19 Warren Street loft sold by minor celebrity at major profit

had been a super white box
The Manhattan loft #PH-W at 19 Warren Street sold on June 7 through a deed filed today (according to StreetEasy), yet the New York Observer observed in yesterday’s edition on-line that it had been sold, “according to city records”. (The h/t goes to Curbed.) The ‘news’ for the Observer was the identity of the MC and the profit; what interests me is the profit, which is not quite as big as you’d think. (Big, just not as big….)

Maybe the Observer just anticipated the deed filing after confirming the approximate price, or maybe they saw the deed before StreetEasy and they just prefer to round to two digits, but they got two prices not quite right in reporting that the MC paid “$1.43 million in November 2002 [and] has now sold his lofty triplex for $3.19 million, according to city records”. The actual numbers on the deeds are $1,425,679 on the entry and $3.185mm on the exit. Any way you round them, the numbers generate a huge gain.

The exit was a quick deal: to market on March 10 at $3.25mm, contract on May 12 at $3.185mm, closing on June 7. The broker babble is rather muted for a $3mm loft, but was certainly sufficient. Most of the babble was on bones instead of finishes:

4 bedroom, 3 full bath 25’ wide triplex condominium with exposed brick walls, 18’ glass solarium great room, media room with built-in speaker surround sound, skylights, and two unbelievable terraces with south and north exposures. A master bedroom with en suite bath appointed subway tile walls, dual pedestal sinks and white carrara marble floors

The Market was a very different animal in 2002 (d’oh!) and the sponsor chose then to not build interior walls, but to otherwise finish the “2,716 sq ft” duplex+mezzanine with two terraces at a pretty high level (“Top-of-the line finished kitchen, viking range, three bathrooms”), instead of Basic White Box of a minimal kitchen and one bath to qualify for a Certificate of Occupancy. I can’t tell from the descriptions whether the white carrara marble floors were original in 2002 or added by the MC, but the floor plans show that the structure is identical throughout, with all plumbing and fixtures sold in 2011 where they were in 2002.

The Observer describes the MC as (among other things) a DJ, so he probably fitted out the media room with built-in speaker surround sound, but he may well have done relatively little “renovation” in the post-2002 build-out. If he spent $100/ft back in the day (remember, he already had a top kitchen and 3 baths), there’s enough room for a nearly $1.5mm gain.

The MC originally put down about $450,000 (per mortgage records on Property Shark), and it appears that he took even that out in refinancing in 2007 and 2009 (his last mortgages in April 2009 total just over $1.9mm!). A big gain, any way you slice it.

terraces are big; also cheap?
There is a great deal of utility in the tiered #PH-W floor plan: 4 bedrooms, 3 baths, media room and and and those two true penthouse terraces (direct access from second level, rooftop, structure set back from building edges) that total 1,175 sq ft (per our data base). In order to assess how strong a price the MC got (huge gain notwithstanding), we need to look at the last sale in the building and to riff with The Miller about how to value outdoor space.

The "1,619 sq ft" #2W sold on March 25, 2010 for $1,582,500 with a small terrace (150 sq ft?). In round number terms, I would retrospectively value that terrace at 33% of the interior space, using The Miller’s principles. The pluses are that it is directly accessed and of modest size, but the fact that it is a second floor terrace drives it (for me) closer to the 25% edge of the ‘normal’ range than to the 50% edge, or beyond. Given the scale it does not matter much, but using 33% results in an adjusted value for #2W of $948/ft 977/ft

(150 x .33 + 1,619 / $1,582,500) [UPDATE: thanks to reader AW for pointing out my math error].

Yes, we have to consider market difference between a closing this month and a closing 15 months ago, but let’s keep this on a rough ballpark value ….

surprise!
I would value the two penthouse terraces at 50% of the interior space of #PHW, for reasons noted above. Retroactive valuations are so much easier! Taking the terraces at 50%, the observed market value of the unit at $3.185mm implies an adjusted value of $964/ft for #PHW (1,175 x 0.5 + 2,716 / $3.185mm).

Are you surprised by how close the two implied values are? I have already tipped my hand as a yes.

The only way to push this in a different direction is to value the two penthouse terraces at much less than half of the value of the interior, which I don’t think is reasonable. And note that we have not made any adjustment for the different market conditions in March 2010 and June 2011.

Bottom Line: the cool tough guy from the 1970s made a lot of money in selling #PH-W, but not (in this context) a ridiculously large amount.

more fun with numbers
In the original sponsor sales, #PH-W (November 2002) sold much later than #2W (December 2000). Perhaps the penthouses took a while to build and finish. But the ratio of the sponsor sale prices in the first sale (#2W then sold at 62% of the price of #PH-W) compares very favorably for #2W to the more recent pair of sales (50%).

Bottom-er Line: arguably, #PH-W did not hold its value as well as #2W.

© Sandy Mattingly 2011