Tishman Speyer Properties LP agreed to buy New York's MetLife Building from the largest US life insurer for US$1.72 billion in the most expensive New York skyscraper deal since the World Trade Centre was leased for a record US$3.2 billion in 2001.

Closely held Tishman Speyer becomes New York's largest office owner. It will add the 58-story tower on the north side of Grand Central Terminal, formerly known as the Pan Am Building, to a portfolio that includes Rockefeller Centre and the Chrysler Building. MetLife will record a gain of US$750 million, the insurer said on Friday.

The deal comes two days after SL Green Realty Corp agreed to pay MetLife US$918 million for the insurer's former headquarters building at 1 Madison Avenue. SL Green, New York's largest office landlord, plans to convert that building's landmark tower into residential condominiums.

"For a week, it sets a new high-water mark for a single private New York seller," said Mary Ann Tighe, New York chief executive of CB Richard Ellis Group Inc, which negotiated the Madison Avenue sale for MetLife. "This truly validates our belief in the city. Who would have predicted this would happen three years after 9/11?"

Taken together, MetLife expects to record a net gain of US$1.17 billion on the two deals once they close in the second quarter.

Tishman owns or has built more than 65 million square feet of buildings worldwide, valued at more than US$16 billion.

Besides Rockefeller Centre and the Chrysler Building, it also owns Berlin's Sony Centre and Sao Paulo's North Tower.

"Iconic-type properties like these are irreplaceable and can never be built again," said Steven Wechsler, Tishman director of capital funds. "This one hasn't been on the market since 1981, and when you have an opportunity like this you have to seize it."

The sale would vault Tishman ahead of SL Green as New York's largest office owner, with close to 20 million square feet.

Wechsler and Rob Speyer, Tishman's director in charge of New York, and son of chief executive Jerry Speyer, were fresh from an all-night coffee-fueled negotiating session with MetLife executives at the insurer's offices in Morristown, New Jersey, where its property operation is quartered.

Tishman said it will own its newest property in a joint venture with New York City Employees' Retirement System and the New York City Teachers' Retirement System, with Lehman Brothers providing additional financing.

Rob Speyer declined to describe the financial structure of the deal. He did say he was not deterred by recent increases in interest rates. US Treasury bills rose to 4.45 per cent from about 4.1 per cent when bidding started in mid-March.

"It's still an extraordinarily low interest rate environment," he said. "To be able to lock in long-term financing at Friday's rates is still very beneficial by any historic measure."

The rise in rates may have hurt private investors that were competing with Speyer, said Dan Fasulo, a researcher with Real Capital Analytics.

(China Daily 04/04/2005 page12)