Content area
Full Text
Cash-flow problems plaguing Time Equities Inc., one of the city's largest converters of cooperative apartments, are forcing a group of its banks to start paying some of the company's maintenance obligations.
The move is good news for co-op owners in buildings converted by Time Equities who would have had to meet the company's maintenance obligations if the banks had not come forward. If followed by other banks, co-op owners throughout the city will find themselves protected despite the financial woes of many sponsors.
But for banks, taking over maintenance payments means carrying an increasing burden at a time when nonperforming real-estate loans are growing at many New York institutions. In the case of Time Equities, Citibank, Chemical Bank and about eight other financial institutions have loaned the company more than $100 million, using as collateral the 2,500 or so apartments it still owns.
The banks will have to classify the loans as nonperforming and inject substantial funds to make up the difference between the rent being collected on these units and the maintenance owed the co-op corporation. They could also face the unpleasant prospect of taking many of these apartments over and selling them at...