National Press Club members voted unanimously yesterday to approve a refinancing proposal that calls for the sale of its 55-year-old building to an investment syndicate to help complete renovation work on the structure.
Had the proposal not been approved, the club could have been left with "a partially completed building, no money and looking at bankruptcy," Press Club President Don Byrne said.
Nearly 200 people attended the membership meeting in the 13th-floor headquarters of the Press Club, amid construction equipment and workers.
The National Press Building Corp., in which the club holds 78 percent of the stock, will retain ownership of the land under its 14th Street building, and will have a 10 percent holding in the investment partnership that buys the structure. At the end of 45 years, the building will be returned to the building corporation, free of debt, Byrne said.
The rest of the money needed to complete the project will be borrowed from Merrill Lynch, Hubbard Inc.
Giant cost overruns on the rehabilitation work begun last year forced the Press Building Corp. to find extra financing. The club now estimates that it needs $75 million to complete the project, but the original financing from the New York State Employees' Retirement System would have provided only $45 million. Switching the financing will force the building corporation to forfeit a $450,000 commitment fee paid by the building corporation.
Under its agreement with the investment syndicate, the Press Building Corp. will continue to operate the building.
Although they voted unanimously for the proposal, some members expressed concern. "I see nothing in there the financing agreement that says we'll be able to pull this off," said a member who asked not to be identified.
Seth Payne, whose employer, McGraw-Hill Inc., has moved out of the National Press Building, said he did not vote against the plan "because we have no other choice."
The syndicate, L-G Associates, is made up of Langelier Historic Properties of Boston and Gardner Capital Corp. of New York City. L-G expects that the 20 percent tax credits available to owners of the building because of its age will attract investors to put up most of the money to buy the National Press Building.
Copies of a letter of agreement signed by L-G Associates and building corporation President William Hickman were distributed to members attending the meeting. Under its terms, the $48.5 million purchase price of the building will be used to pay off an existing first mortgage, the estimated $25 million balance of the construction loan and a $19 million second mortgage to go to the building corporation to apply toward the renovations.
Former Press Club president Vivian Vahlberg, an enthusiastic booster of the financing plan, said in response to a member's question that nearly 60 percent of the 440,000 square feet in the building is leased. She said 85 to 87 percent of the space must be occupied to give the corporation enough money to pay its bills, which will include $8 million annually on the Merrill Lynch, Hubbard loan.
Rent on the building's offices will rise from $13 a square foot now to $26 in the new space. Except for a period of 10 years, when it will pay $350,000 annually, the Press Club will pay $1-a-year rent on the 45,000 square feet it will occupy.