Dev firm aims for restructure.

Tribeca Associates, a Manhattan real estate development firm, is trying to restructure a ground lease it has with Trinity Real Estate for the downtown office property 330 Hudson Street according to a source.

The firm entered into an agreement in 2007 to lease the land under the building, which like many properties owned by Trinity in the area used to serve as a facility for tenants in the printing industry.

The company planned to renovate and expand the antiquated property in a $220 million overhaul to convert it into a 410,000 s/f office and hotel development but the project stalled due to the recession and sharply deteriorating demand for office space and falling hotel occupancy rates.

Tribeca partnered with Latus Partners and Square Mile Capital, a mezzanine lender that was involved in a number of disastrous real estate deals, including financing the conversion of the Sheffield into residential condominiums, a project that defaulted and was purchased in a fire sale by Fortress Partners Capital.

The source said that Tribeca Associates, the lead developer in the deal at 330 Hudson, was trying to restructure its arrangement with Trinity to reflect the "new economics of the times." It's not clear if the firm will be able to come to an agreement with Trinity. Representatives from the church owned landlord wouldn't return calls seeking comment and a spokesman for the company said that it wouldn't comment on deals that were currently "in litigation."

Real Estate Weekly called one of the principals at Tribeca Associates, but the person would not comment.

Still the source, a person familiar with the project, said that Tribeca Associates hoped to restructure its lease with Trinity so that it could carry the property and wait out a turnaround the market. Appetite for new office and hotel space may be years away, but the person said that Tribeca Associates hadn't taken out a construction loan on the project and had only done preliminary work, indicating that its principal carrying cost were the ground rental payments to Trinity.

Before the downturn in the real estate market and the economy, Hudson Square had become an increasingly popular destination for tenants, especially from creative industries whose relocation to the neighborhood garnered attention. MTV Network relocated to 345 Hudson Street, a building owned by Trinity, in 2007 and CBS Radio took about 80,000 s/f in the same building in late 2006.

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