Macklowe Divorce - Judge Orders Art Collection to be Sold

Fellow appraiser Xiliary Twil, ASA sent me some links on the recent court decision for New York City real estate developer Harry Macklowe and his wife Linda. From earlier posts, the divorce has been going on for some time and there have been disputes between he couple of the value of the collection, some say worth $700 million. According to reports, Linda gets to keep 15 works of art which have sentimental value to her and pay Harry $20 million. There is agreement on the value of these pieces.

During the divorce proceedings Linda said the art collection was worth $625 million while Harry ad his legal team believed the value was $788 million. The Art Market Monitor reports the higher valued works followed by the differences in values and are listed below. The valuation differences as being rather great, so it would be interesting to see the differing appraisals and how they came to their value conclusions.

Andy Warhol Nine Marilyns $50m
Alberto Giacometti, Le Nez $35-65m
Michael Heizer Track Painting 1967 $150k-$1.7m
Robert Irwin, Untitled (1965-6) $2m v $8.5m
Jeff Koons Vest with Aqualung $10m - $11m
Jackson Pollock, Number 17 $35m  v $15m

The rest of the collection are lower valued works, also with no agreed upon value and will be sold at auction per the judges order and proceeds to be divided.

The Real Deal reports

In the end, the judge overseeing developer Harry Macklowe’s bitter divorce ordered his fortune split down the middle.

Nearly 12 months to the day after the bitter court proceeding ended, Judge Laura Drager ordered Linda and Harry Macklowe to sell their contemporary art collection, worth approximately $700 million, and split the profits evenly because the two sides could not agree on how much it is worth.

“It is an extraordinary collection and the achievement of a lifetime’s work,” she wrote in a 64-page decision, first reported by the New York Post.

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Drager’s ruling comes nearly a year after the conclusion of a 14-week trial that chronicled the Macklowes’ years of marital strife along with the ups-and-downs of one of New York City’s most storied developers.

In divvying up the couple’s vast fortune, Drager took a scalpel to the assets (and debt) accumulated over a lifetime:

· Linda can keep $40 million worth of art but will pay Harry a $20 million credit.

· Linda can also keep their $72 million condo at the Plaza Hotel, but must pay Harry a $36 million credit.

· Harry will retain ownership of $82 million worth of commercial property, including 737 Park Avenue, but has to pay Linda $41 million.

· They will split $62 million in cash held in several bank accounts;

· Harry will keep “Unfurled,” a $23 million yacht, but they will share $16 million in debt on the boat

· Linda may keep $3.8 million in jewelry, a $409,000 silver collection and $85,000 worth of books

· Harry will hold title to vehicles valued at $385,000

Linda and Harry Macklowe split in June 2016 after the developer left his wife for his now-fiancée Patricia Landeau. Harry reportedly offered Linda $1 billion to walk away, a claim she rejected. Their bitter and pubic divorce trial kicked off in September 2017.

Throughout the proceedings, lawyers for both sides tried to downplay what’s been described as a $2 billion fortune tied to Linda Macklowe’s art collection and Macklowe Properties’ storied 13 million-square-foot portfolio.

On the witness stand, Harry Macklowe — at turns charming and calculating — cast shade on his own projects, namely 432 Park Avenue and 1 Wall Street. While an accounting expert hired by his legal team testified his companies “lose money every year,” Macklowe pegged his net worth at negative $400 million. That was largely due to deferred capital gains on the $2.8 billion sale of the GM Building in 2008.

During the trial, Linda and Harry bickered over the value of their art (she said $625 million, he said $788 million) and their condo at the Plaza (she said $55 million, he said $107 million). Linda also filed a separate lawsuit, later dropped, alleging that Harry and his partners at 432 Park Avenue were trying to force her to close on a $14.4 million condo at the tower that had been downsized without her knowledge.

As part of the divorce proceeding, Harry’s attorney, Peter Bronstein, argued that if Linda takes half of the marital assets, she ought to shoulder some liability. “Mr. Macklowe is trying to get his business back on its feet,” he said. “He’s had to borrow money, get pieces of deals.”

In November, as both sides waited for Judge Drager’s decision, the developer closed on a $750 million construction loan from Deutsche Bank for 1 Wall Street, as The Real Deal reported.

For more than a year, the developer had been negotiating with JPMorgan Chase to finalize an $850 million loan for his office-to-residential conversion slated to hold 566 units. During that time, Macklowe’s equity partner, Qatari billionaire and former prime minister Sheikh Hamad Bin Jassim Bin Jaber al-Thani (HBJ) also transferred his stake to former Qatari emir Hamad Bin Khalifa al-Thani (HBK). After the late-stage switch from J Morgan to Deutsche Bank, HBK is planning to contribute $100 million in additional equity.

Source: The Real Deal 

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