New Building Housing Charter HS for Sale
Yesterday a reader forwarded us a Massey Knakal listing that details how 198 Varet Street, which recently began housing a charter high school, is on the market for $30 million. The listing (click through to see a section of it) says, in part: “This new construction facility, built to suit, was completed andopened in the…
Yesterday a reader forwarded us a Massey Knakal listing that details how 198 Varet Street, which recently began housing a charter high school, is on the market for $30 million. The listing (click through to see a section of it) says, in part: “This new construction facility, built to suit, was completed andopened in the fall of 2010. The tenant, is in its first year ofa 30 year lease. Due to construction delays of over a year the admissions process was shortened resulting in a lower than expected first year student enrollment. However, the school already has an overwhelming amount of preliminary applications and is confident to enroll a sufficient number of students for a profitable next year (1,038 students). The building and charter allow for a maximum capacity for 1,200 students.” The reader who sent in the listing opined: “I wonder how the construction was funded in the first place, if the school is leasing it.” Good question. Another is: What sort of investor would this property appeal to? GMAP
Click to enlarge
Confidentiality? they’re promising a 7.5% cap on a $30M purchase. It kind of gives it away, no?
On a $12M mortgage, it’s a sweet, sweet return. I wonder whose brother-in-law got that deal. The only reason they’d get from under that would be if the school could fail and default, and there is no state guarantee.
Gotham Schools just did a good piece on the financial underpinnings of this building:
http://gothamschools.org/2011/03/17/in-williamsburg-real-estate-troubles-follow-declining-enrollment/
“I don’t understand how they can afford $200,000/month rent.â€
I guess someone convinced the state(?) that it would be cheaper to pay the monthly rent than build the school. And look, you need to sign a confidentiality agreement to see the lease and that’s there’s also a lease guaranty. lovely.
http://www.masseyknakal.com/listings/detail.aspx?lst=20369
extremely difficult to get a construction loan like this, not easy by any means and owner must pledge value of building and must put up many fees and cash but he gets a 20 dollar rent instead of 10/12
lot 24 block 3117
shows mortgages of about $12.5 million dollars(recorded in 2010) and an assignment of rents.
Charter schools are free.
How is the construction funded? They get a construction loan based on the the signed lease. Its not difficult. Some one capitalizes the lease payments and a loan is given. There is also a performance bond. Sometimes its an insurance company. Sometimes another pension type…and then the owner tries to sell and make a profit.
BTW at one time ground leases were used to get around NY States usury laws….
I don’t understand how they can afford $200,000/month rent.
Do charter schools charge their students, or do they make a “profit” off the money given by the state?
only if this building as in BK Heights – it would solve those middle school complaints