Tricks of the trade at 1095 6th.Using tremendous leverage in its $39 billion acquisition of Equity Office Properties Trust Equity Office Properties Trust, headquartered in Chicago, Illinois, is the largest owner of office buildings in the United States. It was formed in 1976 by Samuel Zell [1] and in February 2007, was acquired by the Blackstone Group for $23 billion plus the assumption of , the Blackstone Group Blackstone Group L.P. (NYSE: BX) is a prominent private equity and investment management firm founded in 1985 by Peter G. Peterson and Stephen A. Schwarzman. The company is based in New York City, in River House on Park Avenue at Fifty-first Street, with offices in Atlanta, sacrificed cash flow in pursuit of a strategy in which it would profit by quickly selling Equity's massive portfolio piecemeal. 1095 Avenue of the Americas seemed to be the odd exception. When Blackstone sold off Equity's Manhattan portfolio to the Macklowe's two weeks ago, the building--which was the former New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of headquarters of Verizon--was excluded. The firm meanwhile has been continuing Equity's extensive renovation of the tower, peeling off the inglorious in·glo·ri·ous adj. 1. Ignominious; disgraceful: Napoleon's inglorious end. 2. Not famous; obscure: an inglorious young writer. facade of its days as a telecom center to clad it in a new sheet of emerald glass. Seemingly most telling was the rental hike that it appeared to extract from MetLife when the firm took 410,000 s/f in the building in December 2006. It even turned away a nearly done deal with Goodwin Procter Goodwin Procter LLP is a law firm based in the United States, with a team of 750 attorneys serving clients through offices in Boston, Los Angeles, New York City, San Diego, San Francisco, Washington, D.C. and Palo Alto. , who was considering more than 200,000 s/f, to wait on Midtown's rising rental market. Was Blackstone boosting the building's cash flow in order to hold the property far longer than the rate at which it has been feverishly unloading other portions of the portfolio? While the firm is taking the time to extract value that would have otherwise been diluted or lost had it bundled the property in its lightening quick sale to Macklowe Properties, a closer examination of its lease with MetLife indicates that Blackstone's plans for the building aren't different than what it is doing with the rest of the portfolio. The more expensive lease that MetLife signed when Blackstone took control of Equity's portfolio, was little more than a paper tiger paper tiger n. One that is seemingly dangerous and powerful but is in fact timid and weak: "They are paper tigers, weak and indecisive" Frederick Forsyth. Noun 1. , according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. sources familiar with its terms. Although MetLife was compelled to pay roughly $10 more per square foot, the stiff increase was nearly erased by a commensurate boost in the deal's concessions, which include free rent and work allowances. Blackstone was willing to stomach the giveaways for the higher sales price it will now likely be able to net because of the building's improved cash flow. |
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