WSJ: Apthorpe prices cut in half

right direction but not enough

A gracious lady made to dance for the thrill of boys. Nothing good here.

didn't know about the 15% mid-September covenant. still, don't think that's the reason for the price cut, as nothing moved there at all. the real goal is to sell the 1st unit at least. if avoiding going rental is the goal, why cannot super rich Lev Leviev buy 15% of the units himself? more price cuts to come IMHO

Admin: The parties who purchase the 15% needed to make the plan effective can't be connected with the sponsor, and they can't be bulk buyers. In lower-profile conversions, various games are played to evade the rules; but any sales at the Apthorp will be scrutinized intensely - by the AG, by the tenants' attorney, and by amateurs like us.

I agree with columbiacounty and, sadly, with spinnaker1. When a conversion sponsor overpays for a building, the only winner is the previous owner.

The opening salvo of a conversion from rental to Coop or Condo is a pro forma Offering Plan referred to as a "Red Herring" because the cover print must be in red ink. This is what is presented TO the AG's office for approval as the actual Offering Plan. The AG's Office takes from 4 to 6 months to approve or require changes in the Red Herring to accept it for filing as an official Offering. The Sponsor then has 15 months to either get the required amount of subscribers to the Offering Plan (15% by people who intend to occupy the unit after purchase in the case of a non-eviction plan and 51% of "bona fide existing tenants" in the case of an eviction plan) or abandon the plan. If the plan is abandoned, the Sponsor can not submit a new plan for one year (that would be another Red Herring, which would have to get approved, etc. so if they miss their Sept 15 deadline, take 1 year plus 4 to 6 months plus about another 12 months before they can close again. That's about 2.5 years for missing the deadline).

But to be clear, it's not just that they can't be connected to the Sponsor or bulk purchasers, they can't even be individual unit investors. They must "intend to occupy" the unit.

Let's see, carrying a $426,000,000 purchase with $12,000,000-per-year (as of 2007) rent-roll. The other money they've spent is a drop in the bucket. Doesn't look good, eh?

The best sign of their scared-shitless desperation was suing the seller for a lousy couple of million. They lost there, too.

all in --- someone(s) is going to lose at least a quarter of a billion on this. sorry, but this was obvious from the beginning. having lived in the neighborhood for many, many years and been in and out of the building, bottom line was always "wow, what an incredible space and deal for the RS tenants." the thought of rehabbing the entire building defines the term white elephant.

should i go and offer $800 a foot?

nah, still a tenement on the inside...

Actually I think the article is (relatively) old news, but I'm guessing with all the money they are spending on advertising they are getting frustrated with the slow results. The building is beautiful and the apartments amazing, but so many buyers are waiting for NYC RE's other shoe to drop...

but the asking prices are absurd.

I agree with cc - the asking prices were ridiculous ... 50% off ridiculous is still laughable.

The story is ACTUALLY called "Hotel Sears Tower?"

what happens to buyers if the plan then fails?

Well, I know its not on comps, but there we have it.... a clear set of 50% declines....

"Well, I know its not on comps, but there we have it.... a clear set of 50% declines...."

No, it's much more than that. I had a hundred dollar bill which I was asking $1,000 for, and now I've lowered the price to $200 and still no one is buying it, so we've had at least 80% declines.

"what happens to buyers if the plan then fails?"

a) The transactions are canceled and they get their deposits back, but none of their other costs.

b) If they took occupancy under some occupancy agreement after signing a contract, you could see some very interesting results.

c) If they seem desperate enough and I'm sure the plan won't go through, maybe I'll craft a really nasty occupancy agreement, put 10% down, get it back and have a nice rent stabilized unit in the Apthorp. hehehe.

I contracted and moved in before the co-op conversion closed. Had it fallen through, would've gotten the deposit back, renovation costs refunded, and the RS lease. I spent a year hoping it would fall through, it being 1991-1992 and that lease being worth more than owning.

Nora Ephron smells screenplay!

It would be terrible to buy in and then have it flip to a rental... ugh..

It'll have renters for decades to come, just like almost every prewar building that converted.

Not sure I see the issue with renters - the renters in my building are the cornerstones of the building and the neighborhood. These aren't 26 year olds who wreck the place and move on. The ones in my building have been here 30 years or more, are respectful toward the building and all other tenants. I will be sad when they are no longer with us.

stabilized, i presume?

I wouldn't say the remaining renters in my building are the heart and soul or anything like that, but they're certainly no problem. Most stabilized, with a few controlled still hanging on. The sponsor seems to have few issues with them. (May help that he's rent-controlled himself, in another building.)