Top > Business > 2006 > October > 2006-10-28

Manhattan Real Estate Deal Brings in $5.4-billion

A record-breaking business transaction was in the pipelines this week when real-estate company, Tishman Speyer offered MetLife an astounding $5.4-billion for Stuyvesant Town, an 80-acre property in Manhattan, New York. The site, incorporating also the adjacent Peter Cooper Village, comprises 18 square blocks and approximately 110 buildings. Owned by Metropolitan Life since 1947, Stuyvesant Town was developed to bring affordable housing to soldiers returning from WWII and their families, and has served as a low to middle class housing solution to thousands of people since then.

Industry analysts are wondering how Tishman Speyer will get a return on this staggering amount that it intends to spend on the site. Previous record-breaking real estate transactions were for commercial and not residential properties. In order to justify the sum, Tishman Speyer will need to put the rent up in at least some of the 11,000 apartments in the complex. Although analysts don?t think that Tishman Speyer will raze the existing buildings to construct luxury condominiums, they do think that serious changes will have to be made in terms of rent increases in order to show profit on this deal.

The majority of the biggest real estate deals in the past six years have been for properties in Manhattan, with all of them, as mentioned, for commercial sites. This latest offer beats the previous record for the highest price paid for a property when Tishman Speyer bought Rockefeller Center ? also in Manhattan, of course ? for $1.9-billion. This amount now seems a pittance compared to Tishman Speyer?s latest purchase, and industry analysts are wondering whether this deal will set a precedent for property-owning institutions such as universities and churches to sell their sites to major developers after seeing how valuable their land really is.