“Besides, what is the point in selling a business which earns PIA $7-8 million annually?”
So the Roosevelt Hotel, which occupies an acre near Grand Central Terminal in NYC, has a net income of $7 million or $8 million per year.
This suggests some questions one might ponder:
1. Should an acre in NYC worth a billion dollars be earning a mere $8 million? Seems to me that this is a rather low return -- at $1 billion valuation, that's 0.8% per year.
2. If this property is worth $1 billion, the land rent, at 5% -- "20 years' purchase" -- is $50 million per year. How much does the Roosevelt Hotel pay the City of New York in property taxes each year?
3. How much do the guests at the Roosevelt Hotel pay NYC and NYS in hotel occupancy taxes per year?
4. How much do the employees at the Roosevelt Hotel pay NYC in wage taxes per year? Wouldn't it be better to collect this amount via taxes on land value?
5. How much do the employees at the Roosevelt Hotel pay NYC in sales taxes and property taxes per year? Wouldn't it be better to collect this amount via taxes on land value?
6. When Pakistan International Airlines decides to sell this "taxpayer," for $1 billion, and that $1 billion, created not by PIA or the people of Pakistan, or the hotel management or the hotel employees, leaves this country, will that be a good thing, or something which should have been avoided?
7. Shouldn't the beneficiaries of NYC's land value be NYC, NYS and the American people, instead of a private entity of any kind -- be it PIA, an American REIT, an NYC-based corporation, a family-owned real estate dynasty, one or more American pension funds (corporate or public), a British church, a middle eastern sovereign fund, a mutual fund, or any other private entity?
That site is valuable not because of anything its current owner is doing or is not doing. It is valuable because of the presence of millions of residents in the surrounding area, and of millions more who visit NYC on business and as tourists in the course of a year. It is valuable because we-the-people have invested and will continue to invest in infrastructure and services which protect and serve these sites. Why on earth does a private entity get to pocket what we create?
It doesn't come out of thin air.
For more background on this story, see some previous posts here:
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