Lehman Brothers intends to securitize the $700 million loan that financed the purchase of the General Motors Building in midtown Manhattan by Donald Trump and Conseco Inc., industry sources say.
Mr. Trump and Conseco completed the purchase of the two-million-square- foot office tower, which covers an entire city block, on Monday for $800 million.
According to industry sources, the loan was split into two parts: a $500 million first mortgage, which Lehman will securitize, and a $200 million mezzanine second mortgage, which has been sold to a real estate investment trust.
Mr. Trump and Conseco together put up $125 million in equity. The extra $25 million is for transaction costs not included in the purchase price.
Mr. Trump said he intends to "dramatically change" the retail space on the ground floor.
The retail space is "underutilized," Abe Wallach, Mr. Trump's acquisitions chief, told American Banker this summer. "There's substantial expansion potential for retail in the building."
Part of the toy store FAO Schwartz & Co. is located on the building's first floor.
Mr. Trump is also considering converting some of the office space into condominiums.
Corporate Property Investors Inc., a New York-based real estate investment trust, had owned the GM building for the last decade.