Despite his setbacks, Donald Trump's penchant for being involved in expensive real estate remains. The New York-based Trump Organization is a partner in the redevelopment of the former Paramount building in New York into a luxury condominium and hotel project. While Trump's partners could easily take top billing in the venture, the project will contain some of the city's most expensive residential real estate.

The $250 million redevelopment of the 26-year-old building at Columbus Circle off the southwest comer of Central Park is a joint venture among Stamford, Conn.-based General Electric Pension Trust, Columbus, Ohio-based The Galbreath Co. and the Trump Organization. The job, which includes re-enforcing the structure and increasing ceiling heights, was designed by Philip Johnson. Condominiums in the 52-story building, which is expected to be finished in early-1997, sell for an average of $1,000 per sq. ft. and up to $1,600 per sq. ft.

General Electric Pension Trust purchased the 650,000 sq. ft. property in 1984 as part of a portfolio. Paramount's occupancy of the building ended in June. The Galbreath Co., which manages several properties for the pension trust, was hired in 1993 to study options for the building. The speedy recovery of the multifamily and hotel sectors in New York led to the redevelopment plan, which includes 167 condo units and 166 hotel suites.

"We considered other uses, but we believe this creates the best and highest value for the property," says John H. Myers, executive vice president of General Electric Investment Corp. He refused to say what return the firm seeks, describing it only as significant. "An investment of this size requires a high return, but hopefully we've mitigated the risk by getting and working with our partners."

Through October, about $50 million in condo sales were reported in the project, which will be called Trump International Hotel and Tower.

Like the residential sector, the hotel market has improved dramatically. Occupancies and average daily rates continue to climb in New York, fueled by the economy and the reduction of the city and state hotel room taxes.

"The hotel market is strong now and I think it will be strong when it comes on line," says John Fox.

There's no other development of full-service hotel rooms under way now. And the luxury hotel announced for Times Square by Tishman Hotel Corp. and Walt Disney Corp. is the only other planned.

This is the first time General Electric Pension Trust has teamed up with The Trump Organization. The trust owns more than 2 million sq. ft. in New York and 20 million sq. ft. nationwide.