Tuesday, March 30, 2010

Sales of Oro condos reach 50 percent; KPMG report for the ESDC had the total at 75 percent last August

There's even more evidence that the report (dated August 31, posted below) that KPMG delivered to the Empire State Development Corporation on the housing market in Brooklyn contains lies.

KPMG claimed that the Oro Condos in Downtown Brooklyn were 75% sold. That didn't ring right.


The evidence mounted. In September, Crain's reported that prices at Oro had been slashed 25%. On 1/31/10, the New York Times reported that the building was 44 percent sold.

By March, 50%

And yesterday it hit the halfway mark. A press release dated March 29, headlined Oro Condominium in Downtown Brooklyn Hits 50% Sold Mark, stated:
Downtown Brooklyn's Oro condominium, the 303-unit luxury building at 306 Gold Street, has reached the 50-percent-sold milestone with more than 152 units sold. Sales have soared at the 40-story property with 61 deals made since September 2009.

Much of the recent sales success can be attributed to Oro's new marketing strategy developed by Rose Associates when they were designated as the sales and marketing agent for the building last fall. Prices have been reduced to adapt to market conditions, and units were individually re-priced with adjustments from 6 to 25 percent. In addition, a new advertising campaign was launched late last year, the model apartments were redesigned, and the Web site was re-tooled. As a result, sales surged to an average of 10 deals per month.
If 61 deals were made since September, that means that only 91 of 303 units had been sold by the time the KPMG report was finished.

That's 30%. Not 75%. Not even close.

In the MGPP case

In her 3/10/10 decision (bottom) rejecting a challenge to the Atlantic Yards 2009 Modified General Project Plan (MGPP), state Supreme Court Justice Marcy Friedman wrote, on p. 9:
KPMG concluded that FCRC's residential absorption rate estimates were supported by current market data for condominiums...
But they weren't supported by current market data, because the market data was a lie, not just about Oro but about Richard Meier's One Prospect Park.

As I wrote in a preview to the oral arguments in January, the petitioners challenging the MGPP missed an opportunity to point out that KPMG's figures were extremely unreliable.

Most of the Oro data wasn't out by then, but other information had emerged.

The KPMG report claimed that Richard Meier's On Prospect Park is 75% sold; however, the New York Times quoted the developers as saying half the units have been sold and that StreetEasy.com documented only 25% the units as sales.

KPMG and rationality

There was no rebuttal of KPMG's figures on current condo sales; an affidavit from consultant Joshua Kahr did question the prices and timing of the projected Atlantic Yards condos.

Friedman took that as a duel of experts, and deferred to the ESDC. But had she been convinced--and she should have been--that the KPMG report was simply untrustworthy, she might not have deferred to the ESDC's acceptance of it:
ESDC grounds the rationality of its [10 year build-out] determination in the opinion of its consultant that the market can abosrb the planned units over a 10 year build-out; its intent to obtain a commitment from FCRC to use commercially reasonable effors to complete the Project in 10 years; and FCRC's financial incentive to do so--all factors that were articluated and relied on by ESDC in the documents discussed above.

Under the limited standard for SEQRA review, the court is constrained to hold that ESDC's elaboration of its reasons for using the 10 year build-out and for not requiring an SEIS was not irrational as a matter of law. ESDC's continuing use of the 10 year build-out was supported--albeit, in this court's opinion, only minimally--by the factors articulated by ESDC.
KPMG Atlantic Yards Market Study Aug. 31, 2009

Friedman Ruling on MGPP

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