Friday, March 25, 2011

$48M Plaza condo buy sets new city record

There's a new record in town. Russian composer Igor Krutoy has closed on the 6,000-square-foot Plaza Hotel condominium he chose last month after an epic search for Manhattan trophy apartments, and according to the Post, he paid $48 million for the 12th-floor pad. That's the priciest single condo ever sold in New York -- and the musician isn't even getting the whole floor in the deal. As the Wall Street Journal reported when the contract was signed, Krutoy and his wife, Olga, had been making offers on all the big-ticket condos in the city -- including the $55 million, two-unit combo at 15 Central Park West and equally stunning listings at the Time Warner Center -- before settling on the Plaza spread, which has views of Central Park but wasn't officially on the market. The couple apparently grew tired of losing out to higher bidders, which is why they were willing to pony up the cash for the 1 Central Park South home, sources told the Post.

Source: Real Deal 

Sunday, March 20, 2011

Manhattan apartments lure investors

Eight apartment buildings below 96th Street in Manhattan were sold or went into contract this year; investors say borough has "everything going for it."

When UDR Inc. agreed to pay $260.8 million for a tower in Manhattan's Financial District, it was not only the borough's biggest apartment sale in almost three years. It was also the company's first foray into New York City.
The deal this month by Highlands Ranch, Colo.-based UDR is the latest by a multi-family property investor trying to establish a beachhead in the borough, as apartment demand climbs and rents recover from last year's lows. Several new players are finding opportunity as city mainstays such as Equity Residential, which bought three prime high-rises from developer William Macklowe in 2010, turn their attention to less costly acquisitions outside New York.
Manhattan “has everything going for it from a multifamily perspective,” said UDR Chief Financial Officer David Messenger, whose company is the third-biggest publicly traded U.S. apartment owner. "New York has a great economic base, financial center of the world, extremely high propensity to rent, low home affordability.”
Eight apartment buildings below 96th Street in Manhattan were sold or went into contract this year, not including converted or stalled condominiums, according to Real Capital Analytics Inc., a Manhattan-based property research firm. The three largest by price, which are also the most recent, went to buyers who are dropping a multi-family anchor in the borough.
In February, LaSalle Investment Management, a Chicago-based private-equity firm, agreed to buy Related Cos.'s 265-unit Sagamore building on the Upper West Side, beating 15 other bidders. The company also has purchased multi-family properties in Los Angeles and Washington, D.C., in the past year, according to Real Capital.
The Elektra, a 166-unit apartment building in the Gramercy neighborhood, also went into contract last month, to buyer Invesco Real Estate, Real Capital said. The Dallas-based company hasn't owned a multifamily property in the borough since 2004, said Bill Hensel, an Invesco spokesman.
“For several years leading up to the credit crisis, Equity Residential and Archstone were the dominant buyers of rare, large, trophy, luxury multi-family Manhattan offerings,” said Doug Harmon, senior managing director at Eastdil Secured in New York. Mr. Harmon represented the owner of 10 Hanover Square, the Witkoff Group, in its deal with UDR, as well as the sellers of the Sagamore.
“These days the playing field is a little more open and a little less predictable,” he said.
The newcomers aren't “clouded by their knowledge of history” of the market, which might make them more hesitant to strike a deal, said Robert Knakal, chairman of commercial property brokerage Massey Knakal Realty Services in New York.
“Sometimes you have investors who have been around for decades who turn transactions down, who say, ‘I could have bought that building decades ago for $30 a square foot, why would I pay $700 a square foot today?'' he said. ‘‘It prevents them from making a move.''
Longtime apartment owners haven't abdicated the borough, according to UDR's Mr. Messenger, who said his company competed with Equity Residential (EQR) on several deals last year.
‘‘We still see all the common players at different sites as we're entering a building and they're leaving a building,” Mr. Messenger said. “We know that they're around and they know that we're around as well.”
Demand for Manhattan apartment properties has pushed up prices and lowered the yield for investors. Capitalization rates on multifamily buildings in the borough averaged 5.1% in the fourth quarter of 2010, compared with 6.6% nationally, according to Real Capital. Cap rates, a measure of investment yield, are calculated by dividing a property's net operating income by its purchase price.
Invesco's contract to buy the Elektra for $125 million implies a cap rate of 4%, according to Real Capital. Invesco's Mr. Hensel said the company doesn't comment on sales that are pending.
The average monthly rent for a one-bedroom Manhattan apartment increased 8.6% in February from a year earlier to $2,535, according to brokerage Citi Habitats. Rents for two-bedrooms climbed 9.6% to $3,597, while three-bedroom apartments had an average increase of 12% to $4,874. Average rents for apartments of all sizes have recovered 11% from their January 2010 low of $2,914.
The apartment vacancy rate declined in February to 1.18% from 1.54% a year earlier, Citi Habitats said.
While rents are climbing, New York is the No. 1 U.S. city where leasing an apartment is more affordable than buying a home, according to property website, which compiles data from 50 markets.
At least two high-end Manhattan buildings came to market last month. Developer Gotham Organization is selling its Upper West Side high-rise, the Corner, just a year after construction was completed. Africa Israel USA expects to fetch at least $200 million for 88 Leonard St., its tower in the TriBeCa neighborhood that began leasing in 2007, Chief Executive Tamir Kazaz said in an interview last week.
Of the almost 150 would-be buyers who inquired about the property, which includes a fireplace lounge and an outdoor communal whirlpool, many were companies that don't yet own apartments in Manhattan, he said.
“A lot of them are domestic, outside of New York—Chicago, Atlanta, California,” Mr. Kazaz said.
Chicago-based Waterton Associates, which bid on the Sagamore, will probably “take a run at” 88 Leonard St., Co-founder David Schwartz said in a telephone interview. The investment firm, which owns and operates more than 15,000 apartments in 12 states, has a new $500 million fund that will be leveraged to buy $1.5 billion of apartment assets, the company said in a March 8 statement. Manhattan is one of its targets, Mr. Schwartz said.
Waterton Associates entered the New York market in December, when it bought the senior construction loan and mezzanine debt of downtown Brooklyn's 271-unit Addison apartment complex. The borrower will complete construction on the property and retain ownership, Mr. Schwartz said. Waterton will be paid a “preferred return” from the rental profits.
“We have no presence in New York and we felt structuring a debt position in this case was fine for us,” Mr. Schwartz said.
“We've always been an opportunistic buyer and New York is difficult in that there's tremendous competition, extremely savvy local players,” he said.
UDR's purchase of the 493-unit 10 Hanover Square is the largest apartment deal in Manhattan by price since August 2008, when New York University bought the 304-unit Gramercy Green complex for $275 million, according to Real Capital data. LaSalle's agreement to buy Related's Sagamore for $140 million is the biggest transaction since last March.
“Both recent deals demonstrate a growing institutional appreciation for Manhattan's resiliency and the current positive imbalance between demand and supply, which will no doubt lead to strong rental growth over the foreseeable future,” said Eastdil's Mr. Harmon.
UDR has been considering acquisitions in Manhattan for at least two years, according to Messenger. It reviewed the Macklowe collection of three buildings that went to Chicago- based Equity Residential, the largest publicly traded U.S. apartment owner, for $475 million, he said.
UDR officials are “walking up and down the streets looking at different assets,” and plan to buy several more properties in Manhattan soon, Mr. Messenger said, declining to specify how many or when.
“You're going to see us continually monitoring the market,” he said. “One asset isn't going to be enough for us.”

By Bloomberg News

Fernando Branco, Realtor NY-CT
Vice President
Charles Rutenberg Realty
C: (347) 879-0730
C: (203) 424-0730

Dedicated to excellence and to exceeding expectations

Friday, March 18, 2011

Condo Conversion in the Cards for Iconic Hotel Chelsea?

Some sexy names have been attached to the possible $90 millionish sale of theHotel Chelsea, including boutique hotel big shots Ian Schrager and Andre Balazs. But today Page Six floats a lesser-known name as the front-runner: David Edelstein, president of Tristar Capital. And though he may not have the name recognition of a Schrager or a Balazs, his plan is certainly going to turn some heads.
Sources say Edelstein wants to turn the bohemian landmark into a condo-hotel, adding a mix of apartments in with the hotel rooms. Hey, if the Plaza can condofy the famed Frank Lloyd Wright Suite, can't the Chelsea do the same with the Bob Dylan Room? Page Six also reports that former Chelsea manager Stanley Bard is bowing out of the bidding, probably because his head exploded as soon as he heard the c-word.
· Close on Chelsea [Page Six]
· Hotel Chelsea coverage [Curbed]

Thursday, March 17, 2011

Suze "American Dream is Dead" Orman vs. Warren "Buy Now" Buffett: Whose Real Estate Advice Should You Follow?

You know Suze Orman - she delivers hardcore financial gut checks to everyday Americans on a regular basis. In her latest book, The Money Class, she also recently delivered a pretty striking declaration: that the American Dream - which, for many, includes home ownership and upward economic mobility - is as dead as a doornail. To back this up, she points to huge numbers of jobless and what she sees as the near impossibility of getting credit these days. 

But you might also have heard of Warren Buffett. He just so happens to be the third richest human being on the planet.  In Buffett's most recent letter to his company's shareholders, he, too, made a striking declaration of his feelings about owning a home: "[h]ome ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates."  And the Oracle of Omaha didn't stop there - he literally raved about home ownership, saying that "the third best investment I ever made was the purchase of my home." Now, that's a big statement from a guy whose investment decisions have earned him a net worth over $50 billion!

Suze says the American financial dream is dead. But Buffett says buy, and buy now.  Who's right?  (And who's wrong?!)

Orman is right that one extreme version of the American Dream is dead.  But not the traditional American Dream of owning an affordable home that appreciates over time. That basic premise of the value of homeownership is valid. But it may be valid for a smaller segment than ever before. Orman believes that renters should save, save, save up every penny and they may never be a candidate to own a home.

Buffett believes now is the time to purchase as affordability has never been better.  Buffet wins here; he's right that a home is a very strong investment, with abundant yields, both financial and emotional. And according to our latest survey, the American Dream of homeownership lives on in the hearts of the 72 percent of Americans who say owning the place they live is a part of their personal American Dream. 

How can you make sure your exercise in owning a home is set up to be like Buffett's 3rd best investment (#s 1 and 2 were wedding rings, btw), rather than Orman's image of the American nightmare? Here are 3 basic steps Buffett urges every American who owns a home - or wants to - to include in their approach to home ownership. 
1.  Ditch your "dream home" for a practical pad. When it comes to homes and mortgages, bigger is not always better.  What is better is to buy a home that makes sense for your family's future and its finances. In Buffettt's own words, "a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender . . . facilitates his fantasy."  Instead of buying dream homes, Buffett went on, the goal should be to buy a home you can afford.

2.  When you buy, plan to hold. Warren Buffett is worth $50 billion, and he still lives in the home he bought 52 years ago - for $31,500. Many Americans got caught in the housing crash when they took on mortgages they could only sustain for a short period of time, then weren't able to refinance as expected. Buffett's stock investing advice has long been to avoid making investments you can't hold for at least 10 years. Likewise, buying a home should be done with a long-term plan to avoid catastrophe when home values fluctuate in the short term.

3.  Mortgages should have fixed, affordable payments. In his shareholder letter, Buffett points out that a housing company he holds has done vastly better than other real estate and mortgage industry players and attributes their success to the fact that "our approach was simply to get a meaningful down-payment and gear fixed monthly payments to a sensible percentage of income."  Buffett believes these two mortgage musts are the key to avoiding foreclosure, opining that "[i]f home buyers throughout the country had behaved like our buyers, America would not have had the crisis that it did. . ..  This policy kept [the company] solvent and also kept buyers in their homes."  

Unless you are one of those rare buyers who know their income will increase by a predictable amount at a predictable point in time, like a lawyer prepping for partnership, a good rule of thumb is to stick with a fixed mortgage payment (including taxes and insurance) that's under 30 percent of your take home income.

By Tara Nelson - Trulia

Wednesday, March 16, 2011

Oprah's BFF Gayle King Shows Off Her Manhattan Penthouse

If you can get over the incestuousness of this segment—Oprah bestie Gayle Kinggoing on Oprah designer Nate Berkus's show to talk about her fabulous Manhattan apartment—then you'll be rewarded with a glimpse into the private life of Oprah herself. How so? Because the interior design is in accordance with various Oprah Rules, including no white ceilings. It makes sense that the Queen of All Media would have a say in the place's decor. When the penthouse at East 57th Street'sPlace 57 was bought for over $7 million, it was done so in the name of Oprah's deceased cocker spaniel, making some think that Gayle had a little help with the down payment. Check out the clip below for a peek inside, and a look at some pretty darn interesting Harlem-inspired wallpaper

Manhattan McMansions?

Despite love of condo development, buyers prefer their townhouses old, not new

March 01, 2011 07:00AM
Recession notwithstanding, the median sales price of a Manhattan townhouse jumped 13.2 percent between 2009 and 2010, according to appraisal firm Miller Samuel. One reason for the jump is that, unlike condos, very few newly built townhouses have been added to the housing stock, according to Jonathan Miller, the president and CEO of Miller Samuel. 

That begs the question of why so many New Yorkers spend millions to painstakingly renovate historic brownstones, rather than just building new houses. After all, many Manhattanites love newly built condos, and modern McMansions have spread like wildfire across the country in recent years. 

Building a house in Manhattan isn't for the faint of heart. "It's easier to build a building in Timbuktu than to renovate a small kitchen in Manhattan," joked Stribling senior vice president Tim Desmond. 

But there's more to it than that. It turns out most New York townhouse buyers just like historic homes. 

In Manhattan, "new construction [townhouses are] not well received," Miller concurred. "Gut rehabs are fine, but it's got to have the bones and the fa├žade." 

Failure to heed this preference can damage a house's value. 

"I've seen houses that had contemporary interiors linger on the market," Desmond said. "One of the reasons people like houses is because they like the way they were built originally, with all the different kinds of woods for the floors and that kind of thing." 

When advising Manhattan homeowners who are renovating, he said, "I always tell people that you should keep as much of the original detail as you can … because that is what will sell the house." 

There are some newly constructed houses in Manhattan. New condo Superior Ink includes several adjacent townhouses, two of which are still available, though the rest of the project is sold out, according to director of sales Leslie Wilson. 

The Townhomes of Downing Street, three brand-new houses in Greenwich Village, were designed by 1100 Architect. (Two are in contract, and one is available for $16.95 million.) 

These projects were "very well done," Desmond said, but the audience of potential buyers is simply smaller, especially at the contemporary-feeling Downing Street houses. 

"Most people that are attracted to the far West Village like the feeling of the West Village houses," Desmond said. "It's a unique buyer who would go for something like Downing Street."
The Real Deal