Kola Aluko’s posh penthouse apartment in One57, one of Manhattan’s most expensive luxury towers, has finally sold after months of delays in what New York realtors agree is the most expensive residential foreclosure in city history.
The sale price – a paltry $36 million – suggests that the stress seen in the ultra-high-end real estate market in New York City has only worsened as buyers brace for a glut of new luxury buildings coming online in the coming years.
The buyer of unit 97, one of five bidders aside from the bank, wouldn’t answer questions, and his name wasn’t immediately available. Aluko purchased the building through shell companies. Recently, his assets have been seized by authorities in several countries as he’s wanted for bribing officials to receive lucrative contracts with his country’s state-owned oil company, Bloomberg reported.
Aluko bought the 6,240-square-foot (580-square-meter) residence in December 2014 for $50.9 million, according to New York City records. The sale yielded a compound annual return of about minus 11%.
And in September 2015, he took out an unusually large mortgage with an unusually short term: one year. The $35.3 million mortgage was obtained from Luxembourg-based lender Banque Havilland SA. The full payment of the loan was due one year later, according to court documents filed in connection with the foreclosure. The borrower failed to repay, and now Banque Havilland has forced a sale to recoup its funds.
“It’s probably the most-expensive foreclosure we’ve ever seen in luxury development,” said Donna Olshan, president of high-end Manhattan brokerage Olshan Realty Inc. “I don’t know of a foreclosure that’s larger than that."
WSJ reported in August that luxury condos in Billionaires’ Row have faced steep discounts as building owners have struggled to find buyers.
An analysis of condominium records shows the average discount on nine contracts signed at the Baccarat in 2016 was 22% below the peak asking prices of 2014, when the market was red hot. These include the sprawling 7,300-square-foot penthouse plus terrace that sold in June 2016 for $42.6 million, soon after the asking price was from $60 million to $54 million. Overall that amounted to a 29% price reduction.
One57 went on the market in 2011, and as of August there were still five units for sale. As we’ve previously reported, foreclosure proceedings were started in January. An auction scheduled for July was delayed after a creditor claimed Aluko owed it about $83 million for gasoline and jet fuel.
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