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Showing posts from 2017

Activist investor again goes after Forest City, suggests it's candidate for acquisition

On 4/24/17, Forest City Realty Trust "announced the appointment of Z. Jamie Behar, CFA, and the nomination of Craig Macnab, two highly qualified and accomplished real estate executives with significant board experience, to serve on its Board of Directors."

Behar, joining the board immediately, will fill the vacancy created when Bruce Ratner, executive chairman of Forest City's New York subsidiary, left the board at the end of 2016. As I suggested, the lack of encomia toward Ratner suggested the company was not super-pleased with the performance under Ratner. Macnab, an independent director, would succeed Stan Ross, who won't stand for re-election at Forest City's upcoming, if unscheduled, annual meeting.

Activist investor still pushing

That makes eight of 13 board members independent--enough for the main activist investor, Scopia Capital, but not so for a smaller, feistier activist investor,  Land and Buildings Investment Management, which yesterday issued another…

Resorts World Casino NYC Plaza: public amenity or promotional location? (again)

From the latest Construction Alert: visible work at two arena block buildings

According to the latest Atlantic Yards/Pacific Park Construction Update (bottom), covering the two weeks beginning April 24 and circulated yesterday at 2:19 pm (a bit late) by Empire State Development after preparation by Greenland Forest City Partners (GFCP), the most notable work will occur around the arena block.

At B3 (aka 38 Sixth), the removal of hoist run (exterior elevator) will begin, as will the installation of panels where the hoist run was. Also, removal of overhead protection may occur in certain locations.

At B2 (aka 461 Dean), exterior site work to complete the sidewalk was to begin yesterday, with some work taking place overnight, as discussed in a previously distributed community notice.

Outside B11 (aka 550 Vanderbilt), part of Dean Street will be repaved where the fence was removed.

Saturday and after-hours work

As in previous weeks, Saturday work could occur at B3, B11 (550 Vanderbilt), B12 (615 Dean), and B14. Then again, pretty much nothing has been happening at B…

Nets TV ratings down, attendance up slightly, gate count reportedly up more (but 71% full)

NetsDaily, drawing on Sports Business Journal, yesterday reported YES ratings drop a precipitous 28 percent to worst in NBA:  "Brooklyn Nets games on YES Network posted a 0.33 rating, the lowest for any NBA team since the 2010-11 season when the Nets on YES averaged a 0.31." Apparently the Nets' ratings went up initially, thanks to the addition of Jeremy Lin, then plunged after his injury. NetsDaily suggests:
Next season, YES will likely have a resurgence, with its two-season long dispute with Comcast resolved. That cost them 900,000 households. The Nets and YES will also have a new contract starting next season, with a substantial boost in rights payments.Attendance and gate count up
NetsDaily noted that reported attendance rose to 15,429, an uptick from 15,125 in 2015-16. That represents 28 of 30 NBA teams ahead of the Minnesota Timberwolves and Denver Nuggets, as reported by ESPN.
NetsDaily also reported some statistics that aren't publicly posted: The Nets had a …

Prokhorov said to be selling 49% of the Nets, but that's not easy. Would share of team/arena be worth $1.6B?

Bloomberg reported 4/21/17, Billionaire Prokhorov to Sell 49% in Brooklyn Nets, RIA Reports: Russian billionaire Mikhail Prokhorov wants to sell 49 percent of the Brooklyn Nets, the professional basketball team in New York that he fully owns, according to RIA Novosti.
A buyer for the stake hasn’t been found yet, Prokhovov said, according to the news service. His spokesman didn’t comment immediately when contacted by Bloomberg News.
Prokhorov said in November that he’d hired Allen & Co. to find a local minority investor for the Nets “to further strengthen the team’s New York presence in order to expand upon our business and community relationships.” He didn’t say at that time how much of the club he planned to sell. The news, apparently, is not that Prokhorov wants to sell, given the six-month effort, but that he wants to sell just less than one half.

The more interesting question is how that local investor would "strengthen the team's New York presence" if the major…

Harper's on de Blasio's housing plan: "a target of his own ambitious gamble"

From a thoughtful profile in the April issue of Harper's magazine, headlined Defender of the Community: Bill de Blasio gambles on doing the right thing, from Alan Feuer: Casting himself as a kind of urban Robin Hood, the mayor gave his listeners a choice. He could, of course, sit back and do nothing as the market did to them what it had already done to hyper-gentrified neighborhoods like Williamsburg, in Brooklyn: bury them in glass condominiums and artisanal pizzerias. Or he could use his right hand to welcome builders to the area while employing his left to pick their pockets of apartments people could afford. “I have a huge critique of the free-enterprise system, but it’s not going anywhere,” he said. “There’s plenty of places in the city where someone can build a building in any way they want. That’s the reality of a capitalist system. My vision is that the government intervenes to the maximum extent possible to create balance.” But what if that balance is out of whack, as in…

Irony: Prospect Heights Historic District used to promote 550 Vanderbilt (beneficiary of blight finding)

There's something a little ironic about the tweet at right from Pacific Park Brooklyn, touting the new condo building 550 Vanderbilt. The photo captures not just the brownish brick and large windows of the lower floors of the tower, but also the brown street sign Vanderbilt Av.

A brown street sign indicates a historic district, and the small horizontal band delineates the Prospect Heights Historic District, which was designated in 2009 after several years of activism.

As the map below shows, Vanderbilt Avenue and Pacific Street, just across from 550 Vanderbilt, is the extreme upper right "finger" of the historic district, thus bookending the southeast block of the Atlantic Yards/Pacific Park project.

And that reminds us that the historic district designation came a few short years after the Atlantic Yards site, including many properties on that southeast block, was found to be blighted, to enable eminent domain.

It's not typical for blight--"substandard" a…

My segment on WBAI talking about my affordable housing lottery article

On Thursday, April 20, I appeared on the WBAI morning show, hosted by Michael Haskins, talking about my article for City Limits, The Real Math of An Affordable Housing Lottery: Huge Disconnect Between Need and Allotment.

My main message: whenever you read an article about an affordable housing lottery, and someone says there's a tremendous need for affordable housing, recognize there's a much higher chance for a middle-income household to win than a low-income household to win.

So, Islanders owners want a new arena at Belmont? How do the numbers work?

With the Barclays Center still awkward for hockey, Newsday reported yesterday, Islanders plan to submit bid for arena at Belmont Park, NHL’s Gary Bettman says:
The Islanders plan to submit a bid to the state to build a new hockey arena at Belmont Park, NHL Commissioner Gary Bettman said Friday, marking the first public confirmation of the team’s stadium strategy.
Saying that the Islanders “are reviewing their options,” Bettman also mentioned the land next to Citi Field in Willets Point as a potential landing spot for the Islanders and added that the renovated Nassau Coliseum is “not a long-term option.”
“Yes, there is an RFP [request for proposal] for Belmont and I know they are going to participate in that,” Bettman said of the Islanders. “I believe that everyone thinks there is a terrific opportunity there, if not at Willets Point, to create a more hockey friendly environment for the Islanders, which is something [Islanders co-owner] Scott [Malkin] is committed to do.” Neither team ow…

No Surprise: EB-5 middleman Mastroianni big donor to Trump's inaugural

From the New York Times, 4/20/17, From N.F.L. Owners to Florida Retirees, a Who’s Who of Inaugural Donors:
A million dollars came from Nicholas A. Mastroianni III, whose family firm, the United States Immigration Fund, is a major force in the contentious federal EB-5 visa program. The program, which allows wealthy foreigners to seek United States residency in exchange for investments here, expires at the end of April; Mr. Trump has not yet taken a position on it. Yes, indeed, EB-5 backers want the status quo--or a slightly modified version---to remain.

As I wrote in City Limits, Emerging Kushner Deal Suggests What’s Wrong With U.S. Investor Visa Program (and with video linked on this blog), Mastroianni made a damning admission regarding EB-5, which is supposed to create ten jobs per investor. Last November, when asked at a panel in Shanghai how EB-5 could escape allegations of fraud—after some high-profile scams and scandals—Mastroianni advised picking the right project.

“Projects tha…

Overnight work this week outside 461 Dean to replace sidewalk and road

According to a community notice circulated by Pacific Park Brooklyn, there will be overnight work Monday, April 24 through Friday, April 28. The sidewalk and road in front of 461 Dean (B2) will be replaced, with work lasting from 11 pm through 5 am.

There's an Atlantic Station/Atlantic Yards spec office project. But it's in Atlanta.

Now this was an interesting headline from Bisnow, Hines Teeing Up 500K SF Spec Office At Atlantic Station, especially since it was followed by this:
Hines is expected to go all-spec on a 500K SF office project called Atlantic Yards, connected to Atlantic Station. Hines senior managing director John Heagy said the developer will look to break ground in the second quarter of 2018 on a dual-building project that will use brick instead of the typical steel-and-glass towers seen at Atlantic Station. After all, there's a spec office tower to be built at Site 5 of Atlantic Yards/Pacific Park, and it's expected to be a dual building project. But it's not called Atlantic Yards anymore, and there's no Brooklyn project called Atlantic Station (though there are malls called Atlantic Terminal and Atlantic Center). Ah, this is Atlanta. Only just so many names to go around, I guess.

About those "poor-er floors" in affordable towers: NYC says units redistributed (but new document not yet filed)

In November 2016, I reported on subleases for the "100% affordable" 535 Carlton and 38 Sixth towers that seemed to assign most of the low-income units to the lower floors of each tower.

For example, at 535 Carlton, the 15 neediest households, paying $589 for a one-bedroom and $713 for a two-bedroom, were assigned to the three lowest floors (2-4). The other 75 low-income units were distributed more extensively, but concentrated in the lower half of the building. 
While that wasn't the "poor door" or even the "poor floor," I called it "poor-er floor."

Pushback, but no documentation
A representative of the developer said that was not accurate, but wouldn't provide specifics. 
When the question was raised in public that month, Forest City Ratner's Ashley Cotton said, "And we're working with HDC [New York City Housing Development Corporation], and it will be much more spread all around. The final determination will be done by HDC,…

On the affordable housing lottery analysis: 1M in Housing Connect; an advocate's concern

I'll be on WBAI/99.5 this morning at around 7:30 a.m. to talk about my housing lottery article.
My City Limits article, headlined The Real Math of An Affordable Housing Lottery: Huge Disconnect Between Need and Allotment, was spurred by two things: the common-sense suspicion that many more lower-income people apply for housing lotteries and my increasing frustration with the use of catch-all statistics by the press and others.

(After all, the developers of Hunters Point South had to advertise and assemble a street team to recruit middle-income households.)

So I got the data and drilled down. As I wrote, such statistics camouflage how low-income applicants face crushing odds compared to middle-income ones:
Exactly 92,743 households (not quite 95,000) entered the lottery for the "100% affordable" 535 Carlton tower, city data show. But only 2,203, according to City Limits' analysis, were eligible for 148 middle-income apartments, such as one-bedrooms renting for $2,680 …

From City Limits: "The Real Math of An Affordable Housing Lottery" (light competition for middle-income AY units)

In January, the online publication Bklynr wrote, in Lottery Opens Tomorrow For 300+ Affordable Units At 38 Sixth Avenue:
Demand for affordable housing in other Pacific Park buildings has been profound. According to the developer, the lottery for 461 Dean Street received more than 84,000 applications for 181 below-market units; and 535 Carlton Avenue’s lottery drew roughly 95,000 applications for 298 apartments. Similarly, Curbed called some 179,000 applications for affordable units in those two towers a "tremendous response."

That's par for the course. A 12/15/15 New York magazine article, Affordable Housing Could Look Like This, related, "How long were the odds? There were 925 units available in the complex, and 92,925 applicants — a population roughly the size of Albany — entered the lottery."

And a front-page New York Times article, 1/30/15, Long Lines, and Odds, for New York’s Subsidized Housing Lotteries, similarly recounted long odds and quoted an afforda…

Is 550 Vanderbilt an "oasis above the never-ending excitement of Brooklyn"? Only if isolated.

It's a pretty impressive image, looking south from the north side of Atlantic Avenue, right?

It suggests that the 202-foot tall (plus a 40 foot addition for mechanicals) condo building 550 Vanderbilt stands alone, lording above low-rise (but exciting!) Prospect Heights/Brooklyn.

More realistically...

But that's a very temporary vista, and one looking west from the east side of Vanderbilt Avenue would show 535 Carlton in the background.

Consider the image below, almost from the opposite angle, looking north and west from the southeast, produced in September 2015 by the architects of the B12 (615 Dean) condo tower. That yet-unbuilt tower would be 287 feet, clearly much larger than 550 Vanderbilt (the tower at lower right).

As is the 313-foot tower (B10) planned just north of 550 Vanderbilt, to be built only after a deck is finished over the railyard. Also larger would be most of the towers in Pacific Park Brooklyn.

Doing the math on 550 Vanderbilt rents: out-of-whack for conventional investors

It was inevitable, wasn't it, that apartments at the 278-unit condo building 550 Vanderbilt would be available for rent.

Surely some owners bought units as an investment. And perhaps developer Greenland Forest City Partners will rent out unsold units.

So now four units are for rent, via StreetEasy, for relatively affordable prices, not much above the rents at 461 Dean, which was built for rentals only and has 50% of the units below market.

That suggests the currentglut in and around Downtown Brooklyn doesn't offer as much of a premium for a fully equipped condo building.

Also, perhaps, that apartments in a not-quite-finished building are harder to rent. Note that two of the units have no fee attached, which suggests the owners are willing to absorb the real estate agent's commission--again signs of a buyers' market.

Estimating the math

It also suggests, based on my calculations explained below, that the buyers renting out units may not be conventional investors. The ex…

"Expert" Zimbalist: Brooklyn an example of sports facility as redevelopment catalyst

So Toronto's Metro tabloid offers a short 4/10/17 article, It rarely pays to play when sports teams call for cash: Expert:
Does it ever make sense to subsidize sports?
We asked economist Andrew Zimbalist, author of Circus Maximus and No Boston Olympics. He says the numbers often don’t add up.  ...Zimbalist says emotional arguments to subsidize the team can be made, but don’t substitute for a business case. “If you’re concerned at a social or cultural level, then I would say you have to think about subsidies. But don’t think about subsidies because of an economic impact.” And here's the key paragraph:
Zimbalist doesn’t oppose all sports subsidies. He says stadiums as redevelopment catalysts can make sense, pointing to San Diego, Calif., and Brooklyn, N.Y. But those are the minority, and “the devil is in the details.” He warns against subsidies by another name, like waiving property taxes, interest-free loans or introducing a special tax or fee to support the team. Thing is, Zi…

Forest City's expertise: "mixed-use placemaking" with government help "to regentrify an area"

From a 2/3/17 profile in Multifamily Executive of Forest City Realty Trust CEO David LaRue, headlined LaRue Pilots Forest City Through an Aggressive Transformation:
“The mall portfolio didn’t really have a clear role in a company that’s focusing on their core expertise, which is mixed-use placemaking development that often entails partnering with local government to regentrify an area,” says Sheila McGrath, senior managing director covering equity REITs and real estate operating companies at Evercore ISI, an investment banking advisory firm. I'm not sure exactly what "regentrify" means--the few cites I've seen direct back to "gentrify." A combination of "redevelop" and "gentrify"? (Technically, "regentrify" would suggest gentrifying areas that had once gentrified, then de-gentrified during economic decline.)

But McGrath has it right in describing the developer's role in "partnering with local government."

So, where did that (wrong) $23.8 million Barclays Center revenue estimate come from?

OK, I'm late to this wrongheaded 3/23/17 Newsday editorial analysis:
We do know that Barclays Center paid the Islanders $37.5 million in the year ending in June 2016. That payment made up the majority of the $58.2 million the arena spent on all fees, licensing deals and concessions agreements, according to the arena’s financial statements. But in the same documents, the arena estimated that by 2021, that total figure would fall to $23.8 million.
That leaves one more question: Is Barclays predicting a future without the Islanders? Which Newsday clarified the next day:
The Barclays Center earned $58.2 million in aggregate revenue from licensing, concessions, sponsorships and other similar contracts in 2016, and estimated that revenue number at $23.8 million as of 2021. The payments the arena made or will make in the future to the Islanders are not included in that revenue data. A Point item on Thursday mischaracterized that data.Where did that number come from? 

Well, it came from B…

Newsday: Long Island business leader says Barclays aiming to move Islanders to Nassau (but downsized arena)

Update: Newsday reports that NHL Commissioner Gary Bettman said the Coliseum was “not a long-term option” for the Islanders, and that the team staying at Barclays Center was still on the table.

Here they go again. Newsday reported yesterday, Barclays Center pitch would return Islanders to Nassau Coliseum, says LIA chief, quoting Kevin Law, CEO of the business group Long Island Association.

According to Law, Mikhail Prokhorov's Brooklyn Sports & Entertainment, which would rather not lose the Islanders to an out-of-state arena or a new one at Belmont Park, is willing to add seats to the undersized arena.

The problem is that the Nassau Coliseum was just downsized and remodeled, and reports from concerts say it's already too crowded in the concourses. The other problem is that the owners of the hockey team have not expressed any interest in moving back to a downsized arena with no public transit and limited suites.

I'd still bet this is all part of an effort to renegotiate …

Barclays Center now using Times "Living Large at Barclays" article to promote VIP experiences

So, remember that New York Times article reporting on a free VIP experience at the Barclays Center?

As I wrote last December, even though Sarah Lyall's report was partly tongue in cheek and thus didn't function as an advertisement for the $6,189 VIP experience, I did believe that, given the prominent placement, in print and on the web, with many photos, it sure promoted the Brooklyn Nets and the Barclays Center.

(The Times Public Editor, as well as some but not all readers, also raised eyebrows. I wondered how many--if any--people ever purchased that VIP experience.)

Well, guess what, arena managers must still appreciate the article very much. All publicity is good publicity?

It's reproduced in full, without permission or credit, on the web site of Brooklyn Sports & Entertainment Experiences, with a link from the main page. There's no link to the original Times article, which would have led people to critical comments.

It's also listed at the top of the BSE [Br…

Now that 421-a is back, new momentum for Atlantic Yards/Pacific Park units?

Last November, when Forest City Realty Trust announced--presumably after agreeing with joint venture partner/overseer Greenland USA--an unspecified delay in Pacific Park project residential construction, CEO David LaRue cited the impact of increased apartment supply, uncertainty surrounding the 421-a tax abatement, and increases in construction costs.

Well, now 421-a--or, rather, its successor--has been settled in Albany, and will last at least five years, giving developers more certainty in planning ahead, at least regarding rental units. The resolution is surely not the only reasons for delays--two buildings, 615 Dean (condos) and 664 Pacific (rentals)--already have the tax exemption, but have not gotten started, and only the latter is hampered by a related lawsuit.

But the resolution of 421-a surely helps the developers' financial prognostications, and helps with any planned sale of building sites or shares of future rental buildings. So this resolves some uncertainty and shoul…

As The Wheeler gets developed for office space, a nod to Pacific Park as an "internationally recognized neighborhood"

A 4/5/17 press release, Tishman Speyer Unveils Plans For "The Wheeler;" A Creative Office Campus in the Heart of Downtown Brooklyn, had a couple of interesting aspects.

The Wheeler--"a name inspired by the visionary 19th century Brooklyn developer Andrew Wheeler"--involves a "620,000 square-foot vertical office campus spread across 10 expansive floors" on top of an integrated into two buildings owned by Macy's on Fulton Street and with an entrance on Livingston Street. (One was developed by Wheeler.)

Tishman Speyer notes:
Tishman Speyer is developing The Wheeler during a period of unprecedented growth in Downtown Brooklyn. Between 2012 and 2016, more than 3,000 units of housing were constructed in the greater Downtown Brooklyn area, which encompasses such internationally recognized neighborhoods as Dumbo, Brooklyn Heights, Park Slope, Fort Greene, Gowanus, Pacific Park and Williamsburg. Another 5,000 apartments, more than half a million square feet …

From the latest Construction Update: areas around new towers should improve

According to the latest Atlantic Yards/Pacific Park Construction Update (bottom), covering the two weeks beginning April 10 and circulated Friday at 5:56 pm (with appropriate lead time!) by Empire State Development after preparation by Greenland Forest City Partners (GFCP), the area around some buildings should see an upgrade.

Notably, outside B2, 461 Dean Street, exterior site work to complete the sidewalk is expected, as is removal of the sidewalk bridge.

Outside B11, 550 Vanderbilt, the 16’ high fence along Dean Street should be removed to the property line (but not from the rest of the street).

Street trees outside B14, 535 Carlton Avenue, should be planted by 4/28/17, though that was actually predicted in the previous update. Also around that building, curb and sidewalk removal at Carlton Avenue and Pacific Street will begin, as will a temporary asphalt curb and 8’ construction fence work. (That could be a little more clear.)

As described in the previous alert, and recently notic…

Did the Community Benefits Agreement survive the Greenland deal? Yes, but only two organizational contracts

I was recently asked if the Atlantic Yards Community Benefits Agreement (CBA) continued under the new ownership of Atlantic Yards, the Greenland Forest City Partners joint venture.
The answer is yes, formally, but in practice--as I've written--most of the groups and activities are moribund. Obligations to only two specific groups remain, mainly Downtown Brooklyn Neighborhood Alliance (DBNA), led by the Rev. Herbert Daughtry, and those have been transferred, in significant part if not in full, to the new arena operating company.

In June 2015, I wrote about "Assignment and Assumption Agreement" signed 6/30/14 between Forest City Ratner's Atlantic Yards Development Company (AYDC) and the new Atlantic Yards Venture jointly owned by Forest City (30%) and the new majority owner, Greenland Group (70%). But I did so regarding architecture, not the CBA.

The agreement (bottom) includes various city, state, and private contracts. Notably on page 11, item #32, it indicates that…