Roosevelt Island's Manhattan Park Building Ownership Seeking RIOC's Permission To Restructure Partnership Interest And Refinance Mortgage With New $256 Million Loan - $12.6 Million Fee To RIOC, Board Votes At Directors Meeting Tonight
The ownership of Roosevelt Island's Manhattan Park buildings complex is seeking to restructure its partnership interests and refinance the existing mortgage on the property. According to this June 11, 2014 memo from Roosevelt Island Operating Corp (RIOC) President Charlene Indelicato to the RIOC Board Of Directors:
Roosevelt Island Associates (“RIA”) was the ground lessee under the Manhattan Park ground lease. RIA is a general partnership consisting of (i) two managing general partners,Manhattan Park Inc. (wholly owned by Starrett Companies LLC) and Cohen Roosevelt Associates, which, together, hold a 1% ownership interest and a 50% economic interest in RIA, and (ii) an investor general partner, NCC-RIA (an affiliate of Verizon Capital), which holds a 99% ownership interest and a 50% economic interest in RIA. The managing general partners propose to (i) restructure RIA by redeeming NCC’s general partnership interest in RIA for the sum of $126,000,000, and (ii) refinance the existing leasehold mortgage to order to fund the redemption. Upon completion of the restructuring, Manhattan Park Inc. and Cohen Roosevelt Associates will each have a 50% ownership interest and a 50% economic interest in RIA and NCC will have no longer own any interest in RIA. RIA would like to accomplish the redemption and refinancing simultaneously, but it is possible that the refinancing may occur shortly before or after the closing of the redemption.The consent of RIOC is required in order for the Manhattan Park restructuring and refinancing to go forward. Manhattan Park ownership proposed paying RIOC $12,600,000 for its consent. Ms. Indelicato's memo continues:
RIA intends to refinance the existing mortgage with a new loan of approximately $256,000,000- $261,000,000 (the exact amount will depend upon interest rates at the time of closing, projected to be at the end of June.) In connection with the refinancing, the existing mortgage of approximately $113,000,000 will be satisfied. In addition to repaying the existing mortgage loan and related NYC HDC bonds, proceeds from the refinancing will be used to fund the redemption of NCC’s partnership interest, and pay the costs associated with the refinancing. RIA has indicated that any proceeds remaining after these obligations are satisfied will be kept in a reserve fund for future capital expenditures and repairs, and to upgrade the buildings. RIA does not intend to distribute any proceeds from the refinancing to the partners....
...Under the Manhattan Park ground lease, transfers of ownership interests and refinancing of the sort described above are “Transactions”, for which RIOC’s consent is required, and a Transaction Payment may be imposed. Although the redemption of NCC’s partnership interest and the refinancing may each technically be considered as separate “Transactions” under the Manhattan Park lease, in the instant case, they are part of a single, integrated transaction. RIA has advised RIOC that the redemption of NCC’s interest cannot occur without the refinancing, and that RIA will not refinance the mortgage unless it also proceeds with the redemption of NCC’s interest. In light of the fact that (i) the transactions are part of a single transaction, and neither will occur without the other, (ii) no funds will be distributed to the General Partners as a result of the refinancing, and (iii) excess proceeds from the refinancing, if any, will be put in a dedicated reserve fund to pay for capital improvements for the buildings, RIA proposes paying a single Transaction Payment of $12,600,000 for the redemption of NCC’s interest. RIA has advised RIOC that it cannot proceed with either the redemption or the refinancing if it is required to pay two Transaction Payments, and the statement of revenue and sources submitted by RIA (a copy of which is attached to this memo) confirms that there would be insufficient proceeds from the refinancing to pay more than one Transaction Payment. If RIA does not proceed with these transactions, RIOC will not receive the $12,600,000 Transaction Payment, nor will a dedicated reserve fund be created from excess loan proceeds, if any, to pay for capital improvements to the buildings. RIA has agreed that, if there were a distribution to the General Partners as a result of the refinancing, RIA will make a Transaction Payment of 10% of the amount distributed, in addition to the $12,600,000 Transaction Payment payable in connection with the redemption....Below is chart showing the Manhattan Park Refinancing Projected Sources & Uses from the Indelicato Memo page 4. As shown at bottom of the chart, there may or may not be any funds available from the mortgage refinancing for building upgrade reserve fund.
Click here for the entire Indelicato memo on Manhattan Park ownership restructuring and mortgage refinancing. Ms. Indelicato recommended that the RIOC Board approve the transaction.
The RIOC Board's consent to Manhattan Park transactions are on tonight's RIOC Board Of Directors meeting agenda.
According to the Roosevelt Island Operating Corp (RIOC)
AGENDAUPDATE 6/27 - The RIOC Board of Directors approved the Manhattan Park partnership restructuring and mortgage financing at yesterday's meeting. RIOC President Charlene Indelicato said "it was a very good agreement with Manhattan Park" and that the $12.6 million proceeds to RIOC will go into the RIOC General Fund. RIOC Director Howard Polivy reported representations were made that as a result of the refinancing, there will be no rent increases for Manhattan Park tenants nor change in the composition of Manhattan Park affordable apartments.
JUNE 26, 2014 MEETING OF
THE ROOSEVELT ISLAND OPERATING CORPORATION BOARD OF DIRECTORS
THE MANHATTAN PARK COMMUNITY CENTER,
8 RIVER ROAD, ROOSEVELT ISLAND, NEW YORK
5:30 P.M.[1]
I. Call to Order
II. Roll Call
III. Approval of Minutes
1. May 15, 2014 Board Meeting (Board Action Required)
IV. Old Business
V. New Business
1. Authorization to Consent to Manhattan Park's Refinancing (Board Action Required)
2. Presentation of RIOC's Audited Financial Statements for Fiscal Year 2013-14
3. Approval of Report on Procurement Contracts for Fiscal Year Ending March 31, 2014 (Board Action Required)
4. Approval of Report on Investments for Fiscal Year Ending March 31, 2014 (Board Action Required)
5. Approval of Property Report for Fiscal Year Ending March 31, 2014 (Board Action Required)
6. Approval of Annual Report for Fiscal Year Ending March 31, 2014 (Board Action Required)
7. Ratification of Contract with The Burke Group, LLC for Actuarial Services (Board Action Required)
8. Authorization to Enter into Contract with Thomson Reuters for Access to On-Line Westlaw Legal Research Libraries (Board Action Required)
9. Ratification of Amendment of Contract with Urban Exterminating Company for Pest Control and Extermination Services (Board Action Required)
10. Authorization to Amend the Cell Antenna License Agreement with Sprint (Board Action Required)
11. President's Report
12. Committee Reports
a. Audit Committee
b. Governance Committee
c. Operations Advisory Committee
d. Real Estate Development Advisory Committee
13. Public Safety Report
VI. Adjournment
[1] The RIOC Board Meeting will commence following a public comment period. The public comment period is not part of the meeting.
Here's the discussion.
5 comments :
Gomer Pyle, R.I.O.C.: RIOC admits it's incompetent!
They can't seem to figure out how to fix the foot bridges. I've said this is a weekend job for some Long Island landscaping crew with about $600 of railroad ties from Lowes. Yet the bridges and that portion of Lighthouse Park remain closed ... they closed it off incompetently, too.
It's been two years to accomplish this trivial, but important task. Now RIOC President Charlene Indelicato tells us the work has started, but that isn't so. See pictures from June 22, 2013 and June 22, 2014. Exactly one year later, exactly the same - except the grass has grown higher.
Yesterday at the RIOC Operations Committee Meeting (populated by RIOC Board Member Gomer Pyle's), Rick of the Roosevelt Island Blog asked Ms. Indelicato how long it would take to do the work. Answer: a week or two.
Yup, pretty much what I've been saying for two years. But Ms. Indelicato can prioritize giving $10K to RIRA (essentially no questions asked, co-mingled, pay-off money to a lobbying organization on RIOC-related legislation), and she can speedline the process of approval where RIRA VP (and Main Street WIRE manager) Sherie Helstien can give 48 hours notice to RIRA to get their approval, and the RIOC board can approve the spending a week later. That's 10 days soup-to-nuts approval via Ms. Indelicato's express. Yet, the important stuff lags ... and she blames on procurement (ha!), can't get in touch with the vendor, etc..
So this small week-long task, as Ms. Indelicato admits, takes two years to procure and execute. Truly incompetent management and incompetent board oversight.
Sadly, although Gomer Pyle would have done it just as incompetently as Ms. Indelicato, Gomer Pyle would still have the highest honesty/ethnics, something Ms. Indelicato could learn from Gomer. Well Garsh, Sha-zam, Gall-lee ... never fixed one a them foot bridges before.
Frank Farance
Island House
How much more will the monthly payments on this mortgage be (higher principal but presumably much lower interest) and how much will they have to raise the rent to cover it?
MP just jacked up my rent by 8%.
And why didn't RIOC use this opportunity to help fix the submetering situation by requiring more transparency (since their lease requires MP not make a profit on the electricity, it seems like a reasonable step to take)?
No rent increases or change in composition of affordable apartments as a result of refinancing according to RIOC Director Howard Polivy at yesterday's RIOC Board meeting
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