Carol J. Ott in Legal/Financial
Just a few years before Sandy struck, Lido's owners had finished paying for a five-year, $18 million assessment that had been used to maintain and restore the property. With owners who had difficulty paying their common charges and assessment shares and other units caught up in probate, arrears at Lido Beach Towers had risen to nearly 17 percent.
Lido's Back Was Against the Wall
The unit-owners had to approve any financing, and the board wanted approval to seek a $6 million bank loan and a $2 million loan from the Small Business Administration (SBA). Many owners were opposed.
Niland remembers the turning point, a meeting where a local real estate broker who lived in the building stood up and said: "Look, folks, your property is worthless unless you do this work. We either do the work or you have zero value. So, wake up." And they did. The owners voted "yes" to financing.
With owner approval in hand, Niland began seeking lenders. Most of them, he remembers "were concerned about arrears or the amount of work that had to be done, and whether or not the unit-owners would agree to increase the common charges by enough to cover a loan.… It really became a juggling act because all the lenders were concerned about what was going to get fixed and then whether or not the property would be presentable enough so that sales could resume."
Seeking Lenders Nationwide
When New York lenders all said "no," Niland reached further across the country. A California lender was finally willing to consider the loan. It took a year to negotiate and secure the financing, and during the process, Niland ended up talking to the bank's president — and the bank chairman even got involved.
So did Nancy Bercovici, Lido Beach Towers's current board president. Her previous experience, as president of the Century Condominium and as a senior vice president at the Federal Reserve Bank of New York, made her a huge asset for Lido at this time, says Niland.
She was "a driving force" in getting the loan, Niland adds, calling her "a velvet bull" during the loan process. Typical condo loans are usually not more than $1 million, and Lido was asking for $6 million, so this was a very sizable venture for any lender.
But after about a year's worth of work, the papers were signed and Lido Beach Towers got its bank loan. The loan is structured so that the first two years are a line of credit, and then it rolls into a self-amortizing loan over 15 years.
The SBA loan (as of mid-November, it hadn't closed) will have a 30-year repayment, with a fixed 3 percent interest. And the best part of both loans is that neither has a prepayment penalty, leaving Lido Beach Towers free to pay off both loans — at any time, without punishment — in the future.
Photo by Carol J. Ott. Click to enlarge.
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