Investors buzz over listing of big NYC complex

updated 1:07 p.m. ET Aug. 31, 2006

NEW YORK - The possible sale of an 80-acre Manhattan apartment complex has set the real estate world abuzz, with a potential multibillion dollar price tag and published reports listing some of the biggest names in real estate as possible buyers.

The sale of the Stuyvesant Town/Peter Cooper Village complex on Manhattan’s East Side “is a very high-profile transaction,” said Jonathan Miller, president and CEO of the real estate appraisal and consulting firm Miller Samuel. “The scope of the project is not something we’ve seen before.”

The property’s owner, insurance company MetLife Inc., had announced in July that it was evaluating whether to sell the development, which contains more than 11,200 units spanning nearly 27 square blocks.

So far, the response to the announcement has been positive, Metlife spokesman John Calagna told The Associated Press on Wednesday.

“We’ve got a lot of informal interest,” he said. “We’ve been very pleased with what we’ve been hearing.”

Richard Lefrak, chairman of The LeFrak Organization, a well-established player in the New York’s real estate world, confirmed that his company was interested in possibly bidding on the property.

He called it “unreproducible” and said he had also been approached by several people interested in forming partnerships in order to bid on it.

Other companies that have expressed interest include The Related Cos., Tishman Speyer, Vornado Realty Trust and The Durst Organization, according to a Wednesday report in The New York Times. Tishman, Vornado and Durst declined to comment to the AP; officials from Related were not available.

MetLife has hired brokerage firm CB Richard Ellis Group Inc. to market the properties, and official papers for formal bids will be released next week, Calagna said. The company will evaluate any offers over the next few months before making a final decision. If no bid meets MetLife’s price, then it won’t sell the property, he said.

While Calagna declined to name that price, the Times put it at $5 billion.

That’s not an irrational number, said Jimmy Kuhn, president of Newmark Knight Frank, a real estate brokerage company. With more than 11,000 units, the price per unit is less than $500,000, below the average market price for a Manhattan apartment.

But the property is complicated since the vast majority of units in the complex are rent-stabilized, meaning tenants pay below market value to live in them. Rent-stabilized units can be converted to market-value units over time, but not overnight.

Those apartments covered by the rent-stabilization law would continue to be stabilized even after a sale, said Peter Moses, spokesman for the state Division of Housing and Community Renewal.

“It’s the apartment that’s regulated, not the owner,” he said. “The owner is irrelevant.”

Anyone interested in buying the property would have to be willing to hold on to it for a while and let apartments come up to market rate, said Steve Goldschmidt, managing director at Warburg Realty, a Manhattan brokerage firm.

“It’s a long-term project,” he said.

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