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August 7, 2009

Goldman Sachs Buying Up Fulton Street

fulton1_080709.jpg
In My Brooklyn Report's series on urban blight along Fulton Street, Michael Corley notices that Goldman Sachs' real estate investment arm has taken keen interest in a certain stretch of Fulton Street in Bedford Stuyvesant, buying up at least six neighboring properties in the vicinity of Marcus Garvey Boulevard, including at least one vacant lot. In his piece, he raises questions about the possible motives of Goldman Sachs, namely whether the financial behemoth plans to oust locals in favor for higher-paying suburbanite baby-boomers moving back to the city. Mr. Corley's piece is the second in a three-part series, so we are curious to see if he finds evidence of sketchy political dealings or whether this is, simply, a savvy investment maneuver by Sachs. Update: Looks like this really isn't such big news. As a commenter points out, we wrote about this a year and a half ago! See the post here. GMAP
Goldman Sachs Finds Opportunity in Bedford Stuyvesant [My Brooklyn Report]
Whose [sic] Responsible for the Urban Blight at 1576 Fulton Street [My Brooklyn Report]
Photo by Jonathan Scheff/Brownstoner




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Comments

Goldman Sachs and other "financial types" who invest money in the ghetto are really, really smart people.

I welcome them and their money with outstretched arms. That stretch of Fulton St, for that matter, all of Fulton St. will be much nicer with some deep pockets investing in it.

Comments What??????

Posted by: daveinbedstuy at August 7, 2009 9:12 AM

Well are they actually going to put money into improving these buildings - or are they just gonna sit on them, or sell some silly 'fulton street asset backed security' - ya know, for the investor that wants a lil street cred.

Posted by: dirty_hipster at August 7, 2009 9:17 AM

You can't just have "plans to oust locals in favor for higher-paying suburbanite baby-boomers moving back to the city." It's not like Goldman Sachs owns some baby-boomers that they can just stick in that part of the world. There would need to be some demand.

Posted by: Shoots and Leaves at August 7, 2009 9:18 AM

Dh, you're such a Debbie Downer.

Posted by: daveinbedstuy at August 7, 2009 9:19 AM

Some pretty impressive "shoots" in today's jobs numbers. The futures are through the roof. Ther's gonna be a mighty short squeeze in the market today.

BHO, MM and the rest of you better start thinking about pulling the trigger on some real estate or forever bitter you be.

Posted by: daveinbedstuy at August 7, 2009 9:21 AM

hehe dave ;)

Posted by: dirty_hipster at August 7, 2009 9:24 AM

wow that picture looks like it's straight out of west baltimore. ive been OBSESSED with Baltimore and Detroit lately. those are seriously some of the most beautiful cities that need some help.

*rob*

Posted by: PitbullNYC at August 7, 2009 9:25 AM

rob, baltimore unfortunately has been that way for 40 years. I used to go to Alex brown conferences there and it was depressing back in the eighties. the waterfront got cleaned up there and then they built the ballpark but it never spread.

Philly is the same way outside the 24 X 10 square blocks of center City.

You know why????? Bad democratic mayors that never get tough on crime. That's why. Daley in Chicago seems to be the only one who can pull it all off.

Posted by: daveinbedstuy at August 7, 2009 9:28 AM

I think they are going to move their HQ there.

Posted by: Petebklyn at August 7, 2009 9:31 AM

I think there are two possibilities:

(1) GS believes in the long-term (5 years+) speculative potential of the area and is buying up property.

(2) GS has some inside knowledge from a Govt or Business insider about what is going to happen along "a certain stretch of Fulton Street in Bedford Stuyvesant".

I think (2) is more likely. If they were really interested in Bed-Stuy in general, wouldn't they be buying more broadly? Or as part of a larger strategic bet? Why clump it all in this spot? Maybe I'm missing something, but they are probably smarter than me. After all they convinced the Government to hamstring their competitors and insure their bets (AIG, etc.).

Posted by: theandrewlee at August 7, 2009 9:34 AM

i pass this strip everyday and any new stores would be a great improvement. i hope they don't sit on it and do plan to bring in some quality retailors.

Posted by: bkny at August 7, 2009 9:40 AM

theandrewlee...except for Throop St and malcolm X, there isn't a lot of commercial property around. To be able to get a number of parcels like this in ANY neighborhood is going to work to their advantage in developing something. This is a choice location for development. I think they did their homework.

Posted by: daveinbedstuy at August 7, 2009 9:41 AM

DIBS - seriously, are you suggesting NY RE is going to shoot up in price this year? Stagnation has widely been considered the most optimistic scenario (for sellers, that is), with further price declines considered likely. If you are saying prices are set to rise this year, please provide your explanation.

Posted by: Miss Muffett at August 7, 2009 9:54 AM

Many of these properties were purchased at the end of '07, arguably near the top of the market, and at a time when the Atlantic Yards had more luster as a development project. With AY being scaled back (both in size and cache) and a city in recession I'm not sure I'd get too worked up about imminent displacement.

Posted by: ecoux at August 7, 2009 9:55 AM

As I recall, there was a plan to build a condominium building on that site - with retail on the bottom. There was also a plan to build another condo building across the street where the outdoor market used to be (which I thinkw as being developed in coordination with Restoration Plaza). I had seen renderings for both projects.

See link for article on Brownstoner about the Goldman projects. http://brownstoner.apperceptive.com/archives/bedford_stuyvesant/

Posted by: MaconStreetMan at August 7, 2009 9:55 AM

ecoux makes a great point. Curb your enthusiasm DIBS. Your endless cheerleading for a NYRE rally strains credibility to say the least.

Posted by: Miss Muffett at August 7, 2009 10:01 AM

No, MM, not "shoot up."

Posted by: daveinbedstuy at August 7, 2009 10:02 AM

This has nothing to do with investing in the area for a profit. This group is part of GS diversity program. They will most likley renovate the buildings and sell it at a loss to "minorities" who are middle or low income. It like habitat for humanity.

Posted by: brickoven at August 7, 2009 10:03 AM

Well, I agree with DH in hoping they don't just sit on the properties waiting for the demographic to change. Yeah, it's a really canny and smart investment that few would or could pull off now, but that doesn't mean diddly to the community, which is in desperate need of some judicious commercial urban renewal. Unfortunately, it also feeds into the idea that many in the community have that "the white folks are taking Bed Stuy away from us", a future I don't think is possible unless we let that happen.

It falls to the community at large, and that's old, new, black, white, yuppie, retired postal worker and teachers to make sure that our political representatives, specifically our City Councilpeople and state reps, are representing US, not themselves or their backers. It also falls on us to stay current on what's going on, and get involved in policy decisions. I think it's time everyone, no matter what neighborhood you're in wakes up to the fact that we can't just sit back and trust that people are going to do what's right for us, sometimes we need to involve ourselves in the process, and make sure they do. First thing we need to do is change our city councilman. He's been there too long, and has not represented anyone except himself and his cronies for a looong time. The author of this piece asks where Al Vann has been in this whole process. Good question.

Posted by: Montrose Morris at August 7, 2009 10:05 AM

quote:

Bad democratic mayors that never get tough on crime.

THANK YOU! that is SO spot on. they grease the pockets of everyone in power at the expense of all the citizens. it's SICK


*rob*

Posted by: PitbullNYC at August 7, 2009 10:06 AM

im actually a fan of the mayor of newark nj, Corey Booker, but i think he is too idealistic for that city and cant get around the other politians.

*rob*

Posted by: PitbullNYC at August 7, 2009 10:07 AM

I guess the "WHAT" is smarter than the members of GS. LOL

What a Loser

Posted by: sebb at August 7, 2009 10:08 AM

OK, DIBS, let's forget "shoot up". What about go up at all? Truly, stagnation is probably the best sellers can hope for. Are you seriously thinking there will be price increases in the next year? Again, there is practically universal consensus that prices are likely to go down further in the next year (% matter of debate) - why on earth should I or other bears pull the trigger unless we encounter a motivated seller who wants to get ahead of the market (and of course, with a property we love, needless to say). I find your threats of "embitterment forever" laughable, as if we're still in the "buy now or be priced out forever" era which is now revealed to have been somewhat of a house of cards.

Posted by: Miss Muffett at August 7, 2009 10:11 AM

Relax, Miss Muffett. I too agree that one should only buy when they find something they really like. I did and it didn't really matter what the price was +/- $50-100,000.

Posted by: daveinbedstuy at August 7, 2009 10:16 AM

Al Vann who? What a waste of oxygen. I'm hoping Gs has good reasons for buying the property (by which I mean, good for the community). Maybe it's a hopeful sign because I never would have imagined GS being interested in this corner of the world before.

Posted by: bxgrl at August 7, 2009 10:16 AM

like is said before
This has nothing to do with investing in the area for a profit. This group is part of GS diversity program. They will most likley renovate the buildings and sell it at a loss to "minorities" who are middle or low income. It like habitat for humanity.

Posted by: brickoven at August 7, 2009 10:18 AM

MissMuffet- You sound a little nervous. Relax- It's not going to shoot up overnight but I thnk you and that crazy brownstones half off guy need to get real with your predictions.

Posted by: Adam Incognito at August 7, 2009 10:19 AM

Is Bill Cunningham running against Al Vann????

Posted by: daveinbedstuy at August 7, 2009 10:21 AM

DIBS, you're lucky that 100K doesn't "really matter" to you. For me, that translates into a lot of hours I can spend with my kids instead of working my tail off. Price matters a lot to me, since it translates into what is most precious for me - time with my family. So I'm not buying something overpriced when prices have further to go - period. I know I can't time the bottom exactly but in this climate, I can sure as hell get close.

Posted by: Miss Muffett at August 7, 2009 10:21 AM

Adam - I'm not nervous, just find DIBS (and other bulls) market cheerleading pretty ridiculous and am calling them on it. I am sitting pretty, thank you very much.

Posted by: Miss Muffett at August 7, 2009 10:22 AM

Well, MM. When you are talking about a property that is going to sell for $1.0 - 2.0MM, which I assume is within your range since you're not looking in bed Stuy, $50-100,000 is sorta nit picking. If you, as a buyer are going to haggle with the seller over the last few tens of thousands of dollars in a sale then if I were the seller I'd walk away from you as the buyer because it'll likely mean more crap at the inspection & closing.

Posted by: daveinbedstuy at August 7, 2009 10:25 AM

Yes, DIBS, I realize a few tens of thousands may need to be negotiated. With our last property, we paid a bit more than we wanted to (since it was in the boom years), but figured that, amortized over time, that extra was not such a big deal. But we were talking in the 5s and 10s thousands. So maybe we agree in principal but not in degree - that is, we are flexible, but not to the tune of 100K. Maybe in a sellers market, we would be, but in a buyers market, we will only be flexible to a point.

Posted by: Miss Muffett at August 7, 2009 10:31 AM

"They will most likley renovate the buildings and sell it at a loss to "minorities" who are middle or low income. It like habitat for humanity."

Brickoven, would you like to elaborate on that sentence? What
does "'minorities'" mean, and what does that have to do with one's income?

Posted by: Montrose Morris at August 7, 2009 10:37 AM

Miss Muffett: Just wondering how long will you continue to rant about prices going down?
I think everyone is getting a little tired of it.

Posted by: sebb at August 7, 2009 10:45 AM

According to the article GS has been buying (or at least acquiring) properties along this corridor of Fulton since 1977. What have they been doing with these properties? Why are these purchases more nefarious? Just asking?

Posted by: ecoux at August 7, 2009 10:45 AM

Montrose this is a diversity program. A "minority" can fall under many diff categ. but the most common is African American. That alone has nothing to do with income but through these programs typically they are looking for minorities who fall into certain income brackets. It is GS way of keeping Al Sharpton from rioting outside 85 Broad. Get it?

Posted by: brickoven at August 7, 2009 10:47 AM

Sebb: I am not ranting. I am pointing out that DIBS suggestion of "buy now or be bitter forever" is silly in this climate. If you disagree, please present your argument to the contrary. And watch out for those typos.

Posted by: Miss Muffett at August 7, 2009 10:50 AM

Miss Muffett: I will not argue, I am simply asking how long will you continue to be bearish on NYC real estate ?
We all know you are renting and at some point it would have to make sense that buying and paying down a mortgage becomes the right move.

Posted by: sebb at August 7, 2009 10:59 AM

think hard to buy something when prices go up cause it's probable that we just passed the "BOTTOM". buying close to the bottom is good enough.

Posted by: more4less at August 7, 2009 11:02 AM

Sebb - well I guess we sort of have a point of agreement: "at some point" it will make sense for us to buy again, but we have not reached that point yet, since prices IMO are still too high. I am betting upon a return to at least 2004 levels, if not earlier. This does not mean that I expect to buy a place "for nothing" as some accuse. Prices in 2003-04 were still plenty high (and even 2001-02), since yes, NYC is not a cheap place to live. But the current prices make no economic sense when you look at various established metrics. Until prices DO make sense, I will remain bearish.

Posted by: Miss Muffett at August 7, 2009 11:05 AM

I think I get it now. The bears are convinced we are approaching a once in a lifetime buying opportunity. As such they will wait and attempt to find their dream home (good layout and renovation) in a prime neighborhood (BH, CH, CG, PS) for a reasonable price. For the less connected, they believe that price will trough under $1. For the more realistic, it seems they would pay closer to 1.5, though I’m not convinced they are real buyers.

Really, they seem to be looking for a great investment (at those prices it would likely be better than most alternatives) that would incidentally allow them to live for free. Who wouldn’t want that deal?

The self-serving / self-affirmation routines are getting stale, though.

Posted by: antidope at August 7, 2009 11:07 AM

Oh, and I should add: despite my bets, our bottom line is a house we like at a price we can afford - so the price levels I'm betting on are not dogma for me. But I absolutely do not believe we are at bottom yet.

Posted by: Miss Muffett at August 7, 2009 11:08 AM

Antidope: why are buyers who can pay closer to 1.5 not "real buyers"?

Posted by: Miss Muffett at August 7, 2009 11:09 AM

I don't think this will be the once in a lifetime opportunity. We are well past that. I do believe that prices will be higher in 3-5 years though.

Posted by: daveinbedstuy at August 7, 2009 11:13 AM

My interpretation of the regular bear posters on this board.
Not my interpretation of the real world.

Posted by: antidope at August 7, 2009 11:21 AM

On the contrary, DIBS, we are NOT past that. The bottom has yet to come.

Posted by: Miss Muffett at August 7, 2009 11:21 AM

DIBS, agree with you on that. the lifetime oppty of recent memory was in '96/97

Posted by: more4less at August 7, 2009 11:22 AM

I have to say that I know plenty of people who could find a nice house for $1.5MM. I do not understand what MM wants... prime area pristine rennovation -- a $2.5-3.0MM house -- for $1.5MM? If so, I think she will be where she is for quite a while. I am very bearish on condos, rentals but good houses in good neighborhoods? The GS folks and their ilk will continue to keep those out of reach to all but the select few...

Posted by: BH76 at August 7, 2009 11:26 AM

guess a keyboard warrior with absolutely NO skin / $$$ in the game would be deemed an expert of something - ie can claim to be able to tell someone else whom he/she thinks is also has no skin in the game and just debating for argument sake

Posted by: more4less at August 7, 2009 11:27 AM

I have no idea whether prices will go down or up or really does it make much difference to me. I don't think they will change very quickly in either direction. So if I were buying I'd be in no hurry.
Muffett keeps refering to return to price levels of this year or that. What I don't get from her is how do you know when this happens. I get sense you want house (with correct layout/renovation/etc) in school zone for one of top elementary schools. And in very nice condition and neighborhood...Park Slope/CobbleHill.
Like at what price per sq foot makes a 2003-4 or 2001-2 pricing?

Posted by: Petebklyn at August 7, 2009 11:30 AM

Ugh, BH76, as I've said many times, I am NOT seeking a 2-5-3 million dollar home! Modest home, decent area, prefer to renovate at least partially ourselves.

Posted by: Miss Muffett at August 7, 2009 11:30 AM

MM, we will see how far lower prices go for brownstones in brooklyn. They WILL NOT get to "Half Off Peak Comps" though. if the market collectively thought that there would be no buyers for properties such as those we see weekly in "Last Week's Biggest Sales." And, the inventory is way down.

Posted by: daveinbedstuy at August 7, 2009 11:31 AM

Less 4 More-
forgot your ... ah never mind. you're too wound up.
Have a great weekend.

Posted by: antidope at August 7, 2009 11:35 AM

Yes, but DIBS, last weeks biggest sales were encouraging to me. That house on 8th st that went from 2.4 to 1.8 was approaching affordability for me - so that's the direction I'm talking about.

Posted by: Miss Muffett at August 7, 2009 11:35 AM

Antidope, I was just responding to your post saying I'm, along with other bears (technically, I belong on team realistic), are not REAL buyers. Anyhow, I'm willing to call a truce and debate without the name calling.

Posted by: more4less at August 7, 2009 11:42 AM

So, back to the original topic, Goldman Sachs has been sitting on most of these properties for a year and a half? If their altruistic goal had been "revitalizing the community" or some such pr-speak, are they waiting until they need the defibrillizer and the crash cart, before starting something? Many of these buildings were abandoned when I moved to Bed Stuy in '83. Do something, already. If not, donate them to someone who can, and will. If it's housing, Habitat for Humanity has done some nice work in the area. Sitting on them, waiting for the tide to turn looks mighty suspicious.

Posted by: Montrose Morris at August 7, 2009 11:47 AM

Montrose they are prob. waiting until the day after the gov finds out why oil went to 150.

Posted by: brickoven at August 7, 2009 12:00 PM

I don't see moneyed baby boomers moving to that part of Fulton St. Also, those buildings look totally vacant except for the shops. Renovation to that part of Fulton St. would be most welcome. What the hell are they waiting for?

Posted by: grilledsardine at August 7, 2009 12:04 PM

would assume there has to be commercial development before they can make pitch to get people to move there. good retail (along with safety, good schools,...) is key to draw people in. Am thinking a barnes & noble, movie theater, bowling alley, super market,... would be attractive to existing and future residents in that area. Net is something is better NOTHING

Posted by: more4less at August 7, 2009 12:09 PM

Montrose How active is habitat in that area? I am surprised they are there

Posted by: brickoven at August 7, 2009 12:12 PM

Habitat did an apartment complex over on Halsey, not far from there. The buildings are modern, yet complement the rest of the neighborhood in scale and size. They work really well. Most of the local developers should be required to take notes. They even had the good sense to mount the utility meters on decorative looking brick walls perpendicular to the buildings. They hold the meters, and have vegetation and flowers growing around them which totally hides the functionality. A bit of nothing to the total picture, but shows some sensibility towards the overall environment.

Posted by: Montrose Morris at August 7, 2009 12:39 PM

The plan was to tear all those buildings down and build a condo building with retail, not to renovate the existing structures - see my post above. Additionally, all of the storefronts there are vacant - they were pushed out in anticipation of the project (which may have been delayed by the economy). As I stated above, I have seen renderings of the proposed building.

Posted by: MaconStreetMan at August 7, 2009 12:45 PM

“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you you hope that every day will be the last day – and you lose more than you should had you not listened to hope [ ... ]And when the market goes your way you become fearful that the next day will take away your profit, and you get out too soon…etc.”

Reminiscences Of A Stock Operator
-Edwin Lefevre

Posted by: moreteasir at August 7, 2009 1:16 PM

MTS-
Good book. Great quote.

What blather are you quoting from BO. Is that your opinion? Do you work at GS? Hah. Do you "know" someone that knows someone? How could you possibly know it was bought for diversity purposes and not pure spec? Anyway, wtf are "diversity reasons?"

Posted by: antidope at August 7, 2009 1:23 PM

antidope have you never worked for a large company before? This is a huge segment in almost all companies now and has been for years.

Posted by: brickoven at August 7, 2009 2:24 PM

Yes, MM & BO, those Habitat houses on halsey are very nicely done. I've been meaning to send in a pic as well as pics of what the City of Philadelphia is building. The latter are very nice reproductions of federal style brick houses.

Posted by: daveinbedstuy at August 7, 2009 2:55 PM

I'm a fan of those Habitat houses too. They look great.

Posted by: mopar at August 7, 2009 4:27 PM

Hi Brownstoner Readers,

I'm bkemcee (aka, Michael Corley) the author of the blog post that is the subject of Brownstoner's coverage.

I'm grateful to Browsntoner.com for bringing our content to the attention of it's readers, as it has inspired lively commentary by many interested in the subject.

And I'm also aware of Gabby's original post on the subject back in January 2008, which began the strange journey I embarked on that culminated into MyBrooklynReport.com.

Gabby made note of the topical information that was readily available to anyone gleaning posts from TheRealDeal.com that have their origin in press releases.

The goal of the series is to offer the reader a glimpse into the relationships developed between politicians and special interests and how property is utilized to garner support and influence (the City's unofficial real estate business).

What should stand out to any reader of the series is that 2 elected officials who held sway over appointments made to CB #3 over the last 30+ years could not have assembled the talent to unearth a proposal sooner than this? With Goldman Sachs Urban Investment Group? (Habitat for Humanity, anyone)

Real Estate serves different purposes to the end user. And since vacant land can't depreciate (due to it's scarcity) it becomes an undervalued asset to an already deep pocketed entity with a long term investment horizon.

It took nearly 12 years before they broke ground on the Metrotech project and there hasn't been an arena built to date in the Atlantic Yards footprint (and you've seen press on the change in scope and scale of that project, eliminating a large percentage of affordable housing - lawsuits aside).

DaveinBedStuy, Why would you think that they're going to do something just because CB #3, Land Use Committee of the City Council and The Department of City Planning have all given the green light? (The rezoning is now a irreversible legal statute)

I hold out the possibility of being wrong and hope that something will be erected there very soon.

But what could inspire a change to this location if the economic fundamentals don't indicate a significant return on investment to Goldman Sachs in your time horizon?

Remember, their not developers (shouldn't that give you a clue?)

Posted by: bkemcee at August 8, 2009 1:51 AM

"Goldman Sachs Buying Up Fulton Street"

Anything Goldman Sachs buys is curtesy of the US Taxpayer via the AIG bailout conduit. Other people's $. But that's besides the point...

"BHO, MM and the rest of you better start thinking about pulling the trigger on some real estate or forever bitter you be." - DIBS @ 9:21 am.

Damn, is this and "Last Week's Biggest Sales" all Team Bullshit has to cling to? Get back to me when the monthly YOY reading of NY Case-Shiller gets out of the red. [Idiots].

"...that crazy brownstones half off guy need to get real with your predictions." - Adam Incognito @ 10:19 am

No, you need to get real with your asking price. Take the I-beam like a man.

"But what could inspire a change to this location if the economic fundamentals don't indicate a significant return on investment to Goldman Sachs in your time horizon?" - bkemcee @ 1:51 am

Brownstoner and Team Bull instantly sobered by the very source of information that they OD'd over!

"Update: Looks like this really isn't such big news. As a commenter points out, we wrote about this a year and a half ago! See the post here." - brownstoner

1.5 years ago!? Preeeeeeeeeeeee-Lehman!? How embarassing!

***Bid half off peak comps***

Posted by: Brownstones Half Off at August 8, 2009 3:32 AM

So, bkemcee, if I understand you correctly, you're saying

(1) Why couldn't this development have been carried out by a local neighborhood group?

(2) Why couldn't positive development happen faster?

(3) In other words, this looks like political cronyism, pork, swapping of favors -- and the strange end result is actually just empty buildings, which doesn't have a positive effect on the neighborhood?

Posted by: mopar at August 8, 2009 11:40 AM

Mopar,

I guess the easy answer to all 3 questions could be yes.

But that would imply that I'm a bleeding heart liberal with a narrow focus and affinity for a community or for the "right thing" (I'm in the wrong line of work if that were the case).

But I certainly don't resemble the extreme view points of "Brownstones Half Off" (especially given my days in the trading rooms on wall street - too much trader speak by someone who I doubt has any "skin in the game")

Rather, I think "Enlightened Capitalism" serves many different constituents with a vested stake in a process or opportunity (and I hope I don't come off to tree huggy with that phrase).

I just happen to think that financial resources happen to be an important component to development, but certainly not the only one.

And for years, the dim imaginations by elected officials and the cronyism, pork, favor swapping (and any other phrase that could be inserted here) are dreadful indictments on the borough's political machine and lack of political sophistication on the part of a community that permits their surroundings to bartered and brokered.

Imagine what it must feel like walking past this section for 30 years of your life...while an elected office holder brokers the best deal that benefits them.

sorry for the late reply.

Posted by: bkemcee at August 18, 2009 12:04 AM

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