On Bloomberg Markets, Gilmartin says condo prices vs. Manhattan make Brooklyn "compelling," hails EB-5
"We wanted to operate as efficiently as we could, in order to maximize value for our shareholders and investors," said David LaRue, CEO of Forest City Realty Trust, describing Forest City Enterprises' conversion into a REIT, or real estate investment trust.
That's boilerplate, of course, but it's worth remembering whenever Bruce Ratner, Chairman of subsidiary Forest City Ratner, blathers about being a "civic" developer.
"When you look at the historical performance of the REITS, and our inability to capture our net asset value," Gilmartin said, "for our company, I think it's going to prove to be a very, very wise move, and I think it's going to get us closer to where we believe the value of the company is."
Brooklyn vs. Manhattan
What's strong, asked Liu.
Job growth, said Gilmartin, has created momentum in housing, office, and retail. "Brooklyn is starting to see prices as high as Manhattan for residential and office," Liu said. "Are we pricing out people?"
"This is why Brooklyn is so compelling," Gilmartin said. "When you look at the numbers, Brooklyn is still a 40 to 50 percent discount to Manhattan, in terms of condominium prices. It has a pipeline of affordable housing unlike any that might exist in Manhattan. And as rental markets go, we are still dangerously low, in terms of vacancy rates. So, if you build it, they will come. And I think what makes Brooklyn so compelling is that there's still a $400 a month differential between what it might be to rent an apartment in Manhattan versus Brooklyn. And those are very compelling numbers."
"We can deliver what consumers want... live, work, or play," says LaRue.
"This was a way for developers to get some easy, and cheap money from the Chinese," Liu said, bringing up the EB-5 program. "Is this a program that you're happy to see extended, and are you going to continue to use that to fund your project."
Gilmartin responded, "I believe that, in projects like Pacific Park Brooklyn, where you have a lot of infrastructure--infrastructure loans, land loans are no longer available in our space. So I think in some ways the ability for EB-5 to address avoiding the marketplace and provide well-priced funds for that
has really allowed projects of large scale nature... to actually come to fruition. It's very difficult to use equity to fund those obligations, particularly because the vertical comes so much later. So we have made great use of EB-5, at Pacific Park Brooklyn and out in Nassau, and we're hope--we're thankful that the program can continue."
Well-priced funds? Cheap money!
OK, infrastructure. So that's why they advertised it as an arena+apartment project?
Do note her slip in the last line. "We're hope" suggests she was about to say "We're hopeful," which implies some forward motion--in other words, they just might use it again.