Related leads pack in ST/PCV bidding race.

The Related Companies is on the verge of being selected as the winning bidder for Stuyvesant Town and Peter Cooper Village being sold by the Metropolitan Life Insurance Company, according to a source.

The second round of bidding for the 110-building complex began on Monday, a cut that pruned bids below $4.5 billion. But according to the source, Related has established itself as the auction's frontrunner with an offer that may top $5 billion--the figure that had been treated informally by real estate experts as the very highest the complex's sale price could go. The sale of the two apartment complexes has attracted dominant players in the real estate industry like Vornado, Apollo Real Estate Advisors, and Tishman Speyer. Even deep-pocketed investors from Dubai are said to be taking part, a surprise to many real estate experts who had speculated that the buildings' extensive collection of rent controlled and stabilized apartments--analysis of which is essential to calculating the deal's returns--would prohibit the participation of all but domestic investors with significant experience in the Manhattan residential market.

Stephen Ross, Related's chairman, has had a storied career building and managing both luxury residential and affordable housing developments in the city and also nationally. That experience, combined with his reputation for being one of the most politically connected developers in Manhattan places him in a special position, many say, to extract maximum value from the complex.

There has been fear among bidders that sweeping redevelopment plans for Stuyvesant Town and Peter Cooper Village, which sits on 80-acres of prime Manhattan real estate, could potentially generate a political backlash from city officials eager to preserve the complex as an affordable neighborhood for the city's working class. Yet the prospect of converting some or even the entire complex into luxury housing is what bidders have used to justify their multibillion offers.

If there is any bidder that could ameliorate the competing interests and deflate the political tensions that have cloaked the complex in uncertainty and prevented some bidders from offering top dollar many feel it is Ross, who also happens to be one of the most capitalized developers in the auction.