The Real Deal: How Steve Jones closed the biggest single office building sale in history
By Robyn O. Greene
In early 2005, The Metropolitan Life Insurance Company went to Stephen G. Jones '71 of Cushman & Wakefield and offered him every real estate broker's dream--the opportunity to manage the sale of its most prized possession: the MetLife Building at 200 Park Avenue. There was just one catch…the deal had to be closed in eleven-and-a-half weeks.
Soaring 58 stories above Grand Central Terminal, the MetLife Building at 200 Park Avenue is one of New York City's most recognized icons. At the time of its completion in 1963, it was the largest commercial office building in the world, boasting 2.8 million square feet of office space. Then owned by Pan American World Airways, its curved façade was designed to look like the wing of an airplane, and its roof featured a helipad with seven-minute helicopter service to JFK International Airport.
According to Jones, the building's location--at the pulse of New York City's transportation, commercial, retail, and residential heart--is arguably its most valuable asset. "The 200 Park Avenue address is really the benchmark location," Jones said. "All the leasing brochures for buildings in mid-town measure themselves by how many minutes they are from Grand Central Station, and the MetLife Building sits on top of Grand Central Terminal."
Adding significant value is the fact that this type of commercial property rarely becomes available. Since opening its doors 43 years ago, the building has only sold once, in 1981, to Metropolitan Life, for $400 million. "It's what we refer to in the real estate business as a 'trophy'," Jones said. There's probably only eight or ten trophies in all of New York City--they get the highest rents; they're the most famous, the most photographed; they have the best addresses--and they just don't become available very often. In today's real estate investment environment, you have huge financial liquidity and very scarce product. And this property is the scarcest of the scarce."
Plan your work; work your plan
No tenderfoot when it comes to large transactions (he closed a $2 million portfolio sale for MetLife in 2002), Jones knew full well what a sale of this magnitude would entail, especially given the contracted time period within which it needed to be executed. Still, Jones was undaunted. "Basically I said we could deliver on time because I was willing to take responsibility," he said. Jones went back to his team and devised a highly ambitious schedule. "In order to close by May 4 we basically planned backwards. We drew up a weekly plan and then broke it down into a daily plan, whereby certain things had to be accomplished on this day, by the end of the day. And we didn't go home from work that night until our goals for that day were executed."
Capital Markets Group Director Helen Hwang was one of a team of eight from Cushman & Wakefield who worked on the MetLife deal. According to Hwang, Jones was "not afraid to get his hands dirty" while overseeing the day-to-day workflow. "He communicated with us every day to make sure that the hourly and daily goals were being met," Hwang said. "Having somebody at that high a level talking with clients and to the production people every day, and managing the communication and the workflow--that’s really critical. It's something that's often promised but never delivered--Steve Jones delivered that every day. He really did everything that he promised MetLife."
A man of integrity
MetLife's confidence in Jones's ability to deliver was a primary reason they turned to him to handle the sale. Confidentiality was another. MetLife knew from past experience they could trust Jones implicitly. "He is a man of integrity. And trust and loyalty, and I really mean that," Hwang went on. "In the real estate business, especially, nothing is a secret. When the word gets out to one person, it's out the next day, and everybody knows, and that's just the nature of the business. But with Steve Jones, it's a completely different ballgame. When you say confidential, it's confidential. And when MetLife spoke to Steve Jones and said to keep it confidential, they trusted that it was going to be kept confidential. So basically we got the assignment for the MetLife building without going through a competition, which is unheard of for a building that size."
Brian Fox, Chief Marketing Officer for MetLife, was part of a team responsible for selecting Jones. "We could have gone to a lot of people," Fox explained in a recent phone interview. "Working with Steve is a pleasure for many reasons, but one reason is that he is totally client-driven. He is so focused on us that he becomes an extension of us, and that, to me, is the highest compliment, because it doesn’t feel like you're retaining an outsider; it's like he's part of MetLife. He has woven himself into our culture, and so we're basically working together as a team. He really stepped up, on short notice, in a very short time frame, and he just knocked it out of the park."
According to Fox, many people mistakenly presume that an asset of this caliber is easy to sell. "There are people around the world who every year say, 'If you ever sell this building, I want to buy it,'" Fox said. "That all sounds nice, until you really get down to selling. It requires somebody who is very seasoned to sift through potential buyers and decide who is appropriate. Steve would advise us about which offers were really strong, bona fide, substantial and defensible, and which ones probably weren't going to hold muster. The fact that we reached out to Steve--who's not a native New Yorker--I think speaks volumes about him and his competency."
Hard earned success
Jones's reputation was not earned overnight. In the business for 35 years, he has worked with the folks from MetLife for 15 of those, helping them sell over 100 commercial properties during that time. "Steve Jones basically brought Cushman & Wakefield this sale opportunity through his relationship with MetLife," Hwang said. "MetLife has tremendous respect for him, his work, and his word."
"A lot of it is history and connections, and success," Jones concurred. "You don't get a long-term relationship in a short term. My relationship with MetLife is something I'm very proud of, and it manifests in these kinds of selections, so I'm grateful to them. And when you have that kind of loyalty you'd just kill for them, kill for them! And they know it."
No asking price
Although MetLife had a ballpark value in mind before offering the building, it was listed without an asking price. "The idea of not putting an asking price on it is to make sure the market prices it--and not to undershoot," Jones explained. Bids were solicited through a strictly confidential offering process conducted within a tightly controlled negotiating environment. A grueling method, it is very favorable to the seller, puts tremendous pressure on the buyers, and requires intense scrutiny on the part of the intermediary, in this case, Jones.
The property was initially offered by mail to a select group of about 150 pre-qualified parties. Of those, the fifty or so who expressed interest were then required to sign a confidentiality agreement, which allowed them access to Cushman & Wakefield's secure access website. "Everything was managed online--the whole bid process, the due diligence information, the leases, the property condition reports, the property descriptions--all of that was on our secured access website," Jones said. In this way, C&W was able to carefully monitor potential buyer activity, narrowing the field to about a dozen serious bidders. "We eventually narrowed it down to four or five finalists, but we felt we weren’t quite there yet," Jones went on. As the bidding progressed from the first to the second round, the website became increasingly secure, so only those who were still in the hunt had access to what was going on. According to Jones, it took three complete bidding iterations to get the price up to where he was sure they were getting the last dollar. "In the end it was a very close race between three parties," Jones said. "In fact, it was kind of a dogfight." When the dust finally settled, Tishman Speyer Properties emerged victorious--to the tune of $1.72 billion--adding the MetLife Building to an impressive trophy property portfolio which includes the Chrysler Building, the New York Times Building and Rockefeller Center.
Record breaking pricetag
To say MetLife was pleased with the outcome would be a gross understatement. "One of the biggest deals in history, closed in record time, for a record price," Fox summarized. "It beat our sales expectations by a sizable amount."
Hwang described the transaction as nearly perfect from start to finish. "I really feel that this was, from so many different angles--from the relationship perspective, from integrity and accuracy, to efficiency, timeline, and pricing, the image and reputation of MetLife, and the way we presented everything to the market--completely professional and almost flawless."
One might assume that the unprecedented success of the MetLife deal would go straight to Jones's head, but according to Fox, that is never the case with Steve. "He possesses this self-effacing approach that ingratiates him to others," Fox said. "It just goes to show that somebody of his caliber and his reputation and his potency in the real estate market is still possessed of a really admirable humility, which I think is a hallmark of Steve Jones. In this industry, very few brokers are like that. In a room full of loud, flamboyant egos, Steve stands out because he's sort of quietly earnest, and he doesn't need to blow his own horn. He's the real deal."
Reflecting on his pivotal role in the landmark sale, Jones waxed philosophical. "Years ago all we did was ask MetLife to give us a chance, and they did. When someone gives you a chance, you've got to honor it, and do your absolute best to do the job right."