Each former seat holder of the American Stock Exchange should receive between $10,000 and $15,000 of NYSE Euronext stock after the recent $65 million sale of the Amex building on Trinity Place in lower Manhattan.
The sale of the Art Deco Amex building is the second leg of a two-part transaction. In 2008, NYSE Euronext purchased the Amex for $260 million in a tax-free stock transaction. The deal specified that if NYSE Euronext were to sell the building within a certain period of time, then the 837 Amex seat holders would also receive the net proceeds from the sale.
The Amex building was recently purchased by former hedge fund manager Michael Steinhardt and a partner for $65 million. The plan is to turn the Amex into retail stores. An adjacent building that was also part of the sale will be torn down to build residential units and a hotel, according to press reports.
According to former specialist Bill Silver, who was on the Amex committee charged with selling the building, the net proceeds should be between $10,000 and $15,000 per seat.
"That’s my best guess at this point," said Silver, a partner at Weiskopf, Silver & Co. "Members will be receiving a letter that covers all of this."
Silver said his committee had two hurdles to overcome to sell the building: a poor real estate market and a deadline to complete a sale. First, it was in charge of selling a building in the teeth of the financial crisis, when there was no financing available and few takers. "The first bids we saw were considerably lower," he said, adding that earlier bids would not have given members any return.
Also, the original deal to sell the Amex was set up as a tax-free exchange, and such deals have deadlines. In this case, the building would have reverted to NYSE Euronext if the transaction wasn’t completed in the next year or so, he said.
"It’s a good resolution to a sticky situation," said Michael Whitman, a principal at Stuyvesant Trading, an electronic market maker in options for 30 stocks, and a former board member at the Amex. "At least the seat holders are getting something back."
Out of the $65 million from the sale, Amex seat holders would split roughly $12.5 million, based on the higher distribution of $15,000 for each of the 837 seat holders.
According to Silver, seat holders need to pay other expenses before they see their share of the proceeds in NYX stock. There is a $26 million mortgage that needs to be satisfied, plus interest. In addition, about $15 million in tax abatements to New York City need to be repaid. Other expenses are moving targets and include legal fees, building maintenance costs and the transfer tax for two sales.
Whitman estimated that seat holders received about $311,930 in NYX stock in the first leg of the transaction in 2008. The pricing of Amex seats had been volatile during the last decade of the exchange’s existence, he added. Pricing ranged from $700,000 during the dotcom boom, down to as low as $100,000, when the NASD owned the Amex in the late 1990s, he said.
So what about those who bought seats at the height of their pricing? Did they get burned? Not really, said Howard Lasher, a retired floor broker who spent 42 years on the Amex. "In 2000, the Amex was rockin’," Lasher said, pointing out that seat owners either made money as practitioners or made money leasing their seats. A seat leased for $14,000 a month during the good times, he said.
Whitman said that he doesn’t look back with any regret at the Amex sale. "The sale was a best-case scenario for an old-world exchange," he said. "It felt good at the time, too, because 200 people were able to keep their jobs."
Lasher retired after the sale was completed in 2008, and said he has fond memories. But he is also glad the Amex sale is ready to be finalized: "At the end of the day, I am happy to have had a 40-year career that provided me with a great education and a wonderful living."
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