Despite increasing chatter that the residential market has lost steam in 2016, Douglas Elliman parent company Vector Group reported largely improved year-on-year financial results for its real estate business in its first-quarter earnings report.
Elliman closed roughly $5.7 billion in sales in the first three months of 2016, Vector Group said Thursday. The figure represents a 39 percent jump from $4.1 billion in closed sales in the same period last year, but is down 8 percent from $6.2 billion in the fourth quarter of 2015.
The brokerage also saw pro-forma adjusted revenues of nearly $158 million in the first quarter — a 21 percent increase from around $130 million in the first three months of 2015 – while Elliman’s pro-forma adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $9.1 million in the period more than doubled year-on-year from $3.7 million.
Publicly traded Vector Group[TRData] attributed the jump in its real estate revenues primarily “to an increase in commissions and other brokerage income at Elliman.”
When reached for comment on the brokerage’s improved performance from last year – despite operating in a residential market that is widely seen as having worsened – Vector Group president and CEO Howard Lorber said that while “the market has slowed down for overpriced product” as of late, Elliman “started a lot of closings at our new [condo] developments” in the first quarter.
Lorber cited two Steve Witkoff developments, in particular – 150 Charles Street, in the West Village, and 10 Madison Square West, by Madison Square Park – as well as CIM Group and Macklowe Properties’ 432 Park Avenue, where Lorber himself recently closed on a $15 million unit (Vector Group chairman Bennett LeBow also has a $45 million spread at the supertall condo tower).
A rendering of 432 Park Avenue
Elliman also had “a couple of big signed deals” at Ian Schrager’s recently launched 160 Leroy Street condo development in the West Village, Lorber said, adding that the brokerage is “seeing a pickup on the high-end” of the luxury market at large. “Buyers are there to buy good product,” he said.
Lorber acknowledged that many of the sales that closed in the first quarter were of contracts that were entered into some time before – and hence carried over from last year’s more robust residential market. He said that Elliman had not “dissected” the numbers specifying to what extent the brokerage’s first quarter closings benefited from last year’s contracts.
On Elliman’s improved adjusted EBITDA, Lorber said there was “a little slowdown in some spending we were doing” on the brokerage’s expansive marketing and branding efforts — but added that “new development was the bigger piece” behind the increased earnings.
Elliman and its competitors in the Manhattan luxury market lost a big potential payday Monday when the Chetrit Group and partners pulled the plug on a $1.8 billion condo conversion plan at the Sony building, opting instead to sell the office property to the Olayan Group for over $1.3 billion.