Oct. 17 (Bloomberg) -- Tishman Speyer, the owner of New York's Rockefeller Center, won an auction to buy MetLife Inc.'s 80-acre Stuyvesant Town-Peter Cooper Village, Manhattan's largest apartment complex, with a bid of $5.4 billion.

The purchase will be backed by New York-based BlackRock Realty.

The 11,200-unit complex, Manhattan's largest, is home to generations of teachers and firefighters, lawyers and Wall Street workers. Three-quarters of the residences are rent-regulated, prompting some tenants to protest the sale because they don't want their homes converted into condominiums they can't afford to buy.

Tishman Speyer is acquiring the biggest residential property in the most expensive market in the U.S. at a time when rental vacancies are falling and condominium prices are rising. MetLife, the biggest U.S. life insurer, has been divesting Manhattan property holdings since last year, when it sold its namesake building at 200 Park Avenue for $1.72 billion and its former headquarters at 1 Madison Avenue for $918 million.

``Wall Street is all about current operating earnings,'' said David Anthony, an analyst with Argus Research who has a buy rating on MetLife stock. ``This is about putting it into things that would increase the operating returns.''

MetLife, which last year paid $11.8 billion for Citigroup Inc.'s Travelers Life & Annuity insurance business, built the complex six decades ago, partly by buying up land in what was then known as the Gashouse District.

The city used eminent domain to acquire additional land, sold it to New York-based MetLife and gave the company 25 years of tax breaks because New York needed more affordable housing after World War II.

Louisiana Purchase

The sale may be the biggest real estate transaction in U.S. history, said Steve Murray, editor of Real Trends, a residential real estate communications company. The United States government paid $15 million for the Louisiana Purchase in 1803, the equivalent of $277 million in today's dollars, according to the historical price calculator measuringworth.com.

The median price of new homes in the U.S. was $237,000 in August, up .34 percent from $236,200 a month earlier, according to the U.S. Census bureau. The median price of Manhattan condos rose 1.5 percent to $990,000 in the second quarter from $975,000 in the first, according to Miller Samuel Inc., the biggest Manhattan appraiser.

Rents Rising

Median rents in Manhattan's most-popular neighborhoods rose as much as 9.7 percent between June 2004 and December 2005. The vacancy rate for apartments in Manhattan for the second quarter was 0.55 percent, compared with 0.78 percent in the first quarter, according to New York broker Citi Habitats.

MetLife first said in July it might sell the property. It hired CB Richard Ellis, the nation's largest commercial real estate broker, to do so. Final offers with deposits were due Oct. 16 and the sale should close by Nov. 15, according to documents CBRE sent to bidders.

The current tenants' best hope of keeping the apartments as below-market-rate rentals in perpetuity was a bid by a group led by the New York City Central Labor Council of the AFL-CIO, which controls two pension fund trusts with $5 billion earmarked for real estate investment.

New York City Councilman Daniel R. Garodnick, a life-long resident of Stuyvesant Town and Peter Cooper Village, said the tenant-backed bid planned for some apartments to be sold at market price, others at more ``affordable'' rates, and some retained as rentals.

Rent Controls

Rent regulation keeps prices below market value and limits annual increases. It doesn't allow a new landlord to break the life-long residency rights of tenants. Owners can turn such apartments into co-ops or condos through a series of steps starting with offering to sell units to their occupants. Next, at least 15 percent would have to agree to buy. No regulated tenant could be kicked out if they didn't want to do so.

Otherwise, the new landlord would have to wait until rent- regulated units reach $2,000 per month and a tenant's household income exceeds $175,000 for two consecutive years.

MetLife required potential buyers to sign confidentiality agreements before receiving bid documents. That and the intense competition for the iconic property -- which some real estate observers have put on a par with the sale of Rockefeller Center or the Empire State Building -- has kept much of the sales process secret.

To contact the reporter on this story: Sharon L. Crenson in New York at screnson@bloomberg.net

Last Updated: October 17, 2006 13:04 EDT