Africa Israel in pact on old NY Times building-WSJ

NEW YORK Nov 18 (Reuters) - The U.S. real estate arm of Africa Israel Investments Ltd (AFIL01.TA) has agreed with creditors to restructure its poorly-timed 2007 purchase of the former New York Times headquarters near Times Square, the Wall Street Journal said on Wednesday, citing people familiar with the matter.

The tentative accord calls for Africa Israel, which paid $525 million for the building in 2007 and took on $715 million of debt, to give up half its ownership stake to private equity firm Five Mile Capital Partners LLC, one of the building's creditors, the newspaper said, citing the people.

The venture would infuse money to repay other creditors, who are expected to suffer a big loss given that about $465 million of debt will be wiped out, the newspaper said, citing the people. The building would then be turned into a mixed-use project comprising hotel, retail and condominium space.

Africa Israel could not immediately be reached for comment. A spokeswoman for a U.S.-based lawyer representing Africa Israel did not immediately return a call seeking comment.

Five Mile Capital, based in Stamford, Connecticut, did not immediately return a call seeking comment.

A restructuring would be another sign of deterioration in the nation's commercial real estate market, which many experts believe may not bottom at least well into 2010, if not beyond.

Losses on the old New York Times building may be suffered by a BlackRock Inc- (BLK.N) managed fund, Credit Suisse Group AG (CSGN.VX), and CIT Group Inc CITGQ.PK, the finance company now operating in bankruptcy, each of which hold portions of the original debt, the newspaper said.

Neither BlackRock, Credit Suisse nor CIT could be reached immediately for comment. (Reporting by Jonathan Stempel; editing by Carol Bishopric)