Madoff's Penthouse: What Will It Fetch?

Posted by urbandigs

Wed Sep 9th, 2009 05:43 PM

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A: Lets have some fun here. Madoff's PH unit at 133 E 64th street, a 7-room duplex with a wraparound terrace and quality views is going to be hitting the market in a week or so with Sotheby's agents Serena Boardman & Anne Corey. Personally, I was rooting for my good friend who is also at Sotheby's, Paul Anand. So, what SHOULD it trade for and what WILL it trade for? Two different things so lets hear your thoughts.

Hat tip Curbed.com.

My gut is telling me that the price point this property fits into is roughly trading down about 27-32% or so from peak trades about 2 years ago. This segment of the market was trading down closer to 35% and even saw some distress sales trading closer to down 40% from peak, back in February & March.

I like to do a property valuation based on three main variables: market conditions, property condition, and light/view premium (read my 'valuating Manhattan real estate' piece for more on this topic). Clearly this one will be a bit trickier to pinpoint where it might trade.

Here are the details I have for 133 East 64th Street:

Ownership Type: Co-op
Building Type: Mid-Rise
Service: Full-Time Doorman
# Floors: 12
# Units: 23
Age: Prewar, Built 1927 and Converted 1946
Financing Allowed: 50%

I can't find details on his unit other than that its a seven room PH duplex. We need to know the approximate size, or amount of shares held if possible, # bedrooms and # baths. I assume the property condition will be very good. The key will be valuing the wraparound terrace. How big is the terrace? How is it furnished? Exposures/Sunlight/Views? Layout? It all will play a role.

Past 3 sales in building I have details for include:

3A; 11room/4bed/4bath, 3,800 sft - Sold for $5,730,000 on 10/26/2005
5A; unit info n/a - Sold for $5,000,000 on 05/31/2005
6A; 12room/5bed/4bath, sft n/a - Sold for $5,882,353 on 08/26/2004

The stigma of buying Madoff's home will be the most interesting dynamic in this transaction. Personally, I think its all about exposure when it comes to real estate. Maximum exposure equals maximum profit potential and this one will get massive press. All you need is two willing and able buyers to step up to the plate and when you see the amount of money that was made in the debt/equity markets in the past 7 months, I bet there are a few more multi-millionaire hedgie's out there that would love to brag about owning Madoff's pad! It is a co-op but I wonder what level of pressure is put on them when evaluating the prospective buyer.

I doubt the stigma of it being Madoff's home hurts the value that much in today's market. I think the amount of press it gets will negate any negativity associated with buying the ponzi master's digs.

So, where does it trade? Where is the market for this type of product now? In my view, 9-10 mil is starting pretty high! When I look for some active competition out there I only see:

188 East 76th Street PH with terrace asking $7,850,000 - on market for 12 weeks

My guess is they are setting the price with this 9-room PH duplex listing in mind.