Thursday, September 15, 2011

Ratner, in softball interview, says ticket sales good, sidesteps question about financing, plays dumb when asked about EB-5 venture, again claims AY a "civic project"

In a softball interview (Bruce Ratner on Atlantic Yards Project, Real Estate) posted today on Bloomberg.com, Ratner asserted that ticket sales for Nets games were ahead of schedule and that "there's certainly a chance" that the hockey Islanders might move to Brooklyn.

Though he said financing for the first tower would be in place, he cagily sidestepped a question about financing for the rest of the project and played dumb when faced with a misdirected question about the role of Chinese investors in Atlantic Yards.

As for Atlantic Yards, he again dubbed it a "civic project," as if it were somehow designed to deliver civic benefits ahead of returns to corporate investors. And in an echo of his ally, Brooklyn Borough President Marty Markowitz, Ratner asserted that "people who know me" continue to think his reputation positive.

Leading off

The voiceover introducing the interview was a portent, as Ratner's role in his company was unaccountably inflated:
Bruce Ratner is a property player. he's developed hundreds of thousands of square feet in New York City, from the New York Times building to the Nets arena in Brooklyn, set to open next year. He's transformed the cityscape, sometimes controversially.

But it's not just New York. Ratner's steering the ship of Forest City Enterprises, with offices in eleven cities, including London.
No, he's not. He's on the board of FCE, and he's one of six Executive VPs, but he's not the CEO or CFO. Those guys are in Cleveland.



The hard-hitting interviewer, Betty Liu, began by saying, "Bruce, I always love having you here in the studio."

The first segment of the interview concerned Ratner's thoughts on the local economy. He said that real estate was doing reasonably well, but the latest economic crisis, should it go further, would hurt the city, even though New York "will continue to do better than the rest of the country."

Atlantic Yards

Liu then brought up Atlantic Yards, and they had a brief, joky exchange, with Ratner acknowledging, "I don't know three years ago if I would've smiled, but I'm smiling
now."

Liu referenced the continuing opposition to the project: "Did you see that documentary, Battle for Brooklyn?"

"I have not seen it," Ratner replied, smiling and winking. "I have just read about it, that was enough."

Getting financing

"Are you having trouble getting financing to complete this project?" Liu asked.

"Not really, no," Ratner replied, proceeding not to fully answer the question, redefining "project" as the arena and the first building.

"We've financed the arena already," he said. "Our next project is our residential project, our first building. We will get financing for that, it's about 350, 400 units, half of it affordable, and the rest market-rate. And that'll start probably end of the year, beginning of next year."

"You're going to start breaking ground at the end of this year," Liu said.

"Or at the beginning of next year," Ratner replied.

I'd bet on 2012. (Ratner in September 2010 said the building would go up in 2011.)

Liu asked where the financing would come from.

"There's three or four banks that still do financing for rental residential projects," Ratner replied. "Those banks probably wouldn't lend for condo projects, but they will lend for residential."

The mysterious Chinese

"Is it true, there are some press reports, that the Chinese were interested in perhaps investing, as well?" Liu asked.

"Not that I'm aware of," Ratner replied solemnly. "Not in our project, that I'm aware of, anyhow."

Hold on. Ratner was defining "our project" most likely as the first building.

His interviewer likely didn't know anything about Forest City's effort to recruit 498 foreign millionaires to provide $249 million in low- or no-cost financing to Atlantic Yards beyond the New York Times's misleading summary 8/11/11:
Investors from China are snapping up luxury apartments and planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn.
Forest City, as far as we know, plans to use the money to refinance a land loan and help build a new railyard, though investors were told they were investing in an arena.

Prokhorov's role

Liu asked if Russian billionaire Mikhail Prokhorov is still interested in investing in Atlantic Yards.

Yes, said Ratner. "We haven't presented him with exactly our first project and when we do that, he'll make a decision... He has probably the next six months to make that decision." (Ratner three months ago also said Prokhorov had six months.)

Prokhorov has an option to buy up to 20% of the project.

Hockey in Brooklyn?

Liu asked if the Islanders would come to Brooklyn.

"I would hope that's possible," Ratner replied. "It depends on a lot of things. It depends on whether the Islanders want to come. It depends on whether they have different choices. I think it's not that likely there will be a new arena built in Nassau County with the current state of the economy. So I think there's certainly a chance."

"You're in talks with them now?" Liu asked.

"I can't really talk about that," Ratner responded, smiling. "We'll see what happens."

Ticket sales

Liu asked about sales of basketball tickets.

"Ticket sales are actually very strong," he responded. "We started selling about three-four months ago with our All-Access passes. We're about 30% of the way through where we want to be We're 10% ahead of our schedule. Our tickets went on sale in June for a little bit more expensive seats and, in about four months, our general admission seats and our other seats will go on sale."

The "civic project"

"I'm just curious, not trying to put you on the spot here," Liu said in closing. "You've been called several names by [opponents]... they've been pretty harsh Has it been worth it to your reputation to do this project, to do Atlantic Yards?"

"Yes, very much so," Ratner responded. "I don't even hesitate about that. Y'know, I think it's the right thing, it's a civic project... it's going to bring basketball, it's going to bring circuses, boxing, entertainment, and most importantly, housing and jobs."

He likes to say "civic project"--a rather undefinable term, but one that connotes public spirit--but not "public project."

"And y'know what, my reputation, for people who know me, stays, I think, I hope positive," Ratner said, then added, with slightly skewed syntax, "Those who don't will have to make up their choice, but on the other hand, it's not a popularity contest, it's a contest of seeing that you're doing right, and I think we're doing right."

"People who know me" sounds like Markowitz's "they know me" defense.

What about the possibility that those who've been watching Ratner have concluded that he's not particularly trustworthy, such as promising Atlantic Yards would be built in ten years, then saying that the buildout was market-dependent?

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