The condominium plan was submitted to the state in April 2005 by its official sponsor, which bore the ungainly name W2001Z/15CPW Realty, LLC. On September 8, a month and four days after David Dunlap’s article revealing their plans, the Offering Plan was accepted. In the meantime, two construction loans of $360 million and $100 million were arranged, bringing the total financing for the project to $900 million.
Meantime, the Zeckendorfs had begun putting together their sales operation. Richard Wallgren, a former investment banker who’d segued into a second career in real estate and had worked for Louise Sunshine at Time Warner, was already on board as head of sales. By summer, his team had been assembled and given floor plans so they could begin memorizing the seventy-one different layouts in the building. Letters of intent were already coming in, “from people who knew,” says one of the salespeople, Karen Duncan.
“You are selling dream apartments because they’re not built yet, so you create a vision of how someone will feel walking into 26B even though they won’t open their door with keys for two years,” says Marlene Marcus, who joined in August. Marcus had known the Zeckendorfs since 1986, when she sold Central Park Place for their father, “the first time I can remember saying the word millions,” she recalls. “The penthouses there were about one and a half million dollars. We thought they were so expensive.” Marcus had also worked for Sunshine at the Trump International and Time Warner.
Even before the Fifteen plan was declared effective, the team was making presentations in the construction office on Broadway. They were also making calls. “I knew people at Time Warner who would follow me from building to building,” says Marcus. “They’re not attached. They want to be in the new best building.” Damn the expense and the inconvenience. She also called clients “who’d passed up Time Warner and regretted it.”
Meantime, the Zeckendorfs had already started making money through what might be termed insider sales. Six apartments collectively worth just over $100 million were immediately reserved—and blacked out on those Excel grids—for Arthur and Will; Eyal Ofer and his younger brother, Idan; Goldman Sachs executive Justin Metz; and Lloyd Blankfein, then the second in command at Goldman under its chairman and CEO Henry “Hank” Paulson.
Will chose the northern penthouse on the tower’s forty-first floor, which had a $14 million price tag. “I wanted a private elevator landing,” he says, and it was the least expensive unit that fit the bill.
Arthur went so far as to ride the hoist and walk the concrete slabs before there were walls, looking for the best view of the park when he was sitting down, before deciding on a D-line unit on the tenth floor of the house, listed at the same price as Will’s. “I picked the one with the biggest window on the highest floor facing the park,” Arthur says. He would later name the limited liability company he formed to buy the place Eight Forty Three LLC because he can see all 843 acres of the park from that window. “Up a few floors and you’re looking down, not sitting with the park,” says his interior designer, Kevin Gray.
Ofer claimed the top penthouse on the forty-third floor, his brother the large northern duplex on seventeen and eighteen, and Blankfein the southernmost A-line duplex on the fifteenth and sixteenth floors. Henry Paulson says he doesn’t recall being involved, but Will clearly remembers receiving a strong message from him: Lloyd Blankfein was to have his choice of apartment.
Later, Charles Berman, a partner of Victor MacFarlane’s; Zeckendorf Development’s Judy Kessler, who ran the entire project day to day; and Richard Wallgren would also reserve apartments. “I had an apartment tied up,” says MacFarlane, but unsure which coast he wanted to live on, he gave it up. “Worst real estate decision I ever made,” he admits. When Wallgren sold his $1.8 million one-bedroom unit in 2013, he would almost double his money.
Those nine individuals appear to have been the only purchasers who received significant discounts, which proved to be as good an investment for the partnership as for those individuals. “People love to see the sponsor buying,” says Will Zeckendorf.
None of them wants to discuss their discounts or the negotiations for them in any detail, though. So calculating how they were determined isn’t easy. One recipient says each insider got 6 percent off the initial asking price, representing the sum typically paid to brokers, plus an additional 3 percent as a “friends and family” consideration. Another says that regardless of the value of the apartments they chose, each of the three development partners, Goldman, Ofer, and the Zeckendorfs, were given the opportunity to buy two apartments—any two they wished—and receive an equal discount, a specific sum to be apportioned in any manner they chose. But a comparison of the asking prices in the Offering Plan and the prices reported in (sometimes inaccurate) public records doesn’t support either formula.
The buying process was almost the same for each of the nine as it would be for other purchasers. Though the sales team did quick background checks on people they’d never heard of and shared the results with the Zeckendorfs, all offers, including those made by insiders, were discussed among the partners in weekly meetings, or in e-mails if there was special urgency, then formalized on a deal sheet signed by the buyer and a representative of each of the three partners. A contract would then be drawn up, though those for outside buyers were given precedence. Typically, buyers of new Manhattan condos get a week to ten days to sign their contracts and pay a deposit. The process is designed to nudge them to sign quickly.
A mere five days after the 15CPW Offering Plan was accepted, the first amendment to it was filed with the state, raising the apartment prices. Thirty such amendments would eventually be recorded before every square foot of the building was sold, and as apartments sold and became more scarce and the developers realized how highly the market valued them, prices soared. So potential buyers had an incentive to make up their minds fast.
The first partnership purchasers didn’t have to worry about that. And they clearly had more room for negotiation than those who followed them. Though his duplex was priced at $29 million, Blankfein paid only $25,726,596, a discount of about $3.3 million, or just over 11 percent. The Zeckendorfs each got discounts of $3.5 million, or almost 25 percent on their much less expensive apartments. Eyal Ofer paid a bit more than the original asking price on the one he finally bought after giving up the forty-third floor to an insistent buyer, but his brother, Idan, got about a $4 million discount on his $30 million pad, or 14 percent off. Eyal appears to be the only partner who paid list price, but since his brother got the biggest break of all, perhaps Idan was the fortunate recipient of an elder sibling’s generosity. Or maybe, Eyal just chose to show his friend Carl Icahn that hondling wasn’t kosher at Fifteen.
Even within the partnership, it is apparent that hard bargaining took place. Because they were among the first to buy, and the appliances and finishes had not yet been ordered, the insiders were able to do what most later buyers could not: negotiate and win additional price breaks for choosing to finish the apartments themselves.
Goldman’s Justin Metz called dibs on a three-bedroom unit on the fifth floor. But later, Metz, who had a growing family, decided he wanted a larger apartment. In October 2006, after the tower was topped off, the latest amendment to the Offering Plan noted that apartment 5F had been eliminated and its square footage split between the adjacent 5A and 5B. Though it was late in the game, 5F, which had windows only on the motor court and Sixty-First Street, was still unsold. Metz proposed cutting it up and grafting a 340-square-foot bedroom onto his apartment.
Metz’s desire for a larger apartment was galling after Goldman’s persistent lobbying for smaller ones. The Zeckendorfs were privately furious when Stuart Rothenberg pressed for Metz to get his extra bedroom. “It wasn’t the easiest thing to accomplish,” says someone close to the brothers. “It was good for Justin, not for the project.” But they gave Metz what he wanted. After deducting brokerage commissions and a little more than $150,000 for the kitchen and finishes he rejected, Metz paid $5.75 million fo
r an apartment that otherwise could have cost almost $6.4 million. According to an internal Zeckendorf sales document provided to another apartment purchaser, Metz got his home for $1,500 per square foot, the lowest price in the building, though that number rises to $1,750 when all the breaks are figured in. Still, it was a pretty good deal, even for an apartment beneath the Central Park view line; in comparison, Lloyd Blankfein paid $4,262 per square foot for his duplex, Idan Ofer $4,023, and Eyal Ofer $4,035. But after all, Metz had been the building’s chief cheerleader at Goldman Sachs; Stuart Rothenberg had “never loved this deal,” Will says.
All things considered, the loss of the unloved apartment 5F turned out quite well for the sponsors. Unit 5A next door was reconfigured as a floor-through with four additional rear rooms, adding 1,644 square feet to the spread and allowing a big bump in its initial $9 million asking price. Shortly after its layout was changed, Sonny Kalsi, an investment banker specializing in real estate, agreed to pay just under $15 million for it, or $3,200 per square foot. Metz got quite a deal, but the partnership made more, not less, money.
By then, both wings had been topped off, 80 percent of the apartments were in contract, and the development team had turned the far corner into the stretch where every penny was profit. So Metz’s desire for a larger apartment finally became an ironic footnote.
Anyway, the Zeckendorfs had a new and bigger problem at Goldman. Someone quite a bit more important than Metz was insisting they change their nearly finished building. And this time, the Zeckendorfs wouldn’t, couldn’t, give in.
* * *
I It was also Kessler who’d figured out years before that the key to getting the US Postal Service to temporarily move out of its home on the future site of the Millennium Tower project and then buy it back was to show its executives how much money USPS was losing (about $24 million over the life of the lease) by being a tenant instead of an owner.
II Grabow had first shown him a seventeenth-floor East Side apartment, but on entering, he backed against the wall farthest from the window and confessed he was afraid of heights. “He wouldn’t go above the seventh floor,” Grabow says. He ended up in a fifth-floor unit.
Part Seven
* * *
GROUND-RAISING
A great building must begin with the
unmeasurable, must go through measurable means
when it is being designed, and in the end must be
unmeasurable.
—LOUIS I. KAHN
Daniel Loeb took a month to sign the contract for his Fifteen Central Park West penthouse, but after shaking hands on the deal that took the thirty-ninth floor away from Carl Icahn, he was one of the three early purchasers who attended the ground-raising celebration. It marked the start of both construction of the concrete superstructure and of the public relations effort to sell the apartments. The party began in the foundation pit on September 27, 2005, and continued at the building’s brand-new Stern-designed sales office on the forty-fourth floor of Carnegie Hall Tower, a few blocks away. One sale was even made at the event. After studying the computer simulations of the apartments and walking through the mock-up rooms to the big model of the building, a couple pointed out a particular apartment and said, “We’ll take that one.”
Also in the room were buyers Jeff Gordon, the NASCAR racing champion, and his then girlfriend, Belgian-born swimsuit model Ingrid Vandebosch, whom he’d marry a year later, and Barry Rosenstein, another activist investor like Loeb and Icahn and the founder and head of JANA Partners, a hedge fund. Rosenstein had signed a contract for an apartment that very day. They’d all joined the Zeckendorfs, their mother, Guri Lie, Eyal Ofer and his wife, Marilyn, Bob Stern, and a handful of local officials to hail the start of construction and sales.
Richard Rubenstein, a son of the city’s most powerful PR man and political fixer, Howard Rubenstein, was in the room, too. Richard ran his own PR outfit, specializing in real estate development. He’d worked on both the Trump International and the Time Warner Center. He considered 15CPW a plum account because the Zeckendorfs were targeting the rootless, new global elite, the newest new money, the kind of customers who will pay $10 million or more for a Central Park–view apartment. Rubenstein had joined the team to augment the efforts of Michele de Milly, whose lobbying and PR firm, Geto & de Milly, also has deep ties to city government. She’d handled the project for Avlon for years and continued to consult for the Zeckendorfs. The developers began meeting weekly with Rubenstein’s team just as they had with Paul Whalen.
They decided on a publicity campaign focused on Robert A. M. Stern, who is as polished and well-spoken as he is knowledgeable, and he worked the limestone angle hard. There was a message in the stone. “You’re thinking about the kind of people who define a building, not bankers, but tastemakers,” says Rubenstein. “We wanted it viewed as a luxury proposition. The limestone was the differentiator.” It signaled that 15CPW would attain a level of richness and exclusivity unheard of since the Great Depression.
At first, at least, the names of apartment buyers were not to be revealed—especially the names of Goldman Sachs–related buyers. “That was secret secret,” says a PR team member.
The marketing team planned a subtle campaign aimed at the ultrawealthy and featuring lavish sales kits, a highly produced DVD of a conversation with the Zeckendorfs and Stern, double-page ads in the New York Times Magazine, and even a brochure wrapped around copies of the Financial Times distributed at the World Economic Forum in Davos.
The Zeckendorfs “wanted to establish [15CPW] as a building for affluent New Yorkers, so it became a residence,” says Bruce Richards, a hedge-fund manager with Goldman Sachs connections who would soon buy an apartment. They wanted global money, too, but not the sort that would be content with empty hallways. “The marketing was deliberate, calculated, and efficient.” They “targeted, invited the Fifth and Park buyers,” says Corcoran CEO Pamela Liebman. “They pulled the market to Central Park West. They made it feel like Fifth Avenue. It really helped that rich and powerful people were associated with the building early on. It really set a tone. So it became a very cool place to live, an exclusive club, and to be a buyer made you look really smart.”
Buying wasn’t exactly easy. At first, only a handful of apartments were “released” to the sales team to test the market. If everyone wants A-lines, they’re underpriced. So only a few A-and D-line apartments were made available, and in the house, middle apartments at treetop level were held back, too. Nonetheless, once the sales office opened in Carnegie Tower, “you’d have thought they’d let the bulls loose at Pamplona,” says salesperson Karen Duncan. “We were deluged. The brokers started beating the drums.”
The salespeople made as many as nine presentations a day, and appointments were booked as late as 9:00 p.m. “Elaborate tap dancing” ensued, says another salesperson. “People would say, ‘Can I reserve 9B?’ And I’d go into the next conference room with a note saying it was gone, and that would cause the next person to buy. When somebody fell out, we had backups. We were targeting people with means, wildly successful professionals, people with busy lives who wanted service and amenities and to be pampered. They wanted a place that reflected their status and taste, but they didn’t want small windows, kitchens, or bathrooms or a co-op board prying into their business.”
As hoped, many less desirable apartments went fast, relative bargains at around $2,000 per square foot, when the best apartments were marked and selling at $6,000 per. The very first signed deal was with Robby Browne, a broker for Corcoran who’d brought seven clients to the Broadway construction office to see the plans as soon as he could. “I called everyone I could think of,” he recalls, “and said, ‘You need to buy this.’ After three weeks, I thought, I’m buying. It had everything I want. It’s like a country club. I couldn’t afford the front, of course.” In the days that followed, four B-and C-line apartments in the tower and six more Broadway apartments were sold, only a few to people who planned to live there.
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Jacob Gottlieb, the managing partner and chief investment officer of Visium Asset Management, a $4 billion hedge fund, and his wife, Alexandra Lumiere, then a Brown Harris Stevens broker, bought two of the ninth-floor tower units, giving themselves five bedrooms and almost eleven hundred square feet of terrace over Broadway. The son of an economist and a pediatrician, Gottlieb had traded baseball cards as a boy. Torn between business and medicine, he’d studied both but chose full-time investing after an internship at a New York hospital. A health-care analyst, he became the top earner at a Chicago hedge fund and launched his own the year he bought his apartments. He was living in an East Side condo when he heard about 15CPW, which was walking distance from Visium’s offices. “I’m always looking for compelling investments, including real estate,” he says. “I couldn’t pass up the chance.”
The owners of Mercedes/Berk, a real estate boutique, commercial broker Noel Berk and her life and work partner, Elizabeth Omedes, bought a small two-bedroom just above on the fourteenth floor. Once they moved in, Berk and Omedes would take advantage of their residence in the building and begin representing other owners who’d decided to sell. Berk was also elected to the condo’s managing board, a conflict some co-op boards would find troublesome.
The Zeckendorfs had hoped to keep investors away and sell mostly to people who planned to live there, but there was no way to force buyers to reveal their true intentions, and anyway, the rear units were not trophy apartments. With a partner, Dorothy Somekh, a West Side condo broker who also invests in them, picked up a two-bedroom unit two floors below the Gottliebs. Somekh, once married to an Israeli, is fluent in Hebrew and has many Israeli clients. Three weeks after she bought hers, she sold the C-line apartment on the twenty-fifth floor to Dr. Eli Zahavi, an Israeli energy investor, for about $4.225 million. In the seventies, Zahavi had headed a fuel program for the Israel Defense Forces, then became an international energy expert working in Israel, Puerto Rico, and Texas. He’d just acquired the empty shell of a public company listed on the Tel Aviv stock exchange and formed an American subsidiary, EZ Energy (its first name his initials), to operate gas stations and convenience stores in the United States. He was intrigued by 15CPW and knew of the Ofer family.
House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address Page 22
