gramercy settlement
TRANSCRIPT
![Page 1: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/1.jpg)
The Gramercy Club Cooperative
~Valuation & Settlement~
Opportunity Advisors, LLC
![Page 2: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/2.jpg)
The Gramercy Cooperative Club of Edina
![Page 3: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/3.jpg)
VALUATION
SETTLEMENTISSUES
STAKEHOLDER PRESENTATION
SETTLEMENTPROPOSAL
![Page 4: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/4.jpg)
VALUATION
SETTLEMENTISSUES
SETTLEMENTPROPOSAL
STAKEHOLDER PRESENTATION
![Page 5: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/5.jpg)
Model Format: Discounted cash flow model Buy units today Sell units over time Factor in selling costs, carry costs Solve for value based on required return
VALUATION MODEL
![Page 6: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/6.jpg)
Assumptions: 90 units (128,250 total square feet) purchased 1,425 average square feet per unit Sell all units over 48 month period Gross sales price: $158 psf ($225,000 per unit) Selling costs: 8.2% of gross sales price Capex: $4,275 per unit Taxes: ~$300 per unit per month Dues: ~$500 per unit per month Property management fees: ~$10,700 per month Required investor IRR: 24%
VALUATION MODEL
![Page 7: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/7.jpg)
Original sales price of ~ $253 per square foot (~$240 psf adjusting for
upgrades)
Sales Price Considerations: General market decline
VALUATION MODEL
![Page 8: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/8.jpg)
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10100
120
140
160
180
200
MSPUS
MSP 29%
US 29%
Source: Standard & Poor’s
S&P / CASE-SHILLER HOME PRICE INDEX
![Page 9: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/9.jpg)
Original sales price of ~ $253 per square foot (~$240 psf adjusting for upgrades)
Sales Price Considerations: General market decline Tarnished project image Suburban Condo Large unit size Rentals Re-sales Last 10 units
Updated sales price of ~$158 per square foot Decline of 34%
VALUATION MODEL
![Page 10: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/10.jpg)
Conclusion: Assumptions dictate a bulk purchase price of
~$10,000,000
Assumes: • Taxes current• Conversion to condominiums• Adequate reserves• Standard basket of declarant rights
VALUATION MODEL
![Page 11: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/11.jpg)
SKYSCAPE vs. GRAMERCY
LocationDemographic
Image
![Page 12: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/12.jpg)
SKYSCAPE EXPERIENCE
SkyscapeMinneapolis, MN
Purchased 72 units in January of 2010
Bought in bulk at 45% discount to current prices
Sellers were BofA and Wells Fargo
![Page 13: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/13.jpg)
SUMMERCREST vs. GRAMERCY
LocationDemographic
Image
![Page 14: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/14.jpg)
Just bought a unit at $88 psf
SUMMERCRESET EXPERIENCE
![Page 15: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/15.jpg)
STAKEHOLDER PRESENTATION
VALUATION
SETTLEMENTISSUES
SETTLEMENTPROPOSAL
![Page 16: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/16.jpg)
Time value of moneyHuge and continuing legal feesEliminate continuing risks
Collateral value Litigation risks
SETTLEMENT – WHY SETTLE
![Page 17: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/17.jpg)
A-Banks
B-Banks
Frana (et al)
Resident owners
SETTLEMENT – PRIMARY STAKEHOLDERS
![Page 18: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/18.jpg)
Primary Issues:Treatment of resident ownersSubordination of B-BanksFrana priority
Secondary Issues:Nancy NicholsTitle Insurer
SETTLEMENT – ISSUES
![Page 19: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/19.jpg)
SETTLEMENT – KEY ASSUMPTIONS
Collateral is 90 units90 units valued at ~$10 million in bulk‘A’ Banks’ investment: ~$20 million‘B’ Banks’ investment: ~$4 millionFrana’s services: ~$1.2 million
![Page 20: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/20.jpg)
SETTLEMENT – POSSIBLE SCENARIOS
‘B-Banks’ subordination: Subordination 100% 50% 0%
Frana’s recovery: Recover
$1,200,000 (100%) $600,000 (50%) $0 (0%)
![Page 21: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/21.jpg)
SUMMARY: B-BANKS
FRANA RECOVERY
$0 $600,000 $1,200,000
B-BANKS
% SUBORDINAT
E
Fully subordinate
d 0.0% 0.0% 0.0%Half
subordinated 22.7% 21.4% 20.0%
Pari passu 41.7% 39.2% 36.7%
‘B-Banks’ Potential Recovery
![Page 22: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/22.jpg)
SUMMARY: FRANA
Frana’s Potential Recovery
FRANA RECOVERY
$0 $600,000 $1,200,000
B-BANKS
% SUBORDINAT
E
Fully subordinate
d 0.0% 50.0% 100.0%Half
subordinated 0.0% 50.0% 100.0%
Pari passu 0.0% 50.0% 100.0%
![Page 23: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/23.jpg)
SUMMARY: A-BANKS
‘A-Banks’ Potential Recovery
FRANA RECOVERY
$0 $600,000 $1,200,000
B-BANKS
% SUBORDINAT
E
Fully subordinate
d 50.0% 47.0% 44.0%Half
subordinated 45.5% 42.7% 40.0%
Pari passu 41.7% 39.2% 36.7%
![Page 24: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/24.jpg)
VALUATION
SETTLEMENTISSUES
SETTLEMENTPROPOSAL
STAKEHOLDER PRESENTATION
![Page 25: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/25.jpg)
?
??
A-BanksB-BanksFrana
How do we split up the pie?
SETTLEMENT – PRIMARY QUESTION
![Page 26: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/26.jpg)
Resident owners36 unit holders retain units, butAgree to:
Conversion to condominiums Per unit assessment at $7,500 Declarant rights for purchaser
SETTLEMENT PROPOSAL
![Page 27: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/27.jpg)
Frana receives: 50% on amount owing
B-Banks receive: 50% treatment as an ‘A-Bank’
Title insurer pays $250,000
Nancy Nichols pays $250,000
SETTLEMENT PROPOSAL
![Page 28: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/28.jpg)
Assuming: $10mm pie Frana owed $1.2mm A-Banks owed $20mm B-Banks owed $4mm
Frana gets $600,000 (50% on amount owed) A-Banks get $8,636,364 (43.2% on amount owed) B-Banks get $863,636 (21.6% on amount owed)
SETTLEMENT PROPOSAL
![Page 29: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/29.jpg)
All stakeholders allowed to participate as investors, at their option, on same terms as our partners
Up to $5mm in aggregateAllocated, if necessary, based on original
participation amount
PARTICIPATION
![Page 30: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/30.jpg)
10% preferred return80/20 profit split until 15% IRR70/30 profit split thereafter
PARTICIPATION
![Page 31: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/31.jpg)
If you agree, then: Indicate leadership support Get constituency support Enter into agreements to sell interests to Opportunity
Advisors Close in 30 days
Opportunity Advisors will lead process
IMPLEMENTATION
![Page 32: Gramercy Settlement](https://reader036.vdocuments.us/reader036/viewer/2022062514/5590cbd51a28ab43538b47af/html5/thumbnails/32.jpg)
The Gramercy Club Cooperative
~Valuation & Settlement~
Opportunity Advisors, LLC