> ...venture fund managing partner Jacob Garlick... placed a $190 million bid on the historic Flatiron Building...
> ...you'd think the building would go to the second-highest bidder—but, dear reader, think again, because that guy doesn't even want the building. "I was kind of shocked, to tell you the truth," that bidder, former Flatiron co-owner Jeff Gural, told NY1 after Garlick outbid him. "I never thought someone would bid so much for the building. It's a beautiful building, but it needs $100 million of upgrades, it's basically empty."
Never thought someone would bid $190 mil? OK, so how much did this second-highest bidder bid then? Well:
> But if an extension is not granted, the second-highest bidder in the auction, a group led by GFP Real Estate’s Jeffrey Gural, will have the option to purchase the property at their last bid of $189.5 million, according to a court filing. [1]
About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused.
But it seems they've both changed their minds so no harm no foul...?
Is there any kind of penalty though for bidding at an auction and not following through on the deposit?
> About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused.
Mr. Gural's bid is complicated, because he's already 75% owner of the building; he's really bidding that he'd rather spend $47.5M for the other 25% of the building, than accept $142.5M for his part.
But if Mr. Garlick isn't following through on the bid, it's not surprising that Mr. Gural would rather reauction. He doesn't expect anyone to bid much for the property, and he'd rather spend less to get the other 25%.
Plus, given that the auction was about getting rid of the increasingly weird 25% equity holder, it’s not a far stretch to assume that the minority guy just rigged the auction with „who do I know who I could talk into starting a fake bidding war“, and thus even less appetite among the majority to just pick up the tab for that stunt.
The dynamics of the offer and potential reauction are interesting.
Since the top bidder was essentially going to pay the 2nd bidders highest price (we can’t know what the top bidders price would have been), it’s very strange that they tried to extend an offer to purchase at the 2nd bidders highest price. I would have expected them to extend at the first increment above the 3rd highest bid, as this would have been the result without the first bidder. (And then presumably they could sue the highest bidder for the difference in damages.)
Doing a reauction will be strange, and it creates a weird kind of arbitrage opportunity. Why would other (legitimate) bidders show up when they already know Mr Gural’s bid will be higher? Perhaps there will be only spiteful bids from competitors to ensure that he doesn’t get a deal. Perhaps it doesn’t matter, as they would presumably be able to sue for damages for any difference here as well.
The title here is editorialized (maybe by the moderators, because the original, "Some guy" bought the building, is baity). But it's probably worth saying that he doesn't seem like a VC in the sense we think about; he manages a multi-family office that does PE and venture and isn't tech-focused. "An investor" would be maybe a better description.
They're relatively common in SF, and increasingly common in LA for 4-5 unit apartment->ownership conversions. While they're weird for owners, they're attractive for small-time developers. Conversion to actual condo ownership is subject to regulation, and pretty tightly controlled by the city, but conversion to TiC requires basically no approval for builds with few (~5) units.
They're pretty attractively priced too, since they can be done so quickly, and because owning a 1/4 undivided share of 4 apartments, with exclusive use of one apartment guaranteed only by the strength of whatever contract a small-time developer can get drawn up requires some ... convincing
I didn't realize the Flatiron Building was vacant and apparently in shambles. This guy bought it for 190 mil but from the article it requires another 100 mil to be renovated.
I worked in that building about 10 years ago and old copper pipes running water were directly above server racks. The corner offices facing the park were nice, but everything else was significantly worse than any other building I’ve worked in because of age, low ceilings, etc. I would guess 100 mil is a low estimate.
I hate that intersection. I regularly find myself on Lawrence headed north and need to get to 280 north and it's not pretty.
First I have to get to the right side, but not all the way to the right or it will throw me to 280 south. So second from the right, but immediately after passing the 280s onramp I need to get more to the right where I get off Lawrence and find myself at a red light with 3 left turn lanes but the rightmost of those is already packed up with cars coming off 280n so usually I'm in the second from the left lane. During that left turn I have an eye on getting over to the right because I need to be in the far right lane on Stevens Creek to even be in position to cross the green bike lane into the actual lane that gets me to 280n. That lane is usually already filled with cars coming off Lawrence south and there's a light in the middle of it so I'm trying to merge into standing traffic. Or else waiting at the light and trying to make the short merge after the light.
By far the most stressful bit of southbay driving I ever encounter.
The absurdity of this is off the charts. Someone can just raise one of those ping-pong paddle things, name a price, and win? Don't you at least have to put down a deposit of some kind to participate?
Usually auctions have some sort of deposit requirements, but where large companies are involved it's sometimes just "show us that you have at least $X in the bank" (cash or treasuries or similar) on the theory that they can be sued for specific performance if they don't pay up.
It is manifestation. If he acts like he owns the building and has a positive mental visualization of it, he'll manage to find some way of paying for it.
If you are fond of triangular shaped buildings the G.A.R. building in Detroit sold in 2011 for only $220,000. After rehabilitation it sold for considerably more recently.
Readit News
> ...you'd think the building would go to the second-highest bidder—but, dear reader, think again, because that guy doesn't even want the building. "I was kind of shocked, to tell you the truth," that bidder, former Flatiron co-owner Jeff Gural, told NY1 after Garlick outbid him. "I never thought someone would bid so much for the building. It's a beautiful building, but it needs $100 million of upgrades, it's basically empty."
Never thought someone would bid $190 mil? OK, so how much did this second-highest bidder bid then? Well:
> But if an extension is not granted, the second-highest bidder in the auction, a group led by GFP Real Estate’s Jeffrey Gural, will have the option to purchase the property at their last bid of $189.5 million, according to a court filing. [1]
About 0.3% less? ...Why is he shocked somebody else would pay basically the same amount he himself bid? I am so confused.
But it seems they've both changed their minds so no harm no foul...?
Is there any kind of penalty though for bidding at an auction and not following through on the deposit?
[1] https://therealdeal.com/new-york/2023/03/24/garlick-fails-to...
Mr. Gural's bid is complicated, because he's already 75% owner of the building; he's really bidding that he'd rather spend $47.5M for the other 25% of the building, than accept $142.5M for his part.
But if Mr. Garlick isn't following through on the bid, it's not surprising that Mr. Gural would rather reauction. He doesn't expect anyone to bid much for the property, and he'd rather spend less to get the other 25%.
Since the top bidder was essentially going to pay the 2nd bidders highest price (we can’t know what the top bidders price would have been), it’s very strange that they tried to extend an offer to purchase at the 2nd bidders highest price. I would have expected them to extend at the first increment above the 3rd highest bid, as this would have been the result without the first bidder. (And then presumably they could sue the highest bidder for the difference in damages.)
Doing a reauction will be strange, and it creates a weird kind of arbitrage opportunity. Why would other (legitimate) bidders show up when they already know Mr Gural’s bid will be higher? Perhaps there will be only spiteful bids from competitors to ensure that he doesn’t get a deal. Perhaps it doesn’t matter, as they would presumably be able to sue for damages for any difference here as well.
1: https://therealdeal.com/new-york/2023/03/28/the-trouble-with...
They're pretty attractively priced too, since they can be done so quickly, and because owning a 1/4 undivided share of 4 apartments, with exclusive use of one apartment guaranteed only by the strength of whatever contract a small-time developer can get drawn up requires some ... convincing
always favor the cerulean bidders!!
5300 Stevens Creek Blvd
San Jose, CA 95129
Until around the early 1990's, it had the multicolored Apple II logo on the side facing I-280.
Accolade with Peter Harris was a tenant at one point.
First I have to get to the right side, but not all the way to the right or it will throw me to 280 south. So second from the right, but immediately after passing the 280s onramp I need to get more to the right where I get off Lawrence and find myself at a red light with 3 left turn lanes but the rightmost of those is already packed up with cars coming off 280n so usually I'm in the second from the left lane. During that left turn I have an eye on getting over to the right because I need to be in the far right lane on Stevens Creek to even be in position to cross the green bike lane into the actual lane that gets me to 280n. That lane is usually already filled with cars coming off Lawrence south and there's a light in the middle of it so I'm trying to merge into standing traffic. Or else waiting at the light and trying to make the short merge after the light.
By far the most stressful bit of southbay driving I ever encounter.
(Semi-related trivia: Bioware's office in Austin is a copy of Apple Infinite Loop.)
https://www.freep.com/story/money/business/michigan/2023/02/...