Leigh Kamping-Carder

Bidding War Love Letters: Real-Life Samples From NYC Apartment Buyers

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We don’t envy the residents of Trump Plaza. The family estate that owns the land under the Lenox Hill co-op tower has decided to sell it, Bloomberg News reports, leaving residents with two bad options: buy the land themselves or face sizable rent increases from a new landlord when their lease expires in 10 years. Why is this happening? Trump Plaza is what’s known as a landlease building, where the shareholders of the co-op don’t own the ground the building sits on, and instead pay rent every month to the owner. The apartments tend to be cheaper upfront (in fact, they’re one of the little-known bargains of New York City real estate), but come with higher monthly charges. Oh, and a world of uncertainty: the possibility of rent hikes and problems getting mortgages, plus the nightmare scenario at Trump Plaza. Still, it isn’t often we get to see exactly how this kind of nightmare plays out. In the interest of illuminating exactly what it might mean to buy a landlease co-op, let’s see how both options break down, using Bloomberg's numbers: