Investors hit the jackpot with ATC portfolio buy.

All you need is a dollar and a dream. Actually, a partnership between investment firm, Angelo Gordon, and real estate operator, Irwin Cohen, needed $115 million dollars--but they still hit the lottery.

Purchasing in the fall of 1998 the ATC portfolio--a collection of five buildings located in Manhattan and Long Island City--for a paltry $115 million, the partnership went on to sell the properties individually for a total sum Eastdil broker Douglas Harmon estimated to be as high as $1 billion.

"It's really one of those great success stories," said Harmon, who brokered the sale of each of the five buildings. The portfolio included three buildings in Long Island City, the Factory building, Falchi building, and Center building, as well as two better known assets in Manhattan, Chelsea Market and nearby 85 Tenth Avenue, which was just sold in June by the partnership for $300 million, or $500 per square foot--record pricing for Chelsea. The lofty pricing the properties commanded stems from the fact that many today are thriving office and retail centers. Chelsea Market's high profile tenant roster includes the Food Network, NY1, Sterling Sound, Oxygen Media, and Major League Baseball Productions. 85 Tenth is still home to anchor tenant, Level 3 Communications, as well as Lehman Brothers, which based its backup facilities there because of the building's onsite power generation capability. Celebrity chefs, Mario Batali and Tom Colicchio, are both opening restaurants on the building's ground floor.

When the properties were first acquired however, much of the space, especially in the LIC properties, was nothing more than antiquated manufacturing quarters. Unsurprisingly, the pool of assets suffered from high vacancy rates. Experienced distressed property buyers, the partnership of Angelo Gordon and Cohen set about repositioning the assets. While renovation played a huge part in turning the properties around, it was their leasing that perhaps was the biggest coup in reversing the properties' fortunes.

The partnership rented much of the LIC space to financial firms as well as ad and marketing agencies looking for a more economical alternative to Manhattan. It did some of its best work in Chelsea Market, securing tenants who co-invested in improving their spaces. 85 Tenth became a striking example of how large a part a tenant could come to play in revamping a building.

After deciding that 85 Tenth Avenue would require more work than the partnership's schedule would allow, it sold the property in 1999 to Level 3 Communications, an existing tenant who had space in another Gordon/Cohen building. Level 3 Communications, a major player in the information services industry, put over $150 million worth of investment into the building, revamping everything from its elevators and lobby to its power supply and telecommunications infrastructure. While the building's amenities and unique infrastructural features served Level 3's business needs, the firm had trouble leasing the portion of the property it didn't inhabit and in 2003 Angelo Gordon and Cohen got the chance to buy it back in a sale leaseback transaction.

"We owned Chelsea Market and had owned the building so we were a logical owner again," said Keith Barket, head of real estate acquisitions for Angelo Gordon. "Plus they were going to stay in the building so they wanted an operator who they felt would run the asset properly."

The considerable investment that Level 3 had put into the asset didn't reflect in the sale price. "They basically wrote it off," Barket said.

Angelo Gordon and Cohen sold 85 Tenth for the second time in June to Somerset Partners. The three LIC assets were sold in 2000 and 2001. The partnership sold a 75% stake in Chelsea Market to German fund Jamestown who also bought nearby 111 Eighth Avenue for $775 million in 2004.

That transaction, last year's largest, was also brokered by Harmon. As part of its deal with Jamestown however, the partnership retains a 50% stake in the Chelsea Market's appreciation.