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Red as Lipstick? By Sharon Shpurer Tags: real estate, jacky ben-zaken  Ilan Ben-Dov and Jacky Ben-Zaken face a wrenching decision. A year after buying the so-called "Lipstick Building" in New York, will they gamble that times will improve, or sell at a loss? Ben-Dov pursued the deal through his company Tao Tsuot, and Ben-Zaken through Financial Levers, together purchasing 70% of the Lipstick Building at 885 Third Avenue for just under $650 million. A key problem is that a $60 million bridge loan they took from Goldman Sachs comes due in August - repaying it will be difficult and extending it will cost a fortune. Tao and Levers, which had led a group of investors (the Marciano family owns the other 30% of the building), have an option to extend the Goldman loan by a year and a half, but at interest of 27% for half a year, up from 20% so far. Advertisement Beyond the heavy cost of extending the option, Tao Tsuot and Financial Levers may have another problem. Neither investors nor banks are eager to lend money for real estate deals these days. Real estate companies in general, and Tao in particular, are suffering from negative sentiment on the stock market. Tao's value on the Tel Aviv Stock Exchange has plunged by 75% this year, while Levers has lost 44%. Tao ended the first quarter with a loss of NIS 204 million, which wiped out its shareholders' equity entirely. Meanwhile, at the quarter's end, its liabilities totaled NIS 1.7 billion. Levers is in comparably better condition, with shareholders' equity of NIS 250 million and a balance sheet of NIS 1.1 billion, but it's still highly leveraged. Lately Ben-Dov and Ben-Zaken sold another Manhattan edifice at a loss. Lipstick may yet cost them much red ink, too. They each invested $22.5 million of their own equity in the purchase, and in their first-quarter statements could wind up writing off no small part of that, in part because their costs (including on interest) have so far outstripped income from the building. Nor has the vanishing dollar helped. So far the value of their investment has shrunk by NIS 65 million in shekel terms. Tao and Levers will probably have to adjust downward Lipstick's value in their second-quarter report. Their options, according to a source near Tao, are: write off a large amount, recycle the Goldman loan through an American bank, bring in another partner, or sell at a loss. The last option is the simplest. There are potential buyers aplenty, says the source, and the Lipstick Building is still worth a great deal. Its value hasn't been hurt much by the downswing in the property market. Bookmark to del.icio.us   Marketing ploy Israeli satellite TV has a new star - Mahmoud Ahmadinejad. Through her lens Madonna's next project: documentary about the Israeli-Arab conflict.

Read & React Israeli envoy to London: U.K. has become hotbed of anti-Israeli views Responses: 263 Shalit's father: Gilad begs for his life in new letter Responses: 137 Arab towns to hand out 'Nakba' alternative history booklet outside schools Responses: 117 Top MI officer: Hamas fears broad IDF operation in Gaza Responses: 91 More Headlines 23:00 Syria: First the Golan Heights, then direct talks 01:58 Haniyeh advisor: Hamas expects gesture in exchange for Shalit letter 02:01 U.S. Army training Egyptians to find, destroy smuggling tunnels 23:49 Reservists: If we're captured, don't negotiate for our bodies 17:03 Olmert: Next U.S. administration may not be as accommodating 21:57 Madonna's next project: documentary about the Israeli-Arab conflict 02:12 U.S. court rules former Nazi guard should be deported back to Germany 23:44 Likud MK: Israel will no longer fund terror against its own citizens 00:01 UN Secretary General suggests int'l force to man Gaza crossings 22:23 Israeli satellite TV has a new star - Mahmoud Ahmadinejad 02:46 Dead Sea is alarmingly drying up, dropped 10 centimeters in May 18:19 N.Y. Jewish group departs from Israeli gov't line, will aid Falashmura Previous Editions Select Day 10 jun 09 jun 08 jun 06 jun 05 jun 04 jun 03 jun 02 jun 01 jun 30 may 29 may 28 may

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