Such a price would be good news for the battered commercial real-estate sales arena, but the WSJ’s excellent piece (disclosure: the author is a friend and former colleague) says the GM building may not be a good gauge of the market’s health:
The GM Building, at 767 Fifth Ave. in midtown Manhattan, is one of handful of buildings that so bewitches investors that it’s difficult to determine if the high bids say more about the strength of the New York office market or about the motives of the people who covet it.
After all, the rents from the building barely pay the mortgage and many of the tenants have long-term leases far below current rates. Yet, the sales price jumps every time it changes hands. “Nobody ever made money owning the General Motors Building; they only made money selling it,” says Lawrence Russo, president of Russo Capital Corp., a real-estate-investment advisory firm.
Some of the biggest names in real estate have long coveted the skyscraper, making it the Helen of Troy of office buildings, the façade that launched a thousand schemes. Five years after Donald Trump sold the building, he still regrets giving it up. Developer Sheldon Solow, one of the world’s richest billionaires, never owned it but has spent years in court proving he should have.
And Mr. Macklowe, the besieged current owner, is desperate to hang on to some small stake in it. According to a person familiar with the matter, he has asked bidders to specify whether they would keep him involved in at least the management of the property.
The news that Fidel Castro is stepping down brings various predictions from the papers. The Los Angeles Times says businesses are optimistic that trade restrictions will be lifted. The Journal says “Businesses Hold Few Hopes of More Trade Soon.” The Washington Post has more evidence behind its assertion that any changes will be gradual. It reports that the Bush administration says its won’t relax trade restrictions anytime soon.
We say, here’s a perfect opportunity to relax the ideological rigidity and explore a better policy toward Cuba. The one we’ve had for the last fifty-plus years sure hasn’t accomplished much. But in an election year, it might take Florida freezing over to get that done.
MBIA rehired its old CEO Jay Brown in a move the papers say could set the stage for the troubled monoline bond insurer to split itself into good and bad parts.
The FT says the hire likely means MBIA will consider splitting off its relatively safe municipal-bond insurance business from its rotten structured-finance business—something regulators have been pressing for in a bid to keep states and cities from having to pay much higher interest rates on their debt.
It isn’t clear why the firm is turning to its ex-chief now. The Journal and the NYT say his first tenure was marked by the move into the mortgage-securities realm that now has the company in so much trouble. Here’s the NYT, whose story is by far the best:
But other people familiar with MBIA’s business said they were puzzled by Mr. Brown’s appointment, given that he was either chief executive, chairman or both from 1999 to 2007, when the company aggressively wrote insurance policies on risky mortgage-related securities.
“This is back to the future,” said Leon J. Karvelis Jr., a former MBIA executive who worked at the company for 15 years before leaving in 1997. “I am sort of mystified by this move. I would have thought they would bring in new blood.
“We’re talking here about the guy who presided over the decision to move into structured finance, which has gotten this company into so much trouble.”
Whatever he did in the past, this guy’s a believer. The NYT says Brown sold some of his prized sports cars to buy MBIA stock three weeks ago.