Roosevelt Island Rivercross Coop Building Seeking RIOC Approval For New Mortgage Refinancing At August 5 Real Estate Committee Meeting And Immediately After Full RIOC Board Meeting - Currently Have 10 Year $50 Million Interest Only Mortgage From 2011

According to notices sent out yesterday by the Roosevelt Island Operating Corp (RIOC), the Roosevelt Island Rivercross Tenants Corp 

is refinancing  the mortgage on their 365 unit Co-op building and seeking approval of the RIOC Board of Directors for the transaction.  The subject of Rivercross mortgage refinancing will first be discussed as the sole item on Agenda of August 5 RIOC Real Estate Development Advisory Committee meeting and immediately thereafter the sole public item on Agenda for approval by a Special Meeting of the RIOC Board of Directors.

As of 5 PM this afternoon, there is no other information or material available on the RIOC web site about the Rivercross mortgage refinancing. Yesterday, I asked RIOC for more info but have not received a reply yet. Typically, RIOC posts the Agenda and Item Board materials a few days before a Board of Directors meeting.

As previously reported, in 2011 the Rivercross Tenants Corp refinanced their then existing 30 year mortgage with a new $50 million 10 year 4.64% interest only loan. According to a statement at the time from the Rivercross Tenants Corp Board of Directors:

... The proceeds of the new mortgage will be used as follows: First, to pay off the existing mortgage (approximately $25,000,000, including prepayment fees); Second, to create a $15,000,000 capital improvement fund to pay for energy-savings investments (new windows, a more energy-efficient heating system and submetering); and Third, to create a $10,000,000 fund to pay the real property transfer taxes that may have to be paid if and when Rivercross leaves the Mitchell-Lama program and becomes a private coop....

Below are the RIOC notices regarding Rivercross mortgage refinancing meetings tomorrow.

According to RIOC:

PLEASE TAKE NOTICE that a meeting of the Real Estate Development Advisory Committee of the RIOC Board of Directors will be held on Wednesday, August 5, 2020 at 4:00 p.m. via videoconference.

AGENDA:

1. Discussion of Mortgage Refinancing by Rivercross Tenants’ Corp

2. Any Other Committee Business That May be Brought Before the Committee

***

Due to public health concerns and as authorized by Executive Order of the Governor, this meeting will be conducted via videoconference.

The link to a webcast will be posted on RIOC’s website by 12:00 pm on Wednesday, August 5, 2020.

Also:

NOTICE OF THE AUGUST 5, 2020 SPECIAL MEETING OF THE ROOSEVELT ISLAND OPERATING CORPORATION BOARD OF DIRECTORS

PLEASE TAKE NOTICE that a Board of Directors meeting will be held on Wednesday, August 5, 2020 at 5:00 P.M.

AGENDA:

AMENDED AGENDA:

1- Authorization to Approve Mortgage Refinancing by Rivercross Tenants’ Corp. (Board Action Required)

2- Executive Session to Discuss Pending Litigation

Due to public health concerns and as authorized by Executive Order of the Governor, the August 5, 2020 Board of Directors meeting will be conducted via videoconference.

The link to a webcast will be posted on RIOC’s website by 12:00 pm on Wednesday, August 5, 2020

UPDATE 7:25 PM - August 5 Board of Directors materials are now posted on RIOC web site.  Below is August 4 Memo from Acting President Shelton Haynes to RIOC Board of Directors supporting approval of the Rivercross Mortgage refinance.

Rivercross Tenants’ Corp. leases the property known as Rivercross pursuant to a Restated Ground Lease dated as of November 30, 1977, which was amended by Amendment #1 dated as of March 28, 2011 and the Second Amendment to Restated Ground Lease dated as of May 30, 2018. In July 2011, Rivercross obtained a $50,000,000 loan from NCB, FSB, which was secured by a first leasehold mortgage (the “Existing Mortgage”). The Existing Mortgage was for a 10 year term, maturing in 2021. The interest rate on the Existing Mortgage is approximately 4.64 %. Rivercross seeks approval to refinance the Existing Mortgage with the same lender (now known as National Consumer Cooperative Bank) with a first leasehold mortgage in the amount of $67,000,000, and a second leasehold mortgage securing a $2,900,000 revolving line of credit (collectively, the “New Mortgages”). While the interest rate of the New Mortgages will not be locked in until after RIOC’s consent has been obtained, it is anticipated that the interest rate of the New Mortgages will be approximately 3%.

In conjunction with the Existing Mortgage, the lender and RIOC entered into a Subordination, Non-Disturbance and Attornment Agreement, whereby the lender agreed not to disturb RIOC’s occupancy of the commercial space it sublets in Rivercross if the lender succeeds to Rivercross’s interest under the Ground Lease. RIOC delivered a written consent to the Existing Mortgage, which included various provisions relating to the rights of the parties in the event of the termination of the Ground Lease. The parties contemplate exchanging substantially similar documents in connection with the New Mortgages.

We have been advised by Rivercross’s counsel that it is Rivercross’s intention to use the loan proceeds remaining after satisfaction of the Existing Mortgage to fund reserves.

Recommendation

I hereby recommend that the RIOC Board of Directors consent to the proposed refinancing by Rivercross Tenants’ Corp.

There is no stated reason why approval of Rivercross mortgage refinancing requires an unscheduled "Special" Board meeting and could not be considered at the next regularly scheduled September 10 Board meeting.