Not affiliated with the AOAO or its counsel.
SANDWICH LEASE PURCHASE AMENDMENTS IGNORED
There are 146 residential units, not 149. I learned in grade school that 54 purchased plus 8 sandwich equals 62, not 64. Two math errors in the first sentence. The president of the AOAO does not know how many units in the building. When simple math exceeds the capability of the people supposed to represent us, it becomes obvious why the rent went up so much.
There are additional errors in the first paragraph. The 54 of us who purchased the sandwich lease executed a Limited Warranty Assignment of Ground Lease and Sublease, and Lessor’s Consent and Agreement. Our purchase of the Sublease modified the Master Lease by agreement and consent with the Kong Master Lessees. The modification granted EACH and EVERY ONE of 54 of us with a direct, personal contract relationship with the Master Lessors.
There is not 1 Master Lease - there are 54 mini Master Leases, 1 Sublease of 8 Units to the AOAO, and 1 Direct Lease to Commercial. The agreements modified the payment terms and percentages. The agreements appointed the AOAO as money collection agent for the Master Lessors. If you don’t pay Master Lease because you have an issue, the AOAO will pay the Master Lease, collect from you, and possibly take your property. The AOAO waived my individually granted rights without my agreement. Anyone see a problem with any of this?
parcel value - not land value
Mr. Steinberg keeps incorrectly referring to the calculation for lease rent being computed at 6.0% of LAND value. This is completely wrong, and the lease does not say that. LAND is dirt. The word LAND appears nowhere. The lease provides, "annual rent for and during each of the periods of the lease term which must be renegotiated shall be 6% of the fair market value of the PARCEL.…” The PARCEL described in the Master Lease is an entirely different lesser interest, called a leased fee interest. This is not the same as LAND- a leased fee interest PARCEL is not valued the same as LAND.
The original Master Lease signed in 1970 was a lesser interest leasehold encumbering a 100% fee simple in the dirt upon which Canterbury Place was eventually built. This dirt was identified as 4 contiguous lots owned by the same owner which made up the single parcel premises of about 0.81 acres. The dirt before the lease was signed could be inherited, leased, subleased, partitioned, subdivided, mortgaged, sold in pieces or total, along with all the other components which are the bundle of divisible fee simple real estate rights.
It is important not to be misled by oversimplification of technical real estate concepts. A condominium building built on fee simple dirt in 1970 would belong to each of the individual owners at their percentage from day 1. The key difference for the lessees will be reversion will convey my condo to the Kong Lessors in 2061 if the AOAO continues getting it wrong. A leased fee interest PARCEL is not the same as a fee simple LAND site. Leased fee PARCEL valuation is correctly computed entirely differently, based on discounted cash flow and reversion.
The Canterbury Master Lease dated March 2, 1970 began with a fee simple dirt description totaling 35,365 square feet. Lease execution created a separate 100% leased fee interest PARCEL. The leased fee interest PARCEL has been voluntarily altered by the lessor and reduced from 100% to a minority undivided leased fee interest PARCEL encumbering a 46.1754% undivided fee simple interest in the LAND. The LAND is further encumbered by a high-rise condominium building owned by 56% of the units. The minority leased fee interest may not be further developed, financed, and suffers from limited liquidity, marketability and an AOAO right of first refusal before the Kong Lessors can sell to anyone else.
The Assignment of the Sandwich Lease to 54 of us to which the AOAO and Kong Lessors agreed says that EACH of the INDIVIDUAL Lessees "shall pay the rent under the Lease equal to its undivided interest share in the Lease and shall also be bound by and shall assume all other agreements, releases, indemnities, obligations, liabilities, representations and warranties contained in the Lease ("Lease Obligations")."
This modification requires a Leased Fee Interest parcel value arrived at by multiplying $24 million by 46.1754% percent to result in approximately $11 million agreed by the AOAO and Kong Lessors as the leased fee value of the PARCEL, without any partial interest discount. Multiply my undivided share in the PARCEL of 0.736% to determine the value of my individual PARCEL as required by our Master Lease modification. Compliance with the Master Lease modification results in an individual "A" unit value as agreed with each of us, the AOAO, and Kong Lessors of $80,960. This modified PARCEL value is multiplied by 6.0% for an annual rent of $4858, or $405 monthly. This is less than half the $883/month the AOAO colluded with the Kong Lessors to continue the land oligarchy. If you apply a 25% partial interest discount, the land value of my unit is startlingly close to the the land value the tax assessor assigned to my unit of $59,400. This also reduces my lease payment by an additional 25%. Hmmmm, what a coincidence....