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Seating a jury is simpler than finding new tenants at 40 Wall Street, the Donald Trump-owned building a 20-minute walk from the courthouse where the former president has spent much of his time this week.
Vacancies have risen to 21% at 40 Wall St., a landmarked 71-story building and supertall for its era when constructed in 1930. The three-percentage point increase since last August, Fitch Ratings said in a report this week, is due to Duane Reade closing a 20,000 square-foot store in a former bank lobby featuring graceful limestone arches and black marble balustrades.
The retailer also terminated its lease for 80,000 square feet of corporate office space upstairs. It isn’t clear when the lease was scheduled to expire. Duane Reade continues to pay its vacated store’s rent, Fitch said, and the lease continues until 2032. The owner of Duane Reade, Walgreens Boots Alliance, said the 40 Wall St. store was closed due to “unsustainable business performance and high operating costs.”
40 Wall St. was acquired by Trump in 1995, and the 1.2 million square-foot tower is one of three Manhattan office buildings owned by the Trump Organization. The others are Trump Tower and a 30% share of 1290 Sixth Ave.
Tenants have been steadily leaving 40 Wall St. since in 2018, when its vacancy rate was just 6%, according to Fitch data.
Fitch said rental income for the building has fallen by approximately 43% since 2015, when Trump refinanced the mortgage with the help of Jack Weisselberg, a loan originator at niche lender Ladder Capital and son of longtime Trump Organization CFO Allen Weisselberg. Many older buildings in the Financial District struggle with elevated vacancy rates — the average is 25%, according to CoStar — but Attorney General Letitia James’s fraud suit showed 40 Wall’s financial problems began well before the pandemic.
In 2011, when the building produced negative cash flow for Trump Organization, court records show Allen Weisselberg directed an employee in accounting to prepare a document showing $26.2 million in net operating income. The building actually ran annual deficits as high as $20.9 through 2015.
The document directed by Weisselberg contained “a series of implausible assumptions,” state Judge Arthur Engoron wrote in his ruling in which he ordered Trump to pay $354 million in penalties for fraud, since raised to $454 million. Trump has secured a bond so he doesn’t have to come up with the money while appealing, but James has contested the bond’s validity and a hearing is scheduled for Monday in the state courthouse at 60 Centre St. That’s the same day the president’s criminal trial may begin in a different courthouse at 100 Centre St.
James has threatened to seize and sell 40 Wall St. if Trump doesn’t pay.
“We are prepared to make sure that the judgment is paid to New Yorkers,” she told ABC News in February, “and, yes, I look at 40 Wall Street each and every day.”
40 Wall St. is an undeniably attractive building whose pyramidal crown was the symbol of the original tenant, Bank of Manhattan Co. But it probably wouldn’t be highly valued by rival landlords. Fitch said the average in-place rent is just $40 per square foot, compared to a market/neighborhood average of $55.
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Aaron Elstein , 2024-04-19 19:17:57
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