48 Bond Street closes up 400% since 2008, but …

… it does not count
I was amused by a four-fold increase in value when I reported on April 16 about a Tribeca loft March 2010 resale (139 Reade St closes up 400%), but that one had last sold in 1994. Let’s just say that I am not amused by the four-fold increase in prices of the Manhattan loft #8B at 48 Bond Street from the sponsor sale on April 18, 2008 to the resale on April 20, 2010. That sponsor sale was a real sale only in the sense that a deed was recorded in exchange for money, but that original price was so ridiculously low that I am going to ignore it for purposes of tracking loft sales. Before considering whether the family trust that just ‘made’ $1,643,700 (before expenses) in reselling #8B has cousins of the developer, a couple of things about the building….

perfect timing
If there is another new development in Manhattan (lofts or otherwise) that timed The Market more perfectly than 48 Bond Street, I can’t think of it. The two key calendar points for The Market were The Peak (roughly, deals closing in the first quarter of 2008) and The Freeze (the nuclear winter that followed the Fall of the House of Lehman, September 2008).

There were 11 sales in this new development in March and April 2008; two were in July 2008; one was in October 2008 (on a pre-Lehman contract, no doubt). (The building was built as a 17-unit condop, but the two 6th floor units were sold combined in April 2008, the 9th floor sold as a unit in October 2008, and I don’t see any record of a 10th floor unit changing hands.)

better to be lucky than good?
Even so, the developer here wanted to push the envelope when they started sales in 2007. Several units (at least) needed some price drops to close, even if above the (last) ask. #3B started at $2.1mm, dropped to $1.95mm, but closed at $1,960,131; #7B started at $2.4mm, dropped to $2.25mm and closed at $2,291,062; #4B started at $2.125mm, dropped to $1.975mm then closed at $1,985,587. Nonetheless, net-net they had to have gotten pretty much every last dime out of this project.

there went the neighborhood
Way back in November 2007 I observed that this project and another just down the street changed the values in the neighborhood. From that post of November 1, 2007, re-setting values at 57 Bond / there goes the neighborhood:

cousins? (or blackmailers)
Getting back to #8B at 48 Bond Street, they just sold at $2.1mm after buying almost exactly two years earlier from the developer at the ridiculous price of $456,300. We know that this price is ridiculous because … well, because it is ridiculous for a fabulous brand new loft of "1,551 sq ft". Oh, and because the (identical) loft below it sold for $2,291,062 three weeks earlier.

This is one of those cases in which it is obviously not an arm’s length transaction. But if the purchaser-developer relationship was a little more attenuated, so the friends-and-family discount was more modest, it would have been harder to figure out. Sigh.

Of course, I have fretted before over the difficulties in interpreting ‘comps’ in a world in which it can be hard to determine what is "arm’s length", particularly after my sabbatical when I had many, many loft closings to enter on the Master List of downtown Manhattan loft sales between $500k and $5mm. For more on the arm’s length conundrum, see:

• February 7, measuring arm’s length / not a real "sale" at 125 East 12 Street
• February 9, the unique property next door at 114 East 13 Street, "sold" to a unique buyer
• March 17, 170 Fifth Avenue loft sales are confusing, where I think I discovered an above-market ‘sale’
• January 17, riddle me this / the naked data point at 35 Wooster Street, where I uncovered a related-party transaction
  

big tax bill in a down market
The family trust that just sold #8B should not be too concerned that they had a huge capital gain tax obligation; after all, they had a huge capital gain. From a market perspective, the April 20, 2010 resale at $2.1mm is a valid data point, but is not indicative of a 400% market appreciation for this building. Instead, the fact that #7B sold originally at $2,291,062 suggests that values in this building have dropped moderately (8.4%) since 2007. But that is not a paired resale; just a pretty good comp.

© Sandy Mattingly 2010