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NY Times, Jan. 25, 2019
The $238 Million Penthouse, and the Hedge Fund Billionaire Who May
Rarely Live There
By Nikita Stewart and David Gelles
In Manhattan, where multimillion-dollar real estate sales are downright
routine, a hedge fund tycoon has managed to set a new standard for
conspicuous consumption by paying a fortune for an unfinished piece of
property in the sky.
The billionaire, Kenneth C. Griffin, spent $238 million for a penthouse
at 220 Central Park South that is still under construction, making it
the most expensive residential sale in United States history.
What’s more, in a New York tale that is not entirely uncommon, the
79-story building where Mr. Griffin’s penthouse will soon exist was
built after the landlord evicted dozens of middle class tenants from
their rent-stabilized apartments in what was a fairly modest,
white-brick building with 20 floors.
With a net worth estimated at $10 billion, Mr. Griffin, founder and
chief executive of the global investment firm Citadel, is among the
richest people in the world. And in recent years, Mr. Griffin has become
increasingly willing to flaunt his wealth, spending lavishly on modern
art, philanthropy and trophy real estate, even as income inequality is
roiling the national political debate.
Twice divorced, Mr. Griffin, 50, has three children and is primarily
based in Chicago, where Citadel is headquartered. Through a spokesman,
Mr. Griffin declined to comment for this story.
He is a globe-trotting home buyer, leaving a trail of his pricey
purchases, from a $60 million penthouse in Miami to a $122 million
mansion in London.
All told, according to a person familiar with Mr. Griffin’s spending, he
has spent approximately $700 million on real estate and nearly as much
on art.
He began collecting art more than a decade ago, acquiring works by
Cézanne and Monet. In 2006, he spent $80 million on a Jasper Johns
painting that he acquired from David Geffen. And in 2016, Mr. Griffin
paid $500 million to acquire two paintings — a Jackson Pollock and a
Willem de Kooning — this time from Mr. Geffen’s foundation, in what was
one of the largest-ever private art deals.
Mr. Griffin has declined to join other billionaires in a pact to donate
the majority of their wealth to charity. Created by Bill and Melinda
Gates and Warren Buffett in 2010, the Giving Pledge has more than 150
signees.
But Mr. Griffin has given away about $700 million, according to the
person familiar with his finances.
He is on the board of the Whitney Museum of American Art, which named
the lobby of its new building after him. He donated $40 million to the
Museum of Modern Art. Mr. Griffin and his ex-wife donated $19 million to
the Art Institute of Chicago. And at the Field Museum of Natural History
in Chicago, Mr. Griffin donated $16.5 million to fund the purchase of
the largest dinosaur ever discovered.
Mr. Griffin has also donated huge sums to educational institutions.
In 2014 he gave $150 million to Harvard University, the largest gift in
the school’s history. In 2017 Mr. Griffin’s charity said it would donate
$125 million to the University of Chicago, which would rename its
influential department of economics after him. More recently, Mr.
Griffin has turned his acquisitive eye toward real estate.
Fellow financiers said Mr. Griffin should be applauded for his
philanthropy, rather than vilified for his spending. John W. Rogers Jr.,
the chief executive of Ariel Investments, who serves on the board of the
University of Chicago with Mr. Griffin (as well as on the board of The
New York Times Company), declined to comment on his real estate
spending. “The key thing is that he’s decided to be generous now,” Mr.
Rogers said. “Ken is a role model for the next generation of hedge fund
managers.”
Mr. Griffin has cited his maternal grandparents as inspiration for his
philanthropy. They ran a fuel oil business in Illinois, and when some
customers could not pay their bills during the winter, his grandparents
would extend them credit.
The Harvard graduate made his fortune through finance. As a sophomore in
1987, Mr. Griffin began trading out of his dorm room using a fax
machine, an early personal computer and the phone. Just three years
later, he founded Citadel in Chicago.
The firm grew rapidly, and today Citadel, which is privately held,
manages some $28 billion, trading stocks, fixed income, commodities and
more.
And Mr. Griffin has proved adept at making a profit even during market
turbulence. Last year, Citadel’s flagship fund was up 9.1 percent,
despite a difficult end of the year for most markets. In the hedge fund
industry, where star managers are rewarded with outsize returns, such
performance is extremely lucrative. In 2017 alone, Mr. Griffin earned
some $1.4 billion, more than any other hedge fund manager, according to
Institutional Investor’s Alpha magazine.
Wall Street’s compensations have made New York look like a Monopoly
board come to life; there are so many ultraluxury residential buildings
along the southern edge of Central Park that it has been nicknamed
“Billionaire’s Row.” That Mr. Griffin is spending so freely at a moment
when populist movements are gaining momentum around the globe struck
some critics as especially tone deaf.
“The plutocrats continue brazenly flaunting the excesses that have
enraged much of humanity,” said Anand Giridharadas, author of “Winners
Take All,” and a critic of wealthy philanthropists. “They’re displaying
very little awareness of the moment that we are in.”
On Thursday, economic advisers to Senator Elizabeth Warren, who is
running for president, said that she would propose introducing a new
“wealth tax” on the richest Americans.
Mayor Bill de Blasio has long pushed for a tax on millionaires earning
more than a certain amount of money, but legislators in Albany have not
supported that plan. On Thursday, he called for an expansion of the
mansion tax. Currently, buyers of homes that sell for $1 million or more
are required to pay a 1 percent tax. The tax, the mayor said, needs to
be adjusted to “explicitly” target “high-value purchases” to generate
extra revenue that could be used to create affordable housing.
In addition to his new penthouse in New York City, Mr. Griffin owns many
other properties, including a $60 million penthouse at the Faena House
in Miami.
Mr. de Blasio, who has promoted himself as a national voice against
income inequality, has struggled to address the issue, which is acute in
a city with a housing crisis, poverty and extreme wealth. About 79,000
people, most trapped by out-of-reach rents and low wages, are homeless,
a record number, and the most of any city in the United States,
according to the Department of Housing and Urban Development.
The city’s dysfunctional housing authority struggles to maintain a
complex of buildings that is so aging that repairs often take months or
years to be completed. Even so, there are hundreds of thousands of
people on the waiting list to get an authority apartment.
But on Thursday the mayor mostly criticized Mr. Trump’s tax cuts, which
heavily favored corporations and the wealthy.
“You look at these massive purchases. Does anyone think that these rich
individuals can’t afford more in taxes? They have been getting tax
break, after tax break, after tax break. Before the Trump tax bill they
were already experiencing unprecedented wealth and had a whole system of
tax policy that was favoring them in every conceivable way,” Mr. de
Blasio said. “The Trump tax cuts put that on steroids.”
Mr. Griffin questioned the Trump tax cuts in 2017, suggesting that they
were more aggressive than what was needed to stimulate the economy. Mr.
Griffin — who in 2012 said that the wealthy have “insufficient
influence” in politics — has given to both Democrats and Republicans
over the years, though his fiscal policies appear more closely aligned
with those usually promoted by conservative lawmakers. He has called for
fewer regulations and lower taxes, arguing that such moves would help
the economy.
He was well-known in wealthy, philanthropic and financial communities.
But Mr. Griffin is now known more widely as the man who bought the
penthouse for the outrageous price.
There was nothing ostentatious about the old building, the one that was
mostly demolished by 2013, save for the sought-after address and the
spectacular leafy views of Central Park. It first opened in 1954.
A state law gives landlords the right to remove tenants from
rent-stabilized apartments if they plan to demolish a building and erect
a new one, showing proof of financing to do so. Residents received their
first eviction notices in 2006. A group of tenants, calling themselves
the “Save Our Homes” Association, held on for as long as possible, suing
to stay, but eventually settled for an undisclosed amount.
Connie Collins, a former TV journalist who worked at WNBC, was one of
the holdouts. She recalled being able to see the July 4 fireworks
displays from her 12th-floor terrace. “I just hope one of his terraces
doesn’t get burnt from a spark because it’s so far up,” said Ms.
Collins, 71. She said her monthly rent for a two-bedroom apartment was a
little over $2,000 when she moved in 2008. “It was a great time and an
affordable time,” she said.
Cathy Marshall was also one of the tenants in the old building who
stayed as long as possible; she lived there for 36 years. She was in a
rear apartment on the eighth floor, so she missed out on the scenic
views, but she enjoyed being on the route of the Macy’s Thanksgiving Day
Parade and the New York City Marathon. “People on your floor, if you
were sick, they went down and got you soup,” she said.
“I was very happy there. But change happens.”
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