by Adam Gittlin
After more than a few swipes of Neo’s sandpapery tongue across my skin, I stood up and carried my little partner into the kitchen. I placed him on the black marble countertop next to the sink as he began to shudder with excitement, tapping his two little front paws against the cold rock excitedly. Although late, as often was the case, it was Neo’s dinner time.
I put Neo on the floor with his bowl of food, a combination of wet, canned dog food and some grilled chicken my maid prepared for him. I grabbed a Corona from the refrigerator and headed back out of the kitchen past the dining and living rooms, down the corridor past my guest bedroom, second bathroom, and study. When I got to my bedroom I stripped off my shirt and socks and went straight for the glass doors in the corner of the room, doors that led to my eight hundred square foot terrace overlooking Midtown’s east side. On the deck table there was a glass ashtray from Tiffany, a gift from my grandmother that I imagined she would be ecstatic to know I used strictly for marijuana since I don’t, and never have, smoked cigarettes. There was a half-smoked joint in the little glass bowl’s mouth, and since I wasn’t fucked-up enough already I reached for it and lit it with a book of matches from Ben Benson’s.
I struck a match, and as I got past the inevitable nanosecond of having to smell sulfur, I took a long pull of the dense weed cigarette as I leaned back in one of the deck lounge chairs. I then exhaled as slowly as I had inhaled, immediately taking another serious puff before placing the joint back on the ashtray’s edge and again grabbing my beer. I leaned back into position as Neo came charging outside and jumped right up on my lap. He was trying to climb up me in order to give me another kiss, so I leaned forward and met him halfway as he licked my nose. Then, since a slight midnight breeze had taken hold of the city that night, Neo curled himself up into a ball in my lap as he drifted into sleep, his tired eyes falling against his will within seconds. I didn’t want to wake him, so I remained still for the next half hour as I enjoyed the rest of my beer and surveyed the glowing topography of the city, a vast mountain range of concrete, glass, and steel that had afforded me every aspect of my surroundings.
At one twenty, after a good game of challenging myself to properly identify numerous randomly selected properties from the horizon, I reentered my bedroom, placing a slumbering Neo underneath the blanket on my bed. I headed back down my main corridor all the way to the front foyer, where I retrieved my briefcase before heading to the study. Wearing nothing more than the suit pants I had been in all day, I settled in to the room, a warm, sophisticated study I had modeled after my father’s. The walls, all comprised of dark, stained wood bookshelves lined with everything from classics to beach reads, surrounded me comfortably as I settled in to the oversized, dark leather chair behind my desk. My feet welcomed the plush, black carpet as I turned on my desktop computer and pulled all of my necessary documents from my briefcase. I turned on the desk lamp, which created just enough illumination for my workspace while simultaneously reminding me of what time it in fact was. The apartment was dead quiet, the only faint sounds coming from the streets down below just past the windows behind me.
I began to work furiously.
Chapter 9
7:30 a.m.
Thursday morning. Exactly forty-eight hours after Andreu Zhamovsky had become the focal point of our lives, we were in Tommy’s office ready to each lay our brilliant idea on the table. As always each of us was secretly hoping to outshine the others. Tommy was behind his desk and the three of us were each in our usual spots around his office. Much like any family when in a common gathering place, we were no different. We had our set places, places that made us feel safe, places that reminded us we belonged no matter what. Like my buddy L’s family growing up, each family member, all six of them, would take the same place around the dinner table every night. This never changed, because none of them were willing to let it. That’s family.
All four of us were drinking our morning Starbucks. My night had run right into my morning, so even though I looked as sharp as I did every day, I hadn’t yet had any downtime to wash the prior evening out of my system. For all I cared my Starbucks may as well have been another glass of Sapphire. It didn’t matter. I was pumped. Even more so by the fact that I could tell they were too.
“Let’s get to it straight away, guys,” Tommy began. “I have a breakfast with Jon Robard in an hour.”
“Thanks, Tommy,” Jake said.
Jon Robard was the lead broker on the other side of a deal Jake had been putting together for six months. Jon was representing the owner of a class A building at 55th and Park. Jake was representing Chenowith Publishing that was seeking fifty thousand square feet. They were about to close on two full, contiguous floors, and the window of opportunity was closing for us to lock in our desired numbers. The deal couldn’t be put off. Tommy was sitting in for Jake.
“Now he’s all set with fifty-two dollars per square foot in years one, two, and three. Is that right? Or are they still trying to bump you up starting year three as opposed to four?” continued Tommy.
“We’re airtight at fifty-two, year one through, and including, year three.” Jake responded.
“Fine.”
Tommy then ran his eyes over page sixteen of the lease once again, the page outlining the base rental prices for the space over the term of the lease. These numbers are given as an annual figure for each year of the term, that when divided by the number of square feet being rented gives you the rental cost per square foot.
“Fine,” Tommy said again, as he quickly thumbed through the rest of the document. “Electric, the option to take the floor above in two thousand seven. Everything else seems in place.”
Tommy put the lease, and Jake’s deal, aside.
“Let’s go. Perry, you start.”
Perry was ready to go, I could see it in every aspect of her that morning. Her dark brown Armani pantsuit matched the crisp look in her eye. Her hair was shapely yet full and her make-up was slight but just enough to give her that extra little oomph. She looked like she was about to stand up and litigate the biggest case of her life in front of a packed courtroom. She was excited. She was so Perry.
“Cantrol Petroleum,” she began.
“Twelve sixty-eight Sixth Avenue,” I added.
Tommy, a hint of fatherly advice injected into his upcoming remark, was concerned.
“Public corporation with a tough board. Be careful here, Perry.”
“I spoke to their broker about a week ago, and the word is their financial situation is far worse than even The Street knows. They may have no choice but to alter their office space situation.”
“Doug Welsh has been handling their real estate affairs for years. Why would he be opening up about this so easily?” asked Jake.
“Did I say broker? I meant to say new broker. Does the name Auerbach mean anything to any of you?”
James Auerbach is a hotshot broker on a top team at a rival firm. Not only is he a respected adversary, he is someone we often exchange sensitive information with. A relationship founded on the basis that he is, coincidentally, one of Perry’s closest friends from college.
“You’ve got to be fucking kidding me,” exclaimed Tommy.
“Kidding I am not, Captain.”
“Why are they switching?”
“Because they are as arrogant as every other large fucking corporation out there who wants to blame every little thing on someone else. All of the sudden, while watching their stock price plunge, some old, crusty executive sat back and took notice of the monstrosity of a building they reside in. Then he realized they were laying off people and half of the entire property is empty and they are bleeding because of it. When he realized he was running out of people to point his finger at, he decided it was time to hold Doug Welsh accountable for the fact they were stuck with so much space. They hadn’t planned well enough for a downturn in the economy. Between the fact that they’re having a hard time recovering and the world’s current oil
situation.”
“Why wouldn’t you have mentioned this to us?”
“Because to tell you the truth it wasn’t such a big deal when James told me, and, more importantly, it hadn’t yet been locked up.”
“And now? Is Auerbach’s position locked up now?” asked Tommy.
“It is. I spoke with James yesterday afternoon and he confirmed his involvement with Cantrol. He has signed an exclusive agreement for his team to handle all of their Manhattan real estate affairs.”
“Did the two of you discuss Cantrol’s position as of today?” I asked.
“We did and it’s no secret to them that the sales market is hot. The board would absolutely be willing to look at a possible sale of their world headquarters on Sixth Avenue.”
“Refresh our memories regarding the specifics of the property.”
“One million fifty thousand square feet. Built in 1974, the building is forty-five stories tall, each floor a touch more than twenty-three and a half thousand rentable square feet.”
“Loss factor?” I asked.
“James says about thirty-two percent on a full floor. All building heating and cooling systems have been replaced within the last four years. The lobby and elevator cabs were all part of a thirty-five million dollar renovation completed last summer.”
“How many elevators in the building?” continued Tommy.
“Twenty passenger and four freight.”
“I haven’t been in there for a while,” Jake commented. “How much space does Cantrol actually occupy?”
“Around two hundred thousand square feet. The bottom nine floors, of which at least three basically sit empty.”
“And the rest of the tenant roster?” Jake continued.
“Aside from what’s vacant, fantastic. A couple of international banks and four law firms, all with decent-sized blocks. No one’s lease comes up for at least four and a half years and this is one of the law firms that happens to be the smallest tenant in the property. They specialize in class-action litigation, not a bad niche in 2004. Needless to say, their practice is thriving.”
Perry stood up and handed us each a package containing all of the information she had just revealed. Included were further specifics regarding the property as well as floor plans.
“All in, we’re looking at a transaction in the half a billion dollar range, give or take in either direction. At my request, James has made it clear he will provide any documentation we request as required by our due diligence.”
As always, Perry had set the bar quite high. She was perfectly prepared and had come up with a fantastic scenario. One property, which from a due diligence point of view would undoubtedly help logistically with regard to our time constraints.
“Any questions?”
“Fantastic, Perry. Just great,” commented Tommy. “Sounds potentially nice and neat and it’s a phenomenal property.”
“A trophy building. High-profile, imposing, perfect for the Zhamovsky mindset.” I added.
“Why thank you both very much,” Perry said.
A sweet, confident yet appreciative smile slowly made its way across Perry’s face, the same satisfied look she gets when she knows she has put forth a job well done.
“All right, Jake. Let’s keep going,” Tommy said.
Perry locked her eyes with mine, forcing me to give her even further approval. I felt sad, yet flattered at the same time. Sad that Perry was so focused on my attention toward her, but flattered for the very same reason. I gently nodded and mouthed “not bad,” broadening her smile.
“What have you got?” Tommy continued.
Jake was pumped. He was even wearing a tie bar that morning, something he only puts on if it is time to sequester every single ounce of his most professional self. Something that reminds him of the power broker he had worked so hard to become.
“Slevin portfolio.”
The Slevin clan. Two brothers in their sixties, Ray and Lawrence, each with a son, Jagger and Leo respectively. Don’t ask. The word is that Ray Slevin is a diehard Stones fan. Anyway, the Slevin family owns seven properties along the Park Avenue South corridor, between 14th and 30th streets, right on the avenue.
During the Internet boom running from the late nineties through the millennium, this was possibly the hottest submarket of New York City. Internet firms, advertising agencies both high-tech and standard, you name it; if it was a creative company and had to do with the evolving e-world we were living in, they only wanted to be headquartered on Park South. Rents went through the roof and occupancy rates skyrocketed accordingly. Today, different story. This is possibly the submarket that suffered the most in the wake of someone sticking a pin in the bloated stomach of our economy. Post 9/11 there was more sublease space available than direct space, meaning there was more space being offered by firms locked into leases who no longer needed it than there was being offered by landlords directly. That is how many firms along this corridor collapsed, which means I don’t even need to tell you what happened to the rents. On the positive side, the Park South submarket has been recovering at a decent pace like the rest of the city.
Jagger and Leo Slevin are pricks. Period. Two loaded little brats born on third base who live with the attitude and arrogance of guys who hit a triple. They act as agents on the family’s seven properties, meaning they are the brokers who negotiate all incoming deals on behalf of ownership. Talk about a nice setup. I have inside knowledge that their fathers pay them full commissions for these deals on top of huge salaries, even though they will one day own the buildings. Too bad they’re such fucking morons.
Their fathers are actually decent guys, which makes it even sadder. This family has put a lot of cash in our pockets over the years and we’ve put a number of fantastic tenants in their properties. The Slevins have great respect for our team and, having just come through some tough years, things were again looking up for their holdings. I knew someone would bring them up, and perhaps I would have too if it wasn’t for one thing.
“Sexy enough?” I asked.
“Correct me if I’m wrong here, but according to Jonah, flash and excitement is as important to this guy as the potential to prosper,” added Tommy.
“I hear you guys, but just bear with me. Jonah, you said your Russky friend is a bit of an ego maniac. But I also heard you say that he’s a smart businessman looking to expand into a realm completely new to him, leading the charge for one of the world’s largest company’s board of directors. I imagine the number one issue for them will be financial sensibility here, not just flash on its own. After all, there are going to be a number of people to answer to on their end.”
So far neither Tommy nor I could discount Jake’s comments. We continued to listen quietly.
“This isn’t to say that I haven’t taken the sexiness your guy craves into account. As I looked over the Slevin portfolio, comparing it to other potential transactions out there, it was the one that made the most sense to me for a couple of reasons. You mentioned that your boy controls the popular vote of his board. Therefore, I knew we needed an angle that would appeal to him on a personal level on top of the financial sensibility.”
Jake paused, heightening our anticipation.
“And—” Perry finally said.
“And, what’s the one aspect of Park South/Union Square that not only continues to thrive, but did so in the shit market we all just trudged through?”
I saw where Jake was going. I loved it.
“The nightlife,” I said.
“You got it, killer. The nightlife. Out of the seven Slevin-owned properties, four have happening, high-end, glitzy restaurants as the retail tenants. One more has Stark, the hottest bar and lounge to open in months, written up in New York Magazine just last week. If Zhamovsky wants sexy, few things are sexier than being the number one VIP in some of the hottest restaurants and clubs in Manhattan.”
“Great angle, Jake. I like it,” Tommy said. “Very smart.”
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br /> “Is there really such a thing as a ‘sexy value’ in real estate?” asked Perry, forcing us all to think a bit deeper.
“Look at this market we’re in,” I responded. “The winning property in any market will always have some type of allure. In a market mirroring a recovering economy, it is all about tremendous value, tremendous ‘bang for your buck’ for all buyers, even high-end.”
“You really see ‘sexy’ and ‘value’ coexisting?” she further challenged me.
“Today, interests are seeking property with real value, coupled with that extra something that separates a certain property from all others in its class. To get people to buy in markets like this, there must be that added dimension. Perhaps something that caters to a certain unique use for the property, maybe a potentially niche, future location—something. Just look at what’s happened over the last couple years in the Meatpacking District. Conversely, a market like the one we left behind pre-millennium change, the type of market we’re trying to get to once again, has a different type of high-end buyer. The one willing to pay a premium for what he wants. You’re just used to focusing on sexy in a topped-out market, Perry, but sexy is alive and well in each type of market. It’s all about where you look for it.”
“Amen,” Tommy intervened. “Let’s keep going. Numbers—”
Perry dropped her head back to the notes she was keeping. She hated coming up short in an intellectual confrontation.
“Park South’s vacancy rate hovers around eleven percent. Deals are being done in the mid-twenties per square foot,” Jake started. “In an up market, Park South always performs. It simply always has. In a market on the upswing with money to spend, Park South is the perfect place to get situated for the, eventually, profitable future. How long that future lasts is an entirely different story.”
“And not our worry.” I shamelessly threw in.
“Total square footage for the seven properties?” Continued Tommy.
“One million five hundred seventy-five thousand ten rentable square feet. An average of two hundred twenty-five thousand square feet per property. I’m thinking we pay in the neighborhood of two hundred ninety-five dollars per square foot. Agreed?”
