Brooklyn Heights resident and real estate broker Donald Brennan files this guest post:
After reading the ‘Real Deal on Watchtower Properties’ post here last week I got to thinking – a billion dollars, for 25 properties, where did that number come from? While I am aware of the impeccable condition of these properties, inside and out, my initial reaction was – that’s crazy! Isn’t it? Maybe not.
In order to get a feel for what the estimated billion dollar price tag relates to in a more tangible metric I set out to determine the price per square foot for the portfolio. I broke the properties down into three general categories – non-residential, residential and residential development – determined the approximate size of each property and derived a dollar per square foot value for each category based on recent comparable market transactions and the Watchtower’s own transaction record of previously owned properties. The blended per square foot price works out to $260, which sounds low, doesn’t it? So while we are in the middle of one of the biggest deleveraging cycles ever, the $1 Billion estimate may be understated.
So if market conditions do improve the portfolio may be worth more than a billion dollars. And if there isn’t any improvement, well then they are still sitting on $1,000,000,000 of prime Brooklyn real estate. Not the worst thing.
Brooklyn Heights resident and broker Donald Brennan hosts informal real estate discussions at his home on the third Tuesday of each month. The next session is August17. Visit his website to RSVP and for more information.