Apple (AAPL) Comes Under Scrutiny for Grand Central Lease
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Apple's (Nasdaq: AAPL) plans for its new New York store may not be so grand (Central) after all.
According to the NY Post Thursday, Apple has come under scrutiny by New York state officials on a deal to set up shop in Grand Central terminal, in New York City.
NY State Comptroller Thomas DiNapoli is investigating whether or not the Metro Transportation Authority (MTA) gave favorable terms to Apple for its lease in GCT. Reason behind the investigation is that Apple will be the only one of about 100 retailers not required to make revenue-sharing payments to the agency landlord.
Further, Apple's 10-year lease -- at $800,000 in the first-year -- is well below neighboring tenants.
The investigation might also be more into the MTA than anything; DiNapoli said a July 2010 audit on the MTA's real-estate record keeping found "lax record-keeping, hundreds of vacancies and mediocre marketing of properties," according to the Post.
But a spokesperson for the MTA -- Aaron Donovan -- said Apple is paying for the space. Apple initially put up $5 million upfront, and is making positive modifications to enhance GCT, such as elevators to bring shoppers to the second floor. Donovan contends that Apple is paying $180 per square foot over the 10-year lease, which is about "ten times more than the previous tenant."
Ahead of the bell Thursday, Apple shares are slightly lower.
According to the NY Post Thursday, Apple has come under scrutiny by New York state officials on a deal to set up shop in Grand Central terminal, in New York City.
NY State Comptroller Thomas DiNapoli is investigating whether or not the Metro Transportation Authority (MTA) gave favorable terms to Apple for its lease in GCT. Reason behind the investigation is that Apple will be the only one of about 100 retailers not required to make revenue-sharing payments to the agency landlord.
Further, Apple's 10-year lease -- at $800,000 in the first-year -- is well below neighboring tenants.
The investigation might also be more into the MTA than anything; DiNapoli said a July 2010 audit on the MTA's real-estate record keeping found "lax record-keeping, hundreds of vacancies and mediocre marketing of properties," according to the Post.
But a spokesperson for the MTA -- Aaron Donovan -- said Apple is paying for the space. Apple initially put up $5 million upfront, and is making positive modifications to enhance GCT, such as elevators to bring shoppers to the second floor. Donovan contends that Apple is paying $180 per square foot over the 10-year lease, which is about "ten times more than the previous tenant."
Ahead of the bell Thursday, Apple shares are slightly lower.
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