N.Y.'s tallest to get new owner
By Robert Burgess
Bloomberg News Service
NEW YORK — Donald Trump and his Japanese partners will sell New York's Empire State building for $57.5 million to investors who hold the lease on the 102-story landmark, people familiar with the situation said. The sale will end years of lawsuits over control of the building.
Associated Press
A sales contract for the building and the land underneath was signed Monday afternoon, the people said. The transaction will be completed in about a month.
The investor group that has held the lease on the Empire State Building since 1961 has agreed to purchase the 102-story landmark from real estate magnate Donald Trump and his partner. The skyscraper, completed in May 1931, is the tallest in New York since the Sept. 11 destruction of the World Trade Center.
The buyers, a group led by real estate investor Peter Malkin, own a 115-year lease on the building. The duration of the lease depressed the building's value and made a sale to anyone other than Malkin almost impossible, property brokers have said. Trump's attempts to break the lease in court had failed.
"By combining the ownership and the lease, the value of that property will be greatly enhanced," said John Lyons, head of New York-based real estate investment bank Granite Partners. "The leaseholder will now have an incentive to upgrade the building and bring it back to its former grandeur."
Malkin and Trump both declined to comment. Malkin has said owning the building would make it easier for his group to borrow against the property.
The agreement was reported earlier today by the New York Times and Wall Street Journal.
Consolidating control
The sale would consolidate control of the building, again New York's tallest after the Sept. 11 terror attacks destroyed the 110- story World Trade Center towers, for the first time since 1961, when Henry Crown sold the land under the skyscraper to the Prudential Insurance Co. The insurer then sold the rights to lease the building to Malkin's group.
The family of the late Japanese billionaire Hideki Yokoi, who bought the building in 1991, brought Trump in as a partner in 1994 to try to break the Malkin group's lease. New York's Supreme Court rejected Trump's allegations that Malkin and the building manager, Helmsley-Spear Inc., mismanaged the property and let it fall into disarray.
Had they broken the lease, Trump and his partners would have been entitled to the more than $100 million a year in rents the building generates annually for the leaseholders. The Malkin group paid Trump and his partners $1.97 million a year, a 5 percent return on their initial $40 million investment.
The Empire State Building's vacancy rate tripled to 12.8 percent in the last nine months of 2001, as empty space mounted at a faster pace in the building than in the rest of the city. The rise may reflect tenants' desire to avoid high profile buildings after the Sept. 11 attacks, brokers said.
News of a possible sale surfaced Sept. 14, when Malkin filed documents with the Securities and Exchange Commission seeking approval from his investors to make a bid for the building.
