NEW YORK -- The Empire State Building is for sale, and for a mere $45 million to $50 million, a pittance for a prime property in midtown Manhattan.
But there's a catch -- and it's 85 years long.
Until January 2076, the 102-story building is tied up in a complex leasing arrangement that will prevent its new owner from taking control of the property.
The arrangement is, in effect, an annuity that has been paying the current owner, Prudential Life Insurance Company of America, about $3.4 million a year.
Prudential technically owns the building and the land it stands on, but the property is controlled by two partnerships formed in the early 1960s by some prominent New York real estate investors, including Harry B. Helmsley.
Now Prudential has retained Salomon Bros. Inc. to sell its interest, Peter Malkin, a New York lawyer and investor, said yesterday. Malkin is a partner and investor in one of the partnerships that control the building.
It would be no surprise if wealthy Asian investors, individual or corporate, were among the bidders. Japanese companies have bought a controlling interest in Rockefeller Center in Manhattan, the Pebble Beach golf course in California, and various well-known resorts, as well as dozens of works by great European painters. The Empire State Building is a high-profile symbol that might be hard to resist.
Prudential has apparently decided that it could do better investing its money elsewhere, now that the total it originally invested has been returned to it in fees and the tax benefits have been exhausted. Phone calls to Prudential's offices were not answered yesterday.
Opened on May 1, 1931, the Empire State Building stands at 350 Fifth Avenue between 33rd and 34th Streets in Manhattan. For four decades it was the tallest building in the world, and for many it remains the centerpiece of the New York skyline.
It holds 2.24 million square feet of office space and is currently more than 95 percent occupied, Malkin said.
The two partnerships, Empire State Building Associates and Empire State Building Co., hold leases that give them control of every aspect of the property through 2075.
The partnerships pay Prudential a fixed yearly fee of about $3.4 ++ million; next year the fee will be reduced to about $2 million. The partnerships control all aspects of the property and keep all the income it produces, beyond the fee paid Prudential.
If it could be sold outright, unencumbered by the leases, th building would have a value of $600 million to $800 million in today's real estate market.