In New York, $35m buys an apart­ment – or Grand Cen­tral

Irish Independent - Business Week - - APPOINTMENTS - Danielle Mo­ran

For $39m, you could buy an eight-bed­room man­sion in the heart of New York’s Up­per East Side. Or if you’re the Met­ro­pol­i­tan Trans­porta­tion Au­thor­ity (MTA), you could buy Grand Cen­tral Ter­mi­nal, one of New York’s great­est icons, and still have $4m to spare.

Last Thurs­day, the New York state-run trans­porta­tion agency’s board ap­proved the pur­chase of Grand Cen­tral and Metro-North Rail­road’s Har­lem and Hud­son line from a hold­ing group, Mid­town Track­age Ven­tures. The trans­ac­tion is es­ti­mated to cost about $35m, a sum that stems from a cen­turies-long lease agree­ment the agency struck in the early 1990s.

MTA Chief De­vel­op­ment Of­fi­cer Janno Lieber called the price “a no-brainier, from a fi­nan­cial stand­point.” He’s right. Es­pe­cially in a real es­tate mar­ket that’s known for be­ing among the most ex­pen­sive in the world. There are 46 homes cur­rently for sale in Man­hat­tan for at least $35m, in­clud­ing five at more than dou­ble the price, ac­cord­ing to Zil­low Group Inc.

It’s also a steal by com­mer­cial stan­dards: 1 Van­der­bilt Av­enue, a new-con­struc­tion of­fice build­ing next door to Grand Cen­tral, is pro­jected to cost more than $3bn.

Peter E. Stangl, who served as the chair­man and chief ex­ec­u­tive of the MTA when the orig­i­nal lease was signed, said it makes sense for the au­thor­ity to own in­stead of rent. Its op­tion to buy the ter­mi­nal ex­pires in 11 months.

“Ob­vi­ously to ac­tu­ally have con­trol of prop­erty that you are man­ag­ing, oper­at­ing, main­tain­ing and in­vest­ing in is im­por­tant,” said Stangl, who ini­ti­ated the restora­tion ef­fort at the ter­mi­nal that hinged on the long-term lease agree­ment. “Be­fore we started in­vest­ing, we ne­go­ti­ated a long-term lease to pro­tect our in­vest­ment, know­ing that some­day we wanted to ac­quire it.”

The MTA said the pur­chase price is based on the value of rent it com­mit­ted to pay un­der the terms of the 280-year lease, dis­counted at a “highly favourable” rate. MetroNorth has been pay­ing an an­nual rent of $2.4m.

Built by the New York Cen­tral Rail­road, Grand Cen­tral first opened in 1913 and at­tracts about 750,000 vis­i­tors a day, mak­ing it the city’s most vis­ited des­ti­na­tion af­ter Times Square. The ter­mi­nal was des­ig­nated a land­mark in the 1970s af­ter a con­ser­va­tion ef­fort spear­headed by for­mer first lady Jacque­line Kennedy Onas­sis. Stangl said that fight could be in­grained in the MTA’s de­ci­sion to pur­chase the build­ing.

“It’s deep-seated in the psy­chol­ogy of the MTA that you don’t want to deal with that fight against a wreck­ing ball again,” he said.

With as­sis­tance from Daniel Taub

(Bloomberg)

Sale of the cen­tury: The iconic Grand Cen­tral Sta­tion has been sold for in the re­gion of US$35m, a sum that stems from the terms of a cen­turiesold lease

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