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The Chrysler Building, the stainless steel-clad skyscraper that has highlighted midtown Manhattan's skyline for 67 years, is being acquired by Tishman Speyer Properties, one of New York's largest property companies.
Under an agreement with a nine-member bank group led by Fuji Bank Ltd., a Tishman Speyer investment fund will take over the 77-story Art Deco property from the estate of Jack Kent Cooke, who bought the property in 1979. Terms weren't disclosed, but people involved in the bidding process valued the deal, which includes the adjacent Kent Building, at between $210 million and $250 million. The Fuji-led bank group holds a $250 million mortgage on the property.
The agreement follows one of the most hotly contested bidding wars for a Manhattan property in recent years. Bidders included Saddle Brook, N.J., Vornado Realty Trust; Toronto-based TrizecHahn cqNo Corp.; Goldman, Sachs & Co.'s Whitehall Street real-estate fund; Witkoff Group and Argent Ventures, two New York real-estate firms; and former Olympia & York Developments chief Paul Reichmann.
NEW YORK -- The Chrysler Building, the stainless steel-clad skyscraper that has highlighted midtown Manhattan's skyline for 67 years, is being acquired by Tishman Speyer Properties, one of New York's largest property companies.
Under an agreement with a nine-member bank group led by Fuji Bank Ltd., a Tishman Speyer investment fund will take over the 77-story Art Deco property from the estate of Jack Kent Cooke, who bought the property in 1979. Terms weren't disclosed, but people involved in the bidding process valued the deal, which includes the adjacent Kent Building, at between $210 million and $250 million. The Fuji-led bank group holds a $250 million mortgage on the property.
The agreement follows one of the most hotly contested bidding wars for a Manhattan property in recent years. Bidders included Saddle Brook, N.J., Vornado Realty Trust; Toronto-based TrizecHahn Corp.; Goldman, Sachs & Co.'s Whitehall Street real-estate fund; Witkoff Group and Argent Ventures, two New York real-estate firms; and former Olympia & York Developments chief Paul Reichmann.
Although the building remains one of New York's most famous architectural landmarks, its office space is aging and in need of renovation. Nonetheless, the 1.25-million-square foot building enjoys a prime location in midtown, where office vacancy rates have been falling.
"We intend to do a complete renovation," said Tishman Speyer President Jerry Speyer. "We anticipate spending about $100 million" to replace elevators and the heating and air conditioning systems.
Tishman Speyer, a private-property company, has been an aggressive dealmaker in recent years. It controls a number of office buildings in New York, has developed buildings in Europe and South America, and is part-owner and manager of New York's Rockefeller Center. The Chrysler deal is being done through an $800 million investment fund it set up with Travelers Group.
The late Mr. Cooke bought the Chrysler Building for about $90 million in 1979 from Massachusetts Insurance Life Insurance Co. He later refinanced the Chrysler and Kent buildings with Fuji for $250 million. When the Manhattan property market collapsed in the early 1990s, vacancies rose, and the building's value fell. After Mr. Cooke defaulted on the mortgage earlier this year, Fuji sued to foreclose, and Mr. Cooke vowed to restructure the debt. But after he died on April 6 at the age of 84, his heirs decided not to attempt to retain ownership. A swarm of bidders materialized to bid on the mortgage.
Although the Cooke estate still owns the property, it struck a deal with Fuji several weeks ago under which it will surrender title to the buyer of the debt, in exchange for a payment of undisclosed size, according to someone familiar with the deal.
But gaining control of the property was further complicated by the fact that Cooper Union for the Advancement of Science and Art, a New York college, owns the land under the building, which it leases to the building's owner under a lease that expires in 32 years. Potential buyers also needed to negotiate a new long-term lease.
Yesterday's announcement said that Tishman Speyer also had reached agreement with Cooper Union to extend the land lease for another 150 years. Another bidder said that Cooper Union was asking for $4.5 million a year for the ground rent. Tishman Speyer then struck a deal with Fuji, halting a planned second round of bidding.
Credit: Staff Reporter of The Wall Street Journal
Copyright Dow Jones & Company Inc Nov 25, 1997