Bill Morris in Building Operations on February 14, 2017
Wendy Jeffers started getting cold calls from brokers about five years ago. The city’s real estate market was beginning to heat back up from the brutal recession, and the brokers were interested in buying the 2,000-square-foot ground-floor commercial space in Jeffers’ seven-unit Soho co-op. Jeffers, who had moved into the building back in the bad old days in the 1970s and had served as the co-op board’s vice president since the conversion in 1981, was savvy enough to know not to sell off one of the building’s prime assets. The rent from the commercial space had allowed the board to keep monthly maintenance steady – and artificially low – for decades.
Undaunted, the brokers kept circling. Before long the conversation shifted – to the possibility of buying the entire post-Civil War building. An initial offer landed on the table: $18 million. A week later, a different broker offered $28 million. Jeffers, initially resistant to selling the commercial space, now became open to an almost unimaginable scenario: dissolving the co-op, selling the building, and vacating the premises. Other co-ops have faced dissolution because of corruption or mismanagement; this co-op was considering dissolution because of its pristine fiscal and physical health.
“When the numbers began to get more attractive,” Jeffers says, “I sat down with all of the shareholders and asked, ‘What’s your number?’ Some argued we would never be able to live as cheaply anywhere else. Which is true. We’ve kept the maintenance at $1,000 a month for the past 20 years.”
Any sale was predicated on the unanimous consent of all seven shareholders, and as a first exploratory step they agreed to get their apartments appraised individually. The prices ranged from roughly $3 million to $3.5 million. The consensus was that if shareholders could get double that amount by selling collectively – around $44 million total – they would be open to dissolving the co-op.
More than the galloping value of Soho real estate went into the math. The changes in the neighborhood were not loved by the shareholders – particularly the disappearance of artists and galleries, the arrival of glitzy stores and throngs of shoppers, and the recent glut of noisy, dirty construction sites. The shareholders weren’t getting any younger, and some were tired of walking up stairs. Some wanted to downsize. Others wanted bucolic space, and more of it, to raise a family. One wanted to travel. Everyone agreed that the market couldn’t possibly get much hotter.
“When the numbers started to escalate in the past two and a half years,” Jeffers says, “there was a realization that this was something we should investigate.”
Soon, potential buyers from all over the world – Russia, Syria, and China – were touring the building, but their offers always fell short. It appeared the sale would die aborning. Then at the last minute, a couple of private equity firms partnered to offer to buy the building for $42 million, then return it to commercial use. The shareholders decided to take it.
And so the Soho co-op was dissolved – shares sold, apartments vacated, and the building returned full-circle to its original use as a commercial space. When renovations are complete – two new elevators, new staircases, an additional story on the roof, and a refurbished facade– the ground floor will be retail space and the top four floors will be offices. And there will be one less housing co-operative in New York City.
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