NEW YORK -- Olympia & York Developments Ltd. told bondholders Tuesday it will not pump needed money into its building at 55 Water St. in Manhattan, a clear sign that it will turn over some New York assets to lenders.

About 50 institutions holding some $546 million in debt were told that rental payments and credit lines are sufficient to pay taxes, operations, and debt service only through 1993.

To improve office space, Olympia estimated it could cost $200 million to lease more than 2 million square feet being vacated over the next five years. Olympia said it is willing to continue managing the building.

Separately, Chemical Banking Corp. said it would resign as soon as a replacement can be found as trustee of these and other Olympia & York bonds, citing a potential conflict of interest as a lender to Olympia.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.