Skyscraper Bargain; Empire State Sold for Modest $57.5 Million

The Washington Times (Washington, DC), March 20, 2002 | Go to article overview

Skyscraper Bargain; Empire State Sold for Modest $57.5 Million


Byline: William Glanz, THE WASHINGTON TIMES

The market for icons has softened.

A New York real estate investor will buy the 70-year old Empire State Building for a relatively modest $57.5 million.

Donald Trump and his partners will sell the 102-story building - now the city's tallest - to a group led by Peter L. Malkin in a deal that has surprised commercial real estate professionals. A sale had been rumored since Sept. 14, when Mr. Malkin filed documents with the Securities and Exchange Commission indicating he would make a bid for the building, but the terms of the deal were unexpected.

"The price is surprising - surprisingly low. One would have thought it would go for much more, said Stephen J. Riker, co-chairman of Colliers ABR Inc., a New York real estate firm that manages 18 million square feet of commercial property.

A range of circumstances may have depressed the price of one of the city's most recognizeable buildings.

Most importantly, a convoluted relationship between the ownership and the lease created more than 30 years ago could have lowered the sale price.

Hideki Yokoi bought the Depression-era building in 1991 for $40 million.

But Mr. Malkin's group, Empire State Building Associates, bought the master lease in 1961 for $36 million. The lease runs through 2076. The deal marks the first time since 1961 that the lease and the deed to the building were held by the same group.

Mr. Yokoi died in 1998, but his heirs and Mr. Trump, who joined the investment group in 1994, are paid just $1.97 million a year from Mr. Malkin's group. Mr. Malkin's master lease is the more valuable part of the equation because the building actually generates about $100 million a year in rent from the estimated 950 tenants.

The length and terms of the lease likely made it difficult to sell the building. …

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