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200 Madison lease to sell at auction.

The Marcos New York property ownership saga is set to end on July 20 when a bankruptcy court auctions off a leasehold interest in 200 Madison.

The 25-story building, whose lease runs until the middle of the next century, is the last of a group of Manhattan properties linked to the late Ferdinand Marcos, former president of the Philippines, to be transferred by foreclosure auction. The other properties are the Crown Building (730 Fifth Avenue), 40 Wall Street and Herald Center.

The properties were supposedly purchased "quietly" in the late 70's and 80's using Philippine government and American aid money. They later became the center of a heated ownership dispute between the Philippine government, New York Land Company and Canadian Land, both run by brothers Ralph and Joseph Bernstein and attorney Philip R. Carter, and Marcos friend Adnan Khashoggi.

The 200 Madison leasehold took on its own twists and turns through the years. The Marcos interests obtained the leasehold from a group consisting of Clifford W. Michel, the late Lawrence A. Wien, Harry B. Helmsley and George V. Comfort, whose company, George V. Comfort & Sons, still manages the property. The ground lease is owned by a company whose principal is Alex DiLorenzo.

In the 80's, the Marcos interests pledged the lease as collateral for a second mortgage on the 34th Street retail outlet that later became the Herald Center, an upscale mall never found its market.

The Marcos interests soon defaulted on the Herald Center mortgages and the lender, Security Pacific and its new parent, Bank of America, will be foreclosing on both mortgages simultaneously with the sale.

Herald Center, known in the neighborhood as the "Darth Vader" building because of its black-glass facade, has since been sold to Morris Bailey and is now tenanted with lower price point stores such as Toys 'R Us.

According to Joseph Bernstein, whose companies managed the properties, Security Pacific recently came to an agreement with Adnan Kashoggi, the Philippine government and New York Land. The lender gave up a claim of $7 million left over from the sale of 40 Wall Street and paid the parties $2 million for a consent judgment to permit the sale of the 200 Madison leasehold. Bernstein said the settlements came after Judge Pierre N. Laval tried to give the bank a summary judgement but "didn't do it right."

While the two outstanding mortgages total more than $63 million plus interest, Bernstein said, the equity value "can't be very much" since it is only a 600,000-square-foot building. The ground rent, which is paid to DiLorenzo, was recently raised in arbitration from between $400,000 and $500,000 to $1.5 million per year. The real estate taxes run approximately $3.5 million, Bernstein estimated.

Major tenants in the building, which is also known as 210 Madison and the Putnam Berkeley Building, include:textile manufacturer Collins & Aikman, Simplicity Pattern, Putnam Publishing and Oxford University Press. All 45,000 square feet in smaller spaces throughout the building.

While 200 Madison occupies the blockfront from 35th Street to 36th Street, it

does not sit on a distinguished retail corner - as does the Crown Building at 57 Street and Fifth Avenue, another Marcos property which sold in 1991 for $93 million. The auction, however, experts say, should afford an opportunity for another Manhattan office property to find a new life.
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Title Annotation:bankruptcy court to auction leasehold interest in 200 Madison, New York, New York; last in group of properties associated with late Ferdinand Marcos
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Jul 8, 1992
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