Big British Investment In New York

Press, Volume XCVIII, Issue 29051, 13 November 1959, Page 13

Big British Investment In New York

ISpectauy written for me N.Z.P.A by FRANK OLIVER.} NEW YORK, Nov. 11. It is pleasant to see British money in quantity going back to this side of the Atlantic. The dark days of 1940, when every dollar possible was being sent from here to London as a result of liquidating assets, are still remembered.

Now comes the dramatic announcement that 25 million dollars of British money is going to be invested in one of the biggest real estate developments New York has seen in many years It will help to build the world s hugest office building in the heart of the city, at Grand Central terminal. Only two other buildings in the world are bigger than the 57 storey giant which will be completed by 196 a. They are the Pentagon in Washington, headquarters of the fighting services, and the great Merchandise Mart in Chicago. In a city of skyscrapers, the office building at Grand Central is a puny structure of six storeys and the man behind the new venture, Erwin Wolfson has long been irked by Ulis waste of space—air space that is. He has long had a dream of a great building there, but until the British money became available

the dream could not materialise. He had been having a hard struggle. Although a successful builder of great buildings in New York, American investors fought a little shy of a 90 million dollar building 57 floors high giving 2.4 million square feet of office space. Perhaps they remembered the days when the great Empire State Building was more than half empty and tenants hard to get. Mr Wolfson announced his plans 18 months ago, but did not then look for long-term financing. He waited for tenants to sign up to improve mortgage terms, both in size and interest. Tenants did sign up but there were not enough and some possibilities were hesitant because of doubts about whether such an enormous building was possible even though the location was good and the demand for office space ever increasing. Mr Wolfson had obtained an 80-year lease of the site from the railways using the Grand Central terminal at a rental of 1.1 million dollars a year. The big question was money. Last August, 15 months after the project was announced, a man named Redvers Opie, ' who had been an official in the British Embassy in Washington during the war, walked into Mr Wolfson’s office. He was working for an organisation looking for investment opportunities in America. The visit was welltimed for Mr Wolfson had come to think he would have to have nther partners besides the asso-

mates with him. As a result of his talk with Mr Opie he took a plane to London. There he met Jack Cotton, head of City Centre Properties, and Geoffrey King, chairman of the Pearl Assurance Company, Ltd., which has an interest in Qity Centre. They talked and they then ate dinner. When dinner was finished, Mr Wolfson and Mr Cotton signed their agreement. For 25 million dollars, Mr Cotton has a 50 per cent, interest in the great Grand Central scheme. However, the deal was not announced until after the British election. When the Conservatives won, confidence in sterling was strengthened and both the Treasury and the Bank of England approved the deal.

Mr Wolfson has letters of intent from tenants willing to take half a million square feet of floor space, but he sees no delay now. Floor space will rent for from 5.50 dollars to 9 dollars a square foot per month.

The present six-storey building at Grand Central will come down next March and the new building will be completed, says Mr Wolfson, in 1962.

As British money comes across the Atlantic to New York, so American money if crossing the .ocean in the other direction. Early in December, there will be something new and something typically American in London. The Beneficial Finance Company, the second biggest American “consumer finance” company, will open an office. Beneficial Finance will be the

first American loan company to try to get into the booming British market for consumer credits and it is reported that if it is successful, other American companies that have been watching British developments closely will follow suit.

In 1958, when the Macmillan Government relaxed the hitherto stringent controls over consumer credit, there were available in quantity for the first time since the war durable goods of all kinds and British workers put their new-found prosperity into purchases on credit. Hire purchase has doubled since controls were lifted, but the potential is still considered to be enormous and American loan companies are interested in the British market.

In particular, they look to the car market. In Britain, 25 per cent, of all cars sold are bought pn hire purchase. In America the figure is 64 per cent. The American company believes it will be tough to break into the British market, but it will make one innovation in London. Customers of Beneficial, in London will be able to borrow cash direct as well as to finance the purchase of durable goods. London hire purchase concerns do not normally lend cash. The American company has plenty of cash behind it. One of the largest hire purchase concerns in London is reported to have no more than the equivalent of 850,000 dollars out on loan. By contrast, Beneficial Finance has outstanding receivables in America totalling 500 million dollars.