We believe that based upon the geography of Manhattan and what’s going on in terms of our customers, meaning the tenants, the marketplace — we should be able to achieve market rents in Penn Plaza of $65, $75 and then $85 a foot. There’s no reason that those numbers can’t be achieved over time. Now just as I mentioned that, take the midpoint of the numbers that I just threw, I’ll say $20 a foot, times the better part of 8 million square feet of office space, that’s $160 million a year of potential revenue which goes right to the bottom line, with the exception of a small amount that will be — as the rents go up, the real estate taxes will go up a little bit. So that’s a very, very large number. If you put any kind of a cap rate on that, that creates billions and billions of dollars of shareholder value. Now in order to achieve those kinds of ambitions, we have to “transform that neighborhood.” We have to change the neighborhood. We are hard at work. And by the way, I have said — I think I’ve said it in my letter this year, the big kahuna in this company will be the success that we are able to achieve in transforming the Penn Plaza district and in achieving higher market rents for the assets that we have accumulated there, okay? So we’re hard at work doing that. And it will require world-class sport in terms of architecture and design, which we are up to our eyeballs in. It will require not insignificant dollars of investment, all of which we are involved in and prepared to do. Now the Hotel Pennsylvania is a different kettle of fish. As you may remember, we have an approval to build a better part of a 3 million square foot financial services-oriented tower on that property, which was designed for a huge financial services customer that we had a deal with, that went away in the great recession. So we have an enormous entitlement, including ULURP, the full process, et cetera, which is sitting on our shelves. We abandoned that because it seemed highly unlikely that we would be able to land such a tenant, and we have been focusing in the recent past on renovating the hotel. By the way, we are in the pretty good position where we have a hotel which generates a significant amount of EBITDA, which is a holding action for what we may do with that asset in the future. And we have lately been getting some very interesting intriguing incomings as to office tenants that might want that site. So we are going down 2 paths. One path is the renovation of the hotel, which will drive more income and improve the neighborhood, and the second is putting our big toe into the marketplace to explore the opportunity to land a major anchor tenant for the site and the Penn Plaza district. So we are up to our eyeballs in it. We don’t have anything specific that we’re going to — that we’re able to go to public with yet. This is not a short-term endeavor. It’s 3 or 4 square blocks of the City of New York in a very, very, very crowded district on top of the busiest train station in North America, et cetera. So we’re excited about it. And other than that, I don’t have a whole lot that I can tell you.
Source: Seeking Alpha http://goo.gl/SBfEkl