A relatively unknown family partnership is buying one of the biggest real estate trophies in Manhattan: Citigroup Center, the slant-roofed, 59-story tower that cuts a distinctive silhouette on the Midtown skyline.

Eric D. Hadar and his father, Richard, bid $725 million for the silver tower at Lexington Avenue and 53rd Street, pre-empting other prospective buyers at the very moment many real estate executives were holding their breath, worried that the economy would slow, ending a spectacular real estate boom.

But if the deal is completed, the Hadars are hoping that the purchase of the 1.65-million-square-foot building will catapult them from obscurity to the top ranks of New York’s real estate families.

The Hadars are expected to sign a contract to buy the office tower this morning from Dai-ichi Life Investment Properties, a Japanese insurance company that has owned a major stake in the building since 1987, said Thomas R. McClayton, managing director of Jones Lang LaSalle, an adviser to Dai-ichi.

”They’re going from being a nobody to a big somebody,” said Peter Riguardi, vice chairman of Colliers ABR, a real estate company. ”There are only so many buildings that have a world-class identity and that building is certainly one of them.”

Eric D. Hadar, 36, formed his real estate company, Allied Partners, in 1993, when he bought a two-story building in the East Village. His father, a partner in the firm, had owned the country’s largest direct- marketing company selling jewelry until 1986, when he sold it for $100 million. In recent years, they have made some short-term real estate loans and bought a string of 24 properties, including the Studio 54 building at 254 West 54th Street, 1 East 57th Street and 285 Lafayette Street in Manhattan.

The Hadars also own a one-third stake in Brown Harris Stevens, which is buying Halstead Property Company, making it the second largest residential real estate broker in the city.

Although the Hadar family has valued its portfolio at more than $500 million, none of it compares with Citigroup Center, which George Twill, president of CSFB Realty, called a ”marquee building.” And the Hadars say they are intent on establishing a family-owned real estate empire like the Resnicks, the Roses, the Dursts and the Rudins.

”For me and Dad, this is a multigenerational asset,” Eric Hadar said in an interview on Monday. ”If you look back at the legendary New York real estate families, they’ve always built their empires by agreeing to pay up. A building like this almost never comes on the market.”

The deal for the tower comes amid a general uneasiness in the New York real estate market, with some prospective bidders for Citigroup Center suggesting that the Hadars paid too much. With the turmoil in the stock market and a slowing economy, many real estate executives are concerned that rents and property values may suddenly drop, after reaching record levels over the last four years.

”There’s a tremendous amount of uncertainty at the moment,” said John D. Lyons, executive managing director of Granite Partners, a real estate investment bank. ”But there’s lots of capital available for deals. Historically, real estate has been a hedge against inflation.”

So far at least, office rents have not fallen, just slowed their relentless march upward. According to Cushman & Wakefield, the average rent for prime space in Midtown jumped $17, to $66.68 in the first nine months of 2000, but ended the year with a modest bump to $67.11.

Mr. Riguardi of Colliers ABR said there was still very little vacant space and new buildings under construction already had tenants, although he expected rents to fall by as much as one-third on the far West Side of Manhattan and in other once-industrial areas that had become fashionable for now struggling e-commerce and technology companies.

The Hadars’ deal for Citigroup Center reflects a shift in the kind of buyers prowling the New York real estate market. In recent years, opportunity funds and real estate trusts that required huge profits bought most of the skyscrapers that were put on the auction block. Now the tide is turning in favor of wealthy families and pension funds willing to accept smaller returns as the property appreciates over a long period of time.

The Crown family of Chicago and Tishman Speyer Properties, for instance, recently bought Rockefeller Center when Goldman Sachs’s Whitehall fund put the landmark complex up for sale. And now the Hadars are buying Citigroup Center.

”This market has always been about prominent families investing in real estate to build their wealth,” said Darcy Stacom of Cushman & Wakefield. ”The 1990’s were an aberration.”

In any event, the sale of Citigroup Center is akin to three-dimensional chess. The building, built in 1978, was a looming monolith cantilevered over St. Peter’s Lutheran Church. In an effort to raise cash a decade later, Citicorp sold Dai-Ichi a two-thirds interest in Citicorp Center and a one-third interest in the bank’s former headquarters at 399 Park Avenue for $670 million.

Dai-ichi took the first step toward selling the property in November, when it agreed to a swap with what is now called Citigroup, a financial services company. Dai-ichi signed a contract to buy the bank’s remaining stake in the tower, while the financial company agreed to acquire Dai-Ichi’s interest in the 39-story, 1.6-million-square-foot tower at 399 Park, which will become the world headquarters for Citigroup.

Eric Hadar said that he moved quickly in mid-December when he heard that Citigroup Center was about to go on the auction block. He notified Dai-ichi that he wanted to make a pre-emptive offer for the building, before the Japanese company accepted any bids.

Real estate executives involved in the auction said that Jerry I. Speyer of Tishman Speyer Properties, Abycq Rosen of RFR Holdings, Mortimer B. Zuckerman of Boston Properties and Steven Roth of Vornado Realty Trust all expressed interest in buying the tower, but were somewhat squeamish about paying $750 million, the expected minimum price. Meanwhile, the Hadars quickly made their offer and lined up financing with Deutsche Bank.

Source: New York Times