Foreclosures and flopped flips pile up at One57, sending grim message to big ticket investors

November 16, 2017

Image © Wade Zimmerman courtesy of Agence Christian de Portzamparc (ACDP)

A full-floor, 6,240-square-foot penthouse at Midtown billionaires’ bunker One57 recently sold to an unidentified high bidder–one of five contenders–at a foreclosure auction for $36 million. That number is 29 percent lower than the original $50.9 million price shelled out by Nigerian businessman Kolawole Akanni Aluko for the newly-minted condo in 2014. The fire sale was the fourth resale in the 1,004-foot-tall Billionaire’s Row flagship trophy tower to trade at a loss, according to data from appraiser Miller Samuel Inc., reports Bloomberg. The latest example is the largest discount to date on one of the pricey properties, all of which sends a message to buyers with plans to cash in on the ultra-luxury units in short order. And there are currently 16 apartments at the building listed for sale, most of them by the developer.

The Extell Development Co.’s glass tower quickly became a prominent symbol of New York City’s ultra-luxury boom, attracting investors from around the globe–most of whom rarely occupy their units–and reaching $1 billion in sales in just six months. Now some say the building is becoming a harbinger of a slowdown. The success of One57 helped create the burgeoning “Billionaires’ Row” on West 57th Street as similar big-ticket towers competed for billionaire buyers. One57 currently holds the record for the city’s most expensive residential sale, which closed in 2014 for $100.5 million. But there are only so many billionaires, and moneyed buyers are exercising more restraint lately–and expecting discounts, apparently, given the sheer number of choices.

Additional unsuccessful flips include a 4,483-square-foot 65th-floor apartment that sold in April for 23 percent less than its 2014 purchase price and an identical unit on the 62nd floor whose buyer paid $31.7 million for it 2014 and sold it at a loss last year for $23.5 million after trying for $38.9M. Anna Zarro, director of residential sales and leasing for Extell said, “We cannot speak to the specific cases as to why some of our residents have decided to sell their homes, but are confident that One57 will continue to be one of the best investments and buildings in New York.”

Extell is now marketing units at a discount; in a regulatory filing on the Tel Aviv Stock Exchange this year where Extell sells debt, the company admitted that ultra-luxury sales are slowing in the city, saying it had a adjusted the building’s profit forecasts accordingly. And the developer and resellers both trying to sell units means there are more of them vying for top dollar.

Aluko, the original buyer of the condo sold at last week’s auction, had defaulted on a $35.3 million mortgage from a Luxembourg bank and is accused by the U.S. government of laundering money received from illicit government contracts in Nigeria. Though the bidding started at $15 million, participants stuck around to bump the original sale number over $30 million, which means the pricey properties are still drawing plenty of interest. Jonathan Miller, president of Miller Samuel, said that even though this was a foreclosure auction, “when you have multiple parties fighting for this unit, that’s a credible benchmark for value.”

[Via Bloomberg]


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