Inside Third & Bond: Week 112

The holiday party season is upon us and that means one thing for the Third + Bond blog: end of the year recap.

So, many of you have been following us since the beginning, some just got on board, and others have been actively ignoring us for some time. What the heck have we been up to in the last year? Have we made any progress on building 44 units?

You bet. Back in January, we were pouring foundations and worrying over underground plumbing. Today we have 8 buildings, each 3-4 stories. The buildings are closed in and the façade is a few weeks from completion. We have interiors with wood and tile floors installed, cabinetry in place, and landscaped rear yards. In short, we went from a 15,000 square foot lot with some piles and foundations to just over 50,000 square feet of residential space. What a difference a year can make…

On the blog we’ve talked about topics as diverse as interest rates, window installation, the day-to-day work of Hudson’s Director of Architecture, ceiling heights, logos, and NIDs. Judging from the number of comments left on Brownstoner, the most popular topics were, in first place, the condo’s dog policy, followed by garbage disposals, then the landscaped yard, and so on.

On the flip side, the only postings over the entire year that received zero comments were the blower door test and brise soleil. (C’mon, nothing snarky to say about climate change??) Now, that doesn’t mean we didn’t hear personally from some of you. (Yes, you can borrow our blower door equipment for a small fee.)

Beyond our construction progress, there’s a lot that has happened outside of the site that we’ve been tracking as it has impacted or might impact us. For example, LIBOR. As you’ll remember, 1-month LIBOR is the base interest rate for our construction loan. Way back in Week 27, we talked about getting an interest rate cap as insurance against rates shooting up. Then in Week 59, we noted that LIBOR was 4.56% and our cap of 4.00% had kicked in to our benefit. As of that posting in October 2008, LIBOR saw a monthly high of 4.59% and a low of 3.53%. Since then?

LIBOR continued to fall into January 2009, getting as low as 0.38%. Over the course of the year it varied but never got above the January rate. This week it is 0.23%. Compare that with 2006-2007 when LIBOR was consistently between 4.5-5.5%!

The impact on Third + Bond of LIBOR being so low is that our interest due has stayed likewise relatively low. We haven’t been worried about a slower schedule because the interest cost is low with respect to where we predicted it would be. And a slower schedule benefits us in that we don’t have to launch sales in the worst possible time but have some ability to wait out the worst of the economic slump.

Speaking of which, the economic woes have certainly had an impact on condo sales. We’ve been watching closely to see how our competitors have been doing. In our 2008 end of year recap, we noted that the Satori had not made any sales over its 4-months since opening, even with 10-20% price cuts. Last week, Brownstoner noted that closings at the Satori started in September 2009 and now there are 20 recorded sales and 10 reported contracts. That leaves only 4 units to go.

We’ve also seen the rising importance of FHA, FannieMae and SONYMA project approval as a means to providing mortgage financing for buyers. A few years ago, it never would have occurred to us to pursue project approval and now we not only have it but we boast about it on www.thirdandbond.com!

We can’t say we’ll miss 2009 terribly but we can say that we are cautiously optimistic about 2010.

Inside Third & Bond: Weeks 1-110 [Brownstoner]
The complete offering terms are in an Offering Plan available from Sponsor. File No. CD080490. Sponsor: Hudson Third LLC, 826 Broadway, New York, NY 10003.