Tuesday, May 11, 2010

Empire Of Debt



I promised my kids a couple of weeks ago that one day soon I'd take them to the top of the Empire State Building.

But the next day my BIL dissuaded me. He said that it's now *like* $20 to take the elevator to the top. WOW.

Now I'm not spending $60 or $80 - if my wife is included - for that! My kids can skip that or, google the view.

When you think about it, though, it's not that expensive. Not only is it priced for one-in-a-lifetime visiting tourists, but also those elevators have to cost quite a bit to run and maintain. And there is probably drastically heightened security up there since 9/11. So it's really not as outrageous to charge $20 a head as it sounds.

Plus I once read something crazy like the Empire State Building was only worth $15 million because of all the long-term, below-market leases there. I'm skeptical of that low number but believe it essentially. Alright I found something from 2002:

NEW YORK – The Empire State Building, the cinematic backdrop for everyone from King Kong to Cary Grant to Tom Hanks, has changed hands. Donald Trump and his Japanese partners have agreed to sell the fabled 102-story structure.

The sales price is a stunner: US$57.5 million. That represents only a tiny fraction of the $1 billion that many analysts say the building would be worth without its burdensome 114-year master lease.

Drawn up in 1961, that lease provides for payments of only $1.97 million a year on the 2.5 million-sq.-ft. (225,000-sq.-m.) building. And the lease rate actually drops to $1.72 million from 2013 to 2076, when the lease term expires.

That low-ball lease has depressed the storied skyscraper's market value. So much so, in fact, that the $57.5 million purchase price is considered high, yielding an estimated annual return of just 3.4 percent. The buyer, however, is Empire State Building Associates, an investor group led by New York real estate maven Peter Malkin. And that same group also holds that master lease, which runs through 2076.

Therein lies the buy rationale. With leaseholder and owner in the same stable for the first time since 1961, the legendary tower can now be more easily sold with significantly better financing terms.

The sale closes - perhaps - a tumultuous, byzantine chapter for the facility built in 1930-31. Since the early 1990s, Trump, Malkin and real estate heiress Leona Helmsley have slugged it out for control of the Empire State Building.

Having checked the site now I see that adults do in fact pay $20 a ticket, children ages 6-12 pay $14, seniors pay $18, and that one can pay-up ($45) for a faster ride to the top. I don't see a mention of young children - are they free or are they even allowed? - so perhaps I should in fact take them now before my son turns six. Twenty bucks for the three of us is fine. I did go to the top of the WTC when I was a child but don't remember ever ascending the Empire State Building.

3 comments:

kevin m said...

Turn the table on your landlord. He thinks he has you over a barrel. Well, pay $50 and put a hold on that check then when he or the lawyer calls offer him a couple of bucks more than the $1200 and get him to agree, in writing, that this settles everything otherwise what incentive do I have to pay you when you threaten to sue me again and make me travel back here from NYC. Hell if you are going to stick it to me and make me travel up here from NYC 2 can play that game.

CaptiousNut said...

That tactic was contemplated for a brief moment.

It might piss off the judge though...

I think I'll just come back and argue my case. It is what it is.

I could *get out in front of it* by suing him for back rent.

There's a clause in Massachusetts General Law about *retailiatory eviction/rent increases* that looks askance at any landlords who respond to Board of Health citations by booting out the tenant...

kevin m said...

Years ago a secretary I used to work with bought a lemon of a car and the dealer gave her the runaround and used their knowledge of the law to their advantage over her. So Memorial Day weekend she taped a bunch of lemons and nerff footballs to the car and parked it on the public street across from the dealer. She also taped all the correspondence and repair bills to the windows. She also went armed with the legal section of the law about parking on public streets for when the dealer would call the cops & or tow truck on her. After a day or two of poor sales they gave her a new car. Try something similar???