60 Wall sale could be downtown's Billion Dollar Baby.

Deutsche Bank is in talks to sell 60 Wall Street to a private account managed by Peter Bren of KBS Realty Advisors for $1.2 billion, according to a source close to the transaction.

The sale would be one of the most expensive of all time in Lower Manhattan and part of a short but growing list of sales transactions in the city that have fetched prices over a billion dollars--an amount that had been reserved in years past for only the exclusive trophy office buildings in midtown.

Still being negotiated, according to a source, are the terms of a major leaseback that is being worked into the deal to allow the bank to maintain its space in the tower. Deutsche Bank occupies all of the 50-story property's 1.6 million s/f, but it is not clear whether it plans to remain the sole office tenant or shed some of its space.

To net the type of higher returns that the firm typically seeks, KBS often targets properties with some level of leasing risk so that it can have the opportunity to reposition, fill, and then sell buildings at a significant profit. This mode of investment brings into question whether Deutsche Bank is planning to give up some floors in a downsizing that would allow KBS to capitalize on Lower Manhattan's buoying office rents.

KBS has built a successful real estate investment business allocating large sums of capital into real estate for pension funds, who have steadily increased their allocations into the sector in recent years. The firm invests nationally but is no stranger to Manhattan. It bought and sold 261 Fifth Avenue for a Michigan State pension fund, a building it had acquired with 245 Fifth Avenue, which it still owns. The firm also owned 50 Broadway and has a stake in 45 Wall Street alongside joint venture partner, Rockrose, on behalf of other pension fund clients. Deutsche Bank is handling the building's sale in house, an example of the way that some financial institutions prefer to use their own staff instead of hiring real estate services professionals when handling such large and involved transactions. Citibank took care of the sale of its office tower in Long Island City similarly when it sold the property to Reckson in 2005.

The absence of a broker in the deal has added to its mystery. Many brokers and investors active in the market knew that 60 Wall Street was trading after published reports announced its sale at the end of 2006, but few could place who was buying the building because of the veil of secrecy Deutsche Bank has been able to preserve by dealing directly with the seller. Bren declined to comment on the transaction.