Skip to main content

So, is Greenland a government-owned entity? And what about those Chinese condo investors?

This is the second of a few articles based on the 1/24/17 Atlantic Yards/Pacific Park meeting. Yesterday I wrote about the unclear timing of the project buildout.

A bit of tension emerged at the meeting over the role of Chinese investors and also the Shanghai-based Greenland Group, whose Greenland USA subsidiary owns 70% of the Atlantic Yards/Pacific Park project going forward (with the exception of the B2 tower, aka 461 Dean, and the Barclays Center operating company). In the joint venture Greenland Forest City Partners, Forest City Ratner has 30%.

After Forest City Ratner's Ashley Cotton described Greenland as "a committed partner, they have financial wherewithal," Jimmy Greenfield, a Dean Street property owner, responded, "Greenland is a Chinese government-run corporation, so you don't meet the same--."

"We're publicly traded company," countered Scott Solish, Greenland USA's Project Manager, adding that they were excited about opening the new buildings.

That said, as I wrote, Greenland’s commitment may have diminished somewhat, since it and Forest City are marketing stakes in three towers (B12, B13, B4).

A government-owned entity? Yes. Even if not formally controlled by Shanghai.

Moody's Credit Opinion from 11/29/16
calls Greenland "a local state-owned enterprise"
Later in the meeting, resident Steve Ettlinger told Solish he was curious about the proper description of Greenland. "Everybody... identifies Greenland as a Chinese government-, Shanghai government-owned entity, and you said it's publicly traded company. Can you inform us a little bit about the ownership?"

"Me personally, I can’t," Solish responded.

"You work for them, you must know something," Ettlinger responded. "You said it was publicly traded."

"I don’t have the exact information," Solish said. "I have enough to do in my day-to-day job." Ettlinger asked to follow up by email.

It's fair to call it a publicly-traded, state-owned (or government-owned) enterprise, even if that state ownership is no longer a majority. However, even if Greenland may no longer be fully state-controlled, the current ownership structure seems to favor state control.

As I wrote last February, it's a bit murky: Greenland was long called a "state-controlled enterprise group," as noted by this 12/9/15 note from ratings agency Moody's, with the Shanghai State-Owned Assets Supervision and Administration Commission (SASAC) "effectively the largest shareholder." In November 2016, as shown in the screenshot above, Moody's called it a "local state-owned enterprise."

But state ownership is not incompatible with being publicly traded, and if the state ownership is now below 50%, that does not necessarily remove state control. After all, Wikipedia describes (without a footnote) the SASAC share as today over 46%, with nearly 29% more owned by managers and employees of Greenland Holdings. That seems to favor control, even if it doesn't assure it.

In 2015, Greenland was listed on the Shanghai Stock Exchange. As the Hong Kong-based South China Morning Post reported 4/24/15, that was achieved via an asset swap with another company, Jinfeng, in a move the newspaper (and a Greenland press release) described as a "back-door listing."

"The asset swap deal is part of Shanghai’s increasing efforts to make its state-owned enterprises more profitable, efficient and market-based, in keeping with China’s reform agenda," Greenland Australia said in a press release. In other words, Greenland was not about to be a non-state-owned enterprise.

According to Greenland's Semi-Annual Report for the period ended 6/30/15, filed with the China Securities Regulatory Commission on 8/25/15, state entities held 44.72% of the shares, a Greenland spokeswoman told me last year. 

No English-language version of that report existed, I was told, but the 55%/45% split was reported in the Sydney Morning Herald on 7/21/15 after Greenland was listed on the Shanghai Stock Exchange. (Going by the Wikipedia numbers, the SASAC figure, as noted above, is more than 46%.)

At the very least, the company remains significantly state-owned. Greenland's own LinkedIn page (above) may not have been recently updated (or copy-edited), but it states that it "has become one of the biggest state-owned enterprise in Shanghai."

Obfuscation

Interestingly enough, parent Forest City Enterprises, in its first press release mentioning Greenland, on 10/11/13, did not even use the term state-owned:
Established in 1992, the Shanghai-based Greenland Group has formed a diversified industrial structure with a focus on energy, finance, and real estate. Greenland Group is involved in construction projects in more than 70 cities and provinces in China as well as in Korea, Australia and the United States, among others.
Such language form Forest City has continued. Similarly, Greenland USA's web site obscures the issue:
Greenland USA was established in 2013 as a subsidiary of Greenland Holding Group, which is publicly traded on the Shanghai Stock Exchange (SSE) and ranked 311th on the Fortune Global 500. Greenland Group has developed properties in 26 provinces in China as well as in nine countries on four continents, including the US, Australia, Canada, the UK, Germany, Japan, South Korea and Malaysia. We couple our international expertise in large-scale, mixed-use properties, our commitment to design innovation, quality and efficiency, and local market insight, to bring our vision to life. To date, we have invested more than $8B in projects on the east and west coast and we continually assess new opportunities.
Chinese condo owners?

At the meeting Tuesday, Greenfield, after getting a noncommittal answer regarding how many units at 550 Vanderbilt had been sold, asked what percentage of the condo buyers at the 278-unit tower were Chinese.

"We have buyers from all over the world," responded Solish. (Last year, a press report indicated that some 30% of condo buyers in Greenland's Los Angeles project, Metropolis, were from China.)

Greenfield asked if there was a way to find out how many buyers are going to live there--which implied that absentee owners must sublet, or do shorter-term rentals--and how many were American citizens before they bought the units.

"It begins to make me uncomfortable," responded Cotton, referring to the second part of the question and ignoring the first. "I'm not sure why it matters."

"It made us all uncomfortable for a very long time," Greenfield countered, referring to the project as a whole. The question of absentee ownership in a condo building lingers.

EB-5 role?


Both Greenfield and another audience member connected the potential condo purchase by Chinese nationals with the well-known efforts by the project developers to raise money via the EB-5 program, in which immigrant investors--most of them Chinese--gain green cards by making a purportedly job-creating investment.

Cotton said "EB-5 financing has nothing to do with this condo building," but rather was money for infrastructure. (Interestingly, they've previously pitched it as investing in an arena or towers.)

"What does it [EB-5] have to do with buying a condo?" Cotton asked. "Will Chinese people buy apartments? Absolutely. I'm sure they will, and I'm sure they have."

Indeed, most EB-5 investors from China want to live in California. While it's certainly possible that some Atlantic Yards EB-5 investors might also invest in condos that are part of the project, there's a much vaster universe of potential condo buyers from China.

Early wave of investors?

Greenfield reported spotting 25 Chinese people, none speaking English, apparently on a marketing tour of 550 Vanderbilt.

"What’s the problem with that?" Cotton asked.

"I have no problem with that," Greenfield said. "All I'm doing is suggesting there may have been a bump in your sales initially, because it was marketed to Chinese people in China, and then it begins to go flat. I'm across the street, I get a little agitated, because it seems like nothing is on schedule, and it seems like you're doing a bait-and-switch at each juncture."

"Schedules are frustrating beyond belief to all of us," Cotton responded. "A bait-and-switch I dispute highly.... Anyone is allowed to buy a condo."

"As it should be," Greenfield said.

I wouldn't call the condo sales a bait-and-switch, but I would say they're not exactly completely candid. (How are those 8 acres of park space going?)

Indeed, the condo was marketed in China. And that potential pool of buyers was one reason Greenland got involved in Pacific Park, as it claimed it had "an enormous customer base."

Also, since many Chinese buyers are cash buyers, they supply a good foundation for a condo building sell-through; once a certain number of units are sold, banks can consider writing mortgages.

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

So, Forest City has some property subject to the future Gowanus rezoning

Writing yesterday, MAP: Who Owns All the Property Along the Gowanus Canal, DNAinfo's Leslie Albrecht lays out the positioning of various real estate players along the Gowanus Canal, a Superfund site:
As the city considers whether to rezone Gowanus and, perhaps, morph the gritty low-rise industrial area into a hot new neighborhood of residential towers (albeit at a fraction of the height of Manhattan's supertall buildings), DNAinfo reviewed property records along the canal to find out who stands to benefit most from the changes.
Investors have poured at least $440 million into buying land on the polluted waterway and more than a third of the properties have changed hands in the past decade, according to an examination of records for the nearly 130 properties along the 1.8-mile canal. While the single largest landowner is developer Property Markets Group, other landowners include Kushner Companies, Alloy Development, Two Trees, and Forest City New York.

Forest City's plans unc…