Sunday Press
Real Estate
Atlantic City NJ
ATLANTIC CITY – When Jack Studnicky was hired to save a failed condominium project 10 feet from a railroad track in Queens, his approach was typically unusual. The penthouse roof became a jogging track and two penthouse units became a healthy club and a disco, despite appeals from the bank that the most profitable units were no longer available.
“The model apartment was fixed to appeal to people in their early 30s.” Studnicky said, “We called it the ‘Greenhouse,” and we had the slogan, ‘Make sure you don’t miss the new New York.’
“We put signs on other buildings, ‘Ideal condo conversion site’ and they weren’t even our buildings,” Studnicky said, his voice rising on the word ‘buildings.’ We had 13 derelict cars towed off the street.
“We sold 86 units in one week-end.”
Studnicky, 50, has made a career of saving unsuccessful and troubled condominium projects. Now Studnicky, the man originally hired to market the Atlantic City luxury condo Ocean Club, then fired, is back there again to unravel several square feet of problems in one of the state’s largest buildings.
Not everyone is thrilled. In recent months, tenants of the luxury condo have gone to the media with complaints about poor construction, poor management and dashed financial dreams. A lawsuit bought by an owner alleging defective construction was dismissed based on the condo’s master deed, which prohibits lawsuits by individuals against the developer. The suit will be appealed. Behind some of the frustration is the fact that owners hoping to rent units to overnight guests are unable to do so, at least not at rates originally hoped. On the other side are owners who resent the renting of units, according to various tenants.
Meanwhile, owners seeking to sell their units have been forced to compete with the developers, who also have units to sell.
The level of frustration is evident by the number of tenants complaining about the facility, which can’t help values in the building.
“I spent a lot of money for an apartment and it was a huge, huge error,” said Henry Grubel, an attorney, a unit owner and president of the Ocean Club condominium association, which represents the 600 tenants.
Many question the whereabouts of personalities like Leroy Neimann, Vic Damone, Rod McKuen, Rocky Aoki and Art Linkletter, names often hyped as buyers of units at Ocean Club. Those names were used in marketing, but none of the personalities ever bought.
“These people became nonbeings,” said Lou Vetter, a unit owner and secretary of the condominium board of trustees. “My God, I grew up with Art Linkletter and ‘People are Talking.’ I was looking forward to someone funny being there.” The current relationship between owners and the developers, MLM, “is like a war,” Vetter said.
Al Gardner, a general partner in MLM, noted that David Brenner bought a unit in the building, but that other personalities did not, despite ads that claimed them as Ocean Club residents.
Studnicky, meanwhile, regrets that promises were made about the building, and Atlantic city, that have not come true.
“A lot of real estate was sold based on my credibility,” he said. “I feel bad about that.”
In a tour of the building, Studnicky points out small but nagging problems – peeling wallpaper, an unfinished ceiling and a broken closet door – items to be fixed immediately. Whether or not allegations of more serious problems – in the plumbing system, for example, are true – should be known after an engineering firm hired by the condo association issues a report.
“There’s nothing wrong with that building,” Studnicky said. “It’s had a lot of vandalism from the… people who are angry.
See that section down there?” says Studnicky, standing on an upper floor balcony, pointing to a circular area on the pool deck blow. “That’s supposed to be a gazebo. The owner’s want their gazebo, and they’ll get their gazebo. We’ll take care of that and other things.” Other things includes attention to problems with elevators, security and maintenance.
“The building has the future of being the in-spot between New York and Miami,” said Studnicky in his best marketing dialogue. “It’s a city unto itself whereby every unit will be goldlined. It’ll be a mecca of the rich, the near rich and everybody who wants to be associated with them.”
The gilded language could possibly be reality someday. But it is such hype that sours in the stomachs of some investors, who resent “the effort to sugar coat a very bitter pill,” according to one investor who declined to have his name published. Studnicky, said the investor, “in some respects was the architect of the problem. It’s a little bit difficult for some people to swallow that he’s come back to solve the problem.”
Studnicky admits “Ocean Club’s image is pretty bad.” Throw in a negative media and new tax laws, and the task of selling the costly units – most are over $200,000 – will be tough. “They got somebody working for their benefit,” he said, in reference to himself.
But Ocean Club’s image is a microcosm for Atlantic City, the salesman said. “Atlantic City has not progressed to the degree that everyone thought it was going to 4-5 years ago when we started Ocean Club.” He refuses to blame the city’s government, a popular pastime. “Introducing casino gambling… would just about cripple a small town. Philadelphia and Washington would have had similar problems.”
Studnicky said his approach to Ocean Club’s problems will be practical. One solution, for example, is Studnicky has convinced developers to sell one unit for a tenant to every two for themselves.
Among the units settled, half of the tenants are happy, Studnicky says. “Among them some expected high income opportunities (from nightly rentals), and it hasn’t worked out. Some of them have deep pockets, and they can afford to wait. The others want out.
“The people with deep pockets say, ‘this is the way investments go. You should never make investments unless you can hold on’. The others – they are the most vocal – the only solution for them is to sell the units and get out.
“The developer exacerbated the problem by saying we can’t offer you any solace because we have 135 units of our own to sell.”
The result: Ocean Club will not be marketed as a building whose units can be rented out to overnight guests, but as a second home for the wealthy. “Ocean Club is going to be repositioned and sold as a primary residence or a second home.
“We’re not saying it’s not a good investment. We’re not saying people won’t make money when they go to sell their properties. We’re just saying there will be no big profits for 2-3 years.”
Prices will not be dropped, Studnicky said. “We’re not going to destroy the integrity of the building by cutting prices.”
Another solution is to convince management to clean up its act.
Management “will be given an opportunity to perform a professional function or they’ll be gone. I’m going to be the new broom. I don’t like getting on an elevator and seeing cigarette butts there for two days.”
The “new broom” knows Atlantic City and has the talent to promote it. A handsome, creative, self-made, self promoter, Studnicky has the saavy to remove his gold jewelry when speaking to people who would be offended by it.
He marketed units at other luxury resort properties including The Flagship in the inlet, the Enclave in Chelsea and the Beach House in Margate, selling enough units in each to obtain construction loans, according to Studnicky. In this case, selling means obtaining deposits, not settlements, and therein lies many problems.
In the case of the Beach House, stalled construction forced some potential buyers out of the Beach House, an occurrence unrelated to Studnicky’s involvement, observers say.
John Bingswanger, a partner with Studnicky in the Beach House, did not return phone calls.
In Atlantic City, Studnicky got deposits on 200 f the Enclave Condominium’s 232 units before construction started. William Bobo, vice chairman of U.S. Capital Corp. confirmed those figures.
“Jack is a superb marketing individual, there’s no question about that,” said Bobo, who returned the phone call for Don Tomlin, president of U.S. Capital, recently injured in an auto accident.
Studnicky “sold” 202 units at the Flagship in the inlet. He left as the result of a “mutual terminations” over the operation of the project, Studnicky said. Joseph Massaro, in Pittsburgh, developer of the Flagship, did not return phone calls.
At Ocean Club, Studnicky sold 280 units before construction began. At the Ocean Club, he was gone a month after the mortgage was obtained. The mortgage – more than $100 million of $120 million has been paid off – was the largest residential loan in the history of the Bank of America, Studnicky said. The bank recently bought out the mortgage from a conglomerate of banks, and now holds the paper itself, Gardner said.
“I didn’t leave by my own choice,” Studnicky said. “Essentially I was terminated. To be hired back: I never expected it in a million years.”
Why would MLM hire back the man it fired to do its marketing? Gardner did not give specifics concerning the firing. Studnicky’s return after being fired was “a learning process that took place on the part of the developer the last couple years together with the fact that Jack did have a basic familiarity with the building and an awful lot of owners.”
Gardner hopes Studnicky will “bring about an orderly transition of the control of the building from the developer to the condo association. He has a tremendous amount of experience in this,” and also “to sell out the remaining hundred units and to help show the people who own here what they really have, to generate some good will and peace among the 600 units owners so the word can be spread what a great building we do have here.”
Currently, Studnicky is marketing a 1200-unit condominium in the South Point section of Miami Beach. He was hired as a consultant by U.S. Capitol Corp., the company that built the Enclave.
Studnicky’s experience locally, meanwhile, has not been without blemish. The director of sales of the Flagship condominium, Steven Weintrob, successfully sued him recently for more than $30,000 in commission. Weintrob would not comment. “The court ruled in his favor,” Studnicky said. “Did I think it was right? No.” In addition, Studnicky’s cousin, Craig P. Studnicky, filed suit against Jack Studnicky in a dispute over salary and commission on a local project. Jack Studnicky is countersuing. Both were best man at the other’s wedding.
Meanwhile, Studnicky is hoping to convince the condo association to hire a company that will help in the transition from developer to owners.
One of Studnicky’s talents is to temper the animosity between developers and homeowners in situations like the one at Ocean Club. The animosity is Always new to the owners and developers.
I’ve seen it so many times at other condos, and it happens the same way each time,” Studnicky said. “They are all well meaning people but this is the first time they’ve been involved in this.” He’s convinced the Ocean Club will eventually be sold out, and owners who remain will be happy and the building will regain its dignity.
On a sales level, Studnicky will “create an atmosphere that is dynamic and other conducive to making decisions in.” The reason: “Most people are not decision makers.” The result: “I saw a girl behind the front desk eating a bagel with cream cheese and coffee. That’s never going to happen again. There’s no smoking allowed in the sales center and no smelly foods. Nobody can bring in a hamburger with onions.”
Studnicky once lectured on sales psychology and self-motivation. He offered some insight into salesmanship, Studnicky style.
For one thing, phone calls will be made to buyers who backed out when the building was under construction and interest rates were much higher. Then, there’s the “flushing out” of other potential buyers.
“In a given week, there may be 10 real buyers in the marketplace. We try to design an event to get the 10 buyers in the same place at the same time.” How do you do that?
“I don’t know that yet,” said Studnicky. “We have a lot of things to go back over in the terms of images.”
If Studnicky sounds uncertain, it isn’t because he doesn’t know his business. Articles in various real estate and business magazines and newspapers refer to his sales ability in terms reserved for superstars. It’s not uncommon for “Turnaround Jack,” as one article refers to him, to sell-out units in short periods of time. In Ocean City, Maryland, he sold 139 units in five weeks in a building where only 11 sales had been made in three years. Near Baltimore, his company sold 61 units in 25 days in an apartment building conversion without advertising.
One key, of course, will be the further development of Atlantic City.
A new convention center, a new airport and a high speed line could help make the city, and Ocean Club, more of what developers, investors and Stunicky had hoped for.
September 14, 1986
