New York (real e)state of mind

2005 The Carlyle Group picks up Trump's West Side digs for $1.8 billion

Private equity real estate deals grab headlines for a number of reasons, from the size of the transaction to the stature of the asset acquired to the amount of profits generated. And sometimes, as when The Carlyle Group acquired a tract of land and three apartment buildings on the West Side of Manhattan for $1.8 billion, simply because of the personalities involved.

The sellers included real estate developer and TV personality Donald Trump and Vincent Lo, star of “The Winner,” the Chinese version of Trump's hit reality show, “The Apprentice.” Though no television stars existed among the buyers, their pedigree was nonetheless impressive. In addition to The Carlyle Group, which once counted former British prime minister John Major and former US president George HW Bush among their senior advisors, there was legendary real estate investor and Trump rival Sam Zell. Upon the transaction's closing, Equity Residential, the residential REIT chaired by Zell, purchased the three existing buildings for $809 million.

In addition to the players involved, the transaction was also notable for its size, one of the largest land deals ever in New York City. And for its history: Trump, who took control of the property in the early 1980s, originally wanted to build a 152-story building on the site, the tallest in the world. His vision, however, was eventually overshadowed by his tribulations with local activists and, even more importantly, his well-publicized financial troubles in the early 1990s. Lo was part of a Hong Kong investor consortium that helped bail out Trump's interests in the property, paying off the banks for a reported price of around 30 to 40 cents on the dollar, during that time period.

Trump's troubles with the property didn't end there, however. Less than a month after the sale was made public, Trump sued his business partners, claiming that the sale price was well below what others were willing to pay. Unfortunately for Trump, he lost the case and was forced to stick by the terms of his original agreement, which called for him to roll his proceeds from the New York deal into the $1 billion purchase of the Bank of America building in San Francisco.