The November print issue of The Real Deal is now online, with goodies galore. Like a status check on how Williamsburg's Karl Fischer Row has performed as the market has gone south (answer: not bad, except for poor 20 Bayard). But what about the stuff in Williamsburg and elsewhere that's really not selling? The 601, if you will. In a story on "Real estate's bright (and not so bright) ideas," Sarah Ryley writes about a new proposal for all that arrested development: converting troubled projects into co-ops. A pair of lawyers outlined this plan in an article last month, and here's the gist:
In today's tough lending environment, Heller said, buyers could simply take a share of a co-op's debt rather than securing outside financing for their purchases. Buyers would essentially be getting an apartment at a wholesale price, and the lender and other investors could break even instead of taking a loss. "The most obvious reason that a cooperative structure might relieve pressure on lenders is that if they keep the mortgage in place, they can restructure it as a typical underlying co-op mortgage with a term of five to 15 years; the loan would become performing. This alone would increase the likelihood that the lenders would recoup their investments," Heller wrote in the article.According to smartypants Heller he's had "significant discussions" with about 10 lenders or developers about the co-op switcheroo. But the strategy won't work for everyone, like in buildings where condo units have already closed. Still, it's a thought, and doesn't this city need more jerky co-op boards?
· Real estate's bright (and not so bright) ideas [Real Deal]