Business

Peloton’s net losses narrowed from a year earlier, but it’s the eighth straight quarter the company has failed to turn a profit.
The exercise equipment company, which sells the Bike and Bike+, made more in sales from its subscriptions than its connected fitness products for the third quarter in a row.
CEO Barry McCarthy, a former Spotify and Netflix executive, called the results a potential “turning point.”

Brody Longo works out on his Peloton exercise bike on April 16, 2021 in Brick, New Jersey.
Michael Loccisano | Getty Images

Peloton said Wednesday its net loss narrowed year over year, and, for the third quarter in a row, subscriptions revenue was higher than sales of the company’s connected fitness products.
CEO Barry McCarthy called the results a possible “turning point” for the business, which has spent much of the past year executing an aggressive turnaround strategy. 

The fitness equipment company’s fiscal second quarter revenue beat Wall Street’s expectations, but the company posted wider losses per share than expected. Peloton’s stock jumped about 7% in premarket trading.
Here’s how Peloton did in the three months that ended Dec. 31 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Loss per share: 98 cents vs. 64 cents expected
Revenue: $792.7 million vs. $710 million expected

The company’s reported net loss for the three-month period that ended Dec. 31 was $335.4 million, or 98 cents per share, compared with a loss of $439.4 million, or $1.39 per share, a year earlier. While it’s the eighth quarter in a row the exercise company has reported losses, it’s the narrowest loss Peloton has marked since its 2021 fiscal fourth quarter. 
Revenue dropped 30% compared to the year ago period but exceeded the company’s expected range of $700 to $725 million. Connected fitness product sales, which are typically strong during Peloton’s holiday quarter, dropped 52% year-over-year while subscription revenue jumped 22%. 
“This is the time of year when, if we’re going to sell a lot of hardware, we have so you would expect there to be lots of hardware related revenue, and you would expect that maybe that revenue would exceed subscription,” McCarthy told CNBC. “It didn’t. It’s why in the letter [to investors], I call it out, as it may be a turning point.”

In his letter to investors, McCarthy said he expects the trend to continue. 
The company ended the quarter with 6.7 million total members and 3.03 million connected fitness subscriptions, which is a 10% jump compared to the year ago period. The company counted 852,000 subscribers to its app, a 1% drop compared to the year ago period. It has a goal of getting 1 million people to sign up for trials of its app over the next year.
Peloton is losing money on Bikes, Treads and other machines, but its subscription business has once again kept its overall margins above water. Gross margins for its connected fitness products were negative 11.2%, but gross margins for subscription sales were 67.6%. The total gross margin was 29.7%, up from 24.8% in the year ago period. It declined from the previous quarter, however, driven in part by increased promotions in the holiday quarter.
Peloton expects revenue to be lower but margins higher in the next quarter. The company is forecasting sales between $690 million to $715 million and a total gross margin of about 39%. Wall Street analysts pegged their revenue estimate for the quarter at $692.1 million.
The company is also expecting connected fitness subscribers to be between 3.08 million and 3.09 million. 

Next phase of the turnaround

Peloton, which boomed during the earlier days of the pandemic, has been in the midst of a broad turnaround strategy under McCarthy, who took the helm of the business a year ago. 
The company’s stock is up about 62% so far this year, closing at $12.93 on Tuesday, giving it a market value of about $4.4 billion. Shares are well off their 52-week high of $40.35, which they hit around the time McCarthy became CEO.
“The viability of the business was very much in doubt when I walked in,” said McCarthy, a former Spotify and Netflix executive. “It probably wouldn’t be an overstatement to say there were some people who didn’t expect us to survive this long.”
Since he took over, McCarthy has cut Peloton’s workforce by more than half, expanded its Bike rental program nationwide, started selling certified pre-owned Bikes, debuted a rowing machine and partnered with Amazon and Dick’s Sporting Goods to sell its Bikes and Treads. 
McCarthy’s top priority was to manage cash flow and get the company out of the red, a goal he said the company has nearly accomplished. Free cash flow was negative $94.4 million, compared with negative $246.3 million in the previous quarter and negative $546.7 million in the year-ago period. 
McCarthy said he’s ready to pivot from trying to keep the company alive to growing it, he told CNBC. 
“Now that we’ve addressed the viability issues, let’s get back to thinking about growth and the future of the business, like full stop,” said McCarthy. 
“So there are a bunch of initiatives that we’ve announced that position us to pursue growth,” he added. “And the question we need to answer for investors now that we’re not talking about viability is how fast, how profitable, where’s it coming from, and over time we’ll begin to address some of those questions.”

WATCH LIVEWATCH IN THE APP More

Total mortgage application volume fell 9% last week compared with the previous week.
Even with rates well off their recent highs, applications to refinance a home loan fell 7% for the week and were 80% lower than the same week one year ago.

A “For Sale” sign outside a house in Albany, California, on Tuesday, May 31, 2022.
David Paul Morris | Bloomberg | Getty Images

After a stronger start to the year, mortgage demand plunged last week, despite another drop in interest rates.
Total mortgage application volume fell 9% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

related investing news

6 hours ago

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.19% from 6.20%, with points falling to 0.65 from 0.69 (including the origination fee) for loans with a 20% down payment. The rate was 3.78% the same week one year ago.
Even with rates well off their recent highs, applications to refinance a home loan fell 7% for the week and were 80% lower than the same week one year ago. Homeowners may have jumped back briefly after the holiday lull, causing demand to rise over much of January, but overall there are still very few borrowers who can benefit from a refinance at today’s rates, so demand is now falling again.
Mortgage applications to buy a home fell 10% for the week and were 41% lower year over year. While both home prices and mortgage rates are coming down steadily, the supply of homes for sale is still quite low, and that may be keeping mortgage demand under pressure.
“Purchase activity is expected to pick up as the spring homebuying season gets underway, bolstered by lower rates and moderating home-price growth,” said Joel Kan, an MBA economist. “Both trends will help some buyers regain purchasing power.”
Mortgage rates have been moving in a narrow range for the last few days, but that could all change depending on commentary expected from the chairman of the Federal Reserve on Wednesday. The central bank is expected to hike its interest rate, but that doesn’t necessarily raise mortgage rates. The monthly employment report Friday could also move rates decidedly, depending on what it says about the state of the economy, recession and inflation.
“There are also several important economic reports that could lead traders to revise their assessment of the Fed’s likely course of action,” noted Matthew Graham, chief operating officer at Mortgage News Daily. “In other words, even after the Fed-induced volatility, traders could find new reasons to buy/sell bonds at an even faster pace, thus causing bigger movement in rates for better or worse.”

WATCH LIVEWATCH IN THE APP More

The deal for the Argentine surpasses the £100m Manchester City paid for Jack Grealish from Aston Villa 18 months ago.
The 22-year-old, who only joined Benfica last summer for around £10m, has signed an eight-and-a-half-year deal at Stamford Bridge to keep him at the club until the summer of 2031.

Chelsea had been in talks to sign the World Cup winner throughout January, but Benfica had refused to do business unless the Blues paid his €120m release clause.
Nurphoto | Nurphoto | Getty Images

Chelsea have signed midfielder Enzo Fernandez from Benfica for a British-record £106.8m.
The deal for the Argentine surpasses the £100m Manchester City paid for Jack Grealish from Aston Villa 18 months ago.

The 22-year-old, who only joined Benfica last summer for around £10m, has signed an eight-and-a-half-year deal at Stamford Bridge to keep him at the club until the summer of 2031.

The Premier League’s record buys

Enzo Fernandez – Benfica to Chelsea, January 2023 – £106.8m
Jack Grealish – Aston Villa to Manchester City, summer 2021 – £100m
Romelu Lukaku – Inter Milan to Chelsea, summer 2021 – £97.5m
Romelu Lukaku – Everton to Manchester United, summer 2017 – £90m
Paul Pogba – Juventus to Manchester United, summer 2016 – £89m
Mykhailo Mudryk – Shakhtar Donetsk to Chelsea, January 2022 – £88.5m

Chelsea had been in talks to sign the World Cup winner throughout January, but Benfica had refused to do business unless the Blues paid his €120m release clause.
But Chelsea agreed a deal of €121m at 9.15pm on Deadline Day after 12 hours of talks led by Chelsea’s co-owner Behdad Eghbali from London.
The Blues will pay a first instalment of £30m with the rest of the fee paid in five further instalments.
Fernandez was left out of Benfica’s squad for their game against Arouca on Tuesday night, with the 22-year-old undergoing a medical in Portugal ahead of his switch to Stamford Bridge.

According to Portuguese broadcaster SIC, Fernandez will fly to the UK on Wednesday morning, with a private jet scheduled to leave Lisbon airport at 10.20am.
Fernandez will help to replace Jorginho, who joined Chelsea’s London rivals Arsenal on Deadline Day in a £12m deal.

Read more stories from Sky Sports

Sky Sports’ Ron Walker:
“Fernandez’s attributes make it clear how he can help. Still only halfway through his first season with Benfica, he has racked up the second-most assists in the Primeira Liga, and created 30 chances for his team-mates – some of them particularly eye-catching, and a stunning pinpoint set-up for Goncalo Ramos against Sporting earlier this month perhaps the pick of the bunch.
“It is that kind of playmaking potential which had Manchester City and Real Madrid interested in bringing him in from boyhood side River Plate last summer before he settled on a move to Lisbon.
“No one in the Portuguese top flight has made more passes than the Argentine, and if he does prove to replace Jorginho at Stamford Bridge, he will also provide something extra in the final third where he tops the charts for passes too.
“Should Chelsea want to play with a midfield two, he would offer a better option there too. Fernandez has already taken responsibility without the ball at Benfica, slotting into an anchorman role regularly as required. He has been one of the league’s top tacklers, and only 10 players across the division have won the ball back more in the middle third despite his considerable output further up the pitch.”
Read the full feature here
How much did Chelsea spend in January?
Following the arrival of Fernandez, Chelsea spent £323.3m in January. Here are the deals the Blues made:

Benoit Badiashile – Monaco, £35m
David Datro Fofana – Molde, undisclosed (reported £10m deal)
Andrey Santos – Vasco da Gama, undisclosed (reported £18m deal)
Joao Felix – Atletico Madrid, £9.7m loan
Mykhailo Mudryk – Shakhtar Donetsk, £88.5m
Noni Madueke – PSV Eindhoven, £29m
Malo Gusto – Lyon, £26.3m
Enzo Fernandez – Benfica, £106.8m

Chelsea have splashed over £323m in this January transfer window after completing a British record deal for Benfica’s Enzo Fernandez – so how are they able to spend such huge sums and stay within Financial Fair Play rules?
The UEFA FFP regulations are designed to limit excessive spending and there are also Premier League rules which put a cap on the losses a club can suffer over a three-year period. Large fines or points deductions can be dished out as punishment to clubs which don’t adhere to the rules.
But with the Blues agreeing a £106.8m transfer for Fernandez, new Chelsea co-owner Todd Boehly will have overseen a spend £600m since the takeover in May 2022 – and they appear to have stayed within the guidelines.
Football finance expert Kieran Maguire spoke to Sky Sports News to explain.

WATCH LIVEWATCH IN THE APP More

The decision to reduce the number of turbines for the Scoop Hill Community Wind Farm follows a period of consultation for the project.
If built, the project will have 60 turbines instead of the 75 that were originally proposed.
The tip height of four turbines in the development, in Dumfries and Galloway, will also be lowered.

A golden eagle photographed in Scotland. The bird of prey is protected under the U.K.’s Wildlife and Countryside Act 1981.
Education Images | Universal Images Group | Getty Images

Plans for an onshore wind farm in Scotland have been revised after a number of concerns, including those related to how the project might affect golden eagles.
If built, the Scoop Hill Community Wind Farm will have 60 turbines instead of the 75 that were originally proposed.

The tip height of four turbines in the development, in Dumfries and Galloway, will also be lowered.
In a project update last week, the firm behind the Scoop Hill Community Wind Farm said revisions to the development had been made after “extensive and iterative discussions” with both the local community and consultees.
“During the consultation period, comments were raised by consultees and local residents, primarily relating to landscape and visual impacts, residential amenity, cultural heritage, dark skies and golden eagles,” Community Windpower said.

Read more about energy from CNBC Pro

The company said it would now submit additional documentation to the Scottish government’s Energy Consents Unit in the spring.
“We have taken on board comments raised by consultees and the local community and have made significant, positive changes to the proposed layout,” said Rebecca Elliott, senior project manager for the Scoop Hill facility.

Elliott added that she looked forward to “discussing the updated proposal with the community in the coming months.”
Golden eagle concerns
The decision to reduce the number of turbines for Scoop Hill follows a period of consultation for the project.
Those responding to the consultation included RSPB Scotland, a charity focused on conservation. In a letter sent to the Energy Consents Unit in Jan. 2021, it voiced its opposition to the plans.
Among other things, the letter expressed unease about the facility’s potential effect on the golden eagle, a bird of prey protected under the U.K.’s Wildlife and Countryside Act 1981.   
“We have significant concerns about the impact that this proposal will have on golden eagle through collision risk, habitat loss, the potential for complete abandonment of a territory and impact on roost sites,” the organization’s letter said.
“Furthermore, we believe that the assessment of such impacts through both construction and operation is incomplete, and as such we object to this application,” it added. “We also have concerns regarding osprey and black grouse.”
Balancing act
The decision to reduce the size of the Scoop Hill project represents the latest example of how concerns about the interaction between wind farms and the natural world can create hurdles for companies looking to build out renewable energy projects.  In Dec. 2022, for example, plans for a major new wind farm in Australia were given the thumbs up on the proviso its turbines went offline for five months a year to protect a parrot species.
Brussels-based industry body WindEurope says the effects of projects can be prevented “by adequately planning, siting, and designing wind farms.”
“The impact of wind farms on birds and bats is extremely low compared to the impact of climate change and other human activity,” it adds.
In a statement sent to CNBC, a spokesperson for RSPB Scotland said it hadn’t had “any direct communication with Community Windpower about golden eagles, only through submitting our response to the windfarm application in January 2021.”
“The Applicant did get in touch in November 2022 to provide an update that further work had been undertaken including proposed changes to the wind farm’s design and layout,” they added.
“However, further information on the details was not provided at that time, so we have not been able to fully consider the changes yet.”
“We understand that full details have not been published of the revised proposals so we do not yet know whether this revision might address our concerns,” the spokesperson went on to state. “We will consider the amended proposal carefully, particularly in relation to golden eagles.”

The spokesperson added that while RSPB Scotland supported renewable energy generation, wind farms “must be carefully sited and designed to avoid unacceptable impacts on species of highest conservation concern.”
“There is some research which suggests that golden eagles will avoid areas where wind farms have been constructed, so they are then displaced from the area,” they added.
The organization was aware of at least three collisions involving golden eagles and wind farms located in Scotland but noted there was “no systematic recording of collisions, so this number could be higher for golden eagles and other species.”
“A key concern in relation to Scoop Hill is likely loss of the available land that golden eagles would have access to where they can forage and find food, which could result in the existing territory being abandoned,” the spokesperson said.
Community Wind Power did not respond to CNBC’s request for comment on the RSPB’s remarks ahead of this story’s publication. More

In the past, trips abroad often included personal luxury purchases for affluent Chinese consumers looking to take advantage of currency and tax benefits.
But years of zero-Covid measures have taught Chinese consumers they can get their fix of opulence on their own shores — and experts say this habit is here to stay.
The bleak overseas luxury shopping figures are also compounded by various travel restrictions imposed on Chinese travelers by other countries.

A salesperson showing the limited edition launched by Emporio Armani to welcome the Year of the Tiger at a duty-free store in Haikou, south China’s Hainan Province, January 15, 2022.
Zhou Huimin | Xinhua News Agency | Getty Images

Stocks of many luxury fashion houses reliant on Chinese consumers rallied on China’s reopening, but those customers may not necessarily be buying the goods overseas.
In the past, trips abroad often included personal luxury purchases for affluent Chinese consumers looking to take advantage of currency and tax benefits.

related investing news

2 days ago

Shares of LVMH have gained around 12% since early December when Beijing started rolling back its zero-Covid policies.
Similarly, Cartier-owner Richemont shares have gained about 13%, while Dior rose more than 11% from early December.

Domestic luxury consumption now a habit

The “revenge spending” that comes with the return of overseas travel will lead to an increase in consumption of luxury goods in 2023, Jessy Zhang, an analyst from Daxue consulting told CNBC. 
“[The Chinese’s] mentality is that they need to buy luxury goods in duty-free stores before returning home,” Zhang said.
But years of zero-Covid measures have taught Chinese consumers they can get their fix of opulence on their own shores — and experts say this habit is here to stay. 

A Bvlgari store in a shopping mall in Shanghai, China on January 12, 2023.
CFOTO | Future Publishing | Getty Images

“China’s domestic luxury consumption should far exceed that of overseas luxury consumption,” said Zhang, who estimates that in the long run, domestic luxury consumption will account for 70% of the Chinese luxury consumers’ spending, and a mere 30% from abroad. 
That would be the inverse of spending patterns before 2017, when over 70% of Chinese luxury spending took place outside of China, according to Zhang.
As a result, the world’s largest luxury market by 2025 will be shopping mainly “in-house.” 
“Even though domestic after-tax prices in China could be a disadvantage, the familiarity of the shopping journey, close relationships developed with local store assistants, and the wider range of brands and product offerings in Mainland China over the past years increase the attractiveness of domestic shopping,” said Kenneth Chow, principal at Oliver Wyman.
He added it is unlikely the share of overseas luxury shopping for Chinese consumers will recover to pre-pandemic levels of over 70%.
Additionally, places like China’s island province of Hainan, lined with all its duty-free shopping malls is a tax-free haven for many luxury shoppers. Sales there reported a more than 120% jump in 2020, and increased by about 85% in 2021, according to a report by Bain & Co.

People line up to enter Haikou International Duty Free City Complex on the opening day on October 28, 2022 in Haikou, Hainan Province of China.
Vcg | Visual China Group | Getty Images

“When I came to Hainan, I found out that shopping on the duty-free shops’ apps is too convenient, and it even comes with a direct mail to home option,” a local wrote on Chinese social media platform Weibo.
The increasing digitalization of shopping processes has also facilitated Chinese shopping online for luxury goods, Bain & Co said in a report.
Global luxury houses have also caught on and expanded their physical presence in China since the pandemic started, said Barsali Bhattacharyya, manager of industry briefing at the Economist Intelligence Unit.
“For example, LVMH reported a 20% increase in the number of stores in Asia (excluding Japan) between December 2019 and June 2022,” she said.

Compounded by travel restrictions

The bleak overseas luxury shopping figures are also compounded by various travel restrictions imposed on Chinese travelers by other countries.
European nations, which comprise many luxury shopping locations, recommended requiring travelers from China to show negative Covid tests. Likewise, Japan and South Korea also require Covid tests for travelers from China.
More Chinese consumers are also favoring short-haul trips over long-haul vacations, Oliver Wyman’s Chow said, adding that Hong Kong and Macao would be among the first to benefit from Chinese travelers —earlier than other luxury shopping destinations like Western Europe.
Still, Chow said it will be a “long journey” until international travel is back fully.
“Brands and retailers will need to spend more effort to attract them to shop overseas, and at the same time match their higher expectations.”

WATCH LIVEWATCH IN THE APP More

Two Los Angeles developers hope to find buyers who will pay between $50 million and a $100 million for a condo.
No single LA condo unit has ever sold for more than $22.5 million.
A behemoth duplex in Beverly Hills comes with a price tag of $75 million.
Two penthouses at another building are being packaged for $100 million.

Two developers in California are looking to lure a buyer willing to do something no other buyer has ever done before in Los Angeles history – pay between $50 million and a $100 million for a condo. 
A deal anywhere near those asking prices would shatter a record in the City of Angels, where no single condo unit has ever sold for more than $22.5 million, according to public records.  

A rendering depicts the penthouse terrace and pool at the Four Seasons Private Residences Los Angeles which is on the market for $75M.
Martyn Lawrence Bullard and CRTKL

A behemoth duplex-apartment located at 9000 West 3rd Street in Beverly Hills comes with a price tag of $75 million. 
One LA, as the penthouse is called, hit the market back in July. It spans the top two floors of the Four Seasons Private Residences Los Angeles, part of an ultra-luxe condo project by the Genton Development Company that includes 59 units across 12 stories.

Rendering depicting the finished penthouse atop the Four Seasons Residences Los Angeles.
Martyn Lawrence Bullard and CRTKL

It’s the first stand-alone Four Seasons residence in North America and it sits across the street from its namesake hotel. According to the building’s website, the crown-jewel residence delivers almost 13,000 sq ft of indoor living area and nearly 6,000 sq ft of outdoor space.

Rendering of the primary bedroom at the penthouse known as ONE LA.
Martyn Lawrence Bullard and CRTKL

The penthouse, which appears fully furnished in renderings used to market the unit, is actually being sold “white-box,” meaning a buyer would take possession of unit as an unfinished shell. That means no kitchen, no baths, no millwork, no fixtures. It’s so empty that Billy Rose, co-founder of The Agency RE and co-listing agent on the deal, can be seen with his team in a marketing video riding bikes through the vast raw space.
At the current asking price, the unfinished unit is over $5,700 a sq ft. Rose told CNBC finishing costs vary widely depending on a buyer’s taste, but $8 million is a ballpark estimate. Some buyers, he said, actually prefer the blank canvas delivery so they can customize the residence to their personal taste. 

A 19-person IMAX theater is one of the luxe amenities offered at the Four Seasons Private Residences Los Angeles.
Martyn Lawrence Bullard and CRTKL

The building’s amenities include in-residence dining and housekeeping, a private 19-seat IMAX theater with access to first-run films and private screenings, a fitness center designed by nutritionist and celebrity trainer Harley Pasternak, a pool with private cabanas, and Four Seasons staff at your beck and call, according to the website.

A double shot of luxury

The other ultra high-priced penthouse that’s reaching for LA’s most rarified air is located at 8899 Beverly Blvd in West Hollywood. It has a $50 million asking price that can be super-sized to $100 million.
The 10-story, 40-unit building, designed by architecture firm Olson Kundig, was developed by Townscape Partners. The top floor is divided into two similarly sized penthouses, one on the east and the other on the west.  
According to broker Fredrik Eklund of Douglas Elliman, who reps the development and recently took CNBC on a tour of penthouse east, the four-bedroom, five-bath residence spans about 6,450 sq ft, with 14-foot ceilings. It has motorized glass panel walls that slide away for access to another almost 1,500 sq ft of outdoor space on the wrap-around balcony.  
Unlike One LA, unit PHE is being delivered finished. it’s currently staged with furnishings by ASH Staging. They are not included in the $50 million asking price, which comes to over $7,700 a square foot.  

The view from 8899 Beverly Blvd’s unit PHE where glass panels walls slide away and open to a wraparound balcony.
ASH Staging

The developer has yet to officially list either of the two top-floor penthouses, but has been testing the market’s appetite for PHE since at least April. That’s when the developer started marketing the unit with a $50 million price-tag in a so-called whisper campaign – a term that usually describes the word-of-mouth marketing used to shop around an off-market residence.
In this case, Townscape Partners and Eklund have been whispering pretty loudly about the deal to the press for months. The team is simultaneously shopping an even pricier off-market deal that pairs both of the top-floor penthouses as a combo with a $100 million ask.

The primary bedroom in Penthouse East at 8899 Beverly Blvd.
ASH Staging

The combination residence would position its owner at the highest vantage point in West Hollywood. As a pair, the penthouses deliver eight bedrooms, 10 baths and four kitchens – each includes a main kitchen and an adjacent staff kitchen.
According to Eklund, the package deal brings the total interior footage to somewhere around 13,000 sq ft with an additional 6,000 sq ft outside. Building amenities include an over 12,000 sq ft outdoor area with pool, fireplaces and dining area. There’s also a fitness area and a yoga studio, and a fine-dining restaurant is coming soon.

Penthouse PHE’s primary bath.
ASH Staging

On the subterranean level there are so-called car stables, a term Eklund uses to describe the building’s luxury garage. The parking area includes moody lighting, herringbone-patterned tile flooring and parking spots tucked behind sliding doors made of wood and steel. 
The broker told CNBC a pair of parking spots here cost $750,000, but as part of the penthouse deals the developer would throw in a few spots for free. It would also include a garage-level penthouse-only private lobby with views of the garage, plus seating and elevators that can whisk penthouse guests directly to the top floor. 

The so-called auto stables on the garage level at 8899 Beverly Blvd.
DroneHub Media

Too expensive even for LA?

The $100 million question here is: Will either of these developers find a buyer willing to spend anywhere near that kind of dough on a condo? 
The all-time highest price ever achieved for a single-unit condo sale in LA was at The Century Condos in Century City, where a 9,300 sq ft penthouse closed for $22.5 million, or a little over $2,400 a sq ft, back in 2015, according to public records analyzed by Jonathan Miller, president of Miller Samuel Appraisers and Consultants. 
The Century, which was completed in 2009, stands 42 stories tall with 140 units, and was designed by Robert A.M. Stern Architects. The development also holds the record for highest priced condo sold last year when “Friends” actor Matthew Perry reportedly sold his almost 9,300 sq ft condo for $21.6 million, or just over $2,300 a sq ft. 
Believe it or not, the same building broke another record in 2010, when legendary TV producer Aaron Spelling’s widow, Candy Spelling, spent a record breaking $34.8 million on two contiguous units, which she later combined. Her mega-deal spanned 15,500 sq ft at a price per sq ft of almost $2,250. 

A rendering of the rooftop terrace at ONE LA.
Martyn Lawrence Bullard and CRTKL

At the current asks, a prospective buyer of either One LA or the penthouses at 8899 Beverly Blvd would have to take a gigantic leap from the records established at The Century. While Miller told CNBC real estate markets don’t typically make drastic moves like this, this sort of thing has happened before in LA.
The example he points to is a sliver of the town’s single-family housing inventory known as ultra-luxury spec-mansions. Over the past decade, these homes suddenly achieved sales that broke through the $50 million mark and sustained it. Now the once unimaginable price-level is breached regularly in the high-end spec market.
“It’s a subset of the greater market that doesn’t have a linear or direct connection to what was the luxury market before,” said Miller.
According to Miller, a sudden spike in a housing subcategory like spec homes can happen when developers convince buyers that they’ve created a new real estate product that’s so different from what existed before that it should command a significant premium.

The full-service pool area at the Four Seasons Private Residences Los Angeles.
Martyn Lawrence Bullard and CRTKL

“It’s the beginning of a new dataset,” Miller said.
Rose calls LA’s new super-luxury condo inventory “2.0,” a wave of apartments he describes as more modern, luxurious, and amenity-packed than any condo inventory that came before it. He believes those are some of the reasons the units should command higher prices over the previous wave, which Rose believes includes the record breaking sales at The Century Condo.
So far Rose’s 2.0 theory is supported by a recent sale at the The Pendry Residences, another luxury condo project in West Hollywood, where a 2,700 sq ft unit sold for $13 million and breached $4,800 a sq ft. That is now the highest price per sq ft ever achieved for a condo in LA. This record is more than double the price per sq ft reached in each of those three top sales at The Century Condo.

A seating area on the wraparound balcony of penthouse east at 8899 Beverly Blvd.
ASH Staging

Eklund believes his $100 million whisper listing can and will break a price record in LA. What’s happened already in New York helps. On Central Park, he said, trophy condos have surpassed $10,000 and even $12,000 a sq ft. 
“That happens a lot, so is Los Angeles undervalued still?  Long term, maybe,” Eklund said.
Over the last decade, multiple listing service data shows more than 140 units in New York have sold for $35 million, compared to zero at that level in LA. But Miller adds a giant caveat: the two condo markets are very different. While he said The Pendry sale is clearly a sign, this new market would need to deliver a lot more transactions to determine if it’s sustainable. 
In other words: developers of One LA and the trophy penthouses at 8899 Beverly are in uncharted territory. 
“This is a new market segment,” Miller said. “So we’ll have to see how consumers respond.” 

A seating area and fireplace inside 8899 Beverly Blvd’s penthouse east residence.
ASH Staging

WATCH LIVEWATCH IN THE APP More

Monday – Friday, 6:00 – 7:00 PM ET

CNBC’s Jim Cramer said investors should consider adding J.M. Smucker stock to their shopping list.
Nordson, C.H. Robinson and J.M. Smucker qualified for the S&P 500 Dividend Aristocrats and will be added to the index on Feb. 1, the S&P Dow Jones Indices said earlier this month.

CNBC’s Jim Cramer on Tuesday said that investors should consider adding J.M. Smucker stock to their shopping lists.
“Even though this market’s had a real good run, and I think the bear is more or less dead outside of tech, I still think you need some downside protection because this is a tricky moment,” he said.

related investing news

14 hours ago

Nordson, C.H. Robinson and J.M. Smucker qualified for the S&P 500 Dividend Aristocrats and will be added to the index on Feb. 1, the S&P Dow Jones Indices said earlier this month.
The index is made up of stocks listed in the benchmark S&P 500 that have raised their dividends for at least the past 25 years. The “dividend aristocrats” tend to be stocks with steady payments, defensive qualities and long-term growth.
Cramer said that while Nordson’s stock price is too expensive and management turmoil at C.H. Robinson makes its stock too “iffy,” J.M. Smucker sells for a reasonable price. 
J.M. Smucker stock is also a great choice for investors worried about how the Federal Reserve’s interest rate hikes could slow down the economy, he added.
“This is just a good, solid business that deserves to be considered in the top tier of packaged-foods companies, with the likes of General Mills and Campbell Soup,” Cramer said. “I don’t think it gets the respect that it deserves.”

Jim Cramer’s Guide to Investing

Click here to download Jim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter.

WATCH LIVEWATCH IN THE APP More

Monday – Friday, 6:00 – 7:00 PM ET

It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

Loading chart…

Loading chart…

Clearfield Inc: “There’s an analyst that cut numbers and the stock fell apart. That was ridiculous.”

Loading chart…

Jim Cramer’s Guide to Investing

Click here to download Jim Cramer’s Guide to Investing at no cost to help you build long-term wealth and invest smarter.

WATCH LIVEWATCH IN THE APP More