Steve- 

Thank you for the Letter of Interest from Chase but their response caught me by surprise. Some of the features of the offering are apparently related to a misunderstanding of my experience in real estate. 

I thought I might share with you some of my experiences since it's somewhat painful for me to be categorized as a novice in real estate.

In 1979, the coop red herring was issued for the apartment I rented at 15 West 12th Street. This was my first real estate purchase. It was a sponsor apartment and the transaction was all cash and routine. I owned the apartment until 1997 when I sold it to my next door neighbor. She caught me in the hallway late at night with  a bag of garbage in my pajamas.  She got off the elevator with then Police Commissioner Bill Bratton.  She made me an offer which I accepted. I did not want to let it go but I was living in Georgia at the time and was in New York very infrequently.  It didn't make sense to hold it for those rare visits. Instead, I built a back office apartment at my building at 160 Madison Avenue which served my purposes.

In 1981, our textile company was located at rented premises on the 4th Floor at 160 Madison Avenue, a 7 story concrete and steel 1920's vintage sprinklered building. My father and I agreed to pursue the owner of the building with the purpose of purchasing the building. My father located the owner, retired in Florida. We negotiated the purchase of  160 Madison Avenue which was this ninety year old man's last remaining flagship New York property. He agreed to hold a mortgage for 90% of the purchase price at 9.5% for 30 years with payments payable to his 3 children.  At the 11th hour, it was discovered and disclosed that another tenant in the building had a right of first refusal written into his lease.   We were forced to form a partnership with him and as word spread through the building, other owner occupants wanted in. The building was ultimately purchased as a limited liability partnership by 5 owner occupants. It was one of the first "commercial coops" in New York. 

In 1987, one of the partners, an architect on the 5th floor, expressed an interest in selling and I agreed to buy their 12.5% interest in the building.  His business had taken a turn for the worse during that downturn.  My textile business was doing well and I needed more space.  It was an all cash transaction.

In 1988, another 12.5% owner moved to larger premises. Their apparel business had taken off.  They had several hot brands and had moved to larger premises. They were having trouble subleasing their floor during that time. I agreed to purchase their share but the right of first refusal by the retail owner occupant blocked my purchase. According to documents, when two owners wanted to purchase, the purchaser was to be determined by vote of the board which was deadlocked. The deciding vote was held by another owner occupant  who had already signed a waiver of the right of first refusal.  What I did not know and found out during a heated negotiation meeting of all owner occupants was that the deciding voter was attempting to force me to buy his share instead of the other.   The drama was unnecessary since I happily agreed to buy his share and another owner ended up with the original share. The transaction was partially financed by the seller and was paid in full in 3 years at which time I showed him to the door. We took over building management of 160 Madison Avenue in 1988.

In 1990, I purchased the architect's remaining 8% interest in the building. It was a routine all cash transaction. He was a really good partner.

In 1992, I got a call from the managing agent at 15 West 12th Street that a penthouse apartment with a wrap-around balcony was available. I went to see the apartment and decided that it offered my no improvement in quality of life. I instead bought a summer home former farm house in Sullivan County, New York on 33.5 acres.  My first offer was refused but I later upped my offer corresponding to a decline in interest rates. Citibank financed 1/2 of the purchase price on a 15 year variable rate amortized deal.  The loan was paid off in full early.  The seller was a somewhat famous NYC sculptor.

In 1995, our textile business had outgrown its production.   I elected to open a new factory to manufacture tricot fabrics. I settled on a factory building owned by Imperial Shrade in Ellenville, New York. Negotiations with Shrade dragged on. Their demands seemed to increase as time went on. Their conditions became more onerous. The building needed a lot of work. The contract was topping out at 22 pages single spaced. I started looking elsewhere and very quickly found a  35,000 sq ft building in Soperton, Georgia on 6 1/2 acres to house the new factory.  A five page double spaced contract was quickly signed. 75% financing for 15 years amortized at 80% of prime variable was arranged by the Bank of Soperton, 

In 1996, I moved to Soperton, GA and put the factory together and into production. I lived in a one-bedroom apartment 1/4 mile from the factory.  Carolyn moved down in 2000 and we were married in 2004.  Our two sons were born in Dublin, Georgia in 2004 and 2006. I continued to hold onto my summer home in Sullivan County., 

In 1998, during a trip back to the farm in Sullivan County, I discovered an adjoining parcel for sale which comprised 12.5 acres and a manufactured home. I purchased the property for all cash.

In 2002, I purchased the owner occupant of the 2nd floor at 160 Madison Avenue in an all cash purchase, leaving my father and one other partner in the building.  In 2004, my father transferred his 20.5% interest in the building to me.

In 2005, I completed the payoff on the mortgage for the farm home in Sullivan County.  Citibank offered a no fee HELOC on the farm which I accepted.

In 2006, when Henry was born, I purchased a beautiful craftsman style home in Soperton, GA using funds from the HELOC. 

By 2007, my father's health had begun to deteriorate and my oldest was starting school.  I began to think about moving back to New York.  An opportunity for a larger factory with a working plant manager partner became available in North Carolina which would offer a stepping stone back to New York and the opportunity to greatly expand the textile business.  The deal was struck and the plant and equipment were leased for 3 years from Hornwood, Inc. with rents to be applied against an agreed purchase price at the end of the lease, at our option. We moved to North Carolina early in 2008 and closed the factory in Georgia. The factory had been reasonably successful, supplying product to us throughout those years.  During those years, I became familiar with building and plant management. At one point,  I was approached by the Treutlen County attorney in a condemnation of a right of way on the plant property pursuant to a Federal requirement of a buffer zone for their sewage treatment plant. We settled on a cash payment to me in lieu of condemnation and everyone was happy. I also borrowed and repayed a small loan for the building in Soperton from the Bank of Soperton for capital improvements.   It was too much trouble for a small amount and that next time it would be much larger. The bank president said, "Claude, nothing would make us happier."

Also in 2007, I purchased another adjoining 8 1/2 acre parcel in Sullivan County from a neighbor for all cash.  

In May of 2008, I finally made a deal to buy out the last remaining partner at 160 Madison Avenue. We had come close 3 times before, each time the purchase price climbing significantly higher. There were personality issues.  The purchase was fully financed by Intervest Bank using 160 Madison Avenue to collateralize the loan. It was a 6.5% 5/30 balloon.  Joe Berko of Berko Associates was the mortgage broker.

In June of 2008, I leased out the building in Soperton.  Because of the recession, the tenant never took possession. We made a good cash settlement with the tenant and released them from the lease.

The remainder of 2008 proved to be very difficult and challenging. The recession took its toll on the textile business.  A large customer went out of business owing us a good chunk. Another customer completely moved off shore, another closed completely.I lost a very close friend and business ally. My partner's wife died of cancer. Another long time employee passed away. My father's health got much worse. We cut costs at the plant. 160 was not fully leased but netted enough to cover the loan payments. I sold the house in Soperton at break even. We sold off excess equipment for cash. We cut benefits, took no salaries. I renegotiated the lease with Hornwood.

In 2009, we decided to move back to New York, leaving the North Carolina factory in the capable hands of my partner. There had been significant losses but it had made the turn and was generating good cash.  But New York had become much more expenses. I had been living in one of the poorest counties in Georgia.  So we moved into the summer home. 

In 2010, the factory in North Carolina was closed.  I decided not to exercise the option to purchase.

There had always been rumors about development of the 160 Madison Avenue block. There was an old Con Ed substation next door which was home to Andy Warhol's factory. It was a T-shaped building in the middle of the block extending in the back to 32nd and 33rd Streets.  It had been vacant for some time.  It was an odd and impractical layout.  Someone had bought it and it changed hands a couple of times. It had been demolished in anticipation of a development. I had been in negotiations for the sale of air rights and/or the building for many years but nothing ever took off. By 2010, the owners were in deep trouble and in default. There was always conversation that usually ended up getting me nothing but another legal bill.  Even so, I always insisted on demolition clauses in all my leases with 160's commercial tenants.

So when I got the call from the owner next door, I was not impressed;  another deal, another bank, another pie-in-the-sky.  I wanted to believe but I couldn't. They said meet us. Again?

When the man in the rumpled raincoat showed up at the Eventi Hotel and the Hotel Staff stood at attention, I knew it was real.  We sat and met and talked. He asked my number. I told him. He said, "Claude." and paused. "I'll give you your asking."  Now that's what I call a conversation stopper.  Despite that I asked him, because I was skeptical, why would he buy my building when he didn't even own the vacant parcel next door. "Claude", he said as he rose to his feet and extended his hand, "all that aside, do we have a deal?" "Yes", I said.  By the time I was one block away, my attorney called me and reported that he had heard from the buyer's lawyer.

The down payment for the purchase was received within 2 weeks. It cleaned up all debt (mine and my father's)  and left plenty of cash for operating and moving.  

A side story.  The Intervest loan matured in May of 2011, 2 months after the contract was signed to sell. The renewal was exhaustive.  The loan originated before the recession and had to be renewed under an entirely new set of regulations requiring much more documentation. The building showed a break even because the buyer was paying the expenses but the bank saw a vacant building and couldn't quite accept that. In the end, they renewed the loan.

Vacating the building wasn't bad. One tenant dragged their heels but there was no litigation. The buyer couldn't close on time but paid my carry costs until closing. He also gave me a side letter agreeing to loan me personally up to $2,000,000 until closing. I never took advantage of that.

We had a 90th birthday party for my father in April, 2012. The building deal closed in June, 2012.   We rented a loft on Fifth Avenue. It was a hot real estate market by then. I tried a 1031 but each property turned into an auction. The money sat in escrow at the 1031 agent until December 2012.  I

In October 2012, I purchased a pied-a-terre at 10 Park Avenue. It was an immaculate studio renovated by an architect. 

I searched for properties throughout 2013.  My father passed in June, 2013. The market was hot. Several deals fell through with buyers bidding up and brokers jumping in. In October 2013, I had come full circle to a small building that I had first seen which didn't impress me. I had remembered that my father liked it so I went back to take another look. I made an offer on the spot and it was accepted.  The contract was signed by me and delivered with deposit to sellers attorney. Seller renegged and sold to a higher bidder. I was furious and we were gearing up to sue. The broker contacted me.  He was a friend of the seller. He found another off-market building, a better building, same neighborhood. I looked.  It was a better building. I made an offer. it was accepted. 336 East 56th Street.   When you look at the purchase price, you should see a phenomenal buy and now know why. I do not believe another UES townhouse sold for that low in all of 2013.

The following month, I purchased 534 West 42nd Street Penthouse where I stay when I'm in New York and also houses my home-office.  It also was a great buy from a lender in possession. 

I also sold the factory building in Soperton, Georgia back to the Industrial Development Authority for a nominal amount for tax purposes.

10 Park Avenue 9H was subleased to a cardiologist shortly thereafter.  I just renewed his lease for another year.

336 East 56th has been brought up to snuff with roofwork, insulation, masonry work, some plumbing and fire code stuff. It is fully leased and just this summer had 2 apartments turn over for the first time.  I keep the place clean, safe and up to code. There have been 3 garbage violations since I bought and nothing more.  I have a rent stabilized tenant who has not made a single complaint to HPD. She calls me "handsome" with good reason. My commercial tenant has built a great business. All the taxes utilities, and other bills are paid up to date. 

I've done extensive renovation work on my home in Sullivan County over the past few years.

Throughout the years, I have extensive experience in leases, collections, property management, purchasing, selling, broker contact, tenant contact, vendor contact, DOB, HPD, Sanitation, NYFD, insurance, financing, contractors. accounting, taxes.  I'm the President of the Condo Association at 534 West 42nd Street.  The board there comprises 2 lawyers, 1 accountant and a mergers and acquisitions guy, if that tells you anything. I myself am a non-practicing attorney admitted in NYS in 1982.

Through all these transactions, I have used the same attorney, a lifelong friend and the best tenants' lawyer in New York City, Darryl Vernon of Vernon & Ginsburg.  My accountant through the years is the same., Allan C. Cohn and now his protege, Arthur Langer. My insurance broker is Guy Lustgarten who gets hard nipples from broadform water coverage.

I've always been conservative with respect to leverage. I don't borrow more than I can put to work or repay.

Of all the transactions listed above, I would welcome you to contact any of them. They should all be able to verify transactions and some might say something good about me.  I have closing statements for all of the above.

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