Friday, November 18, 2016

Hard News -- And At Thanksgiving 2016, Too -- For The (Former) Merck HQ Community Of Readington Township, NJ

We read, overnight -- an editorial, in a local New Jersey community newspaper, letting it be more-widely known, via the Mayor of Readington, which township encompasses the legacy Whitehouse Station Merck World HQ (with some 1.1 million square feet of office space). . . that is no longer under contract to any buyer. [Here is my March 2014 backgrounder, on the property -- as Merck secretly prepared to move the Global HQ, to Kenilworth, inside the legacy Schering-Plough HQ.]

In fact, it is back on the market. Over a year and a half ago, we were encouraged to learn that the property had a contract buyer (at first rumored to be Google, but that was subsequently debunked). Now that the property has no buyer, and the community schools, roads and bridges in Readington are once again facing at least a $2 million per year drop in real estate tax revenues, I feel the original 2015 letter to the editors of deserves a re-read -- for all communities likely to be affected by what will in fact be Mr. Trump's "exporting policies" at least as to high paying jobs (despite all his campaign promises to the contrary):

. . . .The company placed the hexagonal-shaped main building and less than half of its 1,000-acre corporate campus on the market in October 2013, listing it with real estate company Cushman & Wakefield. Merck retained a smaller office building and about 550 acres at routes 22 and 523 near Route 78.

Since then, Merck also listed its Summit facility, consolidating operations at its Kenilworth site. . . .

In late 2012 Merck announced that it would move its global headquarters from Readington.

The main building is a five-story granite and glass structure with a five-acre courtyard. It includes a 900-seat dining area overlooking the courtyard, a 250-seat auditorium, a full fitness center and 35,000-square-foot data center.

The corporate campus includes a 17,000-square-foot childcare center, a solar "farm," basketball and tennis courts, a ball field and a helipad. . . . [Ed. Note: And the early 2015 letter, in reply:]

Hopefully, at some point in the future, there will be reason for the apparent optimism for the Merck property that the Mayor seems to have. Until more information is known, I for one am going to refrain from any level of rejoicing.

There are a couple of reasons for my cautious optimism.

1. Since the mayor is soliciting ideas, I assume that the potential buyer is not a "white knight" corporation looking to use the facility in the same fashion as Merck (i.e. a corporate headquarters campus).

2. The buyer's purchase is likely at a significant discount to what the property may have been assessed/valued. The following facts help underscore my concern:

A. In 2014, the assessed value of the subject property was $213 million

B. Merck had the property appraised at a value of $89 million

C. The negotiated assessed value for 2015 was $153 million

D. Merck reserved the right for further tax assessment/relief for 2016. Presumably the prospective buyer will exercise the same right.

3. It would be reasonable to assume that such a tax adjustment/assessed value could be close to or lower than the $89 million. Such a valuation would reduce taxes from the Merck property by approximately $1.8 million – on top of the $1.8 million reduction in 2015.

4. The purchase price could be well below the $89 million appraised value.

5. Whomever the purchaser may be, it will likely take several years to realize the improvements, rehabilitation and occupancy necessary to begin increasing the assessed value.

6. The above scenario and the long term valuation of the Merck property and impact on Readington's tax base is reasonably likely regardless of whom the buyer might be.

7. Moreover, until the buyer's identity and intentions are known, the public – and the mayor – should contain their enthusiasm.

Bob Fasinski | Readington, NJ. . . .

This is indeed hard news, for the people of Readington, NJ. We will keep you in our meditations. Sadly, we expect to see much more of this, under Mr. Trump's actual tax and spend policies (even as the liar that is Mr. Trump takes credit by Tweet for keeping Ford from moving jobs from Kentucky to Mexico -- which the company quite credibly says were never leaving Kentucky, anyway -- sheesh. He's a. . . sociopath). Onward on a warm but gray Friday morning. . . smiling. . . .


No comments: