On Feb. 20, the duplex co-op at 950 Fifth Avenue owned by former Tyco International chief executive L. Dennis Kozlowski had $3 million slashed off its stratospheric $28 million asking price, as the lavish residence failed to interest potential buyers since it hit the market in November, brokers close to the apartment said.
Mr. Kozlowski and Mark Swartz, Tyco’s former chief financial officer, are now standing trial at the State Supreme Court in Manhattan for allegedly looting the $36 billion manufacturing conglomerate of $170 million, plus illegally profiting from $430 million in stock sales after artificially inflating the company’s value; and while the prosecutors attempt to show how the two indicted executives found profligate ways to spend Tyco shareholders’ money, earning it back through the sale of Mr. Kozlowski’s executive residence is proving a harder task.
In March 2000, according to Mr. Kozlowski’s attorney, Stephen Kaufman, Tyco purchased the apartment at 950 Fifth Avenue, which was owned by financier Stephen Schwarzman (who, in turn, paid a then-record $37 million for his triplex penthouse at 740 Park Avenue). Mr. Kaufman said the apartment is an asset of Tyco, and because the board at 950 Fifth Avenue didn’t allow corporate ownership, the shares in the co-op were listed in Mr. Kozlowski’s name. His high-profile neighbors in the limestone co-op, on Fifth Avenue and 76th Street, include Daily News owner and real-estate mogul Mort Zuckerman and Jonathan Tisch, chairman of NYC and Company and chief executive of Loews Hotels.
The 4,500-square-foot apartment is represented by a quartet of brokers from Brown Harris Stevens, including Elizabeth Sample, Jean Meisel, Amy Katcher and Brenda Powers.
Ms. Sample declined to comment on the recent price drop of more than 10 percent to $24.99 million, and her partners didn’t return calls for comment.
“They’re ludicrous for asking that kind of price,” sniped one broker from a competing brokerage who is familiar with the property. “It’s like two floors of a townhouse. Anyone with a large art collection can’t get their paintings in there. And you have to walk through the dining room to get to the kitchen, so I wouldn’t say it has an ideal layout, either. It’s more like a $15 million apartment.”
Mr. Kaufman said his client retains no rights to the apartment, and proceeds from any pending sale would go to Tyco.
“The apartment is an asset of Tyco. It always was, and is, an asset of Tyco. And it is carried on the books as such, as an asset of the company,” he said. “The furnishings will go to Tyco, and some, but not all, of the artwork. The personal artwork belongs to him.”
A spokeswoman for Tyco declined to comment on the ownership or pending sale of the 11-room duplex.
“Since there is ongoing litigation, at this point we cannot confirm details concerning the apartment’s ownership,” Tyco spokeswoman Gwen Fisher said.
With the reduced asking price, Tyco is hoping to unload one of the most envied-and detested-baubles of executive greed to come out of the latest round of corporate scandals, including Martha Stewart’s ImClone stock sale and the trial of John Rigas and his two sons, who are charged with illegally acquiring $2.3 billion in stock from their company, Adelphia Communications, which began on March 1. The Tyco apartment made headlines last year when the public learned of its ornate decorations, including the infamous $6,000 shower curtain and the $15,000 umbrella stand that Mr. Kozlowski purchased, along with his fine-art collection, which includes a $3.95 million Monet and a $4.7 million Renoir.
On Feb. 25, Mr. Swartz, 43, told the jury in State Supreme Court in Manhattan that his boss, Mr. Kozlowski, 57, had the board of directors’ permission to spend $200 million annually on corporate acquisitions.
“He [Mr. Kozlowski] did have authority to make acquisitions of businesses and capital expenditures,” Mr. Swartz said on the witness stand.
These “acquisitions” by Mr. Kozlowski included the $18 million duplex at 950 Fifth Avenue, which was finished with a $13 million decorating job; homes in Boca Raton, Fla.; jewelry from Harry Winston and Tiffany’s; and, most infamously, a $1 million birthday party in Sardinia thrown for his wife, which featured a private concert by Jimmy Buffett (who came for just $250,000) and an intricate ice sculpture of Michelangelo’s David that seemed to urinate Stolichnaya vodka while toga-clad guests danced around.
Mr. Kozlowski’s finance executive was no penny-pincher himself. Mr. Swartz, who left Tyco with a $50 million severance package in September 2003, is also being tried on charges that he used the Bermuda- and New Hampshire–based company as his personal piggy bank.
In May 2000, he reportedly used Tyco funds to purchase a 5,188-square-foot duplex at 30 East 85th Street for $7.7 million, and then promptly listed the place for $12.5 million in September of that year. In November 2003, he sold the 28th-floor duplex with four exposures for $15.9 million to former Sony Music chief Tommy Mottola (Mr. Mottola’s four-floor condo at 9 East 64th Street traded for close to $20 million in December 2003)-but because the Manhattan district attorney froze Mr. Swartz’s assets, he hasn’t been able to gain access to the money from the sale. Testimony from the trial also showed that Tyco paid private-school tuition for Mr. Swartz’s three children.
But while the price drop at 950 Fifth Avenue may help generate interest in the 11th-floor duplex among well-heeled buyers, Mr. Kozlowski has more to worry about than any real-estate troubles. If convicted on the 35 counts of grand larceny, enterprise corruption, violations of state business law and falsification of business records, Mr. Kozlowski and Mr. Swartz face up to 30 years in prison.
RECENT TRANSACTIONS IN THE REAL ESTATE MARKET
Upper East Side
1 55 East 76th Street
Two-bedroom, two-bathroom co-op.
Asking: $699,000. Selling: $699,000.
Maintenance: $1,079; 58 percent tax-deductible.
Time on the market: four months.
QUEEN ANNE’S PLACE For the past 30 years, a gentleman occupied this two-bedroom co-op in the Queen Anne building between Lexington and Third avenues, where he amassed a collection of fine-art books. In fact, he was one of the first residents to move into the building, which dates to 1958. But last year, well over the age of 90, he passed away, and his estate had to sell off his longtime Upper East Side home (though his art-book collection was generously donated to the New York Public Library). When the news broke that the apartment was on the market, a cascade of eager young buyers washed over the place, and a doctor and his wife snatched the apartment just as the real-estate market was heating up at the end of last year. “They were absolutely ready to buy; the timing was just as the market was beginning to turn,” said broker Anne Snee of the Corcoran Group, who had an exclusive on the place. Ms. Snee noted that a similar apartment in the building recently listed for $200,000 more, making the family’s purchase a steal by Manhattan’s exuberant real-estate standards. The clan (they have two children) plan a renovation to the 1,300-square-foot spread and will now enjoy the apartment’s fine details, which include hardwood floors, a windowed kitchen, walk-in closets and northern exposures. “Their children are young now, but the many private schools in the neighborhood are a plus,” Ms. Snee said.
93 Mercer Street
Three-bedroom, two-bathroom co-op.
Asking: $1.5 million. Selling: $1.295 million.
Maintenance: $606; 45 percent tax-deductible.
Time on the market: seven weeks.
ARRANGERS ON A TRAIN The sellers of this Soho loft, a cancer doctor and his nutritionist wife, met a broker by chance on a train and began chatting about their plans to move to the East Village. The broker promptly put them in touch with Mary Anne Fusco, an associate broker with Coldwell Banker Hunt Kennedy, who sold their spacious loft, between Broome and Spring streets. “My colleague met the sellers on the train and got the listing,” Ms. Fusco said. “The seller was interested in purchasing a space with a garden that she found in the East Village. She had a miniature Schnauzer and wanted a ground-floor apartment with a garden.” While the couple found an unlikely slice of bucolic bliss in the East Village, the buyers, a finance executive and her photographer husband, scored their prime 2,200-square-foot loft with Soho staples like a stainless-steel kitchen and private elevator that opens onto the second-floor apartment. Mark Schoenfeld at the Corcoran Group represented the buyers.
124 Hudson Street
Four-bedroom, three-and-a-half-bathroom condo.
Asking: $3.25 million.
Selling: $3.2 million.
Time on the market: three weeks.
EVERYTHING OLD IS NEW AGAIN While real-estate developers lament what they perceive as the city’s draconian enforcement of building specifications in landmarked districts, some enterprising developers have built new properties, including this three-year-old loft development in Tribeca, that cleverly mirror their more historic counterparts while offering 21st-century amenities. “This is an interesting building. It was the first building built in Tribeca that subscribes to landmark specifications,” said Leonard Steinberg of Douglas Elliman, who sold this 3,170-square-foot loft along with fellow Elliman broker Hervé Senequier. “The lobby has a fireplace and a lounge area. It’s like walking into an Ian Schrager hotel. This building is about the whole environment, not just the apartment.” But the apartment’s stature is no less august. And it must have been hard for the sellers, a couple with two children, to relocate their family to Europe when the Wall Street husband got transferred. The buyers, a manufacturing entrepreneur and his wife, were relocating from New Jersey. But unlike the sellers, they weren’t leaving their former abodes behind; they just added the Tribeca loft to their portfolio of homes, which includes a summer spread in the Hamptons as well as their Garden State refuge. Judith Karnas of Douglas Elliman represented the buyers. “They wanted to be in a cool area, especially Tribeca. The J.F.K. Jr. bubble was very attractive to them,” Mr. Steinberg said of this sixth-floor loft, which has a stainless steel kitchen, security system and open northern exposures with views of the Empire State Building.
Follow Gabriel Sherman via RSS.