Sponsor's schedule A's reveal co-op market to be booming

Real Estate Weekly, Dec 27, 2000 by Jenifer Steig

Lack of product and escalating prices are no longer the sole domain of the rental, condominium and single-family home markets in the New York Metropolitan area. Co-ops -- scorned for years by banks and buyers alike in areas outside of Manhattan -- have continued to re-emerge as a viable housing alternative and are claiming their own piece of today's heated residential real estate market.

In fact, an analysis of several of Cheshire's Schedule A's (documents which include information on product and prices) over the last five years reveals that the co-op market outside of Manhattan has not only rebounded from its collapse of the early '90s, but is now experiencing the same market-driven characteristics of its successful counterparts -- e.g., shrinking inventory and elevated prices.

For example, at Kew Court, a 64-unit pre-war apartment building located in Kew Gardens, Queens, Cheshire purchased and restructured a non-performing $1.6-million first-mortgage after the original sponsor defaulted. At the time in 1994, the six-story cooperative was less than 50% sold.

We brought the 33 unsold apartments to market in 1995 and found ourselves negotiating heavily with apprehensive buyers for apartments that sold in the low-$20,000s for one bedrooms and in the low-$30,000s for two bedrooms. Those prices certainly reflected the state of the co-op market at the time, when banks were hesitant about lending and we were working primarily with cash deals.

Today, just six apartments remain available at Kew Court and are commanding prices in the $50,000s for one bedrooms, $70,000s for two bedrooms and more than $100,000 for three bedrooms.

We're also beginning to see a similar resurgence in the co-op market in Westchester County, N.Y., thanks in large measure to a dramatic rise in rental rates throughout the area which is convincing an increasing number of would-be-renters to enter the housing game.

At Hudson Courts, for example, Cheshire purchased unsold shares in 58 apartments in the two-building complex located in Northwest Yonkers. In November 1999. we were selling two-bedroom units in the high-$50,000s ($65.00 per share). Today, comparable units are selling at prices in the mid-$80,000s, while one-bedroom units are being purchased in the $60,000s (close to $90 per share). We've also just taken a contract on a three-bedroom apartment for $76,000, up from the $65,000 price tag a similar unit sold for in March.

Both communities clearly depict the strength of today's co-op market in the Metropolitan area, and encourages Cheshire to continue its commitment to purchasing unsold shares in co-ops with positive cash flows, as well as purchasing non-performing underlying mortgages and turning around distressed co-ops.