Penthouse East, final sponsor unit to sell at 550 Vanderbilt condo building, reaps $4.55M, less concessions (24% off Offering Price). Buyer gets a huge tax break.

Penthouse East (PHE), the last unsold apartment at 550 Vanderbilt, the only condo building in Atlantic Yards/Pacific Park, has finally sold, for $4,550,000, more than eight years after the building began pre-sales. The sale was earlier reported by Marketproof.

From StreetEasy

While the StreetEasy suggests the 3-BR, 3.5-BA unit sold for 4.21% below the listed price of $4,750,000, that's not fully accurate, since the price tag was cut multiple times, from the $5,805,000 in the June 2015 Offering Plan. 

StreetEasy notes that the unit was listed for $5,000,000 in October 2019, then cut to $4,995,000 in May 2022 and $4,750,000 in February 2023. The selling agent was SERHANT, the successor to Nest Seekers International.

Also, the buyer got nearly $126,709 in credits, concessions, and other payments made by the seller, an affiliate of Greenland Forest City Partners, the joint venture that built the building. A footnote in the deed states that the sponsor received $4,423,291.30. 

All told, that $1,381,708.70 reduction from the original price represents a 23.8% cut.

Larger discount now

The two larger penthouses sold at lesser discounts: Penthouse South sold for $6.7 million, a 13.2% discount off the $7,715,000 offering price. Penthouse West sold for $5,85 million, a 14.7% discount off the $6.86 million offering price.

One factor in the larger discount may be higher interest rates, which raise the cost of mortgages and thus ownership.. 

Another may be the slow progress of the overall Atlantic Yards/Pacific Park project; while three acres of open space have been completed on the project's southeast block, which includes 550 Vanderbilt at the east end, the project's remaining five acres of open space depend on the completion of an expensive two-block platform over the Vanderbilt Yard, which will support six towers.

The SERHANT listing hyperbolically claims a "revolutionary new Frank Gehry designed 22-acre project" and "the inaugural opportunity to live and own in New York’s newest park."

After all, Gerhy designed the master plan, not the buildings.

Moreover, the claimed "350,000 square feet dedicated entirely to park space" requires the full project buildout. And that likely will be noisy and disruptive for years. 

More details

The unit is 2,418 square feet, with a 735 square foot balcony, according to the offering plan. So, rather than selling for $2,401/sf as initially requested or $1,969/sf, as StreetEasy calculates (excluding the balcony and using 2,412 square feet) for the latest listing price, the unit sold for $1,829/sf (or $1,834/sf using the StreetEasy square footage).

The unit was built by Greenland Forest City Partners, with Greenland USA having a 70% share in the building. Later, after the joint venture built three towers, Greenland bought out all but 5% of original developer Forest City Ratner's interest in the remaining project going forward. 

Forest City's parent, Forest City Realty Trust, was in 2018 absorbed by Brookfield Asset Management, so presumably a Brookfield affiliate reaped 30% of the sales proceeds.

This is the only condo building in Atlantic Yards/Pacific Park, as a special "carve out" that provided the 421-a tax break to buildings without affordable units--at least if the overall project contained a significant fraction--since expired.

A huge tax break

While the unit comes with $3,698 a month in common charges, according to SERHANT.

As I wrote in May 2022, monthly taxes, highlighted in the screenshot above right in the bottom left corner, were advertised at $94.

The 421-a tax break was expanded for this building thanks to a questionable, if legal, maneuver.

According to the excerpt below from the Offering Plan, owners of PHE--first in the list of three penthouses at the bottom of the list--would have had to pay $3,585.38/month and $43,024.55/year without the initial 15-year tax abatement, as shown in the red column.

Instead, that initial abatement, as presented to potential buyers, lowered taxes to $2,674.11/month and $32,089.29/year, as shown in the pink column. That's a 25.4% annual discount.

2015 Offering Plan

However, as I reported in 2017 for City Limits, the developers were somehow able to pair this building with the distant--separated by two parcels--535 Carlton "100% affordable" building into a single affordable project, thus gaining a more significant 25-year tax break.

As shown in the excerpt below from the September 2021 document, PHE was estimated to pay just $94.19/month and $1,130.28/year with the new abatement. 

That's an enormous discount: 97.4% off the estimated annual $43,024.55/year without any abatement, and 96.4% off the initial abatement of $32,089.29/year. That significantly lowers the cost of ownership.

September 2021 estimate

Note: those numbers probably should be adjusted up, given that taxes likely have risen slightly.