Pete Peterson, the co-founder and senior chairman of the Blackstone Group, and the chairman emeritus of the massively powerful Council on Foreign Relations, has bought that organization’s apartment at the huge Imperial House co-op on East 69th Street. According to city records, he paid the council $3,040,000.

Why would Mr. Peterson, who bought David Geffen’s $37.5 million duplex on Fifth Avenue last year, pick up a petite co-op? “Let me give you the background,” Mr. Peterson said after returning The Observer’s phone call, much to The Observer’s surprise. He explained that Leslie Gelb, the council’s so-called Board Senior Fellow and its president from 1993 to 2003, plus a Pulitzer winner for his work on The Times’ “star wars” series, was given the Imperial co-op when he became the foreign policy group’s leader in 1993.

“Part of the original deal with Les was that the council owned the apartment and rented it to him, and a couple of things came up that changed the situation,” he said. “A board member raised the question as to whether it would be proper for the council to continue to own the property given the fact that he had not been president for five years.”

Mr. Peterson, who is worth $2.5 billion, according to the Forbes 400, handled the prickly situation like a (wealthy) maestro. “I said, ‘Look, I don’t want any questions to be raised about this; why don’t I just buy the apartment?’”

Mr. Gelb and his family will continue to live in the co-op. “It’s perfect for them,” Mr. Peterson said. “It’s not a large apartment—has kind of a small dinning room and a small living room, and I don’t know whether there are two bedrooms or three but they’re rather small. … What I really like is that they like it.”

Meanwhile, Mr. Peterson will have his new 12-room duplex on Fifth, which he said isn’t massive either, at least square footage wise. “The apartment itself is not large. My wife did not want a large apartment, and neither did I. I basically wanted a terrace.”

Does Mr. Peterson own any other real estate for friends or colleagues? “I don’t think I own anything else,” he said. He paused. “I know I don’t. This was just done as recognition of the tremendous job Les did, and the job he’s doing.”

mabelson@observer.com