House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address Read online

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  CONTENTS

  Preface: Clash of the Titans

  Introduction: Up on the Roof

  Part 1 The Other Gold Coast

  Part 2 Out of Arizona

  Part 3 Condomania

  Part 4 Circle Game

  Part 5 Inheritance

  Part 6 Groundbreaking

  Part 7 Ground-Raising

  Part 8 Seeking Alpha

  Part 9 Top of the World

  Epilogue: A Place of One’s Own

  Acknowledgments

  Selected Bibliography

  About Michael Gross

  Index

  To Ophelia

  “Architecture keeps no secrets. It is the great communicator. It tells us everything we need to know, and more, about those who conceive and build the structures that define our cities and our time. We sense instantly whether their vision was mean or grand: whether they felt responsible only to themselves and the bottom line or to a larger idea of society and the world.”

  —ADA LOUISE HUXTABLE, “THE CLASH OF SYMBOLS” (1997)

  Preface

  * * *

  CLASH OF THE TITANS

  Our hopes, like towering falcons, aim

  At objects in an airy height;

  The little pleasure of the game

  Is from afar to view the flight.

  —MATTHEW PRIOR, “TO THE HONORABLE CHARLES MONTAGUE”

  “Complete bullshit!” barks Carl Icahn.

  The fourth-richest resident of New York City, Icahn, seventy-seven, is typically described as a corporate raider by detractors, an activist investor by admirers. All acknowledge that he strikes fear in the hearts of his prey. And he was cursing a blue streak at me.

  He’d started almost as soon as I began telling him a story I’d just heard about an attempt he’d made, in fall 2005, to buy a new Manhattan apartment. And not just any apartment. It was one of a baker’s dozen of penthouses atop Fifteen Central Park West, a two-tower luxury condominium then under construction at the southwest corner of Central Park. Or rather, two of its penthouses, which Icahn, who already owned one about ten blocks away, hoped to combine into something Brobdingnagian, the kind of home only a man like him might be able to afford, and more important, to fill, not just with possessions but with personality, a presence as awesome as the building’s location.

  But I’d also heard that this lion of finance had tried to haggle with 15CPW’s developers, demanding a price cut, which certainly seemed in character for someone who’d picked fights with Phillips Petroleum, USX, Texaco, TWA, and Time Warner. But that had turned out to be a tactical error, because the developers, Arthur William Zeckendorf and William Lie Zeckendorf, the third generation of a New York real estate dynasty, weren’t inclined to bargain.

  Instead, the Zeckendorfs sold the double penthouse to the bidder behind door number two, Daniel Loeb, an equally prominent and pugnacious hedge-fund runner, another activist investor cut from the same cloth as King Carl. Only Loeb was a quarter century younger and willing to pay the full asking price. Which caused Icahn, on learning that he’d been outbid, to launch an epically profane tirade at Will Zeckendorf.

  “ ‘Fuck this, fuck that.’ He said ‘fuck’ five or six times in thirty seconds, then slammed the phone down,” says Will. “Dan was in there early. He was a fabulous buyer.”

  They didn’t really know Loeb when he’d called them up just as they’d begun selling apartments at 15CPW. Icahn had gotten to them first, introduced by one of the Zeckendorf brothers’ two partners, an Israeli-born billionaire named Eyal Ofer, who had invested with Icahn. Earlier that year, Ofer had pointed to 15CPW out the window of Icahn’s office at Fifty-Ninth Street and Fifth Avenue and said, “Look at that.” His new building, rising above the tree line on the opposite side of the expanse of Central Park, was an impressive sight.

  It was also an impressive site: Fifteen Central Park West occupies the first full-block lot on the periphery of the park to be developed in decades—and likely the last for years. Its position is equivalent to oceanfront property in California, an Eiffel Tower view in Paris. Besides its immediate proximity to that 843-acre masterpiece of urban landscape design, 15CPW is also walking distance from Lincoln Center, Carnegie Hall, and the city’s best stores and restaurants.

  Not long after Ofer pointed the building out to him, Icahn was invited to a small cocktail party in a temporary sales office near the 15CPW construction site, where the Zeckendorfs themselves showed him and his wife, Gail, a model of the Robert A. M. Stern–designed, limestone-clad building and floor plans of some of those penthouses. One had already been reserved for Ofer, another for Will Zeckendorf. But the rest were still available, and Icahn focused on the building’s thirty-ninth floor, with two apartments that, so early in construction, could easily be combined into the largest in the building, with 10,643 square feet of interior space, two terraces of 677 square feet, fourteen-foot ceilings, eight bedrooms, ten bathrooms, and 360-degree views of Manhattan and beyond. And it would cost a mere $45 million (plus $28,607.34 in monthly charges).

  “We saw it, we liked it, I told them I was interested,” Icahn says. “I wasn’t that excited by it. I don’t invest in apartments.” But Gail Icahn liked it, and Gail wanted to move; a new building was planned right next to their current one, a few blocks to the southeast, and it was going to block the sunset from their fifty-second-floor terrace.

  “I love the terraces,” Icahn says dreamily. Even billionaires dream. But the risk of losing his view was real and Icahn understands risk and value in his bones. “We talked about price at the cocktail party,” he continues. “I said it seemed high.”

  Zeckendorf recalls that Icahn offered him only half the asking price. Icahn remembers it differently: he wanted only one of the two apartments. “There was no hondling,” he insists. “Bullshit.”

  Eyal Ofer laughs often and loudly when telling his version of the story. “Icahn has got a problem. He refuses to pay. I said, ‘Carl, listen to me. This is not business. This is lifestyle. You will not find another ten thousand square feet in Manhattan. And it’s within walking distance from your office because you don’t like to take a car, it’s too expensive.’ And he said to me, ‘But you want too much money!’ I said, ‘Carl, this apartment will be worth double. Close your eyes and buy it.’ And then Will came and said, ‘Eyal, you brought in Carl, but I have Loeb, who wants it.’ He said Loeb wants to pay more than Carl. So I said, ‘Be fair to Carl. Tell him that you’ve got somebody who is prepared to pay more, but we are prepared to sell it to you, if you’ll confirm it now.’ ”

  “I called Zeckendorf back,” Icahn says. “He said, ‘Hey, I sold it.’ I said okay. I was almost glad. I didn’t want to move anyway. I don’t remember arguing with him. The fact that he didn’t call me back was off-putting. It’s not like he’s a bad guy. That’s what they do. He probably said, ‘Icahn’s looking at it, Dan, hurry up.’ We didn’t hear. Then I called or Gail called and he said it was gone. ‘Loeb’s got it.’ People love this shit. I love the terraces I got.”

  After their phone call, Will reported back to Eyal Ofer. “He said that he had never been treated so poorly i
n his life,” Ofer recalls. “Now, every time I see Carl, he says, ‘You owe me an apartment!’ But he could not bring himself to pay the full amount. And he lives to regret it.”

  Like every New Yorker, Carl Icahn is fascinated by the ins and outs of local real estate. He loves to talk about it and, deep in his heart, likely knows that, after turning his back on 15CPW, he became one of the outs, which is evident as he rambles on, “Look, in retrospect, the building made sense.”

  The reason is that prime Fifth and Park Avenue buildings, the ones the writer Tom Wolfe called “the good buildings,” are all cooperatives, not condominiums; in a nutshell, they operate like private clubs and have for years excluded people like Icahn and Loeb, the sort of rough-and-tumble, loudmouthed, first-generation rich guys—many, but not all of them, Jewish—who don’t care whom they offend, guys whose hard edges have yet to be smoothed by a desire to fit in. Co-op owners are the kind of people who reject, not the ones who get rejected.

  Icahn doesn’t reject the rejection argument, but says what’s really great are 15CPW’s resale values. At $10,000-plus per square foot for its best spaces, the condos at 15CPW have defied conventional wisdom, the stagnating world economy, and, to some, common sense, too. In 2013, Sanford I. “Sandy” Weill, the financier who created Citigroup, sold his 15CPW penthouse—the second largest after Loeb’s—for $88 million, twice what it cost him six years earlier and the highest price ever paid for a Manhattan apartment. “Big trophies are running high,” Icahn says. “But I don’t look at apartments or New York real estate as investments relative to what we do. Since 1968, when I started Icahn and Company, our annual returns have been thirty-one percent. No real estate comes close to that.”

  Will Zeckendorf admits that Icahn is right about what happened. “Carl just could never hit the number,” Will says, “and Dan [Loeb] to his credit, when we said, ‘Listen, we’re talking with someone else,’ he said, ‘I’m there.’ ” Loeb had called the Zeckendorfs himself, without a broker as an intermediary. He’d heard about 15CPW from someone at Goldman Sachs, the renowned but wildly controversial investment bank, which was the third partner in developing the building. Theirs is a small world in which people want big homes high in the sky.

  Normally loquacious, even loudmouthed (his pugnacious open letters to companies he feels are mismanaged are famous), Loeb won’t discuss his purchase. But the Zeckendorfs are full of praise for him. “He completely flattened [Icahn] . . . destroyed him,” says Will. “Full price, no flinching, no bad, naughty words.”

  “Then,” Arthur adds, “I ran into a friend of Dan’s in Paris, telling me how nervous he was. But he didn’t show it to us. He played his cards like a true poker player.”

  Icahn played like a bad sport, they believe, bad-mouthing the building. Eleven days after Loeb signed a contract, the New York Post reported that Icahn was “taking a pass on his reserved $43 million condo.” Sales “appear to have slowed” at the “ultra-pricey” condo, the paper reported, apparently unaware of Loeb’s purchase. Quoting an anonymous source, it said other unnamed billionaires were also “giving up their places on the reserved list.” That part was true. There are regrets to go around.

  Though there was no direct contact between Icahn and Loeb, and Icahn says they are friends, their contest over Penthouse 39 at Fifteen Central Park West was a watershed. The clash of the titans was the first indication that 15CPW would become an apartment building like no other, a new colossus both literally and figuratively, a status signifier nonpareil, a towering symbol of its time.

  It is a sign of a generational shift in the makeup of the 0.1 percent who dance on the head of the pin of American wealth, evidence of the torch passing from the aging financial lions of the mid-twentieth century to a brash new twenty-first-century crop of cats. It is also a signal of other paradigm shifts, too.

  Over the months and years that followed that brief whose-is-bigger contest over that penthouse, it would become clear that 15CPW symbolized upheaval, both in New York real estate and in the upper echelons of international society.

  First, the sums spent on apartments show just how much wealthier today’s wealthy have become. The numbers are astonishing.

  Second, the range of 15CPW buyers (and renters), Loeb’s neighbors, who hail from all around the globe and are as likely to settle in London or Dubai or Hong Kong as New York, shows the new mobility and spread of great wealth; no longer is it just the product of Western European aristocracy or of American industry.

  Third, 15CPW spotlights the new economic sectors that have generated the new new money. Far more of the fortunes at 15CPW come from newly ascendant hedge funds than from traditional commercial, investment, or merchant banks. Many others were forged in emerging markets, and in the information, entertainment, and technology industries. These are not your grandfather’s moguls and entrepreneurs.

  Though it was designed consciously to echo the East Side co-ops that, for the most part, still won’t let 15CPW types in, this West Side condo, which ten years ago would have been considered hopelessly déclassé, has redefined what first class is in New York, in America, and in the world.

  Introduction

  * * *

  UP ON THE ROOF

  There being no fixed caste in America, as in the foreign states, we have established a certain style of living and expenditure, as a distinctive mark of social position.

  —SARAH GILMAN YOUNG, EUROPEAN MODES OF LIVING; OR, THE QUESTION OF APARTMENT HOUSES (FRENCH FLATS)(1881)

  Fifteen Central Park West is more than an apartment building. It is the most outrageously successful, insanely expensive, titanically tycoon-stuffed real estate development of the twenty-first century. Nicknamed Limestone Jesus by the shelter porn merchants at the real estate blog Curbed, it represents the resurrection and the life of our era’s aristocracy of wealth.

  This is the story of the property-lust-making building and the cohort that calls it their tower of power. They are the newest of new money, the men and women of today’s societal elite who are defining what it means to be rich. To some, they are the latest cyclical iteration of Society; to others, the latest nail in Society’s coffin. No longer dignified, unified, wellborn, or even well-bred, they enjoy unheard-of incomes and the most extraordinary standard of living in history because they control the engines of today’s unprecedented wealth: finance, technology, information, and entertainment. Today’s cutting-edge rich profit from ideas more than products.

  Sometimes they are people you barely know about. You don’t see them in public or read about them in the press. But whether they are figures of wide, popular renown such as Denzel Washington, NASCAR’s Jeff Gordon, and Sting—all 15CPW apartment owners—or the many lesser-known yet arguably more influential financiers, the residents of 15CPW are our latter-day priesthood of power, even as we worry what effect their use and abuse of that power is having on our world. For this moment, this house of outrageous fortune, 15CPW, is the high altar of their secular religion.

  Fifteen’s public story began in fall 2005, when Daniel Loeb, who once described himself and his hedge-fund cronies to an old-school moneyman as “a bunch of scrappy guys . . . who enjoy outwitting pompous asses like yourself,” set an earlier Manhattan real estate record by dropping $45 million for his penthouse in what was then still a big hole in the ground. Approaching the apogee of the first financial bubble of the twenty-first century, Loeb’s purchase of a still-imaginary home was an apt symbol of a new-money culture unrestrained by any sense of limits, propriety, or recognizable reality, its wealth outweighing its lack of elegance and subtlety.

  As it rose out of that hole over the next year and a half, Fifteen—it’s spelled out in the building’s custom-designed logo—was something completely different from the buildings before it. Like its logo, the neoclassical über-condo was a throwback to the golden age of Manhattan apartment houses, which are called prewars though they were mostly built between 1912 and 1930, as well as a gauntlet before the remains of what,
for half a century, had passed as American Society. The success of 15CPW consecrated a new, somewhat suspect Global Super-Society. Like them or not, these are individuals who have only one thing in common, staggering net worth, and have become the world’s new ruling class. Typically in their first generation of wealth, they’ve made huge money in new ways. They organize their lives differently, have different standards, spend differently, and give back differently.

  Just as apartments were offered for sale in September 2005, a Citigroup global-equity strategist, Ajay Kapur, coined the term plutonomy to describe nations and geopolitical blocs “where economic growth is powered by and largely consumed by the wealthy few.” Sixteenth-century Spain, seventeenth-century Holland, the Gilded Age, and the Roaring Twenties were prior plutonomies driven by huge, interconnected economic, political, and commercial changes: disruptive technologies, financial innovation, capitalist-friendly governments operating under the rule of law, and “an international dimension” of ambitious immigrants or overseas adventurers. “Often these wealth waves involve great complexity, exploited best by the rich and educated of the time,” Kapur wrote.

  Kapur’s plutonomists are defined by wealth, not nationality. But in the current day, the newest of the new rich come from emerging markets such as the so-called BRIC nations of Brazil, Russia, India, and China. All are well represented at 15CPW, where apartment owners include the operator of Moscow’s Domodedovo International Airport, the biggest developer in Beijing, and an associate of the Indian industrialist known as the richest man in Britain. Central and South Americans at 15CPW run industries ranging from banking to airports to natural cosmetics. Israel is particularly well represented, starting with the country’s richest brothers, Idan and Eyal Ofer, who come from the international shipping business, as do fellow owners from Greece, Norway, China, and Monaco.