the only nyc apt with 2020 value increase

You do realize the sales prices of Coop units have nothing to do with the land valuation?

For Carnegie House, I see Trevor's point. The cost of the landlease depends on the value of the land. Less valuable land = lower landlease payments = lower assessment if they buy-out the land. Although shareholders will have to sell assets to raise the cash, or use cash they've had sitting around, instead of investing that cash in equities that are much cheaper today than a few months ago. So maybe it's all a wash.

I like Trevor's idea. The other beauty here is what happens to the eviction rules for non-payment now -- don't want to renegotiate (or pay at all) the land lease? Good luck kicking me out of this apartment!

That would be an interesting court battle -

30yrs_RE_20_in_REO - Think it through pal. I'm sure that your a smart guy. When you have a co-op on a land lease and the land lease has a reset date approaching, and the value of the land will effect the value of the reset, then, the value of the land plays a HUGE, HUGE, HUGE part in the valuation of the units. Why do you think that these are perhaps the lowest priced units in Manhattan?

George - People are not looking at this as just an investment. People live in these units. It is there home. It is not as simple as looking at a spreadsheet and saying that stocks are cheaper so let me allocate my two bits to some shares of Facebook.

ToRenoOrNotToReno - That is the interesting one...especially when there are some "special units" in the building.

To everyone - Stay safe.

So in other words you have it exactly backwards.

30, Curious why you say that. If appraised land value drops a LOT (say gets cut to half of last transaction price miraculously) at next reset 4-5 years out (I am not saying it will happen), apartments are clearly more valuable as lease payments are lower.

And in the documents, what is the basis for the land valuation?

Please tell us. Thank you .

The reset is based off of a set percentage of the appraised land value at the date of reset. Also, the co-op may also try to buy the land. So, if the land value goes down tomorrow versus today, the future lease payments tomorrow will be less than they are today. Like wise, if they can purchase the land and turn it into a condo, this can be a great investing opportunity.

Let's say they could buy it for the same price as the last transaction on the land. What type of assessments would that take?

Trevor, Will you please post the link to the land valuation agreement if you have it handy? Thank you.

30, Why not 50 percent less?

Also do you know some thing quirky about the structure which will prevent the coop from benefiting from a say 50 percent decline in appraised value of the land (I am not saying that 50 percent decline will happen) and just showing off?

Because there's nothing that says they have to sell and if they are currently getting a 6% return they aren't going to sell into a 12% return when interest rates are low and they bought for that long term 6% to begin with.

Well the appraised value at reset can be say 50 percent lower than their purchase price and they can get I think 7 percent return on that. Mean that current lease payments may not go up at reset.

From what I know here is the summary
“At each renewal the ground lease calls for the annual ground rent to be reset to 8.1667% of the fair market value of the land as if it were a completely vacant lot, ready for development.”

And you think there is any chance whatsoever that the valuation is going to come out 50% lower than their purchase price?

Let's remember that the premise of this thread is that the Coops trading for less because of the building's financial difficulties will lower the land value which in return will increase the value of the Coops.

It is hypothetical scenario thread. Land values can be very volatile especially with retail space continuing its slide downwards. If instead of $264mm, the seller decides to sell it for $200mm, the apartment values will clearly go up. I am not saying that landowner will take $200mm. Just hypothetical.

It's a hypothetical based on an erroneous premise.

BTW even if somehow the land were to get valued at $200 million at the next reset, are you arguing that the monthly maintenance won't still more than triple?

I am so bookmarking this thread to see where we are in 10 years. I did that with a few threads ten years ago with little expectation that the thread would still be accessible 10 years later, but here we are. Old ladies on Beekman Place find fun in strange ways.

Forget 10 years:
Pull it back up January 1, 2021 so we can discuss the premise in the thread title.

Note - tickler entered on calendar.

multi, bordering on TMI lol.

Hmm...riots, looting, protest, migration out of the city...what is the fair market value of the underlying property now? there must be some negative convexity in the valuation. this is an exciting drama to follow!

What was it at the last reset?

https://streeteasy.com/building/carnegie-house/10i

"FRONT ROW SEAT TO THE THANKSGIVING DAY PARADE FROM THE COMFORT OF YOUR APARTMENT!!"

I'll admit to not paying much attention to the parade in recent years, but since when does it go across 57th St and down 6th Ave?

IIRC, when I was in the parade in the early aughts it didn't. According to Wikipedia, they changed the route in 2012 and as a result, it's been going down Sixth Avenue.

Well, that's probably worth $50k right there. This place may end up being a bargain.

https://streeteasy.com/building/carnegie-house/5r

https://streeteasy.com/building/carnegie-house/sale/1476917

Yup those values sure are skyrocketing in 2020.

check out PHD...ouch

RECORDED SALE
$659,000
Sold on 9/22/2020
Sale verified by closing records
Last listed for $1,995,000

only a 67% discount

Last traded for 1.05M in 2014, now cut down to 200k. What’s that an 80% price chop? That has to be the most painful cut I’ve seen in this building. The purchaser before that cleaned up though...

https://streeteasy.com/building/carnegie-house/2021c

"After your complete renovation," Even after putting in $250k to reno where are you going to find a midtown pad for $405/sf? (Yes, landlease risk, I know). And the maintenance is high and will never come down.

Still, the upper floors of those 60s buildings can have interestingly quirky floor plans, and I like this one, quirks and all. Checks many of my 'like to have' and 'must have' boxes.

I though complete renovations are $500/sf?

Monthlies already at $6K and rising as the next reset looms. What would such a place rent for, $8K? Once those two values cross, your share value effectively goes to zero.

(Technically you'd still hold a somewhat valuable option to avoid future rent increases, but all it takes is a small % of your neighbors to disagree with that optimistic forecast, turn in their shares, and start a death spiral.)

It's probably the riskiest place to put $400k right now. You'd probably have more fun lighting the bundle of bills and watching them burn.

I know the place needs a full reno, but I'm sort of disappointed not to see a photo or two, just to see whether one would be stripping out period 1960s decor, or a later 70s update.

https://streeteasy.com/building/carnegie-house/17j
Not really a 2BR.

And 2021C is now in contract.

It has a lot of potential if the building doesn't implode.

Any update on where the building is in terms of their lease? Also, I wonder if the potential buyer of 2021C is an insider? Regardless, I'm really hoping he/she makes out on this one.