Mr. Candlish’s idea for the theater was ambitious: to transform it into a high-tech 3D/4D theater and performance space. The first production would be a combination of a 3D/4D compilation (coupled with live performance) of Broadway’s greatest hits throughout the years.
Despite the novelty of Mr. Candlish’s concept, the duo felt they had finally discovered their “needle in a haystack.” Mr. Kory signed a term sheet in March 2010, and then set out to secure licensing rights. Then the deal hit an expected snag: The trio discovered that the theater was located in an empowerment zone, qualifying them for tax breaks and financing programs, such as EB-5 financing and the New Market Tax Credits program.
“It became apparent that Robert would never agree to fully negotiate and sign a lease until he had shifted the focus of his financing [away] from debt … he wanted to retain more ownership of his project,” Mr. Mendelson said.
Meanwhile, The New 42nd Street had its doubts about the Candlish-Kory-Goddard project.
The three men, and their idea, were unproven tenants. Uncomfortable with the gambit, Messrs. Mendelson and Schmerzler were encouraged to continue to market the space.
A consortium of Hollywood producers and horror buffs, who had their own collection of macabre memorabilia, wanted to open up a horror museum and felt the theater would be perfect for its idea.
“The Horror Guys,” as Mendelson and Schmerzler called them, signed an offer sheet identical to the one Mr. Kory signed, and the Cushman & Wakefield team had themselves a back-up plan.
“They also had a number of West Coast investors and somehow, through the ether, they knew about Robert [Kory] and Robert knew about them,” Mr. Schmerzler said.
In an ironic twist of fate, the fact the two groups knew about one another meant that Mr. Kory was suddenly aware he had a competitor breathing down his neck. Perhaps inspired by the competition, Mr. Kory and Co. set out to secure the necessary music rights—like Rogers and Hammerstein and Andrew Lloyd Weber—and raise enough capital to be able to pull off the 3D/4D venture. He also hired actor Hugh Jackman to serve as a spokesman for the project.
“He got all these balls in the air, all at the same time, and the whole deal was structured on the fact that he had a lease for this theater,” Mr. Mendelson said.
Then Mendelson and Schmerzler advised The New 42nd Street to “hold Robert and his investors’ feet to the fire and make them commit.”
The nonprofit landlord firmed up its offer to Mr. Kory: sign a lease and start paying full monthly rent; sign the Goody Guy Guarantee with lease execution; and waive his right to terminate the lease, thus becoming “an iron-clad tenant.” In exchange, Mr. Kory would receive extensions on his security deposit and his construction guarantee, thus giving him more time to finish his financing.
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