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This is the time of year when Wall Streeters traditionally use their bonuses to buy shiny new condos or grand prewar co-ops. But this year, with banks paying out a huge percentage of bonuses in restricted stock instead of cash, that's not so easy. One would-be bonus-baby buyer wants to know whether condo sellers might be induced to take some of that restricted stock at a nice premium: "Let's say I have $4mm in restricted stock that vests 25% per year for the next 4 years," posits the prospective buyer on StreetEasy.com. "Would a condo seller accept that and $300k cash for a condo worth approx $3.3mm?"
Even if the bank that issued the golden handcuffs waived transfer and vesting requirements (like the employee having to remain with the firm for the entire four years), the proposal receives a dubious response.
"Pre-2008 people got loans against their restricted stock, but I don't know how that is working nowadays," says one. "I don't think any condo seller wants to take a restricted stock position you seem eager to sell at a discount. If it were a diversified stock portfolio, that would be a lot more attractive."
There are also concerns whether the bank issuing the stock would be around in another four years ("Would opinion change if it were [Goldman Sachs] instead of Citi?" wonders the would-be buyer) and about triggering gift taxes or capital gains taxes. We don't know about that, but it wouldn't surprise if an enterprising developer figured out a way to make restricted-stock dreams a reality. (Or if private schools will field similar requests when those enrollment contracts go out next month....)