Crains New York - July 23, 2012 - (Page 4)

Time runs out for owners of midtown time-shares Overbooking brings value of Manhattan Club stakes down; a scramble for exits BY AMANDA FUNG Late last year, Jimmy Cottone took drastic action. He dumped his share in the Manhattan Club, a ritzy midtown Manhattan time-share condominium, for a mere $1. That’s $16,999 less than he paid for it nearly a decade earlier, but one buck more than what he figured was its actual value. “The time-share is completely worthless,”said Mr.Cottone,a Long Islander who has not only seen his annual maintenance fee quintuple to $2,000, but found he was unable to book time to use his share no matter how far in advance he called to make reservations, owing to overbooking. In the end, after finding no takers for his stake on eBay, Craigslist and other online sites, Mr. Cottone handed it over to the Manhattan Club’s owner-operator, Ian Bruce Eichner, chairman of Continuum Co., and other firms, for a dollar. Mr. Cottone has loads of company in a once-glistening project that has drawn a growing army of detractors over the course of nearly five years. A Yahoo online group ap/ wide world photos IN THE MARKETS by Aaron Elstein END OF TIME? Sales of stays at Ian Bruce Eichner’s Manhattan Club have fallen short. where owners voice their complaints has drawn 493 members since it was created in 2007. Three years later, a website called the Disgruntled Manhattan Club New York Timeshare Owners, which chronicles the owners’ plight, went up. More recently, a similar site appeared on Facebook, and TimeSharing Today published an article by a former owner titled “My Manhattan Club Experience: A Tale of Frustration.” It’s all a far cry from the situation in 1997, when the club opened. At the time, it was billed as the first major time-share condominium in New York, where visitors could have a high time in the city at a relatively low cost. The property at 200 W. 56th St. was a bankrupt hotel that Mr. Eichner bought and converted into two properties, the 286-suite Manhattan Club and the Park Central Hotel. The cost of work on the club alone came to $141 million, according to Continuum’s website. Initially, shares were marketed at prices starting at $10,000, depending on the size of the unit. Today, they start at $35,000. Back in 1996, Mr. Eichner, who declined to be interviewed for this article, told The New York Times that if all the time-shares were sold, 18,000 customers a year would buy seven-day stays or the flex-time equivalent. As of 2010, exactly 14,872 had been sold. Since then, there has been a growing number of resales—including owners turning their shares back to Mr. Eichner, who rose to prominence as a developer 30 years ago but lost several properties in the real estate collapse of the 1990s and three years ago surrendered his $3.9 billion Las Vegas casino resort to a bank. While time-shares are relatively rare in Manhattan, some have been quite successful. Shares in 78 units at the New York Hilton that were set aside for time-shares in 2001 sold out in about four years, according to Kim Kreiger,senior vice president of Club and Resorts at Hilton Grand Vacations. That led to the groundSee TIME on Page 23 Here’s one stock that’s smoking hen the going gets tough, the nicotine-addicted reach for a cigarette. And that’s why, if you’re an investor whose taste runs toward smooth, consistent earnings growth, Philip Morris International is a stock you might want to latch onto. Before going any further, let’s acknowledge there is much to dislike about a company that makes and relentlessly markets a product that causes cancer—and death. And let’s admit that cigarettes are socially taboo in New York and many other places around the nation. Still, there are lots of cafés, bars and even offices around the world where people can and do light up; and Philip Morris, trading at around $90 last week, offers a unique way to profit from these people’s stinky habit—and to earn a healthy dividend to boot. Philip Morris International, which was split off years ago from the U.S.-focused Altria, generates about 60% of its earnings from sales in Asia, Africa and the part of Europe that happily lies outside the eurozone.That’s a great place to be, because while belt-tightening smokers in Spain, Italy, Greece and other economically challenged nations are switching to cheaper cigarettes, Russians in particular just can’t seem to get enough of the Marlboro Man. In June, the company launched a new brand in Russia called Marlboro ClearTaste, a cigarette that management billed in a conference call last week as one that “addresses adult smoker product preference.” Whatever that means, it looks like a big hit. Philip Morris’ volumes in Eastern Europe rose by 5% last quarter, helping offset a greaterthan-9% decline in its much smaller Western European sales. While growth prospects overseas are a good reason to hold the company’s shares—at least until Russia, Indonesia and other nations change their views on the acceptability of smoking—the chief attraction in tobacco investing is the guilty pleasure of inhaling the dividends. And that is where Philip Morris actually outdoes even its peers. Last year, the company paid shareholders a 3.4% dividend, a sum that equaled 45% of the company’s operating cash flow—or just half the percentage doled out by Altria. That means that even though Philip Morris has upped its quarterly payout by nearly 50% in the past two years, according to Bloomberg, it would appear to have ample room to raise it even more. There’s something you can put in your pipe and, if you insist, smoke it. W istockphoto -12% DECLINE IN THE PRICE OF GOLD since it peaked in late February. The decline in the metal’s cost, long seen as a measure for the level of fear in the market, suggests investors are a bit more optimistic about the state of the world. 4 | Crain’s New York Business | July 23, 2012 ap/ wide world photos http://mta.info/mta/realestate/retail_leasing.html http://mta.info/mta/realestate/retail_leasing.html

Table of Contents for the Digital Edition of Crains New York - July 23, 2012

Crains New York - July 23, 2012
Contents
In the Boroughs
In the Markets
The Insider
Business People
Small Business
Opinion
From Around the City
Report: Real Estate
Real Estate Deals
For the Record
Classifieds
New York, New York
Source Lunch
Out and About

Crains New York - July 23, 2012