Brompton Buyers are Organizing

That's funny that we're down from Feb 2009. I have been listening to people on this board who bought then brag about how they stared down the bottom and took the plunge and are now happy about it. So much for that bullshit. The Brompton is nice inside...actually much too nice for the block its on...But at a price I'd live there...its PS 290 and convenient.

still too much

No doubt. That is a $5500-6000 rental though...so with the abatement..that is not too too bad.

The Feb 2009 price was within the first couple of weeks of closings in the building, so the price almost surely reflected a contract signed sometime prior to that and very likely pre-Lehman as the Brompton sold well from 2007 on. The willingness to close in Feb 2009 would reflect the buyer's view that he was better off closing than walking from his deposit (deposit at the Brompton is 20% so resale price validates this view), but I would not read any more price signal into it than that.

The price signal to me is luxury condo space at 1100 a foot, granted on their bs sqft figures...which is way off published asks and to me feels directionally lower than March 2009.

Not to say that I wouldnt expect to see this creep down to something like $800-900/ft.

Rhino - I agree with that and with your view that the Brompton would be a nice at the right price.

The 4L price compares very favorably to the two November closings at the Georgica - very similar 1100 and change psf prices (assuming the sqft bs factor is similar across new dev) but Brompton is better to much better location and quality of product.

Round trip closing costs are around 11% on a new development (about 5% going with buyer paying transfer taxes and 6% broker commish on the way out) so the buyer lost 19% - barely better than walking away, but yeah 1% better.

My "agree" was with Rhino's post two above. Would love to see the 800-900 psf prediction come true. Will take some patience I think. Of course I'm patient - hence the screen name.

good find sls. the brompton is a decent product, and was well-thought out for its target audience, unlike many of the other developments on the UES. as such, i'd think the sales prices here would be on the high side of what "normal" luxury new developments might expect to see.

the other developments are not worth close to their asking prices.

thedeuce, the closing costs would be higher than that. forget about that 1%, and more.

So they made a bet and lost. I think the psq figure is the interesting part of the story. What's peak 1600?

How is the Georgica? Did one of you have info on sales in there in the 1100/ft range?

"jimandtim
about 11 weeks ago
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Rhino, Steve is a "safe" homosexual, because you are just doing cyber.

Tells us, when you played rugby college, how often did you make homo jokes? Do you still make them with your old buddies?

When was the last time you shook the hand of a person you knew was gay? Are there any gay people on Wall Street working with you in a professional capacity?

Is a pathetic loser worse than being a homosexual?"

Wow this is old. Here is a belated go fuck yourself.

how did this conversation turn gay? ok, people actually are predicting a windfall in price psf for the brompton?$800-900, when do u think this will happen?

-10% or -15% per year in 2010 and 2011.

"Here is a belated go fuck yourself"

Rhino,
This would make a great greeting card!

Maybe I will send two out next year...One from my family...and one from all my gay friends and I.

lol!

Do we still have any jzhan fans on the board? crescent22? NWT? uppereast? If so, you may be interested to know that in addition to the 80% mortgage that he took out at closing he also just (Feb 2010) got a $63,000 HELOC which makes him almost 90% levered against his purchase price. To recall, the only Brompton resale to date got done at 8% below original buyer's purchase price, so basically some rocket scientist at TD Bank just lent second lien to within rounding of 100% of current value.
http://a836-acris.nyc.gov/Scripts/DocSearch.dll/ViewImage?Doc_ID=2010020900105001

Can someone tell me again what, if anything, mortgage banks have learned from the experience of the last few years?

Brompton closing update. I think it’s time to call this one a success for Related. For the buyers…time will tell.

There was some discussion on the second page of this thread about the number of units. I have since looked at the offering plan, and there are 165 (was 164 but a large combo got split back up into two units, so one of the offspring needed a new tax lot number. Presumably this means that someone walked from a contract on the combo). As of today (4/4/10), the breakdown of the 165 units is as follows:

Closed (deed in ACRIS) - 133 (81% of 164 units excluding super’s unit)
Transferred by Related to company senior execs - 4
Super’s unit - 1
In contact per SE - 4
Listed inventory per SE - 9
No ACRIS record or current listing (a.k.a., shadow inventory) – 14

Total sold/otherwise disposed of = 138 (84%). Total remaining inventory = 27 (16%). For these purposes, I’m calling inventory the 4 in contract, 9 sponsor listings (there are quite a few active resale listings as well) and the 14 shadow inventory. Some might argue that the 4 transfers to Related Cos execs are also effectively shadow inventory. I don’t know enough to speculate. There is some skew in the closings toward the generally smaller units on the lower floors that started closing earlier, so Related still has more than 16% to sell based on square footage or value.

Closings averaged roughly 4 per week for the first four months (Feb-May 2009), then shifted to about 2.5 per month in June-Sept 2009 and have been inching along at average of 1 per week since October. At that run-rate, we’re looking at late 2010 to clean out the inventory (note, not a prediction, merely a mindless extrapolation).

Total proceeds of closed sales just topped $300mm, with total mortgages of $91.7mm, or about 30%. There are not many mortgages with advances above 70%, a lot in the 50-65% range and fully 40% (52 closings) that were all cash. An interesting mini trend is that about 10% of the closings that have a mortgage have a conforming mortgage ($417k or $729k jumbo). On some smaller units, this conforming loan provides a decent advance rate – 60-70+% – but there are a few where the mortgage is only about 30% of purchase price and the buyer had to put up $1-$1.5mm to get their deal closed. This would seem to be a sign of continuing very ugly conditions in non-comforming condo loans.

With one possible exception last summer, Related held the line on asking price through about October of last year, so they got maybe 110 closings done at around ask. Since November, a few of the smaller units have closed at or around ask, while many of the larger ones have been cut 10-20% (and in one case 29%). So far, this has been enough to keep a trickle of closings coming. And don’t weep for Related on these price cuts – closings in the last few months have generally been in the $1,100-$1,300 psf range for smaller/lower floor units and about $1,900 psf for the high floor and penthouse large (greater than 2,000 sf) layouts. While that is down from where some earlier of similar units happened, the price cuts probably just retrace the price increases that Related pushed through in 2007-08 as the marketing of the building was successful. If Related gets the rest of the units away at anything like these prices, they will have done very well on this development. They will also have pocketed some money - to all appearances not a huge amount - from buyers who walked from deposits.

As noted at the top of this page, there has been one resale, on which the original buyer lost 8%.

This actually reads pretty well. As a doomsayer, I can't really argue that my argument isn't on it heels. Maybe there are more people with dough than I imagine.

Rhino I'm with you re: argument on it's heels. I don't understand this outcome at all, but I'm an empiricist. The data are what they are, whether I can make sense of them or not.

Thanks for the updates, sidelinesitter.

I do have a little soft spot for jzhan. Look at the scope and sweep of his autobiographical writing: http://www.rutenbergrealtyny.com/agent_details.aspx?agentid=43461

I guess one can also be dogmatic. Unless you traded in and out of stocks, it has clearly been viable to be clear of them since 1999 as a whole. If people want to buy condos for a 2.8% cash yield, it still need not be me.

The first post on this page records the first resale at the Brompton, down 8% from the sponsor sale. The second resale, for #4MPQ, a large combination that was among the first sponsor closings in early 2009, closed up a 100K (~2%) from the sponsor sale.

02/27/2009 Previous Sale recorded for $4,548,383.
11/30/2009 Listed by Prudential Elliman at $5,100,000.
02/24/2010 Price decreased by 2% to $4,975,000.
05/05/2010 Listing entered contract.
06/15/2010 Listing sold.
06/15/2010 Sale recorded for $4,650,000.

Related continues to sell out their odds and ends of Brompton inventory. By my count, they have 13 units left out
of 165 (8%). Most are larger, higher floor layouts with high ppsf asks, so they still have well over 8% of total sales value tied up in the building. Anyway, one of the exceptions to the large and high floor pattern was #7Q, a 520 sf 1br. The sale just closed 11% below the average of the other floor 4-9 Q lines (the three comps are shown below; the other two - 4Q and 8Q - were subsumed into larger combinations):

http://streeteasy.com/nyc/sale/494866-condo-205-east-85th-street-yorkville-new-york
07/30/2010 #7Q $643,397
08/13/2009 #5Q $731,481
06/08/2009 #9Q $706,076
03/05/2009 #6Q $728,384

There is also a third resale (#11M), at a 16% discount to sponsor sale, but with the buyer being a corporate relo company so I question the value of the comp as a market indicator. On the other hand, it sold for a ppsf right on top of the resale price of #4L at a little over $1,100 psf, so maybe there is something there in terms of setting market for a smaller layout at the Brompton. The lowest sponsor sale ppsf has been in the low $1,200s.

11M was immediately listed for re-resale at basically the resale price. The haircut from sponsor sale made me wonder if the rent vs. buy math could possibly work, but with Brompton one bedrooms renting for about $5 psf per month the asking price is still 18-19x rent.

...but wait, there's more. For the jzhan fans among us (NWT, are you there?), our boy j owns 12M, the same layout one floor up from the 11M resale/relist. He is in at $726k with a $631k mortgage, so at the 11M resale/relist price of $585k, his mortgage is 7% under water. Then there is that little matter of the $63k HELOC noted a few posts above...

Sideline, you are truly awesome. I got a lot of mileage out of this little episode.

This morning ACRIS has satisfaction of mortgage documents, dated 7/31/10, for each of the dozen-ish Brompton units that had not closed as of that date (and were therefore still subject to the lien of the construction loan). I believe this means that the construction loan is gone. Related still has 10 units to close and so has some equity tied up in the building.

In the WSJ 9/23/10:
A federal judge ordered the developer of an Upper East Side condominium tower to return a $510,000 deposit plus interest to a Greek shipping executive and his wife, in a sweeping decision that could expand the rights of condo buyers in New York.

The ruling could allow hundreds of condo buyers to get deposits back, something many of them would like to do given the decline in apartment values caused by the economic downturn. An appeal is expected.

The case involves the 22-story Brompton, a new brick-and-limestone tower built by large New York developer Related Cos. Related has been tougher than most developers in rebuffing buyers' efforts to get their purchase deposits back or to negotiate deep discounts on their agreed-upon sales prices.

The suit was filed by Vasilis Bacolitsas and his wife, Sofia Nikolaidou, who in May 2008 signed a contract to pay $3.4 million for a three-bedroom unit in the building at 86th Street and Third Avenue. Later they tried to back away from the deal and get back their deposit.

The office of New York Attorney General Andrew Cuomo had already rejected a claim by the same buyers under state law for the return of the deposit.

But Judge P. Kevin Castel of U.S. District Court in Manhattan, in an opinion Tuesday, found that the standard sales contract given to the couple didn't meet the requirements of the Interstate Land Sales Full Disclosure Act, which was passed by Congress in 1968 to protect land buyers. The decision allows the couple to rescind their sales contract and recover their deposit, even though the decision said they had defaulted on the terms of the agreement.

Related has 8 units yet to close out of 165, six of them larger, higher floor layouts. In the last month, three of these (12CD, 18D, 19F) have gone to contract or been marked as sold in SE. At about $14mm of asking price among them, that's a good chunk of Related's remaining equity in the building. The closing prices will be very interesting - is Related pricing them to move or holding prices in a market where new dev inventory is thinning out quite a bit?