Courtroom tales from real estate’s biggest divorce — and how it could disrupt an empire
From left: Linda Macklowe, Peter Bronstein, Justice Laura Drager and Harry Macklowe (Illustration by Christine Cornell)
Just after 5 p.m. on a recent Wednesday, Linda and Harry Macklowe packed up to leave the Tribeca courtroom where, for the previous seven hours, paid experts had testified in their $2 billion divorce.
Linda exited first. Steeling herself for the tabloid photographer lying in wait, she stretched her lips into a wide, static smile. Harry — known to regale reporters with “take my wife”-style jokes — hung back, tapping away on his phone.
“Asshole,” Linda muttered as she walked by him.
Incensed, his mouth agape, Harry said: “Did the press hear that?”
The following day, he struck back from the stand. In his telling, the storied 13-million-square-foot Macklowe property empire was a product of one person’s chutzpah and vision: his.
“Your wife testified that she helped you find architects. Is that true?” Peter Bronstein, his lead attorney, asked.
“I couldn’t connect that at all,” Harry replied.
Did she entertain clients?
“I searched my mind for that one, and I didn’t have any recollection.”
Did she contribute design ideas?
“Husbands and wives talk, but as far as ideas, I don’t know what that means.”
Harry Macklowe has played dice with the Manhattan skyline for decades. It’s a well-worn narrative by now: The pigheaded developer who infamously razed Times Square dwellings in the dead of night, the gambler who lost his beloved GM Building along with a $7 billion office portfolio yet clawed his way back into the pantheon, the aesthete with a Helmsley-esque devotion to his properties. With 432 Park Avenue, his legacy was secure, and with 1 Wall Street and a new mystery office project, the 80-year-old was set to end his career with a flourish. But the divorce, set off at least in part by Harry’s affair with a much younger woman, threatens to slash a fortune built over half a century. And since Harry remains active in the market, his liquidity and net worth are of interest to his lenders and partners, and to anyone looking to buy in a Macklowe project.
Justice Laura Drager, the judge handling the ongoing trial, has promised to split the Macklowes’ holdings 50-50. But what Harry is worth, and what Linda is owed, is a matter of fiery debate. It’s Solomon splitting the baby, real estate edition.
“The only way these folks can possibly work out getting those items that are near and dear to their heart is by them working it out,” Drager said from the bench. “You want this court to approach things with a scalpel, and this court doesn’t have the time and resources to do that.”
Michael Stutman, a divorce attorney who’s not involved in the case, agreed. “The judge doesn’t have a scalpel,” he said. “She has a chainsaw.”
II: The crucible
Around 8:30 each morning, a phalanx of lawyers heads into 71 Thomas Street, a limestone-and-brick building at the corner of West Broadway.
Clerks from Linda’s team lug over 30 boxes of case files that are loaded onto dollies and wheeled into Room 305.
(Click to enlarge)
Linda waits in a small conference room for the clerk’s announcement: “All parties for Macklowe!”
Harry is typically among the last to arrive. Impeccably dressed in a dark suit and noiseless loafers, he carries an orange-and-white Macklowe Properties tote and a Starbucks shopping bag with three large coffees. Husband and wife sit on opposite ends of a long wooden table.
Drager used to preside over criminal cases, and once ran the rackets bureau at the Brooklyn district attorney’s office.
“She knows what kind of crucible the courtroom is,” said Stutman, who’s argued before Drager. “She knows how to expedite cases through the system.”
In 2014, Drager was assigned another high-profile split: former governor Eliot Spitzer and Silda Wall.
In that case, she took pains to keep the proceedings out of the tabloids. Spitzer and Wall reportedly never had to show up in court.
The Macklowes, however, received no special treatment, no veil from public view. “Your personal lives, your business, your assets, everything will be displayed for everyone to see,” Drager said in late August. The trial, she warned, was “not going to be a pleasant experience.”
According to Harry, the couple’s assets are valued at $1.3 billion. He’s pegged his personal net worth, however, at negative $400 million, largely as a result of deferred capital gains from the $2.8 billion sale of the GM Building in 2008.
John Teitler, Linda’s lead lawyer, towers over his client, a diminutive figure even in kitten heels. “This is a case study in divorce accounting 101,” he said during opening remarks on Sept. 6, pacing in clunky loafers. “Mr. Macklowe himself knows these types of [capital] gains are never actually realized by real estate developers.”
Harry’s lawyer, Bronstein — who also represented the Macklowes’ daughter, Liz, in her split from real estate scion Kent Swig — dismissed Teitler’s remarks as “divorced from reality.”
Later, Harry testified that after selling the GM Building, he was subject to getting taxed on gains of roughly $900 million. Though he negotiated a “tax protection plan” with buyer Boston Properties, the shield lifts this year, he said.
“I tried with my attorneys to get a written document extending the protection, but I wasn’t able to.”
If Linda takes half the assets, it’s only fair that she take on some of the liability, argued Bronstein, a portly 70-something with curly gray hair. “Mr. Macklowe is trying to get his business back on its feet,” he said. “He’s had to borrow money, get pieces of deals.”
III: Matrimonial math
Since 1980, New York state has treated marriage as an economic partnership. In contested divorces, marital assets — defined as any property acquired during the marriage — are divvied up based on each spouse’s contribution to the union. Even when both sides agree to a 50-50 split, the court has a good bit of discretion, tasked with valuing each asset and ensuring both parties get their fair share.
“It’s really mathematics; it’s a numbers game,” said Ira Garr, a lawyer who represented Rupert Murdoch in his 2013 divorce from Wendi Deng. “If you’re on the giver side, you want [the discount on those values] to be as high as possible. If you’re the wife, you say, ‘No, no, no, he controls the whole building.”
In the case of the Macklowes — who have no prenup — many of the marital assets are in Linda’s name. After losing the GM Building, Harry reportedly transferred several properties to her to stave off creditors. Before the divorce trial kicked off, the developer’s camp signaled a desire to settle out of court. “It’s not a case that should be tried,” one of Harry’s lawyers, Dan Rottenstreich, said in June to the New York Post, which reported that the developer had offered Linda $1 billion to walk away. Linda disputed that claim.
“I have not seen that offer nor anything else like it,” she said. “If that is the offer, I will take it and we will be done tomorrow.”
It’s hard to parse fact from fiction in the trial. Is the couple’s renowned art collection worth $625 million, or $1.4 billion? The lavish Plaza spread they shared worth $55 million, or $107 million?
Both sides are trying to water down their own assets in order to claim a bigger slice of the other’s. In Harry’s case, that means painting his real estate empire as fragile and at risk.
The developer’s 65-unit condo at 200 East 59th Street has sold just three units after nearly a year, Bronstein said. His office-to-condo conversion at 1 Wall may be a dud, as heavy security at the nearby New York Stock Exchange could爱上海同城手机版