Stuy Town going co-op?

thats the plan

No effect on nyc re mtk when 11K well sized centrally located co-op w/o board approval comes into the market in 1 yr... ABSOFKINGLUTELY NO EFFECT.....

congrats aboutready! YOU SCORED... sorry LICC/ERICHO... PH and all LIC buyers...

patience=virtue in a bubble popping...

I wish AR was posting she would have like this one..

Any thoughts on the judge's ruling and how it affects other lawsuits (my bldg.) vs. LL.

Julia, I don't think ar will miss the fact her rental has gone coop. Especially when her insider price will be 20% below mkt at the time. For aboutready I hope in a year, comp mkt unit will be 30% less, making your unit $300psf. Heck step up to a 3 bdrm.

For everyone else. There's your f'king shadow inventory. Just doubled up on the 11k on se for sale in manhattan. Does my $500psf prediction 2 hrs ago look plausible now.

2.yrs ago. Worth correcting.

"ABSOFKINGLUTELY"

Good job, you made up a word, but you didn't use a Z

"Just doubled up on the 11k on se for sale in manhattan. Does my $500psf prediction 2 hrs ago look
plausible now."

Erm, not quite West67th. The vast majority of those apartments are occupied, and presumably a large percentage of current residents will be quite happy to pick up their current homes at 20% off list if the deal goes through. I know I'd take that deal in a heartbeat. Most of those apartments will never actually hit the market of non-tenants. Great news for AR, though!

erm, evnyc.. the current 11K units listed on SE..did they all die out?

You spoke of adding to the inventory. My point is that it would not, or it would in only the most abstract way since most of those apartments would not be for sale to nonresidents. Impact on market: negligible.

how many apartments are currently vacant?

do market rate tenants get offered an inside discount or get bounced out?

how many insider's buy and decide its a good time to flip?

if all of the above adds up to 30%--that's hardly negligible.

"Erm, not quite West67th. The vast majority of those apartments are occupied, and presumably a large percentage of current residents will be quite happy to pick up their current homes at 20% off list if the deal goes through. I know I'd take that deal in a heartbeat. Most of those apartments will never actually hit the market of non-tenants. Great news for AR, though!"

hee, hee. whats funny is I posted that and made the comment specifically to see if folks would comment on this part.

This is the part the bulls didn't want to admit when they looked at the 80s conversions....

Let's see. Smart rich ppl paid $7bill for 11k units at peak. New buyers buying at $3bill with still a few haircuts to come on the secured lenders. Then they'll wholesale 11k units in 6 month span.. Probably 60% off peak. Yep no effect on mkt! WTF!!??? Flmaozz.

Hi my name is w67. I am here to make fun of financial retards.

"The vast majority of those apartments are occupied, and presumably a large percentage of current residents will be quite happy to pick up their current homes at 20% off list if the deal goes through. I know I'd take that deal in a heartbeat."

To live in, or to flip? Given the choice of paying $800 a month in rent w/ RS increases against the "opportunity" to buy a $500K place at $400K with $400 a month in maintenance, wouldn't you just sit on $800 a month? I would, unless I was looking to get out anyways soonish.

In other words, I think those that buy the 20%-off places are likely to be doing so in order to flip. That being said, you can count on a fraction of long-term residents who buy so they can have their name on the deed regardless of the financial advantage of staying at $800 a month.

Curious, why co-op vs. condo?

I wonder how much a one bedroom would cost...i can't imagine it being that high with no doorman, etc. but who knows.

Where do you guys come up with the presumption that insider prices will be 20% off market?

I ask because my friend who lives in a RS building got notice about 2 years ago that the new owners were going to convert the rentals to co-ops. And the insider prices being offered were right at market -- no discount whatsoever.

The conversion plan was apparantly abandoned later when the market tanked, so nothing ever came of it.

Still, I have not heard of any kind of significant discounts being offered via "insider prices" in co-op conversions in many, many years.

Why would a rs tenant buy in a non eviction plan if not offered a significant discount? Why convert if no one buys?

W 67 --Does my $500psf prediction 2 yrs ago look plausible now.

Well, yes for a couple of reasons. First, a 964 sq ft apt at the apthorp just closed for $432 psf. It was probably an existing tenant but nevertheless, it was one of two apts to close there below $500. And other buildings like 99 John are in such distress/foreclosure prices are certain to go lower in certain pockets in near term

secondly, the very fact that you have held that view for 2 yrs, putting off your own purchase of RE, gaining some converts along the way as macro economic view does not improve -- is by definition, deflationary. The concern for deflation is increasing. Pessimism is actually becoming popular --As per this article today in the NY Times. http://www.cnbc.com/id/38635990. That view can in certain fertile circumstances be self-fulfilling.

I asked an important Australian RE developer last week if he was interested in NY RE. He replied that the Australian smart-money viewpoint is so dead certain that America will have a double dip in RE that he was surprised to find resistance at all to that idea when he arrived here. He is buying residential buildings in Spain.

Where does the 65% discount come from? The complex was purchased for $5.4b. According to Pershing, under their plan (which is just a proposal, btw, far from a done deal), the sr. lenders would be made whole. So that's $3b. They paid .15 on the dollar for their piece of the Mezz, which would value the whole block at $150mm. Presuming they aren't doing this pro-bono, and expect a return, you are looking at something like $3.5b proceeds, so a 35-40% discount. Certainly painful, but given the particulars of the rent stabilzation/J-51 issue which in and of itself was massively value-destroying (to the owners), not surprising.

Printer. The senior lenders have not have not put into the kitty as it were. 2ndthusly, ppl are earning 1% on their money. If the mezz guys return 5%, they'll be rock stars. See how deflation works.

Wait, did you really just say that? There's $3B debt, and some guys purchased the mezz block for $150M according to you, putting the deal at $3.15B. Yet because there's an expectation of return (say we all agree it's $350M), you think that puts the valuation at $3.5B now? Really, that's how we're doing accounting now? Can we also just book the $350M profits now because we bought something worth $3.5B for $150M with only $3B debt, you know, ala Enron?

At best, a $3B debt load plus a $150M valuation on the mezz puts the value of the asset at $3.15B. Even that is an over-estimate: the $150M valuation is more like an option on the value of the asset eventually being higher than $3B. One could not get financing for $3B with $150M of equity, so adding $3B to $150M is probably wrong.

Said in other words, the value of that $3B debt is no longer worth $3B, but rather something less. Just because someone paid $150M for the option of the property being worth more than $3B does not mean the property is worth more than $3B.

In case there was any confusion, my comment was directed at printer, not w67th.

No worries inonada. You may call 'me financial retard anytime.

As my old boss would say! It's cram down time.

According to Pershing Square, the sr. lenders would be made whole under the co-op conversion plan. Assuming that Pershing and its co-investors also plan to make money under said plan, they are assuming that they would sell the units for a collective amount which exceeds the $3b sr., the $45mm they've paid for their Mezz, and whatever amount they pay (if any) to the other Mezz holders - I'm rounding up to the $3.5b number.

So if Ackman is successful, the co-op purchasers would pay something over $3.045b collectively for their units. Not sure what is so confusing about this.

I believe $2.4b got crammed Down. As inonada points out, there is no guarantee it will be successful. I mean weren't the $2.4b ahead of the new mezz guys 100% certain they were rock stars? Believe me it's rare that a first go around in a work out actually works. The minute the senior lenders get a wiff that this is not going well, they will perfect their senior secured position and call the shots. Why the f'k they would let $150mm player yank their $3b chain around?

Of course its not a done deal. I'm just pointing out that Ackman believes that he could sell them as co-ops for an aggregate amount above $3b. Presumably reasonably above $3b to be worth his risk. We shall see.

Senior secured lenders will stiff arm until they get par. They know they are close to taking a haircut and will run at first opportunity. Meaning new equity guys need to get 'fresh' $3b. Now new $3b guys will want $1b in junior debt plus better margins to get into the deal. How many monied ppl are out there willing to put in debt to earn 7% when you can get 4% from us govt? Equity guys are looking at paying 8/9/10% on senior debt? It quickly degenerates into playing a game of chkn with current seniors. The equity needs to get $1b in junior debt to come in bf anything gets done.

Just note senior secured will not release one unit's title until they are guaranteed par. Who would buy if there is no title guarantee? It's a catch 22 with new equity guy making that 'bet' he can thread that needle. Good luck, better do it quick, the bubble hasn't finished popping.

Printer, you're missing the point, so let me state it another way.

Pershing paid $44M to put the valuation on the mezz round at $150M. For simplicity, assume cost of capital all around is zero. The mezz round will get something back if it goes for above $3B, zilch otherwise.

Suppose everyone agrees that there's a 50% chance it goes for $3.5B and a 50% chance it goes for $2.0B, and those are the only 2 possibilities. The mezz has a 50% chance of making out with $500M and a a 50% chance of making out with $0, so $250M expected case. So they put up $150M, expecting this to become $250M to compensate them for the risk. Note that this puts the mezz valuation at $150M, not $250M. The debt has a 50% chance of making out with $3B and a 50% chance of making out with $2B, or $2.5B. Now, no theoretical buyer of that debt slice would take the risk on that for free. Rather, they'd only pay $2.3B for the honor: given that $2B is coming back for sure (under enumerated possibilities), they'd want the same rate of return on the $300M becoming $0 vs. $1000M as the mezz has on its $150M becoming $500M.

So, we end up at a valuation of $2.3B for the debt plus $150M for the mezz, so $2.45B. Now I'm not saying those numbers are accurate, but they illustrate the concept.

Make sense?

inonadaz, i don't need the lesson, thanks. I was merely refudiating the contention above that Pershing's plan, if successful, would mean a 65% drop from the purchase, which would be implying something dire about the Manhattan market. His plan, if it succeeded, would imply a valuation of over $3b. Given the $5.4b purchase price, that's a drop of around 40%. But let's remember that a substantial portion of that drop comes from the J-51 issue, which was a direct transfer of wealth from the owners to the tenants. How much, I'm not sure, but pretty substantial, and not something available to anyone but the tenants.

"His plan, if it succeeded, would imply a valuation of over $3b. Given the $5.4b purchase price, that's a drop of around 40%."

You can't compare an "if succeeded" valuation against a market valuation. If you want to use "if suceeded" numbers (which is a bad idea IMO), then you don't compare against $5.4b but rather something higher like $7.5B which represents the "if succeeded" hopes of the original equity holders.

I'm not disagreeing with your "refudiation" in spirit, just pointing out that it contains a faulty understanding of valuation.

The 45mm Ackman paid is a smart "option Premium". He gets to play. Lots of upside and the downside is the loss of his option cost and some legal costs. He'll incur some legal and hopes to recoup it in the upside. Nice move!!!

this is so confusing....

julia... not confusing at all. There are maybe 6 posters on SE that I think get economics and finance. If you extrapolate that to the general public, you get 99% are financial retards.

THE TWO most often misapplied concepts in finance/econ is "opportunity cost" and "risk adjusted returns"... add in a good dollup of emotional ninnies and youz getz a RE BUBBLE. simple really.

nadaz, you are adding in elements I am not. I am not using his purchase price on the mezz to make a valuation assessment. I am solely repudiating the assertion that his plan (note plan, not investment) would imply a 65% decrease in price. This is not rocket science: 35% of $5.4b does not equal >$3b. case closed.

w67thstreet was a TA in business school.

You guys are talking about the value of Pershing's investment versus the implied valuation of the property based on the size of debt that was put on it.

That's fine but it's not what I was asking.

I'm asking, why do you think Pershing will offer the converted units to insiders at a 20% discount to market value?

In other words, if market value for a 2bed unit comparable to StyTown units were $800k, you are assuming that Pershing will offer it to insiders for $640mm.

Why? I don't think they would do that at all. I don't think they will give insiders any kind of special treatment.

GG, while there may be no need to give a 20% discount to a market-rate tenant (you can have them leave after the lease term and sell on the free market), you'll need a discount to incentivize a rent-stabilized tenant to take a bite because you cannot force them to leave.

GG, columbiacounty answered you q lots of posts up.

if you are protected renter, why would you ever "buy"? Only if you believed that even with a rent/buy monthlies that the pot of gold (re-sell) in the future would negate the negative carry... so Pershing will have to "incent" the tenant to BUY, by dangling a discount worthy enough that a Rent Controlled tenant, says I'll take that bet... every month this market continues to decline the bigger the discount necessary to make the renter bite... IMHO. Just cause Pershing thinks it's a good idea.... doesn't make it so. Let's revisit this in a little while...

Brilliant move on Ackman's part. He enlists the greed of Stuy Town residents and removes the threat of political opposition. He's not looking to make renters rich, only himself. And the new owners help finance needed capital projects. He's correct in that there is no money in maintaining the development as a rental. And as a coop he prevents owners from renting out their units and competing with inventory.

"nadaz, you are adding in elements I am not. I am not using his purchase price on the mezz to make a valuation assessment. I am solely repudiating the assertion that his plan (note plan, not investment) would imply a 65% decrease in price. This is not rocket science: 35% of $5.4b does not equal >$3b. case closed."

You are doing much worse than using the purchase price on the mezz to make a valuation assessment (which actually would have some bearing). You are using a horribly stale price on the debt (circa 2006) to make a valuation assessment, thinking that the current valuation must be higher just because someone paid for an option that will pay off above $3b. I.e., I am disputing your use of ">$3b".

"Just cause Pershing thinks it's a good idea.... doesn't make it so"

A small datapoint here: Does the larger market seem to think it's a good idea so far? The 22.5% partner Winthrop, the REIT, has public stock (FUR). Since announcement Winthrop stock is up 6% while the overall stock market is slightly down....

Hello

nadaz - i am making absolutely no judgement whatsoever on the valuation of stuy town. Maybe it ends up at $2b, maybe $4b, it is irrelevant to the points I made which are: 1) 35% of $5.4b is less than $3b. That is indisputable. 2) A meaningful portion of the decline in the value of stuy town is due to the J-51 ruling, something one cannot extrapolate to the Manhattan residential market as a whole. Done and Done.

Printer, I don't disagree with your point generally. I'm just saying your that the $3b valuation you are assigning to the property is based on faulty assumptions.

The assumption that the plan would succeed was not made by me - it was made earlier. Using that assumption (which is that the Pershing Square plan goes through, and succeeds, which would mean (as per Ackman's quote) that the sr. lenders would be made whole), the valuation would by definition be above $3b.

at any rate, with so many successful distressed guys involved, and the politics and history, it will be interesting to see how it all plays out - though one thing I'm pretty sure of is that somehow the taxpayers will end up bending over yet again.

either way, certainly not a good sign for folks who bought in the bubble...

Since you're happy to give valuation on assumptions of success, perhaps you should put out a competing offer to buy the place at $3b.

More details from NYT article:

http://www.nytimes.com/2010/08/10/nyregion/10stuytown.html

"Winthrop has a $25 million slice of $1.4 billion in secondary loans on the property. In recent weeks, Winthrop and Pershing bought the $300 million senior segment of those loans for $45 million or 15 cents on the dollar.

The discount was so steep because the estimated value of the property is now about $1.8 billion, far less than the $4.4 billion in first and second mortgages. Presumably, there is nothing left to pay off the secondary loans."

So, a recent valuation on the property put it at $1.8 billion. Winthrop and Pershing paid $45 million for an option that pays off if the value goes above $3 billion. The NYT explains how $1.4 billion of loans junior to the $3 billion has been whittled down to $45 million, in addition to the $1 billion of original equity. I explain to you how an option of an asset with a strike price of $3 billion does not imply an assset price of $3 billion, especially when only $45 million was paid for that option.

Yet still you insist "the valuation would by definition be above $3 billion"...

Let's put it this way. Right now, MSFT is trading at $25 right now. Yet investors, many of them knowledgeable, paid $0.03 today for call options with a strike price of $30 and strike date in September. Under an assumption of "success" on the trade, MSFT will be worth more than $30.

Does that mean that MSFT is worth $30? If so, can you please buy some MSFT from me at $29?

What vega and theta?

Seg: "A small datapoint here: Does the larger market seem to think it's a good idea so far? The 22.5% partner Winthrop, the REIT, has public stock (FUR). Since announcement Winthrop stock is up 6% while the overall stock market is slightly down...."

Seg, I like the idea. For whatever the reason, we find ourselves in a world where individuals are willing to pay more for owning than renting. The conversion plan is a way to close the gap between a as-rental valuation of the property (say $2 billion) and a as-coop valuation of the property (say $3 billion). I haven't read all the thread with FG, but here is an example of people trying to close the gap by increasing the supply of apartments for sale.

I think there are about 10M square feet, so the original $5.4b valuation put it at $540 a square foot. If the whole place were free market rentals, I think that would work. With the amount of rent stabilized units, it's hard to see how that would have ever worked.

Here's one way to think about what Pershing & Winthrop are attempting. They paid $45M on 10M square feet, or $4.5 ppsf, for an option with a strike price of $300 ppsf. Any upside above $300 ppsf, they get it all. Any amount below $300 ppsf, they only lose $4.5 ppsf. The conversion route is a viable attempt at getting it to above $300 ppsf; as-is valuations put it at $200 ppsf.

Classic deep-out-of-the-money option, with classic role taken by Pershing to attempt to unlock the value through structural changes.

inonada, for someone who nos nada, you certainly post a lot of paragraphs and numbers.

inonada nosnumbers.

inonada is the one who decided that jimhones was rufus and another poster too. http://streeteasy.com/nyc/talk/discussion/18719-hfscomm1-jimhones09-rufusc

agreed inonada. it works for pershing by
1) giving a mgmt contract to an insider, earning $45MM (or at least to pay off some of the option cost) over several years;
2) buy enough senior debt at a steep discount to restructure the senior debt (classic cram down);
3) or 5% chance mkt turns back up.

I think, they'd like #3, but they should have multiplied that w/ 0.

Shave and a haircut.
Two bits.

W67th, I think the $2 billion most senior portion of the $3 billion debt is Freddie/Fannie. If that's correct, is a cram down really possible?

I actually like your #3. Suppose you were a free-market-turned-RS tenant via the J-51 broohaha. You're paying a rent-stabilized $2200 for a renovated 800 square foot 1BR. You figure that come several years, you're out of rent-stabilization. Meanwhile, they dangle the shiny, renovated apartment at you for $480K, or $600 ppsf. You talk to your friends, they sprinkle some lemming juice on you with talk of "man, I would take that in an instance, there's no way you'd ever be able to buy without that, you can color the walls whatever you like".

Err, correct "in an instance" to "in an instant". Damn lemming juice has got me slurring my vocabulamary.

The best scam is when the person being scammed thinks they are scamming.

columbiacounty, you agree with Riversider on that?

I wonder how many smaller-scale debacles are out there hovering under the radar because they didn't involve Tishman, Blackrock, Ackman or $5.4B?

Nevermind, I'm sure this is just an outlier...

nada, for the zillionth time, since you just can't seem to understand, I am NOT using the valuation of the mezz piece that Pershing bought to infer a valuation on the entire complex. It is a theoretical valuation IF his plan were successful. Sort of like 'If I buy MSFT $30 calls for .03 AND the stock trades at $32 where I exercise them THEN I will make $1.97

But if you makes you feel good to intentionally misinterpret what I said so that you can throw out some 'options for dummies' chapter 1 material and feel smart, more power to you. the speed with which you have degraded yourself from a poster with high quality insights into mini me w67 is saddening.

somewhereelse
either way, certainly not a good sign for folks who bought in the bubble...

any sale that is taking place now, at 10-30% under peak prices is not a good sign for those that bought in the bubble. this particular situation is so different from your typical $1mm 2 bed co-op purchase that I don't think it offers much insight.

Pinter. The lady does protest too muchly.

For stuy town residents. Free mkts did not work for you guys. I would be forming a tenants alliance that would negate pershing's attempt to pick off individual bldgs. If all bldgs banded together and negotiated you maybe able to wipe Pershing and the last lemming $1b senior debt and negotiate with Rangel directly. Flmaozz. They may give you title for your monthly rentals.....

"any sale that is taking place now, at 10-30% under peak prices is not a good sign for those that bought in the bubble. this particular situation is so different from your typical $1mm 2 bed co-op purchase that I don't think it offers much insight."

printer, I'm not talking about the sales prices, I'm talking about the additional of inventory (and before that the inability to fill the places).

Remember Metlife got their $7b. Fwiw, I had a job offer from Metlife in their young executive pool. I went to what I thought was sexier, I banking. Makes me wonder about w67 parallel life..... -shrug-

printer:
"nada, for the zillionth time.."

You guys are both right, and it's almost semantics at this point. Take a simpler example with known debt pricing. Say a company has $100 of debt trading at 85% of face, and someone steps in and buys all the equity for $10. Two questions:

What enterprise value threshold is required for the equity to make money on their investment, for it to "succeed" if you will? $110. printer's point.

But what is the value of the enterprise today? Something far less, arguably $95 if you believe the two market valuations. inonada's point.

I'm not sure it's any more complicated than that...

"What enterprise value threshold is required for the equity to make money on their investment, for it to "succeed" if you will? $110. printer's point."

To clarify before someone explodes, obviously $110 is the nominal break-even in this example, and the investment will "succeed" at levels higher than $110 depending on your subjective view of the investment's expected return....

Printer, I'm not trying to put words in your mouth. It seems to me that at a $1.8b valuation (done by someone else several months ago and quoted by the NYT), the place is 65% off its original $5.4b price. I agree that if the Pershing plan were successful at your estimated $3.5b, then it'd only be 35% off its original $5.4b price. What I don't understand, however, is why you attach any significance to the 35% number (which I gleaned from your disagreement with a 65% discount number in favor of a 35% discount number in the first post on the subject, made by you). It seems to me that the 65% is all that matters. I'd truly like to understand why you think otherwise.

"the speed with which you have degraded yourself from a poster with high quality insights into mini me w67 is saddening."

You have said this several times now, typically when I say something with strong conviction with which you disagree. I'd rather stay on topic and not devolve into ad hominems (apologies to w67th for implying that being compared to him is ad hominem), and I apologize for any statements that you perceived as disingenuous and/or patronizing. I'm just trying to understand what your point is on this.

o please... none taken. I can take as much as i can give.... hypocrisy is not my strong suit.

printer... your "home" is toast, so are the 99% of ppl who bought in 2003-2010.. sorry, the GOD OF CASH FLOW is pissed.

sorry to be so slow in responding....I don't think it's correct that a developer who converts a rent stabilized rental building to coops or condos will offer the units to insiders at 20% discount.

Rather, the developer will offer a lump sum buyout that will amount to FAR LESS than a 20% discount from market values. And rent stabilized tenants, who usually could not afford to buy anyway, will often take these much lower buyouts.

For instance in the example I gave earlier of my friend, she was in a rent-stabilized rental that was a small two-bedroom and she was paying $900 per month.

Her landlord filed a conversion plan in which her unit would be listed for aobut $900k.

He was offering to buy out the tenants in her floorplan for aorund $30k.

This is far less than 20% of $900k, so of course the developer would prefer this approach. And many of the tenants, who were lower income folks, were inclined to take the buyout, since they would not be able to buy a unit at anywhere near market prices under any circumstances. Not even at 20% off (if it were offered(

I don't believe the phenomenon of substanital insider discounts for conversions exists any longer. It used to exist, but I doubt that it continues. It doesn't make any financial sense.

It has become an urban myth.

GG, did your friend take the buyout?

If someone is a RS tenant, can't afford to buy (at whatever the price), then they are also unlikely to take the buyout if they don't already intend to move out of the city. Instead they will elect option 3, stay in the building as a rent stabilized tenant.

The reason insider prices and buyouts are offered is that you have to get enough people to participate in order for the red herring to pass. It is probably easier today as most properties have a lot fewer RS tenants than 25 years ago. Of course the apartments are also less affordable than they had been.

nada - I have no opinion on the value - it would take a ton of information I don't have access to regarding current rent roll, the number of stabilized/controlled/market rate units, current financing options, etc., and I don't have a spare $2B+ to invest right now so I'm not looking into it - I'll leave that to the likes of Ackman, Ross, Tepper etc. It well could be that final valuation on exit from bankruptcy is $1.8b - as a matter of fact, I think Ross thinks Ackman's projections are hare-brained. I was merely responding to the concept posted earlier that a successful Ackman plan would imply a 65% loss, which it clearly would not.

And I apologize for the w67 comp - that was childish of me - I shall do my best to refrain in the future.

inonada -- my friend did nothing because the conversion plan was postponed.

I think the developer has the option to resume the conversion, I guess through some stated date, although I don't now how long his option stays alive.

He filed his conversion plan right at the top of the market, I think late 07 or early 08. The RS tenants in the building were organizing to hire a lawyer to look after their interests, and then the market crashed and everything came to a halt.

So my friend is still living there on the RS lease, and I don't know if things got far enough along for anyone to accept the $30k payout.

My understanding is this: some of the RS tenants were paying higher rent than my friend. She had a very good deal at $900 per month and would not be likely to accept the payout.

But some of the other stabilized folks were paying much more -- close to the $2000 per month cutoff. (After rents go over that level they are no longer eligible for rent stabilzation and the units go market rate.)

So some of those people thinking of taking the $30k payout. But I don't know if any of them ever did.

Printer. You financial retard. Backpedaling on option pricing. How can I be insulted from a guy who think an option price has any relevance to a govt sponsored, gi bill built, machinations brought on by the greatest bubble in history?

Pershing makes tons of high risk option like bets. One of only 20 bets need to pay off, I'm thinking stuy town is way way way too complicated even for them (IMHO). Nothing like letting the lemmings fight for lemming pie and swoop in when all seems lost. Pershing like so many others are too early to te party. It's a short sale marketing gimmick, just 1000x larger.

Graffiti - A correction on your understanding of RS leases and the $2000 cutoff. Once you have a RS lease you will ALWAYS have a RS lease, even if the lease price goes to $3,000 or $4,000 or higher.

However an apartment over $2,000 can be removed from RS in one of two circumstances:
1- There is a change of tenancy AND the LL files to remove the apartment from the RS rolls.
or
2- The apartments goes over $2,000 and the income of the tenant goes over $175,000 in each of two consecutive years.

IOW you can make as much as you want and if your apartment is below $2,000 it remains RS. Also, you can be over $2,000 and if you make $2,000,000 every other year but $174,000 every other year the apartment will remain RS. (I presume the latter is how the owners of O'neils maintain their RS lease in the Apthorp. That, and having a cash business.)

Why don't they change that ridiculous feature of the rent stabilization rules?

Maybe it needs to be strapped with explosives and blown into dust?

Stuy Town is an eyesore on Manhattan. Ew.

http://dealbook.blogs.nytimes.com/2010/08/13/ackman-lays-out-his-plan-for-stuyvesant-town/

more info on Ackman's plan - basically would assume the current Sr. mortgage. not clear if current FCF is great enough to pay the current interest on the debt, but he makes clear that he would keep current on it, so presumably it is, or he would be finding that money elsewhere until co-op sales are enough to reduce the principle.

The prices seem optimistic I would think a 15-25% discount to nearby non-doorman coops to take into account the high percentage of renters that's likely to remain in the development for years to come. And with that comes difficulty in obtaining purchase financing.

I saw on curbed that stuytown one bedrooms are renting for $3k.