Rebuttal to APOG

APOG Steering Committee distributed a document to some, but not all, owners putting forth several arguments against signing Klein Group's Listing Agreement. I am not sure if there is more than one page to their document but the page I was given by another owner has 7 arguments against the Listing Agreement.

Here is a link to the document: https://www.dropbox.com/s/fvyci46beq4v4ok/APOG%20Rebuttal.pdf

These arguments have already been debunked. I am not sure what the end game is for the owners who are part of the APOG Steering Committee, but those within and outside of the APOG “collective” should understand that these arguments are fundamentally false. Perhaps it will be clarified when the amendments they wish to make to the Linsting Agreement are disclosed. Maybe those owners don't wish to sell or maybe they think a transaction like this can be accomplished without professional realtors truly committed to working on it. Perhaps they still wish to pursue a strata wind-up despite the known inherent problems with that approach in our situation.

Unfortunately, the recommendations from their attorney are not yet public so I don't know how closely they track to these issues, but as to the issues raised (at least on page 1) and using their numbering:

1. Yes the contract is binding for up to three years but it is completely false that there is no exit. Any owner can sell during the term of the listing agreement to whoever they wish. The limitation is that the broker they use must be Klein Group. No owner gives up control of their ability to sell their property except for that limitation.
2. It is correct that the commission for Klein Group is higher than the commission proposed by other brokers. However, as has been discussed repeatedly, that is a comparison of apples to oranges. The net to owners - after the commission to Klein Group but taking into account expenses owners would be obligated to pay upfront (such as legal fees) under the other proposed scenarios – will likely be substantially higher. Owners would then have the risk of the deal not closing and losing all their upfront payments. Further there is the rather strange assumption that the fee to Klein is unfair because of the impact of a buyers agent. Again, this is a false argument. Sotheby's aside, the potential buyers of Anchor Point will not be dealing through a buyer's agent. So yes, Klein Group would be earning the entire commission and they will be risking capital and therefore committed to be working for it. Finally, signing by June 15gives owners a substantially less expensive commission than what was presented originally, so the argument that Klein Group adjusted their fees is somewhat irrelevant. Keep in mind that the original presentation did not contemplate a group of owners and certain strata councils actively undermining the expressed instructions of the 80% of owners that wish to sell and are open to the assembly method.
3. Yes, the assembly timeframe goals are indeed best efforts. No owner has been asked by Klein Group to put up a dime to cover any expenses. No owner is obligated to pay any of the expenses involved in assembling the 477 owners. Owners have no economic risk, Klein Group is bearing all the economic risk. It is a fair trade-off. Further, Klein Group is the only brokerage that has continued to work with owners to move the project forward. All other brokerages withdrew rather than risk putting up any of their own money to compete with Klein Group's proposal.
4. Yes, the listing price is based on $1400/sq foot and the basis for the ultimate calculation of unit prices is not included. There are several potential methods of calculation, all of which will result in approximately the same ballpark for pricing individual units just as unit entitlement and entitlement upon destruction (as set forth in the strata formation documents) result in similar but not identical figures for owners. The fairest method to the entire group will be determined as we move forward, which should work because everyone has the choice to agree on the price for their unit (or not) at the time offers (if any) come in. The fairest method may not be the best method for me, it may be the best method for my neighbor. Treating each other unfairly is why the Seymour Estates owners were in court for over 3 years despite 100% agreement on the overall property sales price. They incurred enormous legal and related expenses and missed out on 3 years of appreciation while they argued. If we are reasonable with each other, then we all will profit enormously. If not, we will all lose out on this opportunity completely.
5. a) It is correct that Klein Group eliminated the potential commission issue if an owner rejects the sales price even if it is at the Listing Agreement amount. And yes, this is positive and indicative of Klein Group following through on the statements made to many owners. b) No Owner has to sell based on the Listing Agreement price. This is a misreading of how the contract functions. Please check with your own attorney, but according to my attorney, because it is a Listing Agreement and not a Purchase/Sale agreement, there is no one that can force you to close. c) The penalty for failing to close, under ordinary circumstances, would be the commission owing to the broker but Klein Group has eliminated that provision. So, the effect is that if you don't close, there is no penalty.
6. Klein Group will not act as an agent for both sides of the transaction. The potential buyers, as noted above (with the exception of Sotheby's client who no one seems to think is seriously interested in or capable of purchasing the site) do not buy projects like this using a buyer's broker. This, again, is either ignoring how these transactions work or it the concern has been put in there to create suspicion. As Klein Group has indicated, they are happy to clarify the Listing Agreement provision but not change their structure, I am confident they would be happy to insert a further statement that they will not act as a Buyer's agent in any capacity for the AP transaction.
7. The formula calculation question again is raised. Each contract reads the same, the formula that is adopted will be applied equally to all units so that everyone is treated the same. Again if clarification is needed, no problem. But presenting this as if there were something sneaky going on is simply false and deceptive. Again, no owner is putting up any money for anything Klein Group is doing. If some owners wish to hire someone to consider, compare and recommend calculation formulas now, before there is any offer or even commitment to get to market, they can surely go ahead and do so. That is their economic decision and risk.

Perhaps there are additional issues raised by the Steering Committee but so far as I know, there is only this one page.

The June 15 discounted commission deadline is coming up quickly. If you have questions, go to your attorney for answers and advice. The points raised by the Steering Committee are, in my opinion, simply smoke and mirrors. They do not appear on a document with Ed Wilson's letterhead so I cannot be confident that these are actually the attorney's words.

So, if you are part of the APOG collective, you should get advice directly from Ed Wilson to make sure your interests are indeed being looked after, that the communications you are getting are accurate statements of his advice, and that there are no conflicts of interest between the Steering Committee members and the collective. The analyses presented by the Steering Committee in their recent document are simply not helpful or correct. As always, it is best to rely on your own personal attorney that represents just you without any conflict of interest.