-98-
already owned the apartment property to be converted and sold to
individual condominium unit owners. Rather than Prudential’s
selling an apartment property to Frey and other investors,
Prudential elected to participate as co-owner in a joint venture
to convert and sell the property as condominium units.
Prudential would contribute the property and receive (1) all
initial condominium unit sale proceeds up to a specified amount
based, in large part, on the property's appraised fair market
value as a rental property, and (2) 50 percent of all other unit
sale proceeds above the initial specified amount. Frey and other
investors would usually form a limited partnership and were
responsible for renovating and converting the property and
selling the condominium units. The limited partnership that
included Frey and other investors received the other 50-percent
share of all unit sales proceeds above initial specified amount
of the sales proceeds. Frey and/or an entity owned by him also
earned development and management fees from the project.
Frey/Prudential joint venture projects included condominium
conversions known as The Greens, Chatham, Calais, Valleybrook,
and Old Forge. Frey, Transcr. at 677; Wold, Transcr. at 2868.
Prudential and BJF, Inc., entered into a series of consulting
agreements with regard to these projects between August 1, 1981,
and December 1981. Exh. 223, app. A, pt. II, items 13, 16, 19;
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