An attempt for a quick and profitable flip at a fancy Upper East Side condo appears to have fallen victim to the current interest-rate environment.
A seller at the Benson, a 15-unit development at 1045 Madison Ave. that surprised many with its success during the pandemic, has found takers for two apartments in the building, Nos. 10 and 11. They sold this month in separate transactions for a total of about $29 million, which pencils out to just a bit more than the $28 million they cost in 2021, according to the city register.
The seller, identified in records as a shell company, Leftshoe, once had much grander plans.
Within weeks of closing on the two full-floor apartments in March 2022, Leftshoe turned around and almost immediately put both of them back on the market. Leftshoe’s asking price for the pair back then was $35 million, an effort to rake in a 25% profit without apparently ever occupying the two homes.
But by that summer and after some stabs at discounting, Leftshoe seems to have scaled back its ambitions at the building, the creation of luxury firm the Naftali Group. Nos. 10 and 11 began to be marketed as separate units—the presence of a kitchen in both of them suggests they were never officially combined—but even that move seems to have met some resistance. Indeed, both apartments underwent some price cuts, according to Streeteasy, before buyers eventually came around.
No. 10, for instance, initially sought $17.5 million but closed this month for $14.4 million. No. 11, meanwhile, which also closed in April but in a different deal, sold for about $15 million, according to the city register, suggesting that after deducting closing costs and attorney fees, Leftshoe may have ended up back almost exactly where it started.
Of course, March 2022, when Leftshoe tried to take its big swing, was also the beginning of a market-shaping event. It’s when the Federal Reserve began raising interest rates to rein in inflation, actions that have sent home-loan costs to historic highs and dragged on the residential market, even at the high end. And there have been 10 rate increases since. Timing, then, may have not been the seller’s friend.
The buyers of No. 10, a six-bedroom spread with five and a half baths, a living room with a fireplace and a formal dining room, were Ralph and Karen Izzo, according to the register. A nuclear physicist by training, Ralph Izzo served as chairman of Public Service Enterprise Group, or PSEG, the major New Jersey electricity utility, from 2007 to 2022, a tenure during which he made combating climate change a priority. Karen Izzo, meanwhile, is a retired biologist.
The couple, who do not seem to have relied on a mortgage for their purchase, went into contract on No. 10 a while ago, in March 2023, and closed April 5, records show. It’s unclear why the closing took so long.
Ilyse Dolgenas, the lawyer who has represented Leftshoe in all its deals in the building, declined to comment. Craig George, a Sotheby’s International Realty agent who marketed No. 10, did not return an email by press time. And the Izzos could not independently be reached.
Meanwhile, the buyer of No. 11, a mirror image of No. 10 located one floor up, was a limited liability company called 1045 Unit 11, which signed a contract on the apartment Jan. 29 and closed April 5, records show. That buyer also seems to have bypassed the tough lending climate by paying with cash.
A 19-story limestone edifice between East 79th and East 80th streets, the Benson launched sales in September 2020 as the city was in the thick of doomsday scenarios about the Covid crisis. But the market embraced the rare new condo on Madison, which sold all of its units (including one to Naftali chief Miki Naftali) by spring 2023. In all, Naftali made $238 million from unit sales, an amount that reflects price increases on some apartments over the course of the pandemic.
Not every flip at 1045 Madison has fizzled. Indeed, the original owner of unit No. 6, who paid $12.8 million, ended up selling the apartment within months of closing in 2022 to a purchaser who shelled out $14.4 million, a 13% gain, records show. But every other owner at the Benson appears to have stayed put since moving in.
C. J. Hughes , 2024-04-12 19:26:37
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