lots. The property is assessed at $42.9 million by the City of New York.

"It will cost them $100 a square foot just to fix it," said one investment advisor who declined to be identified. "It has asbestos and other systems are in bad shape."

Peter Hauspurg, president of Eastern Consolidated, said this would seem to be a good price. But, he noted, it would be a 20 percent to 25 percent premium over what a private investor could pay because of the vacancy and the fact that so much work would be needed to bring it to marketability. "The price is greater because a tenant would be there right away and an investor would have to plan for two to two and a half years of receiving no rental payments between finding a tenant and rent concessions."

Moran said his company has been researching possible moves for the last three years and has probably seen every available building in the city. "We have been looking around the city and considering renting or purchasing and have not made a decision to buy or even decided if we are leaving the space we are in," he added.

Mutual currently occupies four floors, taking up 170,000 square feet of 666 Fifth Avenue. That is a Tishman property which will already be adversely affected when Batam Doubleday Dell vacates 12 floors as part of the Bertelsmann consolidation into 1540 Broadway.

Mutual has 34 small regional offices around the country but Moran said they would not consider bringing the people back to New York. "It would not make sense for us to interfere with our operation," he said. "We are committed to our regional structure."

Like every other company, Moran said Mutual has been exploring the opportunities in the marketplace. But he added, "there is no time pressure and no indication that we are going to make a decision right now. Once we get to the point where we can make the decision, I am sure we will tell everyone and will not be able to contain ourselves with the joy."

The purchase of an Olympia & York property at a reasonable price would bring good news for its investors and lenders who have been buffeted with one blow after another. Last week the Canadian Government refused to provide loan guarantees to help with the sale of its Toronto world headquarters to lenders. Additionally, the Campeau Corporation--which was a partner with Olympia & York on several deals that helped Campeau--is suing Olympia & York for $1.1 billion stemming from the "insider" purchase of Scotia Plaza. Olympia & York spokespeople called the suit "frivolous." O&Y has negotiated a small working loan with its Canary Wharf lenders and is to meet with bondholders of 55 Water Street in New York City later in the month.
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Title Annotation:320 Park Avenue building not purchased
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:May 6, 1992
Words:567
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