Record residential building sale in Manhattan
Published by The New York Sun on 2005-10-28
Manhattan House, the 22-story iconic building that occupies an entire block on the Upper East Side, was sold this week by New York Life Insurance Company to two veteran New York investors for $625 million.
Real-estate authorities said the price was a national record for a single residential building that would be converted from rental units into ultra-luxury condominiums.
The investors, N. Richard Kalikow and Jeremiah O'Connor Jr., told The New York Sun yesterday that they would significant sums into renovating the 583-apartment building, which occupies more than a million square-feet between East 65th and 66th Streets, bordered by Second and Third Avenues.
"It's location, location, location," Mr. O'Connor said. "It's quality, quality, quality."
Their investment could fetch around $2 billion when the renovated apartments are sold, according to real-estate sources.
Adding to the luster of Manhattan House was the fact that it had had a single owner from the start - New York Life - and also that not one violation of New York's housing laws has been recorded against the premises, he said.
Mr. Kalikow also said that existing tenants would be given an opportunity to purchase their apartments as condominiums.
The record sale of Manhattan House this week was also part of another, larger record set by the broker involved in the deal, executive vice president and managing director of Prudential Douglas Elliman, Dolly Lenz.
In the last 10 days, she contracted to represent $3.1 billion worth of condominium transactions - a figure that brokers in the real-estate industry said was extraordinary. Ms. Lenz - who works on the project with the company's chairman and well-known deal-maker Howard Lorber - has been designated as the exclusive marketing agent for Manhattan House. She will be working in conjunction with Douglas Elliman's development marketing group.
Mr. Kalikow and Mr. O'Connor bought the 55-year-old property as a first joint venture between their respective companies, O'Connor North American Property Partners and Manchester Real Estate & Construction.
They retained the architectural firm that had built Manhattan House in 1950, Skidmore, Owings & Merrill, to redesign the building. The principal architect of the firm was the late, legendary Gordon Bunshaft, who also designed Lever House. The architect for the renovation will be Roger Duffy.
A prominent real-estate appraiser and consultant, Jonathan Miller, said last night that "a sale of this magnitude, a record in its category, demonstrates the confidence real-estate investors have in the viability of Manhattan real estate for both the near and long term."
Asked how the Manhattan House conversion would have an impact on New York housing, Mr. Miller, president and CEO of Miller Samuel Inc., replied:
"The project will add mid-sized and larger units to the market as they become available. This segment has not seen significant addition to its housing stock since the 1980's because new developments have been generally smaller. This sale may cause other landlords to consider a similar move to take advantage of the current strength in the Manhattan condo market."
Ms. Lenz said: "I'm delighted to have been selected to market this property. Manhattan House has long been one of the greatest properties in America."
The building's apartments range from studios to five-bedroom units, and also penthouses. Its garden is widely believed to be the largest private park in the city, according to Ms. Lenz.
She added that the renovations would include freshly landscaping the garden and adding amenities such a health club, a dog walk, and energy-efficient windows. Many of the apartments contain wood-burning fire-places, and these, along with other architectural features that allow lots of light and airiness would be enhanced, Ms. Lenz said.
She also pointed out that Manhattan House has allure on account of its architecture and location, and an environment that sustains a feeling of well-being for its residents.
"Manhattan House also has a certain mystique to it," Ms. Lenz said. "Some real legends have lived there."
Those figures included the Hollywood star who later wed Prince Rainier of Monaco, Grace Kelly. Mrs. Jackie Robinson , wife of the great baseball player, still lives in Manhattan House.
In his widely read work on Manhattan real estate, Carter Horsley said of Manhattan House that "it heralded the some of the best planning intentions of the modern movement that includes the Bauhaus and the International Style: towers-in-a-park, clean lines, and modern conveniences."
"Just as Lever House, and soon thereafter the Seagram Building, shook up the corporate world and launched an elegant new architecture style that dominated the world for more than a generation until the reactionary Post-Modernism style took root in the late 1970s and early 1980s, Manhattan House and the 'white bricks' were regarded initially as a fresh breath of air in comparison with stodgy old, pre-war buildings whose apartments were designed for staffs of servants and would eventually see many of their large units divided into smaller ones," Mr. Horsley said.
Indeed, Manhattan House offers a "refreshing enclave in a madly busy city," Ms. Lenz said.
The selection of Ms. Lenz by Mr. O'Connor and Mr. Kalikow illustrates not only the high regard in which she's held by New York's real-estate titans, but also her furious efforts on behalf of her clients. Notwithstanding the myriad lawyers and accountants involved in the Manhattan House deal, Ms. Lenz attended to virtually every detail.
"She was everywhere, her advice was always on the mark," said Mr. Kalikow's chief investment officer, Jin Lee. "It's always good to have Dolly on your side."
Mr. Kalikow and Mr. O'Connor outbid some of New York's best-known real-estate names - Jerry Speyer, Aby Rosen, the Zeckendorfs, and Dune Capital.
They turned to two investment banks, First Boston Credit and Lehman Brothers, for a short-term acquisition loan. The two institutions underwrote the entire amount that the developers had requested.
Senior Writer and Global-Affairs Columnist