One of many Tenants Association outlets for sharing information on the plan to bid is a regular column in Town & Village called “Focus on Conversion”.  It carries in-depth answers to questions from you and your neighbors.

The Thursday, February 9th column addresses the question “Why don’t the Tenants Association and Brookfield let us know what the cost per square foot pricing will be in their plan?”

Read the full text below:

QUESTION:
Why don’t the Tenants Association and Brookfield let us know what the cost per square foot for apartments will be in their conversion plan?

ANSWER:
The short answer is that we cannot determine purchase prices for apartments until the purchase price of the entire property is known, and even then, no square foot purchase prices can be legally put forth until the New York State Attorney General has approved a filing permitting us to “test the market” on pricing.

Conversion of an existing rental property – to either condo or co-op — is a multi-step process. In a typical conversion, an evaluation of the number of units on the property, the current income from rent, operating and expected long-term maintenance expenses, and taxes all factor into the ultimate price for the property. Separately, the purchase price as well as the cost of capital to finance the acquisition must be determined.

Let’s take one part of this process: the purchase price.  Some have speculated about the price at which the property will be sold, but that will not be known until negotiated with the mortgage holders and their representative, CW Capital.  Naturally, if the property is sold for $4 billion, it will result in higher square footage prices than if it were sold for $3 billion.  Any conversion of Stuyvesant Town and Peter Cooper Village has additional complexity: CW Capital, the special servicer presently managing the property, represents not just one owner, but the many investors that support the first mortgage placed on the property in connection with the original Tishman Speyer purchase.

Another factor impacting the cost of the property involves the Roberts litigation.  The legal rents of over 4,000 apartments are currently unresolved because the damages (including properly resetting rents) in the tenants’ landmark Roberts v.Tishman Speyer case have not yet been established.  The results of this litigation could also create variation in the value of the property.  Since there is no deal with  CW Capital, and since the Roberts case is still unresolved, putting forth a square foot price is not possible at this time, even if it were permissible by law.     

Equally important, the laws governing the conversion process do not allow for disclosure of a price without appropriate filings with the New York State Attorney General and approval by that office.                      

While the TA and Brookfield are working expeditiously on all fronts towards a successful acquisition and conversion, it is expected that the process will take time and it may be a long while before we have clarity on pricing.

The appropriate steps in the conversion process are being followed by the TA and Brookfield and we will make the proposed purchase prices of apartments in our conversion plan public when pricing is known and we are legally permitted to do so.