Buyouts

Landmarking sometimes prevents it. When the West End district was being considered, the board president of 300 WEA, with a developer in tow, appeared before the LPC asking them to exclude the building. Whined that his shareholders couldn't afford a new boiler. Tough shit, said the LPC. They classified the building as "Moderne" and the developer walked. The neighbors whose views would be lost, won.

Some that did sell were 345 E 50th and a small co-op where 535 WEA went up.

This is a pretty unusual building. 88' wide, 103' deep, only 2 stories and 12 apartments total to share. It is at least twice as wide as most building lots. And this price in mind-boggling: $2,000 per developable sq ft. Nutty.

Right, it is an unusual situation. Under-developed lot in a prime non-landmarked location, big enough to make a new building worthwhile without acquiring adjacent lots, and the shareholders all agreeing to sell.

Excellent question Belgariad. I have often thought the same as well.

Here's another one, with all eight shareholders looking to sell: http://streeteasy.com/building/35-east-68-street-manhattan/th

Another one: http://streeteasy.com/building/1025-park-avenue-manhattan/house

ya that one is quite spectacular. wsj article gives a bit of background color. http://www.wsj.com/articles/new-york-co-op-offers-to-sell-all-its-units-for-65-million-1431635804

another one -
http://ny.curbed.com/archives/2015/06/01/enchanting_greenwich_village_townhouse_asks_18_million.php#more

Story in today's paper about small co-ops selling out: http://nyti.ms/1Ur6Zk7

Doesn't the Board of the cooperative have to approve the new buyer? Or, in the case of a small building, is everyone on the Board, making it easy to sell to developers if most of the shareholders want to do that?

Yes, and the guy now holding out admits they were idiots to approve the sales. Here's the history:

07/22/2014 #3 $3,309,312 Recorded Closing
04/02/2014 #2 $1,775,000 Recorded Closing
04/02/2014 #1 $1,775,000 Recorded Closing

#3 and #4 both approved the sales of #1 and #2.

Then the board, however it was composed, approved the sale of #3 to the owner of #s 1&2. Notice how much more #3 got.

The owner of #s 1/2/3 offered to buy #4, but for not enough. #4 is suing that owner and the co-op itself, claiming she should've recused herself, or something. She's saying the suit is just a ploy to get her to up her offer for #4.

Here's #4's affidavit: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=WFqF2FFJhiGhH8mo7mQkrw==&system=prod

And #1/2/3's affidavit: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=se0Sh8BR7qSriAq/fhSb6g==&system=prod

There's more on eCourts.

I favor #1/2/3, because of #4's hurl-making "evicted from my home of 30 years" crap, and his not mentioning the enormous amount the majority shareholder would pay him to get his whiney ass out.

He should've taken the offer. As the NYT story says, he'd pay only capital-gains tax. If he waits for the co-op to dissolve, his payout would be his share of what the co-op nets after 40% tax. Let alone the legal fees.

Can he be forcibly be bought out of his shares via a co-op collapse at an average per share cost around units #1/2?

No. If the co-op sells its land and building, and then winds itself down, he'd get the same price per share as the other shareholder. The co-op would have to pay taxes on the gain first, though.

The court gave him a Temporary Restraining Order preventing the co-op from starting the process of cancelling all leases, selling assets, dissolving assets, paying debts, and distributing remainder.

Oops, dissolving itself, not dissolving assets.

It's like any corporation.

The opposite dissolution situation is when, say, a co-op with a land lease defaults on its lease. That default cancels all proprietary leases and the shareholders of the now-assetless co-op split any cash on hand after legal bills are paid.

So it's a question of a co-op dissolving itself, as in these buyout cases where the co-op owns something whose value can be distributed to its shareholders, or of a co-op having dissolution forced upon it where it defaults on its lease (if that's its only asset) or its underlying mortgage.

NWT, not to put myself too much in the middle of an active lawsuit (I don't know either of the parties) but how is that offer of $1.4 million an "enormous amount" of money? Potential buyer states it's approximately twice the market price, which I have a hard time believing.... certainly if I could buy an around-1,000 sf-apartment with a WBFP off Lexington for $700K, I'd be tempted, because I'm not sure that I would think I was in 2015.

There is the secondary consideration, of course, that if someone does offer you an amount of money for your home, and you choose not to sell, how that makes you "whiney."

Sounds to me like no one is going to win in this situation except the lawyers.

ali r.
{downtown broker}

Ali, in #4's affidavit he says she had offered him $2.7 million at some point. While he sat, she'd gotten #3 to sell, giving her control with 78.4% of the shares, so there was no longer a reason to offer him that much of a premium.

We won't know until the dust settles whether he'd have been better off taking what he could, or holding out for more, or waiting for the co-op to be wound up.

"Whiney" was too harsh. Much as I like to see full employment for lawyers, it's irritating when a party won't see he lost and the party's over, and goes to court.

While he sat, she got #3 to sell for what, $3.5? That gave her 78.4% of the shares and control.

Let's recap the share counts:

#1 258 26%
#2 300 30.2%
#3 220 22.2%
#4 214 21.6%

In any dissolution vote, neither #3 nor #4 could be the sole holdout. If #3 had kept his verbal promise to hold out with #4, there'd be no court case. Once #3 caved in to the big-bucks offer, it was all over for #4 as far as holding out goes. He'll still make out OK in the end, but probably not by as much as if he'd been the one to bail instead of #3.

Kill that fourth paragraph. I wish I could see my whole post while I'm yapping....

#4 has won a skirmish: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=hE4oUIaiicCKCK0Tuyrahw==&system=prod

Wow - decision makes me want to dig into the briefs and caselaw. This is another case where I'd love to see an appellate decision. As always, many thanks to NWT for highlighting. This is a good one and could fall into the bad-facts-can-lead-to-unexpected-precedent if the LLC pushes it to the next level.