Location: How’s the economy been treating you?
Mr. Pariser: The New York economy is very difficult right now. There’s a lot of pain out there. We’ve been blessed with great projects, we’re substantially leased in our portfolio, and in very good shape. So we’re doing very well, but, as an overall statement to the world at large, New York is having a difficult time.
How much do you have in the Bronx? You have some residential?
Mr. Bendit: We have 1,400 apartments in the Bronx, and that’s doing very well.
Would that change if rent-stabilization rules change in Albany?
Mr. Bendit: I don’t think that rent-stabilization laws will affect some of the outer-borough locations as much as they would affect parts of Manhattan.
Just because the rents are too low there?
Mr. Bendit: The rents are too low. You’re not looking at families that are going to be decontrolled. The decontrol limit is too high—we’re not even close to that with our properties there.
The big problem in the industry has been that people have loans that come due but they can’t refinance, whereas it would have been easy a couple years ago. How are you on the debt side of things?
Mr. Pariser: We term out most of our projects into four to six years, so we don’t have any near-term rolls.
In general, you seemed to do pretty well at the market’s peak. You sold 450 Park for over $500 million, which was over $300 million more than you bought it for.
Mr. Pariser: It was a price of $1,650 a square foot for an office building, which turned out to be a near-term peak.
Do you wish you’d sold more back then?
Mr. Pariser: We did sell a bunch and refinanced a bunch. … We wound up selling 450 Park. It turned out to be an even better sale and a perfect decision—it wasn’t exactly foresight. We didn’t think it was going to stop and drop; we just thought it was at a point that we can take advantage of it.
Do you think the people who bought it are regretting it at this point?
Mr. Pariser: They’ll wind up having a longer holding period than they probably would have thought. But, ultimately, it’s a very fine building and a superb location.
Do you think you overpaid for anything at the time?
Mr. Pariser: We’re value buyers, so we like to buy well; so I think we certainly look back at the things we acquired and made very good rational sense. We bought a building on Pearl Street, a 1 million–square–foot building from Verizon two years ago, and our rationale for the deal was that we were going to be one of the few potential sites to put a 1 million–foot tenant, by cleaning up the building, re-skinning it. … That was the right, sound thinking, we didn’t expect the market to slide off. But we still bought it well and it will probably just now be a longer hold.
Is that building just going to sit empty, not making any money for you, until you find someone to fill it?
Mr. Pariser: It’s a big building, but we can afford to hold it, and still produce a product four years from now, five years—whenever we do find that tenant—to produce a product that’s a significant pricing advantage.
At Coney Island, you bought 8 acres out there that you want to turn into luxury housing. When did you first get interested in property out there?
Mr. Bendit: It was 2004. … We had a series of acquisitions, to the point where we control four blocks, more or less, that are either on the north side of Surf Avenue, across from Keyspan Park, or to the west.
Why Coney Island?
Mr. Bendit: What attracted us to Coney Island was the fact that it’s vacant land—we didn’t have to dispossess anybody, relocate anybody. And it’s the beachfront. How much beachfront land is there in New York City? Not only that, but beachfront land that’s accessible to the subway. So, if you think about it, how many young people, or anybody, for that matter, would like to commute into New York or Brooklyn, and go home at night and live on the beach?
Is that to say you see it emerging as a Brighton Beach, or is it more high end than that?
Mr. Bendit: Who knows what it will end up looking like? We just thought it was an opportunity to create a neighborhood. Just the properties we own, we could build 2,500 apartments, at varying price points, from high end, meaning maybe $800 or $900 a square foot if we get lucky, to $300 or $400 a square foot.
But it’s far away.
Mr. Bendit: If there’s an express train, the F express train, which they’re planning on, it’s 30 minutes from midtown Manhattan.
Right to the east, the city wants to create a vibrant, new, year-round amusement district. Does the success of your land depend on that?
Mr. Bendit: I don’t know that people are going to move there because of being adjacent to the amusement district. I think people will want to move there because of the lifestyle. … Having the amusements there, that whole amusement district there being developed only makes it better. … But I don’t know that you need to build the amusement in order for people to live there.
Your land sits around the parking lot for the minor league baseball stadium. The local Councilman, Domenic Recchia, wants that to stay a parking lot, whereas the city wants it to be housing. How does that affect your plans? Can you still develop if that’s a parking lot?
Mr. Bendit: [The lot is] mapped as parkland; and as city parkland, you have certain zoning restrictions that require setbacks or require that you don’t have windows facing it … so when you have a huge development with no windows on one side, it makes it very problematic for it to be a successful development. So if the city is not able to alienate that parkland or move that parkland elsewhere, it has a dramatic impact on the feasibility of our own project.
What’s talking to Domenic like? He seems pretty dead-set on this.
Mr. Bendit: I think Domenic is caught in the middle, because he wants to do what ultimately will be best for the community but he’s dealing with the people who live in the community today, who are a little nervous about what the new development will bring in the way of change.
You’re in talks with the city to bring Ringling Bros. to the city this summer?
Mr. Bendit: They’ve asked us whether we could accommodate them. It’s not really our negotiation; it’s the city’s negotiation. We said that we would work with them in making a place available for the circus to locate during the summer.