Huge loss on the building, small gain on the land in separate transactions.
By Wolf Richter for WOLF STREET.
It goes something like this: In 2006, an investment fund managed by a division of UBS bought a 925,000-square-foot office tower, dating from the 1960s, at 135 West 50th Street in Manhattan for $332 million — just the building (the leasehold interest), not the land.
In 2006, it purchased the land (ground lease) for $279 million. In 2019, it sold the land to Safehold – the company specializes in ground leases – for $285 million, and inked a long-term ground lease with Safehold.
We assume that UBS retained the building because this was 2019 and there was an “office shortage” in Manhattan, and office rents were going to the moon, even for a drab 1960s tower or whatever. This way, in theory, UBS could draw income from the building – the office rents, on their way to the moon, would hopefully exceed the costs of the ground lease and other expenses – while it had drawn $285 million in cash out of the property.
UBS then renovated the building. Construction was finished in 2021. At the time, the building was about 40% leased, according to the Commercial Observer. According to The Real Deal, citing the recent listing, renovation costs amounted to $76 million. So now, UBS had $408 million in the building.
At about that time, the office CRE market began collapsing amid working-from-home and a massive amount of vacant office space coming on the market that no one knew what to do with. But UBS had already gotten $285 million out of the property by selling the land in 2019.
By now the building is only 35% leased, office rents aren’t going to the moon, and aren’t covering the costs of the ground lease, and the whole thing has turned into a money-suck.
UBS tried to sell the office tower, there was apparently a deal that fell through. And so UBS dumped the building by selling it via an online auction at Ten-X for $8.5 million.
What UBS got out of the building it had bought for $332 million and renovated for $76 million ($408 million in total) and the land it had bought for $279 million was: $8.5 million from the sale of the building and $285 million from the sale of the land, for total proceeds of $293.5 million — producing a massive loss on the building but a small gain on the land, for a total loss of $385 million, or a 43% loss on its investment.
But on its financial statement, the loss on the building will be a lot less, because buildings (but not land) are depreciated to zero over a certain period, such as 39 years per IRS rules for commercial buildings, which would have cut the book value of the building on UBS’s balance sheet by 44% over the 17 years that UBS owned it. If UBS depreciated the building that way, the building would have a book value of about $182 million by the time UBS sold the building for $8.5 million, generating an accounting loss of about $174 million on the building itself, and a $6 million gain on the land, for a combined accounting loss of $168.
Earlier this year, we discussed a similar ground-lease situation in Chicago where a 12-story, 50% vacant, old (“landmark”) office tower at 300 W. Adams St. sold for $4 million, for the building only. Alliance HP had bought the whole property for $51 million in 2012 and then divided it into a leasehold interest in the building and a 99-year ground lease. Alliance defaulted on the loan on the building, and lenders foreclosed on the building and sold it for $4 million. But Alliance HP retained the land, and it continued to collect rent on it.
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Wolf Richter for POTUS 2028. Campaign Slogan: The Unvarnished Truth.
Howdy Steelers fan. Stop this stuff. The Lone Wolf will be assonated. Too much truth gets you no where in Politics.
Bubba, that’s a very assassinine comment. Never greet a Steelers fan cordially, they will smother you with a Terrible Towel.
Debt-Free-Bubba,
I’m convinced you’re really Wolf.
I’m leaning toward him being a Bot!
Howdy Lucca. Am honored you think that. Bubba is just an old school fool. I could never live in the city of row houses. San Fran was fun to visit but RVing in the mountains and deserts is the life for me……..
“It’s not a lie if you believe it”
Or simply are not able to understand it.
I’m not at all sure that I understand what you are saying, or maybe it’s that I just don’t believe what it is you are trying to say.
Does that imply that what you are saying is a lie? Or does that mean that it’s true because I can’t understand it? Could what you’re saying represent a paradox and it can be a lie and be the truth? Totally cosmic man!…..
“…everything you know is wrong…”
– The Firesign Theater
may we all find a better day.
“We’re all bozos on this bus.”
– TFT
@Gattopardo
You made me laugh with that one!
There have been quite a few mainstream news articles these days about homeless people who have jobs, insinuating that cost of living is too high to have a house despite not being lazy. I know from the recession era that it can be hard to get a job without a place of residence to put down when applying. I also know that it is hard to get a place to live without a job to put down when applying for a rental. Now that everyone and their grandma is working multiple jobs from home (several only fans accounts), what about those who don’t have a home to work from? Is it discriminatory to have jobs that are work from home only? It’s gotta feel defeating to apply to a WFH job as a homeless person. Are there any WFV jobs yet? (Work From Van, not to be confused for VFW, Veterans of Foreign Wars.) Wolf, I’m that dumbass genius who has finally found the ultimate solution to the CRE crisis that everyone has been brainstorming over. There are a lot of homeless people right? Like, a lot, right!?… in the greatest country on Earth in the history of the world, or most likely the greatest country in the entire known as well as unknown universe, the one that God loves more than any other (well there is one other that I can think of that God probably loves more than us but let’s not worry about that, we know we’re the best and have most favored status). So here’s the solution, the final solution to the CRE problemo!
Let’s get all the corporations to continue to allow WFH gigs, and also have corporations have LAW gigs (Live AT Work). The homeless people can apply to those jobs and get a job and a house. They would be more motivated to live in an office tower than almost anyone else I can think of. We won’t have to worry about retrofitting and building codes because they can handle living in those buildings just as they are, they won’t be picking and they are adaptive and pragmatic.
I’ll take the award for most intelligent dumbass humbly once this great policy is implemented on a wide scale. If it doesn’t work, the homeless people will at least help to demolish and scrap out whatever is worth anything of those buildings, further reducing the financial conundrum that commercial real estate is in.
If I’m wrong in all this, maybe the remaining smart thing to do is to team up with a lawyer that might be among the highly intelligent commenters here. I would want to get in on the top end of where the money is at with class action lawsuit against corporate America for widespread discrimination over housing status. I’m not a lawyer but I can help if you are one. I can put the paperclips on the sets of documents and you can give me a 5% cut of the total payout, which I think is reasonable considering the lawyer’s cut will be way more.
In the mean time, I’m going to go back to trying to figure out why I can’t get reception through my TV antenna since 2013. I’m tired of watching fuzz all day.
I actually like this idea. The only problem is that the employer then acts sort of like the old “company towns”, and could set “rent” to be a very high portion of your paycheck. And they would have to have the ability to evict you at will upon separation from service.
Jefe, If you’re so smart then tell me why I can’t get over the air broadcast reception anymore, otherwise stop trying to tear apart my brilliant idea. Do you really think, of all people, the homeless are ones to be complaining about having to live in a company town vs on the streets. Pinkerton is still in existence and they should have no problem handling any type of potential uprising as long as the company makes sure to keep the LAW (Live At Work) employees malnourished by not offering any on-site fine dining or any exercise equipment in the common area like foosball, pingpong, pinball, hacky sacks or large inflatable exercise balls. All the great tech companies that were offering all of those trendy perks have taken them away so why should these less LAW employees get them anyway.
… And offices don’t have living facilities, like showers, bedrooms, and kitchens.
Neither do sidewalks or freeway overpasses but homeless people seem to do just fine in those places. I think you completely missed the primary strategic value of my idea. It would be a huge step up for those people. How often do you walk by a bathroom on the sidewalk (besides those rare places like some spots in San Fran with the ones they’ve set up more recently), Instead of having to be in full view of the public or trying to hide using a nearby bush to evacuate the bowels, a select cubical, corner of a room, and maybe even an entire floor of the many in the building could be used as a designated spot. No need for pipefitters to come in and retro-fit for residential plumbing, no engineering plans, no building permits………the people we are talking about the pampered type needing white glove service with all the high end luxuries of life.
Stoner on phone to stoner: whatcha doin man?
I’m watchin a Western, man, but it’s really boring.
Yeah that’s why i don’t do westerns. That stuff causes brain damage. All my friends from back in the day who were doing that stuff ended up like John Wayne, never smiling. I lost track with a lot of them and from what I know too many fell into it hardcore and started carrying guns and ended up in prison, dead, or working with cows. Careful with that stuff.
Might I recommend the really good Super Hero genre like the Marvel Comics based movies? Who doesn’t love any movie with Ryan Reynolds, he’s such a ladies man. (Not to be confused with superhero Robert Reynolds, nor to be confused with Cheech Marin who is essentially Burt Reynold’s body double look-alike.)
Slow burn, this joke.
You can get a UPS mailbox without a residence and have all your mail go there. It’s 20-30/mo. Very little junk mail and no worry of mail theft. Used it in a state where I bought and store my van.
Wow really? And you were able to actually fit in it? Would I be able to come and go when I please or only during certain hours? Are the bigger size P.O. boxes large enough to sleep in while storing some clothes and my hotplate? Thanks for the tip Bill NYe, the life hack guy! I’m still a little worried about discrimination from potential employers when they can see on my application that I live at a post office. I’ll definitely keep it in mind though if this greatest house of cards economy of all times turns into the great-great recession 2.0 and I find myself looking for work. Since jobs are so plentiful right now and I know they are out there and pretty much anyone who can fog a mirror can get one at the drop of a hat, I don’t even look or try to get one because that’s like the ultimate job security, but things could change if the economy does and I’ll probably look if that happens.
Right now, with the highest interest rates in memory (my memory at least, I haven’t been kind to my head), I’m really busy managing my 50 dollars in T-Bill investments. I’m all in on the 4-week-ers and happy with that for the moment. I’d hate to see all of my yields going to paying for a P.O. box. I try to ladder my 4-week T-bills by staggering them on weekly increments in case I have an emergency like a genuine reply from someone on Tinder or Grindr showing interest in meeting up and I need to pay someone to use their hose to bathe so I can freshen up beforehand on short notice. I’m thinking about opening a brokerage account with ma’ boy Jerry down at the shelter so I can buy treasuries through him and have the ability to buy and sell on the fly so as to be more liquid like he says he prefers to partake in. I appreciate any and all advice. Best regards to you and yours.
May we all find a better place to stay!
😆 Haha!
Does USPS actually deliver to UPS mailboxes? I know the other way around doesn’t work (you can’t ship UPS to a PO box) and have had issues with shipping to FedEx mailboxes via UPS – the employees at the store sometimes refuse such shipments.
I assumed it was a typo and he / she / them / they meant USPS. Good point though. I forgot or didn’t think about UPS and FedEx having boxes I could sleep in. This is why I read the comments on here. So many smart, knowledgeable people and strategic thinkers. This is why America outperforms despite our poor education system and declining life expectancy.
Yes, USPS delivers to ups store, you get a street address not a PO box. 18 years and counting for me.
Cupcake, go get fked you moron. Maybe read instead of blather, lots of van lifers use UPS stores.
The homeless-people-with-jobs story is not a new one at all. It’s been going on for years now; there are a shocking number of homeless college students as well.
Housing bubbles will tend to have that effect. As someone (I forget who) put it a few years ago, “The Fed prints homeless people.” That’s a bit callously worded for my taste, but it’s not wrong. Driving up the price of housing by loosing endless cash onto the economy in search of yield has real effects on people whose earning power can’t keep up with the spiking costs–and note that there does not have to be a recession, or anything close to it, for this to happen.
“Over the long term, buildings are worth zero, and only the land has value.” Hopefully, the government agency with jurisdiction is making sure that the land holder and any other responsible parties are paying and properly conducting environmental remediation. Further, any demolition is protecting neighbors health.
So over the long term myself and my house are worthless entity’s … sounds about right.
Over the longest term the land my house sits on will also be worthless.
All this worthless talk needs to be studied.
After gazing into the heavens it appears our world, our universe are also worthless.
Even tho becky left her worthless husband bubba for greener pastures, she would always fondly remember his squirrel like nibbling at her neck.
In other words, work from home changed everything…
You’re connecting all the dots today aren’t you. I loved those connect the dots workbooks as a kid. They were almost as fun as connect four. Isn’t it crazy how the connect four pieces can also be used to play checkers. Even crazier is how the same board used for chess is also used for playing chess. I made the mistake of setting my checker pieces up for a match and my opponent set up his pieces, except his were chess pieces. I got my ass kicked.
He was rude. He yelled at me and finished off with saying “I don’t like to get into a battle of wits against an unarmed opponent.” I can’t figure out what he was talking about.
When the World Trade centers collapsed in 2001, a nearby building head damaged severely enough that it required complete demolition and removal… it did not collapse, it needed to be, essentially, dis-assembled floor by floor.
The 39 storey building cost about $130 million to build, and cost almost $240 million to demolish (including the costs of toxic materials removal and remediation)
That was in 2001. How much do you add to demo cost today?
@Wolf
As an engineering professor who has dealt with a number of students, both domestic and international, I would say it is the inability to think and analyze a problem in detail among most domestic students. Problems with STEM subjects, quick soundbites from TVs in liu of reading and learning, trying to substitute tech gadgets for brain activity (and now we have the stupid Generative AI) and so on. I don’t know where this will end.
I guess separating the land from the building allowed them to keep the depreciating assets and forgo big passive investments like land. Especially when the CEOs goal is to maximize profit for the quarter and hence their pay check .
Whatever the land value, it will be greatly impaired if the building is too obsolete to rehab. As one potential investor said of the Kushner building on Manhattan’s Fifth Avenue: ‘It would be better if it was just the dirt.’
He, along with every US prospect passed, until for some unknown X factor, it was bailed out by Qatar.
That real estate is just a vessel for bribes, the same as someone else’s finger paintings were intended for such purposes. Think about it……..Qatar, Kushner……..none of these people are selling what they are selling. They are buying and selling something else. Wasn’t there high rise condos in Panama City, Panama that Mr. T was using to facilitate larger schemes? There was a Yaht once owned by Adnan Kashoggi that Mr. T took possession of. Sometimes making the deal is more important than what is being transacted. I want to get in on this post WWII small circle of players but I’m just a peasant.
This was a great example. thanks.
Read the Beat the Press blog for details. Or read the NYT with a critical mind, for that matter. Just don’t pay for it. It only encourages them.
NYT is a dead man walking.
By the numbers, WAPO will go first.
I think people might be surprised by the degree to which its financials have deteriorated.
Still, as the mouthpiece/front man/PR agency for the Establishment, WAPO might last a long time, propped up by Establishment spending – even if Bezos gets sick of losing $100 mil per year (and after 10 yrs+ of realizing that MSM newspapers are more and more impotent as propaganda in the era of the internet…why it took 10 years (!) for Bezos (!!) to grasp the internet dynamics is a mystery…)
Bezos owns the WAPO. He’s got lots of money to keep it going if he wants to.
If this is what Wolf can uncover, I am sure that the real situation is much worse.
How does one assess the price of something in the absence of true price discovery?
Full FAITH and credit.
Hedge accordingly.
Don’t look now but it appears the economy is softening.
The fed is salivating.
Gold is roaring.
Get ready, get set……….
So the land has value and the buildings do not. Will there then come a time when many of these older office buildings stand empty, as the cost of renovating it too much viz. return on potential leases or rents? Or rents and leases adjust accordingly just to keep the building somewhat occupied after the original owners default?
Will it take a decade (or longer) to sort this dynamic out? Sounds like a deflationary spiral.
yes in a lot of places that’s exactly what’s going to happen. the land will still have value, but unless the cost of demolition and building a new building makes sense an investment, the buildings will be abandoned and stay that way unless the city deems it unsafe or blighted, in which case it would be condemned and seized.
@MiTurn
Actually, the building has negative value.
You would have to spend money to remove the existing structure before starting construction on a modern building.
Lots of people talk about renovation or remodeling, but that is often not possible: You cannot upgrade the foundation.
Wrong DC: “Lots of people talk about renovation or remodeling, but that is often not possible: You cannot upgrade the foundation.”
Not only with regards your last phrase,,,
Foundations of any kind in any place CAN be upgrades,,, and, similarly, ANY existing building can be…
Problem is,,, IF ,,, it is ”cost effective” to do either…
Many times it is NOT, and those buildings require demolition or become not only ”eyesores” but also seriously ”attractive” for vermin of all kinds.
As has been said by Wolf and many others on Wolf’s Wonder,,, gonna beeee a long and interesting event.
There are ways of making modifications to foundations but it’s not realistic to change the foundations of high rise buildings and office towers substantially. There are engineering and construction solutions for cases where problems need to be corrected or changes to the building require some changes to how the foundation distributes loading, but these are expensive and limited in many ways. Even many laymen know that a building is only as good as it’s foundation. That doesn’t mean piles of money and specialized engineers and contractors can’t pull off some feats, but those are extreme cases.
There are so many problems to solve for converting the buildings that even if there were no issues for the foundation, the other obstacles are still numerous, complex, and requiring very individualized solutions.
One simple example of the many problems, and one that people are probably going to overlook when thinking more about the building itself and not realizing all the other issues beyond just the building, is the sewer and water line connections to the buildings from the utilities. There will likely be a significant difference in sewer load and water demand for residential than commercial. Can the infrastructure of the city that is in the ground under the streets handle such a change, and can that change be repeated for many buildings and not just one special case? Are the pipes diameters and pressures adequate. Will the sewage lift pump stations be able to handle the increased loading?
What about fire code and fire department access? Is the fire marshal going to sign of on the change of use. Will they be willing to risk the lives of the firefighters they are responsible for? Is there going to be enough parking? Will the traffic impact studies and considerations that were made for the commercial building imply that residential use will be properly supported by the local infrastructure? Plumbing, weight distribution on floor levels, elevator shafts and access, electrical distribution, insurance, fire escape routes……………………come on, I want to hear your expertise?
I’ve worked on high rise and commercial and industrial buildings. I know a lot about construction and engineering. I’m not so knowledge on finance and playing with numbers so if the value of the buildings plummet and the bean counters can make the numbers work, I would not be entirely surprised, but technically and from a design and implementation standpoint, the outlook on average is not good.
Also consider location, schools, transportation, grocery stores, etc. There are a lot of differences with how office parks are sited compared to residential. There is a lot of commercial office parks and mid-rise buildings all over this country that aren’t even in dense centralized downtown urban core centers that people are probably not considering. It’s a cluster f…. and smart minds can probably do some interesting things and pull off a lot, but trying to think you can turn a hoe into a housewife is a fools errand.
Cupcake – not hard to observe when so many KNOW that freshwater comes from a tap, food from the supermarket, clean air from the sky, and light from a wall switch…don’t you see how SIMPLE most problems are??? (/s, best).
may we all find a better day.
It isn’t just the NYT.
There was a time when the news was a public service type of business. In the 80’s, things changed with the repeal of the fairness doctrine and from then on, news became a profit center. A profit center requires media to be sensational, grabbing for every eyeball and ear they can find to get and keep the subscribers and advertisers. The accuracy of a story is totally irrelevant. You witness this everyday from every form of media out there.
Oops, Wolf Excepted.
Converting office towers into residential towers is a good solution. It will increase housing supply, blend business with housing, reduce traffic, will make these areas more appealing (like some major cities in Europe). But it is much easier said than done, because of complex regulations and lots of necessary structural changes.
“Converting office towers into residential towers is a good solution.”
the says…
“But it is much easier said than done, because of complex regulations and lots of necessary structural changes.”
Have you ever tried to replace the skeleton of a cat with the skeleton of a dog without killing it. Can someone please ask a bunch of civil, structural, mechanical, construction engineers, and architects about this dumbass idea of repurposing a great many office towers to residential buildings.
It’s like listening to a bunch of amazonian jungle natives talk about how eskimos should build their igloos. Get a clue people, or ask the many who actually have one. This doesn’t take an einstein to get to the bottom of this question. People do this stuff for work and they are not rare in this world. They are out there but no one seems to want to ask those who work in the general field for a living.
please refer to my reply above smallbite:
WAS in that exact field as ”cost analyst” many years, per your request:
Some bldgs ARE cost effective candidates for total delta from biz to res…
Exactly how many and/or what percentage , on a macro scale, is probably not even possible due to extent of such buildings.
Kinda like typical epidemiology, in fact only a ”statistical assembly of anecdotal information,” eh
It won’t be cost effective. 2% of buildings being cost effective means it’s not cost effective. If it is cost effective, we would see more serious discussion about it. Some buildings…….meaning what? Like 6 so far of the thousands around the country? Got any examples besides jargon?
Didn’t Red Lobster’s original PE firm sell out the land under their debt acquired Red Lobster locations? Sold it on a lease back deal at inflated rates to the now debt burdened RL chain?
All sounds like the same movie script with different title and actors.
Imp – have the impression (like with many other businesses in our modern world) that when the people who are very good with finance and money (but have little familiarity with, love for, or investment of any serious time truly understanding their ‘factory floor’ and their ‘product’) become upper management, those with long-term hands-on experience and institutional ‘product’ memory are cut (usually after ‘training’ younger, cheaper, and more-malleable hires to a barest-bones standard of performance). Thus the contemporary dearth of editors (as one-man band Wolf well-notes) and a seeming quality decline in this, as in many other areas (as often noted by those who frequent this most-excellent establishment…).
may we all find a better day.
1st Cav,
You just described the prelude to a PE sell out. A management that has no clue as to its brands or its customers who’ve driven the business into a dark corner with no way out. Then come the PE guys, looking for distressed firms with underlying asset values but struggling. Load up the target with debt, sell (cash out) the underlying assets in a sale lease back scheme, (leaseback only if they are needed) pocket the proceeds then let the firm stumble along until bankruptcy. I think Wolf has described several of these in the same basic scenario.
MW: Intel’s huge 27% Plunge Marks a Shift for Chip Stocks. What It Means for AMD, Qualcomm and TSMC.
Intel has been a basket case for two decades. It completely lost its direction and became a financial engineering company. Even at today’s plunged price, it has a P/E ratio of 22, which is double of where it should be. Why did this stock go to $50 last year in the first place? That was market mania.
Well, if we want to start discussing inflated PE ratios…there are dozens and dozens of SP 500 members that could *each* merit a story…
(*And…the great irony is the extent to which GAAP earnings are themselves inflated by crapola accounting conventions, so inflated PEs are built upon already inflated E’s…).
Actually, I think a lot of people would like to see a breakdown analysis of NVIDIA, Apple, Facebook, Amazon’s, etc. assumed future growth rates implied by their goofy PE ratios.
Think I saw another headline they’re about to lay off 15000 people.
Is there any guide as to what that land may be worth now? With an empty old building on it? I am guessing a LOT less than for what it sold.
Of course. Vacant properties are big liabilities, for many reasons. Demolition costs are going up as well.
There are no empty lots in Manhattan.
Gee, there aren’t any empty lots here in Telluride either. So what, what’s your point? Location, location, location.
the financial media is saying that the fed screwed up by waiting to cut.
one bad jobs report means it was a mistake to not cut, but high inflation in the past didn’t mean it was a mistake to not raise.
these people are biased in favor of loose monetary policy, period. that’s because they’re in the asset owning class, and the value of their real estate and stocks is the only thing they care about.
A 2 day selloff has them all wetting their pants.
Seems like the nascent real estate correction abruptly ended when the everything bubble began re-inflating after the FDIC deposit insurance limit became infinity.
Will be interesting to see correlation between stocks (wealth effect) and real estate if this continues.
Ahhhhh…………the stock market is crashing. It’s just like July 24th, 2024 and September 1929 all over again. I can’t believe we might have to live with a week of lower stock prices again. Damn it man. I just had ma’ boy Jerry, my broker buddy down at the shelter, moved all 50 of my treasury dollars into AB InBev. I took it that the fat lady singing at the olympics meant all this stuff going on in the world had finally blown over and things are only getting better from here on out. I swear I have the worst luck. I should have just bought a two 24 packs of Modelos on sale at he grocery store. Problem with that though is that with taxes, I don’t think my 50 bucks would have been enough. It would have been enough plus a pack of hot dogs back in 2019, damn inflation. Damn Trump. Damn Biden. Damn Kim Jung Il, Damn neighbor dog that won’t stop barking, Damn those hotels on Park Place, curse this world…….AHHHHH………I need beer!
Old buildings SHOULD depreciate over time – just like everything else in the world i.e. cars, technology etc..
The fact that residential RE goes *up* over time is an anomaly. Houses are a money pit just like office buildings and should depreciate over time.
People are blind to what is going on and the real driving factor behind residential homes in cities. There are pipes going to all of them. Think about it people, think about it. Three are pipes hidden underground going to every residence. That’s crazy. It’s like some stuff out of the matrix. You are being farmed and you don’t even know it! Wake up! They don’t care about you, they want your sh–! Those turds that slide down those pipes and collect at the sewage treatment plant are eventually turned into fertilizer at the end of the waste water treatment process. They sell that same fertilizer to corporate mega-farms who spread it on their fields to fertilize their crops that they grow and sell as a commodity. You and other animals eat those commodity crops. They want your sh– people, wake up! It’s all about the money. Stop letting them get what they want from you. Grab your pitchforks and let’s go down to the wastewater treatment plant. Let’s find some patriotic plumbers that are on our side to dig up those pipes and bust ’em up and fill them with concrete. Enough is enough! The truth and your sh– will set you free!
I hate it when people tell me to ‘wake up’.
Short ,me 4×4 truck and 4×4 van have actually appreciated over the years,of course they are custom and have top notch maintenance.
I would say the same of well made building and homes that are also well maintained,but they are a rarity.
“But on its financial statement, the loss will be a lot less, because buildings (but not land) are depreciated to zero over a certain period, such as 39 years per IRS rules for commercial buildings, which would have shaved the book value of the building on UBS’s balance sheet by 44% over the 17 years that UBS owned it.”
——-
I’m super-confused now. If they had $123 million invested the building after selling off the land plus renovation expenses, and later sold it for $8.5 million–that is a huge percentage loss on the income statement. They’ll need to recapture 17 years worth of accumulated depreciation, taxed at corporate income tax rates.
Ahhhhh…………the stock market is crashing. It’s just like July 24th, 2024 and September 1929 all over again. I can’t believe we might have to live with a week of lower stock prices again. Damn it man. I just had ma’ boy Jerry, my broker buddy down at the shelter, move all 50 of my treasury dollars into AB InBev. I took it that the fat lady singing at the Olympics meant all this stuff going on in the world had finally blown over and things are only going to be getting better from here on out. I swear I have the worst luck. I should have just bought two of the 24 packs of cans of Modelos that I saw on sale at the grocery store yesterday. Problem with that though is that with taxes, I don’t think my 50 bucks would have been enough. It would have been enough, plus a pack of hot dogs, back in 2019, Damn inflation. Damn Jerome. Damn Janet. Damn neighbor dog that won’t stop barking, Damn those hotels on Park Place, curse this world…….AHHHHH………I need beer!
False alarm! AB InBev is up today so far. It’s up more than the major indexes are down. I’m glad I took ma’ boy Jerry’s advice. He’s a financial guru. I’m going to ask him if I should sell while it’s up. I’ll have made more today than I would have in two weeks in T-Bills. It might be wise to liquidate my holdings, do some profit taking. I can convert it to real liquid and share some with ol’ Jerry for helping me come up quick. Find a broker, advisor, and mentor people. Don’t try to do it all on your own. You might not always do as good as me, but in the long run, you’ll do better overall. There’s going to be some Bud Light tall boys with my name on them tomorrow!
Probably green by the end of the day.
They’ll roll someone out to speak, another data point will come in, etc etc.
Just buy everything.
I would if I could but 50 bucks definitely won’t buy me everything in stock at my local grocery store. If I was really rich like Warren B., or Elon M., or Bill G., or Mark Z, I would buy a whole entire liquor store. That stuff really doesn’t go bad.
I’ve got a fat bottle of Cuervo that I keep in my storage unit. With the desert sun and heat, it’s been hitting 110 degrees or more in there for a lot of the days over the past month and that stuff still tastes fine to me.
The alcohol that they put in the alcohol helps to act as an antiseptic, antibacterial, antifungal, and general preservative. It really doesn’t go bad. In the winter, it doesn’t usually freeze unless it gets ridiculously stupid cold at night. It’s essentially a commodity. The long shelf life, consistent demand, easy storage, and high value to weight and size make it an excellent investment. It’s got a lot of medicinal values too, for example, did you know it’s a diuretic? I keep a spare empty bottle around just because of that effect. Cheers Gimp! It’s always best to share with friends and I’d share a round with you.
Best of luck through these trying times in the market. This is really scary. Hopefully next week everything will be back to completely normal.
“AB InBev is up today so far. It’s up more than the major indexes are down.”
Beer soothes the pain, and stock investors need some soothing right now, and so they’re gunning for a sixpack of Bud Light?
Monitor: It may be time to limit the number of comments from a single individual. And/ or with a word count.
It’s tempting to add: and they must have some connection to the lead article, but I can’t cast that stone.
Leave Bubba alone. He’s got a good heart.
I am thinking cupcake may have a drinking problem.
I suppose given the state of the world it may not be a problem but a solution.
Nick – hm, the need for more ‘monitors’ or ‘editors’? (…there IS a difference, kinda like the difference in judging figure-skating ‘winners’vs. whose first to the checkers in motor racing. What ARE the ‘standards’? Can they, and should they be, ‘automated’?).
may we all find a better day.
The number of comments/ words is a purely objective math fact. You see word limits all over, And it could easily be automated because no judgement required. And note, I said although it would be nice if comments had SOME relation to the WR piece, I was not suggesting enforcement. At this time.
Hi Wolf,
You noted that UBS got $293.5 million out of the $693 million they spent on the office building. But what about profit from the rent/lease payments that they received from 2006 – present? Did the losses from the last five years (after they sold the land) cancel out profits from the previous fourteen years? If they average $6M/yr profit, they would have come out even, right? Still a bad investment, but was capital appreciation their only hope the whole time?
We don’t know anything about the operating profits or losses of this building. Whatever they were, they were booked at the time they were incurred.
The buyer of the “building” is in a sandwich position; they purchased a leasehold interest that has no reversion value but the right to collect lease payments from the building tenants, run and operate the buildings and pay ground lease payments to the ground lessor (assume its Safehold.