Trump Soho Hotel Condominium

condo hotels are the most speculative of investments with or without the trump name. often its hard to justify in the first place.

I have financed a few of these projects and agree they are hard to justify unless the math works, meaning if you can only use the unit for personal use for a finite time then you are essentially investing in a hotel project. And when its rented out, you must split the rental rate with the management company. Concept has worked OK in vacation market like Maui, St. Thomas or South Beach but is far less proven in urban markets.

Anyone know how well Philips Club units have performed long-term? Other condo-hotel projects include the Cassa in Midtown, the Setai on Fifth Avenue and possibly the Waldorf.

Those projects are different and I feel not comparable. Phillips Club is a time share/fractional ownership. Setai is a residential condominium on top of a hotel like 80 Columbus Circle and 215 Chrystie Street. I think Cassa is to be the same. At Trump Soho the units are condominium Hotel units where owners are precluded from spending more than 120 days out of the year or more than 29 days out of any 36 day period in residency.

Yes, 30. These were the first projects that came to mind but for sure Phillips Club is a poor comparable. I mention these three because I believe they all had/have some rental agreements in place for short-term occupancy, all voluntary though I agree.

My basic question is, lumping them all in to one general category, and maybe add The Plaza, The Pierre and the Carlyle to the list, does anyone think these units make good investments? Common charges for Trump Soho are very high and for The Carlyle, absolutely ridiculous.

As for Trump Soho, I wonder why they would terminate the management agreement. Could the termination payment be higher than the NPV of net management income over the term of the deal?

Maybe.

trump doesn't manage anything they don't stick their name on. there's very little to be made in simply managing a property

This project ran into problems from the get go with litigations between business partners and even a criminal investigation. Buyers of those units lost most of the value of their investments and the rent they got was taken away by the charges of the management company. Prices are plummeting now.

I can't help but think they know some bad news is coming and would rather have their name off the building when the headline hits.

I have no actual knowledge but my guess is that they just want to disassociate from the Trump name. Just like here:
https://www.npr.org/sections/thetwo-way/2016/11/15/502201761/trumps-name-will-be-removed-from-apartment-buildings-after-residents-demand-it

http://thehill.com/blogs/blog-briefing-room/news/trump-hotel-toronto-canada-six-million-to-remove-name

As far as how they play out as investments, a lot of them rent for surprisingly high numbers and occupancy rates. From an article you posted in another thread:
"It’s not all doom-and-gloom, other brokers said, with some high-end rentals moving relatively quickly. “You have to be very sharp with what you are offering, there has to be something special to it,” said Corcoran’s Andres Perea-Garzon, who manages a portfolio of short-term rentals at the Pierre, including a unit that is on the market asking $500,000 a month.
That unit, he said, performs well because they allow short and long term rentals, and it works out to be cheaper than staying in the hotel. “It’s a very niche market,” he said. “We are not as affected [by the weaker market] as an another premier building would be.”"

But also remember that a lot of these units traded for spit when the market was at it's low point because of the high monthlies. So someone could have a portfolio of units where they are doing well because the are in it for low capital and as long as they cover the monthlies with short term rentals, everything else is gravy. This unit:
https://s3.amazonaws.com/img.streeteasy.com/nyc/attachments/14156011/large/918f3bb2233494bc9824d8576b7050e3c5383b29.jpg?1492072017
traded for $550K in2004 and then for $2.6MM three years later.

ximon,
Apparently developer Ziel Feldman believes having condo units above a hotel actually adds value to the condo units:

https://therealdeal.com/2017/11/28/watch-ziel-feldman-on-his-firms-monster-buy-in-chelsea-why-eb-5-wont-die-more/

30, not surprising that Feldman would have positive spin on his new luxury condo project. As for the leverage he may get from the lower floor hotel component, I have heard this argument many times in the past especially in the years leading up to the financial crisis when project feasibility was difficult to otherwise justify.

I would be interested in whether there will be contractual relationship between the condo units and the hotel but regardless, I don't think it is reasonable to compare the draw of a Six Senses Hotel Resorts and Spa to a Four Seasons or Mandarin, especially at 518 West 18th Street.

Although the hotel may help justify his high development costs, I am not sure if it will benefit the condo unit buyers. But I would love to see that analysis.

And if I remember correctly, he's planning on asking between $3,800 and $4,800 a foot.

Condo success depends on how much the common charges are. If the condo owners are allocated cost of hotel services which they do not need or use - an extreme example will be daily maid service - it does not work in the current market.

Yes, 300. Shifting developer's operating costs to unit owners is one way developers can make mixed-use projects look more feasible. Other ways are through allocation of limited common elements which shifts capital improvement responsibilities and charging over-priced management fees for billing and custodial services.

Thanks. It is even worse that I thought. If the entrance and management is separate for hotel and condo, and condo units holders pay based on the service they want to use, it makes sense.

That's why I would never buy in one of these new projects which is half rental and half condo. You know they are sticking it to the condo owners.

When they converted Lincoln Towers the Sponsor kept the garage space. They tried to use percentage of utilities used as the basis for apportionment. Well what does the garage use? A couple of bare light bulbs hanging from the ceiling?

yes, condo and condop conversions were notorious for misallocation of expenses. So much so that unit owners eventually took a number of sponsors to court and won the right to changes.

The price at Unit #1111 has dropped significantly over the years. At what point does 246 Spring become a good deal? Does anyone know the monthly return on investment for these units?

I don't know what the split is on revenue at Trump Soho, but typically the unit own gets 40% to 50% and on "luxury brands" only 35%. Let's use a best case scenario and assume 50%. I just looked on Trivago and seen studios renting for $277 a night. I've seen Trump Soho bragging a 90% occupancy which I don't believe, but let's assume that's true as well. So $277 times 50% times 90% times 30 days is $3,739.50. Subtract Common Charges of $2,773 and RET of $799 and you get $167.50 a month or $2,010 per year. Now, I'm sure there are days (like New Years Eve) or months where the rate is higher, but I'd also bet the 50% and 90% are optimistic, so.........