Grantland: Will Nonagenarian Eugene Grant Sell 550 Washington Street?

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“He constantly meets with prospective buyers. And why not? It’s exciting—all the top industry players have come to see him,” the broker said, adding that major successful real estate investors such as Taconic and RXR Realty have been among those who have at least glanced at the property.

To those who have felt thwarted by Mr. Grant’s deep-seated ambivalences it may be little consolation, but 550 Washington Street is clearly an asset Mr. Grant has clutched onto tightly in order to remain relevant in a city loaded with big personalities and prolific investors, these potential buyers have concluded.

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After 50 years, however, Mr. Grant must now finally confront what for him has been unthinkable; losing control of the building he so clearly prizes.

Roughly five years ago, Mr. Grant entered into a partnership with Westbrook Partners, an institutional real estate company that has made several successful investments in the city in recent years. The pairing was arranged in a calculated manner. Mr. Grant made sure to retain the management rights in the venture, leaving him full control over the property and the leeway to continue to invite potential suitors to gaze at his prize in recent years.

550 for web Grantland: Will Nonagenarian Eugene Grant Sell 550 Washington Street?Yet knowing he is in the latter stages of his life, Mr. Grant sewed in a provision that would allow his family to force a sale of the building should he die, an event that would incur a hefty estate tax that could otherwise leave his family scrambling for cash.
The option, as it turns out, goes both ways. Westbrook, several sources familiar with the matter said, is entering a window in which it too can force a sale of the property.

“Gene never expected to live this long,” a source said.

Initially, Mr. Grant argued with Westbrook’s rights and motioned that he would contest them in court. But his opposition has waned.

A private arbitration was recently held to clarify the terms and rights contained within the structure of the partnership.

“Westbrook affirmed its right to force a sale of the property,” a person who was present at that meeting said.

Westbrook, long frustrated with Mr. Grant’s inertia, has let it be known the status quo will no longer be acceptable. It is unclear yet what will result, although it appears Westbrook and Mr. Grant, who several knowledgeable sources say are still on friendly terms, may be heading toward a restructuring that would keep the partnership intact but scuttle Mr. Grant’s control of the building and hand managing-partner status to Westbrook. Mr. Grant will perhaps emerge with the same percentage stake he has long owned in the property, but those who know him say that the tables will nonetheless be turned on Mr. Grant; he will no longer be in control of his building’s destiny.

A REAL GENTLEMAN

Like many successful real estate investors in the city, Mr. Grant had a father, Samuel, who was a real estate man before he. Mr. Grant began his career in the family business after serving as a fighter pilot during World War II and worked with his father for years.

Mr. Grant developed a strong reputation during an era in the real estate business when the city’s industry was dominated by family investors and deals were often done on the strength of someone’s word and a handshake.

“I’ve known Gene for at least 30 or 40 years,” Earl Altman, a landlord and a principal at the real estate firm ABS Partners, said. “He’s a class guy. I’ve never heard anyone say a bad thing about Gene.”

In the early 1960s, Mr. Grant and his father, along with a partner, the owner Lionel Bauman, purchased 550 Washington Street for just a few million dollars, a small fraction of what it is worth today.

Unlike investors today, who often buy Manhattan real estate with a time horizon and specific financial return targets in mind within that deadline (and who often rely on generating proceeds from a profitable sale), the Grants and Mr. Bauman had longer-term plans.

Real estate dynasties, after all, were built by accruing wealth over generations, and among these scions of yesteryear, relinquishing assets was a practice to be avoided all costs.

“Never ever sell—never,” said Andrew Roos, describing the mentality of investors of that period.

Mr. Roos is an executive at Colliers International who understands this thinking from firsthand experience. His father and grandfather built a large real estate portfolio to which he is one of the heirs, though Mr. Roos has also made a name for himself as a successful leasing broker in Manhattan.

“Unlike the current generation of Wall Street-minded investors, who have a proclivity to trade in and out of assets, old-school owners seem to have a natural aversion toward selling etched in their DNA, and in many cases their assets are ultimately left to be settled by their estates and heirs,” Mr. Roos said.

Mr. Altman, who built his own portfolio of buildings, also remembers the attitude firsthand.

“I was brought up on a farm in Massachusetts, and I didn’t have a nickel to my name,” Mr. Altman remembers. “I worked at Helmsley. The guys who never sell have something. That was the way we thought. Real estate in this city just gets better and better and better.”

But the span of Mr. Grant’s hold on 550 Washington Street, long outlasting Mr. Bauman and his dad and stretching to a point at which Mr. Grant has dragged it into a seeming dormancy, has also provoked mockery.

“I think Gene believes he can take it with him,” one executive joked.