The confirmation ends a prolonged period of speculation about the future of the 1,000-room hotel, given "its location, its current condition and its age." But the question is how much can the 79-year-old lodging asset yield. The building underwent a recent renovation, but one contact characterizes the upgrades as "an effort to cure deferred maintenance issues. They were never of a nature that would completely reposition the property as a first-class hotel." He added that the property was valued at "well south of $250 million in 2000. It's certainly south of that now. But the question is what it's worth as an office site."

Probably on the lower end of the $150-million-to-$300-million range that has been bandied about, the source speculates, even though its characteristics are much better suited for office than lodging. These characteristics include an underground--and currently locked--passage to Grand Central terminal and a massive footprint. "All of this strongly suggests that an alternative use of the site as an office might be the highest and best use of the property."