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SAN FRANCISCO-The 135-year-old Albion Castle will trade hands next week for more than $2 million, providing owner and former Citysearch executive Eric Higgs with a five-fold return on his 1998 investment while sating the obsession of the buyer, 54-year-old mortgage banker Kathleen A. Smith.English immigrant John Hamlyn Burnell built the Norman-style castle in 1870 and used it as brewery until Prohibition. Located near the Hunter’s Point Shipyard, the 2,000-sf castle sits on a 10,000-sf waterfront parcel that also produces up to 10,000 gallons a day of fresh drinking spring water. The castle sits atop hand-hewn caves, where the spring water collects in giant cisterns, and is topped by a three-story tower that provides expansive views of the Bay.Smith, who built a castle-like guesthouse in the back yard of her Napa home two years ago after visiting some of the great castles of Europe, plans to utilize the water rights for a bottled water operation and to resurrect the castle’s historic brewery, according to Starboard/TCN Worldwide broker Peter Rosenthal, whom Higgs hired to liquidate the asset. Eventually, she wants to open a restaurant in the building; in the meantime, she’ll reside there part time, says Rosenthal.”She bid on the castle sight unseen,” he tells GlobeSt.com. “She was out of town; she dispatched her son to eyeball it, and apparently he gave her a good enough report that she instructed him to do her bidding — literally and figuratively.”The auction, held at the Palace Hotel on Saturday, drew 18 people, each with cashiers checks for $75,000, and reportedly took about 15 minutes. Despite no minimum bid, the opening bid was $500,000. The offers quickly ran past $1 million and when they hit $1.4 million, only four bidders were still in the running. Smith’s winning bid was $2.09 million. The purchase price represents an annual price appreciation of about 26%.”(Higgs) was very happy,” says Rosenthal. “We had a target price of around $1.5 million.”Prior to the auction Rosenthal told GlobeSt.com he thought it would sell through a standard negotiated sale until he started to evaluate the property. “I couldn’t for the life of me figure out what it was worth,” he said. “I spoke with a number of underwriters, appraisers and agents, and everyone just rolled their eyes; the actual value is very hard to determine by conventional methodologies.” That’s when he decided to sell it by auction and called on second-generation real estate auctioneer Todd Good. More than 1,000 people paid to tour the castle prior to the auction, raising about $2,000 for charity (Direct Relief International). Another 67 people paid $20 for the due diligence package.Smith tells GlobeSt.com the Albion Castle is more authentic than he backyard replica, which has a 35-foot Cinderella tower contrasted by a 16-foot-tall red spiral slide that hangs off the back. “The kids like it,” she says. The Albion Castle’s eventual eating establishment will wait for the neighborhood to improve. The street the castle overlooks, Innes, and the entire India Basin neighborhood are not the city’s most fashionable, but they are improving. Major homebuilders have broken ground on new construction, and significant investment dollars have poured into the area for redevelopment. Lofts across the street from the castle are going for about $600,000. When its ready, she plans to open up an exclusive restaurant in the castle with chef Hoss Zaré, who runs the Zaré Restaurant in Napa with Smith. As for the bottled water operation and the brewery, Smith says she plans to start her own bottled water company and has an interview next week with a brewmaster. Both the water and the beer would carry the Albion Castle name, she says.

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