RPT-CB Richard Ellis handling GM Building deal-sources

(Repeats story from late on Tuesday)

By Ilaina Jonas

NEW YORK, Jan 15 (Reuters) - Macklowe Properties has hired CB Richard Ellis Group Inc (CBG.N) to either sell or recapitalize New York's General Motors Building, sources familiar with the matter said on Tuesday.

Citigroup Inc (C.N) is advising Macklowe, headed by real estate mogul Harry Macklowe, a source familiar with the deal said, adding that the intention was to sell what is one of Manhattan's most prestigious buildings.

Macklowe faces a deadline next month to come up with about $7 billion owed on short-term loans used to buy eight buildings that were the bulk of the Manhattan properties once owned by Equity Office Properties Trust, representing about 6.6 million square feet (613,000 square meters) of office space.

Representatives from CB Richard Ellis or Macklowe could not be reached for comment.

The credit crisis, stemming from trouble in the subprime residential mortgage market, has swept though the lending community, drying up sources of loans that were plentiful less than a year ago.

For the Equity Office portfolio, Macklowe owes Deutsche Bank (DBKGn.DE) $5.8 billion in acquisition financing that is "non-recourse." So if Macklowe defaults, Deutsche bank can take the Equity Office buildings but would have no claim on the rest of Macklowe's empire.

However, a $1.2 billion bridge equity loan from Fortress Investment Group LLC (FIG.N) is secured by 49 percent interest in other Macklowe properties, including the GM Building on Fifth Avenue and 59th Street.

If Macklowe defaults on that, Fortress could claim the 49 percent. But with 51 percent, Macklowe would still control it.

Macklowe, headed by Harry and son William, bought the GM Building, previously half-owned by Donald Trump, in 2003 for a then-record $1.4 billion. It turned the 50-story structure into a hot property, luring hedge funds and private equity firms, and commanding some of the highest rents in the United States.

On Monday, a New York judge allowed a lawsuit by developer Sheldon Solow, who lost out in bidding for the building in 2003, to proceed against then-owner Conseco Inc (CNO.N), but dismissed Solow's demand to award him the building.

The Macklowe team, especially Harry, is seen as visionary in commercial real estate circles, taking the building's dreary failed underground shopping plaza and turning it into Apple Inc's (AAPL.O) largest Manhattan location. They also expanded the building's retail frontage on Madison Avenue.

Other tenants include billionaire investor Carl Icahn and law firm Weil, Gotshal and Manges LLP.

"Despite the turbulence in the real estate capital markets, this asset is unique in location, quality and credit of tenant, and it will be highly sought after on a global basis," said John Lyons, chief executive officer of Savills Granite, a New York-based real estate investment banking firm.

"The buyers will be both domestic and foreign and new ventures will be formed to own this international landmark," Lyons said in an e-mail. "This type of opportunity does not come up for sale very often, let alone twice in five years."