No backsies? At 432 Park, developers buy back a condo to make $39M sale

CIM and Macklowe bought back the smaller pad for $28M

Oct.October 03, 2017 02:15 PM

CIM’s Charles Garner and 432 Park Avenue

What does it take to sell a luxury condominium these days? At 432 Park Avenue, a generous return policy.

Developers CIM Group and Macklowe Properties have taken the unusual step of buying back an apartment at their supertall tower — thereby freeing up the seller to purchase something even bigger.

Property records show the developers paid $27.8 million to take back Unit 65A, a 4,019-square-foot apartment that sold in June 2016. The seller, a corporation dubbed 432 Holdings LLC, shelled out $27 million — or $6,718 per square foot — for the half-floor pad, which has three bedrooms, a windowed eat-in kitchen and the building’s signature 10-foot windows.

But in a simultaneous deal that also closed on Sept. 18, another LLC linked to the 65th-floor unit closed on a larger apartment 15 floors up.

This time, a corporation described as 432 B Holdings LLC paid $39.3 million for Unit 80B. With 5,421 square feet, the four-bedroom sold for $7,231 per square foot. It was asking $44.25 million.

Though unusual, this type of deal is not unheard of, said attorney Terrence Oved of Oved & Oved. He said it amounts to a “put option,” and makes sense given the slowdown in luxury sales.

“The market for super-luxury is stagnating,” he said.

Given the choice between marketing a $39 million apartment or a $28 million apartment, the chances are greater that CIM and Macklowe will find a buyer for the less expensive unit.

Overall, prices in the luxury market slipped 4.8 percent during the third quarter to $6.4 million, according to appraisal firm Miller Samuel. The median price on new development units fell 23 percent year-over-year to $2.79 million.

The property at 432 Park hasn’t been immune to that slowdown, and buyers last year got an average discount of 10 percent. For that reason, Jonathan Miller said the trade-in was an example of “smart unit management.”

It’s not the first time CIM has gotten creative to make a deal. Last year, it provided a hefty loan to the buyer of the tower’s $87.7 million penthouse. Property records show CIM’s $56 million covered nearly two-thirds of the purchase price. The buyer was reportedly Saudi retail magnate Fawaz Al Hokair.

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