News that the Visitation Academy property at 200 East 2nd St has changed hands for $2.75 million (m) highlights the question of whether the City is overpaying at its proposed $3.4m for the hotel site (200 & 212 East Patrick.)
See the COMPARISON table nearby.
The Frederick News-Post reports that the former Catholic nuns’ school site was sold to O2 Holdings an Annapolis-based developer James O’Hare in partnership with Washington DC OTJ Architects in a joint venture named O2J Visitation LLC. They specialize in reuse of historic buildings and ‘infill’ with new construction. They have done somewhat similar projects in Fels Point Baltimore, in Lewes DE, and Annapolis.
The Visitation school which goes back to 1846 closed in 2016 and the 3.02 acre property was recently rezoned to downtown residential from ‘institutional.’
In the Civil War the building was an important hospital for wounded soldiers. The site has towering mature trees, a pleasing courtyard. The south-face of the four story building has balconies on three floors, a most unusual design (see first picture).
The $2.75m paid for the Visitation property is just 60% of the official valuation of $4.57m as assessed by the Maryland Department of Assessments and Taxation (DAT.)
(The Frederick News-Post quoted a ‘base’ number of $3.65m but the records show the current or Jan 1, 2017 valuation as $4.57m.)
By contrast the $3.4m proposed for purchase of the downtown hotel site (200 and 212 East Patrick St) is 1.65 times the state DAT valuation of $2.06m.
Real world property sales are often different from official valuations. Sellers wanting a quick sale — and Visitation was a quick sale coming just two months after the rezoning — usually get less than sellers prepared to wait.
The Visitation buy looks to be a good one given that it is over 50,000 square feet (sf) of great 1900 brick building and splendid mature trees on 3 acres of land in a prime location. The state valuation of the land component at $0.85m or $6.49/sf looks low, probably predating the rezoning from difficult-to-sell ‘institutional’ to much-more-marketable ‘downtown residential.’
The hotel site property valuation at $2.05m looks solid. The buildings on the site are smaller and need a lot more work than Visitation’s. As the comparison table shows the state values the old FNP buildings at less than a third per square foot ($19 versus $63 at Visitation.)
Hotel price artificially high
The $3.4m price for the 1.86 acre hotel site property is artificially high, 65% above the state’s valuation of $2.05m. The $3.4m price was set independent of the City between the current owner, the old Frederick News-Post’s Randall family and Plamondon. The contract of sale (called a purchase/sale agreement or PSA) is conditional on Plamondon and the City pulling off massive state, county and city financial support for a hotel on the site. If the deal between the developer and the multiple levels of government isn’t done, then the property sale at that price is off.
Details of the two properties’ valuations are obtained from here:
Pictures are from the Frederick News-Post.