In 1995, Tony Rezko purchased a second floor condominium in Stone Manor. Tony, at the time, wasn’t particularly well known then, at least not in the infamous context that he is known now. He bought this unit, a rough unit, a unit that was beautiful in terms of square footage and views and property amenities, and over the course of the next 12 years proceeded to slowly, ineffectively, and randomly, renovate his unit. I don’t know whether or not Tony had a nice time there. Apparently, on at least one occasion he entertained a young community organizer on the rooftop deck. When legal troubles brought down his empire in the mid 2000s, the sale of his presumably cherished Stone Manor condo in 2007 was a necessary liquidation.
In 2007, Tony sold the unit for $820k, to a new owner with new vision and a new idea as to what this unit could become. Many months, or years, and several hundred thousand dollars later, the unit was transformed from a torn apart shell to a lavish lakefront residence on the south end of the middle floor of one giant stone mansion. We’ll assume the seller enjoyed a few years there before listing it on the open market for $2.99MM during the summer of 2010. The price then proved too robust for the market, not because the square footage (3000+) didn’t warrant the number. Nor was the price out of line because the views were imperfect (they were and are among the best on the water), nor because the building lacked panache (it wreaks of panache, particularly if the wind is out of the south), nor because it lacked price appropriate amenities (tennis court, subterranean garage, rooftop pool, slips, 10 acres, 400′ frontage), for all of these expectations were far exceeded by the reality that is Stone Manor. Instead, the unit lacked marketability at that higher level because of a simple lack of buyers who seek $3MM condominiums on Geneva.
The price was lowered, and lowered again, and lowered before finally reaching the ultimate asking price of $1.99MM. A buyer paid $1.975MM for this unit last week, a ridiculous list to sale ratio that isn’t mirrored by the rest of the market (lakefront list to sale now hovers around 88%, this one was nearly 99%). The buyer now inherits, by virtue of a nearly $2MM purchase price, an annual tax bill of $25k and monthly association dues of $1800. This is not a property for the faint of heart or the light of wallet.
It’s nice to see this unit sell. It bodes well for the other large lakefront condominiums available on Geneva today (Fontana Shores $995k), and the price paid was reasonable even if a bit high by my eye. There may have well been one buyer out there who thought Stone Manor at $1.975MM made sense, and thankfully for the seller and the seller’s broker (not me), they found him. Or her. So what don’t I like about Stone Manor? There is much to like, but there is equally as much to dislike. If it weren’t for the negatives, the building wouldn’t have any trouble in the market, but alas, there are. Like what? Well, consider the nature of a special assessment on such a property.
A typical condominium building will ultimate need some painting. When that painting is needed, the association is supposed to have money in reserve to cover this anticipated expense. This is a fairy tale akin to the one Bill Clinton warned us about in 2007. The real way associations tend to operate is to charge a monthly fee to cover such anticipated expenses, but then to levy a special assessment above and beyond that monthly fee to actually pay for projects and improvements. In this manner, the condominium concept is entirely and thoroughly broken. So in this typical condominium that needs some painting, the board hires a painter, or two, and he does some painting. A special assessment of a few hundred bucks might be expected. At Stone Manor? When the building need some work done, they hire craftsmen who are versed in the art of restoring 100 year old limestone walls. This, as you can imagine, is not an economical endeavor.
When you consider that just 5 owners reside at Stone Manor, periodic special assessments can be budget killers. There are only five owners to absorb the cost of maintaining a 100 year old structure that rests on 10 manicured acres. A structure, by the way, that happens to have a giant pool filled with water perched upon the roof. This is an expensive formula, one that leaves the major burden of ownership not on the initial purchase price, but on the perpetual maintenance that such a prized ornament will require. This is the Stone Manor problem, and this is why the market has been skeptical of it since a famous Chicago trader first turned it into condominiums in the late 1980s.
Don’t get me wrong, I’m thrilled to see a unit in this stoic building sell, I really am. Volume in any segment of our broader vacation home market is important, and any lakefront condo sale, even if it is an alpha sale such as this, is a nice sign for the rest of the condo market. I hope the new owner loves their purchase, as well they should. There is one other unit available in Stone Manor today. This unit is a double, so the price over $3MM isn’t as bad as it might look on paper. These are magnificent units, able to command sizable prices, even if finding a buyer is one of the greatest coups of Lake Geneva real estate.