Whoa, oh, here she comes. (Elevator View)

Someday soon? (ACdP)

Our pal Elevator View (one of the best photo tweeters/bloggers in town) shot us this photo of new construction fencing going up at 400 Park Avenue South, suggesting that Christian de Portzamparc's long-delayed crystalline apartment building will finally rise there starting this year.

Almost a decade in the works, the project was left for dead in the doldrums of the recession until Toll Brothers and Sam Zell decided to team up this spring to take on the project. According to public records, building permits were approved between April and June, so the 42-story tower, with 363 units, is ready to rise. Neither of the developers were immediately reachable.

We spotted only one penthouse, up on the 40th floor, according to the Schedule A, but there was this one fun tidbit down in the basement: FITNESS CENTER, LAP POOL, YOGA ROOM, KIDS ROOM, LOUNG/CLUB ROOM, THEATRE, GOLF ROOM.

This not only looks like but really is the Fortress of Solitude—it has everything!

Gray at play. (Fred Harper)

In February 2007, Sam Zell told Jonathan Gray to buy a motorcycle.

Mr. Gray, head of the real estate division at private equity powerhouse Blackstone Group, had just closed on the purchase of Mr. Zell’s Equity Office Properties. Blackstone had announced its bid the previous November, just 13 months after Mr. Gray had stepped into his new role. He had spent his entire career at the firm, so his ascent was not so surprising, and had managed 10 deals worth a combined $32 billion so far, so the territory was not exactly new. All the same, Mr. Gray was 37 years old at the time, and he had embarked on the largest leveraged buyout in history.

On Jan. 18, less than a month before the deal was to close, Vornado Realty and two backers launched an unsolicited bid. It was $52 a share to Blackstone’s $48.50. Steve Roth, the bullish—in outlook, demeanor and build—chairman of the massive New York-based investment trust had arrived in the bookish Mr. Gray’s china shop, and it was now a scramble to fend him off.

After three furious weeks of research, negotiations and counteroffers, Mr. Gray prevailed. His offer of $55.50 was 50 cents lower than Mr. Roth’s, but it was all cash, something that the Equity Office board preferred. At $39 billion, the takeover of Equity Office crushed the previous record, the $25 billion buyout of RJR Nabisco by rival Kohlberg Kravis & Roberts 18 years earlier.

Steve Roth 'Still Remorseful' Over Losing Equity Office

Mr. Gray probably could have used some time out on the open road to relax, even if things were about to get a whole lot busier—he had to sell off at least half of Equity Office’s 563 disparate properties to pay down most of the debt taken out on the deal, lest it consume him. Yet Mr. Zell was not proposing that Mr. Gray start a new hobby. The motorcycle was meant to be a media totem.

“You have to take up motorcycles or something,” Mr. Zell told him, according to a person present. “I ride motorcycles, so they start every story with me riding a motorcycle. You need to find a hook.”

Jon Gray still does not own a motorcycle. He does not race yachts or jump out of airplanes. He is not a force in the art world, nor does he want to run for mayor. He would never be caught dead on reality TV, the World Poker Tour or even CNBC for that matter. His name rarely appears in print, and when it does, it is never attached to a quote. True to form, Mr. Gray declined to comment for this article.

Gray's Anatomy: Go Inside Blackstone's Booming Building Empire

“One of his qualities is certainly not an excess of pride,” Blackstone co-founder Peter Peterson said in a telephone interview last week. “You’d have to be a psychotherapist, I guess, to understand why he doesn’t need to grandstand at all, given his remarkable track record, but he doesn’t.

Somehow, mostly by choice and his own careful actions, Mr. Gray has managed to remain an anonymous anomaly in two of the most ego-driven industries in New York, real estate and finance. It may very well be the secret to his almost unparalleled success.

“We distinguish ourselves, as an investment organization, in the downturns,” Blackstone president Hamilton James said during an interview in Blackstone’s sleek 345 Park Avenue headquarters Monday afternoon. Thunder clouds almost obscured the views of Central Park visible through the 43rd-floor windows. “In the upturns, we do about as good as everyone else, but we tend to way outperform the downturns. Jon Gray is a big part of that.”

The only reason Blackstone was willing to tender a higher bid than Vornado was because the firm was able to begin negotiating side deals for many of the assets it was buying before the bigger deal even closed. It sold eight marquee Manhattan office towers to Harry Macklowe for $7 billion on the same day the Equity Office deal was signed, thereby forgoing $212 million in property taxes.

The Macklowe deal underscores Mr. Gray’s eagerness, even anxiety, about selling off many of the assets he acquires. In all, Blackstone would divest itself of more than $28 billion in Equity Office holdings between February and April, selling them to some of the biggest names in the industry, such as Tishman Speyer, Aby Rosen, Morgan Stanley and Boston’s Beacon Capital. Not only did the maneuver essentially give the firm the assets it wanted at a steep discount, but it also saved Blackstone from the kind of catastrophic overleverage that beset Mr. Macklowe, Morgan Stanley and so many others.

“They’re smart, they move quickly, and when they say they’re going to do something, they do it,” said Beacon CEO Alan Leventhal.

This is not to say Blackstone would stop doing deals during this time—it purchased Hilton for a staggering $26 billion in July 2007, besting the old buyout record yet again, and this time without any competition. Already sensing the impending doom, that would be Mr. Gray’s last deal until the middle of 2009.

With Equity Office and Hilton secured, Blackstone had plenty of excess capital, which helped the real estate fund weather the downturn as it prepared to take advantage of all the newly distressed assets. Blackstone launched a $1 billion fund in early 2008 to provide mezzanine lending, as the credit markets had begun to freeze up, and the following year, the main fund would begin its buying spree.

Blackstone spent more than $2 billion on a handful of industrial portfolios in the past year, with roughly 45 million square feet at 275 facilities. There was $9.4 billion for 560 U.S. strip malls owned by Australian operator Centro. It took a stake in bankrupt mall behemoth General Growth Properties, which is controlled by Bill Ackman, the hedge fund manager who happens to be a close friend of Mr. Gray’s (they met at their daughters’ preschool). Blackstone took its stake after Mr. Ackman beat out the firm’s own bid with rival mall operator Simon Properties.

And in a sign of just how much better Blackstone has made it through the crash, Mr. Gray oversaw the purchase last October of the bankrupt Extended Stay hotel chain for $3.9 billion. He knew the business well, having bought it for $3.4 billion in 2004, before selling it three years later for $8 billion, one of countless boom-time deals that cratered. Mr. Gray was there to pick up the pieces.

And That's Not It! Mr. Gray Now Wants a Piece of Bank of America

“What’s the old saying about Wayne Gretzky?” said Roy March, the CEO of Eastdil Secured, which has helped Mr. Gray structure deals almost from the start. “He doesn’t skate to where the puck is, he skates to where it will be. He is always five steps ahead.”

"I've been an admirer of his for a long time," Boston Properties boss Mortimer Zuckerman said. "We haven't done as much business I would have liked, but I think he's a very talented guy. He really knows what he's talking about." Mr. Zuckerman declined to discuss the specifics of any almost-deals.

It does not hurt that Mr. Gray now faces almost no competition. Blackstone is essentially the last firm standing in the realm of real estate equity investing. Competitors like Morgan Stanley, Lehman Brothers and Goldman Sachs’s once-vaunted Whitehall Fund have disappeared or been hobbled, and while competitors like KKR and Apollo have launched rival real estate businesses, they are years of experience and billions of dollars behind.

Blackstone has not been without its blemishes. It posted unrealized losses from markdowns in 2008 and made no deals. Still, its long-term strategy is beginning to pay considerable dividends now that the market has begun to recover. Of the $159 billion under management, roughly a fifth is held by the real estate division, but, as of this year, it has accounted for nearly 50 percent of the firm’s earnings.

The sunny Grays. (Patrick McMullan)

Jonathan Gray joined Blackstone in 1992, straight out of Penn, from which he graduated magna cum laude with a degree in English and a diploma from Wharton. A devoted numbers guy with rimless glasses to match, b-school won out over the classics, though Mr. Gray still makes time for the occasional history tome or biography. He had once considered becoming a journalist, and he openly admits to pretty much everyone that the best thing that ever happened to him was in a Romantic poetry class: he met his wife Mindy there. A Philly native, she worked for Edwin Schlossberg, the exhibition designer and Caroline Kennedy’s husband, until the first of the Grays’ four daughters was born in the late 1990s.

Mr. Gray comes from a business background, though not a finance one. His father worked in the family business, a small auto parts manufacturer on Chicago’s West Side. The 1970s were not exactly the best time for such work and eventually the family was forced to sell to a competitor. In Mr. Gray’s office hangs a poster of an old ad from the auto business his brother had blown up and framed. Above the lines of copy extolling the virtues of the company’s parts is a picture of their grandfather next to the company name: Blackstone Manufacturing. That Mr. Gray would come to work for a firm of the same name is sheer coincidence, according to acquaintances. Mr. Gray’s parents divorced when he was growing up, and his mother, another entrepreneur who ran a catering business, married a banker from Chicago Corp.

In Mr. Gray, Mr. Peterson and fellow Blackstone founder Stephen Schwarzman saw a smart, independent kid who could grow under their tutelage. “I’ve been around Wall Street now, it’s hard to believe, since 1973, and I don’t think I have ever seen this particular combination of attributes,” Mr. Peterson said. “I don’t know if you believe in compound probabilities, but when you have three critical qualities, like his talent, and like his team-building, management ability and then his human qualities, and they’re all at the very, very top rank, and they’re all in the same person, you tell me what the probability is of finding someone like that.”

No Wonder Blackstone’s Boss Just Bought a $25 M. Co-op

Mr. Gray spent his first 18 months at Blackstone working on mergers and acquisitions. Around the time he started, the founders, with an eye toward diversifying, began mulling the idea for a real estate fund. Not unlike today, the country was still littered with the wreckage of a real estate recession, driven by the savings and loan crisis and a botched building boom caused by a flood of Japanese investment.

Blackstone turned to John Schreiber, a fellow Chicagoan who had just retired from JMB Realty. As the fund was taking shape, some of the firm’s senior managers suggested Mr. Gray consider joining it, as something new and exciting but altogether incidental. He became the first, and for a time only, junior-level employee. Combining his skills with numbers and analysis with his experience in M&A and the free-reign offered by the new position, he began to cultivate his understanding of real estate. Yet it was under the tutelage of the equally low-profile Mr. Schreiber—Mr. Peterson described him as a godfather, Mr. March as Obi Wan Kenobi—Mr. Gray soon became a force to be reckoned with. “Jon Gray is maybe the best and brightest in his generation, maybe ever,” said Mr. March. “But he also has the benefit of this sage sensei in John Schreiber, which just makes him even better.”

The first real estate fund was launched in 1994 and raised $335 million, a pittance by today’s standards—the firm is currently at work on raising an unprecedented $10 billion for its seventh real estate fund, on top of the $10.9 billion fund it just closed, numbers that are all the more impressive for being raised during the recession.

After almost a decade of smaller deals, a bid for a small hotel chain made Mr. Gray and his colleagues realize they could buy entire publicly traded companies using commercial mortgage backed securities, or C.M.B.S., so long as the companies’ core assets were property. This strategy offered far greater pools of financing than typical leveraged buyouts. This allowed Blackstone to do bigger and bigger deals, the first of which was Extended Stay, the $3.4 billion portfolio of 685 properties.

“That’s where he made his imprint,” said Lonny Henry, a long-time advisor of Gray’s who ran the real estate desk at Bear Stearns and is now a vice chairman at J.P. Morgan. “It was revolutionary, not just evolutionary, in terms of how deals get done, from structure to finance.”

That year, the firm also purchased Prime Hospitality, the five Boca Resorts in Florida and 31,000 apartments in Germany, followed in 2005 by the London NYC Hotel in Manhattan, Wyndam Worldwide and a portfolio of 30 Canadian office buildings. In 2006, showing no bias for different businesses, it purchased the Zurich Senior Living portfolio of 24 retirement communities, 45 health-care facilities in France, LaQuinta resorts, the 199-bed Trianon Palace near Versailles, the 57-hotel MeriStar, England’s Center Parcs resorts, and biggest of all the 61-office Trizec and CarrAmerica, a 285-building office portfolio. The following year, of course, was 2007.

Real estate is typically a buy-and-hold business, while Mr. Gray’s mantra is more in-line with the private equity industry: buy, fix, sell. The gestation for a property is normally three to four years, though he has shown a willingness to wait longer if the profits are not there, which has especially been the case of late.

More than his intelligence, it is his detachment that sets Mr. Gray apart. He has never fallen in love with the buildings buys—he does not have an edifice complex, he does not chase trophies. His focus, even obsession, with returns has helped the firm sell coveted Manhattan office towers to someone like Harry Macklowe, while three years later he is licking his chops over warehouses by the side of the highway, gushing to colleagues about cap rates and falling replacement costs. Mr. Gray emphasizes quality, but not necessarily sex appeal.

“He is driven by pure self-satisfaction,” said Hilton Worldwide CEO Chris Nasetta, whom Mr. Gray has known from real estate deals for years and who he handpicked to run the company. His enjoyment is almost as calculating as the deals themselves. Mr. Grayt certainly does not seek the adulation of the press or even his peers, just the size of his bottom line, the glory of the returns. One friend said he is always pushing himself to do more, that he is never satisfied.

Mr. Nesetta and others also speak highly of Blackstone's involvement in the businesses its buys. Whereas most competitors farm out the management of their properties, Mr. Gray keeps a close watch, which not only informs decisions at the specific holding but also across the firm. Mr. Gray wants to keep an eye on every penny, every decision, to maximize profits, but there is also another return. Information is paramount, and a big part of Blackstone's success comes with being involved in so many different types of deals, in different sectors, different regions, different scales. "It's a big competitive advantage," Mr. March said.

Mr. Gray is fond of saying that his family is his other full-time job, and that between that and his real one, there is little time for much else. “Jon does work a lot, but he loves what he does,” Mr. Henry said. Mr. Gray makes it home every night for dinner and will reschedule meetings for a recital or a soccer game, though he also freely checks his Blackberry and works late into the night at a home office inside his five-bedroom co-op at Park Avenue’s oldest prewar apartment building. To make sure the girls grow up with the old man’s humility, there are the charities, like the Harlem Village Academy, but also two kids to a bedroom, even though there is room for each to have her own. Mr. Gray walks the mile-and-a-half to work every morning, and he prefers a simple Timex Ironman watch to something flashier—it also helps the avid runner keep track of laps.

“He’s a pretty cool, level guy,” said Jonathan Mechanic, the high-powered Fried Frank attorney who has been across the negotiating table from Mr. Gray on a number of occasions. “He’s not a table pounder. You don’t necessarily have to pound the table to get the results you want.”

Mr. Grey’s greatest asset may be his Midwestern mien. Mr. Ackman, who grew up in a real estate family, said his friend stood out in an industry full of characters precisely because he does not stand out. “He’s highly skilled, people like him, and so people trust him, and in a world where you don’t know who you can trust, it’s good to know you can take him at his word or a handshake,” Mr. Ackman said.

“People trust Jon, so they open up more,” Mr. James said. “In making deals, the more insight you have, the more you can influence the process, the better positioned you are to make a deal.” It is the Midwestern version of keeping your friends close but your enemies closer—in so far as Mr. Gray has no enemies. “He’s a closer,” said Mr. Roth, admiringly. “His objective is not to get into a big drama. His objective is to make a big deal and move on.”

Modest or manic, Mr. Gray is said to keep a low profile because he does not see the benefit of raising his, and would simply prefer to be another cog in the Peterson-Schwarzman machine. Which is not to say he is a hermit—friends describe him as animated and gregarious, but above all else, humble—he simply likes to keep things to himself. That way he can still enjoy his four daughters’ extracurriculars and not appear in The Post with his head photoshopped onto various creatures, as has happened to both of Blackstone’s founders. There is also the fact that, Blackstone being what it is, Mr. Gray’s reputation precedes him, and the press plays not role ing furthering his business interests, which are really the only interests he has. It stokes egos and fires competition and little else. “He doesn’t need the press to help him, that’s for damn sure,” Mr. Peterson said.

Try as he might, Mr. Gray may not be able to stay hidden much longer. Mr. James has big plans for his big man, according to multiple sources. “Tony James is going around telling people, ‘My job in life is to convince Jon Gray to take my job,’” as one of them put it.

Mr. James did not recall making that statement, but during the interview, he allowed that “I think he’d be great at it.” So is Mr. Gray the future of the firm? “He is certainly one of the talented individuals of his generation who could do a fantastic job running the firm. Better than me.”

Gray's Anatomy: Go Inside Blackstone's Booming Building Empire

mchaban [at] observer.com | @MC_NYC

His departure closely follows chief executive Randy Michaels's resignation. Michaels has been criticized for fostering a frat-house corporate culture.

Spector, 63, was one of Zell's first hires after he took over the Company in 2007. Spector first worked for Zell at age 25, as a senior accountant, and held senior management positions in several Zell ventures.

A motorcycle enthusiast, Spector was one of Zell's Angels and took part in the group's annual motorcycling trips abroad. The Ticker adds that "Spector spurned suits and ties for a colorful collection of sweaters."

kstoeffel@observer.com :: @kstoeffel

The announcement, made last night during an interview with CNBC, is not exactly a surprise. In the last two months, a series of scandals have led to the departures of chief innovation officer Lee Abrams, CEO Randy Michaels and a much-hated six-legged statue, Bureaucratic Shuffle, that makes for a pretty apt mirror for all this mess. 

"I don't think that I envision that I am going to have any kind of a role going forward and so, as soon as we get it out of bankruptcy, I will wish whoever takes over a lot of good luck and they should enjoy being in the media business more than I did," Zell said on CNBC last night. "When we're done with the bankruptcy process, I will turn it over to whoever the creditors decide they want to run it and wish them a lot of good luck.”

Tribune Co. filed for Chapter 11 in 2008.

nfreeman [at] observer.com | @nfreeman1234

But first, a note about Mr. Zell's attire. He was wearing jeans and a light gray sweater while most of the audience in the Library's underground auditorium were wearing a suit and tie.

On his outfit : "This is the way I go to work everyday. I was planning to wear a sport jacket, but it took an hour and half to get from the airport, so you'll have to put up with me as I am."

On demand in the housing market: "At least in my lifetime, this is the first recession we had where the real estate industry didn't start in oversupply ... Other than some condos, there aren't any empty buildings. We haven't built anything since 2007."

On Barney Frank and the housing bubble: "We had Barney Frank, you know, parading back and forth in Washington. He said 'Let's keep dancing, let's put out more subprime loans.' And then when the shit hit the fan, Barney wasn't there anymore. That kind of lack of responsibility permeates the whole housing market."

On delayed marriages: "I graduated college, and I was married 10 days later. I'm not saying it was a good idea [big laughter from the crowd]. Within a year, 95 percent of everyone I went to college with was married. Today marriage has been delayed seven-nine years ...  Now we've got to to take all those people out of the market, which is what's happened. We're finally realizing that you buy a house when you need a house."

On referring to Ms. Liu as a "journalist": "I could call you worse."

On the Tribune Company: "When you're dealing with a 160-year-old company, you have a lot of rigid scenarios. The history of monopolies being able to adjust is not a long history of success ... I have to question the whole newspaper approach because so much has passed them by while they didn't do anything."

On management changes at the Tribune Company: "I think that, if we had had a normal environment, the answer is it would have worked. The company is efficient today, and has far greater potential than when we bought it in two and a half years ago."

Earlier: Sam Zell? 'He's a Rat!' Union Yells Outside NYPL

zturner@observer.com

The successful developer and not-so-successful media mogul came to the New York Public Library today as part of the Bloomberg Real Estate Briefing, where he just finished giving a talk (more on that later from The Observer's Zeke Turner). Greeting him this morning were not only Patience and Fortitude but also about 100 angry laborers from Local 46--who also have a lot of patience and fortitude to stand out in the rain like that.

They have been harranging Zell for months now over 500 West 23rd Street, a 96-unit apartment building overlooking the High Line. The down-and-out Shaya Boymelgreen had been working on the project, which Zell picked up for a little under $12 million. The plan is to finish it by next year, but that work is being done without union labor. Hence the protests.

This was an interesting one, as the flyers being handed out pointed not only to issues that Zell's Equity Residential had been having--collapsing garages, illegal fees and class action lawsuits--but also his losing battle with the Tribune company. "As members of Metallic Lathers Union Local 46, a 100-year-old NYC construction union, we feel obligated to educate the real estate and business communities about Mr. Zell's track record," the flyer read in part. No mention was made of 500 West 23rd Street.

But something tells The Observer that the protest won't take. On the way inside, one attendee was overheard saying, "The guy comes to New York and this is the shit they give him. Some welcome."

Actually, that sounds about right for a New York hello.

mchaban [at] observer.com | @mc_nyo

Following the ouster of Tribune Co. CEO Randy Michaels — a former shock jock caught in accusations of his company's late-night partying and sexist work environment — three executives have announced their imminent departures, The Chicago Tribune reports. Tribune Interactive President Marc Chase, Senior Vice President and Chief Operating Officer Jeff Kapugi and Executive Vice President Carolyn Gilbert all spent a large chunk of their careers in the radio industry, working closely with Michaels. 

And these departures may just be the beginning. The Tribune story indicates that other employees — many of whom have a history with Clear Channel, like Michaels — will also be heading out. One such outgoing Tribune Co. staffer — Tribune Tower facilities director John Phillips — directly contributed to the public outing of the alleged frat house atmosphere. A scathing column by David Carr in The New York Times the followed may have precipitated some of the turnover. Phillips uploaded to his Facebook account pictures of employees throwing a raucous poker party in Tribune Co. offices, and included in the captions that all the wild raging "pretty much desecrated it with gambling, booze and cigars." 

nfreeman [at] observer.com | @nfreeman1234

The Chicago Reader reported Tuesday that the statue was rolled out of the Tribune Towers earlier this week, and the timing indicates that the two executive removals precipitated this artistic one. The Tribune Company has yet to comment on the aesthetic decision.

This morning, David Carr wrote a post for the Media Decoder blog at The New York Times about Bureaucratic Shuffle and its departure from the scene. Carr says the decision was sent down from the four-person interim board that was instated after CEO Randy Michaels was forced out earlier this month, and that one employee told him "people are pretty happy about it."

nfreeman [at] observer.com | @nfreeman1234

The New York Times reported yesterday that the board of the company would be asking Michaels, a former shock jock chosen by Tribune owner Sam Zell to take the reins of the media conglomerate, to step down. Michaels told the Chicago Tribune — one of the publications under the Tribune Co. umbrella — yesterday that despite the supposed desire of the board he was, at that time, still holding his position at the company. "I work here today and I'm still working," he had said. Sources close to the situation revealed his resignation not a day later. 

Michaels will be replaced by four Tribune Co. executives as the company seeks to revamp its sullied reputation and dire financial situation. The company is still trying to reach an agreement in U.S. Bankruptcy Court in Delaware.

The Tribune story said the ousting "may have been inevitable" after a column by David Carr in The New York Times detailed the fraternity-esque atmosphere, complete with "pervasive sex talk," that existed within the Tribune Co. offices.  

nfreeman [at] observer.com | @nfreeman1234

The news comes soon after chief innovation officer Lee Abrams stepped down from his position amid uproar over a staff memo that contained, within a video on The Onion, supposedly racy content.

The departure marks a particularly turbulent two weeks in the span of time since real estate mogul Sam Zell purchased the company for $8.2 billion. On Oct. 5 the Times ran a ran a column by David Carr that depicted with vivid detail the frat house atmosphere at the Tribune. One salacious tidbit found Michaels offering a waitress at a hotel bar $100 to show himself and two young staffers her breasts — "watch this," he said. The article alleged that the company, once known for its restraint, was now defined by smoke-filled poker nights and "pervasive sex talk."

Michaels had spent time as a shock jock and executive at a series of radio conglomerates before Zell named him CEO upon acquiring Tribune in 2007. It can be said that since then, the economic woes have been on par with those poisoning the workplace environment. When the company declared bankruptcy in 2008, it listed $7.6 billion in assets and $13 billion in debt — the largest bankruptcy of an American media company in history. Since Zell seized the reins, over 4,000 employees have been laid off.

There has not yet been a statement from a Tribune spokesperson on the resignation. 

nfreeman [at] observer.com | @nfreeman1234