Citizen-journalism gets to the bottom of a Tribeca loft mystery
I had a fun weekend diversion, prompted by a question from Tribeca Citizen (the essential Tribeca blog) about someone who seems to have significantly overpaid for a loft at 155 Franklin Street. Erik was interested in the possibility that this transaction was related to Taylor Swift owning a lot of real estate nearby, while I was intrigued by the puzzle: why would someone pay $9.75mm ($2,754/ft) in November 2017 for a second floor loft that had been purchased for $5.87mm ($1,658/ft) in October 2013?
In a building in which the previous high price per square foot for a loft without outdoor space was $2,325/ft?? When someone paid (only) $2,488/ft for the entire top floor interior in March 2014, without considering the value of the bi-level wrap around terrace included in that purchase???
Now the NY Post claims today to have sources who confirm that this was all a Taylor Swift production. Meaning that she’s paid nearly $50 million for adjacent but not quite contiguous properties:
- $19.95mm in March 2014 for #6S and #6N at 155 Franklin Street (“8,018 sq ft”, in total)
- $18mm in September 2017 for the “5,148 sq ft” 3-story townhouse next door at 153 Franklin Street that (critically, apparently) includes a garage
- $9.75mm in November 2017 for the “3,450 sq ft” loft #2N at 155 Franklin Street
The well-informed readers of TriCit speculated that it was Swift (nice detective work, readers!) and wondered, among other things, if she might use the new #2N loft to gain access from her penthouse at 155 Franklin to the garage in the townhouse, without having to run a gauntlet of paparazzi. Read the TriCit post, in which I threw some cold water on that theory, though a thimble-full compared to the detail of another reader.
Tribeca loft neighbors hope the despot is benevolent
All the paparazzi stuff aside, this accumulation presents an interesting problem for the fellow condo owners at 155 Franklin Street. With a single owner holding #6S, #6N, and now #2N, that’s three of only ten units; given that the penthouse units have that outdoor space, they likely have a disproportionate allocation of common interest, so more than 30% of the voting power in the condo. If two other unit owners agree with a Swift proposal, they likely have a majority, so the Non-Swift Seven can only afford one defection to oppose anything she proposes.
This is one problem with condos for which coops have a solution. When I was president of a 21-unit coop loft building in the 1990s we opposed a shareholder with three units acquiring a fourth, and we had the power and legal authority to do so. The condo board at 155 Franklin Street had only the power of First Refusal if it wanted to prevent Swift from acquiring #2N in addition to the 6th floor units, which meant that the board would have to match the purchase price, and had only 30 days in which to exercise that option.
No condo keeps that kind of cash around (putting aside the fact that Swift overpaid for #2N), and no condo has enough ownership interest to borrow that amount of money, meaning that — on an emergency basis — the condo owners would have to agree to come up with millions of dollars in cash, knowing that the #2N seller and #6S and #6N owner and prospective #2N purchaser would oppose that effort.
Not to mention, what if Swift decides one day she doesn’t want to pay common charges — or the pop music market bottoms out for her, and she can’t pay — and her neighbors have to carry 30% of the cash flow?
I hit such a problem in my April 12, 2011, 95 Greene Street, deadbeat condo owners, and small building risk, which considered a pretty notorious (for its time) condo owner who defaulted on four units worth of common charges in a 26-unit condo. 155 Franklin Street has a bigger over-concentration problem than 95 Greene Street did, back in the day.
And I’ll just leave this here: the standard bank questionnaire in anticipation of a mortgage asks if any one unit holder holds more than 25% of common interest. That will make 155 Franklin Street a Red Flag building for any future mortgage application (which is not to say that exceptions won’t be granted, just that this is an unusual complication; assuming future buyers will mortgage).
old man yelling at clouds
When I lived in Tribeca in the 1980s I lived around the corner from 155 Franklin Street and walked past it to go to work, while my ‘local’ was a block west at 176 Franklin Street. DeNiro and Keitel were very close neighbors (and lots of other celebs called Tribeca home) in those days, but I’m not aware that anyone worried about paparazzi.
Tribeca Citizen has reliably reported that paparazzi are a major problem for 155 Franklin Street residents. Newer condos like River Lofts at 92 Light Street are celebrity magnets, in part, because they have garages with direct access to elevators. (I have a vague recollection that Justin Timberlake and Jessica Biel moved there from Soho Mews at 311 West Broadway because of that feature.)
Swift doesn’t have that sort of access from the 155 Franklin Street penthouse, and I don’t think she gets it by acquiring #2N (see above). So why did she buy #2N?
First, as I explained to TriCit, there’s no way to know. Second, because she can. And the fact that she can throw almost ten million dollars at something that is worth (to the outside world, the world where rational buyers attempt to meet rational sellers) about six million is … frustrating.
Rich people are not just like you and me. In this case, 13,000 sq ft were not enough, and another “3,450 sq ft” somehow makes Swift’s life better. So much so that she vastly overpaid for loft #2N, probably to someone who had no intention of moving, so picked a Make My Day number that was absurd. Swift paid it, because she wanted to and because she could. Damn …
celebs? we got celebs …
The Post has been all over this 10-unit building, name-dropping Steven Soderbergh, Orlando Bloom, Ryan McDonough, and (scandalously) Aziz Ansari in an article on January 31 that noted the #2N sale,