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August 14, 2009
Clarett, Goldman Lose Control of Forté
Not everything Goldman Sachs touches turns to gold. A multi-million-dollar bet on the Fort Greene condo market appears to have backfired, with the Crain's report yesterday that control of the Forté Condos at 230 Ashland Place would shift from Goldman, the 75 percent equity holder, and The Clarett Group, the developer, to the lender, Eurohypo Bank, which is into the project for $41 million. (Prudential Real Estate Investors also has a small equity stake.) “Clarett is proud to have delivered such a beautiful, high quality property—on time and on budget—to enhance the skyline and contribute to the renaissance of downtown Brooklyn,” the developer said, in a statement. “Unfortunately, the sales market in Brooklyn has not been as strong as Forté itself.” A last-ditch marketing makeover by The Developers Group in recent months as well as behind-the-scenes efforts to sell blocks of apartments apparently weren't enough to save the equity investors, as the project was less than 40 percent sold after two years on the market. Clarett's nearby project on Lawrence Street, the 51-story Brooklyner, is still expected to begin renting early next year.
Goldman Sachs' Brooklyn Condo Bet Sours [Crain's] GMAP
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Comments
"Eurohypo Bank, which is into the project for $41. (Prudential Real Estate Investors also has a small equity stake.)"
$25 perhaps?
Posted by: dittoburg at August 14, 2009 9:07 AM
I'm sure Goldman had some complex credit default swaps to protect itself from loss of equity in the project.
This is pocket change for Goldman who reported on Aug 5 that they made more than $100MM in trading revenue per day on a record 46 separate days in 2Q.
Posted by: daveinbedstuy at August 14, 2009 9:08 AM
So, to bring this down to the every day folk, what, if anything, does this mean to those who already bought in Forte? (besides the usual rantings that they now have an apt. not worth much, blah blah)
Posted by: InsertSnappyNameHere at August 14, 2009 9:12 AM
It's amazing how delusional supposedly genius bankers were in financing million dollars condo towers willy-nilly as if everybody and their mother is a rich and stupid.
Downtown Brooklyn has about as much appeal as Jersey City. . . Those condos aren't worth over $300 a square foot in that location depite endless broker babble otherwise.
Posted by: IronBalls at August 14, 2009 9:14 AM
"I'm sure Goldman had some complex credit default swaps to protect itself from loss of equity in the project."
This statement proves that Dave is a Day Trading Pole Smoker!
The What (I'm backkkkkkkkkk)
Someday this Condo is gonna end....
Posted by: Return of The What at August 14, 2009 9:22 AM
Soulless
Posted by: dirty_hipster at August 14, 2009 9:24 AM
that building is too wannabe manhattan. but it's very dallas too. remember that show, dallas? lol.
*rob*
Posted by: PitbullNYC at August 14, 2009 9:25 AM
Hey How's Williamsburg doing??? ROTFLMMFAO!!!!!
You're Dead!
The What
Someday this Condo is gonna end...
Posted by: Return of The What at August 14, 2009 9:26 AM
quote:
Downtown Brooklyn has about as much appeal as Jersey City. .
Jersey City is a REAL city. Downtown brooklyn is an outer borough of a city. therefore Jersey City > Brooklyn.
*rob*
Posted by: PitbullNYC at August 14, 2009 9:27 AM
"Not everything Goldman Sachs touches turns to gold."
...only things where they are able to place key people in Government influential positions, and change policy so that they can't lose.
Posted by: theandrewlee at August 14, 2009 9:28 AM
The bdlg was on a crappy stretch of Fulton. The outside looks dirty, though it was convenient to Flatbush(what a selling point) and BAM. The poor 40% folks will have trouble getting repairs done if needed.
Posted by: DeLepp at August 14, 2009 9:30 AM
Hey what happen to the Forte Ad????------>>>>>>
The What (Buh Bye)
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 9:32 AM
theandrewlee, did you read the Goldman consipracy article or something? According to it, Goldman was PLANNING this all along.
Posted by: Kensingtonian at August 14, 2009 9:32 AM
DeLepp-
It -is- not -was- on a crappy stretch of Fulton. They haven't razed it yet.
And the crappy stretch just starts at the Forte. Its still pretty prime FG.
Posted by: Prodigal_Son at August 14, 2009 9:35 AM
Hey What, you pole smoking numbnut douchebag, welcome back.
BTW, we've been buying GS since about $139, uts now $164 and likely to get to $200 pretty soon.
You making any money this summer or just full of bitter rants????
Sounds like you cut your vacation short. Did the good economic numbers scare you???
Posted by: daveinbedstuy at August 14, 2009 9:38 AM
Goldman is smart they are walking away from a bad trade early. Goldman just showed NYC the true condition of the real estate market. Anybody who was wondering how the hot summer market has gone here is youre answer. I call victory for team bear
Posted by: brickoven at August 14, 2009 9:41 AM
My friend owns the Penthouse in this building. I remember when I went with my boyfriend, he was kinda upset he bought in a pre-war building in North Slope because of how great the views from the Penthouse were. I, frankly, loved the views too and the access to the rooftop. That said, the building where my boyfriend bought recently sold an apartment (as in a month ago) for a bit over what he paid and with fewer renovations. So, I guess maybe it wasn't such a bad call after all.
On another note, do you think they are going to be deals in that building after this little switch-a-roo?
Posted by: LincolnSlope at August 14, 2009 9:42 AM
PS, to the tenants living there they might as well raze it. I should clarify the imediate area around forte not so prime. Just like the rest of NYC a few blocks and you're either in a charming place or .....
Posted by: DeLepp at August 14, 2009 9:42 AM
Guys, Dave is a Day Trading Pole Smoker -->DTPS
How much is that Condo worth? ROTFLMMFAO!
Guess what Jackasses? Any Broker who shows Forte Condos MUST disclose the Bankruptcy!
How many Retards buying now???!!! I caught some wood...
The What (Ker Boom!)
Someday this Condo is gonna end...
Posted by: Return of The What at August 14, 2009 9:47 AM
Future Low-Income Housing!
The What
Someday this Condo is gonna end..
Posted by: Return of The What at August 14, 2009 9:48 AM
BO, aparently you missed the story about Goldman adding to its RE on the Fulton Ave stretch in Bed Stuy.
Your call for victory for Team Bear is a bit premature unless you are saying we've hit that botoom at nowhere near half off peak comps.
Lincoln Slope...always better to buy in an established building than a new development...I've been ranting about that for months now. Good for the bf in the pre-war NS building, congrats.
Perfect example of why so many lunatics on Team bear really don't understand the market.
Posted by: daveinbedstuy at August 14, 2009 9:48 AM
Lincoln slope, will you please stop living vicariously through your friends, boyfriends, aunts, uncles, relations, friends-of -friends, friends-of-friends-of-friends?
Yea this building sucks. Whether or not it's technically in FG or Downtown Brooklyn...it's in Downtown Brooklyn. I rather live in Concord Village than this pos MetroTech-looking tower.
Peace I'm out!
Posted by: ftgreenepark at August 14, 2009 9:49 AM
I guess my link from yesterday about Goldman is worth repeating on here.
http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine
Posted by: Kensingtonian at August 14, 2009 9:50 AM
... and no one has mentioned the awful awful floor plans? all wierd angles, ugly hvac units... i really was interested in the project, but didn't want to attempt to put furniture in there...
as for the finishes and stuff, never saw the finished project, though i'm sure it's average... i don't think people that bought in that building were very informed about the market...
there was so much better available for the same price or cheaper...
Posted by: sender9999 at August 14, 2009 9:50 AM
Kens...I find that Rolling Stone story a bit ridiculous. For example, ALL broker/dealers and investment banks made hay during the tech bubble and it was Credit Suisse and Jack Grubman who were the poster boys of the bad stuff, not Goldman.
RS does some good reporting at times but that story was largely crap.
GS price target $200.
Posted by: daveinbedstuy at August 14, 2009 9:52 AM
Also...anyone wanna take a bet on the last time Return Of The What got laid?
Can you imagine him on a date?
ROTW: "Yea man, because all these YUPPIES moved in from OHIO and with their BABY CARRIAGES and MONEY but they're all going to pay dearly!"
Date: "Uh huh"
ROTW: "And like...soon their brownstones will be worth NOTHING and they'll have to move back to UTAH so Brooklyn can be the way it used to be!:
Date: "Right"
ROTW: "Yea so I'm on this blog. Everybody like, totally knows me, cuz I'm all like: Hey your property won't be worth anything soon! It's so rad"
Date: "Check please!"
Posted by: ftgreenepark at August 14, 2009 9:53 AM
Snappy;
In answer to your question:
From a purely legal point of view, this change *should not* affect the owners in place, as the Forte condominium has already been formed as a separate legal entity. Again, from a purely legal point of view, what has happened is that the ownership of the unsold units has passed from the equity side to the mortgage holder.
From a practical point-of-view, the owners are in for a hellish situation in two ways:
-the ability to sell ANY unit in this condo will be severely crimped for the next couple of years, to say the least. No bank in their right mind will finance a purchase of a unit, which means that they will likely be rented out, which lessens the appeal and value of the building.
-as someone mentioned above, in a new building there are inevitable start-up problems, which are usually addressed by the developer. With the developer out of the picture, they will have a tough time getting these issues addressed.
This is bad news for the Brooklyn condo market, no way around that fact.
Posted by: benson at August 14, 2009 9:55 AM
"Your call for victory for Team Bear is a bit premature unless you are saying we've hit that botoom at nowhere near half off peak comps."
Dave this the first in a series of Nuclear Bombs going off! It's Farking Over!
The What
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 9:56 AM
Dave, I know lol! Agree with you 100%. I found the article anecdotal, if not funny. They got some facts straight but this journalist is a conspiracy theorist (he's known to do that before).. Writing wasn't half bad though and he did sound convincing to anyone who doesn't really understand exactly what happened.
Posted by: Kensingtonian at August 14, 2009 9:56 AM
Kens: While I am no defender of GS, that story is a complete joke. I am sure DIBS would back me up on this, but anyone with knowledge of financial markets and structured finance could point out that Taibbi gets a ton of things wrong in that article. I find it very amusing that he just says everything is hard to understand, even he does not get it, and he has no money to invest anyway. As if that caveat allows him to then say whatever he wants regardless of accuracy or truth.
He has been attacked by numerous members of the financial press/media and is even supposedly going to debate Charlie Gasparino on CNBC. For a preview picture Cramer vs. Stewart with Taibbi as Cramer and Gasparino in the Stewart role.
Posted by: AndYouWillKnowUsbyTheTrailofRenters at August 14, 2009 9:56 AM
if they offer 350 per sq ft, I would buy. trade in my inflated unit for a less inflated unit.
Posted by: more4less at August 14, 2009 9:56 AM
Dave GS Bed Stuy action is to build housing for lower income minorities. The group that purchased is part of there diversity program and not a for profit group. hate to burst youre bubble.
Posted by: brickoven at August 14, 2009 9:58 AM
Dave this the first in a series of Nuclear Bombs going off! It's Farking Over!
The What
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 9:56 AM
WOW, at least he spelled "Nuclear" correctly. I bet he doesn't pronounce it that way.
Speaking of Nuclear, we are still buying GVP.
Posted by: daveinbedstuy at August 14, 2009 9:59 AM
you may declare victory sr brickoven, but it will not be long that you exist as a handle. there are now 4 HOTD's in contract to go along with the 6 already sold at 15+% percent over widget. We'll have to wait for the exact prices, but your call on houses is suffering.
Posted by: antidope at August 14, 2009 10:00 AM
Trail of Renter, I know. Look at my post above yours :o).
Posted by: Kensingtonian at August 14, 2009 10:01 AM
Also...anyone wanna take a bet on the last time ftgreenecorny got laid?
Can you imagine him on a date?
corny: "Yea man, because all these YUPPIES moved in from OHIO and I brought in the Forte Cond!"
Date: "Uh huh"
ROTW: "And like...soon their brownstones will be worth 2.5 million and Black people they'll have to move back to UTAH so Brooklyn can be the way we like it!:
Date: "Right"
ROTW: "Yea so I'm on this blog. Everybody like, totally knows me, cuz I'm all like: Hey your property will be worth plenty soon! It's so deck"
Dave: "I want to suck you off in the bathroom stat!!"
The What (That's all you got?)
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 10:02 AM
quote:
build housing for lower income minorities.
wtf? are there no poor white people either?
*rob*
Posted by: PitbullNYC at August 14, 2009 10:04 AM
I thought the floor plans were pretty interesting. Not boxy like most. And look of the whole building I think is pretty good. It is close to construction zone, and I'm sure some people unsure of how safe their views will be for future.
If few years when other projects are finished and increased population along Flatbush corridor there will be more interest in this building. The area will continue to improve. Transportation is excellent and is central to many areas.
Posted by: Petebklyn at August 14, 2009 10:04 AM
Damn I need coffee!
Brickoven get Major props for breaking the story!
The What (Those BO a years supply of Skittles!)
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 10:05 AM
more4less,
I'd agree that $350 a foot is fair market.
My earlier estimate of $300 is more appropriate for the lower floor units.
Posted by: IronBalls at August 14, 2009 10:06 AM
Anymore studios left?
I'd totally buy a trapezoid-shaped room for 175k.
Posted by: dirty_hipster at August 14, 2009 10:07 AM
http://www.youtube.com/watch?v=2c4L4CPfQY8&feature=response_watch
You can't touch this!
The What
Someday this Condo is gonna end...
Posted by: Return of The What at August 14, 2009 10:09 AM
Dave & What on a date:
What: Yo, Asshat, you're better l;ooking than I thought.
Dave: Why thank you What. Can I get you anything to drink?
What: How 'bout an MD40.
Dave: What, this is the King Cole Bar, they don't have MD 40.
What: Well then what are we celebrating anyway?
Dave: The simple fact thatit's a week before Christmas and the world has not ended.
What: I've pushed it out another few months.
Dave: Have an Asshat martini and STFU.
What: I know when I'm licked.
Dave: No you don't, we don't get to that part until we get upstairs to the room.
Posted by: daveinbedstuy at August 14, 2009 10:09 AM
Right now in Miami Beach you can get beautiful ocean view condos for around $200 a square foot across the street from the beach.
I realize Miami Beach isn't Downtown Brooklyn, but it's still an interesting comparison.
Posted by: IronBalls at August 14, 2009 10:09 AM
GS is walking away this is what makes them the best traders. They know there is a lot more pain to come.
Posted by: brickoven at August 14, 2009 10:10 AM
Benson, thank you for answering my question :) (now I can get out of here and the mayhem that has already ensued!)
Posted by: InsertSnappyNameHere at August 14, 2009 10:10 AM
IB....looks like a lot of value surfacing down in FL. I don't have any desire to ever live there.
I'd like to see where prices have gone in Costa Rica and Mexico....kinda like the western hemisphere's version of Spain to the Brits!!!!
Posted by: daveinbedstuy at August 14, 2009 10:13 AM
M4L and Ironballs;
I have to disagree with you on this one. There is a good chance that this building will become a "defacto" rental. Only 40% of the units are sold, so no bank will finance a purchase by individual owners. It is likely that most of the unsold units will be rented out, either by their new owner or vulture investors. Ditto for the units held by individual investors.
What kind of rent do you think they can pull in, in this market? $25 a foot? If so, you are talking about a GRM of 14 in a troubled building. I don't so.
I'd say $300 a foot, tops.
Posted by: benson at August 14, 2009 10:13 AM
I know I am late responding but:
Rob, boyfriend is a normal term for someone one is dating. If you don't like the term, you can go back to your apartment by yourself, cry a bit, bitch about life, and then jack off, which I imagine is what you do on a daily basis with not much else going on.
FortGreene, who the f said I was living vicariously through others. I have a perfectly amazing life, with a great job and live in an awesome building. I have friends. I know it is hard for you to understand that, but it will all be OK. Just stop being a mean douch and I am sure you will find some as well.
Posted by: LincolnSlope at August 14, 2009 10:13 AM
Kens: Mental note, be sure to refresh immediately before posting comment!
Posted by: AndYouWillKnowUsbyTheTrailofRenters at August 14, 2009 10:14 AM
I like the location, am slightly distressed at how small the apartments seemed in "So You Want to Be a Supermodel" (which, btw, the Mennonite chick should have one, or Sandhurst) -- but the real question I have is, why DOES the building look so grubby and old on the outside? Is there something wrong with the cement? Or is that "weathered" look on purpose?
But it all seems fine to me, if it gets cheap enough. In the long term, I think Forte is a safer bet than the Edge.
Posted by: Heather at August 14, 2009 10:16 AM
one = won... I need more coffee
Posted by: Heather at August 14, 2009 10:18 AM
Lincoln, please don't feed the trolls.
Posted by: daveinbedstuy at August 14, 2009 10:18 AM
Dave & What on a date:
What: Yo, Asshat, any final words?
Dave: Why you have a Bat???????
What: I need you to put the gimp in your mouth so you wont scream.
Dave: What, put down the Bat!!!!!
What: It's been fun Jackass!
Dave: Not the face!!!
What: Goodbye.
**** What drops the bat and takes picture with his camera phone...****
The What
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 10:22 AM
What, you missed the big red bat at Ellis. See, if you had come out you could have hit me with it all night long in between your Karaoke renditions of The Beatles and Eminem.
Posted by: daveinbedstuy at August 14, 2009 10:25 AM
Yeah, you can get some real deals right now in Miami Beach (especially North Miami Beach aka Sunny Isles), but for once I agree with you, DBS. I wouldn't want to live there either, and incredibly the market may still fall further.
For a $100/ft on the beach itself, I'd be tempted, but the views would have to be the bomb.
Posted by: IronBalls at August 14, 2009 10:26 AM
" Is there something wrong with the cement? Or is that "weathered" look on purpose?"
New York Faces Huge Backlog in Concrete Retests
http://www.nytimes.com/2009/08/03/nyregion/03concrete.html?em
Nearly a year after New York City said it had a plan to retest the concrete in an untold number of buildings because a testing company was suspected of failing to perform required tests or falsifying results on scores of projects, only a handful of buildings have been retested.
I'll bet some pieces fell off the Forte, ROTFLMMFAO!
The What
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 10:26 AM
That's crazy, What. You off the meds again?
Posted by: IronBalls at August 14, 2009 10:27 AM
NO. IB, he's right. it was a big story about a week or two ago wrt some concrete company.
Posted by: daveinbedstuy at August 14, 2009 10:29 AM
Benson I think you are talking apples and oranges - the selling price of individual units (to presumably non-speculators) is not based on GRM, its based on comps. And you'd be hard pressed to find similar comps in the area for as low as $350 a sq ft.
Now if you are talking about selling ALL the remaining units to a operator for rentals, then the GRM is relevant, but again I think you $25 a sq ft number is too pessimistic and even so, while you'd likely have trouble on the financing end - 14x isnt really so outrageous for a building in Downtown Brooklyn.
Posted by: fsrg at August 14, 2009 10:32 AM
IronBalls, If I liked Miami I would be VERY tempted now. Friend's parents picked up a 2 bedroom condo in Sunny Isles right across the street from the beach for 120K a couple of months ago. Not sure if they have Waterfront views but the apartment looked amazing from the pics.
Posted by: Kensingtonian at August 14, 2009 10:36 AM
FSRG;
A tough call.
On your first point: I don't think comps for neighboring condo sales are relevant in this situation, simply because such a market no longer exists for this building. Given current financing rules, the only individual owner who can now buy a place in this building is someone who can pay all cash, and, in my opinion, someone with that type of money is not going to purchase their home in this building.
Perhaps I'm being too pessimistic on the rental side. I guess it comes down to how the economy is going to fare in NYC in the next 5 years, and I'm not so optimisitc on that point.
Only time will tell.
Posted by: benson at August 14, 2009 10:41 AM
The Rolling Stone article is inaccurate and sensationalistic. I have yet to meet a Goldman hater who is able to demonstrate any understanding of the GS organization beyond the half-truths that are all over the press and the Internet these days. Maxine Waters is a pretty good example of the extremely low quality of most of the anti-Goldman thinking out there.
Posted by: lechacal at August 14, 2009 10:41 AM
Sometimes I wonder why people are so obsessed with living here. Sell your 2 million dollar brownstone - buy a nice 1 bedroom in Miami for 80K and retire. Work parttime at starbucks for health insurance and hang out on the beach all day. That's sounds alot better than schlepping your ass on a crowded sweaty train to push paper for 30 more years, while you spend your weekends unclogging your tenants toilet and changing lightbulbs.
Posted by: dirty_hipster at August 14, 2009 10:42 AM
DIBS: I agree with you on Goldman going to 200. Dick Bove said BAC goes to 45 banks have a lot of upside.
Posted by: sebb at August 14, 2009 10:43 AM
sebb, Paulson & Co (not Hank, but the hedge fund) took giant poositions in a whole bunch of names in 2Q, They are the 4th largest holder in BAC now. Heebner did as well.
Posted by: daveinbedstuy at August 14, 2009 10:47 AM
quote:
I have a perfectly amazing life, with a great job and live in an awesome building.
PLEASE D.I.A.F!
*rob*
Posted by: PitbullNYC at August 14, 2009 10:48 AM
Finishes in the Forte are actually pretty nice. The layouts are definitely a bit unconventional with all of those no-right angles, but I think that some people are probably into that. How many times have we heard people complain about people living in glass boxes. This is definitely not a glass box. The problem with Forte has always been that it's been priced as if it were the nicest building in the nicest neighborhood and it's clearly not. The proximity to the nevins street subway and to BAM is definitely a plus, but the immediate surrounding area still has a ways to go. This thing came out of the gate at around $800/SF which was nuts. It's currently priced at about $650/SF - which is where it should have been 2 years ago. Those of you who think that a building of this quality with these views, finishes, a doorman, even on a "not totally there yet" stretch of fort greene will go for $350 are dreaming. Look around. Things in Park Slope and Prime Fort Green are still going for about $600-$700/SF and most of Prospect Heights is still going for $500-$600/SF. This will move in 2 seconds if prices drop down to $500/SF.
Posted by: bkre at August 14, 2009 10:52 AM
dick bove? are you serious? turn CNBC off and go buy some real research
Posted by: brickoven at August 14, 2009 10:53 AM
Dirty,
I agree in principal, but aside from all the giant racks in Brazilian bikinis (which rock), Miami Beach truly is soulless, as you like to say. And you can't walk anywhere except a few tourist infest blocks of South Beach.
If prices fell further in Southern California, that's the place to move. Miami Beach is perfect for anybody with limited mobility (retirees)or really lazy folks who are content sleeping on the beach all day getting high.
Posted by: IronBalls at August 14, 2009 10:57 AM
DH, I agree with you. No my idea of a lifestyle but I am sure some people have done it. I don't think Starbucks is offering heath insurance to part-timers anymore. They're not doing to well as a company.
Posted by: Kensingtonian at August 14, 2009 10:58 AM
> This will move in 2 seconds if prices drop down to $500/SF.
To who? All cash buyers? No financing, no sales, period. Game over. Forte = Fail.
Posted by: DitmasSnark at August 14, 2009 10:58 AM
Benson - I dont agree that there are no comps - Toren, Oro, and a few others come immediatly to mind. However you are 100 percent correct that the price per sq ft changes drastically if a buyer is forced to go all cash. However, if the (new) owner cannot figure out some way to get buyer financing then its a forgone conclusion that the rest of the building will go rental. As for the rentals - essentially you are projecting a sub $1900 rent on a 1Br, sub $1500 on the studios and sub $3000 for the 3br (2bath) apts;
Frankly as long as crime stays relatively low in the area - unless the economy completely collapses - which seems to be more remote than this Spring, I just do not see those kind of rent levels returning in Downtown Brooklyn/Ft Greene. As you say - time will tell.
Posted by: fsrg at August 14, 2009 10:58 AM
Oh BTW Welcome back Benson!!!!
The What
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 10:59 AM
And, people who buy at these prices are never "all cash buyers" unless it's someone buying something for their son/daughter and that ain't gonna be this!!!!
Posted by: daveinbedstuy at August 14, 2009 10:59 AM
"No financing, no sales, period. Game over. Forte = Fail."
No Ditmas
Forte=rental
Posted by: fsrg at August 14, 2009 11:00 AM
this will sell for 300 psft bkre and the surrounding buildings are going to get hammered. Do you have any clue how many people are going to walk away from deals in this area now?
Posted by: brickoven at August 14, 2009 11:01 AM
FSRQ hate to tell you but those rental prices you are stating as a dream for DT Brooklyn are exactly what the brooklyner has priced at so
Posted by: brickoven at August 14, 2009 11:10 AM
Ditmas snark - There will be financing available for this. Just because benson says there will be no financing doesn't make it so. It's not like this has never happened before. Construction lenders have foreclosed on developers and found a way to seel the units with financing. There will be financing and these units will sell for about $500/SF.
And then they will open a restaurant in the retail space and DIBS and the What can go on their date.
Posted by: bkre at August 14, 2009 11:13 AM
Forte = rental = fail.
Posted by: DitmasSnark at August 14, 2009 11:16 AM
You'll be wrong again BO. You're probably getting used to that.
It'll go rental and it'll take the bank 5 years to unload the properties unless they sell the loan to a vulture.
The 40% that own are not happy as their re-sales value will be capped until the bank unloads everything.
That said, I think they'll trade at $500/sq ft.
Posted by: antidope at August 14, 2009 11:16 AM
> There will be financing and these units will sell for about $500/SF.
Just because bkre says there will be financing doesn't make it so.
Posted by: DitmasSnark at August 14, 2009 11:17 AM
won't be sold for anywhere close to $300sq ft because owner would never do that. More profitable to keep as rental and for future appreciation.
You don't think Eurohypo could arrange/guarantee financing to invidual buyers if wanted to continue selling off the condos?
Posted by: Petebklyn at August 14, 2009 11:18 AM
Bkre;
You give me too much credit (no pun intended). I have no power in the credit market. I merely stated my perception of the current status of the condo financing market.
Since you disagree, would you be so kind as to let us know which banks are offering financing for condos that are in new buildings that are only 40% sold?
Posted by: benson at August 14, 2009 11:19 AM
bkre = right
ditmas = snark = no idea what's going on.
Posted by: antidope at August 14, 2009 11:19 AM
they have not been able to sell this building at 600 psf and now that its gone bankrupt it will sell for 500 according to team bull. SCARY
Posted by: brickoven at August 14, 2009 11:36 AM
Sorry I missed all the fun in this thread...
When equity holders lose control and the debt holders take over, that opens the door for serious price cuts (as the equity holders could NOT cut the prices without making it obvious to the debt holders that default was imminent).
If they lower prices aggressively, they will probably be able to sell the place.
If they want to rent them, they can rent them, but will the sale price of a "used" condo be higher in 2 years than the sale price of a new one now...
Will be interesting to see what happens.
Posted by: northsloperenter at August 14, 2009 11:37 AM
Has anyone run any numbers?
The German govt rescued Hypo last year and they will not rush to sell if the price creates a significant haircut.
And if they can fish some good prices by offering seller financing, they will. Real estate is their business.
Isn't it possible also that the rental stream from 60% of the building is enough to cover maintenance and debt service on the loan now that the equity is wiped out? It may not have been enough to give a return to the equity, but it'll pay for a large (if not all) chunk of the carry.
And we won't be at the bottom forever. there will eventually be a recovery.
Posted by: antidope at August 14, 2009 11:48 AM
antidope the only numbers you need to know is that GS just walked away from an entire building in the heart of Brooklyn. smart money is saying prices are going much much lower and not recovering anytime soon. I am sure that you know the numbers better then them though right?
Posted by: brickoven at August 14, 2009 11:55 AM
Benson - last time I checked, Euro Hypo was a bank right? You don't think they can figure out a way to offer financing it means crawling out from under this deal?
And by the way - people are closing on units with financing atOne Brooklyn Bridge Park. Last time I checked that building was less than 40% sold too. So it is happening.
Posted by: bkre at August 14, 2009 11:59 AM
I'm sorry did I miss something BO? Is there a senior lender in front of Hypo, like GS had? Have you ever seen the right hand side of a balance sheet?
Posted by: antidope at August 14, 2009 12:00 PM
We already know that antidope is smarter than GS in one respect. antidope didn't invest $10 million of equity on a ovepriced highrise on the edge of fort green. GS did. So there's at least one situation in which antidope was smarter than GS. Are you saying it couldn't happen again?
Also - once GS's equity is wiped out, that frees up Euro HYpo to sell it at market rates. GS needed to earn a return on their equity. Euro Hyps just neads to cover their exposure. It's a much different incentive.
Posted by: bkre at August 14, 2009 12:02 PM
I would guess that one brooklyn will do the same before the new year
Posted by: brickoven at August 14, 2009 12:06 PM
BO - they topped out the Brooklyner (111 Livingston) about two mo ago - the apartments arent listed yet so wtf are you talking about.
Posted by: fsrg at August 14, 2009 12:10 PM
Bkre;
I can't speak for Hypo. What I can say is that they have a semi-toxic asset on their hand: a building that is only 40% sold after two years of marketing, in a non-prime part of DT in a real estate recession.
My guess is that they are looking at two options:
-sell the unsold units as a block at a deep discount to a rental operator, and get it off their books.
-finance the sale to individual owners at a deep discount to move the inventory. This option effectively "morphs" the current loan into many mortgages to individual owners.
Either way they are going to take a hit. I suppose that their best brains are crunching the numbers and trying to figure out the most likely scenario for taking the smallest hit.
Posted by: benson at August 14, 2009 12:12 PM
FSRQ I saw the pricing sheet. Studios will be priced at 1400 as of now. I dont think you guys understand GS owned 75 percent of this project
Posted by: brickoven at August 14, 2009 12:18 PM
BO - I do not know what you saw, nor do I know the size, location or quality of the studios you saw - but the market would have to fall siginifcantly for a new doorman/elevator building in downtown Brooklyn to rent for $25 a sq ft; and if it does - the owners (GS or whoever) and many other LL in NYC will be crushed.
Time will tell.
Posted by: fsrg at August 14, 2009 12:29 PM
the floor plans are horriffic. I looked at all of them and tried to figure out where furniture for a regular working person would go. Couch facing TV....ummm, a kitchen table in the kitchen would be nice, not in the living room. A bathroom window would be great.....oh, and how is one to clean the windows anyway? What good is a view if they are dirty.
Posted by: STARGAZER at August 14, 2009 12:30 PM
"Eurohypo"
How appropriate. The Europeans were buying up all the RE in NYC. You couldn't lose.
Aw man, this story is great. I can't wait to read the rest of it.
Welcome back ROTW!!!
***Bid half off peak comps***
Posted by: Brownstones Half Off at August 14, 2009 12:32 PM
FSRQ I should have typed better. GS ownes 75 % of the Forte not Brooklyner. Brooklyner is a no frills building and the studios will start at 1400. They were smart with this building and did not take the luxury route. Its going to be like the Normandie of brooklyn. The finishes are not high end and the sizes are avg.
Posted by: brickoven at August 14, 2009 12:35 PM
"less than 40 percent sold"
Woooooooowwwwwwww! Sooner or later the truth will always come out.
Forente'
***Bid half off peak comps***
Posted by: Brownstones Half Off at August 14, 2009 12:35 PM
"This is pocket change for Goldman who reported on Aug 5 that they made more than $100MM in trading revenue per day on a record 46 separate days in 2Q."
The new Enron.
***Bid half off peak comps***
Posted by: Brownstones Half Off at August 14, 2009 12:40 PM
Stargazer, if I'm not mistaken buildings like this hire window washers as part of the regular maintenance of common spaces. Not sure how frequently they show up, though.
Posted by: sixyearsandcounting at August 14, 2009 12:40 PM
BHO if you want to short something that you actually know nothing about, GE would be a better bet.
Posted by: daveinbedstuy at August 14, 2009 12:42 PM
IYR is the short Dave we are in at 41
Posted by: brickoven at August 14, 2009 12:46 PM
I think you're swimming against the tide shorting real estate here, BHO. There are plenty of other things that are fundamental shorts...BA for one. GE probably as well.
Posted by: daveinbedstuy at August 14, 2009 12:52 PM
Dave pull up a chart of historical PE's on the REITs. They are trading at a 25 percent premium here. This is a slam dunk!
Posted by: brickoven at August 14, 2009 1:06 PM
Not swimming at all, DIBS. I'm way up here above sea level.
I've been "short" stocks. Half off is fundamental (3 times income, 10 times rent, historic inflation, etc.).
***Bid half off peak comps***
Posted by: Brownstones Half Off at August 14, 2009 1:12 PM
As long as the concrete doesn't actually start crumbling or leaking, I still think it's not a bad building. I like the weird layouts of the u-shaped living room. And the location is much better than Toren or Oro. I think.
Posted by: Heather at August 14, 2009 1:48 PM
> ditmas = snark = no idea what's going on
Well, you got the first two right, and as the song goes, two outta three ain't bad.
Posted by: DitmasSnark at August 14, 2009 1:49 PM
Miami on Fulton isn't going anywhere for the next century so we might as well figure out how to fix this sh*tshow of clueless achitecture (thankfully it's not in my portfolio).
The Fix:
1) Gut the entire second floor and put in a resident's gym, children's playroom, game room. At this price point these amenities are a basic, the existing gym is a cruel joke of an interior closet. "Join Crunch next door" is NOT a good sales approach, it's an excuse for being empty handed.
2) Gut the lobby and ask a real decorator (Victoria Hagan or Bill Sofeild would be amazing choices and bring cache to this looser of a project) to redo it, drunk drag queens aren't always the right answer when it comes to lobby design.
3)Rip up the plaza (it looks like a bus stop) and make it look more like a garden with seating (see anything in the West Village or along the Hudson for a clue).
4) Drop the prices enough that the new owners can easily rip out the Ikea kitchens, bathrooms and door hardware.
Did FoxFowler even take a look at the building's direct rivals? One Handon has way better finishes and amenities, Northside Piers has more outdoor space, amenities and finishes.
Posted by: FloatingWorld at August 14, 2009 1:51 PM
Dave pull up a chart of historical PE's on the REITs. They are trading at a 25 percent premium here. This is a slam dunk!
Posted by: brickoven at August 14, 2009 1:06 PM
If you base your analysis on P/Es to begin with and historical ones at that, you really shouldn't be investing in stocks.
Posted by: daveinbedstuy at August 14, 2009 2:00 PM
ESPECIALLY real estate stocks.
Posted by: daveinbedstuy at August 14, 2009 2:01 PM
Talking stocks tips in a bar? Maybe I'll hang around and see if the topic changes.
On a RE blog. Nah.
See you on the next thread; hope your hot tips work out for y'all.
Posted by: antidope at August 14, 2009 2:09 PM
DIBS: how dare you suggest worth shorting GE...it is only stock I own. And also after claiming economy improving.
THe nerve. I take back the nice things I said about your house.
Posted by: Petebklyn at August 14, 2009 3:27 PM
Hey Assnuts I'm going back on vacation! The Forte Condo Melt-up got be out but when I return it's going to be very bad. Thanks for the laughs Jackoff's!
The What
Someday this war is gonna end...
Posted by: Return of The What at August 14, 2009 3:33 PM
Pete....any idea how much debt they have and what the maturity schedule is???
Posted by: daveinbedstuy at August 14, 2009 3:39 PM
In fact Pete, it is the potential problems that GE may have that I can see as the only event that might make What's prediction of a collapse in 3 months look like it may have some truth to it. It would however only be a collapse in paper assets, not the real economy.
Pete...never, ever, ever own just one stock, no matter how strong your convictions. This is Rule #1 as a fiduciary and it would apply equally to any individual. You really put yourself at huge risk by owning only one stock.
Posted by: daveinbedstuy at August 14, 2009 3:43 PM
There's not one person out there who can tell you what GE is going to earn this year, 2010 or 2011. If you want to buy a call on the economy there are much better ways of doing it.
Posted by: daveinbedstuy at August 14, 2009 3:47 PM
it is the 1 individual stock I own. not only thing. and not that much of it. and bought at $7.50.
Posted by: Petebklyn at August 14, 2009 3:54 PM
Bill Gross just bought a $23 MM mansion on an island in Newport Beach. they will tear down the house and built a more contemporary home.
Posted by: daveinbedstuy at August 14, 2009 3:55 PM
It's so deliciously Dickenesian that his name describes him so aptly.
Posted by: DitmasSnark at August 14, 2009 4:16 PM
i kinda assumed it wasn't the only thing you owned, Pete, I was probably being a bit dramatic to make a point. :)
What's your price target??? Think you're getting greedy???? LOL
Posted by: daveinbedstuy at August 14, 2009 4:46 PM
FloatingWorld has some good ideas.
Posted by: IronBalls at August 14, 2009 10:28 PM
i crap bigger than jerky city.
dave - how is CDS on an equity position possible? C is for credit. also, when is the last time REITs traded on fundamentals?
Posted by: BrooklynLove at August 14, 2009 10:51 PM
Thank you Mista IronBalls.
Hey the mess is here, we might as well as try and fix somethings. We have to deal with the situation thoughfully and directly.
In the late 1920's when The Griffin was completed it was too big, too modern and the wrong style for the area. But as the building aged, as the trees around it grew in it has become an attractive part of Fort Greene's Lafayette Avenue streetscape.
Perhaps if the storefonts of Forte were occupied, if the neighboring parking lots were filled with better scaled buildings, if the plaza was less '1970's late modern corporate' and more residential in scale and more functional for the families that one day might live there perhaps Forte would become a new Griffin and not just a symbol of how communities get sh*t on by bad developers and poorly written zoning codes.
Posted by: FloatingWorld at August 14, 2009 11:22 PM
Latest Restaurant Additions
-
Le Barricou
added November 20, 2009 12:00 PM in Williamsburg -
Der Schwarze Kölner
added November 19, 2009 12:00 PM in Fort Greene -
Oak Wine Bar & Café
added November 18, 2009 12:00 PM in Williamsburg -
Mr. Wonton
added November 17, 2009 12:00 PM in Park Slope -
Casa Rosa
added November 16, 2009 12:00 PM in Carroll Gardens -
Cousin John's Café & Bakery
added November 13, 2009 12:00 PM in Park Slope -
Elote
added November 12, 2009 12:00 PM in Williamsburg -
Miracle Grill
added November 11, 2009 12:00 PM in Park Slope -
Phoebe's Cafe
added November 10, 2009 12:00 PM in Williamsburg -
Ruthie's
added November 9, 2009 12:00 PM in Clinton Hill, Downtown Brooklyn
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