Saudi Arabian family to buy 383 Madison.

The continuing saga of the development site at 383 Madison Avenue took an unexpected twist last week, as a group of Saudi Arabian investors in the partnership which currently owns the property announced plans to acquire the site under its fight of first refusal in the original partnership agreement with CS First Boston.

Just last month, officials at Bear, Stearns & Company had announced that they had reached an agreement with CS First Boston which could have led to their purchasing the property, presumably to develop a new headquarters space at the site, which is bounded by 46th and 47th streets.

That announcement was a shock in itself, as British developer Howard Ronson had for two years been touting his agreement with CS First Boston to purchase the site for around $55 million. Ronson planned to build Midtown's first new office tower since the recession of the late 80s and early 90s. Ronson had been busy seeking tenants for the property, a planned 26-story, 800,000 square-foot tower.

Real estate sources said Ronson had apparently convinced Swiss Reinsurance Company and Morgan Guaranty Trust to commit to space in the proposed project, and that these commitments apparently were enough for lenders to approve starting the project.

How Ronson's option on the property expired is unclear, however, some real estate executives speculate that the developer went to Saudi Arabia after he learned of the Saudi Arabia after he learned of the Bear Steams deal and persuaded the Al-Babtain family, CS First Boston's partners in the site, to exercise their right of first refusal and develop the project with him. Presumably, Ronson will try to hold onto the lease commitments he has worked so hard to attain.

Ronson was unavailable for comment at press time, and no one at his New York operation, HRO International, was available to comment on these developments.

On February 20, Cushman & Wakefield, Inc., advisors to the Al-Babtain family, released a statement on behalf of their client which stated, in part: "The Al-Babtain family, investors in the partnership that currently owns the property at 383 Madison Avenue between 46th and 47th streets, today announced it is purchasing the site from the partnership."

"In January, the managing partner of the partnership, an affiliate of CS First Boston, signed a contract to sell the property to an affiliate of Bear, Stearns & Company," the statement continued. "That transaction will not occur because of today's action by the AlBabtain family."

The purchase is being made under the "right of first refusal" contained in the original partnership agreement with CS First Boston. Under the provision, the AlBabtain family has the right to purchase the property in the event that CS First Boston determined to sell the site to a third party.

According to last Tuesday's announcement, the Saudi Arabian family intends to undertake the development of a new office tower at the Madison Avenue site, consisting of prime retail and state-of-the-art office space "designed to meet the advanced technological needs of the financial services and related industries."

According to a spokesman for the purchasers, "The AlBabtain family is enthusiastic about the acquisition because they view it as the first step in realizing the vision that prompted their original investment in the property in 1982 - the development of the premier office tower in one of the most dynamic office markets in the world, Midtown Manhattan."

A spokesman for Cushman & Wakefield would neither confirm nor deny Ronson's participation with the family in the planned development.

The Saudi Arabians could nave exercised their rights on the building at any time, according to executives familiar with the agreement. But by 1994, when Ronson came on the scene, he was the only developer even considering building in Midtown. Today, developer Douglas Durst is planning a new Times Square office tower, while several other developers have begun assembling land for possible office development.

Meanwhile, officials at Bear, Steams were not available for comment on this latest development, or to confirm what many insiders say is common knowledge that the company is searching for new headquarters space. "Everybody knows that Bear, Steams' lease is coming up," said James Kuhn, president of Newmark & Company.