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Wednesday, June 22, 2005
Smilin' Norm: Appreciation
Paul Demko at the City Pages is staying on the case of Smilin' Norm and the magical 50% appreciation. David Frauenshuh's company bought the Lawson Commons building for $54 million in 2000 from Smilin' Norm's City of Saint Paul and sold it last week for $85 million. Frauenshuh was so grateful, he and his family have contributed $45,000 to Norm and his affiliated bag men since 2002.
While it's possible for Minnesota real estate to appreciate 50% in 5 years, it's quite unusual when that rapid appreciation follows an ever more rapid depreciation. In 1997, Saint Paul spent $100 million building Lawson Commons before selling it to Frauenshuh for $54 million in 2000.
While Saint Paul owned the property, its value fell 46% in 3 years. Why Frauenshuh held the property, it appreciated 50% in 5 years. Quite a remarkable turnaround.
Clarification: The sale to Lawson was not complete. Saint Paul retained some interests in the Lawson Building after the sale, but I'm still chasing down exactly what Saint Paul retained.
