Sunday, May 29, 2016

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said.
When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.

A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development sites, not condos

But rather than build and sell high-end condos, now the joint venture Greenland Forest City Partners is selling three development sites, B12, B13, and B4. As of 2014, the first two (see tentative buildout below) were thought to be condo sites, and B4 was supposed to be a mix of condos and market-rate and affordable rentals.

Interestingly enough, a Forest City Realty Trust executive said--perhaps mistakenly?--that those were sites for rentals.

And are they selling from strength, or weakness? 

One sign of weakness is that the design for the B12 condo tower, at 615 Dean Street, was unveiled last September but the building hasn't really broken ground. And Greenland was known for having the deep pockets to launch a building even without a construction loan.

Now they're seeking new investors "to make the project run even more expediously," in the words of Forest City Ratner's Ashley Cotton. And a FCRT executive said the sale was to take "advantage for demand for residential buildings," which sounds like a sale from strength.

Presumably the buyer, the price, and the percentage sold will hint at who's getting the best of the deal.

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