Morgan Stanley seeking more

Real Estate Weekly, Sept 29, 1993 by Lois Weiss

Morgan Stanley has gone back to city officials with its hand out, now that it has contracted to buy 1585 Broadway for $176 million.

The company had negotiated a package of primarily energy and sales tax incentives totalling nearly $40 million when it agreed not to move out of Manhattan for at least 10 years just one year ago.

That package includes $21.4 million in real estate related tax incentives, and $10.2 million in sales tax exemptions on leasehold improvements, machinery and equipment. The purchase of the former Solomon Equities building through a sealed bid auction was to be completed this week, on Sept. 30.

Now that the company is facing an $18 million city property tax bill each year, it is said to be asking for another $40 million in tax relief and incentives.

M. Myers Mermel, vice president, Morgan Stanley said, "We've made a deposit to purchase the building, and until we close, the deal is not final. We have our own due diligence to complete and are working on understanding the condition of the building."

He would not comment on any negotiations with the city.

Hines Interests Ltd., which conducted the auction on behalf of the consortium of lenders, referred calls back to Morgan Stanley.

Deputy Mayor for Economic Development Barry Sullivan said discussions between his office and Morgan Stanley were ongoing. He would not, however, say the company officials were reluctant to close the deal.

"We are in discussions about how the package we already provided can be transferred to the new building," explained Jeanne P. Nathan, a spokesperson for the economic development office.