Wednesday, April 20, 2016

Are new Atlantic Yards/Pacific Park investors sought to make project go "even" faster? Evidence suggests some delay (+Greenland stress?)

On Tuesday, 4/12/16, the Real Deal reported that Greenland Forest City Partners was seeking new investors for three buildings: the planned B12 and B13 condo towers on the southeast block of the Atlantic Yards/Pacific Park site, as well as the B4 tower--where the developers aim to build office space, after previously planning apartments--at the northeast corner of the arena block.

The next night, at the Atlantic Yards/Pacific Park Community Update meeting, a spokeswoman for the developer wouldn't say much about that plan, but her words, I think, were inadvertently revealing,

"There was report earlier about B12, B13, B4 being marketed," said Gib Veconi of the Prospect Heights Neighborhood Development Council. "Is that accurate?"

"Yes, there is a report that is accurate that we are seeking to recapitalize our investment in order to make the project run even more expediously [sic]," responded Forest City Ratner's Ashley Cotton. "So we are interested in building out Pacific Park, obviously it’s been a long process for us. So we are seeking even more recapitalization to do that."

See black arrows for sites at issue
Is project moving faster?

Let's put aside expediously--which should be a word, but isn't (though another Forest City executive has used it)--and consider Cotton's statement.

While the project certain has speeded up over the 21 months, the design for the B12 condo tower, at 615 Dean Street, was unveiled last September but the building hasn't really broken ground. That's neither expedient nor expeditious.

In other words, they're slightly delayed.

Why are they seeking new investors? Notably, Cotton did not invoke the strength of the condo market nor suggest investors are clamoring to buy in. (Who wants to buy into a speculative office tower, with no anchor tenant named?)

Greenland backing off?

So that hints that senior partner Greenland Group, which owns 70% of the project going forward (excepting B2 and the Barclays Center), may be less willing to spend its own money, in contrast with previous assurances. (Greenland is plurality-owned by the government of Shanghai, and formerly majority-owned.)

Remember, when the joint venture was announced, in a 7/1/14 Forest City Enterprises press release, Zhang Yuliang, Chairman and President of Greenland Group, said, "Together [with Forest City], we're confident we can expedite the construction of Atlantic Yards and build a new community within this extraordinary borough."

Months before that, as I wrote 11/4/13, Zhang told reporters in Shanghai (according to the Wall Street Journal), that he thought the project could be built in just eight years. “We have development funds, development expertise and experience and an enormous customer base,” and Forest City has the local execution capability, he said.

Back then, I was skeptical about that timeline, since the new 2025 completion date had not been negotiated.

Today, after that new timetable was set at the time of the joint venture, Greenland may think less ambitiously.

After some stock market gyrations, it may have a smaller amount of "development funds" or, at least, funds it wishes to risk. And its "enormous customer base"--for the condos--may have more trouble getting its money out of China.

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