The Beav Gets Creative
Just a quick update on the William Beaver House, which we discussed in a piece a little while ago as exemplifying the difficulties of downtown developments in the current environment. Last week Business Week did a piece on a new innovative approach to attracting investors to purchase some of the inventory of new condominiums that has piled up in certain markets, including those at William Beaver House downtown. Real Estate broker Roger Nino is being credited with applying "Master Lease" structures to this task. In a nutshell, the sponsor deposits funds representing a couple of years worth of rental income in an escrow account to be paid to a prospective income oriented investor buying a new condominium. Additionally, the sponsor either rents or promises to rent out the unit for the investor.
“The investor doesn’t want to take a chance on what the rent could be,” Nino explains. “It’s an interesting mechanism that helps you deal with the uncertainty.”
So there you have it, add "Master Leasing" to the list of incentives including "Price Protection" and "Rent to Own" that condominium sponsors are trying in order to address construction loan maturities. I would not be surprised at all to see more sponsors adopting this technique.
Posted by MeekSheep
Mon Jun 29th, 2009 07:44 PM
Do we get to take out no-money down loans, sell the loan to a private investment vehicle leveraged 12x by no-recourse government loans and then reinvest the "rent" into this vehicle? I'm pretty skeptical this whole "Master Lease" thing will work unless you think there truly are people who feel that NY RE has or soon will bottom and 2007 prices are just around the corner. Then again, if someone has this structure in place will banks be willing to loan against a less than 70% filled structure?
Posted by real estate brochures
Mon Jun 29th, 2009 11:05 PM
Hi,
Great to know that these condominium rental and ownership incentives are being discussed!
Posted by Reverse Mortgage Information
Fri Jul 24th, 2009 03:41 AM
Hi,
Thanks Jeff for an informative post. Yes, I am also interested to know the comment for a point raised by MeekSheep that "...if someone has this structure in place will banks be willing to loan against a less than 70% filled structure?"
- J
Posted by Mortgage Advisor
Mon Aug 24th, 2009 07:02 AM
Not sure why the sponsor would take the risk.