Designed by Conrad Alfred Meussdorffer and developed in 1923, the 33,000-square-foot, 8-story-plus-penthouse building at 2100 Jackson Street, on the northwest corner of Jackson and Laguna in Pacific Heights, was purchased by Maurice Kanbar, the founder of Skyy Vodka, for $4.6 million in 1996.
Configured as a 12-unit building, including 7-full-floor units measuring around 3,600 square feet apiece, along with 4 smaller units ranging in size from 775 to 2,815 square feet and an 1,045-square-foot penthouse studio unit atop the building, along with two garages for a total of 12 cars along Laguna, Maurice infamously evicted all of the building’s long-term tenants and then lived alone on the 8th floor, occasionally entertaining on the floor(s) below.
Having never been leased back up, the building is now on the market and will be delivered entirely vacant, allowing for a buyer to renovate and re-lease the building as a high-end rental property, develop the units into TICs and sell them individually, or keep the 33,000-square-foot building as “a residential family compound!”, according to the unpriced offering memorandum now making the rounds.
We’ll keep you posted and plugged-in.
The smaller 8th floor condo of the adjacent building is worth (assessed for) $8 million all by itself.
It really feels to me like a fulfillment of the American Dream that you can get insanely rich by bottling and marketing reagent-grade food waste products to alcoholics. Evicting a bunch of rich-but-less-rich people from their swank flats is icing on that cake.
I was moved to tears – of nostalgia – by this:
the 33,000-square-foot, 8-story-plus-penthouse apartment building at 2100 Jackson Street, on the northwest corner of Jackson and Laguna in Pacific Heights, was purchased by Maurice Kanbar, the founder of Skyy Vodka, for $4.6 million in 1996(emphasis added)
That’s ~$139.39/gsf…, as you imply, I’m guessing it will fetch more now.
Jeffrey, you forgot the part about Mr. Kanbar being an immigrant. That can’t be left out, so crucial it is to American Horatio Alger-type stories the press loves so much when they beat that American Dream drum. The New York Times’ story (link in the post above) mentions that he moved from “what was then Palestine…with his family to the Borough Park neighborhood of Brooklyn in 1936” and that he moved to San Francisco in 1984.
The fact that he was able to evict every tenant in a building built in 1923 must mean that S.F.’s tenant protection and rent control laws aren’t as onerous to landowners as the the local penny ante mom and pop landlords that post here keep saying they are.
Yes , but he didn’t remain a landlord; that’s not some minor detail, rather it was the very thing that allowed him to perform the evictions, as the ‘Examiner’ story – hopefully coming soon to a blog near you – pointed out the Ellis Act allows eviction for those “wanting to get out of the renting business.” One might say the regs ened up being onerous …for the tenants.
its a state law, its called the Ellis Act. Thank god the Dean Prestons of the world can’t get elected at the state level.
Yes, true. The Ellis Act allows for a landlord to evict his/her tenants. But there costs (tenant payments are reasonable, legal fees not so much), and then one must effectively leave the unit(s) vacant for at least 5 years. For a “mom and pop penny ante landlord” it doesn’t pencil out, for a corporate landlord or a rich person, it’s a cost of doing business. If we want all rental properties to be owned by large corporate entities, we’re on the right path.
show me one instance of a corporate landlord completing an ellis act. Kanbar did it for his personal use, made sense for him and i doubt those tenants were destitute in their pac heights full floor flats.
but you are correct that the never ending barrage of new restrictions, (vacancy taxes, fire alarm upgrades, seismic retrofits, rental registry, the high cost of evicting even the worst of the worst tenants), pushes all the mom and pop owners out and brings in all the large investment groups that the BOS hates…let’s face it, our city is run by people who have no idea how the actual world works. sad.
Did he just have friends/associates stay in the lower units, like a private hotel?
“I’ll have the freedom of doing what I want with my own building,” said Kanbar, who is in his 60s, according to published financial profiles. “I may want two floors. I may want three floors.”
“I have no shortage of legal hound dogs to turn loose on a bad landlord, and I have the resources to do it…” This was from a 40 years old furniture store owner, who then went on to plead for sympathy: “My worst-case scenario is that I’ll stay at the Ritz-Carlton or the Huntington when I come to town now…” well, OK, he wasn’t particularly adept at it.
That article you linked is pretty funny, with all the pearl clutching and the “I didn’t think this could happen to me!”.
Final paragraph, too:
—
Collier said he believed Kanbar would turn around and sell the units once his tenants were out.
“That’s gotta be what he’s doing,” he said. “Nobody becomes a rich president of a big company by wasting millions of dollars.” The claim that he’s keeping the building for himself is “not at all believable,” Collier said.
—
Not that it would’ve mattered, I think, but keeping the building for himself seems to have been exactly what he did.
The Tenderloin Housing Clinic attorney wasn’t thinking like a dynastically-wealthy business owner in his 60s, which is what Kanbar was at the time that story was printed.
I’m not a tax attorney, but my understanding is that once his estate is settled, his heirs will get the entire building and for tax purposes, the IRS “steps up” the cost basis of the property to their value on the date of the Kanbar’s death, thus enabling those same heirs to avoid millions of dollars of capital gains taxes when they sell. Kanbar wasn’t “wasting millions of dollars”, he was thinking ahead about how to retain millions of dollars for his family.
An interesting question. But if the FMV is over the Estate Tax minimum, won’t they have to pay an Inheritance Tax ?? Or is the limit at the individual level (of the inheritor) rather than the Estate value?
If this was a civilized country, Kanbar would have been paying taxes on imputed rent for the entire building the whole time. Which is sounds like he could have easily afforded.
The real estate financial consultant quoted in The Examiner article (around ‘graph nineteen) said that the rental income of the higher-priced units amounted to $1.24 per ft.². Let’s just assume for the sake of a back-of-the-envelope calculation that figure applies to every unit (they were all below market value at that time, even for rent-controlled units). Using the above-mentioned total for the floor area of the entire building produces $40,920 per month. Subtract the owners’ equivalent rent of the unit he was actually occupying at the time — let’s call it $4,200 a month — leaving a gross rental income of $36,720 per month (in 1999’s dollars) for the entire building. Or $440,640 yearly.
So, assuming just for the sake of computation ease that he had the building cleared out by the end of that August and brought in no rent through August of this year when he passed, that is 23 years of willingly lost rent. If he never raised the rent, or increased the rent on a vacated unit upon re-lease, that still amounts to over $10 million of forgone nominal gross revenue over the period between the the Ellis Act eviction and his death.
If Kanbar left the tenants who faced eviction in 1999 in place, even assuming no rental increases, and put the collected rent into a treasury bill ladder over the years, his heirs would still have had more money than it would take to buy them out after the estate was settled to empty out the building amicably before it was sold.
Dear Jeffrey,
Nope.
If Mr. Kanbar wants to keep the whole building for himself and family that is prerogative. Having folks like you in the Politburo deciding which extra bedrooms of the rich need taxation is not my idea of a civilized America.
Next, you will decide I only need one bedroom and will want to tax my second guest bedroom?
I’m guessing you are not in the wealth status level as Mr. Kanbar where this would impact you?
To be clear, Mr. Kapitalist Pig-Dog, I think every owner-occupier should pay taxes on imputed rent. That works around the probelms of Prop. 13 and makes the mortgage interest deduction make sense. Also it’s the way they do it in Switzerland, which is not exactly a hard-line socialist regime.
Tax on imputed rent *instead* of a valuation based property tax had some pros and some cons. The main pro is that it treats income from property similarly to other income and income from actual rent the same as rent that you pay to yourself (Imputed rent). This partly avoids the problem that prop 13 tried to solve, taxes shooting up based on speculative valuation increases (price to rent). A main con is that this requires the government to calculate imputed rent for owner occupied (or vacant) units. This could be extremely contentious for unique units with few comparables renting on the open market. Absent good data on actual rents (vs market asking rents) its also makes a market rent analysis error prone even when comparable units are being rented.
This always seemed to me like a nice intellectual curiosity that wouldn’t work so well in practice.