Think about it. An individual with $50 million in cash basically bought $10 billion worth of real estate. . . . That's leverage.
By the end of 2006, Harry Macklowe was the sole owner (with the bank) of the GM Building. In 2005 he'd bought out Steven Mnuchin and Vornado and, in 2006, their replacement—a German pension fund called Jamestown. Deutsche Bank now had a five-year loan on the building for $1.9 billion at a fixed interest rate of just over 5 percent.
Macklowe was busy buying and refinancing other buildings, too. Rob Horowitz wrote down their new deals—all financed by Deutsche Bank—on his A4 lined paper which served as the only record off of which he worked. Who cared about the methodology of the record keeping? They were all getting very rich.
Horowitz documented the refinancing of a sparkling, redesigned office building at 340 Madison Avenue, which Macklowe marketed with his usual panache. He drove to Canada with some colleagues, brought six Smart cars over the border, and disassembled one of them, displaying its parts in the building's entrance to show how “iconic design” works.
He bought a potential hotel site on Madison Avenue and 53rd Street. And in early 2006, Macklowe purchased the Drake Hotel on Park Avenue at East 56th Street for $400 million. (The Drake was famous for housing rock bands like The Who and Led Zeppelin in the 1960s and 1970s.) Deutsche Bank provided the financing. Harry planned to demolish ...