New York's Grand Central Terminal sold for US$35m

New York

FOR US$39 million, you could buy a mansion in New York's Upper East Side with eight bedrooms, 18 bathrooms, a cigar bar, private library, and top-floor indoor pool just blocks away from Central Park.

Or if you're the Metropolitan Transportation Authority, you could buy Grand Central Terminal, one of New York's greatest icons, and still have US$4 million to spare.

On 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 US$35 million, 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-brainer, from a financial standpoint".

This is especially so 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 US$35 million, including five at more than double the price, according to Zillow Group.

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 US$3 billion.

Peter 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 Mr 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. Metro-North has been paying an annual rent of US$2.4 million.

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 and architect Philip Johnson.

Mr 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. BLOOMBERG