Below is a link to an excellent resource regarding de-conversion by Avison Young:
The first time I mentioned de-conversion in a blog post was back in December 2017, months before State Parkway received an unsolicited $45MM offer from The John Buck Company. The post can be found below:
This means I was right about State Parkway being a prime candidate for de-conversion because its business model is broken and assessments are unsustainable.
This page is still under construction!!!
Buck’s offer, my assumptions and calculations (unit owner specific) are as follows:
Price per s.f.: $276.00 (Buck’s offer)
Price per parking space: $25,000 (Buck’s offer)
Total s.f. (excluding garage): 167,857 (estimated; could be as much as 5.5% too high)
2019 Annual Rental/s.f.: $33.60/s.f ($2.80/s.f./month per Buck x 12 months)
2019 Assessments per s.f.: $13.15/s.f. (Source: 2019 Budget)
2019 Cost of Capital per s.f.: $15.96/s.f. (5.55% of average book basis, pre-tax)
2019 Cable T.V. Expense/unit: $459.36/unit (Source: 2019 Budget)
2019 Book and Tax Depreciation: $9.57/s.f. ($49,078,532; 90% non-land; 27.5-year life)
2018 Property Taxes/s.f.: $4.65/s.f. (ballpark estimate – to be replaced with actuals next month)
Reserve Fund: $7.07/s.f. + $581.25/deeded parking space
Special Assessment: $10,000,000 (see blog post)
NOTE: Use the calculations, above and below, at your own risk. The above calculation form was created solely for purposes of promoting discussion among unit owners.
MY OTHER CALCULATIONS are as follows:
P/E/s.f. @ 20x = $308/s.f. (way too early calculation) Formula still under construction
P/E/s.f. @ 26x = $400/s.f. (way too early calculation) Formula still under construction
Total Buck Offer = (calculated) Will hold off until Buck corrects its unsolicited $45MM offer for errors and other inconsistencies.
Total Special Assessment = (calculated)