THE NEW YORK TIMES – April 23, 2004
Friday, April 23, 2004
A Rare Condo Conversion For a West Side Building, by Rachelle Garbarine
An Upper West Side landlord is in the process, rare in recent years, of converting a rental building to a condominium. Two weeks ago, the first 15 of the 98 apartments in the 20-story prewar building at 172 West 79th Street, which is now called the Hopkins, were offered for sale.
Prices for the six apartments still available range from $663,000 for a one-bedroom to $2.68 million for a four-bedroom, according to Jud Ebersman, vice chairman of Walter & Samuels, a real estate services firm that advised the building’s owner on the conversion and is marketing the apartments.
The building, with apartments of 765 to 2,000 square feet, is undergoing a $4 million renovation; apartments being offered for sale are being refurbished, at a cost of $30,000 to $120,000, depending on their size, Mr. Ebersman said. As part of the building-wide renovation, which is expected to be completed in June, the Hopkins will get new elevators and windows, as well as a refurbished lobby. The work being done on the apartments being offered includes installing new kitchens and bathrooms.
The Racolin family, which is sponsoring the conversion, has owned the 1920’s brick building for more than 60 years. It is one of a dozen rental buildings, mostly in Manhattan and with a total of 1,200 apartments, that the family owns, but it is the only one being converted.
Mr. Ebersman, who is the spokesman for the family, said contracts were signed or pending on four apartments, and that offers had been made or accepted on five more, either at their asking process of $532,000 to $2 million, or up to 20 percent more.
Under the conversion plan, tenants can buy their apartments, without any refurbishing, at 10 percent below the original asking price, Mr. Ebersman said. The projected monthly charges, including real estate taxes are $732 to $1,876.
The state attorney general’s office, which must approve all building conversions, accepted the Racolin’s condominium offering plan last month. For the conversion to be approved, the sponsors must sell at least 15 percent of the apartments within 15 months after state acceptance of the plan. Tenants who choose not to buy can stay in their apartments and remain under rent regulation.
Kevin R. McConnell, a lawyer for a tenants’ group, said the bargaining that typically takes place between renters who are considering buying their apartments and the condominium sponsor had not yet started.
Conversions of rental apartments to co-ops or condominiums have become a rarity in Manhattan. At the peak of conversions, in 1986, 231 buildings, with a total of 21,776 apartments, were converted. Last year, conversion plans for eight buildings, with a total of 541 apartments, were submitted to the state, according to the Real Estate Board of New York, which cited statistics from the attorney general’s office.
Theresa Racht, a Manhattan lawyer who specializes in condo and co-op issues, said that among the major reasons for the reduction were the diminished supply of suitable rental buildings to convert and the higher rents landlords can get for apartments that are no longer subject to rent regulation, and can be rented at market rates.
Vacant apartments can be deregulated if they rent for $2,000 a month or more. Occupied apartments renting for $2,000 or more can be deregulated if the tenants’ household income was more that $175,000 in each of the precious two years.
At the Hopkins, Mr. Ebersman said, the sponsor’s primary goal “was to take some capital out of their building and still be left with a rental income.” He said the conversion also made sense because there was virtually no mortgage on the building. Even assuming that the condominium plan for the building goes into effect, Mr. Ebersman added, the sponsor is retaining “the unconditional right to rent rather than sell the remaining apartments.”