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Wadler, Cheng, photos
It takes enormous patience to finance real estate development in New York City. Patience and true grit.
Just ask Chase Manhattan Corp. It recently sold its position in the old West Side Rail Yards after 12 years of involvement. And garnered between 30 and 40 cents on the dollar for its trouble.
Workout experts say the bank is not smiling about this. But one New York-area bank chairman says that after the amount of time Chase spent watching its investment lose value, it was better off getting out when it did. "Something," he says drily, "is always better than nothing."
Because the West Side Rail Yards deal has been around, yielding no returns, for so long, it is interesting to trace just how a bank gets embroiled in a fiasco of this kind.
In Chase's case, it started back in 1979, when New York parking garage magnate and one-time political hopeful Abraham Hirschfeld exercised an option to buy the old rail yards. He teamed up with Francisco Macri, the owner of Argentina's largest construction company, and purchased the site for $45 million.
Often touted as "the largest piece of undeveloped land in Manhattan," the 62-acre parcel (another 14 acres are under water) was owned by the Penn Central Railroad, which collapsed in the mid-1970s.
Even then a young Donald Trump had his eye on the site. He commissioned a master plan for the rail yards, a riverside extravaganza of hotels and luxury apartments including what was supposed to be the tallest building in the world. But the plan would lay fallow for several years.
"It's not that it didn't work out," Mr. Trump says now about his original design. "It's just that I decided not to pursue it. I had too many other things going on."
Enter the bank. In 1982, Mr. Hirschfeld and Mr. Macri formed a limited partnership called Lincoln West Associates and took a mortgage from Chase for $50 million. By the following year the loan had grown by another $25 million.
Two years later, there were still no buildings on the site and the development partners were busy suing each other. Opposition from civic groups and environmentalists held up badly needed city approvals. Disgusted with the lack...