how the pros do it: raise the price, get the price for 66 Ninth Avenue loft

a new building record
The media last week was all over the recent sale of the “2,271 sq ft” Manhattan loft #6W at 66 Ninth Avenue (the Porter House) because the seller is a retail real estate honcho. The stories (from The Real Deal. here) hit the highlights (full ask sale after original price was raised 11%) but wait … there’s more! Further on the theme yesterday of sellers who might prefer to be landlords (October 18, schizo seller succeeds with 224 West 18 Street loft by zigging, then zagging), this seller entertained the same notion. In this case, he may have sold only because the buyer hit the number (after being raised 11%, you will surely remember), which the seller presumably recognized was a stretch number because it re-set the building record on a dollar per foot basis by a large margin.

Make my day, indeed! Let’s look at what RKF sold, and then how he sold it.

15 windows, and more
If I am counting correctly, this loft is the west side of the old top floor of the original building, onto which the famous Porter House 4-story cantilever was grafted in 2002. (As StreetEasy’s building page puts it:

Sitting on top of the renovated brick structure is a 15,000 square feet off-angle zinc and glass box. This dramatic juxtaposition of old and new is underlined by the fact that the zinc metal clad modern addition is set back from the front façade facing Ninth Ave, and cantilevered over it’s neighboring buildings.]

This loft is, then, the old top floor facing you in the listing’s building photo, with the 6 arched windows over Ninth Avenue being the west windows on the #6W floor plan, from living room, to kitchen, to master. In addition to those 6 west windows, the bedrooms over 15th Street have 4 north windows, and the living room, the bedroom/study, and the closet (!) split the 4 south windows. They key to this floor plan is that these are 3 real exposures, not the single-window-exposures you sometimes see bragged about. With the plumbing in the middle, back to the (blank) east wall, this is a very efficient “2,271 sq ft”, an easy 3 bedrooms.

According to the enthusiastic broker babble, the “2,271 sq ft” have been well dressed:

10 ft ceilingd [sic], large arched windows, custom recessed lighting, beamed ceilings, custom woodwork and storage, Jatoba wood floors, a built-in Crestron with intergrated [sic] sound-system, central air conditioning and washer and dryer. … custom-designed dry bar with stow-away bench, a modern Val Cucine Chef’s kitchen with walk-in pantry, marble countertops, stainless steel backspash [sic], custom wood cabinetry, as well as top-of-the-line appliances, including Viking refrigerator, Viking stove with grill and vented hood, Viking dishwasher, SubZero wine cooler, water filtration system, and large sink with garbage disposal. … master bathroom features marble floors and soaking tub, separate glass-enclosed glass shower, double-sink vanity

You can’t see this on StreetEasy or any other public source, but the floor plan is identical to when the recent seller bought loft #6W in 2005. The few pictures that I can see show the same finishes and condition (including the kitchen) in 2005 as now, but I can’t be certain there have been no upgrades. You won’t see, for example, the custom dry bar in the (much more restrained) 2005 babble below, but if it is indicated on the floor plan on the wall between living room and study, that’s the exact same as the 2005  floor plan:

gorgeous, brand new state of the art Val Cucine kitchen with Viking appliances. Custom sound system, custom lighting plan, and beautiful custom built-in-cabinetry

Obviously, the decor is different, 2005 to now. You know that staging-for-value axiom about using neutral colors? The retail real estate honcho didn’t get that memo, judging from the bold colors in the two bedrooms (pix #2, #6). Funny thing is, his seller didn’t either, as the 2005 listing photos in our data-base show a deep brown (!) master bedroom.

how this pro did it
The real estate honcho brought loft #6W to market on July 17 at $4mm, bt must have been swamped with interest (possibly, with offers). So he switched to a higher gear by asking $4.45mm beginning on July 24, obviously continuing to provoke major buyer interest (and offers!) as the contract was signed by July 30. To use a respectful real estate term about this sequence: yowza!

But what you don’t see in any of the media reports about this bold-faced sale is that he didn’t really want to sell. He preferred to use the Ka-ching Machine by renting. Per StreetEasy:

April 8 new to market $22,000/mo
May 7   $20,000/mo
June 13   $18,000/mo
July 30 no longer available  

Notice that he did not start trying to sell until giving $18,000/mo a full month to attract a tenant, after also giving the higher rents a full month each.

The taxes and common charges for #6W are about $3,600/mo, so whether or not $18,000/mo would be a positive cash carry or not depends on RKF’s mortgage. I can’t see his mortgage data at the moment, but $14,400/mo would support about $2.7mm at 5%, if the retail real estate honcho were interested in a mortgage at all, and carried a loan at 5% for $2.7mm.

it is a mere coincidence that a $2.7mm mortgage would represent neutral cash flow had he rented at $18,000/mo, as me might actually have taken out a mortgage about that high when he bought #6W in 2005, since he paid $3.15mm then.

That mortgage number (if there was one) is no longer relevant, of course, because he has sold, instead of renting. But look what a nice number that 2005 purchase was, at least compared to the 2012 sale price:

$4.45mm 2012
$3.15mm 2005
$1.3mm gain (before expenses)

That’s how the pros do it, when everything lines up for them. remember that respectful real estate term? Yowza!

the Meatpacking, from another angle
That Real Deal article noted that RKF “and girlfriend” (in 2012??) moved out of the Porter House after buying a condo at 345 West 13 Street, but that was not new news. They bought that condo (rather, this condo) in September 2010. You won’t find their purchase of the “3,599 sq ft” Manhattan penthouse loft #6D at 345 West 13 Street on my Master List of Manhattan Lofts Sold Since November 2008 because they paid too much. (Too much for my criteria; I have no idea if they overpaid 😉

They are still in the Meatpacking District, but now have a lot more space, including a terrace, and a wet bar instead of a custom dry bar. I bet that last bit was not the reason for the move.

I don’t see a rental listing for the Porter House space before April 2012, so it looks as though the retail real estate honcho carried two spaces for a year and a half. Maybe RKF spent some time renovating the (already spiffy) penthouse, but that’s how the (well-healed) pros do it: buy a penthouse loft for $6.4mm while carrying a nearby loft worth $4.5mm.

© Sandy Mattingly 2012


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