Following the collapse of FTX, the once-prominent crypto exchange run by Sam Bankman-Fried, the luxury real estate acquired by the company will be put up for sale.
According to Bloomberg reportliquidators overseeing FTX’s assets are preparing to sell properties acquired during the cryptocurrency exchange’s glory days before its collapse in late 2022.
FTX’s risky real estate game
The Penthouse of the $30 million Orchid building in the Bahamas, where the now-convicted Bankman-Fried lived and worked with his team until the collapse of FTX, is the room mistress of the real estate heritage currently for sale. But industry experts say FTX may have overpaid for the properties, complicating the breakeven outlook.
Real estate brokers and developers point out that FTX’s acquisitions contributed to an inflated market, which would be analogous to the volatility of the cryptocurrency world at that time. Despite the recovery of FTX cryptocurrency investmentsthe same may not be true for its real estate business in the Bahamas.
After the collapse, the former CEO of FTX Ryan Salame and other key company figures spent $255 million on properties on New Providence Island.
These properties include 52 condos, offices and land parcels concentrated around luxury developments like Albany. According to Bloomberg, the allure of Albany, known for its exclusivity and amenities aimed at the very wealthy, attracted top FTX executives, who were looking to establish a presence in the gated community.
However, questions arise regarding the potential overpayment for these properties, especially given current market conditions.
Potential impact on profitability
While FTX managed to recover a significant portion of the lost funds during its collapse, real estate assets present a more nuanced challenge. Liquidators overseeing FTX’s assets in the Bahamas are expected to begin the sale process soon. However, brokers express doubts about achieving the desired prices for the properties.
The luxury real estate market in the Bahamas saw a 15% price increase in the previous year, but specific purchases made by the exchange may not yield the expected returns. Factors such as taxes and fees, coupled with concerns of overpayment, can impact sales profitability.
Earlier this year, PwC, the consultancy appointed as liquidator of the company’s assets in the Bahamas, solicited proposals from real estate brokers to market and sell the properties acquired by Bankman-Fried and his team.
The sales process is expected to begin in the coming months, with brokers expecting a challenging environment to achieve optimal returns.
Although the exact values of the FTX properties are not disclosed, Bahamians agree that the sales would help move past the Bankman-Fried saga and allow the country to focus on its progress.
Meanwhile, Sam Bankman-Fried was sentenced to 25 years in prison and was recently transferred in a temporary detention center in Oklahoma. However, Bankman-Fried is seeking a different outcome, hoping for a reduction in his sentence by formally appealing the conviction.
Currently, the defunct exchange’s native token, FTT, has seen over a month of sideways price action, resulting in a current trading price of $1.60.
Featured image from Shutterstock, chart from TradingView.com
