The NEW Rector Park

I also thought about this until i saw the common charges which are crazy high. What's the upside of buying there?

The prices are such a substantial discount to comparable properties in BPC that the higher monthlies are more than discounted into the price. Probably the reason why 40 apartments have already been spoken for in just over 1 week since the sales office re-opened.

Au contraire - the prices in this building. are not particularly discounted for BPC. Also, none listed in contract, so "spoken for" means nothing. Let me know when people start actually sending checks in with contracts.

That said, the common charges are not out of line for BPC.

I made an offer for one of the "good" apts with river view and the sponsor wanted full ask--no discount--thanks, but no thanks

Deal or No Deal

No Deal

it was a 739 sf apt that they wanted $890,000 for with common charges of approx $1800 per month--Pass a dena

Mjh: maybe you can help answer this as well, posted on other thread-- Since you put in an offer, maybe you can save us some time and help us out with what you have learned. How are the financials? Heard they were not pumping any money into the buildings reserve fund. I assume everyone who buys pays one year maintenance up front to provide financing for the building, which is common practice. Still transfer taxes I presume? Can you move in once they reach 15% sold? What is the 2011 land lease bump looking like, another $300 per month on 800sq ft.? Does the bldg have adequate flood onsurance coverage or do you have to buy a separate policy, bumping up monthlies another $200-$300 per month? Any special rate on parking if you live there?

Thanks!

Logic--sorry did not get that far with them, once they would not negotiate at all I completley lost interest. Its a nice building and I've lived in BPC several times before and love it, but at that price with no room for discount--not happening. I do know that some of the less desireable units (without views) were much more reasonable. The other stuff would have to be looked at by an atty in the offering plan. Good luck

mJH: Ok, thanks. I live in the area; I will try and swing by to see if they can answer my questions. I looked at the units about 1 1/2 ago and thought the maintenance/tax was a little high then and now it is even higher, so despite the attractive psf on some units, the building financial status w/o a reserve fund and potential for another $500 a month on top of reported numbers would worry me. When you add up transfer taxes, 1 yr maintenance sunk cost and future increases due to ground rent lease, price might not be all that attractive. I warned people back then for bothering to put a 10% deposit down when no one was buying and my doom/gloom unfortunetly turned out to be correct. All the best.

heard they already renegotiated the land lease so that's locked for 15 yrs. Could be why the monthlies are 35% higher than when they were on the mkt last year, and ironically the prices were slashed 35%. would love to hear what other info people have.

the only units that are priced reasonably are the "courtyard" view units, which are all dark and on lower floors. we saw a couple of studios in the $500k range that had what they called "river" views, although in order to actually see the river, you have to stand right at the window. I would call this view a "park" view. For $500k (around 600 sq ft), that's an outrageous price for the area and roughly inline with the prices of similar studios that have been sitting on the market in BPC for months

IMO, they will sell the courtyard view units, which are large and if you can get over the lack of light, well-priced. All of the other units, they'll have to drop the prices on as the differential between a low floor unit and a unit 3 or 4 floors up is currently around 30-40%, which isn't going to fly in that area. They have a Fannie/Freddie arrangement where if they put 50% of floors 4,5,6 in contract, Fannie will start underwriting those floors only. They then have to go to the next set of floors with a similar deal etc.

Any idea what's driving the big difference in monthly costs? Identical apts on higher floors have lower per sq ft monthly charges. What gives?

Anyone notice there is no bike room? What are they thinking???

Washer/dryer in every apartment.. anyone notice that?

Shill much Dyspepsia? Washer/dryer in every apartment is pretty normal feature of new condos.

Looks like the studios and 1BR's were priced to sell, but not so for other units.

$2.30-$2.35/sqft for cc's + PILOT is comparable to the highest priced buildings in the area (specifically, the Visionaire), with fewer amenities (Rector has a standard gym, basement kids room and lounge, whereas Visionaire has a legit pool - not like the useless one in Riverhouse - lounge with big screen TV and pool table, impressive gym with a Yoga floor and a spectacular roof deck that can be used by multiple parties.) Even if a few (or all) of the amenities may not appeal to you, they appeal to many people, hence a better re-sale value.

Sure, Rector's asks are lower ($950+/sqft for larger units), but they're not even negotiable. Visionaire's asks are still rediculous ($1150/sqft) but the selling agents clearly suggest plenty of negotiating room - especially now that Rector Park and the new Liberty buildings have expanded local supply.

Bottom line, there are no good deals in BPC for family-sized units... the apartments are priced at or above the average for the financial district ($870/sqft in June), despite monthlies that are leagues above anything I've seen in the area.

Just ask any of your friends that are buying or have recently bought real estate - they'll tell you you're crazy for thinking of such prices as "deals".

you guys forget that monthlies for every other building will rise quite a bit over the coming years, and that all will be rather comparable. this will be a ticking time bomb for FIDI. at least, you are getting these apartments at values that are discounted, and have fully baked in monthlies, whereas the other buildings you are paying market prices, but have yet to get to the higher monthlies.

For clarification, I was citing Visionaire numbers that exclude the current discount, for an apples-to-apples comparison.

I too have been looking at 1 Rector Park. Yes the fees are high, but when you look at the all in costs of the units, they're in line with other similar properties around the city. The 1 bedroom unit I'm looking at in the $600's would be in the $800-900's in any other new project in the city. Plus, consider this, because the price is low relative to the overall costs, that means a lower down payment and a lower mortgage, even though the total monthly costs may be similar to more expensive units with tax abatements. Also, this building just negotiated a 15 year ground lease, the cost of which is already reflected in the common charge. So unlike other new buildings in BPC which offered abatements on the common charge, at least here you know what you're getting going in the door. And I can say without hesitation, having lived all over the city, I love Battery Park City. I went to look at some apartments in midtown and the noise, traffic and crowds were enough to convince me that BPC is worth the price you pay for living there. As for the building, sales have been brisk, but it's definitely a gamble going in to a new project. If you're not in a rush to move, and you're willing to live there for 3-5 years, I think it's a good deal. Again, look around at new construction, the most affordable of which is currently in Hell's Kitchen and you won't find anything even close for the price.

Was told that 26% of the units are in contract but only one apt above $2mm is in contract (ie. 90% of sales are studios/1br). These common charges are just nuts. I looked at one 3 bedroom with an obstructed view of the river whose commone charges were $5600/month. By comparison I currently rent a 3 BR in the verdesian but a full river view and arguably a better location and pay $6700/month. Granted my 3BR is ~ 500 sq ft smaller than this unit and the building is 8 years old but the disparity is crazy. Assuming I put 20% down my mortgage and common charges for a $2.5mm unit would equal ~ 16k a month (and that's assuming no opportunity cost on my down payment). Pass....no tax benefit can make up for this disparity.

The studio apartments,that is the ones facing the park have no bathtubs, only shower stalls. That to me is a big minus.

Big deal a fifteen year lease; the common charges are already astronomical, and that includes the ground rent.

With only 26% in contract, I do believe Fannie Mae will not finance in any new development unles the sponsor has 51% in contract. It may take awhile to move in.

Does anyone know if people have moved in already? Back in September I was told they were planing on moving people in by January

I was told within 60 days.

"According to a spokesman for the building, 30 percent of the building%u2019s 173 apartments have been sold since the sales office opened in early August and move-ins should begin next month."

http://www.downtownexpress.com/de_404/bpcbeat.html#

What happens if iStar (former lender on the building who foreclosed on the developers) goes bankrupt? Their stock chart (SFI) is not encouraging and I read they have a mountain of debt coming due in June. If someone else takes over in a reorganization, will some apartments be rented?

Also, 225 Rector has been taken over by the Related Companies, a reputable developer. I imagine that will add to neighborhood supply sometime in 2011.

The chart on iStar Financial (SFI) is up 800% in the last too year! That is pretty good if you ask me, but what do I know, I only work on wallstreet. Also iStar's balance sheet, income statement and cash flow looks great and it growing strong every day. That is the reason why the stock is up 800%+. The stock is looking to pop again to the up side in the coming months. Oh did I mention that Goldman Sachs is one of the top 4 institional holders in the stock!. iStar is also in the Russell 2000 index and is a REIT with tax beenfits. If anything iStar is a take over candidate. Their debit is no issue when they have strong cash flows due to projects in the works.

1 Rector Park (333 Rector Place) is now over 30% sold in 6 months. And closings are set for next month. 225 Rector has no relation to 333 Rector Place and has nothing to do with 333 Rector place.

Now I'm suspicious - your comments smack of someone connected to the building. IStar's stock has plummeted from $50-$8 since 2007, clearly suggesting financial problems. Company management acknowledged on recent public conference calls that it needs to refinance a big slug of debt by June, or else seek bankruptcy protection. These are facts.

The outcome may be benign - even if they file Chapter 11. I hope so, because I like the building. Still, no one really knows what would happen. To suggest otherwise is just playing pretend.

by the way - anyone try to get on www.1rectorpark.com lately? Site seems to have shut off.

Since 2007 the entire market and pretty much every stock listed plummeted, in case you were living under a rock. But the best stocks and companies are recovering upward since the market went south and iStar is one of them. It's up 800 % within the last two years. Clearly suggesting financial recover. iStar went from 66 cents to $8 in two years. That's a 800% return!
Low rates are attracting investors and traders into commercial real estate and REIT stocks.

Since you like the building, now I am suspicious.

The risk in Chapter 11 is far less now than it was in 2009.
In case you didn't notice the market is recovering.
Any short term dip in the market is now a buying pop.
Like the one now with the issues with Egypt.

By the way, you need to check your computer www.1rectorpark.com is working fine.

And, YES , I am connected to the building.
I am in contract for a 2 bedroom and scheduled to close and move in mid March.

Wallstreetguy: Were you able to get an actual closing date? I'm in contract for an apt as well and was told closing would start anywhere from 60-90 days but never given an actual date.

Hi NYClivin,
I was told last week that they are “strongly optimistic” that the AG office will declare the condo effective in March and said maybe even late February if they are lucky. I’m not sure about Feb but March may be the best beat. They told me that they submitted their paper work to the AG office in mid January so things are looking good for March. They have been telling people 60-90 days but they told me it would be closer to the 60 day mark (if not earlier) rather than the 90 day mark. They instructed me to have my attorney schedule a closing date with the sponsors’ attorney. So I picked a date in mid March and it was accepted.

By the way, is there a yahoo message board or something for buyers in contract to discuss issues like this? If not, we should set one up. What do you think?

The closing can't start until there are 51% units sold otherwise Fannie Mae will not fund any loans.

I saw the apartments and the studios facing south are beautiful. Only one problem, there's no bathtub, only a shower.

This to me is a big drawback besides the astronomical carrying charges.

Streetsmart,
Not dealing with Fannie or Freddy. So the 51% unit sold thing does not apply in my case.

But if you need a loan with FNMA or FHA and are concerned, not sure if this address the issue or not:
http://www.1rectorpark.com/uploads/Real%20Estate%20Weekly%2010%2020%2010.pdf

Also, never viewed any studios or 1 bedrooms in the building, but I'll take your word.
Good luck.

Wallstreetguy: I'm not sure if anything exists. I think it's a good idea to set something up... go for it!

Wallstreetguy:

It may not apply to you, but I don't see how the building can close if it does not have funds from the other buyers who are getting Fannie Mae loans. I'm certain the sponsor has to pay off a mortgage and needs funds from sales to do so.

actually maybe he has a clause in the mortgage which allows him to pay it off as he sells the units; I think it's called a lien release clause.

nyclivin: okay I will let you know.

streetsmart: the sponsor is the lender (meaning the lender is the sponsor). Buttonwood and Bonjour Holdings transferred 333 Rector Place to its lender which is iStar Financial last year. Nothing to pay off, it's part of iStar Financial's balance sheet now and the proceeds from each unit's closing is part of their cash flow in take. So building can and will start closings after the AG is done with their papper work.

Just got word that the New York AG office is done and has officially declared 1 Rector Park (333 Rector Place) effective as of yesterday!!!! Buyers in contract will soon get letters in the mail to schedule closing dates. Things will be moving fast from here on out. Good luck to all.

Thanks all for your posts...very informative. We have an agreed upon offer on a 2 bedroom. The price - even considering the monthlies (which have come down in the last month due to meeting some projected level in the reserve I think)seems pretty reasonable. The apartments and the entire building are really well done. We have spoken to the recomended lenders including Bank of America and they are all ok providing CONFORMING loans but I have to say I'm not sure I get why. I have always understood that the requirement is typically for 50 % of the building to be sold. Some of the other issues raised in the posts here have concerned us as well. Why have so few $1 M units sold? Is 30% sold in this timeframe a good amount (I just dont know)? The iStar connnection doesnt seem great. What would happen if they couldnt sell the units - rent them out, corporate apts? Also, only one other apt on our floor (and only a few in our line) has sold which sort of feels strange but that just might be the nature of buying in a new development. Love the apt, love the school district, love the ammenities (play room and gym are awesome) but am a little nervous to move forward.

Just got my package in the mail yesterday from 333 Rector. It states that the New York AG office have declared the condo effective and that I should get my stuff together to start my closing procedures. Can’t wait. Good luck to all.

Same here, received written notification that closings can begin now that the condo has been declared effective by the NY AG's office. Looking forward to closing and moving in. In conducting due diligence in the area and having lived in Soho, BPC & Tribeca over the last decade, this building has one of the best value price/sq foot, school zoning, quiet atmosphere w/water views from the apt.

Yes, looking foward to everything as well. Have you locked in a closing date yet? If not, you should.

Yes, thanks. Aiming for early April only as I'm traveling in March. How about yourself? Would assume late Mid-late March is good bet as letter notifying approval stated some admin items are being finalized & closings should start shortly thereafter. Very excited and looking forward to moving in (especially in this time of the year when the its so beautiful out there!). Overall process has been smooth, professional & transparent.

Upon ownership, any thoughts on working w/sponsor & owners to develop rooftop? Down the road ofcourse.

Their estimates are 2 to 4 weeks from Feb 13th. So it should be real soon now.

in the slight chance that i star cant refinance its debt and goes bannkrupt,what happens to those that are closed and living in the bldg?

As was stated in this thread, if you're getting a fannie mae loan, you won't close until 51% of the units are in contract.

If i star can refinance, the I would suggest you pray. And ask your neighbors a block away who bought into 225 Rector Place what happened to them after they moved in. Actually in this case the sponsor defaulted on his loan.

But I would think that this sponsor will get another loan.

As to the apartments for sale, I saw a studio on a very high floor that had direct river views, but they wanted $530K. Too pricey for me.Couldn't live in it anyway.

closings can occur in phases - and the first phase is about to get their 30 day notices. I received mine

We are lending based on phases at One Rector Park. Currently, we are providing financing for units on floors 3-6. sunny.hong@bankofamerica.com

mortgage broker here, closes loans with Wells Fargo.

esfundingco@aol.com

streetsmart, so your a mortgage broker??? Interesting..... Anyway, good luck with everything. Also, if want more clients from 1 Rector Park buyers, a little advice , try to be more positive. Maybe if you sell more mortgages, you can get one of those studios you looked at but found it as too pricey for your budget. good luck with everything.

by the way, iStar got almost $3 billion in senior secured credit agreements last week. The money will be used to pay down a chunk of their debt. "Going concern" is no longer an issue due to this.

http://www.cnbc.com/id/42136926

there is now way streetsmart is a mortgage broker
seems clueless

wallstreetguy - we need to ensure we get to be a part of the 11 building settlement on base rent (including all our neighbors).

we were excluded because no one was paying attention on our side - and no residents.

this could mean a substantive reduction in common charges and an immediate increase in value.

Prospective - I agree. We need to contact Sheldon Silver asap! I was told that the worst case was already factored into our current common charges just in case. That's why it's up there. We need to get together and form a board asap.

I already contacted Milford and they are on it, but hard to say what leverage we now have. If iStar, Corcoran can get this, it would be a boon to sales, but I fear that this may drag on. . . we pay way more than any of our neighbors in base rent which is absurd.

We got to form a board to take care of all this asap. Also we need to find out how much extra it is costing us in the common charges for Abigail Michaels Concierge. Abigail Michaels Concierge has nothing to do with the concierge (doorman) people down stairs at the fornt desk of 333 Rector. I do not see it as anything useful. When I called them I was surpised when they told me that they are paid by the condo monthly and if I wanted stuff, like for them to order movie tickets, find me a moving company, or get me other stuff when I can do it myself. They told me it was free for me but it really isn;t when they put it in the common charges. I don't need to call them to get stuff like that for me if I find out it's adding to my common charges. I though they were the people at the front desk and the doormen but they are not part of that at all.

that's bs - is it in the financials because I didnt see a line item?
we should kill it
I dont think we can form a board until 75% is sold, but we can do an unofficial one I think. . . and we need to keep the pressure up on Milford/iStar that we demand to be part of this settlement.

just on the reducing the common by a few hundred, this building will give us an even greater roi.

My lawyer is holding onto the financials, so I will have him check this out. Bottom line, Abigail Michaels Concierge Service needs to go if it is adding to the expense line, which it is becasue nothing is free. An interim unofficial board is the answer. Let’s put it together on April 21.

ok - how can I reach you?

We should set up a yahoo group or google group.

What exactly is this settlement you guys are speaking of? I want to hear more as I purchased an apt in the building and am awaiting my closing date.

Just want to know what this means for base rent, etc and am ready to speak up if necessary.

nyclivin, please see the link below:

http://web.me.com/broadsheet/Broadsheet/Home/Entries/2011/3/11_March_11_2011.html

Abigail Micheals concierge is a waste. How much of common charges is it? Can we make it part of closing conditions?

We concur but will have to wait until we close and the board is form. First two items to address is:
- contacting Sheldon Silver and being part of the 11 building settlement
- no need for Abigail Micheals concierge

Key person to contact re: settlement in addition to Silver in Anna at Milford -- she is leading the request to the BPCA on the iStar's behalf.

Let me break it down for you guys -

Our direct neighbors were to reset to ~800K base rent this year after years at being 100K
They participated in the settlement and now they are likely to be well below that - I guess 400k.

We, having no residents or representation, simply reset to approximately 900k base rent. This puts us at a higher cost basis - on average 300-400 buck per month for no good reason.

All buyers need to contact iStar and Milford asap to ensure we are included.

I look forward to the yahoo groups invite.

Is Anna going to contact Silver or has she done that already?

she has contacted bpca

istar needs to really lead this and we need to ensure they do

agreed, but I'm not sure if they will at this point since they didn't before. they had their chance a while back but it didn't seem to be a concern or one of their main objectives since they were only suppose to be short term on this project. but Yes, we need to put pressure onto iStar now.

Anyone seen the actual condo financials?

condo financials? yes absolutely. Thats how I know what the base rent is. Agreed on istar but remember they still have to sell another 60 percent more. . . so dropping common will help big time.

i have hit everyone I can
everyone should do the same

Same here. I also spoke to Anna. But had no luck with talking to anyone at iStar that cared. I think a bunch of us may need to go to the next BPCA Community Board Meeting and talk to Sheldon Silver directly. Thoughts / ideas ??

Legitimate question (not bashing) for those on this board who are in contract waiting to close: why did you go into contract on this building now given what seems apparent on this discussion thread - e.g. either the need to lower common charges and/or reduce asking prices to get this building fully sold (or at least not sponsor controled). I've looked at 2, 3 and 4 bedrooms in the building and was generally impressed with the quality of the finishes, common areas, views, light etc. No doubt it's a great building but see no risk in waiting - not to mention that the listings on streeteasy / Corcoran are only about half(ish)? of the full list of available units I got from the sales office. Sales office was blatantly unapoligetic about the common charges being so high. I saw no need to engage in discussions on negotiability of asking prices at that point.

Seems to me that either the asks have to come down - given now that iStar is loan to own on this, no reason they can't lower prices (vs. "sponsor can't lower the prices because the construction lender won't let them. . . ) and/or common charges come down. If iStar has shown no interest in doing either (which to date seems to be the case?), doesn't that imply they have another strategy? Given there business model is not to own real estate outright as they do here does that not portend another exit strategy other than bleeding these units out which to date they haven't been able to do at near the pace of other new developments. Not saying iStar will or has plans to, but could they not pursue the same exit strategy here they did with William Beaver - i.e. sell to another buyer (whom in that case turned the remaining 67% unsold units into rentals - horrible outcome for the 33% who closed. . . ). Why would any one take that risk now? Serious replies only.

Hi - another curve ball I found out today about.
I got notified that I need flood insurance from my lender. I know the building has some but does that mean we all need an individual policy as well? I hear its very expensive.

The building had no idea.

What did Anna say?

Most of the time, the building policy should cover it. Get a copy of the master insurance policy from Anna or Yury at Milford and give it to your lender as well as your attorney.
Anna said she understands and will do what ever is needed but we will have to take the lead on this.

Wallstreetguy, when does your ground rent increase to 900K take effect? Would that be another $300-$400 in addition to you current figures? Looks like the bldg depending on the unit is around $2.20/ft for maintenance and taxes combined and that would take it to $2.48 or so given the ground rent increase?

Is the building only expected to have 1 doorman throughout the day and are they unionized; I assume they are, but 30 West street switched to non-union.

The flood insurance issue came about through Fannie Mae guidlines in 2009 for all of the bldgs in the area and mos tof the bldgs will not change their insurance policy b/c it was going to cost upwards of an extra 200k for the entire buidling for coverage that will never be used; however, certain lenders do not require any additional insurance, the cost will depend on the elevation and current umbrella policy, $1,000 to $3,000. Try Chase, they may not require it.

Logic, the ground rent increases are already factored into the current common charges listed. In other words, the worst case scenario is already priced into the current common charge listed for each unit. This is why 1 Rector common charges are higher than the other buildings around it where none of the ground rent increase are within their current common charges.

The building will have more than 1 doorman. They will be there 24 hours 7 days a week. They all have been hired expect for one open position which is for for a porter.

This building has flood coverage within their master insurance policy. Not sure about the different lenders which may require different things based on their own internal policies. Cash is way to go.

thats right - our sales prices reflects the worst case. riverhouse and visionaire go up 3% ever year regardless.

What is the current status according to Anna? Sponsor has control so they have way more leverage, but yes lets get aggressive.

Another issue are these ads - "Green for more Green" Ridiculous -- who wants to think they are in a discount building. this wont attract the riverhouse contingent.

I was told that riverhouse and visionaire common charge increases will be a lot more than 3%. Their sponsors had a common charge “buy down” so the common charges which you see now are not the real common charges. The "buy downs" are due to expire next year. Just to get this straight, we are not talking about ground rents, we are talking about the common charge. In order to sell their units faster, the sponsors did a “buy down” on the common charges in order to not show the real common. The real common charge will be at least $1.50-$2.00 increase per square foot. So for example, if a unit’s common charge in Riverhouse is $1,700 on a unit that is 1,000 sq ft, the real common charge next year will be $2,550-$3,700. Once this happens, the market value on the resale will drop to reflect the correct common charges. Check out South Cove condos. Owners on resales their offer buy downs all the time.

When you say 3% increase every year, are you basing that off their land lease. Does 1 Rector's land lease reset in 2027 rght now like the legacy BPC bldgs at 6% of FVM, which is being contemplated to adjust based on the preliminary agreement if you were able to be a part of the group of 11?

I don't know if the cc increase on visionaire will be that large. I beleive the increases are graduated over time until the 5 yr mark which is up next yr as you pointed out. I have been trying to get color on that for yrs w/o a lawyer with no luck, hopefully a visit this weekend gives me some info. I don't know why everyone is tight lipped about the facts, saying ask your attorney. If anyone can provide a mor eaccurate picture b/w 200/377/380 rector vs 30 west/ visonaire/1 rector/riverhouse pro forma for increases and buy downs that would be greatly appreciated.

When do you guys plan to move in? Still awaiting a person to appear in the 24/7 lit gym?

There are no "buy downs" in common charges at 1 Rector. Also, the worst case scenarios in “ground rent increases” are already priced within the monthly charges listed now for each unit which you see. In other words, what you see is what you get, unlike the river house, 30 west and visonaire where the real common charges will be set after the sponsor's buy down expires next year. I was told by $1.5 to $2 per sq ft. As for the legacy BPC bldgs, the ground rents increases have not been factored into the monthly fee yet. So expect their monthly fees to go up as well later. 1 Rector move –ins @ end of this month.

Just a small correction about 30 West Street.

The sponsor contribution will expire in November 2011.
Common charge increases directly attributable to the loss of the sponsor contribution will average
about $106 per month per unit.
That's about $.90 per sq. ft. per year.

$0.90 per year? That isn't much of a buy down? $0.90 per month may be what they did.. You may want to double check that.

23G 30 West Listing
Common Charges: $557
Taxes: $1,113

I this is correct plus $0.90/ft per yr that would make it pretty low relative to everyone else, looks like a lie given 6G listing which is blokced by the school and on a much lower floor. Prada, what's the right number and increase about since you live there?

30 West Street 6G
Common Charges: $1,023
Taxes: $1,335

Friends - Battery Park non operating carrying costs are driven by 1) the base rent, 2) the sponsor subsidy (which always will be phased out as in 30 West), and 3) tax exemptions. In the case of 30 West, a few things are going on at once.

1. 30 West's sponsor subsidy is ending. In 2011 the Sponsor subsidy is dropping from 700k to 300K. That means the residents bear 400K more. In 2012, they will bear 300K more when the sponsor subsidy ends completely.
2. 30 West is starting to collect base rent - they have a great deal where the Sponsor paid a bunch in advance and now its the residents' turn. This starts out at approx 500K and rises to 654K next year and then increases 3% each year. (Wall Street Guy this is why we need a break at Rector as we are paying 900K this year when our neighbors got a settlement for lower than that and longer than that. The good news is that our rent doesn't increase - Riverhouse and Visionaire start higher AND increase for 15 years, as does their PILOT/taxes regardless of assessment value).
3. 30 West has a tax abatement which is also ending. On 23G, which has a common interest of .3576% there was a rebate of $2476. This means that the taxes are 200 less per month roughly than they will be when the exemption runs out next year and if you have a bigger place, lets say double, it will be 400 per month impact.

So, let's put it together. And let's use 23G as an example. We know that:

1. Sponsor subsidy decline of 400K this year means a 400K * .3576% impact, or $1430 for the year, which is $120 per month. There will be another 300K * .3576% in 2012, or another $90 more per month.

2. A base rent increase of 500K this year will be 500K * .3576% or $1788 per year, or $150 more per month and increasing $30 per month in 2012 and 3% every year from there.

3. The tax abatement of $2476 will go away, or $200 more per month.

When all is said and done, by 2012 (the end of sponsor subsidy and abatement, and a 600K base rent), 26G carry charges (common and taxes) will go up $210 + $180 + $200 or $590 per month.

If we use 6G as a basis (as reported in the listing), this means that 26G will have common of $1023 + $210+ $180 or $1410 and taxes of at least $1335 (public records show $1480 per month) + 200 or $1680.

Total carry charges for 26G (and by extension 6G) will be $1410 + $1680 in 2012, which when divided by sq. footage of 1190 is $2.59 per sq. ft - in line where other buildings will be.

Slots - you raise some interesting points. Others please read the post above and comment. Here's how I rationalize it:

1. Waiting might have been a good idea, there is always that risk, but I personally found a place at a great price with what I thought was a margin of safety. I didn't think it would be there in a year at the same prices.

2. Prices in this bdlg were discounted significantly because iStar took the bldg back - so buyers are getting "credit" for the scenario you laid out already.

3. Doing a rental bldg in battery park is far less attractive than in the financial district due to demographic. carrying costs, base rent, PILOT, etc. It's probably better for iStar to "bleed" this out rather than sell at a huge discount to a new landlord, but I guess it could happen. I would guess that it is more likely they will sell to someone interested in reselling it as a condo, which isn't the end of the world.

4. Carrying charges in the bldg are not out of whack (see my previous post). It's that other bldgs have subsidies and abatements that will expire shortly.

5. Sponsor has no control over most common charges beyond what amenities they choose to offer and a subsidy they can add. BPCA is who needs to be addressed and we will on the base rent issue. I do agree that it is a bit suspect that iStar hasn't kicked any money in, but could be because they aren't as familiar with the BPC structure.

6. William Beaver has almost double the units vs. 333 Rector, and selling 61 units out of 187 in 6 months isn't bad. Selling another 30 more during the next six months isn't crazy and that would make a resell scenario less attractive.

Thoughts?

7.

Thanks for the info Prospective

I would peg 377/380 adding $250/month for the settlement increase for ground rent at $2.27 using 6R in 380 Rector or 14% lower (minus gym/common area however)

Visonaire: schedule says their base rent is at $956,750 For Aug 2010/July2011 goes up 3% as you said for two more periods then 3.25% to year 25 to $1,863,735 or Aug 2031

They have minimum pilots at $4,977,014 for the Aug 2010/July2011 period, which go up 2% per annum to Year 25 and can be higher based on their assessment.

Since every agent says 1 Rector is great but with high carrying costs, I am trying to get the truth; If your 900k doesn't increase anually similar to 380/377 etc..does it state that in 2027 it will be 6% of FMV??, which is the scarry part for all of these buildings b/c currently for 2012, 377 has a cap of, 872k or 6% of FMV or 920K-so worst case was 920K or in line with 1 Rector Park, but the 2027 issue is the question mark they are trying to negotiate

Agents don't do the math - sure Rector is higher if subsidies and abatements are included. But that's is not the steady state.

Yes, there is 6% of FMV language currently in the contract. I already hear that has been renegotiated to 2040, but not sure. This means 333 Rector will soon benefit from this as well.

TO: prospective, Logic, wallstreetguy, nyclivin, cris123,
I am a new novice in real estate mkt you guys seem to know quite a lot so I ask of your assistance and advice:)
I am considering buying a condo at 1 retor. I am looking to move pretty fast so although I am saying I am looking to buy it, I'll decide within this week. Also I am a cash buyer. I am not rich, but enough cash to purchase a studio and afford CC/PILOT(or RET for other areas). I am sick of dealing with brokers and sponsor's hush hush about any questions related to sponsor's financial s. I do like 1 rector, and yes, the price seem semi reasonably priced but still doesn't seem to make sense to ask for full asking price(as of today's asking price, avail units(i.e. only stuido and 1 bedrms starting 8th floor and up). The sales office said there is no room for negotiation at all. Is this a joke? They told me the cheapest studio currently avail is on the 10th floor(550 sqft, riverview) asking 450K but CC+PILOT =1245/mo. Given the too much supply vs demand in current real estate mkt(esp. BPC), and it's in their(well, more for current soon to be "owners") incentive to for them to meet the 50% requirement for Freddie/Fani M to offer financing for the building, as a 100% cash buyer, who can close in less than 2 weeks, are they serious when saying they will not take anything below offering price? Yes, I do have additional 50K to shall out to meet their full asking price, but how does it make sense? They told me there's so much demand etc.. but.. I am not that dumb. IS it because I am a young female going on my own, they are pulling this? I am so not the person to haggle. Time= money for me. Any advice? More imptly, this whole approach(by the sponsor) has implicit but great implication/ meaning. They do not care about other current purchasers and/or those in contract. longer those units stay empty on shelf, the longer it will take for them to pay off their lender(yes, I read that lender<=>seller). Even so, the longer they take to fill out those properties, greater the opportunity costs for them. And something will have to give- i.e the reserve will be low(well, in this case, more negative)? Forget about the "costs for development portion- the payment for the land lease is a fixed, on-going expense, no? In short, Yes, I can shall out additional 50K to meet the full ask price but in this market, to pay cash, (which means no mortgage contingy => less risk), how does it make sense? They told me the seller doesn't care- they have enough money and they'll be enough demands soon or later, so even if I were to sign contract o spot and etc tomorrow and say I'll close within 2wks- or lose my deposit), they said the seller wants to wait to get full asking price. DOn't you guys care about how indifferent the seller is to selling the place? Yes, the whole issue of entering into " land lease arrangement/settlement with other 11 building will have much more greater impact in attracting more buyers(assuming they won't jack up the price once the CC's n PILOT are lowered), But still, to turn away a cash buyer for difference in 50K from asking price(in this case, it's only me, but they'd be the same to other cash buyers, no? Given the % of units sold, and in return, harder to get financing for others, I can' wrap my brain around it(sorry for my poor writing skill - it's 350 AM and English is my second language). ANyway, so I do like BPC and etc but the numbers just don't add up. It makes no sense(even if I put my money in risk free interest checking/savings; I'll end up with more... with over supply of vacant condos for rental out in Downtown area). Am i missing something? Lastly, anyone hear about the "BCP"credits? Any thought, advice will be appreciated. Thanks

wallstreetguy, you mentioned, I quote "the ground rent increases are already factored into the current common charges listed. In other words, the worst case scenario is already priced into the current common charge listed for each unit." Educate me(without bashing me, please:) but why and how would you know/consider this to be the WCS valuation of the building's financial? NO Business entity (any biz in their right mind) will do their BS, CF stment, and I forgot the last one(it's been a while since i've done corp finance), will put their number as such to show "WCS". We only do WCS when doing M$A and/or Value investing approach. No real estate attorney will actually "re-evaluate" the actual financial to see where/ what section has been made to be a "rosier" picture or not(other very basics). (Besides, in order to do accurate valuation of financial, it takes at the least 3 years of their past financial due to the lag between the 3 financial stmnts, no?)

AS Prospective mentioned in his post, he said that he actually saw and went over the financial, himself. And stated, I quote, "Thats how I know what the base rent is agreed on istar." This does not mean "WCS" valuation and hence passed through on the current high CC(isn't a fact that any increase in Base rent will be reflected on the PILOT?? I am a bit ignorant on that part). But anyway, since up in pilot will also impact CC implicitly as well, I guess that's not too significant(other than to satisfy my own curiosity). SO, just because the current base rent is reflected, doesn't mean their current CC is reflecting "WCS", no? Am I missing something? Can u expain? Are methods for valuating real estate(i.e. condo) financials any different than other entities financials?

Giffengds, ground rents (aka PILOT charges) and common charges are two different things.
Common charges are based on the building's financials and up keep. Ground rents are payments in lieu of taxes (which the worst case scenarios have been disclosed) by the BPCA.

BTW, I too am a cash buyer and trust me when I tell you this, they really don't care. They get their money at closing either way. But I think of this as a investment. Once the economy, job market, RE market and WTC all comes back, you will be happy you bought the place at the current price.

Hope this helps you.

Just a small correction.....

Ground Rent is not PILOT. PILOT is real estate tax and is tax deductible. Grount rent is rent payable to BPCA and is not tax deductible.

The information I previously posted about 30 West st is correct. On NOV 30, 2011 the sponsor contribution ($300,000) will expire. The 2011/2012 budget will take effect DEC 1, 2011. The portion of the common charge increase directly attributable to the loss of the sponsor contribution will be $.90 per square foot per year.

For the mathematicians out there, this is calculated at 333,500 sqaure feet X $.90 = $300,150

The average common charge increase directly attributable to the loss of the sponsor discount will be about $$106 per month.

Prade, thanks for clarifying. Just to expand a little more , Battery Park City condo owners’ monthly fees are made up of 4 parts:

First B.P.C. residents pay PILOTs (payments in lieu of taxes), which the authority collects and turns over to the city. The PILOTs are equal to what residents would pay in property taxes if Battery Park City fell under the city’s purview.

Second, residents pay a civic facilities fee, which the authority uses to maintain the neighborhood’s parks and provide services such as trash pickup to Battery Park City residents. The average monthly fee is around $33. The fee comes to about $41 a month for a two-bedroom and $29 a month for a one-bedroom.

Third, residents pay ground rent, some of which the authority turns over to the city. Ground rents are unique to Battery Park City, part of the city and state’s agreement about how to govern and tax the neighborhood. Battery Park City is legally city land, but it is run by the authority, which is controlled by the state. Back when Battery Park City was built, the city and state decided to rent the land, rather than sell it, to developers who wanted to build residential and commercial buildings. The Battery Park City Authority bid out each parcel of land on a competitive basis, and developers submitted proposals for what they wanted to build and how much they would pay the authority in ground rent over a number of years.

Last, is the amount we pay for the up keep of the building itself, which is the maintenance fee.

And Prada what about tax abatement expiring, base rent collection starting etc? What does that amount to in increases on average for us mathematicians?

Giffends - I have been pleased with the building's responsiveness, but I understand your frustration. Don't take it personally -- it's not you, the Sponsor feels they are already giving large discounts due to the market, history, etc etc. These prices are already fair compared to buildings in the area and maintenance is in line.

Thanks to WallstGuy, prada, prosp, and Logic for your reponse.
Anyone willing to give me their contact info so that I can ask some questions/ advice? Given that this is my first purchase and going in it alone, with all cash, i would really appreciate some advice- any!
I am semi well versed in terms of mkt and financials etc given my background but honesty I am soooo in dark when it comes to real estate stuff. WallstGuy, can you share/ explain further when you say it's an investment? If U are approaching it from the perspective, it really doesn't make sense. From pure opportunity cost of view, this is how I try to rationalize(BTW, I am grossly simplifying):
1. for 450K with monthly carrying cost of $1000, current going rent for studio(around 500 sq ft) in BPC is at best, 1700-2K/month at best(due to flood of over supply of avail condos for lease). This is accounting for the fact that there's increase in demand in rent mkt in recent quarter of 2011 due to rent being so cheap etc. so, you subtract your monthly carrying cost(in our case, we don't ave mortgage so no mtg. interest expense to add on to it). then we are left with $1000/month(at best). multiply that by 12= 12K and divide that by 450K. your rate of return is 2.67%. To be able to compare apple to apple, let's assume no risk- i.e. salvage(well, i know technically it doesn't apply here b/c you can't exactly depreciate it nor can u count for use of life time for this investment) value of the property is ZERO=> i.e. no net gain or loss. NOW, Here is the argument. YOU are saying it'll appreciate. and that it's a current "double Dip" in the RE mkt etc. The fact is, it's not. (well, no one knows). But to be fair, it was called real estate "bubble" for a reason- Bubble is bubble- i.e. over inflated and temp hyper increase in price. US RE mkt is 7th out of 15 worst RE mkt condition. and also look at Japan- the highest RE bubble ever and it'll never go back to it's prime "bubble" state. (to simplfy, some believe it's a temp. drop/dip vs. some believe current state of market is a shift- i.e. permanent impact). So I am no fortune teller (and anyone outthere who claims to be is a moran- even Buffet doesn't) and no one knows what's going to happen in future. So assuming we are taking risk(which we are), let that variable be off-set by the fact that condo at 1 rector will appreciate/depreciate. Hence assume risk free= net gain=ZERO(=> i.e. you are left with your orig investment principal of 450K). In such case, your rate of return is 2.67%. EVen in current economy, you can invest 450K@risk free rate(t-rate) and earn more. I've skipped inflation etc because along with that, so will CC and PILOT will increase. So, how does it make sense to look at it as an investment? Can you teach/share your wisdom? For me, I am at a point where the time and headache is not worth going too much into justify every aspect. However, I still don't see how it's priced right- 450K with 1000 monthly carrying cost.... doesn't just add up. But more imptly, I would love and really appreciate someone to talk and ask some questions who have bought in this building. I really want to, but my logic seem to stand in the way. In addition, since I know so little about buying a condo, any advice would be appreciated. you can email me at eyangllc@gmail.com

Giffengds: you obviously are someone who is considering all factors like I am, and despite rent jumping 8-10% over the last year, still hard to value owning over renting in some cases (i.e. the value of equity ownership/cost of moving/potential asset appreciation, which I am discounting personally over the next 3-5yrs), especially paying sponsor fees/money towards maintenance slush fund and considering you are opting for no mortgage and therefore do not benefit from deducting mortgage interest. Time could change what I said above. If you consider a 10 year horizon over 5 years, but you may need more space in 5 rather than 10.

Given your concerns, I would say you're leaning towards a no and could opt to buy something in say 200 Rector such as 14L for cash, probably can get it for $450K or less and remodel the unit to 333 Rector quality for about $100-125K and save 20K in closing costs in the process with a little lower maintenance and about 60 more extra sq. ft; downside is some highway noise, upside is direct view of freedom tower in 3 yrs and a lot of light. If this is a substantial chunk of your net worth as you noted, it doesn't seem fiscally prudent for you to invest it all in a brand new condo bldg with many unknowns.

How did you guys get comfortable with the financials of the bldg given people may move in shortly, but the building will be only 1/3 or less occupied? I assume IStar covers their shre of Maintenance? My current bldg, which is approx. 80 units larger) has $1mn plus in reserves; did Istar well capitalize the fund or are buyers expected to contribute 1 year of maintenance at closing to shore up the fund--that's how the visionaire was drafted?

giffengds, I understand your fear. I don't know what you do for a living but I sense you do a lot of homework before you make any decisions in your life (which isn’t necessary a bad thing). You should do homework and don't let anyone tell you otherwise.

But trust me when I tell you this, all investments have risks. You have to weigh the risk and rewards. And yes, buying a condo, either at 1 Rector or anywhere else, is an investment. If don't think of it that way, meaning that you goal isn't either to save or make you money in the long run, then you are better of renting and moving on and say no more. Buying a condo may not be for you at this time of your life if you feel that this is a bad investment and it will not save or make you money. Maybe later in your life you may want to revisit. And that will be your opinion and don't let anymore tell you differently. If it makes you sleep better at nights to not buy and to rent then you do so and be happy.

I don't care what you invest in but everything has risk. The less risk the less reward. So you feel its safer renting, then go for it. But if you still want to weight your options than you have to ask yourself these questions:

Is this the top of the RE bubble and are you buying at the highs? Doesn’t appear so.

Has the bubble burst? Yes. Looks like it. We are for sure not at the top.

Are we Japan? We are a lot different than Japan, And by no means Japan.

Are we heading to another double dip? If we are, the stock market and RE markets sure doesn’t indicate that. The Job market is getting better based on last Friday’s monthly job report. And the RE in NYC has been stabilized and even increasing. Since the S&P hit 666 in March 2009, we have gone up 100% to 335 today.

Can this investment increase in value? Maybe.

Can it decrease in value? Sure. All investment can lose you money.

Bottom line, no one can tell you what to do, Also try not to base your decision from people from message boards. Hope this all helps.

Correction, the S&P is at 1335 today not 335. sorry for the many type o.