Chapter 954
Holy crap, there are just too many investment opportunities!
After leaving the building where Huanyu Investment Company's headquarters was located, Lin Haoran, familiar with the area, found a high-end Chinese restaurant nearby and had lunch.
Afterwards, they had the driver take them back to the Citibank headquarters building.
Upon returning to Citibank headquarters, Lin Haoran went directly to Li Guowei's personal office.
Li Guowei represents Lin Haoran at Citibank, so this office can naturally be considered Lin Haoran's office as well.
Lin Haoran had barely sat down when he saw John Reed, whom he hadn't met that morning.
In the morning, Citigroup Chairman Walter Riston told him that John Reed had gone to Trenton, the capital of New Jersey, 100 kilometers away, to handle some branch business and would not be back until noon.
Lin Haoran didn't care about this. He hadn't come to Citibank headquarters specifically to see John Reed.
"Lin, good afternoon." John Reed pushed open the office door, his face apologetic, and quickly stepped forward to greet you. "I'm so sorry, I went to New Jersey this morning and couldn't greet you in person."
"It's alright, Mr. Walter has already told me about your situation. Please have a seat." Lin Haoran waved his hand and smiled, pointing to the chair next to him.
“Lin, if you need anything in New York, just tell me. Citibank still has a certain influence in New York and even throughout the United States,” John Reed said with a smile.
"There is something I really need to trouble you with, John!" Lin Haoran had been waiting for him to say this.
"Oh?" John Reed became curious. "Lin, what is it? I'll do my best to help if Citibank can."
Lin Haoran picked up his teacup, took a small sip, and said slowly, "John, Huanyu Investment Company's office in New York is currently only one floor, and with the increasing number of employees, it's no longer enough."
I want to buy my own building in Manhattan to serve as the US headquarters for Universal Investment Company, and also as a long-term investment. You know, I've always been very bullish on the New York commercial real estate market.
After listening, John Reed nodded and smiled, "Lin, you've come to the right person. Buying and selling buildings in the heart of Manhattan is really not something ordinary people can access."
Owners who want to sell an entire building may list it with real estate agencies, but most transactions don't happen through the agencies because they simply don't have the capacity to sell assets of that size.
They will pass the information on to financial institutions like Citibank, Morgan Stanley, and Merrill Lynch, which have access to truly large buyers.
Lin Haoran nodded; of course he understood this principle.
For building transactions involving tens or even hundreds of millions of dollars, the number of buyers is extremely limited; there are very few people in the world who can buy them.
Transactions at this level rely not on advertising and intermediaries, but on social circles and trust.
“So,” Lin Haoran said with a smile, “Citibank should have resources in this area, right?”
John Reed chuckled, stood up, and said as he walked out, "Lin, wait for me, I'm going to the office next door to get some documents."
A few minutes later, John Reed had returned to Lin Haoran's office.
He walked back and placed a thick stack of folders on the coffee table.
"Lin, to be honest, Citibank's private banking and commercial real estate divisions receive quite a few such sales offers every month."
Some homeowners are getting old and want to cash out to retire; some are funds maturing and need to be liquidated; some are companies facing tight cash flow and have no choice but to sell; and some have seen New York house prices rise and are afraid they will fall in the future.
In short, whatever you want, I can find suitable properties for you in the heart of Manhattan, from Times Square to Wall Street, from Park Avenue to Fifth Avenue.
Upon hearing this, Lin Haoran's heart stirred slightly.
He originally just wanted to buy a building to solve his office space problem, but now it seems that things can be taken a step further.
"John, can you tell me which buildings Citibank currently has for sale?" Lin Haoran asked with a smile.
John Reed opened the top folder, took out a document, and handed it to Lin Haoran: "Lin, take a look at this first. This is One Times Square, the building where the New Year's Eve ball drop ceremony takes place every year."
You should be familiar with this landmark building, right?
Lin Haoran was naturally familiar with this building. It was one of the most frequently seen buildings in New York. Although it wasn't very tall, it occupied the most central location in Times Square.
He took the documents, somewhat surprised. He hadn't expected that the owner of this building would put this golden goose up for sale.
He had seen information about this building in his previous life. Although the building was only 12 stories high and about 45 meters tall, and although few people worked in the building all year round, mainly serving as the supporting structure for the giant LED advertising screen, it could generate $2300 million in revenue annually just from advertising alone.
One Times Square is one of the most famous landmarks in New York and even the world.
Every New Year's Eve, hundreds of millions of people around the world watch the crystal ball landing ceremony via live television broadcast, and the image of that building is broadcast to every corner of the globe.
The advertising space in this building is priceless; it is a truly top-tier and scarce asset.
Lin Haoran was very curious: how much would such a building cost?
He opened the document, saw the price quote, and his pupils contracted slightly.
1200 million US dollars.
? ? ? ? ? ?
At that moment, he had only one thought in his mind: Holy crap, this is so damn cheap!
No, a building that could earn over 20 million US dollars from advertising in the next year is now only selling for 12 million US dollars.
This figure was much lower than he had expected; in fact, it was ridiculously cheap.
"John, is this price... accurate?" Lin Haoran looked up at John Reed, his tone filled with disbelief.
John Reed smiled and explained, “Lin, this price is accurate. In November 1982, which was last month, a Georgia real estate brokerage firm made a formal offer of $12 million to acquire the building, and the owner, TSNY Realty Corp., had a clear intention to sell.”
Although the asking price is $1200 million, if you're interested, you can definitely get it for under $1100 million, and if you negotiate the price down further, the owner might even sell it for $1000 million.
This building is currently under redevelopment in Times Square, and the owners have no intention of holding it long-term. Coupled with the overall downturn in Manhattan commercial real estate from the mid-70s to the early 80s, its valuation is at a historical low.
Lin Haoran quickly did some mental calculations.
$1100 million is just a drop in the ocean for him.
But the value of this building goes far beyond that.
He clearly remembered a statistic from his previous life: in 1985, the resale price of One Times Square soared to $110 million, an increase of more than tenfold in two years.
This isn't an investment, it's picking up free money.
He flipped through a few more pages of documents and finally saw the current revenue situation of One Times Square.
Over the past five years, annual advertising revenue has ranged from approximately $150 million to $350 million.
The core advertising spaces are limited to the Spectacolor electronic screen on the north side and a few traditional neon billboards;
It mainly operates on a "selling time" model, with advertisements playing in a loop. Each advertisement lasts 30 seconds and loops every 20 minutes. The Spectacolor screen on the building generates about $100-200 million in revenue annually, while traditional neon billboards generate about $50-150 million in revenue annually.
Although the advertising revenue looks good, the annual operating costs alone, including property taxes, maintenance fees, utilities, insurance, and management fees, add up to nearly $100 million.
As for the revenue from renting out the interior office space, given the current semi-vacant state of One Times Square, it is almost negligible.
In other words, the annual income of One Times Square varies, ranging from a maximum of $3.5 million to a meager $1.5 million.
When the profit was $350 million, it was okay, but when it was $150 million, the annual profit was only $50.
As for the $2300 million annual advertising fee, that's definitely a future matter. As the commercial value of Times Square increases year by year, the building's advertising revenue will skyrocket.
If you were to buy it now for $1100 million, then 40 years from now, the annual profits and future property value would be several hundred times the return!
Lin Haoran put the documents aside, picked up his teacup, took a sip, suppressed his excitement, and maintained a calm and composed expression.
“John, I’m very interested in this building,” Lin Haoran said calmly, setting the documents aside.
John Reed opened the second folder and handed over a document: "Lin, take a look at this one, the Candler Building, also in Times Square, an iconic historic building on 42nd Street, built in 1914, a landmark and protected building in New York City, adjacent to the Broadway theater district, with a total floor area of over 20 square feet."
Currently, we have stable tenants including New York City government agencies and RCA, resulting in very stable rental cash flow.
Lin Haoran took the documents and was once again shocked when he saw the price quote.
$500 million. He couldn't help but rub his eyes, thinking he was seeing things.
But when I looked again, it was still $500 million.
A historic landmark building in the heart of Manhattan, consisting of a 24-story rectangular tower facing 42nd Street and a 17-story rear wing facing 41st Street, with a total floor area of over 20 square feet, is being offered for just $500 million?
“John, this price…is it correct?” Lin Haoran looked up at John Reed, his eyes filled with doubt.
John Reed explained with a smile, "Lin, you read that right. This building was sold for $130 million in 1980. After the purchase, the owner invested $400 million in renovations, which are now complete. However, the major shareholder of the company that owns the building has put it up for sale again for personal reasons, so the current valuation is around $500 million."
The building was recently renovated, and currently the shareholdings of individual owners are quite dispersed. If you wish, you can acquire full ownership through a premium purchase.
"Does this building have any serious defects or debt problems?" Lin Haoran still couldn't imagine.
What Lin Haoran didn't know was that Times Square today was completely different from Times Square in later years. In the 1970s and 80s, Times Square was known as "America's dirtiest neighborhood," with 42nd Street becoming a gathering place for pornographic cinemas, strip clubs, and pimps.
Last year, Rolling Stone magazine named West 42nd Street "America's dirtiest neighborhood," further damaging the area's reputation.
In addition, the building is nearly seventy years old. Although it has just been renovated, potential buyers are generally skeptical about the maintenance costs and future appreciation potential of such an old building.
In addition, the overall commercial real estate market in New York City is still in a slump, and the revitalization plan for Times Square has not yet yielded significant results. With these multiple factors combined, the valuation of the Candler Building has naturally been suppressed.
John Reed shook his head and smiled, “Lin, this building doesn’t have any serious title or debt issues. The renovation was just completed recently, and the building itself is in very good condition.”
The main problem is the overall economic environment. The reputation of Times Square isn't good right now, so there aren't many people willing to invest in the area. Owners are eager to cash out, so naturally they have to accept low prices.
Lin Haoran quickly flipped through the documents and found the building's revenue situation.
Currently, the annual rental income is approximately $50, and after deducting operating costs, the net income is around $30.
The annual return is approximately 6%.
This yield wouldn't be high in a normal year, but considering that this is a recently renovated historic landmark building, there is huge potential for future rent increases.
Moreover, with the revitalization of Times Square, the appreciation potential of this building is immeasurable.
"John, I'll take this building too." Lin Haoran put the documents aside, his tone still calm.
John Reed clicked his tongue inwardly in amazement.
The two Times Square buildings, worth about $1500 million in total, were bought by this young tycoon without batting an eye.
However, considering the terrifying returns on the other party's past investments, and knowing that the other party had a huge cash flow, John Reed wasn't surprised.
Lin Haoran was also in a good mood at the moment.
It's hard to believe that Times Square, which will become famous in later generations, has such low property prices today.
The two Times Square landmarks can be acquired for a combined price of only around $1500 million. Although neither building is suitable as an office headquarters, they can be a highly profitable investment.
For Lin Haoran, this price wasn't even enough to buy a decent office building in Hong Kong.
Seeing that Lin Haoran was interested, John Reed became even more enthusiastic and opened the third folder.
"Lin, we've finished looking at Times Square. Now let's look at Wall Street. These are the real core assets." He handed over a thick document with a photo of a skyscraper on the cover, magnificent and imposing, its glass curtain wall gleaming in the sunlight.
In those days, although Times Square was very famous, its commercial value was far lower than that of Wall Street.
"Are these the only two buildings for sale in Times Square?" Lin Haoran asked, still feeling a bit unsatisfied.
Upon hearing this, John Reed smiled wryly and said, "Lin, how big is Times Square? It's already quite a lot to have two buildings for sale at the same time."
Lin Haoran thought about it and agreed. Not all bosses are short of money, and not everyone is pessimistic about the future of Times Square.
He looked at the documents in John Reed's hand.
“85 Broad Street, Goldman Sachs Global Headquarters Building, 32 floors, 135 meters high. This building has just been completed and is Goldman Sachs’ new global headquarters. It has a total floor area of 100 million square feet and is the first Grade A office building built in the financial district in ten years.
"The building quality and hardware configuration are the highest standards of their time, but the price is relatively high," John Reed explained from the side.
Lin Haoran took the documents, turned to the page with the price quote, and narrowed his eyes slightly.
US$2.6 million, which is nearly HK$17 billion.
This number is an order of magnitude higher than the combined number of the first two buildings.
However, when considered in the context of key elements such as the Manhattan metropolis, 100 million square feet, and Goldman Sachs' global headquarters, the price seems reasonable, or even cheap.
"John, who owns the property rights to this building? Isn't Goldman Sachs the owner?" Lin Haoran asked.
John Reed shook his head: "Goldman Sachs is only the main user of this building, not the owner. The ownership belongs to the development consortium, which currently has several shareholders. The development consortium is currently interested in selling the building's ownership."
If you're interested, you can acquire the freehold property outright with full cash payment. After the acquisition, you can sign a long-term lease with Goldman Sachs; they'll likely sign it for at least 10 to 15 years. You should be well aware of Goldman Sachs' credit rating.
Lin Haoran was certainly aware of this.
Goldman Sachs is one of the world's top investment banks, with a credit rating that is virtually risk-free.
He even contacted the head of Goldman Sachs, who sent people to Hong Kong to discuss cooperation with him.
After acquiring the building, Goldman Sachs' rental income alone will provide an outrageously stable cash flow.
Add to that the potential for future appreciation of Manhattan commercial real estate, and this investment is practically a sure thing.
“I’m also interested in this building.” Lin Haoran put the documents aside, his tone still calm, but he had already begun to plan the financial arrangements in his mind.
John Reed smiled and opened the fourth folder.
"Lin, take a look at this one, 40 Wall Street, the Manhattan Bank Tower, 72 stories, with a total floor area of 130 million square feet. It was the tallest building in the world in 1930 and is a core component of the Wall Street skyline."
Lin Haoran took the documents and saw the page with the price quote, which stirred up his emotions once again.
$4500 million to $5000 million?
? ? ? ? ? ?
Lin Haoran didn't understand.
前面的32层楼需要2.6亿美元，而这栋72层的大厦只需要4500到5000万美元？
Although this building is a bit old, while the building in front of it was just built, the prices shouldn't be that different, right?
The total building area is larger than the building in front, but the price is more than five times lower!
With a building area of 130 million square feet, that translates to less than $40 per square foot.
The construction cost of a Grade A office building in Manhattan is at least $200 per square foot.
"Why is the price so low?" Lin Haoran asked.
John Reed explained, "The building is currently owned by the Marcos family of the Philippines, who are in the process of concealing their overseas assets and have a strong desire to sell and cash out."
Furthermore, this building only has architectural ownership; the land is leased from the German Hinneberg family, and the land lease needs to be renewed simultaneously. However, these are all solvable issues. If you wish to purchase the land rights permanently, I can also help you contact the Hinneberg family to discuss it.
Lin Haoran nodded and put the documents aside.
He still has a very deep impression of this building; it will become the famous Trump Tower in New York.
He remembered reading something online in his previous life: the other party acquired the building in 1995 and, after renovation, its value increased more than tenfold.
Although Trump is a highly controversial figure, his business acumen, especially in the real estate sector, is truly first-rate.
At this moment, Lin Haoran had only one thought in his mind: "Damn, there are so many investment opportunities in New York!" (End of Chapter)