Greenland Forest City aims to sell unspecified stake in two unbuilt condo towers, plus B4 (apartments→office)

B12 tower, 615 Dean Street

Now, perhaps, we know why the design for the B12 condo tower, at 615 Dean Street, was unveiled last September but hasn't really broken ground. (The most recent Construction Update refers only to site preparation activities.)

The developer wants to sell, according to a Real Deal article today headlined Forest City, Greenland want to sell big stake in Pacific Park complex.

It's unclear whether they're selling from strength (taking profits) or weakness (diminished equity, tougher financing). Both lower risk. There are arguments for both interpretations, but some recent hints of weakness. Ultimately, the sale price would provide more of a clue.

They're selling an unspecified but “very significant” equity stake in the designed but unbuilt B12 (tentatively 265 units) and its condo neighbor B13 (277 units), on the southeast block of the site, and, most surprisingly, the B4 tower at the northeast corner of the arena block.

The latter is surprising because B4, approved as a residential building with 824,629 square feet, is now aimed to be an office tower, assuming the developer gets permission to change the plan, a process that could take a year. That suggests that the sale might take a while, or might not close until after the switch is approved.

Below is an annotated map of the sites for sale.

Black arrows point to building sites where an interest is for sale

Close-mouthed posture

The article states:

A spokesperson for the partnership declined to comment on the size of the equity stake or the asking price, saying only that the companies “remain fully committed” to developing Pacific Park.
“With 1,800 units of housing under way and thousands more in the pipeline, we’re maintaining significant forward progress in constructing Pacific Park,” a spokesperson said. “To ensure the most expeditious and effective build out, our joint venture is seeking strategic opportunities to recapitalize our significant equity investment.”
[CBRE Broker Darcy] Stacom did not responded to a request for comment.

They might have been surprised by the inquiry, but I'd think that if they wanted to say that the first condo tower is doing so well they wanted to sell stakes in future towers, well, they would have said so.

It would be very interesting if they are selling a majority interest in any of these towers or rather making sure a new investor has only a minority stake.

Greenland Holdings stock price 2014-present, via Bloomberg

The Real Deal notes "a recent trend of Forest City pulling out of higher-risk assets," and that Greenland's stock has "taken a hit in China in recent months."

Greenland's fluctuations

That's an understatement. Greenland's stock has gone up and down, as the country's hypercharged economy--and real estate industry--has been in flux.

As I wrote in April 2015, though Greenland's debt-funded development suggests deep pockets, it does not ensure safety. Greenland, I wrote, is vulnerable to major forces in China, as well as currency fluctuations and interest rate increases in the United States.

The bottom line for Greenland could change, I wrote, and today, it may be tougher for wealthy Chinese--i.e., future condo buyers--to get their money out of the country.

So it's worth recalling a warning at a 3/28/14 board meeting of Empire State Development, the gubernatorial-directed authority that oversees and shepherds Atlantic Yards.

Gib Veconi of the Prospect Heights Neighborhood Development Council focused on the state’s failure to consider the option of bringing in other developers. 

The pending Greenland transaction would not represent a multiple-developer strategy, Veconi observed, but rather a single-source development project, one "under the control of a partner exposed to one of the world’s most volatile economies.”

Is a new chapter beginning?