Why Should Shareholders Care if the Sponsor Keeps Apartments?

In the very loose credit market that has now ended, it might have seemed like sponsor-controlled co-ops weren’t really such a bad thing — after all, if the building is comfortable to live in, who cares that the sponsor is running a free market rental business with half the apartments, or controlling the building finances?  Now that we are in an era of extremely tight credit, banks will have much more stringent policies about lending in co-ops, preferring to see over 50% of units owner-occupied.

When shareholders cannot sell or refinance their apartments, the sponsor is causing very direct harm to shareholders.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: