AZURE intelligence! == new construction on 91st & 1st

20 shillings = 1 pounding

Brooks2....I was hoping your 'nuff said would be your swan song..Guess not. If you really find it so tiresome, and nobody could pay you to live at the Azure, why are you wasting your time on this board. I used to read this board and be amazed at the absolute vacuousness of its content. But I eventually began to post largely because of conversations I had with others around the Azure and I realized that people who are considering the Azure actually were looking at this board to see if they could learn information as they considered the building. Clearly, most of the posts had the intellectual heft of a school yard: "yeah, you and what army" "you're not the boss of me." There was certainly no information of any value for a potential buyer. So I started to post, and unlike you and the other trolls, I disclosed that I'm an owner in the Azure, and I offered my opinions and I did them not for you, but for those reading the board. In truth, the back and forth with you and 20 shilling AHart is really like methaphorically debating hamsters.....who incessantly and brainlessly less run on their little Streeteasy Hamster wheel in their little Hamster cage and seem to enjoy the mindlessness of it all. So, I shill I am not. I've always been clear about why I'm posting and I certainly don't hide behind the absolutely anonymity that you cling to. But at the end of the day, the sales trends and pricing trends of the building speak for themselves. You can run faster and faster on your little hamster wheel, but it's not going to change the facts.

"So, I shill I am not. I've always been clear about why I'm posting and I certainly don't hide behind the absolutely anonymity that you cling to."

So you are not anonymous? Sohojohn is your given name ?

If you bought the property to live in and not as an investment why are you so concerned about the value?

I think you are full of it?

Keep shillin

!=?

Brooks2.....again, you keep puffing away on your hamster wheel (and 2,841 posts, that's a lot of puffing). I am an owner in the Azure. I have posted that I live in a 4 bedroom with my family for not quite two years. That allows people who read this board to know where I'm coming from and that I have an informed opinion that I hope others find useful. You? Who knows? Your typical post like that of this morning "Could not pay me to live there" is neither informed, insightful nor useful to anybody reading this thread to learn anything (other than to be serve/volley fodder for the other trolls). So I don't post here to change your mind or opinion, no matter how much you think I am full of it, I simply post here to provide some informed opinion for those who care, and if as a secondary effect I demonstrate how pointless your posts are (not very hard to do), then I'm content.

Ok I believe you

Soho, I'm not interested in living at the Azure, but that's just me. However, I've found your posts informative if I was looking to live there. I'm not sure why you are worried about Brooks2's posts on the subject, and I'm not sure why you'd believe that an educated, interested buyer with appropriate means would ignore the detail that you provide and be more or exclusively focused on the postings on this topic that Brooks2 provides. But now you've been successfully lured into a back and forth of no substance on the topic that has diluted the value of your prior substantive posts.

Greensdale---touché! ;-)

Honestly anyone who thinks that neighborhood is "dangerous" or "sketchy" either hasn't lived there or lived there 10-20 years ago.

We lived there for two years, 3 blocks from the Azure (on second). I loved the neighborhood. Eli's is a great place to shop, there's also a Fairway on 86 btwn 2nd and 3rd I believe, and another supermarket (Food Emporium?) on 86 and 2nd. There's a Duane Reade on 93rd and 3rd and on 92 or 93 and 1st. Starbucks on 92 and 3rd, and of course Asphalt Greene on York. There's a stretch of great restaurants on 2nd from about 86th to 94th, and there are a few intriguing ones on 1st which I unfortunately didn't get to check out. Housing projects are totally safe- I never saw police there, probably because they're only for senior citizens. There's Butterfield's kitchen on 92 and 1st, which was delicious. The neighborhood has tons of kids- definitely a family neighborhood. And although I think the Azure is overpriced, it looks like a very nice building with great views, and I'd definitely recommend the neighborhood.

Dude your on 91st and 1st. I would not say that's close to Fairway on 86th and 3rd.
I've lived in this city a long time and I've never walked that far to buy groceries.
The housing projects are a block away, you will thing the are is very safe until your roommate gets mugged at gunpoint

Eli's is half a block away and C town is two blocks away. No need to walk very far for groceries (and we all have Fresh Direct!)......in terms of the area, Brooks2, you yourself noted when you recounted the story of your roommate getting mugged late at night that it was a long time ago and you admitted that maybe the neighborhood has changed (as has most of NYC from a safety perspective over the last twenty years). This is a very safe neighborhood. I've lived here nearly two years and I'm speaking from on the ground experience.

Ok -- but Realestate19 said Fairway was close by. If that is not right out if the broker shill book, I don't know what is. RealestateNewyork uses whole foods close by as as favorite shill. So that's why I say
Keep Shillin

Brooks2, come on, mugged? Did you lose all of your military training?

There are currently 7 doctors in residence at Azure. These doctors practice at Mt. Sinai, Montefiori, Sloan Kettering, Lennox Hill and New York Hospital. The following testimonials are provided to give prospective purchasers accurate information from additional owners at Azure about some of the topics discussed on this blog. Given the sometime inhospitable and discourteous comments some participating bloggers have made I have decided to remove their names. Those purchasers interested will be provided details at the Azure Sales Office. Please note several home owners have offered to speak with prospective purchasers as well. Azure has indeed become a very supportive and welcoming community.

“For my wife and me, Azure had everything we were looking for in a home. I am a cardiologist at Mt. Sinai and I love being able to walk to work – my commute is so easy, especially compared to years of commuting from New Jersey. We also love how quiet our floor is – our last building had 17 apartments on one floor, and we love that there are only four on our floor now. It’s one of my favorite things about the building. The Upper East Side is an incredible place to live – everything you need can be found within a few blocks.”

-- Dr. xxx

“I am a general internist primary care doctor, and have been in practice for over 25 years. When I was looking to move back to the Upper East Side to be closer to my office, I was instantly drawn to Azure. Not only can I easily walk to work, but Azure perfectly complements my needs in other ways too. I combined two units and love all the space I have. I was actually one of the first people to move in – there were probably only 15 others living here at the time. June will mark 2 years at Azure for me, and I couldn’t be happier.”

-- Dr. yyy

I take it that Dr. Zizmor doesn't live there, otherwise you would have provided his testimonial.

Come to the sales office as stated above and purchasers will receive that information. It is specifically because of comments such as yours that I did not provide their names.

Hmm, so maybe Dr. Zizmor does live there.

Step right up -

Keep shillin

Brooks - definition of shill: One who poses as a satisfied customer or an enthusiastic gambler to dupe bystanders into participating in a swindle

Mattonegroup is hardly hiding his identity.

They are Hiding the ID of testimonials

For those who are reading this board for information, there are no shortage of residents who are happy to provide testimonials, myself included. None of this is "shillin'" as Brooks2 continually suggests, and the fact that people's testimonials don't include their names in no ways invalidates them. I think the sponsor made it clear why he removed the names. Frankly, I don't see a lot of names being proffered around here, anyway

StreetEasy really needs a "like" button. Still chuckling at Greensdale's Dr Z. comment - can't believe it's been 3 years since the thread started - I drove past yesterday and saw the big poster saying "Over 75% Sold", so I guess it's really getting there in terms of occupancy, it just took the pretty route.

>StreetEasy really needs a "like" button. Still chuckling at Greensdale's Dr Z. comment

Thank you. I don't think that Mattonegroup understood though.

Sponsors are very pleased to announce the sale of 27A, a 1,810 SF 3 Bedroom, 3 Bath residence with unobstructed Northwestern views and 28CD, the 2,952 SF, 4 Bedroom, 4.5 Bath residence with unobstructed Southern, East River and Central Park views. Both residences have 10’ ceilings. The contract on 28CD was signed Feb 22nd. The customized construction was completed within 90 days.

Both of these transactions evidence the continued price appreciation of residences at Azure. Wells Fargo, Chase, Citibank, HSBC PNC and Republic Bank, among others, continue to provide acquisition financing to Azure purchasers supported by ever increasing appraisals. Please note in the last week interest rates have begun to climb.

Future asset appreciation is also supported by the media reports of the completion of blasting for the 72nd street station for the Second Avenue subway.

http://gothamist.com/2013/05/16/photos_deep_inside_the_second_avenu.php#photo-1

Azure’s remaining inventory, based on recently signed contracts and the above referenced closings all above the 21st floor, continues to diminish. This results in new purchasers having fewer available purchase options. This is particularly evident in our lowest price 2 Bedroom B line apartments and the 3,000 SF 4 Bedroom CD and AB combinations. All B line units have been sold below the 23rd floor. There are now 13 combination 4 BR residences at Azure. Sponsors are currently in active negotiation for an additional two.
Given that the Upper East Side supply of premium new construction 2, 3 and 4 BR reasonably price residences continues to diminish in the second quarter of 2013 and interest rates on mortgages are rising, it is recommended interested purchasers should take advantage of the remaining purchasing opportunities at Azure as soon as possible.

Finally the sponsors of Azure would like to thank all 200 brokers and guest speakers that participated in our 75% sold summer soirée, the Douglas Elliman new broker training seminar and the Foreign National legal, tax and financing training seminar sponsored by Titlevest, Citibank, HSBC and Azure.

>Future asset appreciation is also supported by the media reports of the completion of blasting for the 72nd street station for the Second Avenue subway.

Oh good, I thought the blasting was going to go on forever, so that's unexpected and the building will definitely increase.

How is the waste transfer facility not going to be a huge deterrent for the neighborhood? Hundreds of garbage trucks driving through daily, air pollution, etc. I find it hard to believe that this will not drive owners out of the neighborhood. What am I missing?

buyer.....I live in the Azure, and for what it's worth, here are my thoughts: 1) The MTS isn't a done deal by any stretch, not from a legal, political or financial perspective. You are probably aware that there is a very active fight going on against the project. 2) in a sense you answered your own question because every potential buyer in this area is aware of the MTS and it is being factored into people's decisions right not, so it's not exactly going to be a bolt out of the blue for local valuations. 3) the City has already disclosed its plan of operating the facility if it's actually built; from the narrow perspective of the Azure, none of the garbage trucks will pass by the building at any point; the facility is to be negatively pressurized to keep odors in and the garbage is to be loaded on airtight containers; trucks will not be allowed to idle on York Ave as they did in the past when the facility was operational; so while I think this would be real issue for the apartment buildings on York, it won't be an issue for the Azure; 4) on the flip side, the second ave subway is going to be a huge positive for the area, so we could all debate the battling influences of the MTS versus 2nd Ave Subway on local real estate values. My greatest personal concern is simply that Asphalt Green is going to be the most affected facility in the area, and that's a worry because my daughters use the facility. But I really don't think the MTS in and of itself is going to reverse the very strong value trends in this area, and particularly for those of us who bought in the Azure early.

so the trash facility is already priced in, while the 2nd avenue subway is not?

I lived in the neighborhood when the previous MTS was operational. My children attended swimming classes at Asphalt Green. The most objectionable aspect of the MTS operation back in 1983 was the stacking up of trucks along York Avenue. That has been addressed in the approved environmental impact statement and plan of operation of the new facility, if it is ever completed. Trucks can only idle on the access ramp to the facility which under the revised updated plan extends out into the East River. The majority of the idling trucks will be approximately three blocks away from Azure.

With regard to the impact of a train line becoming operational and its positive impact on real estate values, look no further for an example than the dramatic impact of the new rail line #7, pending completion in 2014, on the Hudson Yards development on the far West Side. Due to the pending completion of the rail line real estate land values for new development have skyrocketed over the last two years to an extent that they are now comparable to the real estate development sites available in Chelsea and the Upper East and West Sides. In my opinion, based on 30 years in real estate development, the 2nd Avenue transportation network, which will link the Azure neighborhood to all of Manhattan, will have a far greater impact on future real estate values in the Azure submarket market.

I would also note, though emotions run high, that there has been no trend evidenced in the industry sales reports of people desiring to vacate the area or decreases in closed prices or appraisal values. The opposite is in fact the case. Sales prices of all new developments in this submarket have increased over the last 2 years including the last quarter. Land development sites values have increased, retail rents on First Avenue above 86th street have increased. New Yorkers continue to gravitate to the Upper East Side for many reasons. The area has the best public and private educational institutions. It has easy access to Asphalt Green, Carl Schulz the Park, The 92nd Street Y and the ample family friendly entertainment and retail opportunities.

What the previous blogger buyer 2891 is missing is that there is over $500,000,000 in investments currently being made in the neighborhood by Sacred Heart, Trevor Day and Spence. Future New Development of over $800,000,000 for 1,000 residential units is being planned by NYC for a development site on the north side of 96th street between First and Second Avenues. Actual investments and actual progress on the Second Avenue subway have had a more tangible positive economic impact in the neighborhood based my review of all appraisals of Azure residences. This impact is far more than any perceived potential future impact of the MTS. Remember at the time the MTS was operational in 1983 parts of this Upper East Side submarket had the highest residential values in NYC.

As I have noted previously at Azure, sales values have continued to rise. Actual buyers have full knowledge of the pros and cons of the neighborhood and its opportunity for asset appreciation. I do believe most buyers however purchase at Azure not only because they like the value but they love the building amenities, kitchen and bath finishes and views. They like the welcoming friendly community Azure has become. It is an enjoyable place to live. Several friends of purchasers have recently become new owners at Azure. Several friends of purchasers have recently become owners at Azure.

PS I am absolutely certain the full benefit of the Second Avenue subway is not reflected in current prices at Azure.

JButton....I think both the subway and the MTS are things people consider when looking at the area. The MTS has many hurdles to cross to ever be completed and it may ultimately fall on a political, legal or budgetary sword. On the other hand, the subway construction is very real (the blasting sounds around 86th/2nd Ave can be heard here like distant claps of thunder). So I think the subway is more positive because 1) it is the real deal and will be completed while the MTS is still uncertain; and 2) even if both are completed, the positive impact of the subway will be much greater on the entire area than the negative impact of the MTS over on a stretch of York Ave.

unfortunately, construction has started on the MTS. I just checked it today. gonna be a serious longshot to stop it now

Marco....it's not construction. They've begun demolishing the old MTS facility, which had already been budgeted, approved, and is not subject to any of the pending litigation. The construction, if approved and budgeted, will not begin until April 2014 at the earliest. So, the MTS still has a lot of hurdles to cross before stopping it becomes a serious "long shot" as you describe.

The final completion of the MTS will depend on the final determinations made in Federal Court or by the next Mayor. Your vote will matter.

>or by the next Mayor. Your vote will matter.

What is Weiner's stand?

I don't think Weiner has taken a stand yet given he just launched his campaign....we'll all be breathlessly awaiting his tweet.

you are breathlessly awaiting Weiner's tweet?

Market update 05302013: The following news clip provides a good overview of the lack of supply of new residential development opportunities for the Upper East Side. This is one of the key factors that will generate continued price appreciation for Azure’s quality new construction residences. http://masseyknakal.com/people/knn.aspx

Weiner is against the waste transfer facility
http://blogs.villagevoice.com/runninscared/2013/05/upper_east_side_transfer_station_has_5_candidates.php

It is important to note FIVE mayoral candidates are against the MTS.
http://blogs.villagevoice.com/runninscared/2013/05/upper_east_side_transfer_station_has_5_candidates.php

Additional article on Mayoral candidate Thompson's objection to the MTS.
http://www.nydailynews.com/blogs/dailypolitics/2013/05/quinn-thompson-and-ues-trash-station-opponents-stand-for-more-asthma-for-poor-

Mattone, is your point that this is all a big gamble that may or may not work out for Azure buyers, but you have your fingers crossed?

My point is that the MTS development is not certain since there is ongoing federal litigation. In addition the next mayor will determine if the MTS is built. Five candidates are on the public record as being opposed to the construction of the MTS. As stated previously the more important impact on future values at Azure is the diminishing supply of luxury residential units on the Upper East Side and the pending completion of the 2nd Ave Subway. Not a gamble at all in my opinion.

>Not a gamble at all in my opinion.

Is this in the offering document?
Is there a partial refund if you are wrong?

when/where is the trash facility being built?

There are/will be four of them: http://www.nyc.gov/html/dsny/downloads/pdf/swmp/swmp/review_flood_e91_swbkmts.pdf

We don't hear about the two in Brooklyn and the one in Queens.

No supply so buy a dump near a dump

Oh excuse me, buy a luxury apartment near a facility that disposes if waste

NWT: "...in the area of sustained wave action."
The Belt Parkway in that area runs right next to the waterfront. It floods during every heavy rainstorm.

Trash dump or not, land lease trumps it all. look at maintenance charges, $2.3/sqf for 22A including all abatements (over $4k for 1800 sq apt). Wanna guess what this is fully loaded, or even in 5-6 years? Buyers will be lucky to get out at cost.

>>Future asset appreciation is also supported by the media reports of the completion of blasting for the 72nd street station for the Second Avenue subway.

Any update on when Citibike will be there?

Brooks2...The most current analogy to the potential construction of the Marine Transfer Station is the Hudson Square Sanitation Garage at Spring/Washington down on the West Soho/TriBeCa border. While that factility won't transfer garbage, I'd actually argue that it will have a potentially greater impact on the local neighborhood (it's bigger than the MTS and has been under construction for some time, it will have more daily trips of garbage trucks than the MTS --- 161 vs. 131; it will not be a negatively pressurized building, so the odor from the trucks won't be contained). Either way, it's a useful exhibit to consider it's impact on the local "luxury apartment" market, which you flippantly noted a few posts ago. Well, consider the Urban Glass House, which is across the street from the Hudson Sq Sanitation Garage, not over a quarter mile away like the Azure is relative to the MTS (which may still never be built). The Urban Glass House is a relatively small condo with 40 units. You'll see they just had a sale close in April of this year at above list, for $1,539 per sq ft. More interestingly, the seller had bought the unit from the sponsor in Dec 2006, which was pretty damn close to the peak and at a time when the Santiation Garage was not on the horizon, at virtually the same price as they just sold the unit for. In fact, if you look at the Case Shiller index for NYC condos in April of this year when the last unit sold at the Urban Glass House, it was 15% below its level in Dec 2006 when the seller originally bought the unit. In other words, despite the Sanitation Garage becomming a reality across the road, the Urban Glass House has outperformed the NYC condo marker. If that's not enough, check out 505 Greenwich around the corner, or if you want even more luxury, how about 482 Greenwich, which is also right around the corner from the Sanitation Garage and fronts Canal St, but is selling for north of $1,600 per sq foot (and the penthouse at north of $2,300 per sq ft.) In otherwords, simply suggesting that a sanitation facility will devastate the luxury apartments in the area simply doesn't hold true in the one real example we have in Hudson Sq.

JButton.....you've brought that up before. Of course you'd expect maintenance to be higher as there's an element of ground lease payments in there. About 5 months ago, you were making the same point about a comparable unit in the Cielo. My response was easy......the market is efficient and slightly higher maintenance equates to lower values. In the case of the Azure, the discount in value is very compelling and more than compensates for the maintenance differential. So you don't need to go back over five months of posts, I'll repost my analysis/reply to your simple assertion that higher maintenance at the Azure made it less compelling that a similar unit in the Cielo-----------------

JButton....I'll leave the sponsor to address the future maintenance charges/growth trends, but the higher monthly charges at the Azure should come as no surprise (although it does vary based on your floor, as I'm paying $1.70 per sq ft/month). After all, residents are paying ground rent as opposed to the Cielo where the cost of the land is subsumed in the (higher) purchase price.

And it's that dynamic that makes the Azure interesting, from an economic perspective.

I think you were referring to 21AD at the Azure, a 1,940 sq ft 3 bedroom listed for $2.669mm compared to 25D at the Cielo, a 1,920 sq ft. 3 bedroom listed at $3.295mm. As you correctly point out, the common charges are different with the Azure 21AD having monthly charges of $4,253 ($2.36 sq ft/mo) and the Cielo 25D having monthly charges of $2,857 ($1.49 sq ft/mo).

Now Mattone posted early that 58% of the common charges at the Azure go to ground rent and PILOT (property tax), while the comparable at Cielo is 28% for property taxes(the listing notes $808/mo of taxes).

Now, let's do some math. Let's tax adjust the monthly common charges at a nice round 50% marginal tax rate (Fed/State/City in the top bracket post last night's bill) for the 28% of the Cielo common charge that is tax deductible (property tax) and the 45% of the Azure common charges that are tax deductible (as per Mattone). That yields $2,452 after-tax per month ($1.28 sq ft/mo) at the Cielo 25D and $3,232 ($1.66 per sq ft/mo) at the Azure 21AD.

That means a buyer is paying $0.38 per sq ft/mo more in common charges at the Azure 21AD than at the Cielo 25D. Based on the 1,949 per sq ft for the Azure 21AD, that's an extra $740 per month compared to the rate you'd pay at the Cielo per sq ft on an after-tax basis.

Now, to put value around that, think of what current mortgage (assume 30 yr fixed at 3.5%) $740 per month would support -- it's $165K. So, you could argue mathematically (and simplistically) that the higher common charges at the Azure for this apartment would require a $165K discount in purchase price vs. the same sq.ft. apartment at the Cielo, holding everything else constant. You'll note that the discount difference in the two list prices is $632,000.

To your point, the relative growth rates in common charges are important to consider here as this simple analysis assumes fixed differential in common charges, so Mattone's response will be of interest. And it's really a ground rent issue as I'll assume that the Azure can manage itself as well as any other building so non-ground rent common charges for the two properties should be assumed to trend similarly, and let's further simplistically assume that prop taxes at the Cielo and PILOT at the Azure grow similarly for ease of comparison.

Now, we both know there are other factors that drive that price discount, but I do think it's not unreasonable to assume that the differential in common charges reflecting the payment of ground rent is being reflected in the lower acquisition cost at the Azure (and then some -- as I further think there's a "ground lease discount" beyond just the math that is factored into the Azure's pricing because leases tend to scare buyers off -- a sentiment often cited on this thread. To me, that's was an opportunity as it didn't scare me off as a buyer and I believe I got great value when I bought at the Azure)

One other key point, to make the comparison even simpler, if you assume somebody finances 70% of the purchase price at the Cielo (and let's just use the listing price for simplicity), you'd have a mortgage of $2.3mm and as it's a condo, you'll pay a mortgage tax of $43,823 (1.9%). As the Azure is legally a CoOp (very unusual for new construction), you don't pay mortage tax, and that $43K saving in closing costs would cover 59 months of the extra $740 in common charges you'd pay at the Azure 21AD compared to the Cielo 25D.

Net net, the economics of a lease vs. a condo are reasonably transparent and I think are driving the value setting of the Azure vs. other "comparable" properties that are condos.

Soho - there are 2 things here:

1: maintenance is too high AT THIS POINT - despite abatements. Cielo is further along the abatement so taxes there are closer to fully loaded than at Azure. Do you know what your estimated charges will be over the next 10 years?

2: maintenance could skyrocket at land lease reset (see 190 E 72nd street building). Cielo or any other owned land building does not have this risk. Question for you: how often does the land lease reset and what is the formula?

As per your numbers, i see how you get to $165k and i would say this is a best case and very unrealistic. Most people buying a $3m+ apt will face AMT issues and hence will be able to deduct much less than 35% of property taxes that you estimate. In addition, you assume anyone would get a full mortgage interest deduction on additional mortgage - many already have a $1m mortgage so would get none more on this. So worse case scenario is delta of $461k in price explained by difference in maintenance and taxes between the two buildings.

So for me this price difference of $632k would be $461k explained by common charges, and the location 8 block south could easily explain the rest. That leaves land lease for free. what would be your pick?

JButton - There's a lot of issues here, and let me try to address them as an informed owner who hasn't read the offering docs in about two years (but I'm sure the Sponsor can chime in if I get something wrong). Sorry, this is going to be a long post.

I think we all agree that the economics of the relatively higher monthly maintenance charges are fairly clear right now, but you raise the valid point of what does the future look like (and your skepticism is undoubtedly driven by a number of past land lease issues in NYC).

That said, I'm hoping when I'm done you'll appreciate that the sponsor went to lengths to negotiate a unique land lease that protects the Azure unlike any land lease preceding it.

First, a comment on the motivations at play here. The original lease underpinning the Azure was negotiated between the sponsor and the Education Construction Fund during the heady days of the real estate bubble. If that original lease were still in force, I personally would not have bought at the Azure. The crash of the bubble reopened the negotiations as both sides desperately wanted this project to succeed. You'll recall that the entire basis of this structure is for a new school to be built by the developer in exchange for the air/development rights to build the residential building. It's a public/private partnership that seems to work and is a huge priority for a cash strapped state in need of new schools.

The key elements of the renegotiation that made the lease much more attractive was 1) a purchase option on the land in year 75 (none existed earlier) or a one off 50 year lease renewal pushing the potential life out to 125 years; 2) another ten years of a tax cap, that gave the Azure owners 20 years of tax abatement/tax cap protection that I do not believe any other building in Manhattan enjoys.

So, let's deconstruct the components of the monthly charges of the Azure. Clearly, there is the operating budget of the building, like any other building, and that's not the issue here. Then, there are the payments to the ECF for the land lease. From the ECF's perspective, cash flow is cash flow, but from the owner's perspective, the land lease payments are broken into two components: PILOT (Payment in Lieu of Taxes) and ground rent. The sponsor successfully negotiated that PILOT be the majority of the payments we make. Why? Because PILOT, is tax deductible like regular property taxes. So right now, 75% of my payments for the ground lease are in the form of PILOT, and only 25% is ground rent.

And to put some relative parameters around these numbers, a little over 60% of my monthly charges go to a combination of PILOT and ground rent.

Now, I actually have a very good idea what my payments will look like in 10 years, as it's pretty much be set in stone for the ground lease elements. Looking forward, PILOT remains 75% of the payment for the land lease, which maximizes the after tax benefits for me. Over the next 10 years, my PILOT/Ground Rent payments are scheduled grow at a 7.4% annual rate. However, as PILOT is the bigger component of the ground lease payments (75%) it grows faster in absolute terms so that in 2023, it is 58% of the ground lease payments. That makes if more effective on an after tax basis (you want the tax deductible component to grow faster). So, if you calculate the growth rate over the next ten years on an after tax basis (using a Fed/NYS/NYC marginal tax rate of 50% for high earners, those most likely to be purchasing $3-$4mm apartments here), you end up with a 4.5% growth rate.

So frankly, I think an owner in the Azure has a very good idea what the next 10 years holds in terms of monthly charges. An owner in the Cielo has no real certainly as property tax growth rates have not been small, and are certainly subject to the vagaries of NYC politics and the city’s financial position.

But let’s now consider the economics here. While we can’t really do a relative value versus the cielo, because we don’t know what will happen to their property taxes over the next ten years (other than to all agree that it will grow).

What I’m betting as an owner is that the value of my apartment will grow at a faster clip than the value drag from the growth of my monthly payments. Now, most people finance their purchases, so what really matters is the growth in my equity. The leverage works for me here.

But if I simplistically convert my land lease payments today versus what they grow to in 2023 into a present value mortgage equivalent (30yr amortizing at 3.5%), that present value increases a little less than $500,000. In other words, the growth in my payments creates a half a million dollar headwind to the value of my apartment.

So my apartment needs to increase in value by $500,000 over the next ten years to offset the value headwinds of the growing monthly charges from PILOT/ground rent. To pull that off, I simply need an annual price growth rate of 1.2% in my apartment value over the next. I’m pretty sure I can pull that off (or more precisely, the market will do that for me).

For the record, I’ve owned in the Azure for about two years, and based on the latest closings here, the annual growth rate in my apartment’s value has been 9.5% in the last two years. Add in the benefit of leverage, my investment (my equity) has just about doubled. Not a bad return in a low rate environment.

In terms of the lease reset, I recall that will occur in 2030. I pretty confident that I won’t be living here then. The sponsors learned the lesson of Battery Park City, were the appraisal used to reset the lease payments permitted the consideration of virtually any use of the land. So the city/state eagerly picked the use that resulted in the highest valuation (I believe it was a high end hotel). The Azure’s reset very specifically mandates that the reset be predicated on third party valuations on the land that would be used for a residential development like the Azure. The reset is almost a self correcting issue, because if the land value is high driving an increase in ground lease payments in 2030, that would obviously suggest that real estate values are also quite high. So, that would be a high class problem for the residents in 2030.

Market Update: 06042013 Please see this recent article found in about dot com discussing Pied-a-Terre’s
See link: http://vacationhomes.about.com/od/cityvacationhomes.about.com/ss/Your-Pied-a-terre-In-Manhattan.htm

Market Update: 06042013 This article in the New York Times discusses the resent change to a seller’s market. Recent sales contracts in Azure are reflecting this trend, less concessions higher prices multiple bids.
http://www.nytimes.com/2013/06/02/realestate/new-york-city-is-a-sellers-market-so-every-minute-counts.html?_r=0

This thread is hysterically funny -- year 12 of unprecedented fast-paced first sales of units! And ongoing!! The world's slowest stampede to buy, in slow motion replay again and again!!!

Superelasticbubbleplastic

Every minute counts because Citibike only allows 30 minute rentals and the Azure is FAR from the nearest Citibike.

JButton....one additional comment regarding your last post. You remarked the difference in location between the Cielo and the Azure would drive a discount for the Azure. I'll let the market make its own determination, but while I was agnostic about the neighborhood when my family and I bought here, it has turned out to be a tremendous surprise --- particularly for families. Everything my daughters do is within a couple of blocks. Swim classes at Asphalt Green (a block away); more classes at The Art Farm and Elite Gymnastics (half a block away); even more classes at the 92nd Y (two blocks away). My daughter's pre-school even opened a brand new and beautiful facility on 86th between First/Second. The area actually has a surprisingly vibrant restaurant scene as well, and add in Eli's Vinegar Factory and virtually everything you need is within a couple of blocks. My personal view is that none of that is quite as good at the Cielo. But I think stereotyping of real estate in Manhattan looks more to St/Ave numbers than really looking at the neighborhood is very common

Market update 06172013 COMPLETION OF SECOND AVE. SUBWAY GETS GREEN LIGHT
THE FINAL CONTRACT FOR THE COMPLETION OF THE 86TH STREET STATION HAS BEEN ISSUED. See article on GlobeSt.com
http://www.globest.com/news/12_626/newyork/development/Completion-of-Second-Ave-Subway-Gets-Green-Light-334517.html?ET=globest:e39016:418361a:&st=email&s=&cmp=gst:New_York_AM_20130617:editorial

But nothing on Citibike in the area?

Azure welcomes its newest resident.

Marshall Blonsky, celebrated author of On Signs and American Mythologies and doctor of semiotics, has a grand dream for his home at Azure. With help from Anna Maria Olivi, an architect he flew in from Rome, he is creating what he describes as “A museum in which I will happen to live.”

The first installation was new shades to cover the beautiful floor to ceiling windows. These shades will block 95% of the ultra-violet rays, which will protect his new furniture. The furniture is coming from two separate stores: Cassina and Poltrona Frau. Pieces will include a tan leather couch and gran con flort chairs. An art aficionado, Blonsky’s home will feature works from prominent artists, including pieces by Italian artist Giovanni Benedetto Castiglione, Joseph Kosuth, an American contemporary artist whose works feature words encased in neon, and a piece that was a gift from the infamous Andy Warhol.
In Blonsky’s personal museum, even the lighting art is artful, especially a classic lamp that uses a car headlight from the 50s and an arco lamp with a stunning marble base.

Blonsky was originally drawn to Azure because of the high ceilings, which provide ample space for his extensive book collection. He imagines many of the walls will be lined with bookcases. He is also making room for a home theater in the living room, which will also feature a pony skin chair by the window for visitors who “Want to watch the sun go down, contemplate the evening, and meditate as they wish,” says Blonsky.

We wish the best of luck to Mr. Blonsky as he brings his vision to life; we can’t wait to see the finished masterpiece!

so he's going to hang all that great art on the insides of the shades? or directly on the window glass? Facing in or out? or maybe on the doors? or maybe he can create doors for all the bookcases, constructed of warhols, etc?

sounds like a great vision great!

What about Dr. XXX and Dr. YYY? How do their tastes differ from Dr. Zizmor?

I recently moved into the Azure. I was wondering if anyone has any suggestions in terms of what company to use for curtains/blinds? Thanks!

Hi, welcome! Try Automated Shading, www.automatedshading.com. Lady in charge is April Kettelle, april@automatedshading.com. They did a rather difficult job with ours (same building!) and did very well, significantly cheaper than all other quotes. (We did Lutron motorised shades plus a control system to run them.) Good luck!

Market Update 07022013 Manhattan Apartment Sales Increase Despite Reduced Inventory. See the full article in the New York Times.
http://www.nytimes.com/2013/07/02/nyregion/manhattan-apartment-sales-increase-despite-reduced-inventory.html?ref=realestate&_r=0

Sales up yes. Coop prices flat

Market update 07032013 Enclosed is the detailed second quarter 2013 Douglas Elliman sales report referenced in the NY Time article above. Note the category New Developments on page 4, of which Azure is a component, has increases in prices of 30.7% from 1 year earlier.

http://www.elliman.com/pdf/f385bc7cf3a7a4a26884298267eb61091954958c

Is that category dominated by unattractive buildings that don't own the land under themselves, and are at ground zero for massive numbers of garbage trucks and their noise and various stenches rolling by and idling every weekday, in a NYCHA-friendly remote corner of non-prime Manhattan?

Or are most of them in prime Manhattan areas that have gotten more desirable, especially for petroleum mini-barons from far-away nations?

What neighborhood is this in!

what's a land lease? are they common? like, what percentage of owner-occupird apt buildings in NYC are leand leases?

http://streeteasy.com/nyc/talk/discussion/28861-complete-list-of-land-lease-buidlings-in-manhattan

It's a big subject. Very broadly, a landowner either can't or doesn't want to develop its land with a building, and either can't or won't sell its land to a developer. So the landowner leases the land long-term to a developer who'll construct a building. At the end of the lease term, the landowner gets back the use of the land, and the building too, and can either start fresh with a new developer or make a new lease with whoever last owned the leasehold, or sell the land to that last leaseholder or someone else.

In the case of the Azure, the landowner is some unit of government. The co-op owns the leasehold.

nwt, i'm asking here, since i cant bump your link, given my prestigious gray state.

Was there any significant economic impact on shareholders at Chelsea Enclave?

Not as far as I can tell. They'd originally paid for the leasehold up-front. ($30,000,000 or something.) The later switch from leasing to owning the co-op's condo unit was just a wash. I don't have the offering plan, but the process may have been planned from the start, or maybe the seminary first thought it couldn't sell the fee interest but then later figured out it could.

Sometimes religious institutions were given land under the caveat that it couldn't be sold, and/or if it's no longer used as intended it reverts to the donor's heirs. Something like that seemed to be behind the original lease at Chelsea Enclave, but I don't know.

Market update 07022013

NOW 80% SOLD. This includes 25 four bedroom residences, which is an uncommon amount of four bedroom units in one building. The demand for these reasonably priced 3,000 sf 4 Bedroom residences with East River and cityscape views all above the 23rd floor has been, I believe, created by several factors. They include the following:

1.Great amenity space which includes an Exercise Room, Toddler Play Space, Teen Game Room, TV Lounge and Dining Room and a Two Roof Decks

2.High Quality Construction with Viking Kitchen appliances, Bosh Dishwashers and Dryers and Brazilian Aformosia flooring

3.Close proximity to the best public and private educational institutions, public parks, shopping and community based family entertainment. Primary recreational facilities are nearby at Asphalt Green, Carl Shultz Park, 92nd street y and other neighborhood children oriented facilities and a variety of ethnic restaurants.

4.Pending completion of 2nd Avenue Subway

5.Continued price appreciation of all 2, 3 and 4 bedroom units at Azure confirmed by recent appraisals.

6.Friendly, welcoming community of 2, 3 and 4 bedroom purchasers who have made Azure their home

AN IMPORTANT FINANCING NOTE. Attractive financing terms for residence acquisitions at Azure are currently being provided by Wells Fargo, Chase, Citibank, PNC and HSBC. Based on recent mortgage interest rate market volatility many financial experts expect a continued increase in interest rates over the near term of the next two quarters. Any interested purchasers should contact the Azure sales office who will put them in touch with the dedicated loan officers at the above listed financial institutions to determine how purchasers can best lock in current interest rates for their new home purchase ASAP.

Market update 07022013

NOW 80% SOLD. This includes 25 four bedroom residences, which is an uncommon amount of four bedroom units in one building. The demand for these reasonably priced 3,000 sf 4 Bedroom residences with East River and cityscape views all above the 23rd floor has been, I believe, created by several factors. They include the following:

1.Great amenity space which includes an Exercise Room, Toddler Play Space, Teen Game Room, TV Lounge and Dining Room and a Two Roof Decks

2.High Quality Construction with Viking Kitchen appliances, Bosh Dishwashers and Dryers and Brazilian Aformosia flooring

3.Close proximity to the best public and private educational institutions, public parks, shopping and community based family entertainment. Primary recreational facilities are nearby at Asphalt Green, Carl Shultz Park, 92nd street y and other neighborhood children oriented facilities and a variety of ethnic restaurants.

4.Pending completion of 2nd Avenue Subway

5.Continued price appreciation of all 2, 3 and 4 bedroom units at Azure confirmed by recent appraisals.

6.Friendly, welcoming community of 2, 3 and 4 bedroom purchasers who have made Azure their home

AN IMPORTANT FINANCING NOTE. Attractive financing terms for residence acquisitions at Azure are currently being provided by Wells Fargo, Chase, Citibank, PNC and HSBC. Based on recent mortgage interest rate market volatility many financial experts expect a continued increase in interest rates over the near term of the next two quarters. Any interested purchasers should contact the Azure sales office who will put them in touch with the dedicated loan officers at the above listed financial institutions to determine how purchasers can best lock in current interest rates for their new home purchase ASAP.

http://tinyurl.com/m987crr

>5.Continued price appreciation of all 2, 3 and 4 bedroom units at Azure confirmed by recent appraisals.

In other words, your prices have gone up and it's more expensive for a buyer than before?

Buy buy buy before interest go higher!

Alanhart-----you can continue your infantile squawking about the building and the neighborhood. At the end of the day, what matters is what the sales and pricing activity for the Azure are--that's the ultimate measurement of the attractiveness of the building in the eyes of people,who are investing millions in this building rather than you who invests a few typed bytes. The pricing trends speak for themselves. So I'd suggest the market doesn't share your views.

Which market?

Brooks2......duh, the real estate market. Look at the closing prices of the Azure over the last couple of years and that's the verdict of the market: not the rambling postings of various denizens of this board who are clearly lacking a hobby.

Location Location Location

Brooks while the area clearly doesn't float your boat and I gather from your prior posts you last lived here around the time Koch or Dinkins were around the corner in Gracie Mansion and Jobs and Wozniak were in their garage, but this is a great area, particularly for families. At the end of the day, I'll set aside the endless and uniformed pontificated and point out (yet again) the sales volume and pricing trends for the Azure speak for themselves (and confirm the view that the area is clearly attractive for the owners here who are investing millions in their apartment purchases). If I had listened to you and your ilk I would not have bought here, and that would have been a mistake!

Brooks...and to remind you of the markets "verdict" on the building and the neighborhood you enjoy trashing, the Azure was a little over 30% sold when my family and I moved in two years ago; it's now 80% sold. In my personal circumstance, the last apartment to go to contract that is identical to mine sold at a 32% higher per sq foot price than I paid.

Just noticed this morning that the second apartment in the Azure to be listed by the original buyers has gone to contract. 10CD was on the market for a month at $3.75mm. That was $1.1 million above the price the apartment originally sold for in late 2010. Even assuming the contract is at a slight discount to offer, that's damn nice price appreciation. The market delivers another verdict.

Why do you suspect they are selling?

Greensdale....no clue and none of my business and does it really make any difference? The sellers just banked a $1mm gain on a $2.5 million dollar investment in 2 1/2 years. More importantly, they banked that gain because a rational buyer valued their apartment at around $3.7mm, assuming a slight discount to close. That's the key takeaway. The market speaks.

SoJo
Your cheerleading your building and that's fine but Im not seeing the point.
All everything you posted clearly states that it was great and smart to buy during the '09-'11 RE market dip. People selling now who bought then are seeing a wonderful gain.
The "verdict" is for purchases 3 years ago.

So to buy now at today's prices and speculate about value in 2015 to 2017 going in EITHER direction is perfectly valid.

Truth...I'd note that I'm not "cheer leading" for the Azure, rather defending it. You'll note my posts are either highlighting facts or noting my personal opinion and I highlight very clearly that I'm proffering my opinion. "Cheer leading" usually connotes enthusiasm more than fact. Nowhere do I suggest that it is not appropriate to ponder valuations in future years---and that's typically not the subject of the posts of those who have some issue with this building. Future value is one of the fundamental challenges of any real estate purchase.. All I've noted, notwithstanding the flaccid criticisms proffered by many denizens of the Streeteasy boards, is that rational buyers who are making multi-million dollar investments in this building have pondered all the relevant issues (the leasehold, the neighborhood, the building, and their best guess on future valuation) and have made their decision by buying at ever increasing prices. My personal view is real estate values of the Azure (and every other high end building in Manhattan) in the coming years will be significantly affected by the US and Global macro economy and it's impact on rates, the "strategic drivers" of value --- and none of us have good crystal balls, otherwise we'd not be wasting our time on the Streeteasy board, rather we'd be calling the butler to get the G5 fueled up. But for the local drivers of value (the building itself, local supply/demand in this area, trends in the neighborhood ----- the "tactical drivers") I actually feel pretty good about those. So absent another economic shock, I'm personally pretty confident about pricing trends in the next few years. One man's non-cheerleadering opinion.

Ok so you are not saying- rah rah - If Mattonegroup can't do it no one can! Go team go!
But you certainly sound like cheerleading to me.
If you were so firm with your believes why waste your time defending this dump?

SJ, the price appreciation you've noted, is it exceptional compared to that of other new build condos over that time period.

Brooks....as I've noted before, I write on the board simply for potential buyers who are researching the building. If all they read is your profound observations ("a dump," really?) then they learn nothing other than you hate the Azure and have a lot of time on your hands. I want at least one informed view about this building. And I've always been open about where I'm coming from and I stick to facts to make my arguments.

Greensdale.....but even with the price appreciation, the large 4 bedroom/3,000 sq ft apartments are still attractive values compared to what few comparables exist in the area. And as this is a CondOp, you get great benefits at closing compared to a CoOp. And this neighborhood has a tremendous anchor of a ton of private schools (one of the key reasons many families live up here and live at the Azure) and other amenities. And once the 2nd Ave Subway comes in, I personally think that will drive even more improvement to the area (and local real estate values). Net net, I've lived here for two years with my family and have no regrets. It's a great building with a great group of residents. Most importantly, my apartment has appreciated by a little over $1 million in two years. That's the best performing asset in my portfolio. So.....if this place is a "dump," I'm a very happy resident of said dump.

They did ok. About 14.3% annualized vs. 15% for S&P ignoring transaction costs. You tell me which one carried bigger risk.

1000

Button......your math only works if you assume there was no leverage. If, like most mortals, there was a mortgage involved and we assume it was a 70% LTV, then even pushing out the ownership to three years just to make the IRR calculation easy, then their return on their investment was about 34% annualized. And that doesn't count the further benefit of the tax shield on $1mm of their mortgage. 34% annualized in the last three years when the 10 year treasury has generally been bouncing around 2% is a very nice return. And then got to enjoy the apartment for that period. I'll take that over the S&P any day.