Brooklyn Co-op Converts to Condominiums

Sep 20, 2011, 09:15 ET from Hutton Group

BROOKLYN, N.Y., Sept. 20, 2011 /PRNewswire/ -- As a sign of things to come, an established 59-unit co-op in Brooklyn, 1543 West 1st Apts. Co-op has transformed itself to a condominium.  Unit values have jumped overnight from as low as $160,000 for a one-bedroom unit to $255,000 when appraised as a condominium. "Every unit in the building is now a condominium and qualifies for Fannie Mae financing," according to Jack H. Boyajian, President of ROA Hutton and The Hutton Group, the co-op to condominium conversion specialists who managed the entire process.

The building was an established co-op but was suffering from declining prices in a market that was appreciating for condos.  Co-op unit prices were much lower than a few years ago and financing options were limited and expensive.  "Our owners in the building wanted to have the deeds to their units and own real estate rather than shares in a corporation," said Sofya Golkhovaya, Board President.  After Hutton provided each owner with their comparative assessment of co-op vs. condo ownership, the shareholders voted overwhelmingly to convert their interests to condominiums.  The owners were only responsible to pay off their share of the underlying mortgage plus the transaction costs for the conversion in order to receive the deed to their unit; 49 out of 59 owners did that just last month.  

The completion of the conversion was delayed several times due to unexpected changes in the mortgage market and the regulatory landscape created through the Dodd-Frank Act.  "Jack Boyajian and the entire Hutton team were extraordinary in navigating us through this period.  They never gave up and they fought for the success of our conversion at every step of the way," confirmed Ms. Golkhovaya.

In addition to increased values and better financing options, participating owners are saving money every month after converting to a condominium.  "With pre-planning suggested by Jack Boyajian, the building has the extra money required to complete necessary repairs to our elevator as well as put some additional funds into our reserves," said Rimma Drel, Board Secretary.

The conversion of this New York City co-op is not the first for Hutton.  They also managed the conversion of two other co-ops in Queens in 2007 (109-18 Lefferts Condominium) and again in 2008 (Delmar Condominium in Forest Hills).  "While we have converted thousands of units throughout the country, it is particularly satisfying to create equity and value in another community here in New York where co-ops are prevalent.  It is an important trend that other co-ops will have to consider as part of their strategy to respond to current market conditions," said Jack Boyajian.  

ROA Hutton and the Hutton Group manage all aspects of the conversion of co-op communities to condominiums throughout the country.  Since 1992, they have been responsible for converting thousands of units in New Jersey, New York, Virginia, Florida, Michigan, California, Ohio and Illinois.

SOURCE Hutton Group