Hello Sobu Owners,
Following is the status of the assemblage:
There are about five owners who are clearly being "hold outs" and who could spoil the deal for everyone else. Because of this, Josh and I were about ready to throw in the towel the week before last. It is ashamed that greed and totally unrealistic expectations of just a few people could spoil something like this for everyone else. Again...we were ready to throw in the towel.
However; our attitude changed after speaking with a few more developer groups.
History: The original interested party (who challenged us to obtain all 134 signatures and get back to them) is now long gone. They needed to make an acquisition fairly soon (we met with them the first week in October). We still do not have all of the signatures as stated above.
Josh and I decided that despite the fact that we were lacking 100% participation we were really going to continue to try to make this happen.
At that point (with first interested party gone) we were sure that the buyer would take this through the entire due dilligence process and re-zoning process prior to closing (which could easily take up to a year). The reason we felt this way is because we were certain that the buyer would want to tear down the building and re-develop the property (probably with condos). However; after the past two weeks of talking to developers about the property we see a unanimous thought by all prospective buyers: buy the building, convert back to apartments, rent the building for a few years, and re-develop it later on when (hopefully) the condo market is in a better place.
With that said, if the buyer does convert back to condos then they will not need the five or so unreasonable people. They will close on all contracts in place and quite frankly push out the non-sellers with huge assesments that they can not afford. Those non-sellers will likely end up with far less than the $280 per foot that we have offered.
Therefore; we are moving ahead at a rapid pace. The marketing package has been sent to about 60 developers (mostly in Atlanta but some in other states. We have also had meetings with some of those.
Jacoby Development (Atlantic Station) passed as apartments aren't what they historically build. They develop more huge, mixed-use projects like Atlantic Station. They are also working on a huge project currently down near the airport.
The Office Max developers would only want to purchase this land if they could have it for a fraction of our price. They are not "vertical" developers. Their portfolio is more retail.
We have one group that is interested who we have met with on three occassions. Josh and I would not be suprised if we received a written letter of intent from this group. However; in our last meeting they went over their numbers for running the building as apartments and our price of $27 million is not going to make sense for them. We have no idea what their price would be, but we assured them that we have many groups looking at this and that we will not accept a low price until we have literally played this out with every prospective purchaser under the sun.
Certainly...if we do receive an offer...we will present it to you. A meeting would need to take place with that scenario. We'll let you know if we receive anything.
We are pitching this to every big developer in Atlanta (and in other states). We are also pitching this to lots of agents in the commercial world who deal with developers. Lastly, we are pitching this to all of the brokers who deal with strictly apartments.
Apartments properties are hot right now. With the changes in lending, so many of the first time buyers (typical for condos) can not get loans as they were depending on zero money down and interest only. Well...those days are gone. Therefore; there will be a huge pool of people who will turn to rentals.
I'll keep you posted on our progress. When we receive definitive "no's" from developers I will give you the reason why so that you will know.
Thanks,
Annie
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7 comments:
In many states, a condominium association can convert a condominium project into an apartment community with an 80% vote of the condo owners. Can this be done in Georgia? If so, this may give the other owner's a way to sell the building without the consent of the five who do not want to sell. I don't think that the five owner's who passed on the deal realize that this may have been a once in a lifetime opportunity. For anyone who doesn't know (and I don’t see how you couldn’t know), the condominium market across the country is in terrible shape and is only getting worse. Atlanta is no exception. If we can sell, there is no reason to hold out for more money. There is no “more money” when it comes to condominiums these days. As owners, we know that we can’t sell our individual unit without selling the building as a whole. We also realize that it could be ten or more years before sales start to come back. Our thought is that we should sell the building as an apartment building or to be converted into an apartment building while the apartment market is hot. The apartment market has already started cooling in other areas. So, we believe we should get the building sold before the apartment market turns and there isn’t chance to sell at any price.
Annie, thank you and the rest of your team for taking on this endeavor. I greatly appreciate all your hard work on this! This blog is great!
David, unfortunately you are dealing with 5 owners who are completely and utterly unrealistic. Some of the numbers and demands they are asking for proves they are either extremely naive or just don't care. I wouldn't waste anyone's time trying to convince them. That being said the course of action Annie and KW are taking is the right one in my opinion.
Well obviously these 5 people know so much more than the 130+ owners, financial advisors, real estate professionals, etc. who know this is a GREAT OPPORTUNITY.
We should be able to "thank" them personally for their decision.
Does anyone know who these "hold outs" are? Maybe they just dont see the big picture. While the market is so low it would be a great time to take the offer and purchase a new property in the same area. I have personally found several places within a one mile radius that cost under 200k with better views, better amenities (hardwood floors, stainless steel appliances, granite countertops, balconys, etc.), better HOA fees, etc.. Im not to sure if everyone got the letter in the mail but we are about to undergo a 1200 dollar assessment or lose our security/concierge plus assume a $200 assessment. This is just the beginning. I am sure there are more fees to come including upping the HOA fees, and more assessments. Since the last investor has walked, we need to ALL be in favor of the next opportunity.
Thanks for the update guys!
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