Sunday, November 03, 2013

Chinese investor Greenland said not to be "purely financial partner" in Atlantic Yards, so what role will it have?

There's a very interesting nugget inside the Crain's New York Business article headlined Why China loves New York: China-based investors and developers are dropping huge sums for NY properties they consider bargains.

"What you're seeing now is a top-down policy driven by the Chinese government that is allowing and sanctioning these types of transactions," said Kit Kwok, an attorney in DLA Piper's Shanghai office, who worked on the Greenland Group's plan--still not finalized--to invest more than $3 billion for a 70% stake in the 15 remaining Atlantic Yards towers.

A Chinese role

Crain's points to the experience this buyer, and others, have with large-scale real estate development in their home country:
Greenland Holdings, for instance, has built several sprawling mixed-use real estate developments in China and is in the process of raising that country's second-tallest tower—a skyscraper in the city of Wuhan that will rise to a height of more than 2,000 feet.

Mr. Kwok, Greenland's lawyer, said the Chinese state-controlled company's portfolio of jumbo real estate deals both attracted it to the Atlantic Yards project, which includes the construction of more than a dozen apartment buildings, and made it uniquely qualified to help build it.

"Atlantic Yards is going to be a joint effort; Greenland is not going to be a purely financial partner of Forest City," Mr. Kwok insisted.

"They are one of the leading builders in China," he explained of Greenland, "and I think both they and Forest City see value in the fact that they will bring their point of view to this project. Greenland wants to do ambitious projects, and they want to be a player internationally. Atlantic Yards fit the bill."
What does that mean? Would Greenland import some materials or technology? Take a stake in the modular factory?

Stay tuned.

FCR's take

A 11/1/13 Real Deal article headlined Cutthroat competition drives real estate bigwigs to get crafty described a shift by Forest City:
“As we looked into the world post-recession, our business strategy changed,” [CEO MaryAnne] Gilmartin said. “We’ve become a company that enjoys partnerships.”

Gilmartin said partnerships allow Forest City to demonstrate to lenders the value it is creating via its projects. “If you don’t sell, it’s hard to point to that,” she said.

In another recent deal to bring on a partner, Forest City Ratner sold a 49 percent stake in its rental tower New York by Gehry at 8 Spruce Street to pension fund and real estate heavy TIAA-CREF for $250 million in December.
Then again, there's a difference between selling 49% and selling 70%.

The original press release issued last month regarding the Greenland deal stated:
Under the proposed joint venture, Greenland Group would acquire 70 percent of the project, co-develop the project with FCRC, and share in the entire project costs going forward at the same percentage interest. FCRC would manage the day-to-day activities on behalf of the joint venture, which would develop the project consistent with the approved master plan.

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