Dead Cat Bounce?

inonada

Well-known member
Don’t forget the PH.



03/02/2021Modlin Group Listing sold$19,950,000
Sale recorded$15,500,000
11/30/2020Later Listed by Modlin Group$19,950,000
10/05/2020Compass Listing is no longer available on StreetEasy Last priced at $22,650,000$22,650,000
01/23/2019Later Listed by Compass$25,000,000
09/14/2018CORE Listing is no longer available on StreetEasy$25,000,000
06/12/2018Later Listed by CORE$25,000,000
10/16/2017Listing is no longer available on StreetEasy$22,500,000
09/05/2017Price decreased by 8%$22,500,000 ↓
02/28/2017Price decreased by 9%$24,500,000 ↓
03/22/2016Price decreased by 9%$26,900,000 ↓
09/17/2015Price decreased by 12%$29,500,000 ↓
04/28/2015Listed by Douglas Elliman$33,500,000
 

inonada

Well-known member
Building was bought for $26.6M in Jan 2014 at $1027 ppsf. Original asks in 2015 added up to around $86M ($3323 ppsf). Four sales at just under $7M, a couple at the end of 2016 and a couple mid 2017. Then these two at $15.5M and (let’s guess) $8M. Adds up to $51M ($1970 ppsf), $35M less than developer hoped in 2015.

I wonder if the development broke even, ignoring financing costs & developer’s time. David, how do you think this pencils out? Renovations, both interior & exterior, seem extensive and very well done.
 

David Goldsmith

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Without spending a lot of time on calculations I'm guessing they were over $40M just in hard costs. It's hard to imagine soft costs, sales costs, carrying, etc being less than $10M especially given the time involved.

I'll note with all the talk of how blazing hot the market is - and perhaps I've just missed the press releases - is the dearth of announcements from developers about reaching sales milestones on their projects. In fact the only thing I've seen is the opposite, that being developers passing on releasing sales figures except in the most general "we are happy with increases" way. Using one of my favorite buildings to pick on 1 Manhattan Square I only see 32 sales this year out of 815 units. Is it surprising Extell doesn't want to talk about that? Although I do have to give Gary Barnett credit for admitting they would be losing money on half their current projects.

As for another Extell project - 1 City Point in Downtown Brooklyn - we heard from the sales team how well sales were doing before closings started. Then we heard how even more super amazingly well they were doing on top of that when they slashed prices and brought in Serhant to take over marketing and sales. So I'm confused as to why with the upcoming 1 year anniversary of the first closing it looks like they only have approximately 166 units out of 458 units closed or in contract, which is barely more than one third.
 

David Goldsmith

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One of the reasons I think there may be a rocky road ahead for the Manhattan office market is just how much office space is under construction or planned. Although it definitely rubs me the wrong way that we are told by Governor Cuomo, Mayor DeBlasio, Pat Foye, etc how we need "congestion pricing" because of how overcrowded Midtown is, but at the same time Midtown East was upzoned for millions more square feet of office space, the State of New York wants to condemn a string of properties to build a huge project around Penn Station, and the MTA is supporting a zoning variance to double the square footage on the project replacing their former headquarters on Madison Avenue to line their own pockets. And why does the "congestion zone" include Avenue D but not 61st Street? Is there any issue which one is more congested?

AFAIK we are still seeing less than 25% of office workers returned. An increasing amount of tension associated with that. When it comes to permanent WFH it looks like we have gone through denial and are somewhere between anger and bargaining. The quicker we move through depression to acceptance the better. I've read several articles claiming an increasing number of employees are quitting rather than returning to 100% in office jobs. I think the employers who have indicated they will be "disappointed' if everyone isn't back after Labor Day may be in for a rude awakening when other sailors steal their wind (i.e. workforce).
How does this sound for planning?
- Cause congestion on purpose by closing lanes, closing streets (calling it "Open Streets"), etc until NYC becomes the most congested city in the entire country
- Enact "Congestion Pricing" to tax anyone who dares to take a vehicle below 61st St, while upzoning Midtown East forillions more square feet of office space and planning a multi-million square foot expansion of an enormous Penn Station complex.
- Vastly reduce subway and bus service so people can't commute by public transportation:

I’m Miserable’: Why the Wait for the Subway Feels Longer Than Ever​

The pandemic and a hiring freeze have led to a shortage of train operators, conductors and workers in New York City, forcing thousands of subway trips to be canceled.

Then be shocked when we're not back to 100% office occupancy after Labor Day.
 

David Goldsmith

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Staff member
My experience with the MTA is that they usually don't admit to things being as bad as they actually are. So if they are admitting that ridership won't return to 80% to 90% of pre-pandemic ridership until 2024, what does it say about people returning to offices post Labor Day?

MTA leaders mull big train, bus, subway service cuts for 2023; expect transit ridership won’t hit pre-pandemic levels​

Metropolitan Transportation Authority Chief Financial Officer Bob Foran pointed to projections from the consulting firm McKinsey and Co. that estimate the MTA’s ridership by 2024 would only recover to 80% to 90% of prepandemic levels.
 

David Goldsmith

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Staff member
Apparently the market is so hot right now you can sell your One57 Billionaires Row condo for only 27% off 2015 prices.

Shark Tank’s Robert Herjavec Buys One57 Condo for Big Discount​

The IT security firm founder and reality show star paid about $34.5 million for the roughly 6,200-square-foot spread​

Robert Herjavec, founder of an eponymous IT security firm who appears on the investment reality show “Shark Tank,” has snapped up an apartment at New York’s One57 for roughly $34.5 million, he confirmed.

The deal represents a major loss for the seller, a limited-liability company with an address at the offices of Pacific American, a company with ties to Chinese conglomerate HNA Group. The company paid $47.37 million for the unit about six years ago, The Wall Street Journal reported, and the apartment was listed for $45 million in July 2020, according to listing website StreetEasy.
 

David Goldsmith

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At 432 Park, a $30M condo is in default and its owner has vanished​

The $30 million condo unit high atop East 57th Street sits empty, stripped of its furniture and possibly abandoned. The mortgage on the 72nd floor residence at 432 Park Avenue is in default, its guarantor appears to be in custody in China and the unit owner’s identity is uncertain.

Now the firm that owns the debt wants to seize the 4,000-square-foot property on Billionaires’ Row, where high-end real estate purchases are often shrouded behind layers of LLCs.

In a lawsuit filed last week, Maverick Real Estate Partners is seeking to foreclose on the three-bedroom unit, hoping to sell it “on an expedited basis on the grounds that the property is vacant and/or abandoned.”

Maverick alleges the owner of unit 72A — listed as an offshore LLC — has failed to make mortgage payments since March, throwing the loan into default.
 

David Goldsmith

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Building was bought for $26.6M in Jan 2014 at $1027 ppsf. Original asks in 2015 added up to around $86M ($3323 ppsf). Four sales at just under $7M, a couple at the end of 2016 and a couple mid 2017. Then these two at $15.5M and (let’s guess) $8M. Adds up to $51M ($1970 ppsf), $35M less than developer hoped in 2015.

I wonder if the development broke even, ignoring financing costs & developer’s time. David, how do you think this pencils out? Renovations, both interior & exterior, seem extensive and very well done.
Walked by this building today IMG_20210728_170918836.jpg


Seems like a similar situation? What do you think this will sell for?

NB they made this little lobby with what appears to be a "front desk" station for a doorman/security. It seems like the worst possible use of the space.
 

inonada

Well-known member
Interesting situation, David. From what I can tell:

- Paid $11M in 2013.
- Borrowed $8.25M in 2014, presumably to cash out equity down to $2.75M.
- Conversion approved in 2015.
- Tried to sell for $21M w/o any work in 2016.
- Borrowed another $11.75M in 2016, extending the $8.25M as well, presumably to start construction.
- Extended two loans in 2019, through Aug 2021, showing nothing had been yet paid down.

Loan extensions were at prime rate, which I calculate as $4.75M over lifetime of the loan.

They are trying to get $36.5M. I think they'll end up around $30M, but perhaps worse. They're in for $20M loans, plus $7.5M in equity ($2.75M) and interest paid ($4.75M). Take out the broker's fees and other soft cost ($2.5M? -- you'd know better), I think we are looking at zero returns. If the developer put more cash directly into the project, then negative. And that's not even counting 8 years of labor from the developer ($2-4M?), nor the opportunity cost of the equity (deployed $11M for one year, then $2.75M for the next 7 years).

Personally, I would have sat on my ass doing nothing and deployed the equity elsewhere. Indexed S&P 500 would have returned $8M on that capital. Or as w67th & I were advocating mid-2013 when this place went into contract, AAPL would have netted $23M.
 

David Goldsmith

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I'll be interested to see what this actually closed for.

But even in this "Uber hot market" asking price ($13,500,000) had to be dropped below 2013 purchase price ($15,940,000).
 

inonada

Well-known member
Yes, but is that über-prime village or pretty-prime village. People in 2013 told me prices in über-prime village never go down, because they are not making any more. But pretty-prime village is another matter altogether: I understand they may be making more of it.
 

inonada

Well-known member
Listed for 1 day at $14M then taken off market and now back at $16M.
What do you think about this?
The market has spoken repeatedly at $2200 ppsf here, both pre-pandemic (e.g., 7E) and post- (e.g., 7W). That would price this at $10M, add another $1M for outdoor space, and another $1M yet for single-floor factor, I dunno. That adds up to $12M. I don’t really see it beyond that myself. There is so much inventory at this price level that I don’t think the market really values 4500 sq ft any higher than 2x 2250 sq ft, but they had been pricing ($21M) as if that were the case.

They’ve got 3 of these to sell (8, 9, PH), with none sold so far. Asks have ranged anywhere from $14M to $24M over the past 5 years of listings. The half-floors were priced lower ppsf to start with, so I am guessing they were banking on these for the big profits. But clearly they haven’t been moving.

Anyhoots, I think they priced at $14M thinking to clear it out at $12M. But then the return-by-Labor-Day rush gave them second thoughts, thinking the market had turned. I am not hopeful for them, especially with 3 to sell, but we shall see…
 

David Goldsmith

All Powerful Moderator
Staff member
Apparently the market is so hot right now you can sell your One57 Billionaires Row condo for only 27% off 2015 prices.

Shark Tank’s Robert Herjavec Buys One57 Condo for Big Discount​

The IT security firm founder and reality show star paid about $34.5 million for the roughly 6,200-square-foot spread​

Robert Herjavec, founder of an eponymous IT security firm who appears on the investment reality show “Shark Tank,” has snapped up an apartment at New York’s One57 for roughly $34.5 million, he confirmed.

The deal represents a major loss for the seller, a limited-liability company with an address at the offices of Pacific American, a company with ties to Chinese conglomerate HNA Group. The company paid $47.37 million for the unit about six years ago, The Wall Street Journal reported, and the apartment was listed for $45 million in July 2020, according to listing website StreetEasy.

Nearly half of luxury units empty in seven Billionaires’ Row buildings​

Billionaires’ Row is a bust.

Nearly half of luxury units across seven buildings in the uber-exclusive Midtown Manhattan stretch — where apartments have sold for more than $100 million — sit empty and dark, according to a study exclusively shared with The Post.

An analysis of recorded and known pending sales at the seven skyscrapers — 157 W. 57th St., 432 Park Ave., 111 W. 57th St., 53 W. 53rd St., 520 Park Ave., 217 W. 57th St. and 220 Central Park South — conducted by brokerage firm Serhant found that some 44 percent of the building’s collective condos remain vacant.
 

inonada

Well-known member
Nearly half of luxury units across seven buildings in the uber-exclusive Midtown Manhattan stretch — where apartments have sold for more than $100 million — sit empty and dark, according to a study exclusively shared with The Post.
Darn, I thought the study was going to be about the half that have sold but remain empty and dark regardless. That would have been fun too: scan up & down all evening across several nights to see which ones ever have a light turned on.

From what I can gather, the occupancy rate on (sold) ~$10M apts might only be in the range of 30-50%, and at ~$20M+ it drops to 15-25%.
 

David Goldsmith

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Staff member
(By occupancy rate, I mean percent of days the apt is actually occupied by a resident.)
I have a pretty good view of the top half of 432. Seems like it's always the same 2 units always have all the lights on and the others are always 100© dark.
 
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